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Deutsche EuroShop AG signs a purchase agreement for a shopping center in the Czech Republic and approves a capital increase excluding subscription rights of up to 4.7 million new shares as well as the publication of the preliminary results for the 2016 financial year

Hamburg, 7 March 2017 - The Executive Board of Deutsche EuroShop AG, Hamburg (ISIN DE0007480204), (the "Company") today signed a purchase agreement for the acquisition of a shopping center in the Czech Republic. Located in Brno, the Olympia Center has approximately 85,000 sqm of leasable space, more than 200 tenants and an occupancy rate of around 98.5%. The total investment volume of around EUR382 million will be funded by assuming existing loans and taking out new ones, and with cash from a capital increase. The acquisition is planned to be completed during the first half of 2017 and will have a positive impact on funds from operations (FFO). At an NOI return of 5.1%, the acquisition is expected to produce FFO growth of approximately 3 cents per share, calculated on the basis of a full financial year and on the total number of outstanding shares after the capital increase has been completed.

Immediately after signing the purchase agreement and for the purpose of financing the cash portion, the company's Executive Board decided, with the Supervisory Board's approval, to increase the company's share capital by utilising up to EUR 4,700,000.00 of the authorised capital through the issue of up to 4,700,000 registered shares with dividend rights from 1 January 2016 (the "New Shares") for cash. This is equal to approximately 8.7% of the company's current share capital. Shareholders' subscription rights are excluded.

These New Shares will be offered in a private placement by way of accelerated bookbuilding exclusively to institutional investors in Germany, the rest of Europe and selected other countries (the "Share Offer"). Alexander Otto has expressed an interest to the company in participating in the capital increase through a holding company controlled by him.

The price for the offered shares is expected to be determined by no later than 8 March 2017, with delivery against payment on or around 13 March 2017. The New Shares will be admitted for trading without a sales prospectus in the regulated market of the Frankfurt Stock Exchange with a simultaneous listing in the Prime Standard segment of the Frankfurt Stock Exchange, which has enhanced disclosure obligations.

Positive preliminary results for the 2016 financial year

Furthermore, Deutsche EuroShop AG is already publishing preliminary figures for the 2016 financial year today.

• Revenue: EUR205.1 million (+1.1%)
• EBIT: EUR178.6 million (+1.3%)
• EUR145.5 million measurement gains
• EPRA NAV up 9.2% at EUR43.24 per share
• FFO: EUR2.41 per share (+5.3%)
• EBT excluding valuation gains: EUR134.5 million (+5.9%)
• Proposed dividend: EUR1.40 per share (+3.7%)

Shopping center investment firm Deutsche EuroShop closed the 2016 financial year with a positive result that met or slightly exceeded its forecast.

Consolidated revenue was up 1.1%, from EUR202.9 million to EUR205.1 million, in the financial year (forecast: EUR200 to EUR204 million). Earnings before interest and taxes (EBIT) increased by 1.3% in the year under review from EUR176.3 million to EUR178.6 (forecast: EUR175 to EUR179 million).

The 2016 financial result was again impacted by positive measurement effects in the amount of EUR28.7 million (2015: EUR47.2 million) relating to investees recognised at equity, and totalled EUR-13.9 million (2015: EUR-2.1 million). At Group level, too, the value of properties increased, with shopping centers appreciating by 4.6% on average or EUR116.8 million (2015: EUR220.5 million).

At EUR134.5 million, operating earnings before taxes (EBT excluding measurement gains) were up 5.9% versus the previous year (EUR127.0 million). Adjusted for the contribution from the stake in the Saarpaark-Center acquired in the fourth quarter of 2016, EBT excluding valuation gains/losses totalled EUR133.0 million, exceeding the forecast of EUR127 to 130 million. At EUR281.5 million, earnings before taxes (EBT) were down versus the previous year (EUR394.7 million), which saw significantly higher measurement gains of EUR267.7 million.

Funds from operations (FFO) improved by 5.3% to EUR129.9 million, which represents FFO per share of EUR2.41, compared with EUR2.29 in the previous year. At EUR2.39 per share, FFO adjusted for the contribution from the Saarpark-Center was also above the forecast of EUR2.26 to 2.30.

EPRA earnings also performed well and rose 5.0% to EUR2.29 per share (2015: EUR2.18). Net asset value (EPRA NAV) as at 31 December 2016 was EUR2,332.6 million (+9.2%), or EUR43.24 per share (2015: EUR39.58). The method used to determine EPRA earnings was updated for the 2016 financial year and the prior-year values restated accordingly (previously reported figures per share: EPRA earnings EUR1.89, EPRA NAV EUR39.12). The increase in the prior-year values is the result of the adjusted recognition of deferred taxes in the calculation of these figures.

The 2016 Annual Report with the final audited figures for the 2016 financial year will be published as planned on 28 April 2017.

Additional information on the acquisition of the Olympia shopping center in Brno, Czech Republic

Under the purchase agreement signed today, Deutsche EuroShop AG is acquiring 100% of the shares in a property company that is the owner of the Olympia Center in Brno. The company is being sold by two funds managed by Rockspring Property Investment Managers and ECE Real Estate Partners respectively. The acquisition is expected to be completed during the first half of 2017. The acquisition will increase Deutsche EuroShop's portfolio to 21 shopping centers, with a market value of some EUR5.1 billion (100% perspective).

Located in the second largest town in the Czech Republic, the Olympia Center opened its doors in 1999 and is one of the country's biggest shopping centers. Following a reorganisation between 2014 and 2016, it houses more than 200 specialist stores across 85,000 m² over two floors. Anchor tenants include hypermarket Albert, H&M, Intersport and P&C Düsseldorf. The center also features a cinema and entertainment park, as well as more than 4,000 parking spaces. It is very well connected in terms of both road links and public transport. The shopping center is managed by ECE Projektmanagement, and some 1.2 million people live in its catchment area. The Olympia Center welcomes more than 23,000 customers every day and more than 8 million every year.

It is expected to generate EUR20.1 million in rental income in 2017. Anticipated NOI is EUR19.1 million.

Facts & figures on the Olympia Center

Location		Brno, Czech Republic
Future DES shareholding		100%
Rental space in sqm		approx. 85,000
Parking spaces		approx. 4,000
Number of shops		approx. 200
Occupancy rate		approx. 98.5%
Catchment area		1.2 million residents
Opened/restructured		1999/2014-2016
Website		www.olympia-centrum.cz/en

 

Note to editorial staff

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This notice contains complementary financial figures that are not precisely defined by the relevant accounting standards and that (may) represent alternative performance indicators. These complementary financial figures should not be considered in isolation or as an alternative to the figures presented in the consolidated financial statements and determined in accordance with the relevant accounting standards when evaluating the assets, financial position and results of operations of Deutsche EuroShop. Such alternative performance indicators may be calculated differently but labelled similarly by other companies. For explanations regarding the financial figures used, please consult http://www.deutsche-euroshop.de/des/pages/index/p/210

This publication constitutes neither an offer to sell nor the solicitation of an offer to buy securities. In particular, this document constitutes neither an offer to sell nor the solicitation of an offer to purchase securities in the United States. The shares in Deutsche EuroShop AG (the "Securities") may not be offered or sold in the United States of America absent registration or an exemption from registration under the U. S. Securities Act of 1933, as amended (the "Securities Act"). The Securities have not been and will not be registered under the Securities Act. There will be no public offering of the Securities in the United States of America.