Deutsche EuroShop AG Half-Year Report 2020 Englisch

H1 2020 / Half-year Financial Repor t dated 30 June 2020 WILHELM WELLNER OLAF BORKERS LETTER FROM THE EXECUTIVE BOARD D E AR SHAREHO LD ER S, D E AR RE AD ER S, The financial year 2020 started off as planned, but since March 2020 the coronavirus pandemic has been posing major challenges to soci- ety, the economy, and to Deutsche EuroShop too. The spread of the virus caused extraordinary reductions in business activities both for our rental partners and for us. A lockdown of almost all shops in the centers was followed by a demanding phase of safe reopenings and the current ongoing phase of centers operating under a variety of KEY CONSOLIDATED FIGURES preventive measures. in € million Revenue Net operating income (NOI) EBIT EBT (excluding measurement gains / losses 1) EPRA 2 earnings 5 FFO Consolidated profit 01.01. – 30.06.2020 01.01. – 30.06.2019 At the beginning of the pandemic, we quickly and rigorously took all + / - the measures needed to cushion the effects of the crisis on us and 109.4 80.0 78.5 62.1 59.8 59.9 -129.3 111.9 100.4 98.2 81.9 84.3 75.9 66.2 -2.2% our stakeholders as best we could. To further improve our liquid- -20.3% -20.1% -24.2% -29.1% -21.1% ity and financial leeway, operating costs were reduced and non- essential investments halted or postponed. The dividend payment for financial year 2019 has been suspended. At the same time, we have been in detailed discussions with our banks and have success- fully secured the refinancing due this current year. In this difficult situation we have provided temporary relief for our -295.2% tenants beyond the legal requirements, and refrained from taking in € EPRA 2 earnings per share 5 FFO per share Earnings per share Weighted number of no-par-value shares issued 01.01. – 30.06.2020 01.01. – 30.06.2019 0.97 0.97 -2.09 1.37 1.22 1.07 + / - -29.2% -20.5% -295.3% 61,783,594 61,783,594 0.0% legal enforcement action for rent arrears caused by the corona virus pandemic against the tenants concerned for the time being. In the spirit of a partnership-based approach we are talking with all the tenants affected about fair solutions and sharing the pain, in each case depending on the individual situation. We are convinced that in this special situation, this is the best foundation for shared and sustainable business success in the future. in € million Equity 3 Liabilities Total assets EPRA 2 NAV 30.06.2020 31.12.2019 2,454.0 2,601.5 1,926.2 1,957.1 4,380.2 4,558.6 2,454.7 2,613.4 EPRA 2 NAV per share in € 39.73 42.30 Equity ratio in % 3 LTV ratio in % 4 56.0 32.5 57.1 31.5 + / - -5.7% -1.6% -3.9% -6.1% -6.1% Despite all the challenges, we have observed a positive trend in con- sumer behaviour in recent weeks which makes us more optimistic: people are coming back to the centers and are following the special requirements to contain the pandemic, so that centers and shops operate safely at all times. Since the end of the lockdown, foot- fall in our centers has risen to 77% of the previous year’s level at present, and tenants’ revenues in June increased further to 82%. The ratio of rent paid to rent due, known as the collection ratio, has also improved significantly. After an average of 48% of all rent receiv- ables were paid in the second quarter, the collection ratio for July was 78%. Overall, these figures indicate a positive trend, although in Cash and cash equivalents 178.8 148.1 20.7% some cases they are still far from their normal levels. 1 Including the share attributable to joint ventures and associates accounted for using the equity method 2 European Public Real Estate Association 3 Including third-party interests in equity 4 Loan-to-value ratio (LTV ratio): ratio of net financial liabilities (financial liabilities less cash and cash equivalents) to non-current assets (investment properties and investments accounted for using the equity method) 5 EPRA earnings include a one-off tax refund in the same period of the previous year, including interest accrued for previous years. Without this tax refund, EPRA earnings in the previous year would have totalled €75.3 million or €1.22 per share. 1 Deutsche EuroShop / H1 2020

H1 2020 / Half-year Financial Repor t dated 30 June 2020 The coronavirus pandemic had a significant negative impact on our In this special situation with the coronavirus pandemic we have results of operations and measurement gains / losses in the first implemented or initiated all important measures we are able to half of the year. Thanks to our solid balance sheet, low level of debt influence to overcome the crisis. We are in close dialogue with our and continued stable liquidity position we are well placed to cope business partners, especially our tenants, and are confident that the with this. There is still considerable uncertainty about what the situation will continue to stabilise. future holds for the general economic situation and the corona virus pandemic, as well as their ongoing impacts on our business. This We thank you for your continued trust. is particularly the case as regards the spending power of private households and consumer behaviour, which are key for us and for Hamburg, August 2020 the further recovery of our operating business. On this basis, it is currently not possible to issue a reliable business outlook for the second half of 2020. We will issue a forecast as soon as we can ade- quately quantify the impact of the corona pandemic. Wilhelm Wellner Olaf Borkers BASIC INFORMATION ABOUT THE GROUP GROUP BUSINESS MODEL OBJECTIVES AND STRATEGY Deutsche EuroShop is an Aktiengesellschaft (public company) The management focuses on investments in high-quality shopping under German law. The Company’s registered office is in Hamburg. centers in city centers and established locations offering the poten- Deutsche EuroShop is the only public company in Germany to invest tial for stable, long-term value growth. A key investment target is the solely in shopping centers in prime locations. A total of 21 shop- generation of high surplus liquidity from long-term leases in shop- ping centers in Germany, Austria, Poland, Hungary and the Czech ping centers, of which a significant part can be paid out to share- Republic are held in the real estate portfolio. The Group generates holders in the form of an annual dividend. To this end, the Company its reported revenue from rental income on the space it lets in the invests its capital in shopping centers in different European regions shopping centers. in accordance with the principle of risk diversification. Germany is the main focus for investment. Indexed and turnover-linked com- The shopping centers are held by independent companies, with mercial rents ensure that high earnings targets are achieved. Deutsche EuroShop holding stakes of 100% in twelve of them and between 50% and 75% in the other nine. The operational manage- The Company may invest up to 10% of equity in joint ventures in ment of the shopping centers is contracted out to external service shopping center projects in the early stages of development. providers under agency contracts. The Group managing company is Deutsche EuroShop AG. It is sources, and external financing may not account for more than responsible for corporate strategy, portfolio and risk management, 55% of financing across the Group over the long term. As a general financing and communication. The Deutsche EuroShop Group has a rule, long-term interest rates are fixed when loans are taken out or central structure and lean personnel organisation. renewed, with the goal of keeping the duration (average fixed inter- New investments should be financed from a balanced mix of est period) at over five years. The share capital amounted to €61,783,594 on 30 June 2020 and was composed of 61,783,594 no-par value registered shares. The notional value of each share is €1.00. 2 Deutsche EuroShop / H1 2020

