Annual Report Meinl European Land

Transcription

1 Annual Report 2004 Meinl European Land

2 Meinl European Land 2004 Net income increased by 170% to more than EUR 32 million Shareholder s equity increased by 250% to EUR 362 million Portfolio value more than doubled to EUR 532 million Performance of share 10,32%

3 Key figures as at 31 st December Income in EUR 000 Revenues 7,486 7,990 11,941 32,362 Rental Income 6,212 6,600 8,950 25,456 EBITDA 5,001 5,524 7,845 20,475 EBIT 3,178 3,659 5,157 12,993 Profit before taxation ,381 Profit after taxation ,752 Balance sheet in EUR 000 Balance sheet total 69,919 71, , ,077 Fixed assets 68,205 66, , ,496 Cash 441 3,632 58, ,676 Long term borrowings 52,778 51, , ,026 Equity shareholder s funds 14,797 16, , ,686 Share Market Capitalisation in EUR , , ,360 Authorised Shares 60,000,000 20,400,000 20,400, ,000,000 Issued Shares 45,000,000 4,884,001 13,000,001 36,000,001 Nominal Value/Share in EUR Share price as at 30/12/2004 in EUR Value/Share at book value in EUR Value/Share at market value in EUR Profit/Share in EUR

4 Key figures portfolio as at 31 st December Total Overview No. of properties Total letable area in sqm 135, , , ,400 Book value portfolio in EUR ,102 66, , ,533 Market value portfolio in EUR ,100 84, , ,270 Overview per country Czech Republic Hungary Poland Russia Romania Slovakia No. of properties Total letable area in sqm 366,600 73,200 53,300 41,000 14,000 50,300 Book value portfolio in EUR ,114 61,302 76,569 47,498 18,960 50,090 Market value portfolio in EUR ,738 69,128 76,793 55,000 21,480 56,131 Occupancy rate in % Proportion of total (area) in % Proportion of total (market value) in % *) including committed properties, without development projects

5 Contents Key Figures Development during 2004 Financial Highlights Statement of the Board of Directors Retail Real Estate in the New Europe Overview Czech Republic Overview Hungary Overview Poland Overview Romania Overview Slovakia Overview Russia Property Portfolio Organisation Chart Directors Report Financial Statements Notes to the Financial Statements Independent Auditor s Report Officers and Professional Advisors

6 September 2004 Entering Russian market by signing the contract for a shopping centre in Volgograd. The EUR 55 million project generates a yield of more than 14%; final closing due in November. First Polish project: an acquisition of a supermarket in the South-West of Poland. March / April 2004 Issuing of 4 million new shares total issued share capital now 17 million shares. Moreover the company acquires additional properties with a total investment value of EUR 50 million in Hungary and the Czech Republic. June 2004 The General Meeting on 3rd June resolves to increase the authorised share capital from 20.4 million shares to 40 million shares with a par value of EUR 5.00 each. In June the company also issues an additional 7 million new shares: 24 million shares are now listed in the First Market on Vienna Stock Exchange. Regional expansion into Slovakia with the acquisition of two shopping centres with a total value of EUR 55 million. January 2004 At the beginning of the year Meinl European Land holds 132 retail properties with a total estimated value of EUR 223 million. 13 million shares issued are listed on the Vienna Stock Exchange. In January 2004 Meinl European Land increases the issue of secured bonds due 2013 from EUR 50 million nominal value to EUR 100 million nominal value. Highlights Development during 2004 * including committed properties, without development projects.

7 October 2004 Entering Romanian market: acquisition of a EUR 19 million retail warehouse with additional expansion area. Issue of 12 million new shares, total share capital reaches 36 million shares. November 2004 The Extraordinary General Meeting on 26th November increases the authorised capital from 40 million shares to 100 million shares. Completion of the shopping centre acquisition in Russia. December 2004 Contracts signed for EUR 150 million of additional properties in Poland and the Czech Republic, including the first property development project for the company. At year-end 2004, the portfolio comprises 159 retail properties with an estimated value of EUR 532 million*) located in 6 Eastern European countries.

