DIC Asset Annual Report 2009 - DIC Asset AG · · PDF filehelped ensure that we were...

A N N U A L R E P O R T 2 0 0 9

DIC Asset AG at a glance

Key operating figures in EUR million 2009 2008 H2 2009 H1 2009Gross rental income 133.6 134.5 -1% 66.3 67.3 -1%

Net rental income 123.8 126.2 -2% 61.1 62.7 -3%

Proceeds from the sale of real estate 15.2 49.9 -70% 8.3 6.9 +20%

Total revenues 171.3 207.1 -17% 86.0 85.3 +1%

Funds from operations (FFO) 47.6 42.7 +11% 25.9 21.7 +19%

EBITDA 110.8 125.0 -11% 54.7 56.1 -2%

EBIT 80.3 97.0 -17% 39.2 41.1 -5%

EBDA 46.6 53.2 -12% 25.5 21.1 +21%

Profit for the period 16.1 25.2 -36% 10.0 6.1 +64%

Investment 45.2 267.3 -83% 11.7 33.5 -65%

Cash flow from operating activities 38.7 37.2 +4% 19.9 18.8 +6%

Balance sheet data in EUR million 31.12.2009 31.12.2008 31.12.2009 30.06.2009

Equity ratio in % 24.0 24.1 0% 24.0 23.8 +1%

Investment property 2,024.2 2,022.9 0% 2,024.2 2,040.8 -1%

Net asset value 497.1 492.8 +1% 497.1 N/A N/A

Debt 1,682.7 1,681.0 0% 1,682.7 1,694.6 -1%

Total assets 2,213.4 2,214.8 0% 2,213.4 2,223.2 0%

Per share in EUR million 2009 2008 H2 2009 H1 2009

FFO 1.54 1.37 +12% 0.83 0.71 +17%

EBDA 1.51 1.71 -12% 0.82 0.69 +19%

Basic/diluted earnings 0.52 0.80 -35% 0.32 0.20 +60%

Net asset value 15.86 16.23 -2% 15.86 N/A N/A

FFO and profit for the periodin Euro million

FFOProfit for the period

20082007 200920092007

722.2492.8 497.1

2008

Total revenuesin Euro million

OtherProceeds from salesRental income

2009

171.3

2007 2008

Market value of investment property and NAVin Euro million

Opportunistic InvestmentsValue added Core plusNet asset value

236.2207.1

2,192.22,187.5 2,161.844.6

36.142.7

25.2

47.6

16.1

� Overview

List of Subsidiaries and Joint Ventures 134

Announcements on Voting Rights Year 2009 136

Glossary 138

Quarterly Financial Data 2009 140

Multi-Year Overview 141

Portfolio 142

Contact 145

� To our Shareholders 2

� Solidity in Detail 5

� The Share 22

� Group Management Report 26

� Consolidated Financial Statements 70

Notes 76

Auditors’ Report 123

� Statement on Corporate Governance 124

� Report of the Supervisory Board 131

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2 �

Prof. Dr. Gerhard Schmidt, Chairman of the Supervisory Board and Ulrich Höller, Chief Executive Officer

Letter to our Shareholders

Letter to our Shareholders � 3

Dear Shareholders and Business Partners,Employees and Friends of our Company,

Against the backdrop of the financial and economic crisis, we havefaced a difficult year. Nevertheless, we were able to achieve a goodresult for our shareholders, proving once again the solid nature of ourbusiness model:

� Our operating result from real estate management (FFO – fundsfrom operations) amounts to EUR 48 million. It even represents aslight increase on the previous year’s result and is significantly bet-ter than we expected at the beginning of the year.

� At the end of the year, profit thus stands at EUR 16 million – a goodstarting point from which to push on towards our ambitious goals.

� In terms of rental, we exceeded the previous year’s volume by 25%.This success is particularly impressive because we were able to bucka clear downward trend in the market.

� With the primary aim of longer-term lettings in mind, we have invested more heavily in the portfolio. We have also acquired a fur-ther 25.1% of the shares in our property management companyDIC ONSITE, thus bringing it wholly into the Group.

� We are enabling our shareholders to participate once again in thesuccess of our company and will propose to the general share-holders’ meeting that a dividend amounting to EUR 0.30 per sharebe paid.

The good result is down to several factors which are founded on thestrengths of our company:

� One advantage is a clear focus on in-house property management:we can react quickly to changes in the market. In 2009, we focusedon reletting – with great success. The good result of the previousyear was exceeded by some margin, which helped to increase ourcash flow.

� We exploited our financing structure in 2009 to save over EUR 8 million in interest expenses.

� We pressed on with our earnings-oriented sales strategy with itsfocus on small and medium-sized properties and successfullyplaced properties for around EUR 60 million.

This is good news both for our shareholders and our customers, whocan rely as ever on our professional quality of service. Above all, how-ever, they are facts which enable us to secure a better position in themarket than many of our competitors. The healthy figures are the result of a long-term business model with an “airbag” strategy. Stablerental income provides the airbag. Its stability comes from

� long-term tenancy agreements� a diverse tenant structure and � attractive and well-managed rental properties.

The level of rental income, which now stands at around EUR 133 mil-lion, forms the basis of an attractive return for our shareholders, particularly at a time in which business transactions are only to be expected in certain segments of the transaction market.

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4 �4 � Letter to our Shareholders

The business model adopted by DIC Asset AG does not just ensure investors an attractive return, it also relieves the burden of decision-making from the Board of Directors with regard to forced sales, whichare not uncommon in the market at present. Put simply: we can affordto hold on to the company’s assets and thus those of its shareholdersand not to sell them unnecessarily in what is currently a volatile market.

A prudent financing policy also forms part of the airbag strategy. It hashelped ensure that we were able to navigate the past few turbulentmonths safely and emerge unscathed. The strategy we have imple-mented for many years, that of agreeing our financing on a long-termand stable basis and with a healthy degree of flexibility, has enabledus to make corporate decisions calmly and with room to manoeuvre.

We are convinced that we have achieved the best possible result forour shareholders over the past year under the most difficult circum-stances for decades. Our goal for 2010 is to repeat this. This bringswith it further major challenges, because we will not see the eagerlyawaited start of a prolonged upturn in 2010, but rather in 2011. Withrespect to the strategy pursued by DIC Asset AG in this regard, threepoints are critical:

1. We focus our efforts on letting our real estate portfolio in order tocontinue to generate a basic return that is as high as possible.

2. We observe and analyse market trends with great precision, en-abling us to secure a strong position for entering the transactionmarket once again with expedient sales and, possibly, opportuni-ties to make purchases, which are becoming more attractive onceagain.

3. Furthermore, we are using the strengths of DIC Asset AG to provideit with further support: we are continuing to develop our successstrategy with the future expansion of the Funds business segment.This will increase our solidity and stability even further by makingthe most of the opportunities for growth while also giving usgreater room for manoeuvre to exploit future market trends.

We are happy to adapt a well-known formula into “never change asuccessful strategy”, which has generated profitable results both for usand for you, including in the more recent past. In this, we are buildingon the commitment and outstanding strengths of our teams of employees, whom we would like to thank for their efforts and theirgreat motivation to perform. We would be delighted if you were tocontinue to offer your loyal support to DIC Asset AG out of your conviction, and for your profit.

Yours sincerely,

Prof. Dr. Gerhard Schmidt Ulrich HöllerChairman of the Supervisory Board Chief Executive Officer

DIC Asset has strong business structures which can

withstand tough challenges.

With solidity, stability and consistency in detail,

it achieves profitable results year after year.

� 5

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Local expertise, wide-ranging networks and

a clearly targeted portfolio structure:

solid foundations for strong, durable assets.

Market values determined by independent experts confirmthe soundness of the portfolio in tough market conditions.

Market value of investment property EUR million

Co-Investments (269,7)Value added (930,1)Core plus (992,4)

6 �

2006 2007 2008

1,275.3

2,187.5 2,161.8

2009

2,192.2

A high level of stability

With solid business structures built on long-lasting resilience, DIC Asset managed tocombat a considerable downward trend in the market in 2009.

23.9

28.7

37.2

2006 2007 2008

Cash flow from operating activitiesEUR million

The cash flow from ongoing business operations proves highly stable in a difficultmarket environment.

2009

38.7

� 7

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The balanced business model makes use

of synergies and diversifies risks.

8 �

Berlin

Mannheim

Munich

Frankfurt a. M.

Düsseldorf

Hamburg

Bavaria 8%Southwest 19%

Rhine Main area 24%

West region 11%

Rhineland 16%

Hamburg area/North 13%

Berlin/East 9%

Regional distribution of propertiesby lettable area in sqm

� Branches� Region with excellent economic performance� Region with good economic performance

The tenant structure in the DIC Asset portfolio is made up of some 1,600 tenants in various industries and the public sector.

The three portfolio segments "Core plus", "Value added" and "Co-Investments" represent different areas of earning potential managed by the business in a targeted manner. In the future, in addition to opportunistic transactions, the Co-Investments will include special funds: an additional business segment in which DIC Asset can display its provenstrengths.

Balanced business, diversified tenant structure

Main tenantsby rents paid

Public sector22%

Retail 20%

Telco/IT/Multimedia 12%

Others 28%

Industry 8%

Insurance/Banking 10%

� 9

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With intensive property management, the

wholly owned subsidiary DIC ONSITE has

achieved successful lettings in spite of the

market trend.

Letting volumeLettable area in sqm

80.0

124.3

196.3

245.5

2006

�� New lettings

�� Renewals

2007 2008 2009

10 �

DIC Asset's property management service has also dealt with difficult tasks this yearwith great success. Between January and December 2009, letting volume rose to over 245,500 sqm –therefore the level of rental income remained stable and reliable.

Attractive earnings in a turbulent environment

Quarterly rental income EUR million

� 11

33.2 34.1 33.5 32.8

2009

Q1 Q2 Q3 Q4

33.8 33.9 33.3 33.5

2008

Q1 Q2 Q3 Q4

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The regionally structured property manage-

ment service, in the form of six branches

in the main investment areas, allows for a

concentration of skills and expertise: "close

to the property and close to the tenants".

A strong, satisfied tenant base ensures a

sustainable rental income.

12 �

Strong tenant relationships

46,400

90,500

2007 2008

RenewalsArea in sqm

2009

136,700

� 13

Tenant satisfaction – indicated by lease renewals – is evidence of a good-quality portfolio.The volume of lease renewals increased by more than 50%, while the average rental priceremained stable.

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The traditional Bienenkorbhaus property has

gained top-quality rental spaces and stable

anchor tenants following its renovation and

redevelopment.

14 �

In Spring 2009, the official reopening of the historic Bienenkorbhaus on Frankfurt’s Zeil was celebrated. The high-rise building was completely refurbished internally and extended with a new building featuring a modern glass façade.

This revitalisation in a prime retail location increased rental space by 15% and rental volumeby around 30%. Long-term rental contracts have been agreed with each of the anchor tenants, the shoe retailer Görtz and the Frankfurter Sparkasse, with a duration of 15 years.

The ambitious and complex redevelopment was honoured with the "immobilienmanager.AWARD 2010" for best project development in February 2010.

Professional redevelopment raises potential

� 15

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With projects such as the new "MainTor"

quarter in Frankfurt, DIC is demonstrating its

profile with a combination of ideas, capital

resources and strength of implementation.

16 �

DIC Asset participates in high-quality projects in terms of urban development. For the MainTor, a new quarter in the centre of Frankfurt, DIC held a competition involving internationally renowned architects in order to produce the best possibledesigns for the distinctive "MainTor WinX" and "MainTor Panorama" towers.

Creative and integrated urban development

� 17

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A clear, stable financial position provides

a strong backbone: all sub-portfolios are

financed individually, 85% of the financing

is fixed for the long term.

18 �

DIC Asset's strong financing model is organised on a conservative and sustainablebasis.

Of a total of over one and a half million euros of financial liabilities, only around53 million is to be refinanced in the next twelve months. The average interest ratewas reduced by 37 basis points in 2009 and therefore the financing costs could be reduced by 10% overall.

Refinancing requirements set for the long term

Financial debt fixed on a long-term basis

Financial debt cumulated

Financial debt by maturities

� 19

<1 y 1-2 y 2-3 y 3-4 y 4-5 y >5 y

31%

3%

9%12%

22%

100%

50%

0%

23%

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High operational capacity, profitability

even during the economic crisis and timely

preparations for changing market situations

are among the fundamental strengths of

the company.

FFO – Funds from Operations*EUR million

20 �

*Operation income from property management, before depreciation, tax andprofits from sales and development projects

20082006 2007 2009

21.8

44.6 42.7

47.6

DIC Asset has started preparations for expanding its business model to meet the requirements of real estate special funds. Essential elements of the funding structureinclude a significant investment by DIC Asset, which will also apply its established asset and property management expertise to the management of funds.

The funds business segment will open up new groups of new investors as well as addi-tional sources of income – income from investments and ongoing management fees.

New market opportunities at a glance

Sources of income 2009EUR million

� 21

Rental income

Income from investments

Proceedsfrom sales

Management income

3.3

7.5

15.2

133.6

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The Share

Financial crisis depresses prices at the beginning of theyearIn the first two months of 2009, global financial markets werestill in a state of shock following the Lehman bankruptcy.Several major banks and the world’s largest insurance com-pany AIG were rescued through concerted action. Consis-tent cuts in key interest rates and general guarantees keptthe financial system working but the interbank market re-mained severely blocked and share markets remained in freefall. Once again, the DAX fell by over 20% within two months.

Confidence returned in spring At the end of February 2009, market players’ confidence re-turned thanks to the various support measures; pricesstarted to rally and continued to do so until the year-end.The recovery on financial markets was helped by the indus-trialised countries which, through various programmes tostimulate the economy, created steady, artificial demand,which led to a slight economic upturn.

From an annual viewpoint, DIC Asset outperformed theindicesOur share performed in line with general market trends, although it was subject to increased fluctuation. In line withthe downward trend in the market at the beginning of theyear, the DIC asset share also fell to its 52-week low of EUR 2.65on 24 February 2009. With the subsequent recovery, the priceof our share tripled to a 52-week high on 7 October 2009 ofEUR 9.60. Our share ended 2009 +31% up, at EUR 8.15, andconsequently outperformed both the DAX and the SDAX. TheEPRA NAREIT Europe index, which reflects the performance ofthe largest European real estate companies, rose by +28%.

22 � The Share

2004 2005 2006 2007

0.35

0.560.75

1.65

2008

0.30

2009

0.30

Dividend per share Euro million

DIC Asset AG involves its shareholders inthe Group’s success by paying attractive,appropriate dividends. In setting thedividend, we are guided by the operat-ing profit, the Company’s current condi-tion and expected market trends.

For 2009, the Board of Directors is proposing a dividend of EUR 0.30 pershare.

Share buy-back programme completedWe completed the share buy-back programme, which wasstarted in 2008, in February 2009 with the acquisition of4.7% of the capital stock. In total, some 1.5 million treasuryshares were acquired worth EUR 7.2 million in total, at anaverage price of EUR 4.91 per share.

Shareholder structure expanded by a long-term investorIn May 2009, we were able to acquire a new long-term focused investor in the form of solvia Vermögensverwal-tung. solvia Vermögensverwaltung is a highly regardedprivate asset management company with which we havealready worked successfully on other transactions. The in-vestment confirms our strategy and illustrates the appealof DIC Asset AG. solvia acquired the shares at a price ofEUR 6.50 per share and has ranked since then as one ofour largest shareholders with a total of 5.1%.

The Share � 23

100%

120%

140%

160%

60%

80%

40%

100%

120%

140%

160%

60%

80%

40%FebJan 09 Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan 10 Feb Mar

DIC Asset AGSDAXEPRA Developed Europe-Index

Diverse IR activitiesWe talk to our shareholders, investors and analysts on aregular basis about news within DIC Asset AG, discuss thelatest figures and respond to any queries. We consider atimely, relevant and reliable information policy to be ofgreat importance to ensure that potential investors canassess our company and the value of our share realistically.This is why the Investor Relations team reports directly tothe Board of Directors.

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We started 2009 with an event for analysts, at which wewere able to discuss the situation on the real estate mar-ket and the prospects for the coming year with experi-enced market players. We explained the figures for the financial year and quarterly figures in detail and answeredquestions in a total of four telephone conferences. TheBoard of Directors and the Investor Relations team alsoparticipated in twelve events for the industry and analystsin Germany and Europe. Six roadshows took us to London,New York, Paris, Zürich and Vienna.

In 2009, we once again spoke to more than 200 share-holders, investors and analysts to explain the strengths ofour business model and the advantages of our share.

Positive assessments 15 institutions cover our share and produce analyses ofour company at regular intervals. Despite the difficult cap-ital market environment, the number of analysts report-ing on our company remained at a high level. With ten buyrecommendations, two thirds of analysts view our com-pany as being well positioned with better than averageprospects for the future at the beginning of March 2010.Three analysts advise holding the share and only two rec-ommend selling it.

Shareholder structureas at March 2010

Reporting on DIC Asset AGas at March 2010

sell hold buy

�Free float

� Deutsche ImmobilienChancen Group

� MSREF

� solvia Vermögens -verwaltung

10.4%

5.1%

45.1% 39.4%

24 � The Share

Dividend on previous year's levelOur long-term dividend policy is based on DIC Asset AG’soperating profit. The company’s current condition and anticipated market trends are included in the assessment.The Board of Directors will maintain its continuous divi-dend policy for the 2009 financial year and propose pay-ment of a dividend of EUR 0.30 per share to the GeneralShareholders’ Meeting. With an attractive dividend yieldof around 4% in relation to the closing price at the year-end of EUR 8.15, we would like to boost our shareholders’confidence still further and allow them an appropriateshare of the profit for the financial year.

Financial calendar

09.03.2010 Publication ofAnnual Report 2009

March/April 2010 Roadshows regarding Annual Results 2009

10.05.2010 Publication of Interim Report Q1/2010

18.05.2010 German Jour fixe Bank of America/Merill Lynch, London

26./27.05.2010 Kempen European Property Seminar 2010, Amsterdam

10.06.2010 Morgan Stanley European Property Conference 2010, London

05.07.2010 General Shareholders’ Meeting 2009 Frankfurt


02./03.09.2010 EPRA Annual Conference 2010, Amsterdam

19.10.2010 Initiative Immobilien-Aktie 2010, Frankfurt


10

32

Basic data on the share

Number of shares 31,349,999

Share capital in EUR 31,349,999

WKN / ISIN 509840 / DE0005098404

Ticker symbol DAZ

Free float 45.1%

Key indices EPRA, SDAX, DIMAX

Market segment Regulated market; Prime Standard (FWB); XETRA

OTC market; on all German exchanges

Key figures in Euro (1) 2009 2008

Earnings per share EUR 0.52 0.80

Net asset value per share EUR 15.86 16.23

FFO per share EUR 1.54 1.37

Price/Earnings ratio (2) EUR 15.67 7.78

Dividend per share EUR 0.30 0.30

Dividend yield (2) % 3.7% 4.8%

52-week-high EUR 9.60 22.68

52-week-low EUR 2.65 3.89

Annual closing price EUR 8.15 6.22

Average number of shares Thsd. 30,872 31,193

Market capitalisation EUR million 255 195

Price at the end of February 2010 EUR 8.18

(1) In each case closing prices in Xetra trading (2) In relation to annual closing price in Xetra trading

The Share � 25

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26 � Management Report

Highlights of the financial year

Management Report

Company and Environment 27Strategy and Management 30General Economic Conditions 33Business Development 35Financial Information 45Risk Report 52Other Information 58Opportunities and Forecast 65

In 2009, DIC Asset AG continued its steady course andachieved a respectable result with a profit for the period ofEUR 16.1 million. In turbulent times we succeeded in creating a resilient basis for a good result through stablerental income. Thanks to our in-house property manage-ment, which was focussed particularly on reletting in 2009,we bucked the market trend in increasing our letting vol-ume. We have generated an FFO (Funds from Operations)of EUR 47.6 million from our operations – far more thanwe had set as our target for this year on the basis of a con-servative forecast. As at the previous year-end, the marketvalue of real estate assets (including our investments inopportunistic co-investments) amounted to EUR 2.2 billion. The net asset value per share remained virtuallyconstant at EUR 15.86. We shall involve our shareholders inthe result for 2009 through the payment of a dividend ofEUR 0.30.

� Profit for the period of EUR 16.1 million

� Funds from operations: annual target exceeded

� Dividend of EUR 0.30 per share

property management services available for the manage-ment and optimisation of the properties as well as its ex-pertise in structuring and managing portfolios. The Fundsbusiness segment will expand the real estate spectrum inthe segment of core products with a low risk profile, onwhich less focus has hitherto been placed. At the sametime, the business segment will open up new groups ofinvestors as well as additional sources of income – incomefrom the investments and ongoing management fees.

� Properties purchased for the portfolio or for their optimisation

We acquire first-class, high-yield properties with longleases to be held long-term in our Core plus portfolio. Wealso invest in properties for our Value added portfolio,whose value we increase through short or medium-termmeasures.

Operations and business processes

� Development of a new business segment: Funds We have now started preparations for an expansion in ourbusiness model, namely the launch of real estate specialfunds, and are working on the fund structure with a well-known partner. Attractive properties from our portfoliowill be selected for the first fund and structured in an innovative manner to produce a suitable sub-portfolio. Weaim to expand our portfolio of high-yield, low risk Coreproperties in this business segment and acquire suchproperties for funds via the market in future.

DIC Asset will remain significantly involved in the funds,with a holding of at least 20%, thus retaining a long-termalignment of interest with other fund investors. Further-more, it shall make its established and successful asset and

DIC Asset AG: commercial real estate specialist in GermanyDIC Asset AG is a real estate company that has specialisedin German commercial real estate. It invests in real estate,manages and optimises its portfolio and its investmentsthrough its own property and asset management teamand sells properties once it has added value to them. Itsportfolio, which encompasses 318 properties, is concen-trated on office property. The market value of its real estate assets amounts to some EUR 2.2 billion in total,which makes DIC Asset AG one of the largest listed real estate companies in Germany.

Operations

Company and Environment � 27

COMPANY AND ENVIRONMENT

Company structure

Portfolio Co-Investments

Strategy and managementi.a. group development, strategic assetand portfolio management, acquisitionsand sales

Portfolio and investmentsInflow of rental income, sales proceeds profit from investments, managementfee income

Real estate managementRealistaion of value creation strategy asset and property management,tenants’ services , letting

Core plus Value added Opportunistic Investments Funds

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To conclude tenancy agreements, we have to hold ourown in competition with providers offering similar qual-ity properties in similar positions at similar prices. Here,the key competitive advantage is the effective asset andproperty management service provided by DIC ONSITE.Our in-house property management service gives us theedge in terms of customer loyalty, speed and proximity tothe market through our on-site presence and the fact thatour properties are managed directly. Our strategy broughtus significant advantages in 2009.

We optimise the portfolio by selling properties oncewe have added value. Here, we are pitted against marketplayers offering properties in comparable income and riskcategories, of comparable quality and offering a compa-rable return. Demand for large-scale properties was verysubdued in 2009 and the sale processes were frequentlyprotracted particularly because of the financing issues involved, which put prices under pressure. We have there-fore concentrated on smaller, more marketable properties.Thanks to our intensive knowledge of the market and theexcellent networking skills of our sales team, we were ableto agree the sale of 19 properties in 17 transactions in2009.

In the domain of Opportunistic Investments, minorityholdings in complementary real estate segments are acquired. Long-term-oriented core properties are to be acquired in the future Funds segment.

� Tenant-focused property management Our property management company DIC ONSITE has almost 90 employees operating from six offices located inareas where our portfolio is concentrated. With the helpof our property and asset management services for ourproperties and investments, we support our tenants directly and ensure high levels of satisfaction and cus-tomer loyalty. As a result, we secure and increase our rentalincome and generate regular revenues from propertymanagement.

� Value-oriented portfolio optimisation In addition to tenant-satisfaction, we pursue a policy ofsteadily optimising our properties through long-term lets,repositioning or modernisation. In the case of more extensive development services, we make use of the expertise within the DIC Group. We also optimise cashflow, based on long-term business plans and correspon-ding financing structures.

� Selective sales to optimise our portfolioAs an active asset manager, we realise gains and sell properties when attractive opportunities arise. The mainpriority here is to optimise the portfolio to maximise earn-ings in the long-term.

� Fund managementFor the new Funds business segment, we identify suitableinvestment properties in accordance with the respectiveinvestment criteria (particularly core properties) andarrange the purchase of properties. In addition to opera-tional property management, we look after our investorsand provide them with information on the current statusof their investments through prompt and transparent reporting.

LocationsWe maintain regional branches in the areas where ourproperty portfolio is concentrated, to offer efficient anddynamic on-site management of our tenants and proper-ties. The majority of our employees are involved in prop-erty management in Frankfurt am Main, Mannheim,Berlin, Hamburg, Düsseldorf and Munich. The Board of Directors and the head office of DIC Asset AG are locatedin Frankfurt am Main, from where the Group is managedand strategic, management and administrative tasks arecarried out.

Competitive position and sales market When acquiring properties, we compete with national andinternational companies. In the past financial year, thesupply of attractive properties fell and, at the same time,there was a marked decrease in activity among interna-tional investors, in particular. When investing, the regionalmarket knowledge available in our branches gives us aclear edge, particularly over our international competitors.

28 � Company and Environment

Management and Supervision

Board of DirectorsThe Board of Directors of DIC Asset AG manages the com-pany's business. It establishes corporate strategy, runs thecompany, carries out corporate planning and installs effective and adequate risk management systems. TheBoard of Directors consists of three members. Each mem-ber of the Board of Directors is responsible for an areawithin the company laid down in the rules of procedure.

Supervisory BoardThe Board of Directors works closely with the SupervisoryBoard when making important decisions and keeps it in-formed regularly and when required of all business developments and strategic issues. The Supervisory Boardis the statutory control and supervisory body, and, as such,advises the Board of Directors in the decision-makingprocess, supervises its operations and decisions, includingthrough the Audit Committee and has approval rights inspecific situations. The Supervisory Board of DIC Asset AGconsists of six members. During 2009, it held five jointmeetings with the Board of Directors, plus four telephonemeetings.

Statement on corporate governance and additionaldisclosuresThe Statement on Corporate Governance was publishedon the DIC Asset AG website and can be accessed thereat any time. The statement is also a component of the section with the same name "Statement on CorporateGovernance”, where further information on DIC Asset AG’scorporate governance is also to be found. The remunera-tion report containing individual information on the com-pensation of the Board of Directors and Supervisory Boardis also given there.

The control system and processes are explained in detail inthe Risk Report and, in particular, in the comments on theinternal control system.

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30 � Strategy and Management

Group strategy: a focussed business modelSTRATEGY AND MANAGEMENT

Property management: Adding value through our own effortsDIC Asset AG exploits the potential of properties and investments through its in-house property and asset man-agement team via DIC ONSITE. We make profits along theentire value added chain and manage the deployment ofour resources directly. Through our branches, we have apresence in the areas where our investment is concen-trated, which ensures that we are close to tenants. In thisway we develop regional expertise, learn about opportu-nities directly and are able to counter any undesirable de-velopments in the locality speedily. In 2009, we confirmedthis strategic focus on property management by takingover the remaining shares in DIC ONSITE and integratingit completely within the Group.

segments. As a result, the investment strategy covers thevarious investment computations of the cyclical real estatesector comprehensively.

Stable portfolio architecture We ensure a balance of various properties in the port folio,which allows both attractive opportunities and avoids riskbeing concentrated. Our in-house property managementand regional expertise allows us to diversify our invest-ments across a wide range of locations – including attrac-tive secondary locations. In addition to regional diversifi-cation, our policy of letting to different groups of tenantsfrom independent sectors is another key factor in the re-silience of our real estate portfolio.

� Direct and indirect investment in categories offering attractive returns

� Development of a high-yield, robust portfolio � Value is added from the company’s own

resources� New Funds business segment will build on tried

and tested strengths

DIC Asset AG specialises in commercial real estate, partic-ularly office property in Germany. We look after our ten-ants and increase the value of our properties through ourin-house property management service. Our investmentstrategy aims to develop a quality-oriented, high-yield anddiversified portfolio in different income and risk classes.Through our proximity to our tenants and regional mar-kets, we acquire a key edge in terms of location and expertise, most notably compared with international com-petitors. The Group’s strategic focus provided itself againin 2009: we were able to win over an additional strategicmajor investor with our business model and haveachieved great success in property management, whichwill be durable in its effects, with a substantial increase inletting volume.

Earnings-oriented investment strategyWe invest in three segments, which offer attractive yields,using specific income and risk categories. Properties gen-erating substantial cash flow in the Core plus segment aredestined to be held long-term, the Value added segmentencompasses more management-intensive propertieswith short- to medium-term optimisation potential andthe Opportunistic Investments segment contains invest-ments with minority shares in complementary real estate

Core plus Value addedOpportunisticInvestments

� Opportunistic investments andproject developments of the DIC Group with investments from co-investors

� High potential for value creation

� Long-term rentals, first class proper-ties with the potential for value creation

� Long-term investment horizon anddiversification

approx. 992 EUR million

45%

approx. 930 Mio. Euro

43%

approx 270 EUR million

12%

Segments overview and portfolio strategy

Direct portfolio Co-Investments

� Properties with value creation potential that can be realised in theshort and medium term

� Properties with a greater risk/rewardprofile

Strategy and Management � 31

Long-term oriented financial managementExisting finance is always agreed long-term and focusedon the respective property objectives. Our high-yieldproperties, which generate easily calculable, steady cashflow, offer a reliable basis for the investment of moderateto large amounts of external capital. We agree attractiveterms for these borrowings and hedge them adequatelyagainst any increase in interest rates. In addition to creditlines, we use current profits from letting and disposal gainsto finance longer-term focused measures to add value.

Expertise and networkingDIC Asset AG’s success is based on using skilled employeeswidely. Our intensive networking in the regional and national real estate industry and with investors helps usto secure advantages for ourselves in letting and placingour properties. To do this we employ staff with leadershipqualities and highly qualified specialists, and provide ouremployees with training appropriate to their skills.

Sales: Realising value and optimising the portfolioWe sell properties at appropriate times for realising addedvalue and optimising the portfolio with regard to its regional focus and types of use. We invest the funds thatare released in new properties or use them to optimise thecompany’s financing.

Redevelopment in prime location: the Bienenkorbhaus on Frankfurt’s Zeil, winner of the immobilienmanager.AWARD 2010

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increase in value from letting properties (including thechange in vacancies and increase in rental income) andfunds from operations after deducting taxes related tocapital employed (return on equity, ROE) are of central im-portance. In the case of properties in the Co-Investmentssegment, in which we hold minority shares, in principle,the internal rate of return (IRR) is also used as a key figure.Deviations are analysed promptly and managementmeasures established in regular meetings with the Boardof Directors and the respective manager.

InvestmentsDIC Asset AG has direct and indirect investments in 228companies. In most cases, these are property holdingcompanies, via which the Group’s operations are pre-sented. These property companies are combined andmanaged through holding companies. DIC Asset AG’s central investment is DIC ONSITE GmbH, which organisesthe management and optimisation of properties as thecompany’s own property and asset manager. The stake inDIC ONSITE was increased by 25% in 2009 and hasamounted to 100% since October 2009.

Company management

Internal planning and management system Our management system helps DIC Asset AG increase thevalue of the company in the interests of shareholders, em-ployees and business partners and aims to achieve prof-itable growth in sales. We manage our individual proper-ties and portfolios as independent companies and focusthem on the prospects for growth and the individual income situation. It is based on a planning and budgetingprocess that is built on detailed planning at individualproperty level (bottom-up planning) and is finalised viathe targets set (as top-down planning).

Integration of risks and opportunities The targets recorded are supplemented by findings fromrisk management and specific opportunities. This is firstlycarried out at property and portfolio level and then aggregated over the segments to group level. Planned developments and actual earnings are compared andmonitored continuously as a component of risk manage-ment.

Management using key figuresIn essence, DIC Asset AG is managed on the basis of ag-gregated earnings from the individual investments andportfolios. We use specific income-oriented key figures,which are checked against regular reports, to monitor theagreed targets. In this regard, the operating profit fromreal estate management (funds from operations, FFO), the

32 � Strategy and Management

2009 was a difficult year for DIC Asset AG, as it was for al-most every other company. The continuing financial crisisand the abrupt change in economic framework conditionsalso increased the challenges of our business. Activity onthe transaction market virtually ground to a halt, whilecompetition increased markedly on the letting market.Even though our business was not unaffected by this, wewere able to adhere to our sound, successful course.

ployed in 2009, which is only 0.2 million more than in theprevious year. The unemployment rate averaged 8.2%. Itincreased by 0.4 percentage points compared with theprevious year.

Special measures to stabilise the banksThe European Central Bank reacted to the instability in thebanking system by cutting interest rates in several stages,as did central banks throughout the world; the key inter-est rate in the euro zone has stood at a historically low1.0% since May 2009. This was supplemented by extraor-dinary measures such as the purchase of euro bonds andextending the term of refinancing transactions to 12months, which were all aimed solely at reflating and sta-bilising the interbank market.

Financing conditions are difficult despite low interestratesThe low level of interest rates had scarcely any impact onthe company’s investing activities. Lending fell in view ofthe sharp recession, however, many companies were alsofaced with a marked deterioration in financing conditions.

2009 dominated by a record recession Following six years of continuous growth, the Germaneconomy shrank sharply in 2009 with a fall in gross domestic product of 5.0%. Uncertainty as to the survival ofthe financial system after the financial crisis peaked in au-tumn 2008 slammed the brakes on global economic ac-tivity and this had a knock-on effect until the end of the2008/2009 winter. Exports, the most important driver inthe German economy, were hit particularly by a fall in pro-duction of some 17%. In the course of the year, economicgrowth recovered incrementally thanks to governmentsupport measures and the return of confidence in financialsystems throughout the world.

Domestic consumer expenditure, supported by measuresto stimulate the economy such as the car scrappagescheme, provided positive impetus: private consumer expenditure rose by 0.4%, while government expenditurerose by 2.7% compared with the previous year. The infla-tion rate only increased by 0.4% on average over the year.In both 2007 and 2008, the consumer price index rose byover 2.0%.

A stable employment market has cushioned the downturnThe government succeeded in supporting the employ-ment market in 2009 by financing short-time working.While the sharp drop in production had a significant im-pact on the employment market, the increase in unem-ployment remained very moderate. However, at times,around one million people were employed on a short-timebasis in 2009. On average, 3.4 million people were unem-

Macroeconomic trendsGENERAL ECONOMIC CONDITIONS

General Economic Conditions � 33

2005 2006 2007 2008

2009

Gross domestic product

Number of people employeed

4.0%

3.0%

2.0%

1.0%

0.0%

-1.0%

-2.0%

-3.0%

-4.0%

-5.0%

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

Source Statistisches Bundesamt

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Sector trends

A decline in the letting marketThe economic slump had a marked impact on the officeletting result in major office locations (including Berlin,Düsseldorf, Frankfurt, Hamburg, Munich and Stuttgart) in2009. Against the background of economic uncertaintyand lower production capacity, companies cancelled orpostponed planned moves and concentrated on the effi-cient use of existing space. Here, the comparatively stableemployment market proved to be a great support in pre-venting more drastic developments. According to analysisby leading estate agents, the reduction in space let inmajor office locations stood at between 26% and 28% atjust over two million sqm. Düsseldorf and Munich suffereddisproportionately, while Berlin and Stuttgart escapedmost lightly. We identified the same trend, albeit to a lessmarked degree, in medium-sized and smaller office loca-tions.

More competition, more incentives for tenancy agreementsIncreased demand for tenancy extensions, often forshorter terms, was particularly characteristic of lettingmarkets in 2009. New tenancies were rarer and thereforetook place against tougher competition involving greateruse of incentives. As a result, peak rents fell slightly in all lo-cations; estate agents estimate a reduction of around 5%.

Vacancy rates have increased – despite little newbuildingIn 2009, over a million square metres of completed spaceequipped to meet the demands of the 21st century cameon the market for the first time in the major office loca-tions. This equates to an increase of over 20% comparedwith the previous year but is well below the boom in new

construction between 2001 and 2003. Despite the lack ofspeculative project developments, in conjunction with thereduction in letting figures, this had a significant impacton vacancy rates. The vacancy rate in all major office loca-tions increased by 10% on average because of the nega-tive net absorption. Fewer new projects were started in2009, meaning that the number of completions will fallfollowing the end of the current financial year.

Investment market has overcome the state of shock A slight recovery found its way into the transaction marketfor commercial real estate in summer 2009. Transactionsworth over EUR 3 billion were completed in both the thirdand fourth quarters, while the figures for the first twoquarters were only EUR 1.8 and 1.9 billion respectively. Thevolume traded totalled around EUR 10.5 billion. This is asignificant reduction of around 50% compared with 2008.

A focus on smaller propertiesAt around EUR 16 million per property, the average trans-action size was smaller than in 2008. Some four billioneuros (equals 42% of the total volume) were invested inoffice property. This was followed by retail properties, atjust over EUR 2.9 billion (accounting for 30%). Mixed useproperties and warehouse and logistics space both accounted for less than 10%. The main players in 2009were investors from Germany; there has been a wide-spread reduction in interest from international investors.The sustained interest among private investors, who invested around EUR 1 billion in 2009, was remarkable.

Rising prices for core propertiesMany transactions collapsed because of the difficulty inarranging financing and because of the difference between the prices purchasers were prepared to pay andthe prices demanded by vendors. In 2009, demand forfully-let properties in first-rate locations with long tenan-cies and a low risk profile was particularly strong. Sincethere are few of these properties available, prices in thismarket have again increased slightly in recent months asactivity on the transaction market picked up slightly.Throughout the year, it was difficult to establish prices andconduct negotiations for opportunistic investment targets(in secondary locations, with shorter remaining terms,higher vacancy rates etc.).

For 2010 as a whole, we are expecting another difficultyear for the real estate sector. We describe our expecta-tions in more detail in the section “Opportunities and Forecast”.

34 � General Economic Conditions

Trend in rentals and transactions

Office lease take-up in sqm million *

Transaction volume EUR million

2008 2009 2008 2009

20

10

2.9

2.1

* A-office locations Berlin, Düsseldorf, Frankfurt,Hamburg, Munich und Stuttgart

Source Jones Lang LaSalle

Real estate management

� Letting volume increased by 25%� Leases expiring in 2010 already reduced by 34% � Ancillary leasing costs reduced

We let 245,500 sqm in a fiercely competitive market, whichhas significantly stabilised our income base and providedlong-term support for our profits. While the market as awhole shrank by some 30%, we succeeded in expandingour letting volume by some 25%. In view of the markedincrease in competition, we concentrated very success-fully on extending existing tenancies. At the same time,we slightly increased new tenancies at a high level. Oursuccess in the reporting year has affirmed our strategicfocus, namely managing property in-house.

More space let In 2009, our intensive letting activity helped us to succeedin bucking the falling market trend: in the portfolio as awhole, at 245,000 sqm, we let over 49,000 sqm (+25%)more than in the previous year. Given the increase in com-petition for tenants, our focused, local activity involvingcreative, tailor-made letting solutions became even moreimportant. Our new tenancies, at 108,800 sqm, were +3%up on the previous year’s good result, while we increasedlease renewals, based on the satisfaction of our tenants,by +51% to 136,700 sqm. The average term remaining onour tenancy agreements increased by 0.2 years to 5.6years. The rental per square metre decreased slightly byEUR 0.12 to EUR 10.38 per sqm.

