Deutsche EuroShop: 2019 nine-month result on schedule / EUR73 million positive tax effect expected / slight adjustment to the forecast for 2020

• Revenue: EUR167.6 million (+0.3%)
• EBIT: EUR146.9 million (+0.3%)
• Consolidated profit: EUR93.3 million (+13.6%)
• EPRA earnings: EUR120.5 million (+11.8%)
• FFO: EUR111.7 million (+0.9%)
• Optimisation of the investment structure means tax provisions of around EUR73 million can be released and recognised in the income statement
• Partial reduction of the forecast for 2020 in a range of between 0.5% and 1.5%

Hamburg, 13 November 2019 - Shopping center investor Deutsche EuroShop today published its statement for the quarter ending 30 September 2019. Operating performance for the first nine months of 2019 was in line with planning and stable. Like-for-like revenue grew by 0.3%, from EUR167 million to EUR167.6 million. At EUR150.1 million, net operating income (NOI) was on a par with the previous year, while earnings before interest and taxes (EBIT) improved to EUR146.9 million (+0.3%).

Including the positive non-recurring effects from tax refunds for previous years reported at the start of 2019, which were expected by the company in connection with a ruling by the Grand Senate of the Federal Finance Court (BFH) on the extended reduction of trade tax, earnings before taxes and measurement gains/losses (EBT excluding measurement gains/losses) rose by 3.0% to EUR121.6 million in the first nine months of the year (excluding non-recurring effects +1.4%). For this reason, consolidated profit also increased significantly by +13.6% to EUR93.3 million (excluding non-recurring effects +2.7%); EPRA earnings rose by 11.8% to EUR120.5 million (excluding non-recurring effects +3.4%). Funds from operations (FFO) adjusted for measurement gains/losses and non-recurring effects were up EUR1 million up on the same period of the previous year to EUR111.7 million (+0.9%), This represented FFO per share of EUR1.81.

With the first nine months having gone according to plan, the Executive Board has confirmed the forecast for the year 2019 as a whole:

• revenue of between EUR222 million and EUR226 million
• operating earnings before interest and taxes (EBIT) of between EUR194 million and EUR198 million
• earnings before taxes (EBT) excluding measurement gains/losses of between EUR159 million and EUR162 million
• funds from operations (FFO) of between EUR148 million and EUR151 million or between EUR2.40 and EUR2.44 per share
• a dividend of EUR1.55 per share.

Deutsche EuroShop has reviewed its tax investment structure in light of the BFH ruling mentioned above. Accordingly, it is possible to create a holding structure by making changes under corporate law within the Group that enable the extended reduction of trade tax to once again be used in the future in the case of five subsidiaries where Deutsche EuroShop AG is not the sole shareholder.

The planned implementation of the restructuring is still partially subject to the approval of the co-shareholders and financing banks of the affected holdings. However, the Executive Board of Deutsche EuroShop AG believes the transaction can still be completed by the end of the year.

The new holding structure will allow the release of a substantial portion of the deferred tax liabilities recognised in the balance sheet. For the consolidated financial statements as at 31 December 2019, the Executive Board expects to release around EUR73 million to income, which equates to a positive impact on consolidated net income of EUR1.18 per share. The reversal for 2019 will not impact on the FFO and EPRA earnings, After the restructuring, however, the current trade tax charge will be reduced as of the 2020 financial year.

CEO Wilhelm Wellner: "Looking ahead to the forthcoming financial year, we expect the subdued pace of economic activity to continue and the situation on the rental market to remain challenging, given the rapid growth in online retailing. In this market environment, our shopping center portfolio continues to impress with a very high occupancy rate and an attractive tenant mix. However, we expect the letting process will take longer on average and in some cases also require rental adjustments."

Against the background of current developments, the Executive Board has revised its forecast for the coming 2020 financial year. While the FFO per share is still expected to rise from EUR2.43 to EUR2.47, the Executive Board has adjusted its expectations for revenue, EBIT and EBT (excluding measurement gains/losses) downwards slightly to within a range of 0.5% to 1.5%.

The new guidance for the 2020 financial year is now as follows:

• revenue: EUR221 to EUR225 million (previously EUR222 to EUR226 million)
• earnings before interest and taxes (EBIT): EUR191 million to EUR195 million (previously EUR194 million to EUR198 million)
• earnings before taxes (EBT) excluding measurement gains/losses: EUR159 million to EUR162 million (previously EUR161 million to EUR164 million)
• funds from operations (FFO): EUR150 to EUR153 million or between EUR2.43 and EUR2.47 per share (unchanged)

The distribution of a dividend of EUR1.60 per share is still planned for the 2020 financial year.

Full interim report

The full interim report is available as a PDF document and in ePaper format. It can be downloaded from www.deutsche-euroshop.com/ir

Webcast of the teleconference

Deutsche EuroShop will hold a conference call for analysts in English at 9:00 a.m. (CET) on Thursday, 14 November 2019, which will be carried out as a live webcast on www.deutsche-euroshop.com/ir

Deutsche EuroShop - The shopping center company

Deutsche EuroShop is the only public company in Germany to invest solely in shopping centers in prime locations. The SDAX-listed company currently has investments in 21 shopping centers in Germany, Austria, Poland, the Czech Republic and Hungary. The portfolio includes the Main-Taunus-Zentrum near Frankfurt, the Altmarkt-Galerie in Dresden and the Galeria Baltycka in Gdansk, among many others.