H1 2020 / Half-year Financial Repor t dated 30 June 2020 MANAGEMENT SYSTEM ECONOMIC REVIEW The Executive Board of Deutsche EuroShop AG manages the Com- pany in accordance with the provisions of German company law and with its rules of procedure. The Executive Board’s duties, responsi- bilities and business procedures are laid down in its rules of proce- MACROECONOMIC AND SECTOR-SPECIFIC CONDITIONS dure and in its schedule of responsibilities. The coronavirus pandemic slammed the brakes on economic per- The management indicators (performance indicators) are based on formance all over the world. In Germany, Deutsche EuroShop’s main the targets of having shopping centers with sustainable and stable market, gross domestic product (GDP) fell by a further 11.7% in real value growth and generating a high liquidity surplus from their long- terms in the second quarter following a 2.0% decline in the first term leases. These indicators are revenue, EBIT (earnings before quarter of 2020 – the sharpest decline since quarterly GDP calcula- interest and taxes), EBT (earnings before taxes) excluding measure- tions in Germany began in 1970. The unemployment rate at the end ment gains / losses and FFO (funds from operations). of June 2020 stood at 6.3% (end-July 2019: 5.0%). Despite a few new regional centers of infection, consumer sentiment in Germany has Due to the higher rent defaults and arrears as a result of the corona- recovered since May, albeit at a low level. There has been a positive virus, these management metrics currently have only limited infor- trend in both economic and income expectations and in the propen- mation value in some cases, so the collection ratio will be used for sity to spend money. Although consumer sentiment has brightened, management purposes as a supplement until further notice. The col- Germany’s shoppers are still some way from being in a “good” shop- lection ratio measures the ratio of incoming payments to rent and ping mood. According to the Federal Statistical Office, German retail service charge receivables from tenants. sales (including online spending) rose by 2.0% year-on-year in real terms in the first six months of 2020. Online and mail-order contin- ued to be the main growth drivers (+19.7%), whereas bricks and mor- tar retailers were affected by the lockdown measures and reported a decline in sales (-0.6%). 3 Deutsche EuroShop / H1 2020

H1 2020 / Half-year Financial Repor t dated 30 June 2020 RESULTS OF OPERATIONS in € thousand Revenue Operating and administrative costs for property NOI Other operating income Other operating expenses EBIT At-equity proﬁt / loss Measurement gains / losses (at equity) Deferred taxes (at equity) At-equity (operating) profit / loss Interest expense Profit / loss attributable to limited partners Other financial gains or losses Financial gains or losses (excl. measurement gains / losses) EBT (excl. measurement gains / losses) Measurement gains / losses Measurement gains / losses (at equity) Measurement gains / losses (including at-equity profit / loss) Taxes on income and earnings Deferred taxes Deferred taxes (at equity) Deferred taxes (including at equity) CONSOLIDATED PROFIT 01.01. – 30.06.2020 01.01. – 30.06.2019 109,422 -29,376 80,046 2,089 -3,636 78,499 11,725 -21,979 -6,198 6 -16,446 62,053 -217,873 -2,195 28,710 -129,305 -37,300 49,171 -146 -168,702 -49,171 28,564 146 14,092 1,248 93 -7,143 -1,248 -10,095 -93 Change + / - -2,462 -17,905 -20,367 1,377 -716 -19,706 -3,708 3,153 3,122 -2,681 -114 -19,820 in % -2.2 -156.1 -20.3 193.4 -24.5 -20.1 -24.0 12.5 33.5 -99.8 -0.7 -24.2 111,884 -11,471 100,413 712 -2,920 98,205 15,433 -25,132 -9,320 2,687 -16,332 81,873 -8,391 2,942 -209,482 -2,496.5 -5,137 -174.6 -10,188 38,898 66,236 -195,541 381.8 -295.2 Revenue affected by the coronavirus pandemic Revenue for the reporting period came in at €109.4 million, which €17.9 million to €29.4 million. This was due to the higher write- downs on rent receivables, which were measured on the basis of was 2.2% lower on a comparable basis than in the same period of expected rent defaults in connection with tenant support measures, the previous year (€111.9 million). This was due to the legal arrange- and increased write-downs in connection with tenant insolvencies. ments adopted in our foreign markets from mid-March to cushion Overall, write-downs on rent receivables amounted to €19.0 million the effects of the coronavirus pandemic, which included the tempo- (previous year: €0.9 million). With regard to the relevant accounting rary suspension of payment obligations under lease arrangements policies and valuation methods, we also refer to the further expla- for tenants affected by the closures (€2.0 million). We refer here to nations under “Effects of the coronavirus pandemic on the half-year the further explanations under “Effects of the coronavirus pandemic financial report dated 30 June 2020” on page 12 ff. of this report. on the half-year financial report dated 30 June 2020” on page 12 of this report, which illustrates the relevant accounting policies and valuation methods. Sharp rise in write-downs due to coronavirus Center operating costs in the reporting period, comprising mainly Other operating income and expenses Other operating income, stemming primarily from the reversal of provisions, from income from rental receivables written down in previous years and from additional payments in conjunction with ancillary costs, amounted to €2.1 million and was therefore signifi- center management fees, non-allocable ancillary costs, mainte- cantly higher than in the previous year. nance and write-downs of rent receivables, rose by a substantial 4 Deutsche EuroShop / H1 2020

