DES GB2015 Englisch

The Company may invest up to 10% of equity in joint ventures in shop- ping center projects in the early stages of development. New investments should be financed from a balanced mix of sources, and borrowing may not account for more than 55% of financing across the Group over the long term. As a general rule, long-term inter- est rates are fixed when loans are taken out or renewed, with the goal of keeping the duration (average fixed interest period) at over five years. PROFITABLE PORTFOLIO WITH STABLE VALUE Deutsche EuroShop AG holds a balanced, diversified portfolio of shopping centers in Germany and other parts of Europe. We focus our investment activities on prime locations in cities with a catchment area of at least 300,000 residents in order to guarantee a sustained high level of investment security. SEIZING OPPORTUNITIES AND MAXIMISING VALUE In line with our buy and hold strategy, we consistently place greater importance on the quality and yield of our shopping centers than on our portfolio's rate of growth. We monitor the market continuously and act as buyers when an opportunity arises. Rapid decision-making chains and considerable flexibility regarding potential investments and financing structures allow Deutsche EuroShop to react to very wide-ranging competitive situations. At the same time, the Group's management focuses on optimising the value of the existing portfolio of properties. TAILORED RENT STRUCTURE One key component of our leasing concept is a differentiated rental system. While individual owners in city centers are often concerned with achieving the highest possible rents for their property (which results in a monostructured retail offering), we ensure an attractive sec- tor mix and long-term optimisation of our rental income through com- bined costing. Rental partners pay sector-specific and turnover-linked rent. Minimum rents linked to the consumer price index provide a guar- anteed minimum level of income for Deutsche EuroShop AG during periods of economic weakness. THE SHOPPING EXPERIENCE CONCEPT We have outsourced center management to an experienced external partner, Hamburg-based ECE Projektmanagement GmbH & Co. KG (ECE). ECE has been designing, planning, building, letting and managing shopping centers since 1965. The company is currently the European market leader, with almost 200 shopping centers under management. We consider professional center management to be the key to the suc- cess of a shopping center. In addition to guaranteeing standard open- ing hours and a consistently friendly, bright, safe and clean shopping environment, the center management can employ unusual displays, promotions and exhibitions to make shopping an experience. The 500,000 to 600,000 people who visit our 19 centers on average every day are fascinated by not only the variety of sectors represented but also by our wide range of thematic exhibitions, casting shows, fashion shows and attractions for children. As a result, the shopping centers become market places where there is always something new and spectacular on offer. WORKING METHODS OF THE EXECUTIVE AND SUPERVISORY BOARDS The strategic orientation of the Company is coordinated between the Executive Board and the Supervisory Board, and the progress of strat- egy implementation is discussed at regular intervals. The Executive Board is required to inform the Supervisory Board regularly, promptly and in detail of business developments. The Executive and Supervisory Boards examine the Company’s net assets, financial position and results of operations, as well as its risk management, regularly and in detail. In this context, the formal conditions for implementing an effi- cient system of managing and monitoring the Company are checked, as is whether the means of supervision are effective. The significant factors affecting the business are determined by the Executive Board, which notifies the Supervisory Board. The committees advise on the development of the portfolio properties, their turnover trends, accounts receivable, occupancy rates, construction measures and liquidity, as well as investment cost trends for our new development projects. The sales trends and payment patterns of tenants are observed in detail so that consequences can be drawn from these wherever required. New investment opportunities are examined by the Executive Board and, if necessary, presented to the Supervisory Board at reg- ular Supervisory Board meetings. Investment decisions are made by the Executive Board and then submitted to the Supervisory Board for approval within the framework of a decision paper. Moreover, the Executive and Supervisory Boards discuss develop- ments on the capital and credit markets as well as the effects of these not only on the Company’s strategy but also in terms of raising equity and obtaining borrowed capital. The Supervisory Board and its committees also discuss oth- er topical issues with the Executive Board as required. Transactions requiring the approval of the Supervisory Board are discussed and resolved upon at the scheduled meetings. For transactions requiring approval, teleconferences are also conducted with the Supervisory Board or its committees and circular resolutions are passed in writing. INVESTOR RELATIONS 107

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