8 Development of share capital in mio EUR Development of portfolio and assets in mio EUR 1,100 1, share capital 1,500 1, assets portfolio I / I / 2005 Total revenues in mio EUR Market price and net asset value in EUR revenues market price NAV I / 2005* I / 2005 *) Total revenues 2005, based on 4-times of the revenues for the first quarter. *) Net Asset Value (NAV): value per share at market value Financial Highlights

9 5 Share price in EUR Total turnover stock exchange in mio EUR/month ,500,000 3,000,000 2,500,000 2,000,000 1,500,000 1,000, ,000 Jan Mar May 2003 July 2003 Sept Nov Jan Mar May 2004 July 2004 Sept Nov Jan Mar Jan Mar May 2003 July 2003 Sept Nov Jan Mar May 2004 July 2004 Sept Nov Jan Mar Horizontal and vertical risk distribution One of Meinl European Land s key strategies in order to spread the risk is the horizontal and vertical diversification of the property portfolio. Horizontal risk distribution means a broader portfolio spread across different regions. The vertical diversification includes all actions which aim for a wider variation of property formats on the one and a broaden tenant mix on the other hand. Horizontal portfolio diversification By horizontal diversification the risk from regional weaknesses can be reduced significantly. In the past the regional diversification has been only achieved through investment in different regions within the Czech Republic and Hungary, but in 2004 the company resolved to expand to other regions in Central and Eastern Europe. Following initial investments in Poland, Russia, Slovakia and Romania Meinl European Land now operates in 6 Eastern European countries. Moreover the portfolio is widely spread within the individual countries. As a result of this geographic diversification the ratios of letable area in the individual countries have also changed significantly, though the Czech Republic remained the largest region for Meinl European Land at year-end 2004 with a total estimated property value of EUR 254 million, representing 48% of the total property portfolio. Apart from Romania, each other country has a similar percentage share of the portfolio by value. Regional distribution 2004 (based on market value) 14% 10% 4% 11% 13% 48% Regional distribution 2003 (based on market value) 28% Czech Republic Hungary Poland Russia Romania Slovakia Czech Republic Hungary 72%

10 Vertical portfolio diversification Property Mix spread of property formats As far as the type of real estate is concerned, Meinl European Land remains focused on retail properties, as the company may rely on the Meinl Group s long-term tradition and expertise in this business. Nevertheless there exists a spread across different retail concepts within this sector. This kind of vertical diversification seeks to minimize negative impacts, which may appear due to changing demands of retailers. At year-end 2004 the share of the Company s letable area are as follows: shopping centre spaces: 53%; hypermarkets or retail warehouses: 17%; and supermarkets or discounters: 25%. Only a small percentage share of Meinl European Land s portfolio is for non-retail purposes such as logistic activities or office buildings and often these areas are part of a larger retail property. Property usage 2004 (based on letable area) 25% 18% 4% Shopping Centers Supermarkets Hypermarkets Others Tenant Mix diversification of the tenant portfolio A wide vertical spread of the letable area across different tenants is intended to minimize the risk from default by any individual tenant. As in the previous year, Meinl European Land makes every effort to maintain a broad spread of tenants and to further diversify its range of tenants. Currently Meinl European Land has more than 800 tenants in 6 Eastern European countries. Most of the lease contracts are concluded with large international retail companies. Tenant structure 2004 Benetton Carrefour Mc Donalds Erste Bank... Deichmann 15% 3% 5% 53% 3% 9% 12% Tenant structure % 28% Julius Meinl Metro Rewe Spar Ahold Delhaize other tenants Property usage 2003 (based on letable area) 53% Julius Meinl Rewe Spar Ahold Delhaize other tenants 41% 6% 4% 8% 2% 18% 4% 49% Shopping Centers Supermarkets Hypermarkets Others Amongst the other tenants are several well-known companies, such as Carrefour, Deichmann, Tengelmann, Erste Bank, Mc Donalds, Benetton and a lot of other big international retailers. Moreover this category comprises smaller local tenants with one single unit on the one hand and major local companies, often market leaders in the respective market on the other hand. Such local majors generate a few percent of the company s total rental income. Compared to the previous year, retail warehouses have become more important within the portfolio while the proportion of shopping centre space remained constant and that of supermarkets was reduced relatively, as the company realised only smaller acquisitions in this segment. Meinl European Land enlarged its portfolio in 2004 by buying properties with a total letable area of 280,000 sqm, with shopping centres accounting for 190,000 sqm, retail warehouses and hypermarkets for 65,000 sqm and supermarkets, especially discount stores, for 25,000 sqm. In 2004 Meinl European Land has further extended its diversification of its portfolio of tenants with several mainstream tenants such as Carrefour and Metro being added to the list. This diversification has occured as a result of the acquisition of new properties. Consequently the relative contribution of the two biggest tenants Julius Meinl and Spar has decreased diminished by over one third to 15% and 12% respectively of the total rental income.