The good letting result kept rental income virtually on theprevious year’s basis. The letting volume represents rentalincome of some EUR 24.8 million per year. We reduced thepotential pro rata volume of tenancies expiring in 2010from the original figure of EUR 15.7 million by EUR 5.4 mil-lion or 34% in the past financial year.

Business Development � 35

BUSINESS DEVELOPMENT

Occupancy rate gradually stabilised during the yearIn 2009, we were able to keep the occupancy rate virtuallystable at around 87% (previous year: around 88%). Whenfigures during the year are examined, the continuous im-provement becomes apparent: from January to the middleof the year, the rate rose from 86% to 88%. In August, it fellback temporarily as a result of tenancies ending on a fixedor planned basis to 86%. Through intensive activity, we in-creased the occupancy rate to 87% by the year end.

* excluding revolving agreements

Potential lease expiryRental income in % *

40

50

30

20

10

1 year 2 years 3 years 4 years ≥5 years

8% 12% 13%

9.6%

57.4%

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36 � Business Development

AN ATTRACTIVE ANCHOR TENANT� Surge in quality in the retail mix� Long-term, large-scale tenancies

The Stadtbadgalerie in the centre of Bochum combines retail andoffice space. The anchor tenant was Karstadt, which operated a discount store.

We terminated the tenancy agreement – before the company’s insolvency – and repositioned the building. Our new anchor ten-ant, Modepark Röther, has increased the appeal of the property toother new tenants with its branch range and quality. The tenancyagreement covers 6,500 sqm and runs for ten years.

Stadtbadgalerie Bochum (Düsseldorf Branch – West Region)

OPTIMISED FOR EDUCATIONAL USE� Focused letting� Occupancy ratio increased significantly

The 5,300 sqm large office building in Berlin had ahigh vacancy rate when we took it over. We fo-cused the building on educational use – in linewith its immediate surroundings, which include aschool and a kindergarten – and carried out reno-vations. In September 2009, we acquired our newanchor tenant in the form of an ecclesiastical edu-cational establishment, which wants to establish aprimary school on an area of 2,000 sqm. We alsolet 400 sqm to a company specialising in adult ed-ucation. Overall, the new agreements increase theoccupancy rate significantly, to around two thirds.

Berlin, Bundesallee (Berlin Branch – Berlin/East Region)

20092008

Letting volume +25%Lettable area in sqm

245,500

196,300

Letting volume

in sqm on signature 2009 2008

Office 145,300 114,600

Retail 32,700 17,700

Other commercial 60,200 59,500

Residential 7,300 4,500

Total 245,500 196,300

Parking (units) 1,990 1,070

In 2009, we were able to conclude several larger individuallets, meaning that a volume of more than 60,000 sqm wasachieved from the ten largest lets. We extended a long-term tenancy covering over 9,900 sqm with the insurancegroup AXA in Wiesbaden. We let office space of 9,100 sqmin a property in Mannheim to the Federal State of Baden-Württemberg. Our sole tenant Nokia Siemens Networksextended its tenancy agreement for 8,800 sqm in the Science Park in Ulm. In Hamburg, DELACAMP AG, a spe-cialist supplier of office printing materials, and Antalis,a major European paper wholesaler, rented a total of14,100 sqm.

The five largest leasing deals in 2009

Tenant’s name Area in sqm Location

AXA 9,900 Wiesbaden

Vermögen und Bau BW 9,100 Mannheim

Nokia Siemens Networks 8,800 Ulm

DELACAMP AG 7,300 Hamburg

Antalis GmbH 6,800 Hamburg

Total 41,900


ATTRACTIVE LETTING TERMS WITH NO DISCOUNTS� Long-term tenancies with no incentives� Rental income increased by 34%

We acquired the multi-storey office building inMannheim, which had a vacancy rate of 40%, in2007. We invested some EUR 0.4 million in mod-ernising the space with the aim of winning overnew tenants with fixtures and fittings that meetthe demands of the 21st century. In 2009, ourbranch succeeded in letting just over 2,100 sqm,on a 5-year tenancy to the University of Mannheimand a 15-year tenancy to the City of Mannheim, di-rectly and without the use of brokers or incentives,by a targeted approach to potential tenants. Thesetenancies increased the occupancy rate in theproperty to 75% at present and boosted rental income by some 34%.

Kaiserring, Mannheim (Mannheim Branch – Southwest Region)

Josef-Haubrich-Hof, Cologne (Düsseldorf Branch – Rhineland Region)

BETTER LET UNDER OUR OWN AUSPICES� Letting to individual tenants� Rental increased by 10%

We decided not to extend a general tenancyagreement at the Josef-Haubrich-Hof building inCologne, which was predominantly used as a doc-tors' centre. We took the view that by letting di-rectly to individual tenants – and carrying outstructural improvements – we could achieve ahigher rental. We optimised the physical structure,created additional space and upgraded the tech-nical equipment. As a result, we have found newtenants for 84% of the space so far and increasedthe rental by 10%. There is also further potentialfor an increase in income of 20%.

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Ancillary leasing costs reduced The reduction in ancillary leasing costs, the so-called “second rental”, is an important element in the currentcompetitive letting market with price-conscious tenants.In 2009, we examined the properties in our portfolio systematically with regard to their ancillary costs and efficiency. The quality of our buildings was clear in thecomparison with the sector benchmarks contained inJones Lang LaSalle's OSCAR study: over 90% of all proper-ties, which are predominantly used as offices, reportedbetter results than the benchmarks established by JonesLang LaSalle.

Hamburg, Osterstraße(Hamburg Branch – North Region)

A good result can always be improved on, most notablyin technical property management: through our in-houseproperty management, we can recognise potential sav-ings easily and implement them consistently. We imple-ment a comprehensive package of measures, which includes energy saving measures and the renegotiation ofservice agreements among other things. This has alreadyallowed us to reduce assignable ancillary costs by around2% for 2009. We have also created the preconditions for asignificant additional reduction of probably 5-7% for 2010.

Comparable rental income virtually stableLike-for-like rental income – that is the comparable in-come from properties in the portfolio in 2008 and 2009(excluding project developments) – fell slightly by 4.2%compared with the previous year to EUR 136.7 million p.a.If the scheduled termination of the tenancy agreementwith Deutsche Börse AG is not taken into account, the reduction was -0.4%. Even before Deutsche Börse AGmoved out, we succeeded in letting 28% of the space toan international IT consultancy for six years, which partlycompensated for the fall in rental.

FULLY LET AND EFFICIENT� Modernisation has a positive impact on operating costs� Income increased by 30% through full utilisation

The property is centrally located in a district of Hamburg and offers arental space of 6,700 sqm. Some 1,000 sqm was vacant when we tookthe property over in 2007. We optimised the space by installing fixturesand fittings that met market requirements and, at the same time, re-duced operating costs through the use of modern technology. When let-ting the property we focused on its principal use, as a medical practice,and its easy accessibility and approached suitable tenants selectively.Achieving full occupancy in the third quarter produced an increase inrental income of 30%.

� Residual term of the tenancy agreements increases to 5.6 years

� Slight reduction in market values of 1.6%� Net Asset Value virtually stable at EUR 15.86

per share

At the end of 2009, our real estate portfolio encompassed318 properties with a pro rata lettable area of 1,274,500sqm. The properties generated annual rental income ofEUR 142.4 million (including opportunistic co-invest-ments) and have a market value of EUR 2,192.2 million. Inthe course of the year, our portfolio volume was increasedby three additions with a floor space of 12,780 sqm. Thiswas matched by the disposal of 23 properties in total witha floor space of 13,900 sqm.

Regrouping and renaming process in the segmentsFor the makeup of the portfolio, with effect from 31 De-cember 2009 we regrouped a total of eleven propertieswithin our Core plus and Value added segments in linewith their progress and changes in letting and value ap-preciation. Six properties moved to the Core plus segmentand five properties to the Value added segment. As partof the preparations of the Funds business segment we alsorenamed the Core segment Core plus.

Portfolio


Forms of use(by rents paid)

Retail 17%

Residential 1%

Office 68%

Others 14%(e.g. logistics,

industrials)

Main tenants(by rents paid)

Retail 20%



Industry 8%

Others 28% Public Sector 22%

Portfolio overview

as at 31.12.2009 Core plus Value added Co-Investments Total

Lettable area in sqm * 469,100 637,100 168,300 1,274,500

Market value of real estate assets 992.4 930.1 269.7 2,192.2in EUR million *

Number of properties 48 137 133 318

Residual terms in years 7.1 4.2 4.7 5.6

Occupancy rate 93.4% 82.8% 83.0% 86.7%

Rental income per sqm in EUR 12.19 9.28 8.82 10.38

Annualised rental income in EUR million * 66.5 60.5 15.4 142.4

Portfolio: Broad diversification focused on office space

* pro-rata values

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Market value of the real estate holdings has fallenslightlyThe annual market valuation of our portfolio by inde-pendent surveyors, in which each of our properties is reviewed, took place at the end of 2009. The market valueis based on a sales-oriented consideration and is the esti-mated transaction amount at which a property wouldchange hands between the purchaser and vendor undernormal conditions on the date of the valuation. Havingfallen sharply in the previous year, the market as a wholeappears to have bottomed out as at 31 December 2009with market values only having fallen slightly.

The result for our portfolio: the cumulative market value ofcomparable portfolios (like for like) is slightly down,namely -1.6%, on the level of the previous year, which is amarked stabilisation compared with the previous year'sreduction of -8.5%. Following the acquisitions, disposalsand the adjustment in value, our portfolio had a marketvalue of EUR 2,192.2 million as at 31 December 2009. Inthe previous year, the market value was EUR 2,161.8 mil-lion. The Net Asset Value rose slightly by +0.9% compared

with the previous year to EUR 497.1 million. The Net AssetValue per share amounted to EUR 15.86 (previous year EUR16.23).

We record our assets at cost less depreciation, which iswhy the change in market value has no direct impact onthe balance sheet. The section on assets provides more information on how our properties are reported.

Three additions in the portfolioWithin the year we acquired three properties with a let-table area of 12,780 sqm worth EUR 33.5 million in our direct portfolio. All the properties were from previous acquisitions and ownership has passed to us now thatconstruction is complete.

Earnings-oriented sales policy continuesIn 2009, our activities remained focused on placing smallerand medium-sized properties and attracting private investors. We have postponed the sale of larger propertiessuch as the Bienenkorbhaus in Frankfurt into the futurewhen revival in demand from institutional investors, in

particular, will pick up once more and financing conditionswill be better.

From our Core plus and Value added portfolios, we sold13 properties with a pro rata volume of EUR 15.2 million ata profit of EUR 1.5 million, which was credited to the income statement. Ten properties worth a total of EUR38.8 million were sold from the Opportunistic Investmentssegment, in which we hold minority interests.

With the sales proceeds we achieved, we exceeded the respective carrying or market values. We achieved mostsales in the fourth quarter, which argues in favour of aslight revival in the market. The average transaction vol-ume amounted to EUR 2.8 million. The largest propertywas the Rathausplatz property in Eschborn worth someEUR 11 million, followed by four properties with a trans-action volume of between EUR 4.0 and 7.0 million.

The transaction volume of the sales agreed in 2009amounted to some EUR 60 million in total without takingaccount of the amount of the investment.


Changes in market valueEUR million

Portfolio market value as at 31.12.2008 2,161.8

+ Acquisitions/additions 78.3

- Sales/disposals -22.0

+/- impact of valuation -25.9

Portfolio market value as at 31.12.2009 2,192.2

Transaction volume 2009 by quartersAfter signing, no consideration of investment stake volume

EUR million Number of Transactionproperties volume

Q1 2 12.1

Q2 6 9.4

Q3 2 2.8

Q4 9 35.5

Total 19 59.8


45%


43%approx.

270 EUR million12%

Core plus Value added OpportunisticInvestments

Market value as at 31.12.2009EUR million

MainTor project: Progress in the planning processThe end of the zoning process for the MainTor project isapproaching: The zoning plan was submitted to the mu-nicipal authorities for a decision at the beginning of 2010and is expected to come into effect in spring following aresolution by the Frankfurt City Councillors. This is thebasis for the first stage of construction, which will startwith the demolition of the building on Weißfrauenstraßein the north east of the site.

With an investment volume of approximately EUR 500 million, the DIC Group will construct an open and livelyquarter on one of the most attractive development sites inthe Frankfurt city centre. The project development willopen up historic routes from the city centre to the riverMain and provides for a central square. Three towers willbe constructed – the 100 metre high “WinX“ and two tow-ers of 64 metres each. While the towers will be used almostentirely as office space, smaller residential buildings willsupplement the variety of uses to which the site can beput.

Project developments

� Bienenkorbhaus reopened � MainTor project: the end of the development

plan process is imminent

We carry out development work on suitable propertiesto achieve a significant increase in their value by reposi-tioning the properties or increasing the space that can beused with major structural work. Building work on the Bienenkorbhaus has been completed since the beginningof 2009 and the well-known building has been reopened.With the MainTor project, we are coming to the end ofthe approval process and have recently chosen the bestdesigns for the two high-rise buildings in an advisoryprocess.

A new Bienenkorbhaus on Frankfurt’s ZeilThe Bienenkorbhaus was awarded the prize for the bestproject development by the magazine Immobilienman-ager in February 2010. In April 2009, we celebrated the official reopening of the historic Bienenkorbhaus onFrankfurt's Zeil. In a construction period of just over oneyear, the high-rise building was completely refurbished internally to meet the technical requirements of the 21stcentury and extended with a new building featuring amodern glass façade. The investment volume amountedto EUR 75 million in total. The refurbishment increased therental volume by some 30% and added high quality retailspace, for which the shoe retailer Görtz and the Frank-furter Sparkasse have each agreed 15 year tenancy agree-ments. The occupancy rate, based on rental income, currently comes to 85%.

The project is gaining in statureOne of the smaller towers, namely the MainTor Porta, is tobe constructed in the first phase of construction. A panelof representatives of the City of Frankfurt, the DIC Groupand independent experts chose the best solutions for thetwo high-rise buildings, namely “WinX” and “MainTorPanorama”, from seven entries in a process for calling inexpert opinions from architects in December 2009. Twodesigns of the architects KSP Jürgen Engel and Prof. Mäck-ler, which together form a harmonious urban solution, willprobably be selected in March 2010 following further processing.

Acquisition of MainTor project sharesIn the third quarter of 2009, the DIC Group acquired theshares of its co-investor Morgan Stanley Real Estate Funds(MSREF) and now holds 100% of the MainTor project. Con-centrating the investments will benefit the consultationprocesses in the current stage of the project and may accelerate stages of the project. Additional partners maybe involved in the subsequent construction of individualsub-sections. As a result, DIC Asset AG’s minority holding,which is held via the Opportunistic Investments segment,increased from 20% to 40%.


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The knowledge, performance and commitment of our em-ployees provide the basis for our company’s success. Weshall only achieve our ambitious targets, if we have com-petent and motivated employees, who represent our com-pany successfully to tenants and business partners.

Property management: Enhanced structure and organisationIn 2009, we focused particularly on developing our property management activities, where the number ofemployees more than quadrupled to 89 in the period from2006 to 2009 following the establishment of DIC ONSITE.Following this period of rapid growth, we analysed the po-tential for organisational improvements and, in particular,strengthened the areas of Key Accounting, Controllingand technical management. We have also intensified ourtraining and opportunities to acquire qualifications. Weaim to work out further opportunities for improvementwith our employees in the current financial year througha broadly based customer satisfaction survey.

Positioning as an attractive employer The principal task of our personnel management team isto enthuse high performing staff about our company andto retain them long-term. Entrepreneurial thought and action, the ability to act on one's own initiative, flexibilityand specialist knowledge are of vital importance for us.We endeavour to position DIC Asset AG as an excellentemployer, both now and in the future, in order to appealto talented and highly qualified candidates. We are investing in collaborations with selected technical univer-sities and universities to recruit junior staff with impres-sive academic qualifications.

Qualification and personal developmentPersonal development aims to promote our employeesand improve their qualifications. We support our employ-ees in their personal further development and advance-ment and invest in disseminating knowledge and compe-tence. We analyse the skills and motivation of ouremployees systematically as basis for our personnel de-velopment and base personnel-related decisions and de-velopment measures on these results. We have imple-mented a modular development programme, whichdovetails with this, for management.

Training in the GroupAs a company, we invest in training young people andview this as an important socio-political contribution. In2009, two employees participated in training on the realestate sector in the Frankfurt and Mannheim offices.

Incentives and recognising performance Our employees’ salaries consist of a basic income, per-formance-related components and supplementary bene-fits and are geared towards achieving our strategic andoperational targets. As a result, we consciously encourageand support a focus on performance and an awarenessof entrepreneurial issues – depending on the area of responsibility of the individual employee.

Focus on property management As at 31 December 2009, DIC Asset AG employed 112 employees throughout Germany in the Group comparedwith 99 at the end of the previous year. On average it employed some 106 employees in 2009 – some 10 morethan in 2008. The company's concentration on propertymanagement is apparent from its personnel structure. 89employees, which equates to 80% of the workforce, workin asset and property management for our 100% propertymanagement subsidiary DIC ONSITE. It operates through-out Germany with six branches located in areas where ourportfolio is concentrated. DIC Asset AG is managed fromFrankfurt am Main, as the location of the Board of Direc-tors, and central management and administrative tasks arealso carried out there.

In 2009, expenses of EUR 9.2 million in total were incurredfor salaries. Of this figure, performance-related compen-sation amounted to EUR 0.9 million, social security contri-butions, pensions and other benefits totalled EUR 1.0 million.

Our employees

Employee structure

Number of employees 31.12.2009 31.12.2008

Portfolio management and investment 8 8

Property and asset management 89 78

Group management andadministration 15 13

Total 112 99


Following a bumpy start, the performance of our sharewas positively supported by the widespread recovery infinancial markets in 2009. Thanks to our reliable businessmodel and sound results, DIC Asset AG outperformed therelevant indices, namely the SDAX and EPRA, and endedthe year around 30% higher. You can find more informa-tion in the “Share” section.

As a real estate company with a long-term investmenthorizon, we shall benefit from dealing with resources andthe environment in an economical and sustainable man-ner. Our portfolio encompasses 318 properties in some 90cities. Our activities and those of our tenants generatewaste, which is disposed of. Our companies and our ten-ants consume electricity and water. Real estate manage-ment also results in the release of carbon dioxide and hasother effects on the environment. In our entrepreneurialdecisions and processes, we take account of ecologicaland social requirements and, wherever possible, foregothe opportunities for short-term gains in favour of funda-mental options for optimisation. Our focus on sustainabil-ity also includes dealing with our employees, customersand business partners in a fair and responsible manner.

Measures affecting portfolio properties The effective management of our existing properties is ofequally great interest both for us and for our tenants. Wemaintain a continuous discussion with our tenants regarding the economical consumption of electricity andheat in our properties and show them opportunities foroptimising their consumption.

We combine processes and operations, such as waste disposal and maintenance measures, in terms of their logistics to ensure that an efficient and, at the same time,highly cost-effective service can be supplied. Many ofour properties are located in close proximity to publictransport and can therefore be easily accessed by our employees.

Share: Attractive growth Sustainability


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Project developmentsFrom the beginning, we take account of sustainability issues in planning and executing the redevelopment ofbuildings in such a way that the long-term impact is as environmentally sustainable as possible. The issue of sus-tainability is also becoming more and more of a priorityon the part of users, particularly larger national and inter-national companies. As early as the initial planning stages,we have the opportunity to make a positive impact on theenergy efficiency of the building by implementing inno-vative ideas and using cutting-edge technologies. To thisend, we make targeted use of specialist consultancy serv-ices and technical expertise. The requisite investment isrepaid by the significant reduction in ancillary costs.

Some examples: – In particular, comprehensive consideration is given to

sustainability issues when developing a quarter such asthe MainTor project. The first phase of construction,namely the MainTor Porta, will therefore be awarded aGold DGNB (Deutsche Gesellschaft für nachhaltigesBauen e.V.) certificate.

– A main sewer runs through the MainTor project site,which carries waste water with a relatively constant average temperature throughout the year. We can savelarge amounts of the demand for primary energy byusing this waste water to generate energy.

– The refurbishment of the Bienenkorbhaus led to energysavings in compliance with the current energy savingregulations of 10%.

Charitable involvementWe are also willing to assume responsibility outside thecompany. For instance, as a Frankfurt-based company, wetook on the sponsorship of Frankfurt’s Goethe House in2009. Because of budgetary issues, the museum was facedwith reducing opening hours by one day a week. Throughour support we are allowing the people of Frankfurt andvisitors access to the world-famous museum seven days aweek as usual. In 2009, we also supported the KlingsporMuseum in Offenbach.


Where possible, we invest in long-term technical andstructural measures to make savings. Particularly in tran-sitional phases, which occur when properties are being refurbished or there is a change of tenant, we analysemeasures that will improve the efficiency and sustainabil-ity of our buildings. In 2009, we implemented measuresto ensure that resources are used more sustainably in several properties. In addition to the positive impact onthe environment, our tenants and the company benefiteddirectly from a reduction in ancillary costs, which was significant in some cases.

Some examples:– In one property in Hamburg, we installed and pro-

grammed an external temperature control for an exist-ing air-conditioning system. The measure, which in-volved minimal financial expenditure, has alreadyreduced the requisite system output significantly by60%.

– A new district heating transmission station where theheating circuits controls are linked to external weatherconditions will significantly improve energy efficiencyin a property in Mannheim. We expect to reduce energycosts by at least 30%.

– The insulation was optimised when the windows in aproperty in Heilbronn were replaced, leading to savingsin heating costs. We plan to reduce energy costs by 20%here.

� Stable rental income� FFO increased to EUR 47.6 million � Profit for the period of EUR 16.1 million

The earnings position in 2009 was characterised most no-tably by the resilience of our income base combined witha scheduled rise in expenses. The increase in expenses isconnected with our intensive letting activities and the requisite increase in employee numbers. As a result, weachieved a profit for the period of EUR 16.1 million – a figure that we consider gratifying in such a crisis-riddenyear as 2009.

Rental income matches the level of the previous yearAt EUR 133.6 million, gross rental income also virtuallymatched the level of the previous year thanks to strongletting figures. Increases in risk provisioning and changesin the demarcation between operating costs and assigna-ble expenses squeezed net rental income compared withthe previous year by -2% to EUR 123.8 million.

With a virtually unchanged portfolio volume, we increasedincome from managing property for third parties slightlyby EUR 0.2 million to EUR 3.3 million. We sold 13 propertiesfrom the Core plus and Value added segments for EUR 15.2million. Since we were only able to place smaller proper-ties, as the transaction market was blocked, sales proceedswere EUR 34.7 million down on the previous year. Total income added up to EUR 171.3 million.

More intensive property management results in increased expensesThe operating cost items increased as planned comparedwith the previous year. Our intensive letting activities – thebasis for increasing letting income by 25% – entail greaterexpense in a competition-oriented environment. Admin-istrative expenses grew by EUR 1.4 million (+18%) to EUR9.0 million. Personnel expenses rose by EUR 2.4 million(+35%) to EUR 9.2 million, since on average the companyemployed 10 more employees in 2009 in the wake of developing DIC ONSITE and the provisions for perform-ance-related payments increased because of the positivetrend in the share price.

The ratio of personnel and administrative expenses (ex-cluding income from managing property for third partiesand the Board of Directors’ emoluments) to gross rental-income increased by 2.1 percentage points to 10.0%.

FINANCIAL INFORMATION

Financial Information � 45

Overview of income

EUR million 2009 2008 delta

Rental income 133.6 134.5 -1%

Revenues from the disposal of properties 15.2 49.9 -69%

Other income 22.5 22.7 0%

Total revenues 171.3 207.1 -17%

Rental income EUR million

Derivation statement FFO

EUR million 2009

Net rental income 123.8

Result from associates 7.5

Income from real estate management fees 3.3

Result of other operating income/expenses 0.3

Net financing costs -69.1

Personnel expenses -9.2

Administrative expenses -9.0

Funds from operations 47.6

133.6134.5

93.6

2007 2008 2009

Revenues and results

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FFO stands at roughly EUR 48 millionFFO (Funds from operations), which reflects the cash flowsfrom our portfolio, increased by EUR 4.9 million (+11%) toEUR 47.6 million, since interest expense, in particular,could be reduced compared with the previous year. Thecomparable FFO in the previous year, excluding the syn-dication effect of the MainTor transaction, stood at EUR42.7 million. The FFO per share increased from EUR 1.37 toEUR 1.54.

Opportunistic Investments: EUR 7.5 million contribution to profitsProfits from associates – in essence, the profits from ouropportunistic co-investments – came to EUR 7.5 millionand primarily comprised ongoing contributions to profitsfrom letting and the sales of ten properties (EUR 0.3 mil-lion). Compared with the previous year, they fell by EUR1.3 million (-15%).

Interest expense sharply reduced by over EUR 8 millionIn recent months, we gradually exploited the current lowinterest rates to optimise our financing structure. Interestexpenses on a comparable financing volume decreasedas a result of this and of repayments following sales by EUR8.4 million (-10%) to EUR 74.6 million. Overall, net financ-ing costs, at EUR 69.1 million, were EUR 6.9 million (-9%)down on the figure for the previous year.

Profit for the period: some EUR 16 millionMeasured against the difficult conditions prevailing in ourtransaction and letting markets, we have achieved a grat-ifying profit for the period of EUR 16.1 million. Comparedwith the previous year the result fell by EUR 9.1 million (-36%) primarily because of the reduction in income fromsales and higher expenses incurred in our letting activi-ties. Earnings per share amount to EUR 0.52 comparedwith EUR 0.80 in the previous year.

Segment resultsRental income was divided between the Core plus segment (EUR 70.1 million) and the Value added segment(EUR 63.5 million). No rental income accrues in the Opportunistic Investments segment because of the minority holdings. Earnings before tax (EBT) in the Coreplus segment, at EUR 7.4 million, were mainly generatedby the Group’s ongoing letting activities. With revenues ofEUR 12.5 million, sales were concentrated on properties inthe Value added segment, which together with ongoingbusiness gave rise to EBT of EUR 5.3 million. The Oppor-tunistic Investments segment contributed to the Group’ssuccess with EBT of EUR 8.0 million, which mainly consisted of ongoing rental income and sales revenues.

46 � Financial Information

Overview of results

EUR million 2009 2008 delta

FFO 47.6 42.7 +11%

EBITDA 110.8 125.0 -11%

EBIT 80.3 97.0 -17%

EBDA 46.6 53.2 -12%

Profit for the period 16.1 25.2 -36%

Earnings per share (EUR) 0.52 0.80 -35%

FFO per share (EUR) 1.54 1.37 +12%

FFO and profit for the period in EUR million

2007

44.6

2008 2009

36.142.7

25.2

47.6

16.1

�� FFO �� Profit for the period

�� Interest �� Personnel and adminstration

without management board remuneration

Expenses in EUR million

74.683.0

53.4

10.6 13.7 16.7

2007 2008 2009

Financial management and basic principlesThe paramount aim of our financial management is to ensure the solvency of the DIC Asset Group at all times andto protect its financial independence. We also attach im-portance to the establishment of stable, long-term struc-tures to support the development of our business and togive us the required degree of freedom in decisions suchas sales.

Management of our financing is organised centrally withinDIC Asset AG and covers all subsidiaries and property companies. As a result, our internal and external fundstransmission is cost-effective. It also allows up to optimiseour liquidity management and reduce our external borrowings.

We conclude financing on a long-term basis that is con-gruent with our property and portfolio strategies toachieve the greatest possible stability. We also hedge cashflows against increases in interest rates. Liabilities areagreed at normal market conditions, which are reviewedregularly.

We have recruited strategic finance partners as share-holders in the Company and in this way are also able tominimise the financing risk in respect of procuring exter-nal capital. We are currently making use of this in the formof a loan from Provinzial Rheinland amounting to EUR 8.8million. We maintain good business relationships with various partner banks and avoid being heavily dependenton individual financial institutions.


� Sharp reduction in interest expenses� A large proportion of investments covered by the

company’s ability to generate finance internally� Interest rate hedging instruments updated to

reflect the current level of interest rates

A constant supply of liquidity and a sustainable financingstructure are one of the most important tasks in a crisis sit-uation – as was amply demonstrated in 2009. We adoptedselective measures to strengthen our sound long-term financing base still further in 2009. At the same time, wewere able to exploit the low level of interest rates to makesignificant savings.

DebtEUR million

2009 2008

Interest bearing debt (short and long-term) 1,588.9 1,574.5

Other liabilities 93.8 106.5

Total debts 1,682.7 1,681.0

Debt ratio 76.0% 75.9%

Equity ratio 24.0% 24.1%

Residual debt terms as % of total

<1 y 1-2 y 2-3 y 3-4 y 4-5 y >5 y

Financial Position

3%

9%12%

31%

22%23%

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Financing volume unchangedAt the reporting date 31 December 2009, debt comprisedan amount of EUR 1,588.9 million, which is virtually un-changed on the previous year. In essence, this consists ofloans with financial institutions. In 2009, we raised new financial debt of 49.5 million, primarily to finance the acquisition of property. Following sales and scheduled repayment, some EUR 35.1 million of debt was repaid.

Debt fixed long-term Around 53% of our debts have a term of more than fouryears. Only a small portion, at EUR 53.2 million (3%) is to berefinanced in the next 12 months. In essence, this relatesto the Bienenkorbhaus property. As at 31 December 2009,the average term of the liabilities came to 4.1 years.

Hedging against increases in interest ratesTo give us security in our planning and to avoid the riskof changes in interest rates, 85% of all financing is eitheragreed at a fixed interest rate or hedged via simply structured derivative financial instruments. In 2009, weconcluded two swap agreements covering a total credit volume of over EUR 300 million. Possible changes in theinterest rate do not impact on income but only on the equity reported in the balance sheet. Only 15% of our lia-bilities are agreed at variable rates. In 2009, we benefitedconsiderably from the low level of interest on this borrowing, which relates mainly to short-term liabilities.

Interest expenses substantially reducedThe average interest rate on all our borrowings fellto 4.60% as at 31 December 2009. Thanks to restructuringfinancing amounting to EUR 275 million on morefavourable terms and reduced expenses in the case of variable financing, we succeeded in saving some EUR 8.4million compared with the previous year on a comparablefinancing volume. At the previous year end, the averageinterest rate was still 37 basis points higher at 4.97%.

All financing commitments fulfilled In principle, we conclude long-term financing for our ac-quisitions before we conclude purchase agreements,which is congruent with the respective property targets.All financing commitments, including covenants, werecomplied with at the reporting date. At the beginning ofthe new financial year, we agreed a waiver of the LTVcovenant for three years on a portfolio financing worthsome EUR 440 million with the consortium leading bank.The scheduled review of real estate values by the bank's internal surveyors showed that we could potentiallybreach the contractually agreed figures. In return for thewaiver, we have agreed to save an amount of up to EURsix million for two years; the funds can be used for futureinvestment in the portfolio properties.

Even greater priority given to liquidity planningThe financial crisis in recent months has illustrated that inextraordinary situations a constant supply of liquiditybased on resilient and long-term financing is of maximumimportance for a company’s continued existence. Buildingon the business plans, we compile an annual liquidity planas part of the budget process, which is updated and supplemented by a weekly liquidity status report. Thesteadiness and computability of our cash flow from rentalincome allows us a very detailed liquidity forecast againstwhich the deployment of funds can be targeted very precisely. DIC Asset AG was able to fulfil its payment obligations at any time during the reporting year. As at31 December 2009, free liquidity amounted to EUR 38.8million compared with EUR 46.4 million in the previousyear.


Other informationThere are no forms of off-balance sheet financing. The con-solidated financial statements reflect all forms of the com-pany's financing. More detailed information on financingsuch as the terms of loans or information on derivative financial instruments are provided in the Notes to the consolidated financial statements.

More investment in the portfolioIn 2009, our total investment came to EUR 45.2 million. Themajority, at EUR 33.5 million, related to properties, whichwere added to our portfolio – from purchases in previousperiods – in 2009. We invested more, namely EUR 11.7 mil-lion, in the portfolio, primarily for refurbishment and up-grading fixtures and fittings in connection with lettings.The total figure is divided between the Core plus segment,which accounted for EUR 35.0 million, and the Valueadded segment, which accounted for EUR 10.2 million. Theprevious year’s investment of EUR 267.3 million related primarily to acquisitions (EUR 175 million) and investmentin the portfolio (EUR 4.3 million).

As at 31 December 2009, the Company has investmentcommitments of EUR 3.2 million for work on portfolioproperties, of which some EUR 1.3 million will be investedin 2010. DIC Asset AG has sufficient funds to meet theseobligations from its own resources.

Cash flow statement: well balancedIn 2009, we achieved stronger cash flow from operationsthan in the previous year: Cash flow from ongoing busi-ness activity rose by EUR 1.5 million (+4%) to EUR 38.7 million. Given a slight fall in the profit for the period, the reduction in interest payments, in particular, had a positiveimpact.

In 2009, we curbed investment in the acquisition of realestate. By contrast, we increased investment in the port-folio with the aim of making properties more attractive tonew and existing tenants. Incoming payments from salesrose, since transfers of title relating to sales in previous reporting periods also took place in 2009. Overall, we reduced cash outflows for investment purposes sharply in2009 by EUR 161.6 million to EUR -58.5 million. Our abilityto generate financing internally together with incomefrom sales was sufficient to cover the funds needed for investment.

In 2009, we took on far fewer new liabilities because of thereduction in investment and instead repaid more than inthe previous year. In addition, the reduction in the divi-dend compared with the previous year and inflows fromthe sale of treasury shares carried weight. The net inflowfrom financing activities amounted to EUR 12.2 million intotal.

Viewed overall, we have kept the inflow and outflow offunds in balance: cash and cash equivalents amounted toEUR 38.8 million as at 31 December 2009, compared withEUR 46.4 million in the previous year.


Overview of cash flow EUR million

2009 2008

Profit for the period 16.1 25.2

Cashflow from operating activities 38.7 37.2

Cashflow from investing activities -58.5 -220.1

Cashflow from financing activities 12.2 64.0

Net changes in cash and cash equivalents -7.6 -118.9

Cash and cash equivalents as at 31 December 38.8 46.4

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Balance sheet value of our real estate confirmedWe report our real estate at cost less depreciation, whichis reviewed with the help of impairment tests as requiredunder IFRS. As a criterion for comparison with balancesheet values, we are guided by the value in use, which reflects the value of a property irrespective of its intendeduse. Since we keep our properties in the portfolio on amedium- to long-term basis and, in some cases, carry outextensive repositioning and development measures, thevalue in use figure is to be used for the balance sheet in-stead of the pure market value. The market value is basedon the short-term and only represents the sale value onthe balance sheet date. No adjustments to real estate assets were required under the impairment tests. As at 31December 2009, the market value of our real estate wasEUR 2,192.2 million according to the report at hand.

Assets: real estate assets stableAt the end of 2009, total assets, at EUR 2,213.4 million wereat virtually the level of the previous year.

The carrying value of investment property came to EUR2,024.2 million. The figure was increased through the addition of three properties worth EUR 33.5 million plusinvestment in the portfolio of EUR 11.7 million. On theother hand, sales of properties led to disposals of EUR 13.7million. Shares in associates – these are our opportunisticco-investments – rose by EUR 10.2 million to EUR 28.9 mil-lion, in particular, as a result of the increase in the MainTor investment from 20% to 40%.


� Investment reduced� Equity ratio constant at 24% � Net Asset Value matches the level of the

previous year at EUR 15.86 per share

Movements in DIC Asset AG’s balance sheet are charac-terised by stability and steadiness: as at 31 December2009, we reported only minor changes in aggregate itemscompared with the previous year. We have invested lessand repaid debt following sales. Market values are also robust, which confirms our balance sheet values andmakes a Net Asset Value at virtually the previous year'slevel possible.

Asset Position

At the year-end, current assets came to EUR 140.8 million,which is EUR 18.1 million less than on 31 December 2008.In essence, this is the result of the reduction in receivablesfrom the disposal of properties following the receipt offunds and from the fall in cash and cash equivalents. Thiswas matched by the increase in current receivables fromrelated parties. As at 31 December 2009, non-current assets totalled EUR 2,072.6 million. The assets are spreadacross the segments as follows: Core plus accounts for EUR1,064.5 million, while EUR 1,006.3 million is attributable toValue added and EUR 43.8 million to Opportunistic Investments.

Liabilities: capital resources at the previous year’s levelIn the reporting year, equity decreased slightly from EUR533.8 million to EUR 530.7 million: this was primarily theresult of the increase in the negative hedging reserve ofEUR 17.0 million for theoretical losses on interest hedgesas a consequence of the continuing extremely low level of

interest rates. On the other hand, the reversal of the reserve for treasury shares and the increase in retainedearnings increased equity. At 24.0%, the Group’s equityratio remained virtually constant at the previous year’slevel of 24.1%.

Debt: only minor changesNon-current debt remained virtually constant comparedwith the previous year, at EUR 1,605.0 million. In the reporting year, non-current debt was reduced slightlythrough repayments following sales, while the value ofdebt resulting from derivatives increased because ofchanges in interest rates. At EUR 77.7 million, current lia-bilities were virtually identical with the previous year. Here,the increase in short-term debt caused by debt expiringwas virtually offset by the fall in trade payables followingpayment of the purchase price. Liabilities are divided predominantly between the Core plus segment, which accounted for EUR 845.1 million, and the Value added segment, which accounted for EUR 818.6 million.

Net Asset Value virtually stableThe net asset value of DIC Asset AG stood at EUR 497.1 mil-lion as at the 2009 year-end. The ratio gives the real valueof all tangible and intangible assets less liabilities. Com-pared with the previous year, the net asset value roseslightly by EUR 4.3 million. Here the reduction in the market value of real estate was offset by the increase inother assets and reserves as well as retained earnings. Thenet asset value per share amounted to EUR 15.86 (previousyear: EUR 16.23). The reduction is attributable, in particu-lar, to the higher underlying number of shares at the balance sheet date, since this was reduced arithmeticallyin the previous year by the acquisition of treasury shares.


Overview of the balance sheetEUR million

31.12.2009 31.12.2008

Total assets 2,213.4 2,214.8

Non-current assets 2,072.6 2,055.8

Current assets 140.8 158.9

Equity 530.7 533.8

Non-current liabilities 1,605.0 1,603.7

Current liabilities 77.7 77.3

Equity ratio in % 24.0 24.1

Debt ratio in % 76.0 75.9

Balance sheet structure in %

Assets

Liabilities

94 6

24 73 3

�� Non-current assets�� Current assets

�� Equity�� Non-current liabilities�� Current liabilities

Explanation of changes in net asset valueEUR million

31.12.2009 31.12.2008

Market value of real estate 1,924.4 1,927.8

Market value of investments 36.8 32.7

+/- other assets/liabilities incl. minority interests 124.8 106.8

Net loan commitments at carrying amount -1,588.9 -1,574.5

Net asset value (NAV) 497.1 492.8

Number of shares (Thsd.) 31,350 30,367

NAV/share in EUR 15.86 16.23

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DIC Asset AG’s risk management system is an integral com-ponent of the principles of management and supervisionin the Group and assists our Company in achieving itsgoals. It secures its continued existence in the long term inthe interests of its management, employees and investorsand protects it from critical situations. As an importantcomponent, the internal control system is integrated inthe superordinated risk management system. The fact thatit is integrated within our organisation and is mandatoryfor all parts of the business and all employees should ensure that risks are recognised promptly and can becountered in an appropriate and prompt manner.

