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REAL ESTATE MARKET With an 11% growth in transaction volume to €25.2 billion, the commercial property investment market in Germany continued its expansion course in 2012, according to CBRE. The market was again dominated by individual transactions, with portfolio transactions rep- resenting around a quarter of the volume (26% compared to 20% in 2011). Retail properties accounted for just under 36%, with investments in this asset class declining by 13% to €9.15 billion in 2012. CBRE sees the combination of a focus on core products by investors and low supply in this segment as one of the main reasons for the decline. According to information provided by Jones Lang LaSalle, foreign investors were responsible for 50% of the retail investment volume. With half the sum of investments from outside Germany coming from French investors, US investors were relegated to second place (8% following 39% during the previous year). Asset and fund man- agers continued to be the most important investor groups in 2012, representing 41%, along with real estate companies and REITs, who accounted for 29% of investments in retail properties. Shopping centers continued to dominate the retail property segment, with a 34% share of transactions, followed by inner-city business premises in prime shopping locations (31%). The transaction vol- ume in shopping centers dropped by 34% to €3.1 billion in 2012 compared with the strong previous year. Given the ongoing defensive investment strategy pursued by real estate investors, top returns in 2012 lingered at a record high. High- equity funds, such as international sovereign and pension funds and various German open-ended property funds, are often prepared to accept lower returns in return for being able to invest financial resources promptly. According to Cushman & Wakefield, top returns for shopping center investments in Germany remained at the previous year’s level of 4.8% at the end of 2012. As a result, the current level is still at the lower threshold of the ten-year range of 4.8% to 5.75%. SHARE PRICE PERFORMANCE Deutsche EuroShop shares began 2012 with a price of €24.80. Dur- ing the first few trading days of the year, the price dropped to €23.72 on 6 January. From then on, share prices were on an upward trend, reaching their highest price of the year at €32.03 (Xetra closing price) on 1 November 2012. The price hovered around this level until the end of the year and was at €31.64 on the last day of trading in 2012. The shares closed the year with a performance of +32.7% (incl. divi- dends; 2011: -11.1%). EVALUATION OF THE FINANCIAL YEAR The Executive Board of Deutsche EuroShop is satisfied with the past financial year. The Allee-Center Magdeburg and the expansion of the Main-Taunus-Zentrum, the Altmarkt-Galerie and the A10 Center, which were included in our full-year results for the first time, made a significant contribution in this regard. Revenue was planned at between €207 million and €211 million and totalled €211.2 million (2011: €190.0 million) as of the reporting date, corresponding to an increase of 11%. Earnings before interest and taxes (EBIT) of between €177 million and €181 million were planned; the year ended with EBIT at €181.0 million which was at the upper end of the forecast range and 9% over the previous year (2011: €165.7 million). We expected earnings before taxes (EBT) excluding measurement gains/losses of between €90 million and €93 million. The actual EBT of €95.9 million exceeded this range and represented an 11% increase year on year (2011: €86.5 million). Deutsche EuroShop has thus proven once again that it has an out- standing shopping center portfolio and is well positioned. Results of operations, financial position and net assets CORRECTION OF AN ERROR IN ACCORDANCE WITH IAS 8 The Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin – Ger- man Federal Financial Supervisory Authority) notified us that an audit of the financial statements for the financial year 2011 revealed two mistakes: The item “Measurement gains/losses” indicated in the consolidated income statement was €8.3 million too low because merger-related expenses connected to the acquisition of the Billstedt-Center Ham- burg, which should have been recognised in financial year 2010, were erroneously recognised in financial year 2011. In the 2011 consolidated financial statements, cash inflows in the amount of €155.2 million were recognised in “Cash flow from oper- ating activities” and cash outflows in the same amount in “Cash flow from investment activities”, both in connection with the acquisition of the Billstedt-Center Hamburg. However, no cash inflows or out- flows in this amount actually took place during the period. GROUP MANAGEMENT REPORT { 124 } DES ANNUAL REPORT 2012 Results of operations, ﬁnancial position and net assets

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