H1 2020 / Half-year Financial Repor t dated 30 June 2020 At €3.6 million, other operating expenses, most of which related value were higher purchase yields for shopping centers, a reduction to general administrative and personnel expenses, were up on the in the average market rent, expected longer re-letting periods and same period last year, in particular as a result of one-off financing increased investment requirements. costs in connection with the extension of our credit line (€0.5 million) as well as higher consulting costs (€0.2 million). EBIT significantly lower than last year Earnings before interest and taxes (EBIT) at €78.5 million were well Taxes on income and earnings Taxes on income and earnings amounted to €-2.2 million (previous year: tax income of €2.9 million) and included a trade tax refund of €7.1 million in the previous year. Deferred taxes resulted in income of below the figure for the previous year (€98.2 million), largely due to €28.7 million (previous year: deferred tax expense of €-10.2 million) the write-down of accumulated rent arrears and the corona virus- due to the devaluation of real estate assets. driven decline in revenue. Financial gains / losses almost at previous year’s level At €16.4 million, financial gains / losses (excluding measurement EPRA earnings and consolidated profit significantly lower EPRA earnings, which exclude measurement gains / losses, fell sig- nificantly to €59.8 million or €0.97 per share, due mainly to the write- gains / losses) were almost unchanged year on year (previous year: downs on rent receivables and the decline in revenue. The decline €16.3 million) and is the result of opposing, mutually offsetting in earnings is also attributable to a one-off income from trade effects. The at-equity (operating) profit / loss fell by €3.7 million, due tax refunds included in the previous year and the interest income in particular to higher write-downs on rent receivables as a result accrued on this. of the coronavirus. In the previous year, other financial gains and losses included a one-off interest refund of €2.7 million for a trade The large valuation loss resulted in a consolidated loss of tax refund. On the other hand, the interest expense of Group com- €-129.3 million, after a consolidated profit of €66.2 million in the panies was reduced by €3.2 million. In addition to scheduled repay- same period of the previous year. Earnings per share amounted to ments, the cheaper refinancing for the Rhein-Neckar-Zentrum Viern- €-2.09 (previous year: €1.07). heim center and the A10 Center Wildau had a positive effect here. The share of earnings attributable to limited partners decreased in line with the reduced EBIT. EPRA EARNINGS EBIT (excluding measurement gains / losses) falls by a quarter due to corona The decline in EBIT and at-equity profit / loss plus the one-off inter- est refund the previous year caused EBT (excluding measurement 01.01. – 30.06.2020 01.01. – 30.06.2019 in € thousand per share in € in € thousand per share in € gains / losses) to fall from €81.9 million to €62.1 million (-24.2%). Consolidated profit -129,305 -2.09 66,236 1.07 Measurement gains / losses negative in a changed market environment The coronavirus pandemic also had an impact on the valuation of the Group’s real estate assets in accordance with IAS 40 and led to a measurement loss of €-217.9 million. Of this, €-168.7 million after minority interests was attributable to the measurement of the real estate assets reported by the Group and €-49.2 million to the meas- urement of the real estate assets of joint ventures accounted for using the equity method. The average value of Group properties after ongoing investments fell by 5.5% in the first half of 2020; the range of changes in mar- ket value was between -3.1% and -9.9%. While the occupancy rate remained high at 97.0% (-0.6% compared with the last reporting date), the measurement of the property portfolio against the back- ground of the coronavirus pandemic was materially influenced by several factors. Among the issues contributing to the decreases in Measurement gains / losses investment properties 1 Measurement gains / losses derivative financial instruments 1 Deferred tax adjustments pursuant to EPRA 2 217,873 3.53 8,391 0.14 -88 0.00 -141 0.00 EPRA EARNINGS 3 59,770 0.97 84,306 -28,710 -0.47 9,820 0.16 1.37 Weighted number of no-par-value shares issued 61,783,594 61,783,594 1 Including the share attributable to joint ventures and associates accounted for using the equity method 2 Affects deferred taxes on investment properties and derivative financial instruments 3 EPRA earnings include a one-off tax refund in the period the previous year, including interest accrued for previous years. Without this tax refund, EPRA earnings would have totalled €75.3 million or €1.22 per share. 5 Deutsche EuroShop / H1 2020

H1 2020 / Half-year Financial Repor t dated 30 June 2020 Development of funds from operations (FFO) Funds from operations (FFO) are used to finance our ongoing invest- ments in portfolio properties, scheduled repayments on our long- term bank loans and as the basis for the distribution of dividends. Significant non-recurring effects that are not part of the Group’s operating activities are eliminated in the calculation of FFO. FFO FUNDS FROM OPERATIONS 01.01. – 30.06.2020 01.01. – 30.06.2019 in € thousand per share in € in € thousand per share in € declined from €75.9 million to €59.9 million or by €0.25 per share Consolidated profit -129,305 -2.09 66,236 1.07 to €0.97. As an income-based figure, FFO do not reflect the current significant increase in rent receivables, so the analysis of tenants’ payment behaviour expressed in the collection ratio is also neces- sary. This ratio was 97% in the first quarter and 48% in the second quarter. Measurement gains / losses investment properties 1 Tax refund for previous years 0 0.00 -8,961 Deferred taxes 1 -28,710 -0.47 10,188 FFO 59,858 0.97 75,854 217,873 3.53 8,391 0.14 -0.15 0.16 1.22 Weighted number of no-par-value shares issued 61,783,594 61,783,594 1 Including the share attributable to joint ventures and associates accounted for using the equity method RE VENUE in € million 111.9 109.4 EBIT in € million 98.2 EBT * in € million FFO PER SHARE in € 78.5 81.9 62.1 1.22 0.97 -2.2% -20.1% -24.2% -20.5% H1 2019 H1 2020 H1 2019 H1 2020 H1 2019 H1 2020 H1 2019 H1 2020 * excluding measurement gains / losses 6 Deutsche EuroShop / H1 2020