Risk management examined and optimised on an ongoing basisWe scrutinised our risk management system closely andenhanced it financial year 2009, particularly for monitoringfinancing risks. To this end, various stress tests involvingnot only different interest rate scenarios but also trends inletting properties and selling real estate were carried out.These analyses are at the disposal of the Board of Direc-tors. An external Data Protection Officer was also asked toanalyse how the Company deals with sensitive data. Allthe findings of the audit were used to refine the monitor-ing systems with the aim of being able to identify risks andinitiate suitable countermeasures in good time.

Risk early warning system The aim of the risk early warning system within the riskmanagement system is to record all relevant risks and theircauses, to quantify them and communicate them, so as toexecute optimal countermeasures to eliminate or managerisk at an early stage. The early warning system is promptlyadjusted to changes in the environment and assessed bythe auditor with regard to its effectiveness. Responsibilityfor identifying, reporting, assessing and managing occur-ring and potential risks has been decentralised and lieswith the specialist level. Risk review processes, summaryreporting and risk control processes are carried out cen-trally. For this purpose, the Company receives informationwithout delay from the property and asset managementteams.

Risk identificationMaterial business risks both within the company and in relation to the market and the sector have been definedfor all levels of responsibility to ensure a standardised andcomprehensible approach. They are analysed systemati-cally as part of general operations.

Risk analysis and communication Risks identified with the help of the risk catalogue are assessed with regard to the probability of their occurringand the potential loss established. Newly occurring risksentailing a substantial financial impact are notified imme-diately. The Board of Directors and Supervisory Boardas well as decision-making bodies are kept regularly informed and, if necessary, on an ad hoc basis via estab-lished reporting channels and, as a result, are able to takeappropriate risk management action promptly. Longer-term risks are integrated in the strategic planning process.

Risk management and controlIf necessary, the respective specialist managers, togetherwith the Board of Directors, decide on an appropriatestrategy for managing risk. Controlling monitors the operating success of risk management and communicateschanges from the planned development in good time.

Risk management documentationThe existing guidelines, procedures, instruments, areas ofrisk and responsibilities are documented in writing andcontinually expanded. A document summarises the basicelements of the normal cycle introduced as part of the riskmanagement system. On this basis, authoritative instruc-tions on the standard conduct to be adopted across theGroup in dealing with risks albeit tailored to his/her responsibilities are conveyed to each employee.

RISK REPORT

Risk management system of DIC Asset AG

52 � Risk Report

External risks

� Macroeconomic risksA period of economic weakness constitutes a short tomedium-term risk for growth in sales and earnings. Thisrisk relates primarily to the share of sales revenue from theletting of office space that is currently vacant or tenancyagreements that may expire. The Company is also exposedto risk from the possible insolvency of tenants. To minimisethis risk, DIC Asset AG concentrates particularly on long-term leases to top quality tenants, on spreading salesacross a large number of different tenants and investingin rapidly growing regions. At present, a slight economicrecovery is expected in 2010, which is why we considerthere is little likelihood of a further deterioration in theeconomy. If it occurred, this could have a slightly to mod-erately serious negative financial impact on the current financial year.

� Sector specific risksThe real estate sector is exposed to risks from varioustrends. In the letting market an oversupply of space canlead to price pressures, a loss of margin and vacancies. DICAsset AG minimises this risk on the one hand by intensiveexamination of investments; on the other hand, in its subsidiary DIC ONSITE, it has a property and asset man-agement organisation operating across Germany, whichis able to implement appropriate actions rapidly and guar-antees a high occupancy rate.

The continuing tensions in the financial system representa further risk. The absence of any easing in stringent financing conditions continues to block the transactionsmarket, which could be detrimental to our sales targets,in particular. This risk would not signify any major prob-lems in the medium-term, since the Company's businessplans at property and portfolio level are always long-termin their focus and planned sales can be postponed to a future date.

For 2010, we are currently assuming that the probability ofthe sector suffering negative growth is average. Thiswould have a slightly to moderately serious financial impact.

� Regulatory and political risksDIC Asset AG may be affected by risks resulting fromchanges in statutory or quasi-statutory provisions. Usuallychanges of this kind require a lead time, which allows suffi-cient time to adjust. However, in exceptional situationssuch as the financial crisis, the government may providerapid support for the economy. For financial year 2010, weexpect government support for companies to continueand consider any risk of this kind to be unlikely. We assessthe possible financial impact as minimal.

� Legal risksDIC Asset AG is exposed to the risk that third parties willassert claims or file actions for a possible breach of theirrights within the framework of normal business opera-tions. For this purpose, all material acts carried out by theCompany are carefully checked in order to identify and

avoid potential conflicts. Risks may also arise from non-compliance with contractual obligations. There are no material legal disputes, which could constitute a consid-erable risk, either pending or foreseeable. We consider therisk from current legal risks to be improbable and the financial impact to be low.

Overview of individual risks

Risk Report � 53

External risks

� Macroeconomic risks� Sector specific risks� Regulatory and political risks� Legal risks

Financial risks

� Interest rate risks� Financing and liquidity risks� Valuation risks

Strategic risks

� Acquisition risks� Project development risks

Operational risks

� Letting risks� IT risks

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Financial risks

� Interest rate risksSignificant changes in interest rates can impair DIC AssetAG’s profitability, liquidity and financial position as well asits opportunities for expansion. We counter the risk aris-ing from changes in market interest rates by hedging therates on approximately 85% of our financing. As at31.12.2009, the average interest rate amounts to 4.60%.Within the next twelve months some 3% of the financingvolume is due to be refinanced. We used the low level ofinterest rates in 2009 to restructure or extend interest-rateswaps and wish to continue this. We assess the probabil-ity of negative economic influences caused by a signifi-cant change in the interest rate structure in the first halfof financial year 2010 to be low. Any possible negative financial impact would be low. In the event of sustainedpositive economic growth, we expect interest rates to risein the second half but this would have little impact on cashflow because of the measures we have taken to hedge interest rates.

� Financing and liquidity risksSatisfaction of the Company's ongoing financing require-ments entails the risk of having to accept disadvantageousfinancing conditions in the event of any liquidity crunch.The Company’s liquidity planning monitors, controls andtherefore prevents such liquidity squeezes. DIC Asset AG’sfinancing and liquidity requirements for its operations aresecured long-term and are based on the substantial, long-term cash flow from our investments. The conclusion ofaffordable long-term financing was and is a material con-dition for all new acquisitions.

When concluding loan agreements, financial covenants(credit clauses imposing financial ratios) are often agreed,in particular as part of the financing of real estate port -folios. A breach of these financial ratios can have negativefinancial effects. DIC Asset AG has only agreed a manage-able number of credits with covenants. Compliance withthem is monitored continuously and providently throughrisk management in the Treasury Division. Deviations fromfixed threshold values identified through ongoing sensi-tivity analyses are presented to the Board of Directorswithout delay and the type and scope of the counter-measures to be taken are determined.

Overall, we rate the probability and impact of financingand liquidity risks as moderate.

� Valuation risksThe market value of the real estate assets held by DICAsset AG’s subsidiaries is established annually by neutralvaluers in accordance with international guidelines. Themarket valuation is subject to fluctuations and can be influenced by external factors such as a deterioration ineconomic framework conditions. A fall in market valuescan have repercussions on fixed assets, the balance sheetstructure and on financing conditions. We consider thatvaluation risks are unlikely in 2010, since we assume that,in essence, real estate values hit rock-bottom in 2009. Thefinancial consequences to be expected of any further fallsin value would be moderate.

Strategic risks

� Acquisition risksIn the case of acquisitions, particularly larger-scale port-folios, there are medium to long-term risks in overvaluingpotential income and synergies as well as undervaluingfuture cost increases and rental risks. The Company coun-ters this risk prior to any purchase being made by meansof extensive due diligence and the preparation of risk-ori-ented business plans, which are adjusted on an ongoingbasis in line with cost and earnings trends. We estimatethis risk and its possible financial repercussions for 2010as low.

54 � Risk Report

� Project development risksThe overwhelming majority of our project developmentactivities are arranged on a long-term basis, which is whyrisks to the Company’s income are posed, most notably,by changes to market conditions and time delays. To re-duce this risk, we only carry out development projectswhere suitable tenants have been found in advance. Wealso enter into long-term financing arrangements and im-plement a stringent system of project and cost controls.We endeavour to spread risk appropriately by involvingpartners in the projects and through contractual agree-ments. On the basis of planned project developments, weestimate this risk as low for 2010 and its potential finan-cial impact as moderate.

Operational risks

� Letting risksDIC Asset AG minimises the risk of non-payment of rentby letting and leasing its properties to companies withgood credit ratings and through the property manage-ment provided by its 100% subsidiary DIC ONSITE. DICAsset AG tries to avoid being dependent on a few majortenants. In addition, when deciding on acquisitions, therisk of non-payment of rent is minimised through an

intensive analysis of properties, the market, locations andtenants. Generally, long-term tenancy agreements are desirable and measures are also taken promptly to extendtenancy agreements. In financial year 2010, tenancyagreements with a volume of some EUR 10.3 million mayend. There are also rental agreements amounting to EUR5.9 million which have no fixed end dates but which areperiodically extended for various terms. We assume thatthe majority of these can be extended or let to new tenants through letting activities. There is a risk of non-payment of rent in individual cases but we consider its financial impact is minor and moderately probable.

� IT risksA loss of the database or a longer failure in the systemsused could lead to our operations being considerably dis-rupted. The Company has protected itself against IT risksthough its own network, modern hard and software solu-tions and safeguards against attacks. Structural securitymeasures are in place to protect the computer centre. Alldata are backed up daily in an external data depository.Detailed rules on access rights ensure that employees canonly access the systems and documents they need to fortheir work. Overall, we therefore consider IT risks to be un-likely and their possible consequences to be moderate.

Overall risk assessmentWith regard to the risks explained in this report and thecurrent prospects for business, we do not anticipate anyrisks whose effect could directly jeopardise the existenceof DIC Asset AG despite the continuing difficult macro-economic conditions.

Risk Report � 55

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Material features of the internal control system and therisk management system with regard to the financial reporting process.

GeneralThe internal control system (ICS) and the risk managementsystem with regard to DIC Asset AG’s financial reportingprocess encompass all guidelines, procedures and meas-ures aimed at ensuring that the financial reporting is effective, cost-effective and compliant and guaranteeingcompliance with the relevant legal provisions. The inter-nal control system consists of two areas, namely controland monitoring. In organisational terms, the Treasury, Controlling and Accounting divisions are responsible forcontrol.

The monitoring measures consist of elements incorpo-rated in the process and external, independent elements.Among others, the integrated measures include manualcontrols such as the “dual control principle”, which is applied universally, and technical controls, essentially soft-ware based checking mechanisms. In addition, qualifiedemployees with the appropriate powers (Managing Directors of portfolio companies or employees in the sec-ond management tier, for instance) as well as specialisedGroup departments such as Controlling or Legal performmonitoring and control functions as part of the variousprocesses.

The Board of Directors and the Supervisory Board (in par-ticular the Audit Committee) as well as a firm of auditorsare involved in the monitoring system with various checksthat are independent of the Company's processes. Theaudit of the Group’s financial statements represents oneof the key activities in the controlling measures that areindependent of the Company’s processes, which is sup-plemented by additional audits such as the audit carriedout by the fiscal authorities.

With regard to the Company’s financial reporting, the riskmanagement system focuses on recognising the risks ofinaccurate book-keeping, financial accounting and reporting in good time, on assessing them and communi-cating them. Further comments on the risk managementsystem are provided under the heading “Risk manage-ment” in the Risk Report.

Use of ITThe software used to record accounting transactions inthe individual companies consists of established standardsector solutions in the majority of cases. The correctness ofthe programs and interfaces used is regularly examinedand verified. Accounting-related interfaces are checked bythe Group auditor as part of the audit. The results of theaudit of the IT systems include concrete recommendationsfor increasing the security of the systems and for enhanc-ing the expertise of the employees responsible for the sys-tems. The entire IT system, including the bookkeeping andthe accounting, is protected against unauthorised access.

Internal control system

Key regulations and control activities to ensure that thefinancial reporting is correct and reliable The regulations and measures prescribed by the internalcontrol system ensure that transactions are recordedpromptly and completely in compliance with statutoryand internal provisions, assets and liabilities are recog-nised, measured and reported accurately in the consoli-dated financial statements. The accounting documentsprovide a reliable and comprehensible information base.

The control activities that ensure that the financial reporting works correctly and reliably include the use ofdeviation analysis to investigate financial reporting- related issues and developments in addition to the auditsof the quarterly and annual financial statements. Admin-istration, execution, settlement and approval functions areseparate and are carried out by different employees tominimise the opportunities for malpractice. The internalcontrol system is arranged in such a way that bothchanges in the environment can be integrated andchanges to the provisions governing financial reportingcan be implemented.

The pertinent statutory reporting rules are supplementedby the International Financial Reporting Standards (IFRS)and recommendations such as EPRA and applied by DICAsset AG as uniform measurement and reporting princi-ples throughout the Group. This also encompasses regu-lations pertaining to the balance sheet, income statement,cash flow statement and segment reporting. The reportingrules regulate formal requirements for the consolidated financial statements, such as stipulating the companies tobe included in the scope of consolidation and the contentof the reports to be prepared by the individual companies,in detail. Internal regulations governing settlement prac-tice within the Group, for instance, are also provided.

At Group level, control encompasses, most notably, theanalysis and, if necessary, adjustment of the separate financial statements submitted taking into account thefindings of the auditor and the discussions held with him.Impairment tests carried out centrally, in particular, the annual review of the market value of all real estate carriedout by independent surveyors ensure that the valuationcriteria are applied uniformly and on a standardised basis.The data required for disclosures in the Management Report and the Notes are also aggregated and adapted atGroup level.

Qualificatory statementsEven tried and tested and established systems such as DICAsset AG’s internal control system and risk managementsystem cannot exclude errors and infringements entirely,meaning that absolute security with regard to the accu-rate, complete and prompt recording of data in the Groupfinancial reporting cannot be guaranteed. Transactionsthat cannot be routinely processed or that occur time-crit-ically at the end of an accounting period hold a certain potential risk. Risks may also arise from the scope for discretion that employees have in recognising and meas-uring assets and liabilities. A certain risk also arises fromthe use of service providers to process data. Financial reporting-related risks arising from financial instrumentsare explained in the Notes.

Risk Report � 57

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Results of Operations, Financial and Asset Position DIC Asset AG is the holding and management companyof the DIC Asset Group. In essence, its operational real estate activities are organised via the property companies.The Group’s earnings situation is therefore influenced primarily by the results from its investments. DIC Asset AGprepares its separate financial statements in accordancewith the HGB.

In the 2009 financial year, profits fell by EUR 10.2 millionto EUR 13.9 million. This is essentially due to lower revenues from sales and earnings from investments as wellas higher personnel expenses. Retained earnings includ-ing profit carried forward increased by EUR 9.4 million toEUR 29.0 million.

The Company's equity amounted to EUR 599.4 million asat 31 December 2009, some EUR 4.5 million more than inthe previous year. Equity was reduced by the dividendpayment in mid-2009, in particular, which was more thanoffset by the profit for the period. As in the previous year,the equity ratio amounted to 82%.

We acquired three properties in Pfungstadt with a volumeof some EUR 5.0 million in February 2010. The retail prop-erties complement an existing retail centre in the localityand are let to major retailers long-term.

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

“We hereby declare that according to the facts known tous at the time in which the legal transactions were con-ducted, our company received or paid a commensuratecondition in each transaction. We took no actions at thebehest 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.

58 � Other Information

OTHER INFORMATION

Results of Operations, Financial andAsset Position of DIC Asset AG

Material Events after the Balance Sheet Date

Relationships to Affiliates

Other Information � 59

The following disclosures in accordance with §§ 289 para.4, 315 para. 4 HGB reflect the circumstances as of the balance sheet date. The following explanation of these disclosures also meets the requirements for an explana-tory report under the § 176 para. 1 sentence 1 AktG.

Composition of the subscribed capitalThe subscribed capital in the amount of EUR 31,349,999.00consists of 31,349,999 bearer no-par shares. There are noother classes of shares. All shares have the same rights andobligations. Each share gives entitlement to one vote atthe General Shareholders' Meeting. This excludes anytreasury shares held by the Company itself. The Companywill have no rights based on these shares. The voting rightbegins when the statutory minimum deposit has beenmade on the shares. The rights and obligations tied to theshares are shown in detail in the terms of the Stock Cor-poration Act [AktG], in particular §§ 12, 53a ff., 118 ff. and186.

Restrictions affecting voting rights or the transfer ofsharesIn May 2009, solvia Vermögensverwaltungs GmbH acquired 1,474,022 shares from DIC Asset AG, which camefrom one of the Company’s share buy-back programmes.Both sides agreed a commitment clause under whichsolvia Vermögensverwaltungs GmbH will, in principle,keep the block of shares until at least 31 December 2010.

Direct and indirect capital shareholdings, which ex-ceed 10 % of the voting rights Please refer to the Notes to the consolidated financialstatements with regard to direct and indirect holdings inthe capital of DIC Asset AG, which exceed 10 % of the voting rights.

Statutory provisions and the requirements of the Articles of Incorporation on the appointment and dismissal of members of the Board of Directors andthe amendment of the Articles of Incorporation The appointment and dismissal of members of the Boardof Directors is based on §§ 84, 85 AktG and § 7 of the Arti-cles of Incorporation (version dated 7 July 2009). Pursuantto § 7 para. 1 of the Articles of Incorporation, the Board ofDirectors is composed of at least one person. The Articlesdo not contain any special arrangements for the appoint-ment or dismissal of individual members or all members ofthe Board of Directors. The Supervisory Board has thepower of appointment and dismissal. It appoints membersof the Board of Directors for a maximum term of office offive years. Members may be reappointed or their term maybe extended for a maximum of five years in each case subject to § 84 para. 1 sentence 3 AktG.

Amendments to the Articles of Incorporation are madepursuant to §§ 179, 133 AktG and § 5 para. 2, § 9 para. 6and § 14 of the Articles of Incorporation (version dated 7July 2009). The Articles of Incorporation have not exercisedthe option of imposing further requirements for amend-ments to the Articles. Unless prevented by statute, theGeneral Shareholders' Meeting adopts resolutions by asimple majority of votes cast and, if the law prescribes a

majority of shares besides a majority of votes, by a simplemajority of the share capital in place when the resolutionis made. The Supervisory Board has the power to makeamendments to the Articles of Incorporation if only thewording is affected.

The Board of Directors' powers to issue and redeemsharesThe powers of the Company's Board of Directors to issueand redeem shares are all based on resolutions to that effect by the General Shareholders' Meeting, the contentof which is shown below.

� Authority to acquire treasury sharesBy resolution of the ordinary General Shareholders’ Meet-ing of 7 July 2009, the Board of Directors is authorised until6 January 2011 to acquire treasury shares of up to 10 % ofthe Company’s share capital existing at the time the reso-lution is made. At no time may the acquired shares together with other treasury shares in the possession ofthe Company or allocated to it under the §§ 71a ff. AktGrepresent more than 10% of the share capital. The autho-risation may not be used for the purpose of trading intreasury shares. The authorisation may be exercised as awhole or in instalments, once or more than once, for oneor more purposes, by the Company or by companies dependent on or majority-owned by it, or by third partiesacting on their behalf or on behalf of the Company.

At the Board of Directors’ option, and with the prior con-sent of the Supervisory Board, shares may be acquiredthrough the stock exchange or through a public offeringdirected to all shareholders or a public invitation to all

Takeover-related disclosures

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shareholders to submit offers for sale. If the shares are acquired on the stock exchange, the purchase price pershare paid by the Company (excluding transaction ancil-lary costs) may not be more than 10% over or under theprice determined on the trading day by the opening auc-tion in the Xetra trading system (or a comparable succes-sor system) on the Frankfurt stock exchange. If they are acquired by a public bid directed to all shareholders or apublic invitation to submit such a bid directed to all share-holders, the purchase price offered per share (excludingancillary acquisition costs) in the event of a public bid di-rected to all shareholders or, in the event of a public invi-tation to submit such a bid directed to all shareholders,the margins of the purchase price spread (excluding an-cillary acquisition costs) set by the Company may not bemore than 10 % over or under the average closing pricesof the Company’s shares in the Xetra trading system (or acomparable successor system) on the Frankfurt stock exchange over the last five trading days before the day ofthe public announcement of the public bid or the publicinvitation to submit a bid.

If there are significant differences from the relevant priceafter the publication of a public offering directed to allshareholders or a public invitation to all shareholders tosubmit offers to sell, the offering or the invitation to sub-mit offers to sell may be adjusted. In this case the averageof the closing price of the Company's shares in the Xetratrading system (or a comparable successor system) on theFrankfurt stock exchange over the last five trading daysbefore the public announcement of any adjustment willbe used as a basis.

Where a public offering directed to all shareholders isover-subscribed, it can only be accepted on a quota basis.In the case of a public invitation to all shareholders to sub-mit offers for sale, where not all equal offers are accepted,the offers can only be accepted on a quota basis. Prefer-ential treatment of smaller numbers up to 100 shares pershareholder can be provided for. The public offering directed to all shareholders or the public invitation to allshareholders to submit offers for sale may stipulate furtherconditions.

The Board of Directors is authorised, with the prior con-sent of the Supervisory Board, to use the treasury sharesacquired on the basis of this authorisation for any legalpurpose, in particular the following: (i) The shares may bewithdrawn without a further resolution of the GeneralShareholders’ Meeting being required for the withdrawalor its execution. They may also be withdrawn by the sim-plified procedure without capital reduction by adjustingthe pro rata mathematical amount of the remaining sharesin the Company's share capital. If they are withdrawn bythe simplified procedure, the Board of Management is au-thorised to amend the number of shares in the Articles ofAssociation. (ii) The shares may also be disposed of in away other than through the stock exchange or by an offerdirected to all shareholders if the purchase price payablein cash is not significantly lower than the market price ofessentially equivalent shares already quoted. The numberof shares sold in this way together with the number of newshares that were issued during the life of this authorisa-tion from authorised capital to the exclusion of subscrip-

tion rights in accordance with § 186 para. 3 sentence 4AktG, and the number of shares that can be createdthrough the exercise of option and/or conversion rightsor the fulfilment of conversion obligations arising fromwarrant bonds or convertible bonds issued during the lifeof this authorisation under the exclusion of subscriptionrights in accordance with § 186 para. 3 sentence 4 AktG,does not exceed 10% of the share capital. (iii) The sharesmay be sold for a contribution in kind, in particular, in con-nection with the acquisition of businesses, parts of busi-nesses or corporate interests and in connection withmergers of businesses. (iv) The shares may be used to ful-fil the conversion and/or subscription rights and/or optionrights or conversion obligations as part of convertiblebonds or bonds with warrants issued by the Company orits group subsidiaries in which DIC holds a 100 % interest. As at 31 December 2009, the Company holds no treasuryshares. It has not made use of the authorisation describedabove.

Authorised capitalWith the resolution of the General Shareholders' Meetingof 6 June 2007, the Board of Directors was authorised to in-crease the Company’s share capital by a maximum of EUR14,250,000, with the approval of the Supervisory Board,up to 5 June 2012 through one or more issues of newbearer shares against cash consideration and/or contri-butions in kind (authorised capital).


Shareholders are to be granted subscription rights here.The new shares can be accepted by one or more financialinstitutions specified by the Board of Directors, subject tothe obligation that they offer them to the shareholders (in-direct subscription right). The Board of Directors is, how-ever, authorised to exclude shareholders’ subscriptionrights 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 participationrights issued by the Company or its direct or indirectmajority-interest companies subscription rights tonew shares in the amount that they would be entitledto after exercise of their conversion or option rights orafter fulfilment of the conversion obligation;

(iii) if shares are issued against contributions in kind, particularly as part of the acquisition of or merger withcompanies or parts of companies or the acquisition ofinterests in companies;

(iv) if the shares of the Company are issued against cashcontributions and the issue price per share is not sig-nificantly lower than the stock exchange price of pre-viously issued shares with the same terms at the timeof the issue of the shares. In these cases, however, theexclusion of subscription rights can only take place ifthe number of the shares issued in this way togetherwith the number of treasury shares that were sold dur-ing the life of this authorisation under the exclusion ofsubscription rights in accordance with § 186 para. 3sentence 4 AktG, and the number of shares that canbe created through the exercise of option and/or conversion rights or the fulfilment of conversion obli-

gations from option and/or conversion debenturesand/or participation rights that were issued duringthe life of this authorisation under the exclusion ofsubscription rights in accordance with § 186 para. 3sentence 4 AktG, does not exceed 10 % of the sharecapital at the time the authorisation becomes effec-tive or at the time of the issue of the new shares.

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

Following a partial drawdown through the resolution ofthe Supervisory Board and the Board of Directors on 19November 2007, the authorised capital amounts to EUR11,400,001.00 on 31 December 2009.

� Contingent capitalThe Board of Directors is authorised by two resolutions bythe General Shareholders’ Meeting on 14 May 2008 toissue, with the consent of the Supervisory Board, bearerbonds with warrants or convertible bonds or a combina-tion of these instruments (together, "bonds") on one ormore occasions up to 13 May 2013 in a total nominalamount of up to EUR 250,000,000.00 and to grant optionrights to holders of bonds warrants or conversion rightsfor bearer shares in the Company representing a propor-tionate amount of the share capital of up to EUR7,837,499.00 in total to holders of conversion bonds sub-ject to the precise terms of the option or convertible bond

conditions (“Authorisation I” and “Authorisation II”). Bondswith option rights and/or conversion rights or obligations,which were issued on the basis of the other authorisationby the General Shareholders' Meeting on 14 May 2008, areto be counted towards the above mentioned total of up toEUR 250,000,000.00, so that this total nominal amount ofup to EUR 250,000,000.00 can only be used once in total byusing Authorisation I and Authorisation II. The Bonds canalso be issued in the legal currency of an OECD countryother than euros, subject to the limit of the correspondingvalue in euros. They may also be issued by a group com-pany of DIC Asset AG within the meaning of § 18 AktG inwhich DIC Asset AG directly or indirectly holds 100% ofthe share capital. In this event, the Board of Directors is authorised, with the consent of the Supervisory Board, toassume the guarantee for the bonds on behalf of the Com-pany and to grant options and conversion rights or obli-gations on bearer shares in DIC Asset AG to holders ofbonds with warrants and or convertible bonds or to impose them upon them.

The statutory subscription right is granted to the share-holders in such a manner that the Bonds are accepted bya financial institution or a syndicate of financial institutionsunder the obligation to offer the bonds to the sharehold-ers. If the bonds are issued by a group company of DICAsset AG within the meaning of § 18 AktG in which DICAsset AG directly or indirectly holds 100% of the share capital, the company must ensure the grant of the statu-tory subscription right for the shareholders of DIC AssetAG in accordance with the preceding sentence. The Boardof Directors is authorised, however, with the consent of


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the Supervisory Board to exclude fractional amounts forthe shareholders resulting from the proportionate sub-scription right and to also exclude the subscription right tothe extent that this is necessary in order for the holders ofpreviously issued option rights or conversion rights or obligations to exercise options or to convert to be granteda subscription right to the extent to which they wouldhave such a right as a shareholder after exercising the option rights or the conversion rights or fulfilling the op-tion obligations or the conversion obligations. The Boardof Directors is also authorised with the consent of the Supervisory Board to completely exclude the subscriptionrights of shareholders for bonds which are issued with op-tion rights and/or conversion rights and/or option obliga-tions and/or conversion obligations which are issued inexchange for payment of cash to the extent that the Boardof Directors comes to the conclusion after a proper exam-ination that the issuing price of the bonds is not materi-ally lower than their hypothetical market value calculatedon the basis of recognised, particularly financial mathe-matical methods. This authorisation to exclude the sub-scription right applies to bonds which are issued with op-tion rights and/or conversion rights or option obligationsand/or conversion obligations which include an optionand/or conversion right or an option obligation and/orconversion obligation for shares representing a propor-tionate amount of the share capital which in aggregatecannot exceed 10% of the share capital either at the timethe issue takes effect or at the time the above authorisa-tion is exercised, whichever value is lower. The followingwill be counted against the above mentio ned 10% limit:

(i) both new shares issued from authorised capital excluding the subscription right under § 186 para. 3sentence 4 AktG during the term of this authorisation

up to the issue in accordance with § 186 para. 3 sen-tence 4 AktG without subscription rights of bondswith option and/or conversion rights or obligations,

(ii) and those shares, which are acquired on the basis ofan authorisation by the General Shareholders’ Meet-ing and are sold during the term of the authorisationin accordance with § 71 para. 1 No. 8 sentence 5 inconjunction with § 186 para. 3 sentence 4 AktG up tothe issue under § 186 para. 3 sentence 4 AktG exclud-ing subscription rights of bonds with option and/orconversion rights or obligations subject to exclusionof the subscription right,

(iii) and those shares which are to be issued when exer-cising bonds with option and/or conversion rights orobligations issued without subscription rights on thebasis of the other authorisation by the General Share-holders' Meeting on 14 May 2008 in accordance with§ 186 para. 3 sentence 4 AktG to the extent that thesebonds have been issued up to the issue, subject to theexclusion of subscription rights, pursuant to § 186para. 3 sentence 4 AktG of bonds with option and/orconversion rights or obligations under the authorisa-tion by the General Shareholders' Meeting on 14 May2008.

In the case of the issuance of bonds with warrants, eachindividual bond will have one or more option certificateswhich entitle the holder to obtain bearer shares in DICAsset AG in accordance with the terms and conditions ofthe option to be determined by the Board of Manage-ment. In the case of bonds with warrants denominated ineuros which are issued by DIC Asset AG, the terms andconditions for the options can provide that the optionprice can also be paid by transferring individual bondsand, if appropriate, an additional cash premium. The

proportionate amount of the share capital allocated to theshares to be drawn for each individual bond cannot exceed the nominal amount of the individual bonds. Tothe extent that fractions of shares result, there can be aprovision that these fractions can be combined in accor-dance with the terms and conditions of the option or thebond in order to subscribe to complete shares, if appro-priate, upon making an additional payment. In the case ofissuing convertible bonds, holders will receive the irrevo-cable right to convert their bonds to bearer shares in DICAsset AG in accordance with the terms and conditions es-tablished by the Board of Management for the convertiblebond. The ratio for the conversion results from dividingthe nominal amount or the issuing price of an individualbond which is less than the nominal amount by the de-termined conversion price for one share in the Companyand can be rounded up or rounded down to a full integer;furthermore, any additional payment to be rendered incash and the combination or compensation for any frac-tion of amounts which are not capable of being convertedcan be determined.

In the case of issuing bonds which provide for optionrights or conversion rights or establish a mandatory option or conversion, the option price or the conversionprice is calculated on the following basis:

When issuing bonds, which grant an option right but donot establish a duty to exercise the option, the optionprice corresponds to 125% (Authorisation I) or 130% (Au-thorisation II) of the volume weighted average price of theCompany’s shares in Xetra trading (or a correspondingsuccessor system) on the Frankfurt stock exchange duringthe period between adopting the resolution on the use ofthe Authorisation by the Board of Directors and the


allocation of the bonds by the banks accompanying theissue or, in the case of granting a subscription right, 125%(Authorisation I) or 130% (Authorisation II) of the volumeweighted price of the Company’s shares in Xetra trading(or a corresponding successor system) on the Frankfurtstock exchange during the days on which the subscriptionrights for the bonds are traded on the Frankfurt stock ex-change, except for the last two trading days of the tradingin subscription rights (the average price referred to is alsoreferred to hereinafter as the “Reference Price”).

In the case of issuing bonds, which grant a conversionright but do not establish a duty to convert, the conver-sion price corresponds to 125% (Authorisation I) or 130%(Authorisation II) of the Reference Price.

In the case of issuing bonds which establish a duty to con-vert or to exercise an option, the conversion price or op-tion price corresponds to the following amount when thebonds become due or in the case of a takeover offer:

• if the volume weighted average price of the shares ofthe Company in Xetra trading (or in a correspondingsuccessor system) on the Frankfurt stock exchange onthe 20 trading days ending on the third trading day either before the bonds become due or, in the case of atakeover offer, on the third trading day prior to the con-version date or the option exercise date (“AveragePrice”)– is smaller or equal to the Reference Price, the Refer-

ence Price,– is greater than the Reference Price and less than 118%

(Authorisation I) or 120% (Authorisation II) of the Reference Price, the Average Price,

– is greater or equal to 118% (Authorisation I) or 120%(Authorisation II) of the Reference Price, 118% (Au-thorisation I) or 120% (Authorisation II) of the Refer-ence Price.

• Notwithstanding the above provisions, the price is118% (Authorisation I) or 120% (Authorisation II) of theReference Price, if the holders or creditors of the bondsexercise an existing conversion or option right beforethe duty to convert or exercise the option arises.

• Notwithstanding the above provisions, the price is theReference Price if the Board of Directors, with the con-sent of the Supervisory Board and in accordance withthe terms and conditions of the bonds, calls for an earlyconversion to prevent immediate, significant damageto the Company.

In the case of bonds with option or conversion rights orobligations, the option or conversion price can be ad-justed to preserve value in the event of economic dilutionof the value of the option or conversion rights or option orconversion obligations in accordance with the detailedprovisions of the bond, notwithstanding § 9 para. 1 AktGunless the adjustment is already regulated by law. Theterms and conditions of the bonds can also provide for anadjustment of the option or conversion rights or option orconversion obligations in the event of a reduction of cap-ital or other extraordinary measures or events (for exam-ple, unusually high dividends, control being obtained bya third party). In the case of a third party obtaining con-trol, an adjustment of the option or conversion pricewhich is standard for the market is provided for.

The terms and conditions of the bonds can provide for theright of the Company, in the event of an conversion or option being exercised, not to grant new shares but to paya monetary amount, which corresponds to the volumeweighted average price of the shares in DIC Asset AG inXetra trading on the Frankfurt stock exchange or on a cor-responding successor system during the ten trading daysafter declaration of the exercise of the conversion or op-tion for the number of shares that would otherwise haveto be delivered. In the event that the Company announcesthe exercise of the right to pay a monetary amount afterexercise of a conversion right or option, the ten tradingdays begin only on the third trading day after the announcement by the Company about the payment of amonetary amount. The terms and conditions of the bondscan also provide that the bond with warrants or the con-vertible bond can be converted using existing shares ofthe Company instead of using new shares from contingentcapital or that option rights or the option obligation canbe satisfied by delivering such shares. The terms and con-ditions of the bonds can also provide for an obligation toconvert or an obligation to exercise an option at the endof the term (or at any other time) or can provide for theright of the Company to grant the creditors of the Bondscompletely or in part shares in the Company instead ofpaying the amount due upon final maturity of the bondslinked to a conversion right or an option right (this also includes maturity upon notice of termination). The pro-portionate amount of the share capital of the shares to beissued upon the exercise of the conversion right or optioncannot exceed the nominal amount of the bonds. § 9 para.1 in conjunction with § 199 para. 2 AktG must be compliedwith.


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The Board of Directors is authorised, with the consentof the Supervisory Board, to establish further details concerning the issuing and structuring of the bonds, inparticular, the interest rate, issue price, term and denomi-nation, provisions on protection against dilution, as wellas the option or conversion period, or the Board of Direc-tors can do so in agreement with the management bodiesof the group company of DIC Asset AG issuing the bondwith warrants or the convertible bond.

To service conversion and option rights or obligations aris-ing from bonds issued on the basis of Authorisation I bythe General Shareholders’ Meeting on 14 May 2008 up to13 May 2013, the share capital was conditionally increasedby up to EUR 7,837,499.00 by the issue of up to 7,837,499individual bearer shares (contingent capital I/2008).

To service conversion and option rights or obligations aris-ing from bonds issued on the basis of Authorisation II bythe General Shareholders’ Meeting on 14 May 2008 up to13 May 2013, the share capital was conditionally increasedby up to a further EUR 7,837,499.00, by the issue of up to7,837,499 individual bearer shares (contingent capitalII/2008).

The Board of Directors has not made use of the authorisa-tions described above to issue bonds with warrants orconvertible bonds or a combination of these instruments.

Major agreements on condition of a change of controlas a result of a takeover bidDIC Asset AG has entered into the following significantagreements that contain change-of-control clauses.

This includes a loan agreement with Provinzial RheinlandLebensversicherung AG that provides for a cancellationright 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 in several joint ven-tures with Morgan Stanley Real Estate Funds (MSREF) onthe one hand and DIC Capital Partners (Germany) GmbH &Co. KGaA on the other hand. The respective joint venturepartner will be granted the right in the case of a change ofcontrol to acquire the interests of DIC Asset AG in the re-spective real estate investment at the current marketvalue. In particular, there is change of control if DeutscheImmobilien Chancen AG & Co. KGaA no longer directly orindirectly holds at least 30% of the shares and votingrights in DIC Asset AG.

Indemnity agreements entered into with members ofthe Board of Directors or employees in the case of atakeover bid In the case of a change of control, a member of the Boardof Directors will be entitled to extraordinary termination ofthe employment contract. A case of change of control willbe in place if a shareholder holds at least the majority ofthe voting rights represented in the General Shareholders’Meeting and at the time of the conclusion of the employ-ment contract, that shareholder did not hold more than20% of the share capital of the Company, or the Companyconcludes an affiliation agreement as an independentcompany or is integrated into or merged with anothercompany. A Board member exercising his right to termi-nate is entitled receive a payment of twice his total annualearnings in the financial year prior to the change of con-trol. If the remaining period of his contract of employmentis less than two complete years, the equivalent of twoyears’ total earnings is replaced by a proportion of twoyears’ total annual earnings calculated pro rata over theshorter period remaining.

Other informationThe other disclosures in accordance with §§ 289 para. 4,315 para. 4 HGB refer to circumstances that do not exist atDIC Asset AG. There are no shareholders with special rightsconferring supervisory powers nor are there any votingcontrols by employees with shares in the Company’s capital.


We see material opportunities for DIC Asset AG in factorsthat pertain to our business model and which result fromour activities and our positioning in the market. We pursuethese opportunities actively. If we can exploit them, thenthey will boost our business development significantly.However, these opportunities are not included in ourprofit planning, since they cannot be clearly forecast, in-fluenced or quantified. We have not taken general chancesthat apply equally to every market player into account inthis presentation.

Opportunities: for opportunists and property managersThe difficult real estate market and continuing difficultiesin raising finance could cause problems for short-term oriented real estate investors with management intensiveportfolios in the next few months, since rental income isnot being received or is declining. This may offerfavourable purchase opportunities and opportunities forgrowth for DIC Asset AG. With our expertise and our Germany-wide property management services, we alsoconstitute a suitable partner for banks involved in takingover portfolios or restructuring non-performing invest-ments.

Interest rates: securing favourable interest rates long-term Interest rates are at a historic low, which offers excellentopportunities for improving the interest burden long-term. In 2009, we made use of the favourable opportunityto improve our terms in the case of renewals and interestrate hedging deals and will continue to do so. However,banks continue to be very hesitant in granting new loans.Should this change, there will be potential opportunitiesfor us to obtain refinancing on more favourable terms ona broader basis.

Thin cap rules: statutory framework easedThe thin cap rules were also eased as a result of the Wachs -tumsbeschleunigungsgesetz (Growth Acceleration Act)adopted in December 2009. The thin cap rules regulatethe restriction on the deduction of interest expenses asoperating expenses to which we had reacted with exten-sive optimisation measures. Among other things the relaxation includes the increase in the exemption from therestriction on deducting interest from the previous levelof EUR 1 million to EUR 3 million net interest expense. Theopportunity for DIC Asset AG that will arise as early as the2010 financial year consists firstly of a reduction in the taxburden and secondly further restructuring under com-pany law will become obsolete.