11 7 Development of portfolio value During the last two years the company has overseen a sixfold increase in the value of its portfolio from EUR 84 million in 2002 to an estimated value of EUR 517 million at the year-end Over the same period the total letable area has grown from about 140,000 sqm up to almost 600,000 sqm. Development portfolio in sqm Long-term Contracts All lease contracts with the major tenants as well as most of the contracts with local tenants are for terms of 10 to 15 years. Lease term in % (based on letable area) 25% 800,000 letable area properties No. of properties % 15% 600, , % 5% 200, / / / / /> IV In 2004 Meinl European Land Limited invested more than EUR 290 million in new retail properties. These investments were divided as follows per country: At year-end 2004 approximately 70% of the existing rental contracts have remaining lease terms of more than 5 years, running until 2010 or later, and approximately 30% of the contracts run until 2015 or even longer. Short-term lease contracts for one or two years are offered mostly for smaller shop units only. Investments in mio EUR Slovakia Romania Russia Poland Hungary Czech Rep In addition, the property value of the portfolio has increased by approximately EUR 20 million since the last valuation. Consequently the estimated property value increased by EUR 310 million in total compared to year-end 2003.

12 Statement of the Board of Directors

13 9 Dear Shareholders of Meinl European Land, Dear Sirs and Madams, The year 2004 was for Meinl European Land and consequently also for you as shareholder of special importance. The company has entered 4 new markets and is now operating successfully in 6 Eastern European countries: The Czech Republic, Hungary, Poland, Romania, Russia and Slovakia. Due to this regional expansion Meinl European Land has again achieved its ambitious targets and has doubled the property value. Turnover and operational profit (EBITDA + EBIT) have been significantly increased. Consequently it is a great pleasure for us to provide you in this annual report an overview of the activities and prosperties during Moreover this report should give you an idea of the planned future development of Meinl European Land. Three capital increases in April, June and October 2004 with a total volume of 23 million shares were places successfully and have generated proceeds of more than EUR 260 million for the portfolio expansion. This development continued also after the reporting period: In January 2005 the company issued 10 million new shares and in March 2005 Meinl European Land successfully closed the largest capital issue in company s history generating total proceeds of EUR 560 million. In the course of these capital increases the company has gained a large number of new shareholders and shareholder count is currently more than 35,000. But also our existing shareholders have participated in the capital increases and have exercised their subscription rights. This sign of confidence by our shareholders is for us the confirmation that we are on the right path with our strategy as a property holding company focussed on retail real estate in Central and Eastern Europe. Apart from these successful share issues Meinl European Land has increased the volume of secured bonds due 2013 outstandig to EUR 100 million nominal value in January 2004 by issuing bonds in a nominal value of EUR 50 million. The bonds have been placed mainly with institutional investors. Proceeds have been used for the ongoing expansion and have been invested in attractive retail properties. Shares of Meinl European Land also performed well: The share price increased by 10.32% in 2004 without any withholding tax. For a similar taxable asset this represents a yield before tax of more than 13%. The extremly low volatility proofs the stability of our share and the underlying assets. This is one of the main reasons why Meinl European Land ranks amongst the most traded securities of the Vienna Stock Exchange. This unprecendented development only two years after the IPO is also reflected in the inclusion into the GPR 250 index in January This real estate index tracks the performance of the 250 leading and most liquid property holding companies worldwide. Only companies with a free float market capitalization above US$ 50m are eligible for inclusion.