H1 2020 / Half-year Financial Repor t dated 30 June 2020 FINANCIAL POSITION AND NET ASSETS Net assets and liquidity The Deutsche EuroShop Group’s total assets decreased by €178.4 mil lion to €4,380.2 million compared with the last reporting date, primarily due to the decline in the market value of real estate. By contrast, liquidity increased by €30.7 million to €178.8 million during the period. After a significant increase in liquidity in the first quar- in € thousand 30.06.2020 31.12.2019 Current assets 222,057 170,150 Change 51,907 Non-current assets 4,158,093 4,388,455 -230,362 Current liabilities 186,156 111,136 75,020 Non-current liabilities 1,740,024 1,845,991 -105,967 ter of the year, this remained stable overall in the second quarter of 2020. Due to the low collection ratio in the second quarter as a result Equity (including third-party interests) 2,453,970 2,601,478 -147,508 of the coronavirus, the Group’s receivables increased significantly by TOTAL ASSETS 4,380,150 4,558,605 -178,455 €21.0 million (after write-downs). Current liabilities increased mainly due to loans which are due to expire at the end of June 2021, and which were reclassified from non-current liabilities to current lia- bilities accordingly. BAL ANCE SHEE T STRUC TURE in € million 4,558.6 170.1 4,380.2 222.1 4,380.2 186.2 4,558.6 111.1 4,388.5 4,158.1 1,740.0 1,846.0 2,454.0 2,601.5 Current assets Non-current assets 2019 2020 2020 2019 Current liabilities Non-current liabilities Equity (includ- ing third-party interests) Equity ratio of 56.0% The equity ratio (including the shares of third-party shareholders) Non-current deferred tax liabilities declined by €27.7 million to €351.1 million as the market value of real estate fell. Other current was 56.0%, slightly down compared with the last reporting date and non-current liabilities and provisions decreased by €2.4 million. (57.1%) and still at a very healthy level. Leverage ratio remains low As at 30 June 2020, current and non-current financial liabili- EPRA net asset value declines due to property devaluations Net asset value (NAV) as at 30 June 2020 was €2,454.7 million, com- pared with € 2,613.4 million at the end of 2019. This is equivalent to a ties stood at €1,511.5 million, which was €0.9 million lower than at decline in net asset value per share of €2.57, from €42.30 to €39.73 the end of 2019. The scheduled repayments were offset by a loan (-6.1%). increase of €7.4 million to finance investment measures. Despite the significant devaluations on shopping centers, the loan-to-value ratio is a very solid 32.5% (31 December 2019: 31.5%). 7 Deutsche EuroShop / H1 2020

H1 2020 / Half-year Financial Repor t dated 30 June 2020 EPRA NAV 30.06.2020 31.12.2019 in € thousand per share in € in € thousand per share in € significantly to 12.5% of disposable income. This money will be missed by the retail sector, as will the lost sales from the lockdown phase. The economic stimulus measures recently adopted by the Federal Government (including bridging assistance, a child bonus for families and a reduction in VAT) may provide some relief. For the coming year the German Council of Economic Experts considers Equity 2,123,383 34.37 2,249,573 36.41 a V-shaped recovery of the German economy to be possible, while Derivative financial instruments measured at fair value 1 Equity excluding derivative financial instruments Deferred taxes on investment proper- ties and derivative financial instruments 1 Goodwill as a result of deferred taxes 29,057 0.47 33,726 0.55 2,152,440 34.84 2,283,299 36.96 other institutions such as the OECD and the Bundesbank expect a slower recovery. EXPECTED RESULTS OF OPERATIONS AND FINANCIAL POSITION We are currently still in a situation of great uncertainty as to the extent and duration of the substantial impact of the coronavirus pan- demic on our tenants’ businesses and hence on our own business 355,996 5.76 383,818 6.21 outlook. Operating figures, especially customer footfall and tenant -53,727 -0.87 -53,727 -0.87 and collection ratios have also improved further recently. However, revenues, have been performing positively since stores reopened, EPRA NAV 2,454,709 39.73 2,613,390 42.30 the figures are still significantly below where they were a year ago. We are in detailed discussions with our tenants to find viable eco- nomic solutions for both sides. We have already been able to reach some initial agreements, but are still in ongoing negotiations with Number of no- par- value shares issued as at the reporting date 61,783,594 61,783,594 the majority of our tenants. Moreover, the course of business over 1 Including the share attributable to equity-accounted joint ventures and associates REPORT ON EVENTS AFTER THE REPORTING DATE No significant events occurred between the reporting date of 30 June 2020 and the date of preparation of the financial statements. OUTLOOK ECONOMIC CONDITIONS the rest of 2020 will depend on how the pandemic develops and the protective measures required. A quantifiable estimate is still not reliably possible at the present time. However, we do not expect to be able to make up the accumulated revenue falls and the write- downs in the first half by the end of the year, so revenue, EBIT, EBT (excluding measurement gains / losses) and FFO will therefore be below the 2019 figures. A new forecast will be issued as soon as the effects of the coronavirus pandemic can be adequately quantified. RISK REPORT The coronavirus pandemic will have an impact on the individual risks of the Group with respect to the amount of losses and the like- lihood of occurrence. As already outlined in our 2019 risk report (see the 2019 financial report, p.18), the extent of this risk is cur- rently not quantifiable. Depending on how the pandemic progresses, For 2020, the German Council of Economic Experts expects the Ger- the individual risks and the overall risk position will be reviewed man economy to shrink very significantly by 6.5% in real terms. and regularly re-evaluated. However, we expect that individual risks With regard to price trends, the experts at the Federal Ministry of will increase in terms of the amount of losses and /or likelihood of Economics and Energy expect the inflation rate to fall to 0.5% and occurrence. Given our good balance sheet structure and solid liquid- the number of unemployed and recipients of short-time work- ity position and having assessed various risk scenarios, we do not ing benefits to rise sharply towards the end of the year as a result currently see any risks that could endanger the company’s contin- of the coronavirus pandemic. As a result, economists expect pri- ued existence. vate consumer spending to fall by 7.4% and the savings rate to rise 8 Deutsche EuroShop / H1 2020