Opportunities and Forecast � 65

OPPORTUNITIES AND FORECAST

Opportunities for our business model

Growth potential: implementation of equity-oriented measures Growth that maximises our earnings is a fundamental partof our corporate strategy. We therefore always pursue options that will encourage new investors to participatein our business model or expand existing equity partner-ships. Our equity story is attractive and has proved to behighly resilient in the face of the substantial pressures thatwe have faced in the recent difficult months. Raising equity at an appropriate time can significantly increase ouropportunities for growth and consequently future poten-tial earnings.

Funds business segment: equity boost and new investorsIn the past year, we have undertaken intensive prepara-tions for the establishment of our new Funds business segment. We shall open up new groups of investors andan expanded area of investment in core properties withthese investment products. We shall retain a significant in-vestment, of at least 20%, and shall use our establishedasset and property management services to manage andoptimise the properties. We shall achieve investment income from successfully placing the funds and will alsogenerate steady inflows from management fees. We canalso use the inflow of capital to reduce liabilities and initi-ate additional growth.

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Economic environment The German Bundesbank expects that the German econ-omy’s recovery process, which has been supported bymonetary and fiscal policy stimuli, will continue, albeit ata slower rate. The momentum resulting from governmentsupport measures will gradually be taken over by market-driven growth factors. According to the federal govern-ment, growth of 1.4% in gross domestic product is to beachieved in 2010. For the labour market, it is assumed thatthere will be a gradual reaction to the reduction in pro-duction capacity, so that while jobs will be lost, no suddenrise in unemployment is imminent. According to state-ments by the European Central Bank, interest rates are notexpected to rise in the near future but the special meas-ures will gradually be reduced. The ifo business climateindex fell for the first time after ten months of growth inFebruary 2010. Here, perceptions of the present businesssituation were more negative, the companies questionedare more confident with regard to the next six monthsthan was previously the case.

Letting volume of expected to equal previous year’slevelThe recovery in the economy will probably not have anyimpact on the letting market yet. Companies will continuepostponing their relocation plans and instead increasinglyprefer to extend their tenancies of existing premises short-term. The trend in the employment market will also limitdemand for space. Estate agents’ analysts expect theamount of space let to match the level of the previousyear.

We therefore expect the environment to remain compet-itive and rentals to remain under pressure. With our prop-erty management services, we are in a good market posi-tion to build on our direct contact with tenants and thecustomer loyalty we have built up to achieve anothergood letting result. The development and expansion ofDIC ONSITE were the initial steps, which were followed bythe takeover of all the shares in 2009. In 2010, employeesin the local branches will be supported by the target-ori-ented incentives for improvement provided by a compre-hensive customer satisfaction survey and further trainingand qualification measures. However, since we shall notremain unaffected by the macroeconomic development,we expect the letting volume to remain at the previousyear’s level and a stable occupancy rate of 86% to 87%.

Forecast

� No appreciable improvement in the sector environment

� Rental income of EUR 126 million expected� Operating income (FFO) of EUR 39 to 41 million

planned

In view of the prospects for economic growth, we are expecting another difficult year for the real estate sector in2010. The letting market could be depressed by the expected growth in unemployment, while the transactionmarket has recently been showing slight signs of recov-ery. Taking account of our specific strengths and compe-tencies, we see our opportunities for strategic growth overthe next few months in property management, in partic-ular, and the area of opportunistic investments.

66 � Opportunities and Forecast

Selective earnings-oriented sales Both our property objective and the underlying financingstructure give us flexibility in executing placements: weare not forced to sell properties at a defined date, sinceour business plans allow flexible adjustments. As in recentmonths, we shall place marketable properties at the timewe can achieve the optimal return. The majority of theproperties, which we shall offer for sale, will be worth be-tween EUR 5 and 15 million. We expect to reach the pre-vious year’s level with a sales volume of at least EUR 60 mil-lion also for 2010. Should the market environment provemore favourable in the second half of the year onwards,with larger sales becoming more feasible, we may be ableto achieve a greater transaction volume.

Examining opportunities for growthIn 2010, we shall continue to pursue opportunities for acquisition and, if applicable, complete attractive deals. Inrecent months, however, the supply of properties hasbeen restricted by the barriers on the transaction marketand limited relatively one-sidedly to core products. Theopportunity for purchases could rise once more over thenext few months because of conditions in the market. Ourbroadly based position with group-wide expertise in theareas of project development, property management andadding value represents a good starting position for exploiting these opportunities.

Assumptions on which the profit forecast is basedOur forecast is based on the following material assump-tions:

� The economy will continue to recover slightly and theconditions on which banks are prepared to lend will improve. Unemployment will increase when the short-time working programme ends; however, this will happen gradually and not suddenly.

� The anticipated falls on the letting market will not betoo dramatic. Pressure on rentals will not increase disproportionately and competition will no longer increase sharply.

� The forecast is base on income from the tenancy agree-ments in place at the end of 2009. Non-payment of rent,as a result of insolvencies, for instance, will remainwithin existing parameters and will only show a slightupward trend.

� We can maintain letting volume in our portfolio at theprevious year’s level and keep the occupancy rate in theportfolio at 86% to 87%.

Opportunities and Forecast � 67

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Expected sales and earnings position Forecasts for the current financial year are far less certainthan usual in view of the continuing certainty regardingdevelopments as a consequence of the global financialand economic crisis. This is why our planning also includesadditional risk assumptions for this year. The forecast maydiffer materially from actual results if underlying assump-tions are not fulfilled or other developments occur.

With regard to the letting result, we are again assuminggood payments, which will stabilise and reinforce thequality of our portfolio even in a challenging environment.The decrease in letting figures caused by the economicproblems can be partly offset by the acquisition of newtenants.

On the basis of the existing portfolio, we are expectingrental income of EUR 126 million and FFO of betweenEUR 39 and 41 million.

With regard to results, we expect the Core plus segment tobe largely stable compared with the previous year. By con-trast, the outlook is weaker in the Value added segmentand our opportunistic investments given the increase inthe vacancy rate.

Subject to a slight economic recovery, we are expectingpositive growth in sales and earnings – at least matchingthe level of 2010 – in 2011.

Expectations with regard to the financial position In net terms, no major external financing is required forour ongoing operations. Current financial resources aresufficient for our liquidity requirements in 2010 and alsooffer us opportunities for organic growth.

Plans are in place to invest in the portfolio in 2010 for thepurposes of maintenance but also for improvements, suchas equipping it for new tenants. Investment in the portfo-lio will probably come to between EUR 10 and 14 million,which equates to around 8% to 11% of gross rental in-come. Investment will largely be generated from operat-ing cash flow. The company has investment commitmentsof EUR 3.2 million, of which EUR 1.3 million is to be invested in 2010. Additional external funds may be raisedin the case of acquisitions.

Dividend policyWe allow our shareholders to share in the performance ofDIC Asset AG. We are pleased to be able to do this for thedifficult 2009 financial year on the basis of our success insound operational business. As a result, we are continuingDIC Asset AG’s continuous and attractive dividend policy.We shall propose payment of a dividend of EUR 0.30 pershare for the 2009 financial year, which equates to a pay-ment of EUR 9.4 million. As in the previous year, we shallbe guided by the figure for funds from operations and ourshareholders shall participate commensurately in the success of DIC Asset AG.

We also wish to be guided by the growth in funds fromoperations taking account of the general conditions pre-vailing at the time for the next financial year. On the basisof our forecast for 2010, we are expecting a dividend atthe level of the previous year.

68 � Opportunities and Forecast

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70 � Consolidated Financial Statements

Consolidated Financial Statements

Consolidated Profit and Loss Account 71

Consolidated Balance Sheet 72

Consolidated Statement of Cash Flow 74

Consolidated Statement of Changes in Equity 75

Statement of Comprehensive Income 75

Consolidated Financial Statements � 71

Consolidated Profit and Loss Account for the Period from 1 January to 31 December 2009

TEUR Notes 2009 2008

Total revenues 171,320 207,134

Total expenses -90,975 -110,165

Gross rental income 1 133,607 134,520

Ground rents 2 -782 -374

Service charge income on principal basis 3 18,445 18,608

Service charge expenses on principal basis 3 -21,235 -19,661

Other real estate related operating expenses 4 -6,283 -6,860

Net rental income 123,752 126,233

Administrative expenses 5 -8,984 -7,607

Personnel expenses 6 -9,159 -6,793

Depreciation and amortisation 7 -30,440 -28,075

Management fee income 8 3,372 3,134

Other income 9 735 941

Other expenses 10 -433 -654

Net other income 302 287

Investment property disposal proceeds 11 15,161 49,931

Carrying value of investment property disposal 11 -13,661 -40,141

Profit on disposal of investment property 1,500 9,790

Net operating profit before financing activities 80,343 96,969

Share of the profit of associates 12 7,478 8,760

Net financing costs 13 -69,136 -76,006

Profit before tax 18,685 29,723

Income tax expense 14 -3,190 -5,232

Deferred income tax expense 14 634 683

Profit for the period 16,129 25,174

Attributable to equity holders of the parent 16,069 25,078

Attributable to minority interest 15 60 96

Basic (=diluted) earnings per share (EUR) 16 0.52 0.80

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Consolidated Balance Sheet as at 31 December 2009

ASSETS

TEUR Notes 31.12.2009 31.12.2008

Investment property 17 2,024,225 2,022,920

Office furniture and equipment 18 567 641

Investments in associates 19 28,946 18,708

Other investments 20 0 241

Intangible assets 22 221 196

Deferred tax assets 14 18,652 13,100

Total non-current assets 2,072,611 2,055,806

Receivables from the sale of property 23 67 19,639

Trade receivables 24 4,500 8,972

Receivables due from related parties 25 86,876 76,377

Income taxes receivable 26 6,079 2,621

Other receivables 27 2,619 2,671

Other current assets 28 1,808 2,247

Cash and cash equivalents 29 38,826 46,417

Total current assets 140,775 158,944

Total assets 2,213,386 2,214,750

Consolidated Financial Statements � 73

EQUITY AND LIABILITIES

TEUR Notes 31.12.2009 31.12.2008

Equity

Issued capital 30 31,350 31,350

Share premium 30 530,747 528,450

Hedging and translation reserve 30 -56,489 -39,521

Reserve from treasury shares 30 0 -4,977

Reserve from first-time application of IFRS 30 -2,373 -2,373

Other reserves 30 1,136 1,136

Retained earnings 30 24,857 18,193

Total shareholders' equity 529,228 532,258

Minority interest 15 1,450 1,537

Total equity 530,678 533,795

Liabilities

Interest-bearing loans and borrowings 31 1,535,582 1,554,752

Deferred tax liabilities 14 9,396 7,431

Derivatives 21 60,052 41,462

Other non-current liabilities 32 0 13

Total non-current liabilities 1,605,030 1,603,658

Interest-bearing loans and borrowings 31 53,272 19,783

Trade payables 33 3,177 34,368

Liabilities to related parties 25 4,020 6,501

Provisions 34 24 34

Income taxes payable 35 4,253 5,299

Other liabilities 36 12,932 11,312

Total current liabilities 77,678 77,297

Total liabilities 1,682,708 1,680,955

Total equity and liabilities 2,213,386 2,214,750

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Consolidated Statement of Cash Flow for the Period ended 31 December 2009

TEUR 2009 2008

Operating activities

Net operating profit before interest and taxes paid 97,765 108,390

Realised gains/losses on disposals -1,500 -9,790

Depreciation and amortisation 30,440 28,075

Movements in receivables, payables and provisions 6,150 3,085

Other non-cash transactions -12,512 -9,356

Cash generated from operations 120,343 120,404

Interest paid -77,888 -85,347

Interest received 3,947 7,180

Income taxes paid -7,694 -5,049

Cash flow from operating activities 38,708 37,188

Investing activities

Proceeds from sale of investment property 34,176 26,381

Proceeds from sale of development property -1,191 -4,245

Dividends received 0 248

Acquisition of investment property -62,505 -208,069

Capital expenditure on investment property -11,723 -5,770

Acquisition/disposal of other investments -2,214 -3,865

Loans on other entities -14,972 -24,492

Acquisition of office furniture and equipment -97 -273

Cash flow from investing activities -58,526 -220,085

Financing activities

Proceeds from other non-current borrowings 49,469 144,316

Repurchase/disposal of own shares 7,311 -4,977

Repayment of borrowings -35,148 -23,579

Dividends paid -9,405 -51,727

Cash flow from financing activities 12,227 64,033

Net increase in cash and cash equivalents -7,591 -118,864

Cash and cash equivalents at 1 January 46,417 165,281

Cash and cash equivalents at 31 December 38,826 46,417


Consolidated Statement of Changes in Equity for the Financial Year 2009

Reserve fromIssued Share Reserve Reserve for first-time Other Retained Minority Totalcapital premium for treasury cash flow application reserves earnings interest

TEUR shares hedges of IFRS

Status as at 31 December 2007 31,350 528,450 0 7,769 -2,373 1,136 44,842 1,574 612,748

Dividends 2007 -51,727 -51,727Profit for the period 25,078 96 25,174Losses from cash flow hedges* -41,258 -41,258Losses from cash flow hedges from associates* -6,032 -6,032Repurchase of own shares -4,977 -4,977Repayment of minority interest -133 -133Status as at 31 December 2008 31,350 528,450 -4,977 -39,521 -2,373 1,136 18,193 1,537 533,795

Profit for the period 16,069 60 16,129Losses from cash flow hedges* -16,005 -16,005Losses from cash flow hedges from associates* -963 -963Comprehensive Income -16,968 16,069 60 -838

Dividends 2008 -9,405 0 -9,405Purchase of own shares -2,270 -2,270Disposal of own shares 2,297 7,247 9,544Repayment of minority interest -148 -148Status as at 31 December 2009 31,350 530,747 0 -56,489 -2,373 1,136 24,857 1,449 530,678* net of deferred tax

Statement of Comprehensive Income for the Period from 1 January to 31 December 2009

TEUR 2009 2008

Fair value of hedge instrumentsCash flow hedges -16,005 -41,258Cash flow hedges from associates -963 -6,032

Recorded directly in equity -16,968 -47,290Profit for the period 16,129 25,174

Comprehensive income -839 -22,116Equity holders of the parent -899 -22,212Minority interest 60 96

Consolidated Financial Statements � 75 Ove

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76 � Notes

Notes to the Consolidated Financial Statements

Information on the company 77

Accounting policies and procedures 77

Principles underlying the consolidated financial statements 79

Accounting and measurement principles 81

Notes to the income statement 85

Notes to the balance sheet 91

Segment reporting 107

Reporting on risk management 110

Contingencies and other financial commitments 111

Related party disclosures 112

Legal transactions with companies with significant influence 113

Other information 120

Auditor's Report 123

Notes � 77

Application of International Financial Reporting StandardsUnder European Parliament and European Council Direc-tive (EC) 1606/2002 on the application of international accounting standards (EU Directive) of 19 July 2002, allcapital-market oriented companies with registered officesin the European Union are required to prepare their con-solidated financial statements in accordance with Inter-national Financial Reporting Standards (IFRS) for financialyears beginning on or after 1 January 2005.

DIC Asset AG has prepared its consolidated financial state-ments in accordance with IFRS and the supplementaryregulations under § 315a Para. 1 HGB (Handelsgesetzbuch– German Commercial Code) to be applied in accordancewith German commercial law.

The accounting and valuation methods applied in the dis-closures and the Notes to the consolidated financial state-ments in financial year 2009 are based on the same accounting and valuation methods applied in the consol-idated financial statements in financial year 2008. The annual financial statements for the companies included inthe consolidated financial statements are based on uni-form accounting and measurement principles. Valuationsbased on tax regulations are not incorporated into theconsolidated financial statements. The separate financialstatements of the consolidated companies were preparedas at the reporting date of the consolidated financial state-ments.

The consolidated accounts were prepared in Euro. Unlessnoted otherwise, all amounts are expressed in thousandsof Euro (TEUR). Figures may be rounded to the nearest EUR1,000.

DIC Asset AG (the “company”), its subsidiaries and its pro-portionately consolidated joint ventures (“DIC Asset”), areactive in the area of asset and portfolio management.

Shares in the company are listed in the Prime Standardsegment of the Frankfurt Stock Exchange and the stockexchanges in Munich, Düsseldorf, Berlin-Bremen, Ham-burg, Stuttgart and Hanover.

DIC Asset AG, which is entered in the commercial registerof the District Court of Frankfurt am Main (HRB 57679), hasits registered office in Frankfurt am Main, EschersheimerLandstr. 223.

The Supervisory Board is expected to approve the publi-cation of the consolidated financial statements on 3 March2010.

Information on the company Accounting policies and procedures

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financial year 2009, or which have not yet been recognisedby the EU.

The IASB has published a series of additional standards,which – just like the above-mentioned standards, have nomaterial impact on the consolidated financial statementsof DIC.

The amendments to IAS 1 relate to the presentation of thenet assets, financial position and results of operations forIFRS-based financial statements. Accordingly, a consoli-dated statement of comprehensive income is now pre-sented, and the consolidated statement of changes in

The expense from the amortisation of processing fees aris-ing in connection with financial liabilities (TEUR 1,260 /previous year TEUR 1,001) was reclassified from adminis-trative expenses to interest expense because of its quasi-interest nature.

The previous year’s figures were corrected accordingly.

Effects of new pronouncementsThe International Accounting Standards Board (IASB) andthe International Financial Reporting Interpretations Com-mittee (IFRIC) have adopted additional standards and in-terpretations whose application is not yet required for

The income statement was prepared using the cost-of-sales method, following the plan suggested by the Euro-pean Public Real Estate Association (EPRA).

For purposes of clarity, individual items have been sum-marised in the income statement and on the balancesheet. An explanation is provided in the notes. In accor-dance with IAS 1 (Presentation of Financial Statements),balance sheet reporting distinguishes between non-cur-rent and current liabilities. Liabilities and provisions areconsidered to be current if they mature within one year.

The consolidated financial statements for financial year2009 have been prepared in accordance with the IFRS asimplemented by the European Community. DIC takes intoaccount all of the International Accounting StandardsBoard (IASB) standards and interpretations in force as at31 December 2009.

Changes in the presentationIn accordance with the EPRA Best Practices Recommen-dations in force since July 2009, we have made changesto the way in which items are shown in the income state-ment.

The changes relate to the following matters:

The costs of properties standing empty (TEUR 2,824/previous year TEUR 2,974), which were previously reportedin the expenses for operating and ancillary costs, were reclassified in the item other property-related expenses inaccordance with the recommendations.

Standard or Interpretation Obligatory applicationfor financial years beginning on or after

IFRIC 12 “Service Concession Arrangements“ 30 March 2009

IAS 27 “Consolidated and Separate Financial Statements”(revised 2008) 1 July 2009

IFRS 3 “Business Combinations“(revised 2008) 1 July 2009

Changes to IAS 39 “Financial Instruments: Recognition and Measurement“,Eligible hedged items 1 July 2009

IFRIC 16 “Hedges of net Investment in a Foreign Operation“ 1 July 2009

IFRIC 15 “Agreements for the Construction of Real Estate“ 1 January 2010

IFRIC 17 “Distributions of Non-cash Assets to Owners“ 31 October 2009

IFRIC 18 “Transfer of Assets from Customers“ 31 October 2009

IFRS 1 “First-time Adoption of International Financial Reporting IFRS“(revised 2008) 31 December 2009

Changes to IFRS 1 “First-time Adoption of International Financial Reporting IFRS“Additional Exemptions for First-time Adopters 1 January 2010

IFRS 9 “Financial Instruments”Phase 1: Classification and Valuation 1 January 2013

Changes to IAS 23 “Borrowing Costs“Removal of the Option of immediately recognising borrowing costs as an expense 1 January 2009

Changes to IAS 24 “Related Party Disclosures”Exceptions to the disclosure requirements 1 January 2011

Changes to IAS 32 “Financial Instruments: Presentation“Classification of Rights Issues 1 February 2010

IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments 1 July 2010

78 � Notes

Principles underlying the consolidated financial statements

the companies in question, normally through a 50% orgreater interest. Subsidiaries are consolidated from thedate on which the possibility of control exists, and ends ifthere is no more possibility of control.

Joint ventures in accordance with IAS 31 (Interests in JointVentures) are proportionately consolidated in accordancewith the interest held in the joint ventures.

In contrast, participations in which DIC Asset AG exercisessignificant influence but not joint management – on thebasis of an interest of between 20% and 50% – are valuedusing the equity method (associates). For holdings valuedunder the equity method, costs are increased or reducedannually in the amount of the corresponding change inshareholder's equity of the equity holding of DIC Asset AGin accordance with IAS 28.

During initial consolidation of holdings under the equitymethod, negative goodwill arising from the initial consol-idation is treated in accordance with the principles of fullconsolidation. Profits and losses resulting from trans ac-tions between Group companies and associates are elim-inated in accordance with the Group holdings in the associate.

equity is shown as a separate component of the financialstatements. The statement of comprehensive incomecomprises the consolidated profit and loss and other in-come corresponding to income and expenses recognisedunder equity.

The amendments to IAS 23 now requiring capitalisationof borrowing costs do not impact the assets, financial position and results of operations since the Group has already exercised the previous option.

IFRS 8 replaces the previous provisions of IAS 14 on seg-ment reporting. The main amendment relates to the defi-nition of the segments which follows the reporting struc-ture used internally by decision-makers (managementapproach). Since we have already followed the manage-ment approach in previous years, no change is made tosegment reporting in the consolidated financial state-ments.

Consolidation principlesCapital is consolidated in accordance with IFRS 3, “Busi-ness Combinations”, by offsetting the book values of hold-ings against the proportional revalued equity of sub-sidiaries on the date of their acquisition. Assets andliabilities are recognised at their fair values. In accordancewith IFRS 3, goodwill arising from business combinationsis no longer amortised, but is subject to an annual reviewfor impairment.

Negative goodwill resulting from the review is recognisedimmediately on the income statement. Undisclosed accruals and provisions and undisclosed liabilities are car-ried forward during subsequent consolidation in accor-dance with the corresponding assets and liabilities.

Intragroup profits and losses, sales, expenses and revenueand intragroup receivables and payables are eliminated.In the DIC Asset AG Group, trade payables and accruals arerecorded at customary market conditions. The effects onincome tax of consolidation processes affecting incomeare accounted for and deferred taxes are recognised. Jointventures are consolidated on a proportional basis usingthe same principles.

The consolidated financial statements include the trans-actions of subsidiaries of which DIC Asset AG holds a con-trolling interest, either directly or indirectly, or if, becauseof its economic control, it benefits from the activities of

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The joint ventures apply the same accounting and meas-urement principles as DIC Asset AG.

DIC Asset holds shares in 11 companies (previous year 11)for strategic reasons, which are included in the financialstatements of the DIC Asset Group using the equitymethod. The following table shows a summary of the aggregated income and expenses as well as the assets andliabilities of holdings reported under the equity methodin the DIC Asset consolidated financial statements.

In October 2009, DIC Asset AG acquired the remainingshare of 25.1% in DIC ONSITE GmbH from FAY Asset Manage ment Holding AG. As a result, DIC Asset AG has a100% stake in DIC ONSITE GmbH. In December 2009, DICAsset AG exercised the call option agreed in the contractdated 17 January 2003 with Goldbeck Immobilien GmbH.As a result, it increased its stake in Gewerbepark Langen-feld West 3 GmbH & Co.KG, Bielefeld from the previous93.2% to 99.2%.

As a result of their liquidation in 2009, the companiesDeutsche Immobilien Chancen Objekt Ulm 1 GmbH & Co.KG, Deutsche Immobilien Chancen Objekt Ulm 2 GmbH &Co. KG and Deutsche Immobilien Chancen Objekt Re-gensburg GmbH & Co. KG, which were already commer-cially inactive, were deconsolidated. Comparability withthe previous year is maintained due to the limited scope ofthe deconsolidation.

The consolidated subsidiaries are listed in the appendix 1to the notes to the consolidated financial statements.

In addition, 22 (previous year: 22) joint ventures are pro-portionally consolidated. These are listed in the appendix2 to the notes.

There are indirect and direct holdings of 20% and 40% in83 companies. These companies were accounted for as associates pursuant to IAS 28.13, using the equity methodand are listed in the appendix 2 to the notes.

DIC MSREF HT Eschborn was merged with DIC MSREF HTPortfolio GmbH with effect from 31 March 2009. The hol-ding in DIC HI Portfolio GmbH and DIC Hamburg PortfolioGmbH with their respective subsidiary companies is theresult of a 1.2% direct holding of DIC Asset AG and an18.8% indirect holding via DIC Opportunistic GmbH.

Scope of consolidation

As at 31 December 2009, in addition to DIC Asset AG, atotal of 123 (previous year 135) subsidiaries were includedin the consolidated financial statements. Subsidiaries arecompanies in which DIC Asset AG, as parent company, exercises a controlling influence in the form of a direct orindirect majority of the voting rights in the company.

A total of 12 inactive subsidiaries were liquidated in the2009 financial year.

22 (previous year 22) joint ventures were proportionatelyconsolidated in accordance with IAS 31. The joint venturesin the DIC Asset Group consist of two parties, which eithercarry out activities jointly or administer assets under jointmanagement or administer jointly managed units.

The joint ventures had the following effect on the assetsand liabilities and the income and expenses of the Group:

TEUR 2009 2008

Current assets 12,813 4,087

Non-current assets 109,525 116,356

Current liabilities 37,081 5,699

Long-term liabilities 61,839 94,618

Net assets 23,418 20,126

Income 9,951 10,350

Expenses 7,874 8,469

Annual profit 2,078 1,881

TEUR 2009 2008

Assets 1,326,548 1,264,564

Liabilities 1,183,288 1,197,884

Net assets 143,260 66,680

Income 144,556 131,184

Expenses 117,789 113,988

Annual profit 26,767 17,196

80 � Notes

The property of the company is treated as a financial investment, since property trading itself is not consideredto be part of regular business activity. The fair value ofthese properties is indicated in the notes to the balancesheet. It is determined in accordance with internationallyrecognised evaluation methods, e.g. the discounted cash-flow method, or derived from available sales contract offers and/or from the current market price of compara-ble properties.

Plant and equipmentProperty, plant and equipment are recorded at cost lessdepreciation. Debt costs are not recognised as part ofcosts in equity. Property, plant and equipment are depre-ciated on a straight-line basis. The useful life of property,plant and equipment is normally between three and 13years.

InvestmentsHoldings measured under the equity method are recog-nised at their proportional equity using the amortised costmethod.

“Available-for-sale” interests are included, and measuredat fair value, provided this value can be determined reli-ably. If no such value is available, they are recognised atcost.

Sales and other operating incomeSales from letting and leasing as well as income from prop-erty management are realised, after deducting any reductions in income, in line with the tenancies, if the pay-ments are fixed by contract or can be reliably determinedand settlement of the related claims is likely.

Income from the sale of real estateThe realisation of income from sale transactions (e.g. investment property) is recognised at the time of transferof risk, that is, at the time of the transfer of possession,rights and obligations, rather than at the time of entry intothe property register, or when the service is provided, lessdiscounts and rebates.

This does not apply to contract revenue resulting from theapplication of the percentage-of-completion methodwhen certain development projects are sold.

Real estate held as a financial investmentInvestment property is accounted for at cost less depreci-ation. Where they can be assigned directly to the con-struction or acquisition of a qualifying asset, debt costs arecapitalised over the period during which all work is essentially concluded in order to prepare the qualifyingasset for its intended use or sale. Otherwise, debt costs arerecorded directly under expenses. The rate of debt coststotals 2.58% during the year under review. Land is not de-preciated. Buildings are depreciated on a straight-linebasis over their useful lives as follows. The following use-ful lives are assumed when depreciating buildings:

Accounting and measurement principles

Useful lifein 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

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Share-based paymentsShare price oriented compensation paid in the Group isreported in line with IFRS 2 “Share-based Payments”. The“virtual share options” are share-based remunerationtransactions with cash compensation, which are measuredat fair value each balance sheet date. Remuneration ex-pense accrues proportionally taking account of the serv-ices provided pro rata temporis during the waiting periodand is recorded in the income statement until it becomesnon-forfeitable.

This estimate is based on the Black-Scholes option pricingmodel.

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

Financial liabilities are classified as current liabilities if theliability will be settled within twelve months of the bal-ance sheet date.

Impairments in receivables are partly taken into accountusing impairment accounts. The decision on whether a default risk is to be depicted via an impairment accountor a direct reduction in the receivable depends on the reliability of the assessment of the risk situation.

Cash and cash equivalentsCash and cash equivalents includes cash and cash at banksthat is available within three months as well as term de-posits that is available within three months.

ProvisionsProvisions take into account all recognisable obligationsas at the balance sheet date that are based on past eventsand for which the amount or final maturity is uncertain.Provisions are recognised only on the basis of a legal orconstructive obligation to a third party, the fulfilment ofwhich makes an outflow of funds probable, to the extentthat a reliable estimate can be made of the amount of theobligation.

Provisions are recognised at the amounts required to clearthe obligations and are not offset against reimbursementrights.

Intangible assetsIntangible assets are recorded at cost less depreciation. Allintangible assets have a specific useful life and are thusamortised. Business software is amortised over threeyears; the useful life of concessions and other rights is nor-mally 10 years.

Receivables and other assetsReceivables and other assets, except for derivative finan-cial instruments, are measured at cost less depreciation.

If there is any doubt as to whether receivables are recov-erable, they are recognised at their lower realisableamount. In addition to any individual impairment chargesthat may be required, in the case of identifiable risks,lumped individual impairment charges are created fromthe general credit risk. In the case of trade receivables, it isassumed that the nominal amount less impairmentcharges corresponds to the fair value.

82 � Notes

Changes to fair values of derivative instruments, which donot fulfil the criteria of a hedging relationship (hedge accounting), are recorded directly in the income state-ment and recognised as profit or loss.

Movements in the reserve for cash flow hedges in equityare presented in the statement of changes in equity and inthe list of recorded income and expenses.

LeasingLeases where a material proportion of the benefit and therisks of owning the leased property remain with the les-sor are classified as operating leases. Payments receivedor made under an operating lease are recorded in the in-come statement over the term of the lease. Tenancy agree-ments for properties are regarded as leases in this sense.

Leases where the lessee bears the material risks and thebenefits arising from the leased property are classified asfinance leases. The Group does not enter into this type oflease.

Deferred taxesDeferred taxes arising from temporary differences be-tween IFRS accounts and the tax balance sheets of theseparate companies and from consolidation are recog-nised separately. Deferred tax assets also include tax reduction claims resulting from the anticipated use of existing tax loss carryforwards in subsequent years. Theyare capitalised if the realisation of these loss carryforwardsis reasonably certain.

Deferred taxes are calculated on the basis of tax rates,which apply or will apply at the date they are realised.

In financial 2009, the corporate tax rate totalled 15% plusthe solidarity surcharge of 5.5% of the corporate taxcharge. This resulted in an actual corporate tax rate of15.8%. Including trade tax of 16.1%, the total tax rateequalled 31.9%.

Derivative financial instrumentsDerivative financial instruments are recognised as assetsor liabilities. Irrespective of their purpose, all derivative financial instruments are measured at fair value. They areinitially accounted for on their date of origin. As a basicprinciple, the Group classifies derivative financial instru-ments as a hedge against the risks of fluctuations in pay-ment flows from future transactions which are highly likelyto occur (cash flow hedge).

On conclusion of the transaction, the Group documentsthe hedging relationship between the hedging instru-ment and the underlying transaction, the aim of the riskmanagement and the underlying strategy. In addition, theassessment of whether the derivatives used in the hedg-ing relationship compensate the changes in fair value orthe cash flows of the underlying transactions very effec-tively is documented at the beginning of the hedging relationship and continuously thereafter.

The effective part of changes in the market value of de-rivatives, which are destined to hedge payment streamsof fixed obligations and constitute qualified hedges (IAS39.88) are, in principle, recorded under equity with no ef-fect on income. On the other hand, the ineffective part ofchanges in value is recorded directly in the income state-ment. Amounts recorded in equity are reclassified in theincome statement and recognised as income or expendi-ture in the period in which the hedged underlying trans-action affects earnings.

When a hedging instrument expires, is sold or the hedgingtransaction no longer fulfils the criteria for hedge account -ing, the accumulated profit or loss remains in equity andis only recorded in the income statement when the un-derlying transaction occurs. If the future transaction is nolonger expected to occur, the accumulated profits orlosses, which were recorded directly in equity, are to be reclassified in the income statement immediately.

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Assumptions underlying accounting estimatesAssumptions and estimates must be made in the consoli-dated financial statements, which may affect the amountand presentation of the reported assets and liabilities, theincome and expenses, as well as the contingent liabilities.The assumptions and estimates relate to:

– the determination of the economic useful lives of assetsheld as fixed assets,

– the calculation of discounted cash flows as well as thediscounting and capitalisation interest rates used in im-pairment tests,

– the calculation of the fair values and present values ofminimum lease payments,

– the reporting and valuation of provisions as well as

– the future usability of tax loss carryforwards.

All assumptions and estimates are constantly re-evaluatedand are based on past experiences and other factors in-cluding expectations with regard to future events.

Actual values may deviate from the assumptions madeand estimates.

Currency conversionThe functional currency of all consolidated subsidiariesand joint ventures is the Euro. Foreign-currency trans ac-tions are converted at the exchange rate on the day of thetransaction. Profits and losses from the settlement of suchtransactions and from the conversion of monetary assetsand liabilities as at the balance sheet date are included inthe income statement.

Balance sheet items expressed in foreign currencies arevalued at the exchange rate on the balance sheet date.Foreign-currency losses of TEUR -206 (previous year: for-eign-currency losses of TEUR -464) are recorded in otheroperating expenses.

84 � Notes

Notes to the income statement

4. Other property-related operating expensesOther property-related expenses fell by TEUR 577 (8.4%)from TEUR 6,860 to TEUR 6,283 in financial year 2009. Thistrend is primarily attributable to the first-time capitalisa-tion of external brokers’ leasing commission amountingto TEUR 556, which accrues when new tenancy agree-ments are concluded. This is countered by an increase ofTEUR 324 to TEUR 1,557 in maintenance and repairs as wellas insurance payments received of TEUR 449. Vacancycosts totalled TEUR 2,963 in the financial year (previousyear TEUR 2,945).

5. Administrative expensesCompared with the previous year administrative expensesare made up as follows:

1. Rental incomeConsolidated rental income fell by TEUR 913 (1%) fromTEUR 134,520 to TEUR 133,607 in the financial year 2009.This fall results, among other things, from the sale of prop-erties at the end of 2008 and the beginning of 2009, fromtenancy agreements not being extended at the end of2008 or, in some cases, being concluded at lower averagerents and from the termination of the tenancy agreementwith the Frankfurt stock exchange as a result of its reloca-tion. The rental income attributable to these circum-stances amounts to approximately TEUR 5,943. Throughthe addition of three properties from the Value6 portfolioto the portfolio, the 12-month occupation (for the firsttime) of the DIC 26 portfolio and new tenancy agreementsfor the Zeil property from the Fraspa portfolio, rental in-come of TEUR 4,991 was achieved, which virtually offsetthe above-mentioned reduction.

2. Ground rentsThese are ground rents for the Odin portfolio propertiesin Munich Grünwald (TEUR 320), Duisburg (TEUR 60) andHamburg (TEUR 67), the Augusta portfolio properties inKonstanz (TEUR 101), Ludwigshafen (TEUR 56) and Edin-gen-Neckarhausen (TEUR 18) as well as for the Value6portfolio property in Moers (TEUR 113), the RMN portfolioproperty in Hemsbach (TEUR 35) and for the Ruhr portfo-lio’s Stadtbadgalerie property in Bochum (TEUR 12).

3. Income and expense from operating and ancillarycosts

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

The income from operating and ancillary costs assignedto tenants fell by TEUR 163 (1%), the expenses from oper-ating and ancillary costs rose by TEUR 1,574 (8%). With theexception of one property in the Augusta Portfolio, rentalincome was realised in the case of all investment property.Operating expenses directly attributable to the one prop-erty were not significant in the financial year.

TEUR 2009 2008

Legal and consulting fees 2,444 1,541

Rental and ancillary costs 882 765

External services 735 626

Accounting and administration fee 687 491

Ancillary financing costs 586 600

Automobile costs 518 447

Auditing costs 517 579

Advertising 453 610

Insurance/contributions and taxes 256 200

EDP costs 250 287

Remuneration of Supervisory Board 204 204

Rental and leasing costs for BGA 173 97

Recruitment 85 372

Other 1,194 788

Total 8,984 7,607

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6. Personnel expensesPersonnel expenses are composed of the wages andsalaries of the staff of DIC Asset AG and DIC ONSITE GmbHof TEUR 8,124, as well as the related social security taxes ofTEUR 1,035.

The causes of the increase in personnel expenses of TEUR2,366 from TEUR 6,793 to TEUR 9,159 are to be found inthe further increase in staff numbers and in the provisionsfor bonuses and share price oriented remuneration.

The number of employees at year end has risen from 99employees in 2008 to 112 employees in 2009. On averageover the year, 18 staff were employed at DIC Asset AG and88 at DIC ONSITE.

Details of the Board of Directors’ remuneration pursuantto § 314 Para. 1 No. 6 Letter a Sentences 5 to 9 HGB (Ger-man Commercial Code) are given in the Statement on Corporate Governance.

7. Depreciation on intangible assets held as fixed assetsand property, plant and equipment

Depreciation and amortisation primarily affect recognisedreal estate and, to a lesser extent, office furniture andequipment and intangible fixed assets. Amortisation anddepreciation rose by TEUR 2,365 (8%) from TEUR 28,075 toTEUR 30,440 compared with the previous year. This in-crease is based on the inclusion of real estate for the entireyear or virtually the entire year that was acquired during2008 or initially consolidated in 2009.

GmbH; auditors, tax consultants and lawyers in financialyears 2009 and 2008:

The fees for audits of the financial statements relate to theaudit of the consolidated financial statements and the financial statements of DIC Asset AG and its affiliates pre-scribed by law.

The fees for other assurance activities relate to the auditreview of the interim financial statements in accordancewith IFRS.

In essence, the fees for tax consultancy services are attrib-utable to the ongoing consultancy services provided inconnection with the preparation of tax returns and thechecking of tax assessments as well as advice on other taxissues.

The expense from the amortisation of processing fees aris-ing in connection with financial liabilities (TEUR 1,260/previous year TEUR 1,001) was reclassified from adminis-trative expenses to interest expense because of its quasi-interest nature. The previous year’s figures were amendedaccordingly.

The increase in legal and consulting fees is primarily con-nected with higher surveyors’ fees for the valuation of thereal estate portfolio required at the balance sheet date ofTEUR 750 (previous year TEUR 207).

Marketing costs primarily include costs for the prepara-tion of reports and presentations, for object marketingand the preparation and publication of the annual report.

In the financial year the company granted compensationof a total of EUR 204,476.10 to members of the Super visoryBoard. Additional details, in particular information in accordance with § 314 para. 1 No. 6 letter (a), are providedin the Statement on Corporate Governance.

The following fees were incurred for the services suppliedby the auditors of the financial statements Rödl & Partner

TEUR 2009 2008

Audits of the financial 442 504

Other assurance activities 75 75

Tax consultancy services 218 219

Legal advice 56 63

Total 791 861

86 � Notes

11. Profit from disposal of investment propertyOn the basis of developments in the market, the Grouphas achieved profits of TEUR 1,500 (previous year TEUR9,790) from the sale of investment property by selectivelydisposing of smaller and more medium-sized properties.