14 From an operational point of view the year 2004 was characterised by a significant increase of the property portfolio. Moreover the company focused on the consolidation of its competitive advantages. One of the company s main strategies, that has been implemented in the reporting period is the horizontal and vertical risk distribution. This includes a wider diversification of the portfolio across different regions on the one hand and a diversified tenant mix on the other. With the expansion into 4 new markets, a further diversification in existing markets and the addition of several well-known brand retailers to the tenant mix, Meinl European Land took a big step towards risk control. Compared to its intended expansion, Meinl European Land has even topped its ambitious targets: With a total estimated property value of EUR 532 million, the portfolio increased by EUR 310 million or 140% in The increase is mostly based on acquisitions. During the year the company has acquired 30 new properties with a total investment amount of EUR 290 million. As a result of the EU accession yields declined and property values rose and consequently the existing properties increased in value by more than EUR 20 million an increase of 5% compared to the last valuation. At year-end 2004 Meinl European Land s portfolio comprises in total 159 retail properties with a total latable area of almost 600,000 sqm. One of the most important acquisitions and at the same time the largest single investment was a shopping centre in Volgograd/Russia. The purchase price for the only modern shopping centre for a hub of one million inhabitants was approximately EUR 55 million. The company s main reasons for entering the Russian market have been the large population, the gradually increasing purchasing power and, not least, the high yield levels the shopping centre in Volgograd generates a yield of more than 14%. Meinl European Land intends to enlarge its activities in Russia during the next years to benefit from the window of opportunity whilst possible. An important market for the company in 2004 was Poland, where Meinl European Land acquired properties with a total value of almost EUR 80 million since its market entry in September. Furthermore, the company entered into a development project for a shopping centre with a total value of EUR 47 million and a scheduled opening in autumn All properties are retail real estate, which are let on a long-term basis. The company expects that Poland, which is already home to its second largest unit, will become the most important and largest investment market of Meinl European Land in Other key acquisitions have been a portfolio of two shopping centres in Slovakia with an estimated property value of more than EUR 55 million and the first investment in Romania, a retaill warehouse in Bucharest. Apart from the existing letable area this project also has a land reserve of approximately 150,000 sqm, which will be developed over the next few years. The company also enlarged the portfolio in its existing markets Czech Republic and Hungary, two countries that also show significant economic growth like the other new EU members Poland and Slovakia. In the Czech Republic, Meinl European Land made its highest investments with EUR 85 million. One of the acquisitions was a shopping centre in Brno with a purchase price of EUR 36 million. For the coming years the company expects a stable economic and political development and consequently significant growth in its target markets. The demand of European retailers remains at a high level and the supply of attractive retail spaces remains below this market demand. This situation offers a high potential for new retail properties. We feel confident, that these expansion opportunities combined with a wide regional diversification and a balanced tenant mix comprising the big retail players will enable Meinl European Land s solid and sustainable growth in the future.

15 11 For the year 2005, Meinl European Land intends to continue the successful expansion of the last reporting period. An ambitious target, but absolutely feasible based on the company s pipeline, which comprises at year-end 2004 properties of a total value of more than EUR 700 million. Moreover, some of the projects in the pipeline have already been closed in the meantime, including a large shopping centre in Ekaterinenburg in Russia, which generates a yield similarly attractive to the first Russian project. Moreover the company has realised in the first months of 2005 several smaller and larger acquisitions within a total value of more than EUR 150 million. Last but not least we want to thank you, our shareholders, for the confidence you have put in us. We will all continue to work on Meinl European Land s successful further development. The New Europe offers a multiplicity of attractive expansion opportunities, which we will pursue target-oriented in The Board of Directors June 2005

16 Retail Real Estate in the New Europe

17 13

18 Market Environment Economic Development in Eastern Europe Meinl European Land s target markets have been dominated in 2004 by a dynamic expansion and solid economic growth, which was in most cases higher than growth in Western Europe. At the same time the economic and political situation saw a further stabilization. Based on the macroeconomic growth, there was a significant increase of international inward investment in these markets. This development in turn constituted a further push to the economic upswing. Due to the positive economic fundamentals, unemployment and inflation rates declined and the numbers show a positive trend. Unemployment and inflation rates are in the meantime comparable to Western European rates in most of the countries. Development - GDP in % RO RUS 4.00 HU CZ SK 2.00 PL e Development - CPI in % Source: Colliers, CEE Marketreport RO RUS HU SK CZ PL e Source: Colliers, CEE Marketreport 2004 Development - Unemployment in % 20 PL SK RUS RO CZ HU e Source: Colliers, CEE Marketreport 2004

