Our first 10 years on the stock market

In 2010, Deutsche EuroShop celebrated its 10th anniversary. But are 10 years really that significant in the life of a company? Probably not. Yet, for some players on the stock market, even three months can seem "long term". Despite the short-term thinking that frequently prevails on the capital markets, 10 years on the stock exchange can be an eternity. We share this view, given that the stock markets have seen two major crises in 10 years which have not exactly made things easier for us or anyone else on the capital markets.

How did our story begin? In September 2000 – under the aegis of Deutsche Grundbesitz – a shelf company was renamed and Deutsche EuroShop commenced business operations. Our IPO followed just a few days later, with investors able to submit buy orders from 2 October 2000 to 29 December 2000, subject to a minimum subscription obligation of 50 shares at the fixed price of €38.40 (before 1:2 share split on 6 August 2007). As befitting a stock borne of the retail sector, a discount also came into play: those who subscribed to shares as early as October 2000 received a €0.30 discount per share, with a €0.15 discount being granted to all subscribers in November 2000.

Since 2 January 2001, the shares of Deutsche EuroShop have been listed for official trading on the Frankfurt Stock Exchange.

With the dot-com bubble having just burst, Deutsche EuroShop did not get off to the most auspicious of starts. It took almost three years – having already created an internal professional structure to coordinate communication with the capital market – for us to place all the shares owned by Deutsche Bank and, in doing so, significantly increase our free float. Until this task was complete, few investors on the capital market were interested in us. It was only when Deutsche Bank concluded its exit in mid-2003 that things changed.

Our company is now emerging from its fledgling years, and we again believe that we are equipped to grow further.

Analysts then began to cover our stock, and trading volumes on the stock market increased numerous times over. We subsequently made it onto the SDAX and then, one year later in autumn 2004, onto the MDAX.

Since then, we have been among the 100 biggest listed companies in Germany, even though we are the smallest on the exchange in terms of staff numbers. And as the stock market loves comparing figures: not only are we streets ahead of Daimler, Siemens, Deutsche Telekom and co with regard to sales and profit per capita, but we are also one of the best in terms of liabilities per capita.

At the end of 2004, banks discovered the growth potential of real estate shares, and this fuelled further interest. More and more analysts published reports on Deutsche EuroShop, and the press also began to cover us. Real estate shares had suddenly gone from wallflower status to becoming the stock market's flagship. The real property market saw much the same phenomenon. For investors worldwide, Germany became the place to be. This led to sharp price rises and, conversely, to diminishing returns. We therefore decided at the end of 2006 to refrain from participating in this race and put our investment activities on ice. At the time, we had no idea that it would be three years before we saw attractive conditions on the market again. Once banks started experiencing difficulties half a year later, a wider public began to wonder when the bubble would burst. Nevertheless, it would be another 14 months before Lehman Brothers collapsed.

Looking back at our first decade, we can conclude that four of the last 10 years were good and six were difficult. Last year was one of our good years, and we think this will also be the case for 2011. This is because the crisis barely affected Deutsche EuroShop, although the impact on our operating environment was severe. By maintaining a relatively good level of performance on the stock market, we not only became Germany's biggest listed real estate company at one stage, but the public at large now also regard us as an exemplary public company. This, above all, is down to exercising restraint.

Our company is now emerging from its fledgling years, and we again believe that we are equipped to grow further. The prices for shopping centers are high again, albeit at levels that seem acceptable. In cooperation with lenders, we are able to put up investments which also stand up to the requirements of the capital market. This allows us to raise the necessary equity via the stock market. And our aim is to make hay while the sun shines – not only to keep our company right at the top of the German stock list but, in particular, to close the gap on our major European competitors in the shopping center sector. After all, a sizeable presence on the capital market also enables us to become a must-have stock and thus helps reduce capital costs.

Deutsche EuroShop AG – the first 10 years for shareholders*

1
Since the IPO, the share price has risen by 130%.

2
In the last 10 years, the Deutsche EuroShop share has outperformed the DAX, MDAX and EPRA indices (+7%, +117% and +83% respectively).

3
What began as investments totalling €10,000 are now worth €23,027.

4
Investors who participated in the two rights issues in 2010 have seen the new shares increase by 37%.

5
Crisis? What crisis? Since 2007, DES shareholders have enjoyed average annual growth of 12.2%, whereas the DAX has lost an average of 5.0% per year.

6
The dividend has risen steadily, from €0.96 per share for the 2001 financial year to €1.10 per share for 2010

7
Investors who have stayed with us since the IPO have, to date, received €9.04 per share in the form of dividends. In June 2011, they will earn another €1.10 per share.

8
Investors who participated in one of the four capital increases have all profited as a result.

9
Investors holding DES shares over the last 10 years would have achieved an average return of 10% per year.

10
Our 100 biggest shareholders, accounting for 1% of our 10,000 shareholders, hold almost 80% of our shares.

* As of 31 December 2010; our performance calculator is available online at: www.deutsche-euroshop.de/

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