In 2009, the company sold a total of 13 individual proper-ties, of which 9 properties were attributable to the Berlin(TEUR 356) and Fraspa (TEUR 193) portfolios in which thecompany receives 50% of the sales profits and 2 proper-ties from both the Augusta (TEUR 412) and Dolphin (TEUR289) portfolios.

The following were sold among others:– the property at Börsenplatz 1-3, Frankfurt – the Berlin Haus, which consists of 5 properties and was

documented in 2008, from the Berlin portfolio – the individual property at Rheinstraße/Illstr. from the

Berlin portfolio.

Income of TEUR 184 was also generated through the sub-sequent payment of the purchase price by WACO PE & PMA.G. Luxembourg.

Selling costs of TEUR 190 (previous year TEUR 517) wereoffset against the proceeds of sales.

8. Income for management feesThe income relates to property and asset management,leasing and disposition fees charged by DIC Asset AG andDIC ONSITE GmbH to the following consolidated compa-nies:

With the exception of DIC ONSITE GmbH's external cus-tomers, transactions with related parties within the mean-ing of IAS 24.9 are involved.

9. Other operating income

Other operating income primarily contains income fromthe recovery of value-adjusted receivables.

10. Other operating expensesThis item consists chiefly of expenses for training, courierand translation services and other general organisationalexpenses, aperiodic expenses as well as the foreign cur-rency losses of TEUR -206 arising in this year from the valuation on the reporting date of two loans in Swissfrancs (nominal amount as at 31 December 2009 CHF9,098,667.52), taken out in 2003 by the companies Gewer-bepark Langenfeld West 3 GmbH & Co. KG and DIC ObjektFrankfurt 1 GmbH & Co. KG.

TEUR 2009 2008

Deutsche Immobilien Chancen Beteiligungs AG 1,413 1,139

DIC HI Portfolio GmbH 695 549

DIC Hamburg Portfolio GmbH 527 429

DIC MSREF FF Southwest Portfolio GmbH 182 225

DIC MSREF HMDD Portfolio GmbH 138 47

DIC ONSITE GmbH’s external customers 132 313

DIC MSREF Berlin Portfolio GmbH 102 174

DIC MSREF HT Portfolio GmbH 44 44

DIC MSREF Berlin GmbH (ebay) 18 6

DIC MSREF Fraspa Portfolio GmbH 13 33

ARCA 7. Vermögens- und Verwaltungs GmbH 93 132

Hauptpost Erfurt GmbH & Co. KG 0 28

Deutsche Immobilien Chancen Objekt Coburg GmbH 9 15

Deutsche Immobilien Chancen AG & Co. KGaA 6 0

Total 3,372 3,134

TEUR 2009 2008

Income from non-monetary benefits 241 173

Release of provisions 0 237

Insurance compensation 11 89

Other 483 442

Total 735 941

Notes � 87 Ove

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14. Income taxes13. Net financing costsThe item is made up as follows

12. Share of the profit from associatesThis item refers to the interest of DIC Asset AG in the fol-lowing associates accounted for under the equity methodof the profits and losses assumed for the financial year:

Current income taxes affect profits subject to taxation ofconsolidated subsidiaries and DIC Asset AG. The currenttax expense is composed primarily of corporate taxes in-cluding solidarity surcharge (TEUR 1,942) and trade taxeson earnings (TEUR 1,248). On 31 December 2009, DICAsset AG again reports a tax loss carryforward for pur-poses of trade taxes of TEUR 260. Because of the use oftrade tax loss carryforwards, the Group’s parent companyonly accrued current trade tax expenses to a limited extent.

The decrease in expenses for current income taxes is dueprimarily to the taxation of the Group's parent companyDIC Asset AG. The deferred taxes result from timing differ-ences between tax balance sheet values and IFRS balancesheet values and from existing income tax loss carryfor-wards and interest carryforwards under thin cap rules. De-ferred taxes are calculated on the basis of tax rates, whichapply or will apply at the date they are realised. The cor-porate tax rate of 15%, the solidarity surcharge (Solida -ritätszuschlag) of 5.5% and the company-specific trade in-come tax rates are taken into account in calculatingdomestic deferred taxes.

One property from both the DIC Hamburg portfolio andthe DIC MSREF HMDD portfolio were sold by means of notarised agreements dated 28 December 2009 and 18December 2009. Economic ownership of these propertieswill not be transferred to the purchaser until 2010 respec-tively.

TEUR 2009 2008

DIC Main Tor Zweite Beteiligungs GmbH & Co.KG 5,991 5,362

DIC MSREF FF Südwest Portfolio GmbH 1,052 646

DIC MSREF HT Portfolio GmbH 573 547

DIC MSREF HMDD Portfolio GmbH 356 313

DIC Opportunistic GmbH -490 330

DIC Development GmbH -2 -2

DIC GMG GmbH -2 0

DIC MainTor GmbH 0 1,567

DIC Main Tor Verwaltungs GmbH 0 -3

Result from associates 7,478 8,760

Overall, the negative net financing costs reduced by TEUR6,870 (9%) compared with the same period in the previ-ous year.

The reduction in interest expense is directly linked to thelow level of interest rates throughout the year, from whichthe Group has benefited in the case of its variable-rate financing.

The financial results presented include income of TEUR424 (expense for the previous year of TEUR 334) from thevaluation of derivative financial instruments (interest-rateswaps) at fair value.

TEUR 2009 2008

Interest income 5,513 7,003

Interest expense -74,649 -83,009

-69,139 -76,006

TEUR 2009 2008

Current tax expense -3,190 -5,232

Deferred tax income 634 683

Total income tax expense -2,556 -4,549

88 � Notes

Deferred tax income compares with the prior year as fol-lows:

The difference between anticipated tax expense andactual tax expense can be reconciled as follows:

Deferred tax claims and liabilities can be classified into thefollowing issues:

TEUR 2009 2008

Deferred taxes on tax loss carryforwards +2,588 +2,577

Deferred taxes on real estate valuations -1,152 -2,460

Deferred taxes on derivatives -135 +107

Deferred taxes on capitalising “rent-free periods” -480 -55

Deferred taxes on equity transaction costs +37 0

Deferred taxes on other adjustments -224 +514

Total +634 +683

TEUR 31.12.2009 31.12.2008Assets Liabilities Assets Liabilities

Loss carryforwards 8,412 0 5,824 0

Investment properties 336 9,123 238 7,060

Derivative financial instruments 9,537 0 6,663 0

Non-current interest-bearing debt 0 15 0 18

Other 367 258 375 353

Total 18,652 9,396 13,100 7,431

TEUR 2009 2008

Pre-tax Group results 18,685 29,722

Legal tax rate applies (in %) 31.93% 31.93%

Expected tax expense 5,965 9,489

Deviations from tax rate

Effects from differences in levy rates, staggered tariffs, tax-free amounts (trade tax) -132 -276

Difference in deferred tax rate/income tax rate -1,055 -1,326

Tax effects from deviations in the tax assessment base

Effects from Group losses with no effect on taxes 2,396 550

Effects from higher tax depreciation of the real estate portfolio -1,488 -1,004

Effects from the expanded reduction for income from real estate management -2,239 -2,131

Effects from tax results from subsidiaries 0 43

Effects from tax-free sales of properties (95% tax free) 0 -2,771

Effects from non-deductible interest expenses -163 163

Consolidation activity without deferred tax -1,992 -15

Effects from tax loss carryforwards 95 43

Permanent differences 448 611

Other deviations 444 -451

Recognition of deferred taxes 410 1,245

Aperiodic effects -133 379

Actual total tax expense 2,556 4,549

Notes � 89 Ove

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In accordance with the recommendation of the EuropeanPublic Real Estate Association (EPRA), the net asset value(NAV) is calculated as at 31 December 2009 and 31 De-cember 2008 as follows:

As a result of the sale of treasury shares in May 2009, a totalof 31,349,999 shares carried dividend rights as at the 2009balance sheet date.

16. Earnings per share, Net Asset Value (NAV) and NAVper share

In accordance with IAS 33.12, earnings per share are cal-culated from the Group profit after minority interests andthe number of the shares in circulation on an annual av-erage.

The target tax rate to be applied was determined on thebasis of the tax rates that applied in Germany in 2009 and2008. A tax rate of 31.925% was taken as a basis here. Thisis calculated from a nominal corporate tax rate incl. soli-darity surcharge of 15.825% and a nominal trade tax rateof 16.10%. The trade tax rate is based on a levy rate of theCity of Frankfurt of 460%. Since 2008, the trade tax is nolonger deductible from the tax assessment basis. Nominaltax rates thus correspond to the actual tax rates.

If the expanded reduction in trade income can be claimed,the resultant increase in the corporate tax rate is taken intoaccount in the effects of the expanded reduction.

15. Profit allocated to other shareholdersProfits allocated to minority shareholders of TEUR 60 (pre-vious year TEUR 96) were credited to minority interests inequity from the results of the financial year. The completechanges in the profits/losses allocated to minority inter-est can be found in the consolidated statement of changesin equity.

From considerations of materiality, the minority share inpartnerships is not shown as outside capital..

The dividends paid in 2009 and 2008 for the respectiveprevious financial year totalled TEUR 9,405 (EUR 0.30 pershare) and TEUR 51,727 (EUR 1.65 per share).

For 2009, the Board of Directors will propose a dividend inthe amount of TEUR 9,405 (EUR 0.30 per share). The entiredividend will be subject to capital gains tax. This is ex-pected to come to TEUR 2,351. These dividends will not berecorded as a liability in accordance with IAS 10 in theseconsolidated financial statements.

Earnings per share 2009 2008

Group profit for the period after minority interests (EUR) 16,068,859 25,078,333

Weighted average number of shares issued 30,872,029 31,192,545

Basic (= diluted) earnings per share (EUR) 0.52 0.80

TEUR 31.12.2009 31.12.2008

Book value of the real estate 2,024,225 2,022,920

Value difference at fair value -99,811 -95,125

Market value of the interests 36,830 32,739

+/- other assets less other liabilities 126,154 108,340

Net credit liabilities at book value -1,588,854 -1,574,534

Minority interests -1,450 - 1,537

NAV 497,094 492,803

Deferred taxes on the differencebetween fair value/book value 5,336 6,011

NNAV 502,430 498,814

Difference in value as compared to fair value of net credit liabilities -43,298 -27,089

NNNAV 459,132 471,725

Number of shares in millions at the balance sheet date 31.35 30.37

NAV/share 15.86 16.23

NNAV/share 16.03 16.43

NNNAV/share 14.65 15.53

90 � Notes

As at 31 December 2009, costs included interest on debtcapital of TEUR 2,499.

Investment property includes a property worth EUR 1.5million at the year end, which had already been sold bynotarised agreement in December 2009. The economictransfer to the purchaser will only take place during 2010.Owing to the minor nature of this item in respect of thereal estate portfolio, a restructuring pursuant to IAS 5 wasnot carried out.

18. Office furniture and equipment

17. Investment property The fair values of investment property, which are calcu-lated in addition, are based entirely on the findings of theindependent valuer contracted for this purpose, Cushman& Wakefield, which has undertaken a valuation in accor-dance with internationally recognised standards. The calculation of market values is based on a dynamic calcu-lation of their present values, the discounted cash flowmethod. A cash flow period of 10 years is generally taken,at the end of which the property is assumed to be sold.The discounting rate recognised for the valuation com-prises a risk-free rate which can be derived from the current yield on long-term, fixed income federal bondsand a property-specific risk premium which reflects the restricted fungibility of real estate investments in relationto more fungible forms of investment such as equities orbonds.

When carrying out impairment tests on investment prop-erties in accordance with IAS 36, the composite book val-ues for property and buildings are compared with themarket values of the properties determined by surveyors.The comparison is based on gross market values, i.e. ex-cluding transactions costs which may accrue in the eventof the properties actually being sold. In addition, param-eters specific to the company were used when calculatingcomparative values. These parameters take account of thevalue in use of the properties within corporate use. In thisrespect, the important factor is, in particular, planning forthe retention of the property in the Group as well as resultant anticipated cash flows.

An objective capitalisation rate is also calculated in accor-dance with the criteria of IAS 36.A17.

Investment properties are valued at cost when they areadded to the portfolio. Transaction costs are includedwhen they are valued for the first time. The cost model inaccordance with IAS 40.56 is used for subsequent valuations. Here, investment properties are valued in ac-cordance with the provisions of IAS 16, i.e. at cost lessscheduled and unscheduled depreciation as well as appreciation.

Notes to the balance sheet

TEUR 2009 2008

Cost

As at 1 January 2,077,970 1,879,945

Additions resulting from acquisitions 33,550 235,592

Additions resulting fromsubsequent expenditures 11,626 4,290

Disposals 13,980 41,857

As at 31 December 2,109,166 2,077,970

Depreciation

As at 1 January 55,050 28,692

Additions 30,243 27,940

Disposals 352 1,582

As at 31 December 84,941 55,050

Book value 31 December 2,024,225 2,022,920

Book value 1 January 2,022,920 1,851,482

Fair value 1,924,414 1,927,795

TEUR 2009 2008

Costs

As at 1 January 748 526

Additions 64 273

Disposals 0 51

As at 31 December 812 748

Depreciation


Additions 138 112

Disposals 0 51


Book value 31 December 567 641

Book value 1 January 641 480

Notes � 91 Ove

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In principle, contracts for derivative financial instrumentsand financial transactions are only concluded with majorbanks to keep credit risks as low as possible.

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

20. InvestmentsThe investment in ING LPFE Bodenfeld GmbH & Co. KG of5.4% was sold at the end of 2009 in connection with theexercise of the option by ING Real Estate Investment Management Germany GmbH. The resulting sales profitamounted to TEUR 14.

21. Derivative financial instrumentsOnly interest rate swaps are agreed. Within the frameworkof the swap contracts it uses, the Group pays fixed intereston a specific capital sum and in return receives variable in-terest on the same capital sum. These interest-rate swapsoffset the effects of future changes in interest rates on thecash flows of the variable interest-bearing investments.

At the balance sheet date, the following derivative finan-cial instruments were held:

19. Shares in associates

In the third quarter of 2009, the DIC Group acquired theshares of its previous co-investor Morgan Stanley Real Estate Funds for the MainTor project. As a result DIC AssetAG’s minority holding increased from 20% to 40%. Thisshare item includes costs of TEUR 2,469 as well as nega-tive goodwill of TEUR 2,238 reported under the result.

TEUR 2009 2008Equity Book Equity Book

interest value interest value

Interest in:

DIC MainTor Zweite GmbH & Co.KG 40.0% 17,336 20.0% 9,862

DIC MSREF HMDD PortfolioGmbH 20.0% 3,257 20.0% 2,657

DIC MSREF FF SüdwestPortfolio GmbH 20.0% 4,269 20.0% 3,134

DIC MSREF HT Portfolio GmbH 20.0% 3,711 20.0% 2,102

DIC MainTor Verwaltungs GmbH 40.0% 8 40.0% 8

DIC Development GmbH 20.0% 64 20.0% 7

DIC Opportunistic GmbH 20.0% 293 20.0% 866

DIC BW Portfolio GmbH 1.2% 0 1.2% 72

DIC GMG GmbH 20% 8 0% 0

28,946 18,708

The book values of the derivatives are equivalent to theirmarket values.

TEUR 31.12.2009 31.12.2008Nominal Fair Nominal Fairvolume value volume value

Assets

Interest-rate hedge agreements (Swaps) 0 0 0 0

Liabilities

Interest-rate hedge agreements (Swaps) 1,006,368 60,052 982,035 41,462

TEUR 31.12.2009 31.12.2008

Nominal Fair Nominal Fair-volume value volume value

Assets

0 0 0 0

Liabilities

DIC AP Portfolio GmbH 355,100 19,058 373,500 11,869

DIC Objekt Braunschweig GmbH 12,399 405 12,610 149

DIC Objekt Nürnberg GmbH 22,024 1,077 22,024 891

DIC Objekt Hannover GmbH 18,926 925 18,926 765

DIC OP Portfolio GmbH 273,000 19,923 225,000 12,025

DIC VP Portfolio GmbH 86,500 6,712 86,500 5,688

DIC 26 Portfolio GmbH 112,000 5,974 98,000 5,208

DIC RMN Portfolio GmbH 21,794 1,545 37,350 1,631

DIC MSREF Berlin Portfolio GmbH (pro rata) 19,000 175 51,500 495

DIC DP Portfolio GmbH 47,000 3,209 48,000 2,497

DIC Objekt Köln 1 GmbH 8,625 212 8,625 244

DIC RP Portfolio GmbH 30,000 837 0 0

1,006,368 60,052 982,035 41,462

92 � Notes

The amount stated relates to rights to use of a cafeteria inthe business park in Ulm and software.

In addition, receivables in the amount of TEUR 1,223 weredirectly written off during the financial year 2009. Of thisamount, TEUR 1,141 was expensed in the profit and loss account.

As at the balance sheet date, there were no further over-due receivables that were not value-adjusted.

23. Receivables from the sale of real estateThis item includes a remaining purchase price claim fromthe previous year (TEUR 67).

The claim reported in the previous year from the sale ofreal estate mainly related to the Neumarkt property (TEUR18,965).

24. Trade receivablesThese are primarily receivables from operating and ancil-lary costs.

At the end of financial year 2009, impairment chargeswere applied to trade receivables of TEUR 902 (2008: TEUR401).

There have been the following changes to impairmentcharges for receivables:

As at 31 December 2009, negative market values of TEUR50,372 (previous year TEUR 34,367) after the deduction ofdeferred taxes were recorded in equity. The interest-ratehedge agreements run for between one and seven years.

The derivative financial instruments reported for RMN-Portfolio GmbH include one (previous year: two) interestrate hedge contract concluded in 2002, where the rules ofhedge accounting are not applied. Accordingly, the ex-penses and revenues arising from the changes in the fairvalue of the interest-rate hedge agreements are reportedon the income statement (cf. notes under 15. Net financ-ing costs).

In financial year 2009, there were interest rate hedgeagreements with a total nominal volume of TEUR 632,628(previous year TEUR 780,575) at holding companies inwhich DIC Asset AG holds 20% and 40% indirectly and directly, which were concluded to hedge future variablecash flows. The property companies pay fixed-interestrates between 3.175% and 4.55%, which are matchedagainst interest at 1-month or 3-month Euribor rates. Theexpenses and revenues arising from the hedging of futurecash flows are recorded by the property companies underequity with no effect on income. DIC Asset AG records itsshare of the changes recorded directly in the equity of the

associates of TEUR -6,117 (previous year TEUR -5,154) afterdeducting deferred taxes in group equity in accordancewith IAS 28.39.

22. Intangible assets

TEUR 2009 2008

Cost


Additions 84 0

Disposals 0 0


Amortisation


Additions 59 33

Disposals 0 0


Book value 31 December 221 196

Book value 1 January 196 229

TEUR 2009 2008


Additions 632 537

Use 72 130

Release 59 6


Notes � 93 Ove

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25. Receivables from related parties

Relations with related parties are described in detail under“Notes on related parties”. The value shown in the balancesheet relates to:

TEUR 31.12.2009 31.12.2008

Receiv- Liabilities Receiv- Liabilitiesables ables

Deutsche Immobilien Chancen AG & Co. KGaA a) 20,236 0 19,163 0

DIC Opportunistic GmbH b) 21,427 0 21,672 0

DIC MSREF Berlin Portfolio GmbH c) 2,447 0 2,352 1,750

MSREF Sparks B.V. a) 781 0 737 0

DIC MSREF HMDD Portfolio GmbH b) 1,538 56 1,665 0

DIC MSREF FF Südwest GmbH b) 1,187 0 1,185 0

DIC Hamburg Portfolio GmbH b) 12,051 0 8,342 81

DIC MSREF Frankfurt Portfolio GmbH c) 5,241 0 5,281 0

DIC MainTor GmbH b) 108 0 104 0

DIC MSREF HT Portfolio GmbH b) 647 428 1,629 0

MSREF V Lupine B.V. a) 0 0 0 0

Deutsche Immobilien Chancen Beteiligungs AG a) 808 0 421 400

DIC MSREF Berlin GmbH c) 864 0 766 300

DIC Capital Partners (Europe) GmbH a) 0 26 0 0

DIC HI Portfolio GmbH b) 7,101 1 616 0

DIC Projekt Frankfurt 1 GmbH & Co. KG a) 0 106 9 114

MSREF V Daffodil Holding B.V. a) 0 909 2 792

MSREF Quick GmbH & Co. Verwaltungs KG a) 0 2,443 0 2,315

DIC Projektentwicklung GmbH & Co. KG a) 0 21 39 172

MainTor Zweite Beteiligungs KG b) 12,379 8 12,248 0

Fay Asset Management Holding GmbH b) 0 0 0 150

Other 61 22 146 427

Total 86,876 4,020 76,377 6,501

94 � Notes

a) Related party under IAS 24.9a(ii)b) Related party under IAS 24.9bc) Related party under IAS 24.9c

– if it is necessary to grant holders or creditors of theconvertible and/or option bonds and/or participa-tion rights issued by the company or its direct or in-direct majority-interest companies subscriptionrights to new shares in the amount that they wouldbe entitled to after exercise of their conversion or op-tion rights or after fulfilment of the conversion obli-gation;

– if shares are issued against contributions in kind, par-ticularly as part of the acquisition of or merger withcompanies or parts of companies or the acquisitionof interests in companies;

– if the shares of the company are issued against cashcontributions and the issue price per share is not sig-nificantly lower than the stock exchange price of pre-viously issued shares with the same terms at the timeof the issue of the shares. In these cases, however, theexclusion of subscription rights can only take place ifthe number of the shares issued in this way togetherwith the number of treasury shares that were soldduring the life of this authorisation under the exclu-sion of subscription rights in accordance with § 186para. 3 sentence 4 AktG, and the number of sharesthat can be created through the exercise of optionand/or conversion rights or the fulfilment of conver-sion obligations from option and/or conversiondebentures and/or participation rights that were issued during the life of this authorisation under theexclusion 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 be-comes effective or at the time of the issue of the newshares.

26. Receivables from income taxesThe figure reported relates to imputable taxes and corpo-rate tax reclaims.

27. Other receivables

28. Other assetsThis item includes prepaid ground rents TEUR 1,328 (pre-vious year: TEUR 1,676) and other costs paid in advance.

29. Bank balances and cash on handThe bank balances are available for use by the companyand are subject to no restrictions.

30. Equity

a. Subscribed capitalThe subscribed capital of the parent company DICAsset AG was TEUR 31,350 as at the balance sheet date.It consists of 31,349,999 bearer shares in the form ofno-par shares, each of which represents an interest inthe capital stock of EUR 1.00. There are no other classesof shares. All shares have the same rights and obliga-tions. Each share gives entitlement to one vote at theGeneral Shareholders' Meeting.

b. Authorised capitalWith the resolution of the general shareholders' meet-ing of 6 June 2007, the Board of Directors was autho-rised to increase the company’s share capital by a max-imum of EUR 14,250,000, with the approval of theSupervisory Board, up to 5 June 2012 through one ormore issues of new bearer shares against cash consid-eration and/or contributions in kind (authorised capi-tal).

Shareholders are to be granted subscription rightshere. The new shares can be accepted by one or morefinancial institutions specified by the Board of Direc-tors, subject to the obligation that they offer them tothe shareholders (indirect subscription right). TheBoard of Directors is, however, authorised to excludeshareholders’ subscription rights with the approval ofthe Supervisory Board,

– to compensate for fractional amounts;

TEUR 2009 2008

Interest receivables 0 492

Deposits 1,424 762

Value added tax 241 575

"Rent-free period" receivables 665 350

Creditors with debit balances 153 70

Other 136 422

2,619 2,671

Notes � 95 Ove

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would have such a right as a shareholder after exercis-ing the option rights or the conversion rights or fulfill-ing the option obligations or the conversion obliga-tions. The Board of Directors is also authorised with theconsent of the Supervisory Board to completely ex-clude the subscription rights of shareholders for bondswhich are issued with option rights and/or conversionrights and/or option obligations and/or conversion ob-ligations which are issued in exchange for payment ofcash to the extent that the Board of Directors comes tothe conclusion after a proper examination that the is-suing price of the bonds is not materially lower thantheir hypothetical market value calculated on the basisof recognised, particularly financial mathematicalmethods. This authorisation to exclude the subscrip-tion right applies to bonds which are issued with option rights and/or conversion rights or option obli-gations and/or conversion obligations which includean option and/or conversion right or an option obliga-tion and/or conversion obligation for shares repre-senting a proportionate amount of the share capitalwhich in aggregate cannot exceed 10% of the sharecapital either at the time the issue takes effect or at thetime the above authorisation is exercised, whichevervalue is lower. The following will be counted againstthe above mentioned 10% limit:

– both new shares issued from authorised capital ex-cluding the subscription right under § 186 para. 3sentence 4 AktG during the term of this authorisationup to the issue in accordance with § 186 para. 3 sen-tence 4 AktG without subscription rights of bondswith option and/or conversion rights or obligations,

by using Authorisation I and Authorisation II. The Bondscan also be issued in the legal currency of an OECDcountry other than euros, subject to the limit of the cor-responding value in euros. They may also be issued bya group company of DIC Asset AG within the meaningof § 18 AktG in which DIC Asset AG directly or indirectlyholds 100% of the share capital. In this event, the Boardof Directors is authorised, with the consent of the Supervisory Board, to assume the guarantee for thebonds on behalf of the company and to grant optionsand conversion rights or obligations on bearer shares inDIC Asset AG to holders of bonds with warrants and orconvertible bonds or to impose them upon them.

The statutory subscription right is granted to the share-holders in such a manner that the Bonds are acceptedby a financial institution or a syndicate of financial in-stitutions under the obligation to offer the bonds to theshareholders. If the bonds are issued by a group com-pany of DIC Asset AG within the meaning of § 18 AktGin which DIC Asset AG directly or indirectly holds 100%of the share capital, the company must ensure thegrant of the statutory subscription right for the share-holders of DIC Asset AG in accordance with the preceding sentence. The Board of Directors is autho-rised, however, with the consent of the SupervisoryBoard to exclude fractional amounts for the share-holders resulting from the proportionate subscriptionright and to also exclude the subscription right to theextent that this is necessary in order for the holders ofpreviously issued option rights or conversion rights orobligations to exercise options or to convert to begranted a subscription right to the extent to which they

The Board of Directors is authorised, with the approvalof the Supervisory Board, to determine the content ofthe share rights, the details of the capital increase aswell as the conditions of the share issue, in particularthe amount of the issue.

Following a partial drawdown through the resolutionof the Supervisory Board and the Board of Directors on19 November 2007, the authorised capital amounts toEUR 11,400,001.00 on 31 December 2009.

c. Contingent capitalThe Board of Directors is authorised by two resolutionsby the General Shareholders’ Meeting on 14 May 2008to issue, with the consent of the Supervisory Board,bearer bonds with warrants or convertible bonds or acombination of these instruments (together, "bonds")on one or more occasions up to 13 May 2013 in a totalnominal amount of up to EUR 250,000,000.00 and togrant option rights to holders of bonds warrants orconversion rights for bearer shares in the company rep-resenting a proportionate amount of the share capitalof up to EUR 7,837,499.00 in total to holders of conver-sion bonds subject to the precise terms of the option orconvertible bond conditions (“Authorisation I” and “Au-thorisation II”). Bonds with option rights and/or con-version rights or obligations, which were issued on thebasis of the other authorisation by the General Share-holders' Meeting on 14 May 2008, are to be counted towards the above mentioned total of up to EUR250,000,000.00, so that this total nominal amount of upto EUR 250,000,000.00 can only be used once in total

96 � Notes

– When issuing bonds, which grant an option right butdo not establish a duty to exercise the option, the option price corresponds to 125% (Authorisation I)or 130% (Authorisation II) of the volume weighted average price of the company’s shares in Xetra trad-ing (or a corresponding successor system) on theFrankfurt stock exchange during the period betweenadopting the resolution on the use of the Authorisa-tion by the Board of Directors and the allocation ofthe bonds by the banks accompanying the issue or, inthe case of granting a subscription right, 125% (Authorisation I) or 130% (Authorisation II) of the vol-ume weighted price of the company’s shares in Xetratrading (or a corresponding successor system) on theFrankfurt stock exchange during the days on whichthe subscription rights for the bonds are traded onthe Frankfurt stock exchange, except for the last twotrading days of the trading in subscription rights (theaverage price referred to is also referred to here-inafter as the “Reference Price”).

– In the case of issuing bonds, which grant a conver-sion right but do not establish a duty to convert, theconversion price corresponds to 125% (AuthorisationI) or 130% (Authorisation II) of the Reference Price.

– In the case of issuing bonds which establish a duty toconvert or to exercise an option, the conversion priceor option price corresponds to the following amountwhen the bonds become due or in the case of atakeover offer:

– and those shares, which are acquired on the basis ofan authorisation by the General Shareholders’ Meet-ing and are sold during the term of the authorisationin accordance with § 71 para. 1 No. 8 sentence 5 inconjunction with § 186 para. 3 sentence 4 AktG up tothe issue under § 186 para. 3 sentence 4 AktG ex-cluding subscription rights of bonds with optionand/or conversion rights or obligations subject to ex-clusion of the subscription right,

– and those shares which are to be issued when exer-cising bonds with option and/or conversion rights orobligations issued without subscription rights on thebasis of the other authorisation by the General Share-holders' Meeting on 14 May 2008 in accordance with§ 186 para. 3 sentence 4 AktG to the extent that thesebonds have been issued up to the issue, subject tothe exclusion of subscription rights, pursuant to § 186para. 3 sentence 4 AktG of bonds with option and/orconversion rights or obligations under the authori-sation by the General Shareholders' Meeting on 14May 2008.

In the case of the issuance of bonds with warrants, eachindividual bond will have one or more option certifi-cates which entitle the holder to obtain bearer shares inDIC Asset AG in accordance with the terms and condi-tions of the option to be determined by the Board ofManagement. In the case of bonds with warrants de-nominated in euros which are issued by DIC Asset AG,the terms and conditions for the options can provide

that the option price can also be paid by transferringindividual bonds and, if appropriate, an additional cashpremium. The proportionate amount of the share cap-ital allocated to the shares to be drawn for each indi-vidual bond cannot exceed the nominal amount of theindividual bonds. To the extent that fractions of sharesresult, there can be a provision that these fractions canbe combined in accordance with the terms and condi-tions of the option or the bond in order to subscribe tocomplete shares, if appropriate, upon making an addi-tional payment. In the case of issuing convertiblebonds, holders will receive the irrevocable right to con-vert their bonds to bearer shares in DIC Asset AG in accordance with the terms and conditions establishedby the Board of Management for the convertible bond.The ratio for the conversion results from dividing thenominal amount or the issuing price of an individualbond which is less than the nominal amount by the de-termined conversion price for one share in the com-pany and can be rounded up or rounded down to a fullinteger; furthermore, any additional payment to berendered in cash and the combination or compensa-tion for any fraction of amounts which are not capableof being converted can be determined.

In the case of issuing bonds which provide for optionrights or conversion rights or establish a mandatory option or conversion, the option price or the conver-sion price is calculated on the following basis:

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only on the third trading day after the announcementby the company about the payment of a monetaryamount. The terms and conditions of the bonds canalso provide that the bond with warrants or the con-vertible bond can be converted using existing sharesof the company instead of using new shares from con-tingent capital or that option rights or the option obli-gation can be satisfied by delivering such shares. Theterms and conditions of the bonds can also provide foran obligation to convert or an obligation to exercise anoption at the end of the term (or at any other time) orcan provide for the right of the company to grant thecreditors of the Bonds completely or in part shares inthe company instead of paying the amount due uponfinal maturity of the bonds linked to a conversion rightor an option right (this also includes maturity upon no-tice of termination). The proportionate amount of theshare capital of the shares to be issued upon the exer-cise of the conversion right or option cannot exceedthe nominal amount of the bonds. § 9 para. 1 in con-junction with § 199 para. 2 AktG must be compliedwith.

The Board of Directors is authorised, with the consentof the Supervisory Board, to establish further detailsconcerning the issuing and structuring of the bonds, inparticular, the interest rate, issue price, term and de-nomination, provisions on protection against dilution,as well as the option or conversion period, or the Boardof Directors can do so in agreement with the manage-ment bodies of the group company of DIC Asset AG issuing the bond with warrants or the convertiblebond.

In the case of bonds with option or conversion rightsor obligations, the option or conversion price can beadjusted to preserve value in the event of economic dilution of the value of the option or conversion rightsor option or conversion obligations in accordance withthe detailed provisions of the bond, notwithstanding§ 9 para. 1 AktG unless the adjustment is already regu-lated by law. The terms and conditions of the bonds canalso provide for an adjustment of the option or con-version rights or option or conversion obligations in theevent of a reduction of capital or other extraordinarymeasures or events (for example, unusually high divi-dends, control being obtained by a third party). In thecase of a third party obtaining control, an adjustmentof the option or conversion price which is standard forthe market is provided for.

The terms and conditions of the bonds can provide forthe right of the company, in the event of an conversionor option being exercised, not to grant new shares butto pay a monetary amount, which corresponds to thevolume weighted average price of the shares in DICAsset AG in Xetra trading on the Frankfurt stock exchange or on a corresponding successor system dur-ing the ten trading days after declaration of the exer-cise of the conversion or option for the number ofshares that would otherwise have to be delivered. Inthe event that the company announces the exercise ofthe right to pay a monetary amount after exercise of aconversion right or option, the ten trading days begin

• if the volume weighted average price of the sharesof the company in Xetra trading (or in a corre-sponding successor system) on the FrankfurtStock Exchange on the 20 trading days ending onthe third trading day either before the bonds be-come due or, in the case of a takeover offer, on thethird trading day prior to the conversion date orthe option exercise date (“Average Price”)

– is smaller or equal to the Reference Price, the Reference Price,

– is greater than the Reference Price and less than118% (Authorisation I) or 120% (Authorisation II)of the Reference Price, the Average Price,

– is greater or equal to 118% (Authorisation I) or120% (Authorisation II) of the Reference Price,118% (Authorisation I) or 120% (Authorisation II)of the Reference Price.

• Notwithstanding the above provisions, the priceis 118% (Authorisation I) or 120% (AuthorisationII) of the Reference Price, if the holders or creditorsof the bonds exercise an existing conversion oroption right before the duty to convert or exercisethe option arises.

• Notwithstanding the above provisions, the priceis the Reference Price if the Board of Directors,with the consent of the Supervisory Board and inaccordance with the terms and conditions of thebonds, calls for an early conversion to prevent im-mediate, significant damage to the company.

98 � Notes

Exchange. If they are acquired by a public bid directedto all shareholders or a public invitation to submit sucha bid directed to all shareholders, the purchase priceoffered per share (excluding ancillary acquisition costs)in the event of a public bid directed to all shareholdersor, in the event of a public invitation to submit such abid directed to all shareholders, the margins of the pur-chase price spread (excluding ancillary acquisitioncosts) set by the company may not be more than 10%over or under the average closing prices of the company’s shares in the Xetra trading system (or a com-parable successor system) on the Frankfurt Stock Exchange over the last five trading days before the dayof the public announcement of the public bid or thepublic invitation to submit a bid.

If there are significant differences from the relevantprice after the publication of a public offering directedto all shareholders or a public invitation to all share-holders to submit offers to sell, the offering or the invitation to submit offers to sell may be adjusted. Inthis case the average of the closing price of the com-pany's shares in the Xetra trading system (or a compa-rable successor system) on the Frankfurt Stock Exchange over the last five trading days before thepublic announcement of any adjustment will be usedas a basis.

To service conversion and option rights or obligationsarising from bonds issued on the basis of AuthorisationI by the General Shareholders’ Meeting on 14 May 2008up to 13 May 2013, the share capital was conditionallyincreased by up to EUR 7,837,499.00 by the issue of upto 7,837,499 individual bearer shares (contingent cap-ital I/2008).

To service conversion and option rights or obligationsarising from bonds issued on the basis of AuthorisationII by the General Shareholders’ Meeting on 14 May 2008up to 13 May 2013, the share capital was conditionallyincreased by up to a further EUR 7,837,499.00, by theissue of up to 7,837,499 individual bearer shares (con-tingent capital II/2008).

The Board of Directors has not made use of the autho-risations described above to issue bonds with warrantsor convertible bonds or a combination of these instru-ments.

� The Board of Directors' powers to issue and redeem shares

The powers of the company's Board of Directors toissue and redeem shares are all based on resolutions tothat effect by the General Shareholders' Meeting, thecontent of which is shown below.

� Authority to acquire treasury sharesBy resolution of the ordinary General Shareholders’Meeting of 7 July 2009, the Board of Directors is authorised until 6 January 2011 to acquire treasuryshares of up to 10% of the company’s share capital existing at the time the resolution is made. At no timemay the acquired shares together with other treasuryshares in the possession of the company or allocatedto it under the §§ 71a ff. AktG represent more than 10%of the share capital. The authorisation may not be usedfor the purpose of trading in treasury shares. The au-thorisation may be exercised as a whole or in instal-ments, once or more than once, for one or more pur-poses, by the company or by companies dependent onor majority-owned by it, or by third parties acting ontheir behalf or on behalf of the company.

At the Board of Directors’ option, and with the priorconsent of the Supervisory Board, shares may be acquired through the stock exchange or through apublic offering directed to all shareholders or a publicinvitation to all shareholders to submit offers for sale. Ifthe shares are acquired on the stock exchange, the pur-chase price per share paid by the company (excludingtransaction ancillary costs) may not be more than 10%over or under the price determined on the trading dayby the opening auction in the Xetra trading system (ora comparable successor system) on the Frankfurt Stock

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As at 31 December 2009, the company holds no treas-ury shares. It has not made use of the authorisation de-scribed above.

d. Capital reservesThe capital reserve amounts to TEUR 530,747 (2008TEUR 528,450). The increase is the result of the increasein liquidity of TEUR 2,297 generated by the sale of treas-ury shares. See Reserve for treasury shares.

e. Hedging reserveThe reserve contains the effects of hedge accounting,which have no impact on results.

At the balance sheet date, subsidiaries’ cash flow hedgeagreements resulted, after the deduction of deferredtaxes of TEUR 9,470 (previous year: TEUR 6,461), in unrealised losses of TEUR 50,372 (previous year: TEUR34,367) while associates' cash flow hedge agreementsresulted, after the deduction of deferred taxes of TEUR74 (previous year: TEUR 84), in unrealised losses of TEUR6,117 (previous year TEUR 5,154) (cf. 22. Derivatives).

The change is primarily the result of the reduction inthe level of interest rates in 2009.

– The shares may also be disposed of in a way otherthan through the stock exchange or by an offer directed to all shareholders if the purchase pricepayable in cash is not significantly lower than themarket price of essentially equivalent shares alreadyquoted. The number of shares sold in this way to-gether with the number of new shares that were issued during the life of this authorisation from authorised capital to the exclusion of subscriptionrights in accordance with § 186 para. 3 sentence 4AktG, and the number of shares that can be createdthrough the exercise of option and/or conversionrights or the fulfilment of conversion obligations aris-ing from warrant bonds or convertible bonds issuedduring the life of this authorisation under the exclu-sion of subscription rights in accordance with § 186para. 3 sentence 4 AktG, does not exceed 10% of theshare capital.

– The shares may be sold for a contribution in kind, inparticular in connection with the acquisition of busi-nesses, parts of businesses or corporate interests andin connection with mergers of businesses.