19 15 Retail Market Yields in European Capitals The positive economic development causes a further harmonization towards market conditions in Western Europe. In the Czech Republic and Hungary but also in Poland and Slovakia yields dropped by up to one percent after the entry in the European Union in May As rental levels remained largely unchanged, this lead to significantly increased property values. Yields also came back in Romania, underlining the high expections of the EU-entry of this country. In the meantime the decline in yields has slowed and yields are now expected to remain stable with a slight downward tendency. However, based on the opinon of real estate advisors, Meinl European Land expects that this development in yield levels may repeat itself in the countries in Phase Two for EU accession. Despite these trends, yields in Central and Eastern Europe continue to be above the yield levels in Western Europe. Net retail yield in European cities in % Berlin Bratislava Budapest Bukarest Frankfurt London Madrid Moscow Rome Paris Prague Warsaw Source: Colliers, CEE Marketreport 2004 Rents in European Capitals Rents for retail properties in Eastern European capitals are still significantly below the rental levels in most of the comparable Western cities. In general rents remained on a solid level in 2004 in all markets, where Meinl European Land operates, even if there may have been some regional differences within the individual countries. Average rental per sqm in EUR Bratislava Brussels Budapest Bukarest Frankfurt London Madrid Milan Moscow Paris Prague Stockholm Warsaw Bratislava Brussels Bukarest Budapest Madrid Frankfurt London Milan Moscow Paris Prague Stockholm Warsaw Source: Colliers, CEE Marketreport 2004 Market penetration in European Capitals The development of the Eastern European retail markets is still lagging Western Europe and consequently the market penetration is significantly lower. The low penetration offers a high potential for European retailers as well as for international property companies and developers over the years to come. Shopping centre space per 100 inhabitants in sqm ,000 1,200 Source: Colliers, CEE Marketreport 2004

20 Ústi nad Labem Hrádek nad Nisou Liberec Chomutov Ceská Lipa Náchod Teplice Duchcov Hradec Králové Podébrady Nejdek Neratovice Benatky Praha Karlovy Vary Nymburk Rakovnik Pardubice Zdár nad Sezavou Pilzen Rokycany Tábor Jihlava Rockycany Domazlice Pelhrimov Trebić Brno Strakonice Trebon Znojmo Ceské Budéjovice Karviná Ostrava Frydek Mistek Novy Jicin Vyskov Zlin Uherské Hradisté Hodonin Overview Czech Republic

21 17 Market development 2004 The economy in the Czech Republic performed well again in the year of joining the European Union. A combination of strong exports, which increased at double digit rates, and high private investment resulted in a GDP growth of 3.6% (2003: 3.7%). Due to rising costs and tax increases inflation is higher than in 2003, but at a rate of 2.6% comparable to inflation rates in Western European countries. Unemployment declined further compared to previous years and was at year-end at 8.3%, below the average in the EU (8.9%). Retail market 2004 was also a dynamic year in the Czech retail property market. It was characterised faremost by a strong demand for retail space by international retail companies already established in the Czech Republic. Furthermore and as a consequence of the EU accession, new European retailers are keen on entering the market. Due to rising incomes and higher purchasing power, it is expected that this development will continue in 2005, in particular as the potential for expansion is still high. Currently in the Czech Republic retail space is approximately 1.2 sqm per inhabitant, but longer-term it is expected that retail space will increase to match levels in Western Europe (2 sqm per inhabitant). This implies for the coming years an expansion potential of 8 million sqm as wages in the Czech Republic rise to reach Western European levels. A reversal in the trend occured in the split of the demand for individual retail formats. For years the food retail market has been dominated by the strong demand for hypermarkets and by now nearly 150 such stores exist in the country. This trend changed in 2004 and retail companies seem to be focused on the expansion of other formats. Dedvelopers responded to this format-specific saturation of demand by concentrating more on other retail concepts: in 2004 new developments of hypermarkets dropped to 60,000 sqm compared to 200,000 sqm newly built hypermarket space in On the other hand, the supply of new supermarkets, convenience stores, shopping centres and also retail warehouses, often developed next to existing hypermarket locations to fulfil customers needs, has been significantly enhanced. Based on market studies analysing the demand of international food retailers, this trend is likely to continue. Due to the strong demand for special property formats and the strong purchasing power rents in the Czech Republic remained on a firm and stable level despite a larger supply of retail areas. Rents per month can reach based on the location for food-areas EUR 6 10 / sqm and for non-food spaces up to EUR 20 / sqm. The rental level should remain strong also in the next few years. Investments 2004 Meinl European Land expanded its portfolio in the Czech Republic by more than 80,000 sqm in Acquisitions include hypermarkets, retail warehouses and a shopping mall, several smaller supermarkets and discount stores. The total investment value of newly acquired properties is more than EUR 85 million. The largest single acquisition in the Czech Republic in 2004 was a shopping centre with an investment value of EUR 36 million, which is on long-term leases to 70 local and international tenants. An adjacent hypermarket is owned by French operator Carrefour group. At year-end 2004 the Czech portfolio comprised 99 retail properties with an estimated value of almost EUR 255 million, generating a yield of more than 9%. Consequently the Czech subsidiary continues to be the largest entity in Meinl European Land. Anchor tenants are international retail players such as Ahold, Julius Meinl, Rewe, Spar and Tengelmann. In addition the company has several well-known local tenants. Increase of revenue Due to the portfolio expansion on the one hand and the full profit contribution from properties, which have been acquired late in 2003, on the other hand, the rental income in the Czech Republic increased to EUR 16 million. This represents an increase of EUR 9 million or 140% compared to As in the years before the company acquired properties in the second part of the year and these projects will not generat a full return for Consequently in 2005 the turnover should further increase by more than 20% without any new acquisition. Occupancy rate The occupancy rate in the Czech properties is around 95%, which is approximately the same rate as for Although this occupancy rate is a bit lower than in other subsidiaries of the company, it compares well with the average in the retail business in the Czech Republic. Outlook Due to the continuing convergence towards Western European market conditions the company expects in the years to come a dynamic appreciation of the Czech portfolio. Following the entry in the EU, retail yields have dropped already by up to 1% and the market expection is for a further gradual slide in yields. This appreciation will be reinforced as a result of the ongoing modernisation and optimisation of existing properties. Convergence with Western Europe on the other hand also implies expections of lower yields and consequently higher prices for potential investors. Nevertheless Meinl European Land believes that it will continue to be able to realise new projects with attractive returns in the future. Top 5 Tenants Czech Republic rental income annualised in EUR in % in % Ahold 1,500,000 8% 2% Julius Meinl 6,000,000 32% 41% Rewe 1,125,000 6% 3% Spar 4,500,000 23% 17% Tengelmann 160,000 1% 1%