H1 2020 / Half-year Financial Repor t dated 30 June 2020 CONSOLIDATED BALANCE SHEET ASSETS in € thousand ASSETS Non-current assets Intangible assets LIABILITIES 30.06.2020 31.12.2019 in € thousand 30.06.2020 31.12.2019 EQUITY AND LIABILITIES Equity and reserves 53,746 53,752 Issued capital Property, plant and equipment 386 424 Capital reserves Investment properties 3,635,872 3,822,786 Retained earnings Investments accounted for using the equity method Non-current assets 468,089 511,493 4,158,093 4,388,455 Total equity Non-current liabilities Financial liabilities Deferred tax liabilities Current assets Trade receivables Other current assets Cash and cash equivalents Current assets 61,784 61,784 1,217,560 1,217,560 844,039 970,229 2,123,383 2,249,573 1,359,109 1,433,373 351,079 378,755 28,390 14,863 7,417 14,646 178,804 148,087 222,057 170,150 Right to redeem of limited partners 330,587 351,905 Other liabilities 29,836 33,863 Non-current liabilities 2,070,611 2,197,896 Current liabilities Financial liabilities Trade payables Tax liabilities Other provisions Other liabilities Current liabilities 152,349 78,974 2,692 2,102 5,691 5,805 1,401 8,120 23,322 16,836 186,156 111,136 TOTAL ASSETS 4,380,150 4,558,605 TOTAL EQUITY AND LIABILITIES 4,380,150 4,558,605 9 Deutsche EuroShop / H1 2020

H1 2020 / Half-year Financial Repor t dated 30 June 2020 CONSOLIDATED INCOME STATEMENT in € thousand Revenue Property operating costs Property management costs Net operating income (NOI) Other operating income Other operating expenses Earnings before interest and taxes (EBIT) Share in the profit or loss of associated companies and joint ventures accounted for using the equity method Interest expense Profit / loss attributable to limited partners Interest income Financial gains or losses Measurement gains / losses Earnings before tax (EBT) Taxes on income and earnings CONSOLIDATED PROFIT Earnings per share (€), undiluted and diluted 01.04. – 30.06.2020 01.04. – 30.06.2019 01.01. – 30.06.2020 01.01. – 30.06.2019 53,666 -21,252 -2,398 30,016 1,434 -1,258 30,192 -43,817 -10,976 -1,796 1 55,650 -2,965 -2,900 49,785 561 -1,429 48,917 7,119 -12,602 -4,676 111 109,422 -24,326 -5,050 80,046 2,089 -3,636 78,499 -37,300 -21,979 -6,198 6 111,884 -5,922 -5,549 100,413 712 -2,920 98,205 14,092 -25,132 -9,320 2,687 -56,588 -10,048 -65,471 -17,673 -163,967 -190,363 33,024 -5,226 33,643 -6,812 -168,702 -155,674 26,369 -157,339 26,831 -129,305 -2.54 0.43 -2.09 -7,143 73,389 -7,153 66,236 1.07 STATEMENT OF COMPREHENSIVE INCOME in € thousand Consolidated profit Items which under certain conditions in the future will be reclassified to the income statement: Actual share of the profits and losses from instruments used to hedge cash flows Deferred taxes on changes in value offset directly against equity Total earnings recognised directly in equity TOTAL PROFIT Share of Group shareholders 01.04. – 30.06.2020 01.04. – 30.06.2019 01.01. – 30.06.2020 01.01. – 30.06.2019 -157,339 26,831 -129,305 66,236 2,229 -495 1,734 -829 196 -633 4,003 -888 3,115 -155,605 26,198 -126,190 -155,605 26,198 -126,190 -2,330 540 -1,790 64,446 64,446 10 Deutsche EuroShop / H1 2020

H1 2020 / Half-year Financial Repor t dated 30 June 2020 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY Number of shares outstanding Share capital Capital reserves Other retained earnings Statutory reserve Cash flow hedge reserve Total in € thousand 01.01.2019 Total profit Dividend payments 01.01.2020 Total profit Dividend payments 30.06.2020 30.06.2019 61,783,594 61,784 1,217,560 61,783,594 61,784 1,217,560 0 0 0 0 61,783,594 61,784 1,217,560 0 0 0 0 974,484 66,236 -92,675 948,045 993,900 -129,305 0 2,000 -26,080 2,229,748 0 0 -1,790 64,446 0 -92,675 2,000 -27,870 2,201,519 2,000 -25,671 2,249,573 0 0 3,115 -126,190 0 0 61,783,594 61,784 1,217,560 864,595 2,000 -22,556 2,123,383 CONSOLIDATED CASH FLOW STATEMENT in € thousand Consolidated profit Income taxes Financial gains or losses Amortisation /depreciation of intangible assets and property, plant and equipment with a finite life Unrealised changes in fair value of investment property and other measurement gains / losses Distributions and capital repayments received Changes in trade receivables and other assets Changes in current provisions Changes in liabilities Cash flow from operating activities Interest paid Interest received Income taxes paid Net cash flow from operating activities Outflows for the acquisition of investment properties Inflows from the disposal of investment properties Outflows for the acquisition of intangible assets and property, plant and equipment Cash flow from investing activities Inflows from financial liabilities Outflows from the repayment of financial liabilities Outflows from the repayment of lease liabilities Payments to limited partners Payments to Group shareholders Cash flow from financing activities Net change in cash and cash equivalents Cash and cash equivalents at beginning of period CASH AND CASH EQUIVALENTS AT END OF PERIOD 01.01. – 30.06.2020 01.01. – 30.06.2019 -129,305 -26,369 65,471 72 168,702 6,104 -21,190 -2,429 3,369 64,425 -21,883 6 -1,494 41,054 -6,037 490 -3 -5,550 7,416 -8,401 -45 -3,757 0 -4,787 30,717 148,087 178,804 66,236 7,153 17,673 89 7,143 13,104 519 624 250 112,791 -25,132 7 -3,209 84,457 -7,239 0 -19 -7,258 2,500 -6,539 -83 -8,784 -92,675 -105,581 -28,382 116,335 87,953 11 Deutsche EuroShop / H1 2020

