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Investing in Real Estate Opportunities WestLB Real Estate Day The Waldorf Astoria, New York PowerPoint Presentation
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Investing in Real Estate Opportunities WestLB Real Estate Day The Waldorf Astoria, New York

Investing in Real Estate Opportunities WestLB Real Estate Day The Waldorf Astoria, New York

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Investing in Real Estate Opportunities WestLB Real Estate Day The Waldorf Astoria, New York

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  1. Investing in Real Estate Opportunities WestLB Real Estate Day The Waldorf Astoria, New York Tuesday, April 25th 2006

  2. Key Drivers Demographics Market Environment • Capital markets (G-REIT) Legal & Regulatory Supply

  3. Colonia Real Estate AG aims to become a market leader for opportunistic Investments and Asset Management in German Real Estate. We invest in real estate assets in the areas of residential, hotel, retail and office with existing high positive cash flows. We intend to create a diversified, high cash flow generating portfolio, which provides a base for strong cash distribution to CRE‘s shareholders. Mission Statement

  4. Company Overview Portfolio and Strategy Residential Real Estate Commercial Real Estate Asset & Fund Management Capabilities CRE‘s Financials Summary Appendix Content

  5. Specialized teamwith proven experience in Real estate investments (Edgar Krauss, Markus Drews) REAM - real estate asset management (Resolution GmbH) Private Equity (Stephan Rind, Christian Grosch) Capital Markets (Klaus Reichert) Fund Management (Mario Liebermann) Nationwide local presence, offering in-depth local knowledge Fully integrated business model, covering the entire value chain in real estate investments and services Company overview: group highlights

  6. Focus on small- and midsize portfolio‘s, off-market transactions and distressed situations Niche approach allowing to avoid price increasing auctions Exploiting own vast network and that of banks, lawyers and realtors No compromise on key investment guidelines Active portfolio management targeting quality properties in undervalued markets that offer high value appreciation potential Professional management improving tenant structures Focus on vacancy reduction Preparation for privatisation and/or block transaction High level of transparency and governance Company overview: group highlights

  7. Company overview: structure Colonia Real Estate AG Investments Services CRM • 100% CRE Research & Management GmbH Residential Real Estate • 100% CRE Wohnen GmbH • 99.68% Grasmus Holding B.V. Office/Retail Real Estate • Mainly co-investments with Resolution clients Hotel Real Estate • 94% CRE Hotel Immobilien GmbH CFM • 56 % CRE Fonds Management GmbH Resolution • 56% Resolution GmbH • Asset Management for 3rd Parties Target: EUR 500 Mio. new Investments in 2006 (EUR 300 Mio. Residential; 200 Mio. Office- and Retail) Target: EUR 2 bn assets under management until 2008 (currently EUR 700 Mio)

  8. Our nationwide office network makes CRE group a key multi-local REAM in Germany 38 dedicated and experienced professionals in Cologne, Frankfurt, Hamburg Stuttgart, Munich and Berlin Local expertise and access in all relevant markets in Germany Higher dealflow and top research capabilities leads to superior performance Company overview: network

  9. Company overview: milestones Foundation of CFM together with senior management team from DB Real Estate Acquisition of Resolution GmbH (AuM € 700mn) Acquisition of „Bremen“ and „Hamburg“ portfolio Acquisition of Grasmus B.V. (3,500 appartments) Acquisition of GEBB building (distressed seller) Application for Prime Standard and SDAX Membership Acquisition of Arcon Trust GmbH (3 Marriott Hotels) 10:1 Capital Increase Application for General Standard Acquisition of Kueppersbusch AG through SwissReal Estate 4:1 Capital Increase Application for General Standard New management team and renamed to Colonia Real Estate 2004 2005 2003 2006

  10. CRE‘s Share Price Performance • Best performing real estate stock in Europe in 2005 with a805% return • Current market cap of EUR 720m • 3.9m shares issued and outstanding (including management options, fully diluted number amounts to 4.4m) • SDAX member as of March 20th 2006 • Envisaged 3:1 share split, raising the number of outstanding shares to 15.6m (announced, AGM decision pending)

  11. Company overview: ownership structure • Fortman Cline Group (incl. Swiss Real Estate) intens to remain major shareholder but intends to decrease its stake further to increase the free float • Cerberus Group will be minority shareholder (1.7%) in CRE with a 2 year lock-up • Management owns 6% through stock option plan with 2 year vesting OWNERSHIP STRUCTURE

  12. Company Overview Portfolio and Strategy Residential Real Estate Commercial Real Estate Asset and Fund Management CRE‘s Financials Summary Appendix Content