– The shares may be used to fulfil the conversionand/or subscription rights and/or option rights orconversion obligations as part of convertible bondsor bonds with warrants issued by the company or itsgroup subsidiaries in which DIC holds a 100 % inter-est.

Where a public offering directed to all shareholders isover-subscribed, it can only be accepted on a quotabasis. In the case of a public invitation to all sharehold-ers to submit offers for sale, where not all equal offersare accepted, the offers can only be accepted on aquota basis. Preferential treatment of smaller numbersup to 100 shares per shareholder can be provided for.The public offering directed to all shareholders or thepublic invitation to all shareholders to submit offers forsale may stipulate further conditions.

The Board of Directors is authorised, with the prior con-sent of the Supervisory Board, to use the treasuryshares acquired on the basis of this authorisation forany legal purpose, in particular the following:

– The shares may be withdrawn without a further resolution of the General Shareholders’ Meetingbeing required for the withdrawal or its execution.They may also be withdrawn by the simplified pro-cedure without capital reduction by adjusting the prorata mathematical amount of the remaining sharesin the company's share capital. If they are withdrawnby the simplified procedure, the Board of Manage-ment is authorised to amend the number of sharesin the Articles of Association.

100 � Notes

The transaction costs for the purchase and sale of treas-ury shares were immaterial and were recorded underexpenses.

f. Reserve for treasury sharesThe reserve for treasury shares was reversed from equity in connection with the sale of the 1,474,022treasury shares in total acquired via the share buybackprogramme. The increase in liquidity of some EUR 2.3million generated through the sales price of EUR 6.50per share was depicted via Group equity without anyimpact on the income statement in accordance withIFRS 32.33.

g. Retained earningsIn accordance with the German Commercial Code, theresult of the annual financial statements of DIC AssetAG compiled in accordance with the German Com-mercial Code is definitive for payments to DIC AssetAG’s shareholders. The reconciliation of the Groupprofit for the period with retained earnings is shown inthe following table:

TEUR 2009 2008

Profit for the period 16,129 25,174

Profit/loss carryforwards 18,193 44,842

Dividend payouts -9,405 -51,727

Profit attributable to minority interests -60 -96

Consolidated retained earnings 24,857 18,193

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31. Long-term interest-bearing debtThe fair value of fixed-rate debt is based on discountedcash flows calculated on the basis of interest rates fromthe yield curve of 31 December 2009. When calculatingthe fair value, the current market trend was taken into ac-count in accordance with IAS 39 AG78, meaning that themargin on financial instruments has increased from 0.93%to 1.25%.

The book values of variable-rate debt is roughly equiva-lent to their fair values.

The maturities of variable-rate and fixed rate-debt are asfollows:

Interest rates on the variable-rate debt were adjusted reg-ularly. Interest-rate adjustment dates are based on the 1-month or 3-month Euribor plus an average margin of0.93% (previous year: 0.88 %). Fixed-rate debt carries anaverage interest rate of about 4.85% (previous year:5.08%).

As in the previous year, with the exception of a liability vis-à-vis Provinzial Rheinland Lebensversicherung AG of TEUR8,750 (previous year TEUR 10,000), the interest-bearingdebt was secured entirely through charges over propertyin the year under review. The loan from Provinzial Rhein-land Lebensversicherung AG was primarily securedthrough rights and claims from holdings in the share cap-ital and common stock of the property companies of theFraspa portfolio.

TEUR 31.12.2009 31.12.2008Book value Fair value Book value Fair value

Long-term (> 1 year) interest-bearing debt

Variable-rate debt 148,599 148,599 145,848 145,848

Fixed-rate debt 1,386,983 1,424,352 1,408,904 1,431,788

1,535,582 1,572,951 1,554,752 1,577,636

Short-term (< 1 year) interest-bearing debt

Variable-rate debt 46,054 46,054 2,753 2,753

Fixed-rate debt 7,218 13,147 17,030 21,236

53,272 59,201 19,783 23,989

Total 1,588,854 1,632,152 1,574,535 1,601,625

TEUR 31.12.2009 31.12.2008

Total variable- Total fixed- Total fixed- Total variable- Total fixed- Total fixed-rate debt rate debt rate debt rate debt rate debt rate debt

Weighted interest Weighted interest

< 1 year 46,054 7,218 4.73% 2,753 17,030 5.12%

1 - 5 years 121,777 1,058,255 4.79% 58,423 601,108 5.11%

> 5 years 26,822 328,728 5.05% 87,425 807,796 4.96%

194,653 1,394,201 148,601 1,425,934

102 � Notes

35. Income taxes payable

The item “Project development costs” refers to payments

for project development services for the WACO Projekt-

management AG property such as broker commission,

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 con-

nected with actions for rescission and similar actions by

individual minority shareholders. A provision in the

amount of TEUR 24 has been made for costs of legal dis-

putes.

32. Other non-current liabilitiesThe previous year’s item in the amount of TEUR 13 referredto the residual amount of an interest equalisation pay-ment of TEUR 1,190 each to Gewerbepark LangenfeldWest 3 GmbH & Co. KG and DIC Objekt Frankfurt 1 GmbH& Co. KG promised by Deutsche Immobilien Chancen AG& Co. KGaA. These payments were reported on the incomestatement over the remaining term of the loan. In relationto maturity, the remaining share at the balance sheet isrecognised under current liabilities.

33. Trade payablesThese liabilities include:

34. ProvisionsThese provisions include:

The purchase price liability was settled on 1 July 2009.

TEUR 31.12.2009 31.12.2008

Purchase price liability DIC 26 Portfolio 0 30,000

Other trade payables 3,177 4,368

3,177 34,368

TEUR 01.01. Use Re- Allo- 31.12.2009 lease cation 2009

Project development costs 9 0 9 0 0

Litigation costs 25 1 0 0 24

34 1 9 0 24

TEUR 31.12.2009 31.12.2008

Trade tax 1,308 2,172

Corporate tax 2,945 3,127

4,253 5,299

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Mr Höller and Mr Koch exercised their rights when the pre-conditions for their “old options” from 2006 were reached.The total of 75,000 “virtual shares” were measured at theXetra closing price on the date the options were exercised,namely EUR 9.21 in the case of Mr Höller and EUR 9.15 inthe case of Mr Koch. This resulted in a total cash settlementof TEUR 470.2.

The share-based compensation recognised as an expenseof TEUR -64 in the reporting year should be considered atransaction with a related party within the meaning of IAS24.9d. Additional details, in particular information in accordance with § 314 Para. 1 No. 6 Letter a Sentences 5 to9 HGB (German Commercial Code), are provided in thesection on corporate governance.

37. Additional notes on financial instrumentsThe fair value of a financial instrument is the amount forwhich an asset could be exchanged, or a liability settled,between knowledgeable, willing parties in an arm’s lengthtransaction. If financial instruments are listed on an activemarket, the respective price represents this value. For un-listed bonds, liabilities to banks, promissory note loansand other non-current financial liabilities, the fair value iscalculated as the present value of future cash flows, takingaccount of yield curves.

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

Liabilities arising from Supervisory Board compensationare liabilities to members of the Supervisory Board and areconsequently recognised as liabilities to related partieswithin the meaning of IAS 24.9d. For information on theindividual members, see “Related party disclosures” andthe details on Supervisory Board compensation in themanagement report.

The performance-related compensation agreement withthe members of the Board of Directors is treated by thecompany as a share price oriented compensation model.At the end of 2009, the three members of the Board of Directors hold options on 150,000 so-called “virtual shares”of the company. These options may not be exercised bymembers of the Board of Directors until they have beenon the board of DIC Asset AG for three years. As at 31 December 2009, the company estimates the fair value peroption at EUR 5.70 for Mr Höller, EUR 2.86 per option for MrKoch as well as EUR 2.96 per option for Dr. Schäfer. This estimate is based on the Black-Scholes option pricingmodel.

The critical parameters for this valuation model are theshare price on the balance sheet date of EUR 8.15, the exercise price of EUR 2.90 for Mr Höller and EUR 20 forDr. Schäfer and Mr Koch, the standard deviation from the expected share price return of 78.8% and the annual risk-free interest rate of 1.33% and 1.02%. Volatility as meas-ured by the standard deviation from the expected shareprice returns is based on statistical analyses of the dailyshare price over the last two years.

36. Other liabilities

TEUR 31.12.2009 31.12.2008

Deposits 1,676 1,144

Advance rent payments received 1,640 1,347

Tenant allowances DP Berlin 1,279 1,622

Value-added tax 1,229 1,757

Profit-sharing 940 688

Provisions for outstanding invoicesand operating expenses 2,923 1,423

Auditing costs 456 743

Property transfer tax 386 362

Shared-based payments 308 371

Supervisory Board compensation 265 237

Interest payable (bank) 250 0

Tax consultancy costs 189 195

Holidays 168 236

Interest adjustment 13 339

Other 1,210 848

12,932 11,312

104 � Notes

The values for the previous year are as follows:

TEUR Valuation in accordance with IAS 39Valuation Bookcategory value Fair value

acc. with IAS 39 31.12.09 31.12.09

Cost Fair Fair(less value value

deprecia- recognised recognisedtion- in equity in profit

or loss

ASSETS

Investments AfS 0 0 0

Receivables from the sale of real estate LaR 67 67 67

Trade receivables LaR 4,500 4,500 4,500

Receivables from related parties LaR 86,876 86,876 86,876

Other receivables LaR 2,619 2,619 2,619

Other assets LaR 1,808 1,808 1,808

Liquid funds LaR 38,826 38,826 38,826

LIABILITIES

Long-term interest-bearing debt FLAC 1,535,582 1,535,582 1,565,802

Derivative financial instruments with hedge relationship n.a. 60,052 59,842 210 60,052

Other non-current debt FLAC 0 0 0

Current debt FLAC 53,272 53,272 66,350

Trade payables FLAC 3,177 3,177 3,177

Liabilities to related parties FLAC 4,020 4,020 4,020

Other liabilities FLAC 12,932 12,932 12,932

TEUR Valuation in accordance with IAS 39Valuation Bookcategory value Fair value

acc. with IAS 39 31.12.08 31.12.08

Cost Fair Fair(less value value

deprecia- recognised recognisedtion- in equity in profit

or loss

ASSETS

Investments AfS 241 241 241

Receivables from the sale of real estate LaR 19,639 19,639 19,639

Trade receivables LaR 8,972 8,972 8,972

Receivables from related parties LaR 76,377 76,377 76,377

Other receivables LaR 2,671 2,671 2,671

Other assets LaR 2,247 2,247 2,247

Liquid funds LaR 46,417 46,417 46,417

LIABILITIES

Long-term interest-bearing debt FLAC 1,554,752 1,554,752 1,577,636

Derivative financial instruments with hedge relationship n.a. 41,462 40,828 634 41,462

Other non-current debt FLAC 13 13 13

Current debt FLAC 19,783 19,783 23,989

Trade payables FLAC 34,368 34,368 34,368

Liabilities to related parties FLAC 6,501 6,501 6,501

Other liabilities FLAC 11,312 11,312 11,312

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Cash flow from financing activities is characterised by the

raising of non-current loans, in particular to conclude the

financing of the Forum portfolio (EUR 21.0 million), to

finance the acquisition of the remaining Value 6 proper-

ties (EUR 17.3 million), to finance the expansion in the

RMN portfolio (EUR 1.6 million) as well as cash outflows

for the scheduled repayment of loans and unscheduled

repayments in connection with sales (EUR 35.1 million)

and dividend payments for financial year 2008 (EUR 9.4

million).

In October 2009, DIC Asset AG acquired the remaining

share of 25.1% in DIC ONSITE from FAY Asset Management

Holding GmbH at a total purchase price of TEUR 1,191.

Presentation in accordance with IFRS 7.40 is waived for this

acquisition as the company has already been fully consol-

idated within the Group.

Cash flows from investment and financing activities are

calculated on the basis of payments. Investing and

financing activities that did not result in changes in cash or

cash equivalents, are not included in the cash flow state-

ment.

Besides a large number of property-related measures,

which mainly serve to improve, modernise and protect the

property portfolio, investment in new properties – such as

the additions to the Value 6 portfolio – are primarily aimed

at expanding the property portfolio. Cash flows from the

acquisition and disposal of investment properties, which

arise in this connection, were shown in cash flow from in-

vesting activities. Investing activities also include cash

flows from the acquisition and disposal of plant and

equipment, shares in associates, investments and intangi-

ble assets. Cash flows from the granting and repayment of

short-term loans are also reported here.

Investing and financing activities that did not result in

changes in cash or cash equivalents are not included in

the cash flow statement.

Net gains and losses from financial liabilities at cost less

depreciation are made up of gains or losses from elimina-

tion and the ineffective portion from fair value hedges.

Notes to the cash flow statement

The cash flow statement shows how the Group’s cash and

cash equivalents have changed in the course of the re-

porting year as a result of cash inflows and outflows.

Pursuant to IAS 7 Cash Flow Statements, cash flows are

separated into those derived from operating activities and

those derived from investment and financing activities.

The funds in the cash flow statement include 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 2009, the use of

these funds was not subject to any restrictions.

Net gains and losses from financial instruments are as follows:

TEUR 2009 2008

Financial liabilities at cost less depreciation (FLAC) 210 634

106 � Notes

Capital market oriented companies are obliged to com-pile a segment report as part of their separate and con-solidated financial statements (IFRS 8.2).

Under IFRS 8.1, the segment report has had to be com-piled in accordance with the management approach (IFRS8.BC6 (b)) since 1 January 2009. This involves publicationof quantitative and qualitative information, which is dif-ferentiated and structured in accordance with the com-pany’s sub-divisions and gives readers the opportunity toview the company from the viewpoint of its management.

In accordance with the Group’s internal reporting and or-ganisational structure, the presentation of individual datafrom the consolidated financial statements is differenti-ated according to the areas of the company involved.

The real estate portfolio of DIC Asset is composed of thesegments “Core plus portfolio”, “Value-added portfolio”(VAD) and “Opportunistic Co-Investments” (OPP). The“Other" segment primarily includes the Group’s parentcompany.

Segment reporting


TEUR Core plus VAD OPP Other Group

Interest income 544 224 1,201 3,544 5,513

Interest expense -38,588 -35,450 -40 -611 -74,649

The following interest income and expense was incurred by each segment during the 2009 financial year:

Segment assets and segment debts are reconciled as follows with Group assets and Group debt:


Rental income 70,088 63,519 0 0 133,607

Proceeds from sales 2,425 12,736 0 0 15,161

Profits from sales 264 1,236 0 0 1,500

EBITDA 61,675 54,473 -681 -4,684 110,783

EBIT 45,430 40,522 -681 -4,928 80,343

Profit from associates 0 0 7,478 0 7,478

EBT 7,387 5,297 7,999 -1,998 18,685

Taxes - 2,556

Profit for the period 16,129

Segment assets 1,064,490 1,006,285 14,849 74,106 2,159,709

Shares in associates 0 0 28,946 0 28,946

Income tax claims 24,731

Consolidated total assets 2,213,386

Segment liabilities 845,078 818,554 22 5,405 1,669,059

Income tax owed 13,649

Group liabilities 1,682,708

Segment investment 34,954 10,222 0 0 45,176

Depreciation 16,242 13,951 0 247 30,440

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Core plus portfolioThe Core portfolio includes high-yield real estate which isto be held as inventory and managed in the long term.Real estate within the Core segment is leased on a long-term basis to tenants of good creditworthiness and has ahigh occupancy rate.

Value added portfolioThe Value added portfolio is characterised by real estate,which, for example, may have been purchased as part ofbulk purchases and/or for which we have identified thepotential for added value, which we estimate can be raisedin the short to medium term by means of appropriatemeasures (e.g. optimisation of the usage concept, refur-bishment, optimisation of the occupancy rate) and thenrealised through sale.

Opportunistic Co-InvestmentsWe participate in certain opportunistic co-investments ofDIC Deutsche Immobilien Chancen AG & Co. KGaA as apassive investor with minority interests. The investmentsare in real estate which is then re-positioned on the mar-ket via project developments, new leases and relettingalong with other measures. This adds investments offer-ing a higher risk/reward profile to the portfolio and opensup the prospect of additional potential earnings.

The company is active in a single geographical segment(Germany). Therefore the company does not report on itsoperating activities by geographic location.



Rental income 68,706 65,814 0 0 134,520

Proceeds from sales 18,612 31,319 0 0 49,932

Profits from sales 2,966 6,824 0 0 9,790

EBITDA 65,521 60,996 -18 -2,457 124,043

EBIT 50,805 47,853 -18 -2,673 95,966

Profit from associates 0 0 8,760 0 8,760

EBT 10,509 8,458 8,953 -1,803 29,721

Taxes -4,549

Profit for the period 25,174

Segment assets 1,059,709 1,014,064 15,185 91,364 2,180,321

Shares in associates 0 0 18,707 0 18,707

Income tax claims 15,721

Consolidated total assets 2,214,750

Segment liabilities 832,178 810,620 14,346 11,081 1,668,226

Income tax owed 12,730

Group liabilities 1,680,955

Segment investment 53,838 185,748 27,435 297 267,318

Depreciation 14,716 13,144 0 215 28,075


Interest income 310 369 832 5,492 7,003

Interest expense -41,107 -40,264 -621 -1,017 83,009

The following interest income and expense was incurred by each segment during the 2008 financial year:

108 � Notes

LeasingThe Group has no financial leasing arrangements. All leaseagreements that DIC has concluded with its tenants areclassified as operating leases in accordance with IAS 17.Accordingly, the group is the lessor in a number of oper-ating leasing arrangements (rental agreements) of varioustypes through the investment properties from which it derives the majority of its income and earnings.

As of the balance sheet date, investment properties witha book value of TEUR 2,024,225 (previous year: TEUR2,022,920) were let under the Group's operating leasing.DIC Asset AG will receive the following minimum leasepayments, which are calculated as cash values, from existing leases:

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

The total expenses for operating leases in which the com-pany is the lessee were TEUR 174 (previous year: TEUR122). The operating lease agreements primarily involveleased vehicles. DIC Asset will make minimum lease pay-ments of TEUR 68 in 2010 and TEUR 52 in 2011 to 2013 forexisting operating leases not subject to termination.

TEUR 2010 2011-2014 from 2015

Future minimumlease payments 121,202 317,648 194,583

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Interest rate riskInterest rate risks arise as a result of market-driven fluctu-ations in interest rates or margins on new borrowings andrenewals of loans. The Group's interest rate risk is mainlythe result of debt, loans and interest-bearing investments.This risk is mitigated by using derivative instruments, inwhich variable interest payments are exchanged into fixedinterest rate payments and hedged in this way againstchanges in interest rates; cf. number 21.

In accordance with IFRS 7, interest rate risks are presentedby way of sensitivity analyses. These show the effects ofchanges in market interest rates on interest payments, in-terest income and expense, other income componentsand, in the case of derivatives with a hedge relationship,the effects on the hedging reserve in equity and the fairvalue of these derivatives. The interest rate sensitivityanalyses are based on the assumption that changes inmarket interest rates of primary financial instruments withfixed interest rates only affect income if these are meas-ured at their fair value. As such, all financial instrumentswith fixed interest rates that are carried at amortised costare 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

Reporting on risk management

The Group is exposed to various financial risks – credit risk,liquidity risk and interest rate risk – in connection with itsoperating activities.

Explanations of the risk management system and the busi-ness risks are given in the company's management reportunder “Risk management”. We are making the followingsupplementary notes on individual risks within the scopeof IFRS 7:

Credit riskA credit risk is the unexpected loss of cash and cash equiv-alents or income. This is especially the case if the debtor isnot fully able to meet his obligations by the due date or ifthe assets serving as collateral lose value. We limit risk bycarrying out regular analyses of creditworthiness, espe-cially in connection with reletting. The maximum defaultrisk is represented by the book value of the financial assetsrecognised in the balance sheet. The default risks of derivatives correspond to their positive market value. Seeparagraph 24 for value adjustments on customer receiv-ables.

Liquidity riskThe liquidity risk to which the DIC Asset Group is exposedis made up of obligations under contractually agreed in-terest and principal payments for original financial liabili-ties and the liquidity risk from derivative financial instru-ments at fair value at the balance sheet as follows:

TEUR 2009 2010 to 2014 and2013 after

Non-derivative financial liabilities

Long-term interest-bearingdebt 69,877 959,062 886,117

Other non-current debt 0 13 0

Current debt 20,663 0 0

Trade payables 34,368 0 0

Liabilities to related parties 6,501 0 0

Other liabilities 11,312 0 0

Derivative financialliabilities 12,079 39,164 7,951

154,800 998,239 894,068

The values for the previous year are as follows:

TEUR 2010 2011 to 2015 and2014 after

Non-derivative financial liabilities

Long-term interest-bearing debt 38,296 1,276,278 363,581

Current debt 54,601 0 0

Trade payables 3,177 0 0

Liabilities to related parties 4,020 0 0

Other liabilities 12,932 0 0

Derivative financial liabilities 32,704 91,643 5,074

145,730 1,367,921 368,655

110 � Notes

A sublease agreement is in effect between DIC Asset AGand Deutsche Immobilien Chancen AG & Co. KGaA, whichhas provided for a net payment obligation of TEUR 15monthly since 1 August 2007. The agreement remains ineffect until 31 October 2014. If the lease agreement is notterminated in writing at least 12 months prior to expira-tion, it is automatically extended by an additional 12months.

Additional financial obligations arise from operating leaseagreements for vehicles in which the company is the lessee; see “Leasing”.

financial liabilities for which there are no attributable interest-rate hedges. The effects of a market interest ratebeing increased or decreased by 100 basis points on eachbalance sheet date would have the following implicationsfor income and equity after taking deferred taxes into consideration:

DIC Asset AG issued a guarantee bond vis-à-vis DeutschePfandbriefbank (legal successor of HRE) to the amount ofits 20% holding in DIC HI Portfolio GmbH in which it un-dertook a maximum guarantee of a total of TEUR 2,000 prorata on the basis of a loan agreement between DIC HI Port-folio GmbH and HRE.

In addition, a letter of comfort was issued for the sub-sidiaries of the subsidiary incorporated “at equity”, DICMSREF HMDD Portfolio GmbH, regarding the 20% hold-ings of outstanding liabilities of interest payments.

Contingencies and other financial commitments

TEUR 2009 2008+100 Bp -100 Bp +100 Bp -100 Bp

Effect on income from variable interest-bearing financial debts +1,945 -1,945 +2,474 -2,474

Effect on equity from financialderivatives +32,008 -34,318 +31,108 -31,108

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The company has filed a dependent company report onits relationships to these related parties. This report listsall legal transactions conducted by the company or itssubsidiaries with, at the behest of or in the interest of affiliates over the past financial year, as well as all othermeasures taken or omitted by the company at the behestof or in the interest of these companies over the past financial year. The report concludes with the followingstatement:

“We hereby declare that according to the facts known tous at the time in which the legal transactions were con-ducted, our company received or paid a commensurateconsideration in each transaction. We took no actions atthe behest of or on behalf of the controlling company.”

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

Related parties include the 22 proportionately consoli-dated companies as well as the 11 companies incorpo-rated at equity (see "Scope of consolidation").

Due to their significant influence, the following compa-nies and persons are related parties:

– Deutsche Immobilien Chancen AG & Co. KGaA– Group companies 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”)– DIC Capital SE– Prof. Dr. Gerhard Schmidt

Additional related parties are the Supervisory Board, theBoard of Directors, executives and close relatives of theseindividuals.

Related party disclosures

112 � Notes

Deutsche Immobilien Chancen AG & Co. KGaA has a cur-rent account relationship with some of the DIC Asset AGsubsidiaries which is offset with reference to the report-ing date. The Deutsche Immobilien Chancen AG & Co.KGaA companies shown in the table receive interest cred-its for the loans made available in the following amounts.

The companies Deutsche Immobilien Chancen ObjektUlm 1 GmbH & Co. KG, Deutsche Immobilien Chancen Ob-jekt Ulm 2 GmbH & Co. KG and Deutsche ImmobilienChancen Objekt Regensburg GmbH & Co. KG were liqui-dated on 30 September 2009. Existing claims againstDeutsche Immobilien Chancen AG & Co. KGaA arisingunder loan agreements have already been settled.

Deutsche Immobilien Chancen AG & Co. KGaAThere are connections between the personnel ("doublemandate") of Deutsche Immobilien Chancen AG & Co.KGaA and its sole general partner, Deutsche ImmobilienChancen Beteiligungs AG, at the level of the Board of Di-rectors and Supervisory Board. One of the three membersof the Board of Directors of the company, Mr Ulrich Höller,is also a member of the Board of Directors of Deutsche Im-mobilien Chancen Beteiligungs AG, whose board also con-sists of two additional members. Since March 2006, themember of the Board of Directors Ulrich Höller has hademployment contracts with both Deutsche ImmobilienChancen Beteiligungs AG and the company. Each of thesecompanies pays 50% of Mr Höller’s fixed compensation. Inaddition, there is variable compensation related to theperformance of the companies of the Deutsche Immo-bilien Chancen KGaA Group and the DIC Asset Group, aswell as options for shares of Deutsche Immobilien Chan-cen AG & Co. KGaA and compensation based on the shareprice of DIC Asset AG. There is also an overlap of personnelin the Super visory Board of DIC Asset AG, Deutsche Im-mobilien Chancen AG & Co. KGaA and Deutsche Immo-bilien Chancen Beteiligungs AG in the person of Prof. Dr.Gerhard Schmidt and Klaus-Jürgen Sontowski who arealso indirectly significant limited shareholders in DeutscheImmobilien Chancen AG & Co. KGaA. In addition, Dr. Ger-hard Schmidt is also the indirect majority shareholder ofits sole general partner, Deutsche Immobilien ChancenBeteiligungs AG.

The company currently provides general property andbuilding management services (including re-letting serv-ices) as well as services related to technical building man-agement for a total of 66 properties, including some inwhich Deutsche Immobilien Chancen AG & Co. KGaA hasa controlling interest. In 2009, the total amount of com-pensation collected by the company for these services wasTEUR 3,372 (previous year TEUR 3,314). Of this, a total ofTEUR 7 (previous year TEUR 7) was compensation paid bythe companies of the Deutsche Immobilien Chancen AG &Co. KGaA Group.

The company has made an overdraft facility available toDeutsche Immobilien Chancen AG & Co. KGaA, on whichinterest has been set at 6% p.a., to be payable in arrears. Assecurity for any part of the loan used, Deutsche Immo-bilien Chancen AG & Co. KGaA has pledged to the com-pany its 10% interests in Deutsche Deutsche ImmobilienChancen Objekt Ulm 1 Erweiterung GmbH & Co. KG. As at31 December 2009, the portion of this overdraft facilitythat had been used equalled TEUR 15,994 (previous year:TEUR 15,089). DIC Asset AG received interest credits in theamount of TEUR 905 (previous year TEUR 932) in the reporting period for the day-to-day money made avail-able. In the previous year, this facility was provisionally increased by TEUR 1,600 for 100 days. The agreed termswere no worse than those which the company would haveobtained for a comparable monetary investment. For thisreason, performance and consideration were the same foreach transaction.

Legal transactions with companies with significant influence:

TEUR 2009 2008

Deutsche Immobilien Chancen Objekt Regensburg GmbH & Co. KG 0 -11

Deutsche Immobilien Chancen Objekt Ulm 1 GmbH & Co. KG 20 33

Deutsche Immobilien Chancen Objekt Ulm 1 Erweiterung GmbH & Co. KG 61 64

DIC Objekt Frankfurt 1 GmbH & Co. KG 72 69

Gewerbepark Langenfeld West 3 GmbH & Co. KG 117 111

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expertise available in this area. The amount of the fee isbased on the personnel and material expenses incurredin carrying out project-related work on the basis of the financial and personnel accounting records of the con-tractual parties. The resulting compensation claims, plusVAT, are paid quarterly. In addition, DIC Asset AG is to becompensated for expenses in connection with activity forDIC Opportunity Fund GmbH. No payments were made infinancial years 2005 to 2009.

Deutsche Immobilien Chancen Beteiligungs AGFor the years 2003, 2004 and 2005, DIC Asset AG haspledged to reimburse Deutsche Immobilien ChancenBeteiligungs AG, the sole general partner of Deutsche Immobilien Chancen AG & Co. KGaA, 50% of the costs thatare incurred by Deutsche Immobilien Chancen Beteili-gungs AG in connection with the employment of mem-bers 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 ofDirectors of DIC Asset AG have been compensated fortheir activities for Deutsche Immobilien Chancen Beteili-gungs AG exclusively through it. The amount of reim-bursement for the fringe benefits granted to Mr UlrichHöller was TEUR 8 (previous year TEUR 22) for the financialyear 2009. Further details are provided in the manage-ment report.

Under the “German Investment Program Agreement”dated 29 July 2004 and the “Investment and ShareholderAgreement” dated 7 June 2005, certain joint ventures ofDIC Asset AG, namely, DIC MSREF Frankfurt Portfolio

Compensation for services related to accounting, finance,controlling and administration were calculated on thebasis of expenditures and compensated in the amount ofTEUR 18 in 2009 (previous year TEUR 18) for services ren-dered for the benefit of DIC Asset AG and TEUR 669 (pre-vious year TEUR 727) for services for the benefit of thecompanies of the DIC Asset Group.

DIC Opportunity Fund GmbHDIC Asset AG provides property management services forDIC Opportunity Fund GmbH, in which Deutsche Immo-bilien Chancen AG & Co. KGaA has a 100% interest, for themanagement of properties held directly or indirectlythrough holdings by DIC Opportunity Fund GmbH on thebasis of an agreement dated 29 May 2004, revised on 6January 2005. From 31 December 2005, the agreementwill be extended for an additional year if notice of termi-nation is not given by one of the parties at least twomonths before the end of the year. The agreement mayalso be terminated, subject to a notice period of fourweeks to the month end, if the shareholder structure ofDIC Opportunity Fund GmbH undergoes fundamentalchanges. The amount of the fee is 1% of the annual netrent of the properties involved. The fee totalled TEUR 9 in2009 (previous year TEUR 28).

Furthermore, on the basis of an agreement dated 22 October 2004, for itself and its associated companies DICOpportunity Fund GmbH enlists the services of DIC AssetAG for its ongoing support and advice in the purchase andsale of portfolios and individual properties in the “oppor-tunistic co-investments” sector as well as making its

In addition, a sublease relationship is in place betweenDeutsche Immobilien Chancen AG & Co. KGaA and DICAsset AG as well as its wholly-owned subsidiary DIC ONSITE GmbH with regard to office space used byDIC Asset AG and DIC ONSITE GmbH at the Frankfurt siteas Deutsche Immobilien Chancen AG & Co. KGaA acts asthe general tenant for all space rented by DIC Group com-panies in the Group headquarters in Frankfurt. Theamount of the rent is based on the space actually occu-pied by DIC Asset AG and DIC ONSITE GmbH and isrecharged at the same price per square metre, which is acomponent of the general rental agreement of DeutscheImmobilien Chancen AG & Co. KGaA. For 2009, rent paidto Deutsche Immobilien Chancen AG & Co. KGaAamounted to TEUR 261 (previous year TEUR 266). DIC AssetAG considered the rental interest to be at the normal ratefor the location and appropriate. Renting space at anothercompany would not have resulted in lower expenses. As aresult, performance and consideration were also the samein this case.

DIC Projektentwicklung GmbH & Co KGDIC Projektentwicklung GmbH & Co. KG, in whichDeutsche Immobilien Chancen AG & Co. KGaA has a 100%interest, provides various services for DIC Asset AG. Included here are all services related to technical buildingmanagement (e.g., defect removal, rebuilding manage-ment, maintenance) to be provided to the company itselfor on the basis of active service agreements by the com-pany to various property companies. In addition, DIC Projektentwicklung GmbH & Co. KG has assumed all accounting and other administrative functions, includingIT services, for the company and its subsidiaries.

114 � Notes

– Tenant improvement fee (equates to a fee for re-leasingservices): 3.5% to 5% of the internal and external coststhat arise from renovation for a new tenant (particularlyfor planning and renovation) or negotiable on the basisof this expense;

– Development fee: for project development servicesthrough to initial leasing: dependent on expenses ormarket-rate compensation.

In 2009 and 2008, the following compensation was paidto Deutsche Immobilien Chancen Beteiligungs AG, inwhich MSREF holds 25.1% of the share capital, in each caseexcluding sales tax:

GmbH, DIC MSREF Berlin GmbH, DIC MSREF Berlin Portfo-lio GmbH, DIC MainTor GmbH (formerly DIC MSREFWeißfrauenstraße GmbH), DIC MSREF HMDD PortfolioGmbH, DIC MSREF HT Portfolio GmbH and DIC MSREF FFSüdwest Portfolio GmbH and their respective whollyowned property companies receive various services fromDeutsche Immobilien Chancen Beteiligungs AG. Accord-ingly, the above-named companies and Deutsche Immo-bilien Chancen Beteiligungs AG have entered into agree-ments for the provision of various management servicesas well as commissions on the leasing and divestiture ofreal property, in each case at the time of establishment ofthese MSREF joint ventures. Moreover, special compensa-tion arrangements have been established with DIC MSREFFrankfurt Portfolio GmbH, DIC MSREF HMDD PortfolioGmbH, DIC MSREF HT Portfolio GmbH and DIC MSREF FFSüdwest Portfolio GmbH for re-leasing services. In addi-tion, an agreement regarding development fees for DICMainTor GmbH, DIC MSREF HMDD Portfolio GmbH, DICMSREF HT Portfolio GmbH and DIC MSREF FF SüdwestPortfolio GmbH was also concluded.

With the Sale and Transfer Agreement of 17 August 2009,the company – together with DIC Opportunity Fund andDIC Capital Partners (Germany) GmbH & Co. KGaA – indi-rectly and directly acquired the share of 50% in DIC MSREFWeißfrauenstraße GmbH held by MSREF V Lily Holding B.V.on 11 September 2009. The company’s name was thenchanged from DIC MSREF Weißfrauenstraße GmbH to DICMainTor GmbH. The company now holds a direct and in-direct stake of 40% in DIC MainTor GmbH; the remaining60% is held indirectly by DIC Opportunity Fund (30%) andDIC Capital Partners (Germany) GmbH & Co. KGaA (30%).The existing service agreements were continued un-changed.

Under the current asset management agreements, MSREFjoint ventures are to provide the following compensationto 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 netmonthly rental or a net monthly rent, if an outside bro-ker is involved;

– Disposition fee (equates to a sales commission): 1% to3% of the sales price after transaction costs if no outsidebroker is involved, and 0.3% to 1.5% of the sales priceafter transaction costs if an outside broker is involved;

MSREF joint ventures (EUR) Base Leasing Dispos. TI/Devel. Totalmgm. fees fees fees fees

DIC MSREF Frankfurt Portfolio GmbH 2009 16,374 13,002 73,125 100,000 202,501

2008 8,742 0 18,250 300,000 326,992

DIC MSREF Berlin GmbH 2009 94,410 0 0 0 94,410

2008 92,771 0 0 0 92,771

DIC MainTor GmbH (formerly DIC MSREF 2009 294,000 0 0 0 294,000

Weißfrauenstraße GmbH) 2008 294,000 0 0 650,000 944,000

DIC MSREF HMDD Portfolio GmbH 2009 68,074 0 18,000 0 86,074

2008 68,907 0 207,750 0 276,657

DIC MSREF HT Portfolio GmbH 2009 71,470 0 157,500 0 228,970

2008 73,416 0 0 0 73,416

DIC MSREF FF Südwest Portfolio GmbH 2009 124,315 0 0 0 124,315

2008 122,730 0 0 0 122,730

DIC MSREF Berlin Portfolio GmbH 2009 81,348 92,144 296,088 0 469,580

2008 91,174 123,990 120,550 0 335,714

Overall totals 2009 749,991 105,146 544,713 100,000 1,499,850

2008 751,740 123,990 346,550 950,000 2,172,280

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The amount charged under this agreement by the com-pany to Deutsche Immobilien Chancen Beteiligungs AGtotalled TEUR 743 in the financial year 2009 (previous yearTEUR 603).

Aside from its Board of Directors, Deutsche ImmobilienChancen Beteiligungs AG has no employees of its own. Forthe purpose of providing the services assigned to it in accordance with the Asset Management Agreement, it, forits part, makes use of services rendered by DIC Asset AG.Under an agreement of 16 November 2005 (supple-mented by five addenda as a result of newly acquiredportfolios), DIC Asset AG charges fees to Deutsche Immo-bilien Chancen Beteiligungs AG, the amount of which de-pends on whether, with the approval of the company, theMSREF joint venture has contracted third-party serviceproviders.

In particular, the agreement provides for compensationfor services related to portfolio and asset management inthe amount of 2% of the net annual rent or 0.5% of the netannual rent if an external management company is in-volved. Assistance with leasing is compensated in theamount of 1.5 times the agreed net monthly rent – or 0.75times the agreed net monthly rent if an external brokerwas involved. The compensation paid for sales assistanceequals 0.3% to 1.5% of the realised proceeds – or 0.15% to0.75% of the realised proceeds if an external broker wasinvolved. Individual properties and project developmentsmay be subject to case-by-case arrangements. On thebasis of this agreement, the DIC Asset AG chargedDeutsche Immobilien Chancen Beteiligungs AG the fol-lowing amounts for services related to MSREF joint ven-tures for 2009 and 2008, in each case excluding sales tax:

Recipient of service (EUR) Asset mgm. Leasing Dispos. Totalfees fees fees

DIC MSREF Frankfurt Portfolio GmbH 2009 14,499 9,508 36,563 60,570

2008 6,242 0 9,125 15,367

DIC MSREF Berlin GmbH 2009 15,735 0 0 15,735

2008 15,462 0 0 15,462

DIC MSREF Weißfrauenstrasse (MainTor) GmbH 2009 196,000 0 0 196,000

2008 196,000 0 0 196,000

DIC MSREF HMDD Portfolio GmbH 2009 34,037 0 9,000 43,037

2008 34,454 0 83,100 117,554

DIC MSREF HT Portfolio GmbH 2009 34,172 0 78,750 112,922

2008 35,771 0 0 35,771

DIC MSREF FF Südwest Portfolio GmbH 2009 62,158 0 0 62,158

2008 61,365 0 0 61,365

DIC MSREF Berlin Portfolio GmbH 2009 40,674 64,253 148,148 253,075

2008 45,587 75,178 40,825 161,590

Overall totals 2009 397,275 73,761 272,461 743,497

2008 394,880 75,178 133,050 603,108

116 � Notes

– Disposition fee (equates to a sales commission): 0.75%to 2.5% of the sales price after transaction costs if no out-side broker is involved, and 0.5% to 1.5% of the salesprice after transaction costs if an outside broker is in-volved;

– Tenant improvement fee (equates to a fee for re-leasingservices): 3.5% to 4% of the internal and external coststhat arise from renovation for a new tenant (particularlyfor planning and renovation) or negotiable on the basisof this expense;

– Development fee: for project development servicesthrough to initial leasing: dependent on expenses ormarket-rate compensation.