H1 2020 / Half-year Financial Repor t dated 30 June 2020 DISCLOSURES REPORTING PRINCIPLES In many countries, statutory rent moratoria and other support measures for tenants have been adopted to mitigate the effects of the coronavirus pandemic. In Germany, for example, a restric- tion on the ability to issue notice of termination during the period from 1 April 2020 to 30 June 2020 in the event of non-payment of rent where this is due to the effects of the coronavirus pandemic These interim financial statements of the Deutsche EuroShop Group was laid down in law. In parallel to the legal measures, we decided as at 30 June 2020 have been prepared in compliance with IAS 34 not to legally enforce coronavirus-related rent arrears until further (Interim Financial Reporting) in an abridged form. The abridged notice due to the serious economic impact of the pandemic on our interim financial statements are to be read in conjunction with the tenants. The aim was to provide temporary financial relief to the ten- consolidated financial statements as at 31 December 2019. ants affected, so that when shops reopened and depending on the The interim financial statements have been prepared in accordance ual and fair solutions could be sought with them to overcome the situation and the extent to which the tenants were affected, individ- with the International Financial Reporting Standards (IFRS), as they challenging situation. must be applied in the EU. The accounting policies applied are the same as those used in the most recent consolidated financial state- ments at the end of the financial year, unless otherwise stated in the Measure of accrued rent receivables Due to the partial cessation or reduction of rental payments by ten- following section “Effects of the coronavirus pandemic on the half- ants, the receivables portfolio (before write-downs) increased by year financial report dated 30 June 2020”. For a detailed description €39.2 million from €9.9 million to €49.1 million in the first half of of the methods applied, please refer to the notes to our consolidated 2020. In a departure from the previous procedure for calculating financial statements for 2019 (2019 Annual Report, p. 36 ff.). write-downs on accounts, which used to see all receivables older than 90 days generally written down on an individual basis taking The new accounting standards and interpretations for which appli- into account recoverable collateral, the write-downs as at 30 June cation became compulsory on 1 January 2020 were observed; how- 2020 were measured on the basis of actual and expected defaults ever, these did not have any impact on the presentation of the finan- in connection with tenant support measures. Measurement also cial statements. took into account the code of conduct developed by the two inter- est groups HDE and ZIA, which is intended to help in this extraordi- The interim financial statements as at 30 June 2020 have neither nary situation and achieve an appropriate and out-of-court sharing been audited in accordance with Section 317 of the German Com- of the pain between tenant and landlord in the interests of justice. mercial Code (HGB) nor reviewed by an auditor. The write-downs calculated in the first half of the year amounted to EFFECTS OF THE CORONAVIRUS PANDEMIC ON THE HALF-YEAR FINANCIAL REPORT DATED 30 JUNE 2020 €19.0 million for Group companies and €2.9 million for com panies accounted for using the equity method. It should be noted that this is an estimated value that is subject to significant uncertainties and may differ from the actual arrangements with tenants still to be reached. It is also important to bear in mind that the write-downs recognised in the first half of 2020 do not allow any conclusions to The officially imposed nationwide store closures and other pro- be drawn about the total volume of concessions, as this is a meas- tective measures to contain the coronavirus pandemic had a mas- urement of outstanding rent receivables as at the reporting date. sive impact on customer footfall in our shopping centers as well as on our tenants’ revenues and thus their economic performance in the first half of 2020. Even after the almost complete opening of all shops in our centers, the effects of the coronavirus pandemic on customer footfall and tenant revenue are still substantial. 12 Deutsche EuroShop / H1 2020

H1 2020 / Half-year Financial Repor t dated 30 June 2020 Revenue Where tenants benefit from existing or newly created legal regu- Measurement of investment properties In contrast to the interim financial statements of previous years, the lations governing rental payment obligations in the event of a pan- exceptional conditions this year made it necessary for the exter- demic, the resulting rent adjustments are recognised directly in rev- nal appraiser Jones Lang LaSalle GmbH (JLL) to review the mar- enue. For Deutsche EuroShop this applies to our shopping centers ket values of our shopping centers, which it did in accordance with Galeria Baltycka Gdansk (Poland) and City Arkaden Klagenfurt the guidelines of the Royal Institution of Chartered Surveyors (RICS). (Austria), and led to a reduction in consolidated revenue of €2.0 mil- JLL’s market value assessment was carried out under considerable lion as well as a reduction in the at equity profit / loss of €0.9 million. uncertainty. For example, since the outbreak of the pandemic there With the reopening of the shops, discussions with the tenants were estate. There was also a higher degree of uncertainty when esti- initiated with the aim of finding mutually acceptable and sustainable mating future rental payments. JLL took these increased uncertain- solutions to share the burden of the coronavirus pandemic. Inten- ties into account in a number of ways, including by increasing the sive talks are already under way with a number of tenants in a spirit discount and capitalisation rates. In response to this background, the of partnership. For a small number of the contractual relationships expert opinions included a special warning on this subject as recom- it was possible to come to a final arrangement before 30 June 2020. mended by RICS (“Impact of Covid-19”). have been very few market transactions in shopping center real Until a new arrangement is entered into with the tenants, the provi- sions of the original leases continue to apply unless statutory pro- visions and /or the terms of the lease specify different treatment in the event of a pandemic. We expect to be able to finalise the majority of the arrangements with our tenants in the second half of 2020. In the spirit of a mutual balance of interests for temporary rent adjustments, these arrange- ments will regularly also include consideration from the tenants (e. g. extensions to leases). Depending on whether material provi- DISCLOSURES ON THE CONSOLIDATED BALANCE SHEET AND THE CONSOLIDATED INCOME STATEMENT Investment properties Investment properties performed as follows in the first half of 2020: sions of the original lease are amended, rental concessions granted in € thousand 2020 2019 have to be spread over the remaining term of the lease or recog- Carrying amount at 1 January 3,822,786 3,891,700 nised immediately as an expense. For the second half of 2020, this Addition from right-of-use assets (IFRS 16) may mean that the write-downs on receivables recognised in the first half of the year will have to be partially reversed and conces- sions instead recognised on a straight-line basis over the remain- Disposals of investment properties Recognised construction measures 0 -490 6,037 322 0 19,324 ing term of the lease. Unrealised changes in fair value -192,461 -88,560 Carrying amount at 31.06. / 31.12. 3,635,872 3,822,786 The Investment Properties (IAS 40) were measured at fair value. Valuations were performed by the appraiser JLL as at 31 Decem- ber 2019 and 30 June 2020. As in previous years, the discounted cash flow method (DCF) was used as at 31 December 2019. Please refer to the notes on the DCF method in our 2019 Annual Report on pages 43 ff. This is a level 3 valuation method in the valuation hier- archy of IFRS 13. 13 Deutsche EuroShop / H1 2020