  13. German RE: A Sleeping Giant TOTAL REAL ESTATE VALUES IN EU • Germany is Europe‘s biggest Real Estate Market, but prices are under-performing European peers • Estimated 3.4mn RE units with an approx. value of about EUR 138 bn. with public entities • ca. 900,000 units are held by corporates with an approx. value of EUR 37bn. • Massive potential for portfolio shifts and possible introduction of REITs will ease exit through stock listing Source: Deutsche Bank, LBS, Unternehmensangaben, HVB Global Market Research,

  14. Trading 30 - 40% Holding and Optimization 60 - 70% t Growth and Value in Business Model CRE‘s goal is to build up a diversified high- yielding portfolio in German real estate As an active portfolio manager, we also realize capital gains where we see limited value appreciation potential Trading aims to capture market opportunities as they occur A combined growth and value strategy Assets

  15. Key objectives for CRE to enter investments: Each single investment must be cash flow positive Focus on opportunistic investments in residential assets Focus on value added investments in non-residential assets Acquiring good – mostly office - assets from distressed sellers Focus on out-of-favour commercial real estate Target investment size: EUR 10m - EUR 80m Attractive bracket between private investors and large financial groups Target IRR >15% based on estimated holding period of up to eight years Proprietary quantitative screening process Efficient and fast screening, avoiding investment mistakes through rigerous process CRE‘s investment strategy

  16. Residential RE – the CRE difference

  17. CRE‘s current portfolio allocation AuM by region • Total Investments have reached EUR 200m in assets (as of 03/30/06) • Including Resolution (EUR 700m in total assets under management) CRE operates close to EUR 1bn in assets • CRE is one of the fastest growing asset managers in Germany AuM by strategy AuM by asset class

  18. Residential RE: Grasmus Portfolio „Grasmus“ - Residential RE Acquisition: 06 / 2005 Locations: Aurich, Delmenhorst, Emden, Ganderkesee, Leer, Sande, Wilhelmshaven and Wittmund Purchase price: EUR 88mn Equipment: 3,488 units, 1,137 parking lots Year of construct.: 1968 – 1975 Net rent: EUR 11.5m p.a. / gross yld: 13,05% Vacancy rate: 6.5% (at purchase: 11%) 10/05: Succesful Block Sale of 708 units to an international Investor Group

  19. Residential Real Estate „Bremen“ - Residential RE Acquisition 03/06 Location: Brake and Nordenham Purchase Price: EUR 6.7m Equipment: 356 units, 58 parking lots Net rent: EUR 0.8m p.a. / gross yield: 11,94% „Hamburg“ - Residential RE Acquisition 03 and 04/06 Location: Elmshorn and Itzehoe Purchase Price: EUR 38.2m Equipment: 1,577 units Net rent:EUR 4.95m p.a. / gross yield: 12,95%

  20. Office/Commercial RE (I) Office Real Estate Properties: 2 office buildings Acquisition: 01 / 2005 Tenant: G.E.B.B. GmbH Location: Cologne Purchase price: EUR 10.2m Equipment: 6,680 qm office space, 150 parking lots Year of construct.: 2001 Net rent: EUR 1.0m p.a. / gross yield: 9,81% Duration of lease: 2012 (Indexed leases) G.E.B.B. is a 100% subsidiary of German Ministry of Defense

  21. Office/Commercial RE: Hotel Portfolio Hotel Real Estate Properties: 3 Marriott Hotels (Courtyard) Acquisition: 10/2004 Tenant: HPI Germany Location: Kassel, Braunschweig, Eisenach Long term value: EUR 27.2m Equipment: 439 rooms, 6 restaurants, 3 Bars, 2 Spa‘s, conference facilities Year of construct.: 1993 - 1995 Net rent:EUR 2.0m p.a. / gross yield: 9,2% Duration of lease: 2022, triple net Indexed leases Fully guaranted lease payments

  22. Residential portfolios Acquiring at least E300m worth of residential portfolios in 2006 (including already pending portfolios in Hamburg and Bremen) Allowing for a swift exit of parts of the portfolio, if opportunities occur and the minimum IRR target is achievable Office/commercial portfolios Acquiring at least E200m worth of assets, obeying the strict CRE 10-step investment criterias Current cash levels and equity is sufficuient to finance, structure and improve these investments Investment prospects for 2006

  23. Company Overview Portfolio and Strategy Residential Real Estate Commercial Real Estate Asset & Fund Management CRE‘s Financials Summary Appendix Content

  24. Foundation of CRE Fund Management in Q1 2006 (CFM) 5 dedicated professionals in Frankfurt and Cologne offering closed-end fund or REIT solutions for retail and institutional investors Acquisition of Resolution offering REAM to third parties 24 dedicated professionals with offices in Cologne, Frankfurt, Stuttgart, Munich and Berlin cover all relevant markets Established 12 year track record and high-quality customer base (Blackstone etc.) with EUR 700m Assets under Management Active management of principal portfolio optimization to enhance cash-flows and increase value (i.e. reducing vacancy, reducing outstanding rents, privatizations) Asset & fund management capabilities