In 2009 and 2008, the following compensation was paidto Deutsche Immobilien Chancen Beteiligungs AG, inwhich DICP holds 7.5% of the share capital, in each caseexcluding sales tax:

DIC Capital Partners (Europe) GmbHThe company has granted to DIC Capital Partners (Europe)GmbH (formerly DIC Beteiligungs GmbH), which indirectlycontrols Deutsche Immobilien Chancen Beteiligungs AGas the general partner of Deutsche Immobilien ChancenAG & Co. KGaA, a loan in the amount of TEUR 700 at an in-terest rate of 4.5% p.a. (payable annually in arrears). Theloan is unlimited and was valued at TEUR 440 (previousyear TEUR 421) as at 31 December 2009. To secure thecompany's loan repayment and interest claims against DICCapital Partners (Europe) GmbH, DIC Capital Partners (Europe) GmbH has assigned to the company its claimsagainst Deutsche Immobilien Chancen Objekt Mozart-straße 33a GmbH for dividends and the repayment of aloan.

Under the “Shareholder Agreements” dated 27 November2006 and 9 May 2007, two other joint ventures of DICAsset AG, namely, DIC Hamburg Portfolio GmbH and DICHI Portfolio GmbH, and their respective wholly ownedproperty companies receive various services fromDeutsche Immobilien Chancen Beteiligungs AG. DIC Ham-burg Portfolio GmbH and DIC HI Portfolio GmbH are opportunistic co-investments in which DIC Asset AG has a20% interest (1.2% directly and 18.8% indirectly throughDIC Opportunistic GmbH). Other investors are DeutscheImmobilien Chancen AG & Co. KGaA with a 30% interestwhich is held by its wholly owned subsidiary DIC Oppor-tunity Fund GmbH (1.8% directly and 28.2% indirectlythrough DIC Opportunistic AG) and DIC Capital Partners(Germany) GmbH with a 50% interest (3% directly and47% indirectly through DIC Opportunistic GmbH).

Accordingly, the above-named joint venture andDeutsche Immobilien Chancen Beteiligungs AG have entered into “Asset Management Agreements” for the pro-vision of various management services as well as com-missions on the leasing and divestiture of real property, ineach case at the time of establishment of these joint ven-tures. Moreover, special compensation arrangements havebeen established with DIC Hamburg Portfolio GmbH forre-leasing services and an agreement regarding develop-ment fees has been concluded.

Under the existing service agreements (“Asset Manage-ment Agreements”) these DICP joint ventures are to pro-vide the following compensation to Deutsche ImmobilienChancen Beteiligungs AG:

– Base management fee: 1% of annual net rent;

– Leasing fee (equates to a leasing commission): 2.5 netmonthly rental payments or one net monthly rental pay-ment, if an outside broker is involved;

Recipient of service (EUR) Base mgm. Leasing Dispos. TI/Devel. Totalfees fees fees fees

DIC Hamburg Portfolio GmbH 2009 96,350 90,655 318,548 0 505,552

2008 108,019 0 278,500 0 386,519

DIC HI Portfolio GmbH 2009 227,147 0 106,350 0 333,497

2008 237,160 0 0 0 237,160

Overall totals 2009 323,497 90,655 424,898 0 839,050

2008 345,179 0 278,500 0 623,679

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Morgan Stanley Real Estate Funds (MSREF)Together with the companies of the MSREF Group, DICAsset AG has acquired interests in investment properties,including:

– a portfolio acquired from the Frankfurter Sparkasse,which is held via DIC MSREF Frankfurt Portfolio GmbHand its four wholly owned subsidiary property compa-nies, under agreements dated 22 December 2004;

– the so-called “eBay-Campus”, which is held by DIC MSREFBerlin GmbH and its three wholly owned subsidiaryproperty companies under agreements dated 23 August2005;

– the Degussa property in Frankfurt am Main, which isheld by DIC MainTor GmbH and its three wholly ownedsubsidiary companies, under agreements dated 14 October 2005; expired with the acquisition of the MSREFshares on 2 October 2009;

– properties transferred from MEAG, which are held by DICMSREF HMDD Portfolio GmbH and its eight whollyowned subsidiary property companies, under agree-ments dated 14 December 2005;

– properties acquired from Hochtief, which are held by DICMSREF HT Portfolio GmbH and its ten wholly owned sub-sidiary property companies, under agreements dated 24May 2006;

rent. Assistance with leasing is compensated in theamount of 1.5 times the agreed net monthly rent – or 0.75times the agreed net monthly rent if an external brokerwas involved. The compensation paid for sales assistanceequals 0.38% to 1.25% of the realised proceeds – or 0.25%to 0.75% of the realised proceeds if an external broker wasinvolved. Individual properties and project developmentsmay be subject to case-by-case arrangements. On thebasis of this agreement, the DIC Asset AG chargedDeutsche Immobilien Chancen Beteiligungs AG the fol-lowing amounts for services related to DICP joint venturesfor 2008 and 2009, in each case excluding sales tax:

As, aside from its Board of Directors, Deutsche ImmobilienChancen Beteiligungs AG has no employees of its own inthe property management sector, for the purpose of pro-viding the services assigned to it hereunder, it makes useof DIC Asset AG materials and personnel.

DIC Asset AG charges fees to Deutsche Immobilien Chan-cen Beteiligungs AG, the amount of which depends onwhether, with the approval of the company, the DICP jointventure has contracted third-party service providers.

In particular, the amount of the fee for services related toportfolio and asset management is 0.5% of the net annual

Recipient of service (EUR) Asset Mgm. Leasing Dispos. TotalFees Fees Fees

DIC Hamburg Portfolio GmbH 2009 48,175 55,781 159,604 263,560

2008 54,009 0 138,875 192,884

DIC HI Portfolio GmbH 2009 113,574 0 53,175 166,749

2008 117,330 0 0 117,330

Overall totals 2009 161,749 55,781 212,779 430,309

2008 171,340 0 138,875 310,215

118 � Notes

As a result of its accession to an agreement betweenDeutsche Immobilien Chancen AG & Co. KGaA and Forumof 18 September 2005, the company is also entitled andobligated vis-à-vis Deutsche Immobilien Chancen AG &Co. KGaA, to acquire a 40% share in the so-called "oppor-tunistic investments" of Deutsche Immobilien Chancen AG& Co. KGaA.

Due to the interest of 50% from other financial investors(such as MSREF) in opportunistic investments, the com-pany’s equity share amounts to 20% in total.

Transactions with executivesLegal transactions with executives and their close relativeswere entered into only to an insignificant extent.

Shareholder structureDeutsche Immobilien Chancen AG & Co. KGaA, Frankfurtam Main, directly and indirectly, holds a minority stake of39.4% (previous year 39.4%) in DIC Asset AG. The corre-sponding announcement pursuant to § 20 AktG has beensubmitted to the company.

– properties transferred from the Falk group, which areheld by DIC MSREF FF Südwest Portfolio GmbH and itssix wholly owned subsidiary property companies, underagreements dated 16 August 2006; and

– a portfolio acquired from the Landesbank Berlin, whichis held via DIC MSREF Berlin Portfolio GmbH and itstwelve 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 companiesof the FF Südwest portfolio, the HT portfolio and the prop-erties transferred from MEAG at 20% each indirectlythrough the portfolio companies. In addition, aside fromthe 50% stake in each of the divisions of the MSREF group,the company holds a 30% indirect interest in DIC Oppor-tunity Fund GmbH. The company holds an indirect inter-est in the property companies for the MainTor property of40%; the remaining 60% is held by DIC Opportunity Fund(30%) and DIC Capital Partners (Germany) GmbH & Co.KGaA (30%).

With respect to the distribution of profits, the DIC share-holders are entitled to equity return-based profits paid inadvance, that, in the case of an equity return in theamount of 17.5%, amount to 10% of profits and reach theirmaximum amount of 30% of profits at equity returns ofover 27.5%.

The company continues to be bound by credit agree-ments with the joint ventures, under which the companyacts both as lender and borrower. The underlying creditcomes in the form of overdraft facilities with an agreed in-terest rate of 6% p.a. in each case. Interest is payable in ar-rears at the end of a year or quarter or is added to the prin-cipal. The agreements call for neither fixed terms norcollateral security. With regard to the balances existing asof the balance sheet dates, see 25. “Receivables from re-lated parties”.

Forum European Realty Income II L.P. (Forum)On 11 July 2008, Deutsche Immobilien Chancen AG & Co.KGaA, Forum European Realty Income S.ar.l. and ForumEuropean Realty Income II L. P. (hereinafter referred to as"Forum") entered into two agreements on the issue of con-vertible bonds. Forum is therefore extending its existingconvertible bond by a further three years while at thesame time taking up an additional convertible bond alsowith a term of three years and the option to convert 1.52million DIC Asset AG shares, which are to be provided byDeutsche Immobilien Chancen AG & Co. KGaA. In return,Forum has transferred its holding of 4.9% in the DIC Group.

Notes � 119 Ove

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Corporate GovernanceThe declaration regarding the German Corporate Gover-nance Code pursuant to § 161 AktG has been submittedand is available to shareholders at any time.

Supervisory BoardThe members of the Supervisory Board are:

Dr. Gerhard Schmidt (Chairman), Attorney, Glattbach

Mr Klaus Sontowski (Deputy Chairman), Businessman, Nuremberg

Mr Michael Bock, Member of the Board of Management of Provinzial Versicherungsanstalten der Rheinprovinz AG, Düsseldorf

Mr Hellmar Hedder, Head of Real Estate Portfolio Management, VersAM Versicherungs-Assetmanagement GmbH, Münster

Mr Russell C. Platt, Chief Executive Officer Forum Partners, London/UK

Mr Bernd Wegener MRICS, Principal Head of the Real Estate Management Division at the Versicherungskammer Bayern (Bavarian InsuranceChamber), Munich

Announcements pursuant to § 160 AktGThe existing announcements following § 21 para. 1 WphGconcerning direct and indirect investments in the issuedcapital of DIC Asset AG are listed in appendix 4 to thenotes.

Events after the balance sheet dateThe transfer of possession, rights and obligations for theproperty located at Am Griesheimer Weg, Pfungstadt acquired in accordance with the purchase agreementdated 9 September 2009 (RMN portfolio) at a cost of TEUR4,964 will take place on 15 February 2010.

One property from the Berlin portfolio was transferred toa new investor with transfer of risks and rewards on 28February 2010. Pro-rata sales proceeds of TEUR 1,525 wereachieved for the property.

An opportunistic property located at Schlossplatz, Olden-burg from the MEAG portfolio was sold for TEUR 1,300 bynotarised agreement dated 18 December 2009. The trans-fer of possession, rights and obligations took place on 31January 2010. DIC Asset AG will receive 20% of the salesproceeds.

Apart from these transactions, no further material trans-actions were resolved, initiated or implemented in thepost-balance sheet period under review, i.e. the period be-tween the balance sheet date and the date of release ofthe consolidated financial statements by the Board of Directors on 3 March 2010.

EmployeesIn 2009 the Group had an average of 106 employees (pre-vious year 96 employees).

Other information

120 � Notes

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 (Germany) III Verwaltungs GmbH, Munich: Chairman of the Supervisory Board **

– DIC Capital Partners (Germany) III GmbH & Co. KGaA, Munich: Chairman of the Supervisory Board *

– DICP Asset Management Beteiligungsgesellschaft mbH & Co. KGaA, Munich: Chairman of the Supervisory Board **

– DIC Opportunistic GmbH, Frankfurt am Main: Chairman of the Supervisory Board *

– DIC Development GmbH, Frankfurt am Main: Chairman of the Supervisory Board*

Klaus-Jürgen Sontowski – GRR 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 GmbH, Frankfurt am Main: Deputy Chairman of the Supervisory Board *

– DIC Development GmbH, Frankfurt am Main: Deputy Chairman of the Supervisory Board

Michael Bock – Avenue des Arts, 35 S.A., Brussels, Belgium: Chairman of the Supervisory Board

– Kapitalbeteiligungsgesellschaft der Deutschen Versicherungswirtschaft AG, Düsseldorf: Deputy Chairman 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 **

– DICP Capital SE, Munich: Member of the Supervisory Board

– MUK Kapitalbeteiligungsgesellschaft mbH, Cologne: Member of the Supervisory Board **

– GRR AG, Erlangen: Deputy Chairman of the Supervisory Board

– Litos Immobilien AG, Munich: Deputy Chairman of the Supervisory Board

– MEDICLIN Aktiengesellschaft, Offenburg: Member of the Supervisory Board

– Handwerksbau Niederrhein Aktiengesellschaft, Düsseldorf: Member of the Supervisory Board

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

– Crown Westfalen Bank AG, Bochum: Member of the Supervisory Board

* Membership as defined in § 100 para. 2 sentence 2 AktG** Supervisory Board not formed on the basis of legal requirements

Notes � 121 Ove

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122 � Notes

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 position

of the Group are presented in such a way in the Group

report as to give a picture that corresponds to actual cir-

cumstances and describes the material opportunities and

risks of the Company’s and the Group’s anticipated devel-

opment over the rest of the financial year.

Frankfurt am Main, 3 March 2010

The Management Board

Ulrich Höller Markus Koch Dr. Jürgen Schäfer

In the financial year the company granted compensationof a total of TEUR 204 to members of the SupervisoryBoard. Further details, in particular information in accor-dance with § 285 sentence 1 No. 9 letter a sentences 5 to9 HGB, are given in the annual report.

The Chairman of the Supervisory Board of the company,Dr. Gerhard Schmidt, is a partner in the firm of lawyersWeil, Gotshal & Manges LLP. This firm received compensa-tion for legal advisory services, which was reported underexpenses, in the amount of TEUR 23 for the financial year2009 and TEUR 36 for the financial year 2008.

Board of Directors

The members of the Board of Directors are:

Mr Ulrich Höller (Chairman),

CEO, Master of Economics, Real Estate economist (ebs),

FRICS, Dreieich-Buchschlag;

Mr Markus Koch (Deputy Chairman),

CFO, Master of Business Administration, Elz;

Dr. Jürgen Schäfer,COO, lawyer, Real Estate economist (ebs),FRICS, Bad Homburg;

Responsibility Statement

Auditors´ Report � 123

Auditor's Report

these requirements. The combined group managementreport is consistent with the consolidated financial state-ments and as a whole provides a suitable view of theGroup's position and suitably presents the opportunitiesand risks of future development.

Nürnberg, March 3, 2010

Rödl & Partner GmbH

Wirtschaftsprüfungsgesellschaft

Steuerberatungsgesellschaft

Dr. Rödl Danesitz

Wirtschaftsprüfer Wirtschaftsprüfer

(German Public Auditor) (German Public Auditor)

We have audited the consolidated financial statementsprepared by the DIC Asset AG, comprising the balancesheet, the profit and loss account, statement of compre-hensive income, statement of changes in equity, cash flowstatement and the notes to the consolidated financialstatements, together with the group management report,which is combined with the management report of theparent company, for the financial year from January 1 toDecember 31, 2009. The preparation of the consolidatedfinancial statements and the combined group manage-ment report in accordance with IFRS as adopted by the EU,and the additional requirements of German commerciallaw pursuant to § 315a (1) HGB are the responsibility ofthe parent Company's Board of Management. Our re-sponsibility is to express an opinion on the consolidated financial statements and the combined group manage-ment report based on our audit.

We conducted our audit of the consolidated financialstatements in accordance with § 317 HGB and Germangenerally accepted standards for the audit of financialstatements promulgated by the Institut der Wirtschafts -prüfer (IDW). Those standards require that we plan andperform 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 combined group

management report are detected with reasonable assur-ance. Knowledge of the business activities and the eco-nomic and legal environment of the Group and expecta-tions as to possible misstatements are taken into accountin the determination of audit procedures. The effective-ness of the accounting-related internal control system andthe evidence supporting the disclosures in the consoli-dated financial statements and the combined group man-agement report are examined primarily on a test basiswithin the framework of the audit. The audit includes as-sessing the annual financial statements of those entitiesincluded in consolidation, the determination of entities tobe included in consolidation, the accounting and consol-idation principles used and significant estimates made bythe Company´s Board of Management, as well as evaluat-ing the overall presentation of the consolidated financialstatements and the combined group management report.We believe that our audit provides a reasonable basis forour opinion.

Our audit has not led to any reservations.

In our opinion, based on the findings of our audit, the con-solidated financial statements comply with IFRS asadopted by the EU, the additional requirements of Ger-man commercial law pursuant to § 315a (1) HGB and givea true and fair view of the net assets, financial position andresults of operations of the Group in accordance with

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124 � Statement on Corporate Governance

Declaration of Conformity and Corporate Governance Report 125

Compensation 128

Other information 130

Statement on Corporate Governance

remuneration for the Board of Directors is fixed in future, the Supervisory Board will take into considera-tion the new statutory provision to agree in principle acap for variable remuneration components to cover extraordinary developments.

� When concluding Board of Directors contracts, careshould be taken to ensure that payments made tomembers of the Board of Directors upon prior termina-tion of their work for the Board of Directors withoutgood cause should not exceed two years’ pay, includingancillary benefits (severance cap) and should remuner-ate no more than the residual term of their contract ofemployment. In deviation from clause 4.2.3 paragraph4 of the Code, no severance cap was or is agreed whencontracts are concluded with the Board of Directors. Anagreement of this kind runs counter to the basic un-derstanding of a Board of Directors contract that is rou-tinely agreed for the duration of the period of appoint-ment and can, in principle, not be terminated ordinarily.In addition, we believe that a cap to the severance pay-ment in the event of work for the Board of Directorsending prematurely without good cause is, in practice,not automatically enforceable unilaterally by the Com-pany. In the event of a Board of Directors contract beingterminated prematurely by mutual agreement, we shallendeavour to take account of the recommended courseof action.

� The Supervisory Board is required to propose suitablecandidates for new appointments or reappointmentsto positions on the Supervisory Board by the GeneralShareholders' Meeting. In deviation from Clause 5.3.3of the Code, no nomination committee was or is formedfor this purpose. As the six Members of the SupervisoryBoard are only representatives of the shareholders andthe current practice of voting proposals being prepared

The principles of responsible and good corporate gover-nance determine the actions of the management and supervisory bodies of DIC Asset AG. In this statement, theBoard of Directors reports on corporate governance in accordance with § 289a HGB and files a report – on behalfof the Supervisory Board as well – on the Company’s cor-porate governance in accordance with Clause 3.10 of theGerman Corporate Governance Code.

The Board of Directors and Supervisory Board regularlyaddress issues of good corporate governance. In particu-lar, they have familiarised themselves with the innovationsin the German Corporate Governance Code and havedealt with the question of compliance with the recom-mendations in financial year 2009. The consultationprocess resulted in the adoption of an updated annualDeclaration of Conformity dated 3 December 2009, whichhas been made permanently accessible to the public onthe Company’s website.

It is worded as follows:“The Board of Directors and Supervisory Board declarethat DIC Asset AG complied with the recommendations ofthe Government Commission on the German CorporateGovernance Code as published on 6 June 2008 from thedate of submission of its previous Declaration of Con-formity on 3 December 2008 until 5 August 2009 and since6 August 2009 has complied with and will continue tocomply with the recommendations as published on 18June 2009. The following exceptions applied or apply:

� In deviation from Clause 3.8 Paragraph 2 of the Code,the existing D&O insurance policy for the SupervisoryBoard did not and does not currently provide for anydeductible in accordance with the new provisions of§ 93 paragraph 2 of the Stock Corporation Act (Aktiengesetz – AktG), because the Company makes useof the transition periods admissible under law. Within

these transition periods, the Company will amend theexisting regulations concerning the deductible in theD&O insurance policy in line with the new statutory pro-visions and, in so doing, will also agree an appropriate deductible for the Members of the Supervisory Board.

� The members of the Board of Directors have beenpromised performance-related payments (profit-shar-ing bonuses) and options on so-called “virtual” sharesas variable remuneration components. In accordancewith clause 4.2.3 paragraph 2 of the Code, both positiveand negative developments within the agreed assess-ment period are taken into consideration when deter-mining the variable remuneration components insofaras the payments may turn out to be correspondinglyhigher or lower, or may not be made at all. When theyexercise the options, the Members of the Board of Directors receive share-price-dependent paymentswhich are based solely on the Company’s share pricewithin a reference period. In deviation from clause 4.2.3paragraph 3 of the Code, these options on virtual shareswere not and are not based on “demanding, relevantcomparison parameters” within the meaning of theCode.

We are of the opinion that incorporating additionalcomparison parameters will not bring about any greatermotivation or sense of responsibility. In deviation fromclause 4.2.3 paragraph 3 of the Code (2008 version), nopossibility of limitation (cap) for extraordinary, unfore-seen developments was or is agreed in existing Board ofDirectors contracts. The Company is convinced that theannual fixing of the profit-sharing bonuses by the Supervisory Board, the comparatively low proportion ofthe options in the total remuneration received by theBoard of Directors, and the proper fixing of a strike pricemake it unnecessary for caps to be adopted. When the

Declaration of Conformity and Corporate Governance Report

Statement on Corporate Governance � 125 Ove

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Modus operandi of the Board of Directors and Super -visory Board � Dual management structureAs required under Germany company law, the dual man-agement structure of DIC Asset AG, as a listed public limited company, consists of a Board of Directors and a Supervisory Board. There is rigid separation of the twoboards, allowing each of them to perform its different duties independently. The duty of the Board of Directors isto manage the Company, that of the Supervisory Board isto monitor this.

� Close cooperation between the Board of Directorsand Supervisory Board

The Board of Directors and the Supervisory Board workclosely together in the interests of the Company. This en-sures that optimal use is made of the professional expert-ise of the Board members and speeds up decision-makingprocesses. The Board of Directors keeps the SupervisoryBoard regularly, promptly and comprehensively informedof strategy, planning, risk exposure and risk managementas well as current business developments.

The Board of Directors puts forward strategic proposals,discusses them with the Supervisory Board and ensuresthat they are implemented. In the case of certain definedmeasures of material significance - such as major capitalinvestments – the rules of procedure for the Board of Directors stipulate that the approval of the SupervisoryBoard is necessary. The Supervisory Board has also issued

Information on corporate government practicesDIC Asset AG attaches great value to corporate gover-nance. The Board of Directors and Supervisory Board con-sider they have an obligation to ensure the Company'scontinued existence and the generation of sustainedvalue added through responsible corporate governancethat is focused on the long-term. Good corporate gover-nance also includes dealing with risks in a responsiblemanner. The Board of Directors makes sure that risks areadequately managed and controlled in the Company (cf.the comments in the Risk Report) and ensures that theCompany complies with the law as well as the recom-mendations of the German Corporate Governance Codein accordance with the annual Declaration of Conformity.The Company’s internal control, reporting and compliancestructures are continuously revised, enhanced and ad-justed to changes in framework conditions.

At present, more sophisticated corporate governancetools, such as in-house corporate governance principlesor compliance guidelines, are not required because of DICAsset AG’s company specific circumstances. Should the implementation of additional tools become necessary onthe basis of future developments, the Board of Directorsand Supervisory Board will react without delay.

by the full Supervisory Board has proved to be efficient,the Supervisory Board sees no need to form a nomina-tion committee.

� In deviation from Clause 5.4.6 Paragraph 1 of the Code,the Deputy Chairman of the Supervisory Board was notand is not considered in the remuneration of the Supervisory Board. Insofar as our experience to date hasshown that the number of occasions on which deputi-sation has been required is small, we regard separateremuneration as unnecessary.

� In slight deviation from Clause 7.1.2 of the Code, thehalf-year financial report was not and is not made pub-licly accessible within 45 days of the end of the report-ing period due to an unavoidably tight schedule. Wehave published all other quarterly reports and the con-solidated financial statements within the deadlines recommended by the Code and intend to maintain thisin the future.

Frankfurt am Main, 3 December 2009Board of Directors and Supervisory Board of DIC Asset AG“


A committee for more effective workingThe Supervisory Board has created an Audit Committeefrom amongst its members, which supports the Super -visory Board in performing its functions and reports regularly to the entire Supervisory Board. In particular, theAudit Committee deals with issues relating to the moni-toring of the financial reporting process, the effectivenessof the internal control system, the risk management sys-tem and compliance. It assesses and monitors the inde-pendence of the auditors and determines the focus of theaudit in consultation with them. The Audit Committeemeets when events merit this

The Audit Committee has the following three members:

– Michael Bock (Chairman of the Audit Committee)– Prof. Dr. Gerhard Schmidt– Hellmar Hedder

The Chairman of the Audit Committee is an independentfinancial expert and has particular knowledge and expe-rience in the areas of financial reporting and the auditingof financial statements from his professional work as theCFO of Provinzial Rheinland Versicherung AG.

There are currently no plans to create additional commit-tees.

rules of procedure for its work. The Chairman of the Supervisory Board coordinates the work of the Super -visory Board, chairs its meetings and protects its interestsexternally. A summary of the type and scope of the Supervisory Board’s activities in financial year 2009 is givenin the Board’s report.

� Disclosure of conflicts of interestEach member of the Board of Directors and the Super -visory Board discloses any possible conflicts of interest tothe Supervisory Board. When the Supervisory Boardmakes decisions regarding contracts with SupervisoryBoard members pursuant to § 114 AktG, the member con-cerned does not participate in the decision.

� Effectiveness of the Supervisory Board’s work The Supervisory Board regularly examines its own effec-tiveness. This examination takes the form of a company-specific questionnaire, which is evaluated without delay.The results are discussed and the findings are then incor-porated into the Board’s future operations.

Composition of the Board of Directors and SupervisoryBoard The Board of Directors of DIC Asset AG consists of threemembers: the Chairman (CEO), the Deputy Chairman, whois responsible for Finance and Controlling (CFO) and theDirector who is responsible for Operations (COO). The allocation of duties between the members of the Board isclear from the business allocation schedule. The Board ofDirectors adopts its resolutions by a simple majority of themembers participating in the resolution; if the votes areequal, the Chairman/Spokesman has the casting vote.

The Supervisory Board of DIC Asset AG consists of sixmembers, who are all elected by the General Shareholders’Meeting. The Supervisory Board has elected a Chairmanand a Deputy Chairman from its midst. Members of theSupervisory Board are elected for a term of office until theend of the General Shareholders’ Meeting that ratifies theactions of the Supervisory Board for the fourth financialyear from the start of the term of office. The financial yearin which the term of office starts is not included in this cal-culation. The current terms of office of incumbent Super-visory Board members end at different times because theywere appointed at different times. When proposing can-didates for election to the Supervisory Board, attention isfocused on the perception of the knowledge, skills andprofessional experience needed for the tasks to be per-formed and on ensuring the requisite diversity in its com-position. Former members of the Board of Directors of DICAsset AG are not represented in the Supervisory Board.The Board includes an adequate number of independentmembers, who are not related to the Company or its Boardof Directors in any professional or personal capacity, whichwould give rise to a conflict of interests.

Please refer to the Notes to the consolidated financialstatements with regard to the actual membership of bothBoards and the disclosures in accordance with § 285 No.10 HGB.


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good cause should not exceed the value of two years’ remuneration (settlement cap) and should not reimbursemore than the remaining period of the contract of em-ployment.

In the event of a change of control, the Chairman of theBoard Ulrich Höller is entitled to terminate his contract ofemployment prematurely. In exercising his right to termi-nate Mr Höller is entitled to receive a payment of twice histotal annual earnings in the financial year prior to thechange of control. If the remaining period of his contractof employment is less than two complete years, the equiv-alent of two years’ total earnings is replaced by a propor-tion of two years’ total annual earnings calculated pro rataover the shorter period remaining.

� Compensation in financial year 2009In addition to his work for DIC Asset AG, one member ofthe Board of Directors held the same position for DeutscheImmobilien Chancen Beteiligungs AG in financial year2009. The total compensation of the members of theBoard of Directors granted by DIC Asset AG amounted toTEUR 1,711 in financial year 2009.

� Stock-based compensation as a long-term incentiveIn addition, members of the Board of Directors hold options on so-called “virtual” shares in DIC Asset AG, whichalso take account of both positive and negative develop-ments. The options are fictitious and do not give any rightto purchase shares but grant the right to a cash payment.When exercising the options, Board members receive pay-ments to the amount of the share price less EUR 2.90 (MrHöller) or EUR 20.00 (Mr Koch and Dr. Schäfer) for each virtual share. The exercise of the options is linked to a spe-cific number of years’ service as a Board member. Theshare price is calculated from the average of the closingprices in a reference period of ten trading days. The totalvalue of the share options at 31 December 2009 was TEUR308 according to IFRS.

� Termination of Board membershipWith the exception of a Board contract covering the even-tuality of a change of control, the Board contracts do notcontain an express undertaking to provide a severancepayment. Contrary to the recommendation in clause 4.2.3of the German Corporate Governance Code, no agree-ment has been made that payments, including fringe ben-efits, to Board members who leave the Board early without

Compensation of members of the BoardThe compensation paid to the Board of Directors is decided by the Supervisory Board and is subject to regu-lar review. In addition to fixed remuneration and ancillarybenefits, Board compensation includes a variable, per-formance-based component and a long-term incentivecomponent. The relationship between total remunerationand the individual compensation components is appro-priate to the tasks of each member of the Board, their per-sonal achievements, the economic situation, the successand future prospects of DIC Asset AG and is also appro-priate taking account of the remuneration paid in compa-rable companies and the compensation paid to other people working for the Company.

� Variable, performance-related compensationThe variable, performance-related compensation is basedon the operating results of the DIC Asset AG Group and,consequently and therefore takes account of both posi-tive and negative developments. It amounts to at least50% (Mr Höller and Mr Koch) or a maximum of 50% (DrSchäfer) of the fixed remuneration. The level of paymentsis set annually by the Supervisory Board up to 30 April ofthe following year.

Compensation

EURFixed Profit Stock-based Total Total

compensation sharing compensation * Other ** 2009 2008

Ulrich Höller 399,999.96 100,000.00 255,500.00 3,013.68 758,513.64 160,166.60

Markus Koch 350,000.00 85,000.00 117,250.00 38,743.88 590,993.88 120,158.38

Dr. Jürgen Schäfer 250,000.08 50,000.00 33,700.00 27,347.76 361,047.84 385,657.00

Total 1,000,000.04 235,000.00 406,450.00 69,105.32 1,710,555.36 665,982.01

* In addition to the appreciation in the stock options in existence as of 31 December 2009, stock-based compensation also includes the value of the options ofMessrs Höller and Koch exercised in the past financial year

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

Board of Directors compensation 2009 Options on virtual shares

EURExercised Actual Exercise

number number possible from

Ulrich Höller 40,000 85,000 31.12.2011

Markus Koch 35,000 35,000 31.07.2011

Dr. Jürgen Schäfer ––– 30,000 30.09.2010

Total 75,000 150,000


Compensation of members of the Supervisory BoardSupervisory Board compensation is based on § 10 of thearticles of incorporation of DIC Asset AG. Each member receives performance-based compensation appropriateto his work. Supervisory Board members receive a fixedremuneration of EUR 15,000 for each full year of member-ship. As a variable, performance-dependent fee, eachmember receives EUR 2,556.46 for each percentage pointof dividend over the rate of seven percent, calculated onthe amount of equity, that is distributed, but no more thanEUR 12,782.30. The Chairman receives double the fixedand variable compensation. In addition to the remunera-tion, each member of the Supervisory Board receives reimbursement of his expenses, including Value AddedTax.

For membership of a committee of the Supervisory Board,which has met at least once during the financial year, themembers of the Supervisory Board also receive compen-sation of EUR 2,500 per committee for each full financialyear of their membership of this committee, but not exceeding EUR 5,000 in total. The Chairman of a Super -visory Board committee receives twice this additional compensation.

During the 2009 financial year, total remuneration of themembers of the Supervisory Board amounted to TEUR204. In addition, payments of TEUR 34 were made during2009 (2008: TEUR 36) to the law firm Weil, Gotshal &Manges LLP, in which Prof. Dr. Gerhard Schmidt, the Chair-man of the Supervisory Board, is a partner.

Directors’ transactions in the 2009 financial yearUnder § 15a of the German Securities Trading Act (WpHG),persons holding management positions must disclose theacquisition or disposal of shares in DIC Asset AG and anyrelated financial instruments where these exceed EUR5,000 in a calender year. During the 2009 financial year,DIC Asset AG received and published notification of thesale of 10,345 shares from the Chairman of the Board ofDirectors Ulrich Höller.

EUR Fixed Variable Compensation Totalcompensation compensation Committee

membership

Prof. Dr. Gerhard Schmidt (Chairman) 30,000 25,565 2,500 58,065

Klaus-Jürgen Sontowski (Deputy Chairman) 15,000 12,782 ––– 27,782

Michael Bock 15,000 12,782 5,000 32,782

Hellmar Hedder 15,000 12,782 2,500 30,282

Russell C. Platt 15,000 12,782 ––– 27,782

Bernd Wegener 15,000 12,782 ––– 27,782

105,000 89,475 10,000 204,475

Supervisory Board compensation in 2009

Shares held by members of the Board of Directors andSupervisory BoardThe number of shares in the Company or related financialinstruments held directly or indirectly (under the terms of§ 15a WpHG) by members of the Board of Directors andthe Supervisory board is less than one percent of theshares issued. However, 39.37 % of the voting rights in DICAsset AG are attributed to the Chairman of the Supervi-sory Board, Prof. Dr. Gerhard Schmidt, in accordance with§ 22 para. 1 sentence 1 No. 1 WpHG, which are held byDeutsche Immobilien Chancen AG & Co. KGaA and its sub-sidiaries DIC ML GmbH and DIC Opportunity Fund GmbH.


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Financial reporting and auditingDIC Asset AG prepares its consolidated financial state-ments in accordance with International Financial Report-ing Standards (IFRS), taking account of the recommenda-tions of EPRA, while separate financial statements arecompiled in accordance with HGB. The financial statementfor the whole year is drawn up by the Board of Directorsand verified by the Supervisory Board, as are the quarterlyand half-yearly reports. The Supervisory Board proposesan auditor on the recommendation of the Audit Commit-tee that is then chosen by the General Shareholders' Meet-ing. The auditor makes a statement of independence tothe Supervisory Board.

Shareholders and General Shareholders’ Meeting In the General Shareholders' Meeting, shareholders of DICAsset AG make use of their rights. The General Sharehold-ers’ Meeting elects the members of the Supervisory Boardand makes decisions on ratifying the actions of the Boardof Directors and the Supervisory Board as well as on Supervisory Board compensation. It decides on the distri-bution of profits, on amendments to the Articles of Incor-poration and important structural measures that have animpact on the policies of the Company. Every shareholderis entitled to take part in the General Shareholders' Meet-ing, to vote with his registered shares and to pose ques-tions to the Board of Directors.

Transparent communicationDIC Asset AG issues a detailed report each quarter on busi-ness developments and the position of its earnings, finances and assets. In addition, the public is kept in-formed of developments in the Company through the useof a variety of media. Insider information that could havea significant influence on the share price is published immediately in the form of ad-hoc announcements. DICAsset AG's website is an important tool for supplying information to shareholders, investors and the generalpublic. On its website, DIC Asset AG provides financial reports as well as ad-hoc and other announcements inboth German and English. A newsletter keeps interestedinvestors up to date and the financial calendar providesinformation on important dates.


Other information

� May 2009In a telephone meeting of the Supervisory Board, theBoard of Directors reported on business development, theresults of the first quarter 2009 and planned sales activi-ties. The Supervisory Board also agreed by means of a writ-ten draft resolution to the planned sale of treasury shares– subject to compliance with certain parameters – to astrategic investor.

� June 2009At the meeting, the Board of Directors presented the prob-able results of the second quarter of 2009. Sales and leas-ing activities and the status quo of interest rate hedgingmeasures and proposals to exploit the low level of interestrates were also presented and discussed in a plenarymeeting.

� July 2009 The Supervisory Board met members of the Board of Directors for a strategy meeting to discuss the Company’sfurther development in detail. DIC Asset AG’s basic posi-tion and long-term focus were discussed and confirmed.Key internal property-related issues for successful devel-opment and relevant potential for growth were workedout and possible strategies discussed. The analysis of material factors for changes in the DIC Asset AG shareprice was also a subject of discussion.

Advisory, monitoring and reviewing role of the Super-visory BoardIn financial year 2009, the Supervisory Board regularly anddiligently monitored the management of DIC Asset AG bythe Board of Directors and advised both on strategic cor-porate development and significant individual measures.

Through the financial year, the Board of Directors providedthe Supervisory Board with regular, timely and compre-hensive information on all material issues involved in cor-porate planning, on the Company’s and Group’s position(including risks, the internal control system and risk man-agement) and compliance as well as significant businessevents. This took place regularly, promptly and in detailthrough written and oral reports. Deviations from plannedbusiness development were explained in detail by theBoard of Directors. The Supervisory Board was involved inall material decisions at an early stage and – to the extentnecessary and in the interests of the Company – gave itsapproval after examining and discussing them in depth.

In 2009, the Supervisory Board met for five ordinary meet-ings and a further four telephone meetings. All membersof the Supervisory Board were represented in more thanhalf of the meetings. The Chairman of the SupervisoryBoard was also notified of material developments and decisions by the Board of Directors between the meetings.The members of the Board of Directors participated in allof the meetings.

In all the meetings, the Board of Directors explained theoperational business development (in particular, lettingand sales activities), the trend in sales and earnings as wellas the Group’s financial position, with each issue thenbeing discussed jointly. The Supervisory Board was alwaysprovided with the documentation and – if necessary – therequisite written draft of the resolution in sufficient time toprepare for meetings and resolutions. The SupervisoryBoard was informed of particularly important businessevents by the Board of Directors in detail and, at all times,without delay. If necessary, decisions were made using thewritten resolution procedure, which does not require thephysical presence of the members.

Focal points of the meetings

� March 2009The meeting focused on the results of the previous meet-ing of the audit committee, which were debated and dis-cussed in detail. The annual financial statements of DICAsset AG for financial year 2008 were approved and theconsolidated financial statements were agreed. Theagenda for the 2009 General Shareholders’ Meeting wasdiscussed and adopted. The Board of Directors also explained the key points of the Group’s planning for 2009including the profit forecast, which was subsequently dis-cussed. Planned sales activities were also the subject ofdiscussion. In the absence of the Board of Directors, theSupervisory Board set its variable remuneration for thepast financial year.

Report of the Supervisory Board � 131

Report of the Supervisory Board

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132 � Report of the Supervisory Board

The meeting in September 2009 focused on questions ofreal estate valuations and issued of risk management (in-cluding the internal control system). Legal changes affecting the 2009 financial statements were also dis-cussed and finally, the priorities for the audit of the annualfinancial statements were set in consultation with the auditor.

Corporate Governance reviewed, Declaration updatedDuring the year under review, the Supervisory Board hashad regular dealings with the Company’s corporate gov-ernance. The Supervisory Board issued the current decla-ration of conformity to the recommendations of the German Corporate Governance Code pursuant to § 161AktG together with the Board of Directors in December2009 and made it available to shareholders on the Com-pany's website.

The Board of Directors and the Supervisory Board reporton corporate governance in a separate section “Statementon Corporate Governance”. The Declaration of Conformityis also reproduced there in full.

Annual and consolidated financial statements 2009audited and approvedThe Board of Directors prepared the annual and consoli-dated financial statements for financial year 2009 includ-ing the management report summarised with the Groupmanagement report. This was audited by Rödl & PartnerGmbH Wirtschaftsprüfungsgesellschaft Steuerberatungs-gesellschaft and provided with unqualified certification ineach case.

Report by the Audit CommitteeThe Supervisory Board has established an audit commit-tee to ensure that work is allocated efficiently. It is involved, in particular, with the financial statements, riskmanagement (including the internal control system), com-pliance and the preparation of the issue of the mandateto the auditors and the setting of priorities for the audit.The chairman of the audit committee provided regular,detailed reports on the committee’s work to the plenarymeetings of the Supervisory Board.