H1 2020 / Half-year Financial Repor t dated 30 June 2020 The following overview shows the key assumptions used by JLL to The appraisal showed that for the first half of 2020, the real estate determine the market values: Valuation parameters in € thousand Rate of rent increases Cost ratio Discount rate Capitalisation interest rate portfolio had a net initial yield before transaction costs of 5.71% compared with 5.43% in 2019, and a net initial yield after transaction costs of 5.39% compared with 5.12% in 2019. 30.06.2020 31.12.2019 Outstanding tenant incentives granted and still to be spread over the 1.10 10.73 6.09 5.22 1.24 term of the leases amounting to €4.6 million were deducted from the 10.42 appraisal value. These were reported under other assets. 5.92 5.11 Financial instruments With the exception of derivative financial instruments and other financial investments measured at fair value, financial assets and liabilities were measured at amortised cost. Due to the pre- A 25 bp change in a material parameter (sensitivity analysis) of real dominantly short-term nature of trade receivables, other assets estate appraisals would have the following pre-tax impact on meas- and other liabilities, and cash and cash equivalents, the carrying urement gains / losses (including the share attributable to at-equity amounts on the reporting date did not deviate significantly from the consolidated companies): fair values. Sensitivity analysis – Valuation parameters Basis Change in parameter in € million 1.10 10.73 6.09 5.22 + 0.25 percentage points - 0.25 percentage points 150.3 -115.0 + 0.25 percentage points - 0.25 percentage points + 0.25 percentage points - 0.25 percentage points -10.7 10.0 -73.0 71.8 + 0.25 percentage points - 0.25 percentage points -114.6 119.9 in % 4.0 -3.0 -0.3 0.3 -1.9 1.9 -3.0 3.2 Rate of rent increases Cost ratio Discount rate Capitalisation interest rate The fair values of financial liabilities measured at amortised cost were equal to the net present value of debt-related pay- ments based on current yield curves (Level 2 under IFRS 13) and amounted to €1,550.7 million as at 30 June 2020 (31 December 2019: €1,584.4 million). The derivative financial instruments measured at fair value were interest rate hedges. Here the fair value was equivalent to the cash value of future net payments expected to be received from hedging transactions (Level 2 in accordance with IFRS 13) based on current yield curves. Liabilities from interest rate hedges totalled €29.1 mil- lion as at 30 June 2020 (31 December 2019: €33.1 million). 14 Deutsche EuroShop / H1 2020

H1 2020 / Half-year Financial Repor t dated 30 June 2020 SEGMENT REPORTING Segment reporting by Deutsche EuroShop AG is carried out on the basis of internal reports that are used by the Executive Board to man- age the Group. Internal reports distinguish between shopping centers in Germany (“domestic”) and other European countries (“abroad”). As the Group’s main decision-making body, the Deutsche EuroShop AG Executive Board first and foremost assesses the performance of the segments based on revenue, EBIT and EBT excluding measure- ment gains/losses. The measurement principles for segment report- ing correspond to those of the Group. In order to assess the contribution of the segments to the individual performance indicators as well as to the Group’s success, the income, expenditure, assets and liabilities of the joint ventures are included in internal reporting in proportion to the Group’s share therein. Sim- ilarly, for subsidiaries in which the Group is not the sole shareholder, income, expenditure, assets and liabilities are likewise only consol- idated proportionately according to the corresponding Group share. This results in the segments being divided as follows: BREAKDOWN BY SEGMENT in € thousand Revenue (01.01. – 30.06.2019) EBIT (01.01. – 30.06.2019) EBT excl. measurement gains / losses (01.01. – 30.06.2019) Domestic 96,738 (97,449) 70,908 (85,741) 52,576 (64,355) Abroad 19,111 (21,670) 15,549 (20,507) 12,087 (16,972) Total Reconciliation 115,849 (119,119) 86,457 (106,248) 64,663 (81,327) -6,427 (-7,235) -7,958 (-8,043) -2,610 (546) Segment assets (31.12.2019) of which investment properties (31.12.2019) 3,179,874 (3,315,952) 3,064,700 (3,246,262) 750,291 (773,700) 714,450 (743,828) 3,930,165 (4,089,652) 3,779,150 (3,990,090) 449,985 (468,953) -143,278 (-167,304) 01.01. – 30.06.2020 109,422 (111,884) 78,499 (98,205) 62,053 (81,873) 30.06.2020 4,380,150 (4,558,605) 3,635,872 (3,822,786) The adjustment of the proportionate consolidation of the joint ven- In view of the geographical segmentation, no further information tures and subsidiaries in which the Group does not own a 100% pursuant to IFRS 8.33 is given. stake is carried out in the reconciliation column. Deferred tax liabili- ties are considered by the Executive Board of Deutsche EuroShop AG in a cross-segment manner and are therefore included in the recon- ciliation column of the segment liabilities. Accordingly, the goodwill from the acquisition of Olympia Brno was allocated to the reconcili- RELATED PARTIES FOR THE PURPOSES OF IAS 24 ation column of the segment assets. The reconciliation column also With regard to disclosures regarding related parties, please refer to contains the companies that are not allocated to either of the two the consolidated financial statements as at 31 December 2019 (2019 segments (Deutsche EuroShop AG, DES Management GmbH, DES Annual Report, p. 57), which did not undergo any material changes Beteiligungs GmbH & Co. KG). up to 30 June 2020. 15 Deutsche EuroShop / H1 2020