22 Miskolc Eger Nykregyhaza Köszeg Szombathely Körmend Bük Györ Nyergesúfalu Tatabányá Celldömölk Vásvár Budapest Esztergom Jaszbereny Gyöngyös Zalaegerszeg Dunaujváros Dunaföldvár Nagykanizsa Keszthely Kalocsa Szeged Tolna Kaposvár Szekszárd Pécs Hajdúböszörmény Debrecen Overview Hungary

23 19 Market development 2004 The year of joining the European Union was a positive one for Hungary; not only politically but also economically. Based primarily on a strong increase of private consumption, GDP increased in 2004 by 4.0%, significantly above the European average (2.3%). This rise of GDP represents the strongest growth in the last few years and it is expected that the Hungarian economy will increase by a similar rate for the next few years. Consumer price inflation reached 6.8%, slightly above the rate in 2003, but for 2005 considerable lower inflation at a rate of 3.6% is forecast. With an unemployment rate which has for years been constant at approximately 6.0%, unemployment in Hungary is significantly lower than in other new EU-countries and below the European average. Retail market The Hungarian retail market was characterised by a strong and dynamic development. The EU accession has encouraged new retail brands to enter the market and thereby increased competition, especially in the food and fashion sectors. Even though some companies withdrew partly or completely from Hungary as a result of fierce competition, 2004 was a banner year for most of the retailers. Based on expert opinions agressive expansion will be the strategy of most of European retailers in Hungary over the next few years. Consequently the demand for attractive locations will remain strong, but with large regional differences, mainly caused by the different levels of purchasing power. While some parts of Hungary have reached a high income level and a consequently strong purchasing power, some rural regions have remained quite far behind. In general, however, demand by private consumers is increasing: as an examplealready 80% of all Hungarians have a mobile phone. These regional differences show on the supply as well as on the demand side. Some regions, particularly in the catchment area of Budapest, are now showing a certain degree of saturation whereas in other regions new projects for new attractive retail locations are brought to the market successfully. Retail rents in Hungary continue to be stable, albeit with regional differences. In regions with high demand the rents increased slightly. In the less developed parts of Hungary with weak infrastructure or lower demand the rental level decreased slightly. Monthly rents for food retailing space amount to EUR 6-9 / sqm per month, non-food rents generally range from EUR / sqm. Investments 2004 Meinl European Land has following the acquisition of the Eurocenter OBUDA at year-end 2003 concentrated more on smaller and regional projects. This was due to a certain saturation in the sector of larger shopping centres, especially in Budapest. In 2004 the company acquired 5 new discount markets a retail format in strong demand in Hungary. During the year the company sold two smaller properties with profit, which were no longer compatible with Meinl European Land s portfolio strategy. At year-end 2004 the Hungarian portfolio comprised 48 retail properties with an estimated value of nearly EUR 70 million and an average net yield of approximately 9%. As in the other countries anchor tenants are European retailers, such as Delhaize, Rewe, Spar and Tengelmann. Increase of revenue In Hungary revenue grew significantly in 2004, mainly based on the rental income generated by the Eurocenter OBUDA shopping mall. As it was acquired in autumn 2003, this center contributed only 2-months income in the previous year. Total rental income in Hungary amounted to more than EUR 6 million in 2004, which represents in increase of 150% compared to 2003 (EUR 2,35 m). Occupancy rate In Hungary the occupancy rate remains at 100% with largely long term lease contracts in place. The sector average vacancy rate is approximately 4% in Hungary. Outlook Like the other new members of the European Union, Hungary s property market shows a strong convergence with conditions in Western Europe. Consequently the value of the existing portfolio has increased over recent year and is expected to grow further during the next years. Due to this development new projects available on attractive terms have become scarce. Nevertheless Meinl European Land s current pipeline includes several Hungarian properties smaller discount markets as well as larger retail warehouses - with a total value of nearly EUR 100 million, for which closings are expected in Top 5 Tenants Hungary rental income annualised in EUR in % in % Delhaize 1,468,000 24% 28% Rewe 866,000 14% 8% Spar 1,150,000 19% 19% Tengelmann 62,000 1% 1% Sonstige 2,554,000 42% 44%