Mr Michael Bock, as Chairman of the Audit Committee, isan independent financial expert and has particular knowl-edge and experience in the areas of financial reportingand the auditing of financial statements as the CFO ofProvinzial Rheinland Versicherung. Additional membersare the Chairman of the Supervisory Board Prof. Dr. Gerhard Schmidt and Hellmar Hedder.

The audit committee met twice in 2009. The annual andconsolidated financial statements for the financial year2008 as well as the associated audit reports were exam-ined and discussed in detail in March 2009 in the presenceof the auditor to prepare for the meeting of the Super -visory Board. Recommendations were also prepared forthe requisite resolutions.

� August 2009 Within the framework of a telephone conference, theBoard of Directors presented the results of the secondquarter of 2009. The interim report was approved by theSupervisory Board following the subsequent discussion.The Supervisory Board agreed to the purchase of sharesin the MainTor project.

� September 2009 The chairman of the audit committee reported on the previous meeting of the audit committee, which dealtwith issues or real estate valuation and audit questions, inparticular. The Board of Directors updated its assessmentof earnings and provided a status report on sales and let-ting activities. In addition, strategies for securing long-term financing were debated and discussed. Followingdiscussion of the proposal, the Supervisory Board agreedto acquire the remaining shares in DIC ONSITE with theaim of integrating property management completelywithin the Group.

� November 2009At the meeting, the Board of Directors provided a statusreport on property sales and letting activities and the wayahead. Issues of financing and possible options for growthwere also presented and the way ahead was discussed ina plenary meeting.

Report of the Supervisory Board � 133

The Supervisory Board approved the Board of Directors’report on relationships to affiliates and also seconded theresult of the audit of the report by the auditor. As a resultof its own audit, the Supervisory Board established that ithad no reason to object to the declaration made by theManagement Board on the relations with affiliated com-panies, presented at the end of the report.

Auditor proposedThe audit committee recommended to the SupervisoryBoard that it propose commissioning Rödl & PartnerGmbH Wirtschaftsprüfungsgesellschaft Steuerberatungs-gesellschaft, Nuremberg to audit the annual financialstatements and consolidated financial statements for financial year 2010 and to review the interim report to theGeneral Shareholders' Meeting. On the basis of this rec-ommendation the Supervisory Board adopted a proposalto this effect for submission to the General Shareholders’Meeting.

The Supervisory Board would like to thank the Manage-ment Board and the employees for their dedication andhard work during the past financial year.

Frankfurt am Main, 3 March 2010

The Supervisory BoardProf. Dr. Gerhard Schmidt- Chairman -

The audit committee first checked the financial state-ments to prepare for the Supervisory Board meeting onthese statements. The auditor participated in the meetingin February 2010, reported on the significant findings ofits audit and was available to answer the committee'squestions. On this basis, the audit committee compiled areport on its work and prepared recommendations for theSupervisory Board’s resolutions.

The Supervisory Board audited the annual and consoli-dated financial statements for financial year 2009, themanagement report summarised with the Group man-agement report and the Board of Directors’ proposal forthe distribution of profits. To this end, these reports, thereports of the auditor and the audit committee were pre-sented in good time and discussed in detail and examinedin the Supervisory Board meeting in March 2010. Thechairman of the audit committee informed the Super -visory Board meeting of the significant content and resultof the audit committee's preliminary audit. The auditoralso reported on the material findings of his audit and answered questions.

The Supervisory Board concurred with the results of theauditor's audit. On the basis of its own checks, the Super-visory Board established that it has no cause for objec-tions. Accordingly the Supervisory Board approved the annual and consolidated financial statements prepared bythe Board of Directors in line with the recommendation ofthe audit committee. The annual financial statements ofDIC Asset AG are hereby approved.

Proposed distribution of profits In connection with the proposal on the distribution ofprofits by the Board of Directors, the Supervisory Boardalso discussed the balance sheet policy and financial plan-ning in the audit committee and the entire SupervisoryBoard. On the basis of its own audit, the Supervisory Boardsupports the proposal on the distribution of profits by theBoard of Directors.

Relationships to affiliates reviewedThe Board of Directors prepared a report on relationshipsto affiliates for financial year 2009. The auditor has auditedthis report, reported on its findings in writing and issuedthe following unqualified certificate:

“According to our properly considered audit and evalua-tion, we confirm that1. the actual information in the report is correct,2. in the legal transactions mentioned in the report, under

the circumstances known at the time they were under-taken, the consideration paid by the Company was notdisproportionately high."

The Board of Directors’ report and the auditor's reportwere also made available to the individual members of theSupervisory Board in a timely manner. These reports wereexamined and discussed in depth in the meetings of theaudit committee and the Supervisory Board. The auditorparticipated in these and reported on the material find-ings of his audit.

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DIC Asset Beteiligungs GmbH, Erlangen 100,0

DIC Office Balance GmbH, Frankfurt 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 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 OP Objekt Betriebsvorrichtungs 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

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







Name and registered office of company Interest (%)


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 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

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 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 a. M. 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 a. M. 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 a. M. 100,0

Name and registered office of company Interest (%) Name and registered office of company Interest (%)

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 6 Co. KG, Frankfurt am Main 100,0

DIC DP Objekt 2 GmbH, Frankfurt am Main 100,0





DIC DP Betriebsvorrichtungs GmbH, Frankfurt am Main 100,0

DIC 25 Portfolio GmbH, Frankfurt am Main 100,0

DIC 25 Trier GmbH, Frankfurt am Main 100,0

DIC 25 Herborn-Seelbach GmbH, Frankfurt am Main 100,0

DIC 25 Unkel 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 MainTor Real Estate 1 GmbH, Frankfurt am Main 100,0

DIC ONSITE GmbH, Mannheim 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 99,2

Deutsche Immobilien Chancen Objekt Ulm 1 Erweiterung GmbH, Erlangen 90,0

Deutsche Immobilien Chancen Objektbeteiligungs GmbH, Erlangen 90,0

Consolidated subsidiaries

List of subsidiariesAppendix 1 of the notes to the consolidated financial statements

134 � Overview

DIC MSREF Berlin GmbH, Frankfurt am Main 50,0

DIC Objekt Berlin 1 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 GmbH, Frankfurt am Main 50,0

DIC Berlin Portfolio Objekt Hardenbergstraße GmbH, Frankfurt am Main 50,0

DIC Berlin Portfolio Objekt Berliner Straße GmbH, Frankfurt am Main 50,0

DIC Berlin Portfolio Objekt Frankfurt GmbH & Co.KG, Frankfurt am Main 50,0

DIC Berlin Portfolio Objekt Arnulfstraße GmbH, Frankfurt am Main 50,0

DIC Berlin Portfolio Objekt Badensche Straße GmbH, Frankfurt a. M. 50,0

DIC Berlin Portfolio Objekt Cottbus GmbH, Frankfurt am Main 50,0

DIC Berlin Portfolio Objekt 1 GmbH, Frankfurt am Main 50,0





Name and registered office of company Interest (%)

DIC MainTor GmbH, Frankfurt am Main 40,0

DIC MainTor Porta GmbH, Frankfurt am Main 40,0

DIC MainTor Primus GmbH, Frankfurt am Main 40,0

DIC MainTor Südareal GmbH, Frankfurt am Main 40,0

DIC MainTor Zweite Beteiligungs GmbH & Co. KG, Frankfurt am Main 40,0

DIC MainTor Verwaltungs GmbH, Frankfurt am Main 40,0

DIC GMG GmbH, Frankfurt am Main 20,0

WACO Beteiligungs GmbH, Frankfurt am Main 20,0

DIC MSREF HMDD Portfolio GmbH, Frankfurt am Main 20,0

DIC MSREF HMDD Objekt Düsseldorf GmbH, Frankfurt am Main 20,0

DIC MSREF HMDD Objekt Essen GmbH, Frankfurt am Main 20,0

DIC MSREF HMDD Objekt Frankfurt GmbH, Frankfurt am Main 20,0

DIC MSREF HMDD Objekt Radolfzell GmbH, Frankfurt am Main 20,0

DIC MSREF HMDD Objekt 1 GmbH, Frankfurt am Main 20,0




DIC MSREF HT Portfolio GmbH, Frankfurt am Main 20,0

DIC MSREF HT Objekt Düsseldorf GmbH, Frankfurt am Main 20,0

DIC MSREF HT Objekt Erfurt GmbH, Frankfurt am Main 20,0

DIC MSREF HT Objekt Hamburg GmbH, Frankfurt am Main 20,0

DIC MSREF HT Objekt Krefeld GmbH, Frankfurt am Main 20,0

DIC MSREF HT Objekt Mannheim GmbH, Frankfurt am Main 20,0

DIC MSREF HT Objekt Mörfelden-Walldorf GmbH, Frankfurt am Main 20,0

DIC MSREF HT Objekt Neu-Ulm GmbH, Frankfurt am Main 20,0

DIC MSREF HT Objekt Saarbrücken GmbH, Frankfurt am Main 20,0

DIC MSREF HT Objekt Weimar GmbH, Frankfurt am Main 20,0

DIC MSREF FF Südwest Portfolio GmbH, Frankfurt am Main 20,0

DIC MSREF FF Südwest Objekt München 1 GmbH, Frankfurt am Main 20,0

DIC MSREF FF Südwest Objekt München 2 GmbH, Frankfurt am Main 20,0

DIC MSREF FF Südwest Objekt Nürnberg GmbH, Frankfurt am Main 20,0

DIC MSREF FF Südwest Objekt Würzburg GmbH, Frankfurt am Main 20,0

DIC MSREF FF Südwest Objekt Heilbronn GmbH, Frankfurt am Main 20,0

DIC MSREF FF Südwest Objekt Mainz GmbH, Frankfurt am Main 20,0

DIC BW Portfolio GmbH, Frankfurt am Main 20,0

DIC Development GmbH, Frankfurt am Main 20,0

DIC Opportunistic GmbH, Frankfurt am Main 20,0

DIC HI Portfolio GmbH, Frankfurt am Main 20,0

DIC HI Objekt Berlin Landsbergerstraße GmbH, Frankfurt am Main 20,0

DIC HI Objekt Frankfurt Theodor-Heuss-Allee GmbH, Frankfurt a. M. 20,0

DIC HI Objekt Hamburg Kurt-Schumacher-Allee GmbH, Frankfurt a. M. 20,0

DIC HI Objekt Hamburg Steindamm GmbH, Frankfurt am Main 20,0

DIC HI Objekt Koblenz Frankenstraße GmbH, Frankfurt am Main 20,0

DIC HI Objekt Koblenz Rizzastraße GmbH, Frankfurt am Main 20,0

DIC HI Objekt Köln GmbH, Frankfurt am Main 20,0

DIC HI Objekt Neu-Isenburg GmbH, Frankfurt am Main 20,0

DIC HI Objekt Ratingen GmbH, Frankfurt am Main 20,0

DIC HI Objekt Schaumainkai GmbH, Frankfurt am Main 20,0

DIC HI Objekt 1 GmbH, Frankfurt am Main 20,0





DIC HI Objekt 6 GmbH & Co.KG, Frankfurt am Main 20,0










DIC HI Betriebsvorrichtungs GmbH, Frankfurt am Main 20,0

DIC Hamburg Portfolio GmbH, Frankfurt am Main 20,0

DIC Hamburg Objekt Dammtorstraße GmbH, Frankfurt am Main 20,0

DIC Hamburg Objekt Ernst-Mantius-Straße GmbH, Frankfurt a. M. 20,0

DIC Hamburg Objekt Großmannstraße GmbH, Frankfurt am Main 20,0

DIC Hamburg Objekt Harburger Ring GmbH, Frankfurt am Main 20,0

DIC Hamburg Objekt Marckmannstraße GmbH, Frankfurt am Main 20,0

DIC Hamburg Objekt Schädlerstraße GmbH, Frankfurt am Main 20,0

DIC Hamburg Objekt Schlossstraße GmbH & Co.KG, Frankfurt a. M. 20,0

DIC Hamburg Objekt Schwenkestraße GmbH, Frankfurt am Main 20,0

DIC Hamburg Objekt 1 GmbH, Frankfurt am Main 20,0










Name and registered office of company Interest Name and registered office of company Interest

Joint ventures with proportionate consolidation Indirect and direct holdings of 20% and 40% respectively

List of joint venturesAppendix 2 of the notes to the consolidated financialstatements

List of joint venturesAppendix 3 of the notes to the consolidated financial statements

Overview � 135 Ove

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Announcements pursuant to § 160 AktG

a. DICP Capital SE, Munich, Germany, informed us pursuant to § 21 Para.1 of the German Securities Trading Act (WpHG) that its share of votingrights in DIC Asset AG, Frankfurt am Main, exceeded the levels of 3%,5%, 10%, 15%, 20%, 25% and 30% on 17 September 2009 and nowamounts to 39.37% (corresponding to 12,342,634 votes). 39.37% ofthese voting rights are to be assigned to the company (correspondingto 12,342,634 votes) pursuant to § 22 Para. 1 Sentence 1 No. 1 WpHG.Assignment is conducted via companies controlled by DICP CapitalSE, namely DIC ML GmbH, DIC Opportunity Fund GmbH, DeutscheImmobilien Chancen AG & Co. KGaA, Deutsche Immobilien ChancenBeteiligungs AG, DIC Grund- und Beteiligungs GmbH and DIC CapitalPartners (Europe) GmbH, whose share of voting rights in DIC AssetAG, Frankfurt am Main, each totals 3% or more.

b. solvia Vermögensverwaltungs GmbH, Wolfenbüttel, Germany, in-formed us pursuant to § 21 Para. 1 WpHG that its share of voting rightsin DIC Asset AG, Frankfurt am Main, exceeded the levels of 3% and 5%on 20 May 2009 and now amounts to 5.11% in total (1,602,522 votingrights).

F. Rehm, Germany, informed us pursuant to § 21 Para. 1 WpHG that itsshare of voting rights in DIC Asset AG, Frankfurt am Main, exceededthe levels of 3% and 5% on 20 May 2009 and now amounts to 5.11%in total (1,602,522 voting rights). Of these, 5.11% are assigned as vot-ing rights (1,602,522 voting rights) pursuant to § 22 Para. 1 Sentence1 No. 1 WpHG via solvia Vermögensverwaltungs GmbH, Wolfenbüttel,Germany, whose share of voting rights totals 3% or more.

c. Massachusetts Mutual Life Insurance Company, USA, informed us pur-suant to §§ 21 Para. 1, 24 WpHG:Correction of voting rights notification pursuant to § 21 Para. 1, 24WpHG OppenheimerFunds Inc., Centennial, Colorado, USA, fell belowthe 3% level of voting rights in DIC Asset AG, Frankfurt am Main (ISIN:DE0005098404, WKN: 509840) on 9 January 2008. The share of the vot-ing rights on this date amounted to 2.91% (911,303 voting rights),which are to be assigned to OppenheimerFunds Inc. pursuant to § 22Para. 1 Sentence 1 No. 6 WpHG.

Voting rights notification pursuant to § 21 Para. 1, 24 WpHG Oppenheimer Acquisition Corp., Centennial, Colorado, USA, fell belowthe 3% level of voting rights in DIC Asset AG, Frankfurt am Main (ISIN:DE0005098404, WKN: 509840) on 9 January 2008. The share of the vot-ing rights on this date amounted to 2.91% (911,303 voting rights),which are to be assigned to Oppenheimer Acquisition Corp. pursuantto § 22 Para. 1 Sentence 1 No. 6 Sentence 2 WpHG.

Voting rights notification pursuant to § 21 Para. 1, 24 WpHG MassMutual Holding LLC, Springfield, Massachusetts, USA, fell belowthe 3% level of voting rights in DIC Asset AG, Frankfurt am Main (ISIN:DE0005098404, WKN: 509840) on 9 January 2008. The share of the vot-ing rights on this date amounted to 2.91% (911,303 voting rights),which are to be assigned to MassMutual Holding LLC pursuant to §22 Para. 1 Sentence 1 No. 6 Sentence 2 WpHG.

Correction to the voting rights notification pursuant to § 21 Para. 1, 24WpHG Massachusetts Mutual Life Insurance Company, Springfield, Massa-chusetts, USA, fell below the 3% level of voting rights in DIC Asset AG,Frankfurt am Main (ISIN: DE0005098404, WKN: 509840) on 9 January2008. The share of the voting rights on this date amounted to 2.91%(911,303 voting rights), which are to be assigned to MassachusettsMutual Life Insurance Company pursuant to § 22 Para. 1 Sentence 1No. 6 Sentence 2 WpHG.

d. DIC ML GmbH, Frankfurt am Main, informed us pursuant to § 21 Para.1 WpHG that its share of voting rights in DIC Asset AG, Frankfurt amMain, fell below the level of 10% on 9 July 2008. DIC ML GmbH’s shareof voting rights now amounts to 9.19% (corresponding to 2,881,668votes).

e. DIC Opportunity Fund GmbH, Frankfurt am Main, informed us pur-suant to § 21 Para. 1 WpHG that its share of voting rights in DIC AssetAG, Frankfurt am Main, exceeded the level of 3% on 14 July 2008. DICOpportunity Fund GmbH’s share of voting rights now amounts to4.85% (corresponding to 1,519,000 votes).

f. Deutsche Immobilien Chancen AG & Co. KGaA, Frankfurt am Main, vol-untarily informed us pursuant to § 21 Para. 1 WpHG that its share ofvoting rights in DIC Asset AG, Frankfurt am Main, amounted to 39.37%(corresponding to 12,342,634 votes) on 14 July 2008. 14.04% of thesevoting rights are to be assigned to the company (corresponding to4,400,668 votes) pursuant to § 22 Para. 1 Sentence 1 No. 1 WpHG. As-signment is conducted via companies it controls, namely DIC MLGmbH and DIC Opportunity Fund GmbH, whose share of voting rightsin DIC Asset AG, Frankfurt am Main, each totals 3% or more.

g. Deutsche Immobilien Chancen Beteiligungs AG, Frankfurt am Main,voluntarily informed us pursuant to § 21 Para. 1 WpHG that its shareof voting rights in DIC Asset AG, Frankfurt am Main, amounted to39.37% (corresponding to 12,342,634 votes) on 14 July 2008. Of these39.37% are to be assigned to the company as voting rights (corre-sponding to 12,342,634 votes) pursuant to § 22 Para. 1 Sentence 1 No.1 WpHG. Assignment is conducted via companies it controls, namelyDIC ML GmbH, DIC Opportunity Fund GmbH and Deutsche Immo-bilien Chancen AG & Co. KGaA, whose share of voting rights in DICAsset AG, Frankfurt am Main, each totals 3% or more.

h. DIC Grund- und Beteiligungs GmbH, Erlangen, voluntarily informedus pursuant to § 21 Para. 1 WpHG that its share of voting rights in DICAsset AG, Frankfurt am Main, amounted to 39.37% (corresponding to12,342,634 votes) on 14 July 2008. 39.37% of these voting rights are tobe assigned to the company (corresponding to 12,342,634 votes) pur-suant to § 22 Para. 1 Sentence 1 No. 1 WpHG. Assignment is conductedvia companies it controls, namely DIC ML GmbH, DIC OpportunityFund GmbH, Deutsche Immobilien Chancen AG & Co. KGaA andDeutsche Immobilien Chancen Beteiligungs AG, whose share of vot-ing rights in DIC Asset AG, Frankfurt am Main, each totals 3% or more.

i. DIC Capital Partners (Europe) GmbH, Munich, voluntarily informed uspursuant to § 21 Para. 1 WpHG that its share of voting rights in DICAsset AG, Frankfurt am Main, amounted to 39.37% (corresponding to12,342,634 votes) on 14 July 2008. 39.37% of these voting rights are tobe assigned to the company (corresponding to 12,342,634 votes) pur-suant to § 22 Para. 1 Sentence 1 No. 1 WpHG. Assignment is conductedvia companies it controls, namely DIC ML GmbH, DIC OpportunityFund GmbH, Deutsche Immobilien Chancen AG & Co. KGaA, DeutscheImmobilien Chancen Beteiligungs AG and DIC Grund- und Beteili-gungs GmbH, whose share of voting rights in DIC Asset AG, Frankfurtam Main, each totals 3% or more.

j. GCS Verwaltungs GmbH, Glattbach, voluntarily informed us pursuantto § 21 Para. 1 WpHG that its share of voting rights in DIC Asset AG,Frankfurt am Main, amounted to 39.37% (corresponding to12,342,634 votes) on 14 July 2008. 39.37% of these voting rights are tobe assigned to the company (corresponding to 12,342,634 votes) pur-suant to § 22 Para. 1 Sentence 1 No. 1 WpHG. Assignment is conductedvia companies it controls, namely DIC ML GmbH, DIC OpportunityFund GmbH, Deutsche Immobilien Chancen AG & Co. KGaA, DeutscheImmobilien Chancen Beteiligungs AG, DIC Grund- und BeteiligungsGmbH and DIC Capital Partners (Europe) GmbH, whose share of vot-ing rights in DIC Asset AG, Frankfurt am Main, each totals 3% or more.

k. Prof. Dr. Gerhard Schmidt, Germany, voluntarily informed us pursuantto § 21 Para. 1 WpHG that its share of voting rights in DIC Asset AG,Frankfurt am Main, amounted to 39.37% (corresponding to12,342,634 votes) on 14 July 2008. 39.37% of these voting rights are tobe assigned to him (corresponding to 12,342,634 votes) pursuant to§ 22 Para. 1 Sentence 1 No. 1 WpHG. Assignment is conducted viacompanies he controls, namely DIC ML GmbH, DIC Opportunity FundGmbH, Deutsche Immobilien Chancen AG & Co. KGaA, Deutsche Im-mobilien Chancen Beteiligungs AG, DIC Grund- und BeteiligungsGmbH, DIC Capital Partners (Europe) GmbH and GCS VerwaltungsGmbH, whose share of voting rights in DIC Asset AG, Frankfurt amMain, each totals 3% or more.

Announcements on Voting Rights Year 2009Appendix 4 of the notes to the consolidated financial statements

136 � Overview

l. European Investors Inc., New York, USA, also informed us pursuant to§ 21 Para. 1 WpHG that its share of voting rights in DIC Asset AG, Frank-furt am Main, exceeded the level of 5% on 17 January 2008 and nowamounts to 5.04% (1,581,134 voting rights). Of these, 5.04% (1,581,134voting rights) are to be assigned to European Investors Inc. pursuantto § 22 Para.1 Sentence 1 No. 6 WpHG.

.m. MSREF V Marble B.V., Amsterdam, the Netherlands, informed us pur-

suant to §§ 21 ff. WpHG that its share of voting rights in DIC Asset AG,Frankfurt am Main, exceeded the level of 10% on 7 December 2007and now amounts to 10.41% (3,262,022 voting rights). All voting rightsare held directly by MSREF V Marble B.V.

n. MSREF V Cosmos B.V., Amsterdam, the Netherlands, informed us pur-suant to §§ 21 ff. WpHG that its share of voting rights in DIC Asset AG,Frankfurt am Main, exceeded the level of 10% on 7 December 2007and now amounts to 10.41% (3,262,022 voting rights). All voting rightsare assigned to MSREF V Cosmos B.V. pursuant to § 22 Para. 1 Sen-tence 1 No. 1 WpHG. Assignment is via MSREF V Marble B.V., whoseassigned share of the voting rights is 3% or more.

o. MSREF V International Holdings Coöperativ, U.A., Amsterdam, theNetherlands, informed us pursuant to §§ 21 ff. WpHG that its share ofvoting rights in DIC Asset AG, Frankfurt am Main, exceeded the levelof 10% on 7 December 2007 and now amounts to 10.41% (3,262,022voting rights). All voting rights are assigned to MSREF V InternationalHoldings Coöperativ pursuant to § 22 Para. 1 Sentence 1 No. 1 WpHG.Assignment is via MSREF V Marble B.V. and MSREF V Cosmos B.V.,whose assigned share of the voting rights each totals 3% or more.

p. Morgan Stanley Real Estate Fund V International-TE, L.P., New York,USA, informed us pursuant to §§ 21 ff. WpHG that its share of votingrights in DIC Asset AG, Frankfurt am Main, exceeded the level of 10%on 7 December 2007 and now amounts to 10.41% (3,262,022 votingrights). All voting rights are assigned to Morgan Stanley Real EstateFund V International-TE, L.P. pursuant to § 22 Para. 1 Sentence 1 No. 1WpHG. Assignment is via MSREF V Marble B.V., MSREF V Cosmos B.V.and MSREF V International Holdings Coöperativ, U.A., whose assignedshare of the voting rights each totals 3% or more.

q. Morgan Stanley Real Estate Fund V International-T, L.P., New York, USA,informed us pursuant to §§ 21 ff. WpHG that its share of voting rightsin DIC Asset AG, Frankfurt am Main, exceeded the level of 10% on 7December 2007 and now amounts to 10.41% (3,262,022 votingrights). All voting rights are assigned to Morgan Stanley Real EstateFund V International-T, L.P. pursuant to § 22 Para. 1 Sentence 1 No. 1WpHG. Assignment is via MSREF V Marble B.V., MSREF V Cosmos B.V.and MSREF V International Holdings Coöperativ, U.A., whose assignedshare of the voting rights each totals 3% or more.

r. Morgan Stanley Real Estate Investors V International, L.P., New York,USA, informed us pursuant to §§ 21 ff. WpHG that its share of votingrights in DIC Asset AG, Frankfurt am Main, exceeded the level of 10%on 7 December 2007 and now amounts to 10.41% (3,262,022 votingrights). All voting rights are assigned to Morgan Stanley Real EstateInvestors V International, L.P. pursuant to § 22 Para. 1 Sentence 1 No.1 WpHG. Assignment is via MSREF V Marble B.V., MSREF V Cosmos B.V.and MSREF V International Holdings Coöperativ, U.A., whose assignedshare of the voting rights each totals 3% or more.

s. Morgan Stanley Real Estate Fund V Special International, L.P., New York,USA, informed us pursuant to §§ 21 ff. WpHG that its share of votingrights in DIC Asset AG, Frankfurt am Main, exceeded the level of 10%on 7 December 2007 and now amounts to 10.41% (3,262,022 votingrights). All voting rights are assigned to Morgan Stanley Real EstateFund V Special International, L.P. pursuant to § 22 Para. 1 Sentence 1No. 1 WpHG. Assignment is via MSREF V Marble B.V., MSREF V CosmosB.V. and MSREF V International Holdings Coöperativ, U.A., whose assigned share of the voting rights each totals 3% or more.

t. MSREF V International-GP, L.L.C., New York, USA, informed us pursuantto §§ 21 ff. WpHG that its share of voting rights in DIC Asset AG, Frank-furt am Main, exceeded the level of 10% on 7 December 2007 andnow amounts to 10.41% (3,262,022 voting rights). All voting rights areassigned to MSREF V International-GP, L.L.C. pursuant to § 22 Para. 1Sentence 1 No. 1 WpHG. Assignment is via MSREF V Marble B.V., MSREFV Cosmos B.V., MSREF V International Holdings Coöperativ, U.A., Mor-gan Stanley Real Estate Fund V International-TE, L.P., Morgan StanleyReal Estate Fund V International-T, L.P., Morgan Stanley Real Estate In-vestors V International, L.P. and Morgan Stanley Real Estate Fund VSpecial International, L.P., whose assigned share of the voting rightseach totals 3% or more.

u. MSREF V, L.L.C., New York, USA, informed us pursuant to §§ 21 ff.WpHG that its share of voting rights in DIC Asset AG, Frankfurt amMain, exceeded the level of 10% on 7 December 2007 and nowamounts to 10.41% (3,262,022 voting rights). All voting rights are as-signed to MSREF V, L.L.C. pursuant to § 22 Para. 1 Sentence 1 No. 1WpHG. Assignment is via MSREF V Marble B.V., MSREF V Cosmos B.V.,MSREF V International Holdings Coöperativ, U.A., Morgan Stanley RealEstate Fund V International-TE, L.P., Morgan Stanley Real Estate FundV International-T, L.P., Morgan Stanley Real Estate Investors V Interna-tional, L.P., Morgan Stanley Real Estate Fund V Special International,L.P. and MSREF V International-GP, L.L.C., whose assigned share of thevoting rights each totals 3% or more.

v. MSREF V, Inc., New York, USA, informed us pursuant to §§ 21 ff. WpHGthat its share of voting rights in DIC Asset AG, Frankfurt am Main, ex-ceeded the level of 10% on 7 December 2007 and now amounts to10.41% (3,262,022 voting rights). All voting rights are assigned to

MSREF V, Inc. pursuant to § 22 Para. 1 Sentence 1 No. 1 WpHG. As-signment is via MSREF V Marble B.V., MSREF V Cosmos B.V., MSREF V In-ternational Holdings Coöperativ, U.A., Morgan Stanley Real EstateFund V International-TE, L.P., Morgan Stanley Real Estate Fund V Inter-national-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 assignedshare of the voting rights each totals 3% or more.

w. Morgan Stanley, New York, USA, informed us pursuant to §§ 21 ff.WpHG that its share of voting rights in DIC Asset AG, Frankfurt amMain, exceeded the level of 10% on 7 December 2007 and nowamounts to 10.87% (3,409,081 voting rights). All voting rights are assigned to Morgan Stanley pursuant to § 22 Para. 1 Sentence 1 No. 1WpHG. Assignment is, inter alia, via MSREF V Marble B.V., MSREF V Cos-mos B.V., MSREF V International Holdings Coöperativ, Morgan StanleyReal Estate Fund V International-TE, L.P., Morgan Stanley Real EstateFund V International-T, L.P., Morgan Stanley Real Estate Investors V In-ternational, L.P., Morgan Stanley Real Estate Fund V Special Interna-tional, L.P., MSREF V International-GP, L.L.C., MSREF V, L.L.C. and MSREFV, Inc., whose assigned share of the voting rights each totals 3% ormore.

x. Stichting Pensioenfonds ABP, Heerlen, the Netherlands, informed uspursuant to §§ 21 ff. WpHG that its share of voting rights in DIC AssetAG, Frankfurt am Main, exceeded the level of 3% on 4 October 2007and now amounts to 3.23% (corresponding to 921,580 voting rights).

y. FMR Corp., Boston, Massachusetts, USA, informed us pursuant to § 21(1) WpHG that its share of voting rights in DIC Asset AG, Frankfurt amMain, fell below the level of 3% on 1 February and now amounts to1.71%. The voting rights are assigned to FMR Corp. pursuant to § 22 (1)2 WpHG in conjunction with § 22 (1) 1 No. 6 WpHG.


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138 � Glossary

Asset managementValue-orientated running and/or optimisation ofproperties through leasing management, repositio-ning or modernisation

At equity methodMethod of determining the (company's) value basedon discounted future cash flows

Cash flowMeasure that shows the net inflow of cash from salesactivities and other current activities during a givenperiod

Core real estateProperties let on long-term leases to tenants withoutstanding credit ratings in the best locations aredescribed as “core real estate”

Change of control clauseContractual provision in the event of a takeover byanother company

Corporate governanceRules for sound, responsible business management.The aim is for management in line with values andstandards in accordance with shareholders and otherinterested groups. The annual declaration of confor-mity to the German Corporate Governance Codeprovides a tool to assess the corporate governance

Debt ratioRatio of external capital to total capital as shown onthe balance sheet

Derivative financial instrumentsDerivative financial instruments, or derivatives, arereciprocal contracts, whose price determination isgenerally based on the trend of a market-dependentunderlying security (e.g. shares or interest rates).They are used for various reasons, including hedgingfinancial risks

EBIT Earnings before Interest and Taxes

EBITDA Earnings before Interest, Taxes, Depreciation andAmortisation

EPRA indexEPRA (European Public Real Estate Association) indexfamily, used internationally, that details the perfor-mance of the world's largest listed real estate com-panies

FeePayment 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

Financial covenantsFinancial covenants (credit clauses) are conditionsset up by financial institutions when financing realestate portfolios and are are tied to achieving of keyfinancial figures (such as debt ratio, interest servicecover ratio or debt service cover ratio – ISCR, DSCR)during the term

Hedge (Cash flow hedge, Fair value hedge)Agreement of a contract to safeguard and compen-sate 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 oninformation that is easy to understand and fair is paramount, ahead of protection of creditors and risk-related matters

Impairment testObligatory periodic comparison under IFRS of mar-ket and book values and the assessment of potentialsigns of a sustained impairment in the value of assets

Glossary

Glossary � 139

Interest swap With interest swaps, counterparties exchange cashflows from fixed and variable loans. This enables interest rate risks within corporate financing to behedged

Joint ventureLegally independent joint-venture company, inwhich two or more companies are involved

Market capitalisationTotal market value of a company listed on the stockexchange, resulting from the share price multipliedby the number of shares issued

NAV (Net asset value)Represents the intrinsic value of a company. This iscalculated from the value of assets minus liabilities

Operating leasing Term connected with international valuation rules. Itdescribes a periodic lease agreement that is not fullyamortised by the lessor's financing costs

Peak rentThe peak rent is the highest possible rent that couldbe expected in the market for a fictitious, top- quality,superbly equipped office unit in the best location

Percentage of completion method The percentage of completion method is used inlong-term project developments to assess the profitbased on the degree of completion (performanceprogress)

Prime StandardSegment of the Frankfurt Stock Exchange with thegreatest relevance and degree of regulation

Property managementComplete property servicing by own efforts or bymanagement of commercial, infrastructure and tech-nical service providers

Real estate special fundsReal estate special funds are open-ended real estatefunds, which are launched solely for institutional investors (such as insurance companies, pensionfunds, benefit funds, foundations, etc.)

RedevelopmentRedevelopment is any type of measure to developproperty that is already in use

RefurbishmentGenerally, structural changes to a building aimed atimproving a building’s quality and/or fixtures and fittings

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EUR million Q1 2009 Q2 2009 Q3 2009 Q4 2009

Rental income 33.2 34.1 33.5 32.8

Investment property disposal proceeds 4.4 2.5 3.3 5.0

Total revenues 43.6 41.7 42.3 43.7

EBITDA 27.5 28.6 27.4 27.3

EBIT 20.2 20.9 19.8 19.4

FFO 10.2 11.5 13.9 12.0

Profit before depreciation 9.9 11.2 13.1 12.4

Profit for the period 2.6 3.5 5.4 4.6

Earnings per share (in EUR) 0.08 0.12 0.17 0.15

Cash generated from operating activities 9.2 9.6 10.1 9.8

Market value of investment property * 2,184.4 2,179.7 2,217.6 2,192.2

Total assets 2,214.4 2,223.2 2,209.1 2,213.4

Equity 512.8 528.6 517.7 530.7

Equity ratio in % 23.2 23.8 23.4 24.0

Total liabilities 1,701.6 1,694.6 1,691.5 1,682.7

Debt ratio in % 76.8 76.2 76.6 76.0

* acquisitions during the year considered at purchase costs

Quarterly Financial Data

140 � Overview

Multi-Year Overview

EUR million 2005 2006 2007 2008 2009

Rental income 18.1 38.4 93.6 134.5 133.6

Investment property disposal proceeds 21.7 64.5 122.9 49.9 15.2

Total revenues 43.1 110.9 236.2 207.1 171.3

EBITDA 18.7 37.0 99.8 125.0 110.8

EBIT 14.7 28.5 80.0 97.0 80.3

FFO 7.4 21.8 44.6 42.7 * 47.6

Profit before depreciation 10.4 23.5 55.9 53.2 46.6

Profit for the period 6.4 15.0 36.1 25.2 16.1

Earnings per share (in EUR) 0.87 0.85 1.25 0.80 0.52

Cash generated from operating activities 7.8 23.9 28.7 37.2 38.7

Market value of investment property 337.5 1,275.3 2,187.5 2,161.8 2,192.2

Total assets 369.8 1,343.7 2,121.5 2,214.8 2,213.4

Equity 115.3 534.0 612.7 533.8 530.7

Equity ratio in % 31.2 39.7 28.9 24.1 24.0

Total liabilities 254.4 809.7 1,508.8 1,681.0 1,682.7

Debt ratio in % 68.8 60.3 71.1 75.9 76.0

Net asset value 142.2 608.2 722.2 492.8 497.1

Net asset value per share in EUR 13.98 21.34 23.04 16.23 15.86

Dividend per share in EUR 0.56 0.75 1.65 0.30 0.30

* excluding the profit from syndication of development


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142 � Portfolio

Portfolioas at 31.12.2009

OpportunisticCore plus Value added Investments Total

Number of properties 48 137 133 318

Portfolio volume in EUR million 992.4 930.1 269.7 2,192.2

Portfolio proportion 45% 43% 12% 100%

Net annual rent in EUR million 66.5 60.5 15.4 142.4

Lettable area in sqm 469,100 637,100 168,300 1,274,500

Rental income per sqm in EUR 12.19 9.28 8.82 10.38

Occupancy rate 93.4% 82.8% 83.0% 86.7%

Growth of portfolio volumeEUR million

31.12.2007 2,188

31.12.2008 2,162

31.12.2009 2,192

Berlin

Mannheim

Munich

Frankfurt a. M.

Düsseldorf

Hamburg

Bavaria 8%Southwest 19%

Rhine Main area 24%

West region 11%

Rhineland 16%

Hamburg area/North 13%

Berlin/East 9%

Regional distribution of propertiesby lettable area in sqm

Forms of useby rents paid

Retail17%

Residential 1%

Office 68%

Others 14%(e.g. Logistics,

industrial)

Main tenantsby rents paid

Retail 20%



Industry 8%

Others 28% PublicSector 22%

Broad diversification focused on office space

� Branches

� Region with excellent economic performance

� Region with good economic performance(based on regional ranking of „Initiative Neue Soziale Marktwirtschaft“ 2009)

Portfolio � 143

Core plus segment

– Long-term rentals, first class properties with the

potential for value creation

– Long-term investment horizon and diversification

EUR million 2009 2008 ∆Rental income 70.1 68.7 +1.4EBT 7.4 10.5 -3.1Market value of investment property 992 946 +46

Main key figures1,058

EUR million, as of 31.12.

2007 2008 2009

Market value of investment property

Value added segment

– Properties with value creation potential that

can be realised in the short and medium term

– Properties with a greater risk/reward profile

EUR million 2009 2008 ∆Rental income 63.5 65.8 -2.3EBT 5.3 8.5 -3.2Market value of investment property 930 974 -44

Main key figures



Segment Opportunistic Investments

– Opportunistic investments and project developments

of the DIC Group with investments from co-investors

– High potential for value creation

EUR million 2009 2008 ∆EBT 8.0 9,0 -1,0Market value of investment property 270 242 +28

Main key figures


2007 2008 2009


946 992

974

2007 2008 2009

864 930

242266 270

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144 �

From left to right:

Markus Koch, 47

Board Member, CFO

Ulrich Höller, 44

Chairman of the Board, CEO

Dr. Jürgen Schäfer, 48

Board Member, COO

Board of Directors

Contact � 145

DIC Asset AG

Grünhof · Eschersheimer Landstraße 223

60320 Frankfurt am Main

Tel. (0 69) 9 45 48 58-0

Fax (0 69) 9 45 48 58-99

ir @dic-asset.de

www.dic-asset.de

Contact

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146 � Disclaimer and Imprint

Forward-looking statements

This annual report contains statements that refer to future develop-

ments. 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.

Note

This report is published in German (original version) and English

(non-binding translation).

© March 2010

Publisher:

DIC Asset AG

Grünhof · Eschersheimer Landstraße 223

60320 Frankfurt am Main

Photographie Board of Directors:

Gaby Sommer, Lierschied

Concept and Realisation:

LinusContent AG, Frankfurt am Main

www.linuscontent.com

Directly in Mannheim´s city: the DIC Asset AG branch,Augustaanlage

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