  25. Range of REAM Services Incentive Fees: 10 – 30% of profits above certain hurdle rates Acquisition Fees: 1 – 2% of Transaction Volume Asset Management Fees: 0,5 - 1% of Transaction Volume

  26. CRM, CFM and Resolution are the cornerstone to transform CRE into a fully integrated real estate investment company Asset management is creating strong recurring revenue streams without the need of high investments – and increases value to owners / 3rd parties CRE expects the volume of real estate assets acquired by foreign investors to be in need of professional local REAM to reach EUR 80bn by 2010 Rising institutional investors‘ interest requires nationwide operating real estate managers and fund managers Crisis of open-end funds and potential iniation of G-REITs drives demand for alternative transparent products (closed-end funds, REITs) CRE aims to achieve assets under management of EUR 2bn by 2008 Starting from initial E700m in 2006 Asset Management Prospects (I)

  27. REAM Based on the initial business model, CRE expects until end of 2008 E5-7m in annual fees from Resolution‘s current REAM activities E10 – 13m in acquisition fees for new Resolution activities Fund management New closed end funds are expected to be launched as early as 2006 E2 – 3m in closing fees in 2006 About 1 – 2% in annual fund management fees Business development partly depending on the launch of G-REITs Research & Management New investors seeking investment targets would be advised on structuring and acquiring deals Pure 3rd party approach, using vast internal experience Asset Management Prospects (II)

  28. Company Overview Portfolio and Strategy Residential Real Estate Commercial Real Estate Asset and Fund Management CRE‘s Financials Summary Appendix Content

  29. 20052004 Total operating performance € 39,9 Mio. € 0,8 Mio. Total operating income € 19,6 Mio. € 0,8 Mio. EBIT € 12,9 Mio. € -0,5 Mio. Group Income € 6,8 Mio. € -0,6 Mio. Earnings per Share € 2,36 / € 1,97 € -0,27 / Balance sheet total € 141,5 Mio. € 28,5 Mio. Equity Ratio 22,9 % 11,2 % CRE‘s financial highlights 2005

  30. Strong Outlook Sales (EUR Mio.) Group Income (EUR Mio.) 60 45 30 15 0 24 20 16 12 8 4 0 -4 2004 2005 2006e 2004 2005 2006e

  31. Company Overview Portfolio and Strategy Residential Real Estate Commercial Real Estate Asset and Fund Management CRE‘s Financials Summary Appendix Content

  32. A highly motivated management team with a broad and complimentary skillset and a 12 year track record A nationwide office network with local access to all relevant regions Together with Resolution operating more than EUR 900m in assets A growth and value opportunity as one of the few integrated real estate investment firms in Germany at the beginning of the transition of Europe‘s largest Real Estate Market The fundament is set – join us building the house… A Unique Opportunity

  33. Contact Colonia Real Estate AG Hohenstaufenring 48-54 50674 Cologne / Germany Stephan Rind CEO phone: + 49 221 71 60 71 0 fax: + 49 221 71 60 71 99 mail: Internet:

  34. This document contains certain forward-looking statements and information relating to the Colonia Real Estate AG Group that are based on beliefs of its management as well as assumptions made by and information currently available to Colonia Real Estate AG. When used in this document, the words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan” and “project” and similar expressions, as they relate to the Colonia Real Estate AG Group or its management, are intended to identify forward-looking statements. Such statements reflect the current views of Colonia Real Estate AG with respect to future events and are subject to certain risks, uncertainties and assumptions. Many factors could cause the actual results, performance or achievements of the Colonia Real Estate AG Group to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements, including, among others, changes in general economic and business conditions, changes in currency exchange rates and interest rates, introduction of competing products by other companies, lack of acceptance of new products or services by the Group´s targeted customers, changes in business strategy and various other factors, both referenced and not referenced in this annual report. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in this annual report as anticipated, believed, estimated, expected, intended, planned or projected. Colonia Real Estate AG does not intend, and does not assume any obligation, to update these forward-looking statements. Disclaimer

  35. Company Overview Portfolio and Strategy Residential Real Estate Commercial Real Estate Asset and Fund Management CRE‘s Financials Summary Appendix Content

  36. Shareholders` Equity and Liabilities 2005 2004 Current Liabilities (19,4 Mio.) 14% Long-term Liabilities (24,2 Mio.) 85% Current Liabilities (1,0 Mio.) 4% Long-term Liabilities (89,6 Mio.) 63% Shareholders` Equity (3,2 Mio.) 11% Shareholders` Equity (32,4 Mio.) 23%

  37. Assets by Segment 2005 2004 Hotel (28,4 Mio.) 100% Office (13,3 Mio.) 10% Residential (91,4 Mio.) 69% Hotel (28,6 Mio.) 21%

  38. Increase in Households foreseen

  39. Where are the „good“ markets