24 Byton Tczew Pila Torun Plock Warschau Siemianowice Slaskie Olkusz Swietochlowice Srem Lublin Zamość Overview Poland

25 21 Market Development 2004 With an area of 300,000 squarekilometres and 40 million inhabitants Poland is the largest and most populated new member of the European Union. 20 cities in Poland have more than 200,000 inhabitants and 90 cities more than 50,000 inhabitants a demographic situation unlike in any other Eastern European country. After some years of stagnation, GDP showed strong growth of 3.8% in 2003 and 5.3% in Exports also increased again in For the next few years an economic growth rate greater than 4.0% is predicted. In 2004 the inflation rate was 3.6%, higher than in 2003 (0.7%), but lower than in most of the other countries in the region. With 18.3% unemployment rate Poland is one of the countries with the highest unemployment in Europe, even if this rate is nearly 2% lower than some years ago. Over the next 2 years a further decline by 3% is forecast. Nevertheless, unemployment remains the largest problem of Polish economy. Retail market Poland is one of the largest retail markets in Central and Eastern Europe and shows strong potential for continued growth. Built on the dynamic economic recovery, Poland is quickly catching up from behind other countries in the region. This potential has been recognised by European retailers: After some years of decreasing interest, several companies newly entered the Polish market in 2004 or raised their commitment. For 2005 a further increase in demand for retail space is expected. During the last year, European food retailers expanded especially in the hypermarket format. Moreover, the big players Ahold, Carrefour and Tesco have broadened their activities in Poland by introducing a second market format and are currently establishing supermarkets with approximately 2,000 sqm floor area throughout Poland. One of the main reasons for the increase in demand is the positive trend of purchasing power, caused by the strong economic growth. Although the income level in Poland is still below that in the Czech Republic or Hungary, the present economic recovery is leading to a continued increase of disposable income and consequently of purchasing power for the next few years. The associated strong demand for attractive retailing locations provides great opportunities for retail property developers and investors. A huge supply of retail space already exists in the urban areas of Warsaw, Gdansk and Cracow and for the near future some saturation of demand is expected in these regions. Longer-term, new development projects will take place in to smaller regional cities, where most European retailers are still not established. The consolidation of the market also affects rental levels, which have declined over the last few years. However, dependent on location and the quality of tenants, material differences exist in rental levels: Monthly rents for food retail space run from EUR 7-10 / sqm per month, smaller non food areas range up to EUR 25 / sqm. Investments 2004 In September 2004 Meinl European Land expanded its activities into the Polish market. The first investment was a supermarket with 2,500 sqm letable area in the South West of Poland, which generates a yield of more than 11%. In the following months, the company increased the Polish property portfolio significantly. The largest single acquisition in Poland was a portolio of 7 neighborhood shopping centres with a total investment value of EUR 62 million. This deal had not closed at year-end and is consequently not included in the fixed asset position in the balance sheet. Moreover the company acquired its first development project, a shopping centre with a total letable area of 35,000 sqm with a scheduled opening in autumn The lease contracts with the anchor tenant, German based Metro group with its Mediamarkt electronics warehouse and Real hypermarket as well as with several other tenants are already signed. The total investment value for the project will be EUR 47 million. After closing of these acquisitions and after the completition of the development project the Polish subsidiary will be Meinl European Land s second largest unit with a total portfolio value of EUR 125 million. All properties are on long-term leases to European retailers such as Ahold, Carrefour, Deichmann, Metro or Rewe as well as to well-known local companies and generate a yield of more than 9%. Occupancy rate The occupany rate of Meinl European Land s portfolio in Poland is nearly 100%. In general, vacancy rates in Poland are approximately 4%. Outlook The retail market in Poland is developing quickly and market conditions will soon be equal to the situation in Western Europe. Especially in the metropolian areas it will become more difficult to acquire new projects with yields at double digit rates. Nevertheless, due to the overall market size and the multitude of smaller to medium-sized cities with low market penetration, a huge potential for projects with attractive returns exists in regional centers. Due to this potential for expansion, Meinl European Land expects that Poland will become one of the largest activities of the company. The company intends to grow the Polish portfolio up to a total value of more than EUR 400 million in The Polish pipeline consists of projects with a total value of more than EUR 300 million. Top 5 Tenants Poland rental income annualised in EUR in % Ahold 1,355,000 23% Carrefour 329,000 5% Nomi 2,100,000 33% Rewe 235,000 4% Metro*) 1,300,000 22% *) Mediamarkt & Real in development project Torun, beginning with 10/2005