H1 2020 / Half-year Financial Repor t dated 30 June 2020 OTHER DISCLOSURES Dividend The Annual General Meeting accepted the proposal by the Execu- interim management report of the Group includes a fair review of the development and performance of the business, and the posi- tion of the Group, together with a description of the principal oppor- tunities and risks associated with the expected development of the tive Board and Supervisory Board to carry forward Deutsche Euro- Group for the remainder of the financial year. Shop AG’s unappropriated surplus for 2019 of €34,629 thousand to new account and not to distribute a dividend. Hamburg, 13 August 2020 Responsibility statement by the Executive Board To the best of our knowledge, and in accordance with the applicable reporting principles for interim financial reporting, the interim con- solidated financial statements give a true and fair view of the assets, Wilhelm Wellner Olaf Borkers liabilities, financial position and profit or loss of the Group, and the THE SHOPPING CENTER SHARE KEY SHARE DATA Following a year-end closing price* for 2019 of €26.42, Deutsche Sector / industry group Financial Services / Real Estate Share capital as at 30.06.2020 €61,783,594.00 EuroShop shares were steady in the first few weeks of 2020. On 3 January 2020, the share closed at €26.50, the highest price in the first six months of the year. At the end of February, investor uncer- tainty rose sharply in connection with the coronavirus pandemic. This led to considerable price falls for our shares, those of our peers and stock markets worldwide. DES shares were trading at €25.40 in Number of shares as at 30.06.2020 (no-par-value registered shares) Dividend for 2019 Share price on 30.12.2019 the closing auction on 21 February 2020, but ended the first half of Share price on 30.06.2020 2020 at €12.55 on Xetra after a very volatile bear market period that Low / high for the period under review saw the price range between €9.94 and €15.68. Deutsche EuroShop’s market capitalisation stood at €775.4 million at the end of the period. This equated to a performance of -52.5% for the reporting period. The SDAX fell by -7.8% over the same period. DEUTSCHE EUROSHOP VS. SDAX AND EPRA COMPARISON, JANUARY TO AUGUST 2020 indexed, base of 100, in % Deutsche EuroShop EPRA SDAX Market capitalisation on 30.06.2020 Prime Standard OTC markets Indices ISIN Ticker symbol 61,783,594 €0.00 €26.42 €12.55 €9.94 / €26.50 €775.4 million Frankfurt and Xetra Berlin, Düsseldorf, Hamburg, Hanover, Munich and Stuttgart SDAX, EPRA, GPR 250, MSCI Small Cap, HASPAX, F.A.Z.-Index DE 000748 020 4 DEQ, Reuters: DEQGn.DE 140 100 60 20 16 * Unless otherwise specified, all information and calculations are based on Xetra closing prices. Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Deutsche EuroShop / H1 2020

H1 2020 / Half-year Financial Repor t dated 30 June 2020 FINANCIAL CALENDAR 2020 13.08. 20.08. 03.09. 07.09. 21.09. 22.09. 01.10. Half-year Financial Report 2020 HSBC European Real Estate Conference (virtual) Commerzbank Sector Conference (virtual) Jefferies Real Estate Conference (virtual) Goldman Sachs & Berenberg German Conference 12.11. 25.11. 01.12. Quarterly statement 9M 2020 DZ Bank Equity Conference, Frankfurt Berenberg European Conference, Pennyhill (virtual) Our financial calendar is updated continuously. Baader Investment Conference, Munich (hybrid) Please check our website for the latest events: Commerzbank German Real Estate Forum, London www.deutsche-euroshop.com/ir ALLEE-CENTER MAGDEBURG STADT- GALERIE PASSAU CITY ARKADEN KLAGENFURT ALTMARKT-GALERIE DRESDEN RHEIN-NECKAR-ZENTRUM VIERNHEIM / MANNHEIM RATHAUS- CENTER DESSAU ALLEE-CENTER HAMM WOULD YOU LIKE ADDITIONAL INFORMATION? CITY- GALERIE WOLFSBURG MAIN-TAUNUS-ZENTRUM SULZBACH / FRANKFURT ÁRKÁD PÉCS www.deutsche-euroshop.de Then visit us online or call us: Patrick Kiss and Nicolas Lissner Phone: +49 (0)40 - 41 35 79 20/-22 Fax: +49 (0)40 - 41 35 79 29 www.deutsche-euroshop.com/ir Email: ir@deutsche-euroshop.de Forward-looking statements This quarterly statement contains forward-looking statements Rounding and rates of change Percentages and figures stated in this report may be subject to based on estimates of future developments by the Executive Board. rounding differences. The rates of change are based on economic The statements and forecasts represent estimates based on all of considerations: improvements are indicated by a plus (+); deterio- the information available at the current time. If the assumptions on ration by a minus (-). which these statements and forecasts are based do not materialise, the actual results may differ from those currently being forecast. 17 Deutsche EuroShop / H1 2020