26 Overview Romania Bukarest

27 23 Market Development 2004 The economy in Romania grew significantly in 2004 along the trend in other countries in the region. After an increase of GDP of around 5% in previous years, the economy expanded in 2004 at a substantially higher rate of 8.3%. Based on expert opinions, the current situation should provide a solid basis for the future prosperity of the country. As the entry into the EU has been set for 2007, strong economic growth is forecast for the years to come. Unemployment further declined to 6.8% of the working population. This rate is significantly below the unemployment rate in most of the countries in the EU. A positive trend has also become apparent in respect to inflation in Romania: Even though average annual inflation was still 11.9% for the year (2003: 15.3%), the December figure had dropped to 9.3% year on year. The government has announced its aim to reduce the inflation rate to 7% by Considering that Romania has seen inflation rates of 50% in recently years this would be a remarkable achievement. Retail market The favourable political and economic development has had an impact on the retail market in Romania. With purchasing power developing gradually demand for properties by European retailers has increased, even if certain reservations still exist and only a few companies are established on the market. Nevertheless companies have started to recognize the high potential of the retail market in Romania and it is expected that most of the European retail companies will set up networks in Romania in the next few years. Currently the availability of attractive and suitable retail properties is still limited and restricted almost entirely to Bucharest. Given the current trends and the increase in demand, the supply of spaces will grow initially in the larger cities and subsequently in regional towns of Romania. The nascent development of the Romanian retail market is reflected in price movements: 2004 has seen a rapid increase of both rents and property prices. The pressure originating from unsatisfied demand has given landlords a very strong position in contract negotiations. Average monthly rents for retail space run from EUR 5-8 / sqm for food areas, for non food areas the rents are EUR / sqm. Some big players are prepared to make extra payments to existing tenants of property in premium locations in order to obtain the space and to take over the lease. With supply increasing, the pressure on landloards will grow and it is expected, that rents, as in the Czech Republic or Hungary, will eventually stabilise. Investments 2004 In October 2004 Meinl European Land made its initial move into the Romanian market. The first, and so far only acquisition, was a retail warehouse in Bucharest. Apart from the existing letable area of 14,000 sqm, there is an area of more than 150,000 sqm for expansion. This area will be developed step by step over the next few years, depending on market demand. In its present stage of development, the project is on a long-term lease to the German based Metro group with its do-it-yourself concept Praktiker and a local electronics retailer. The purchase price of the retail warehouse was approximately EUR 19 million and based on rents from the currently developed area the yield is 11%. Occupancy rate In the current stage of development, the occupany rate is 100%. In the future, Meinl European Land will develop parts of the development land in response to market demand in order to avoid vacancies. Outlook Meinl European Land expects the dynamic development of the Romanian retail property market to continue over the next few years. The price movement last year with yields dropping by approximately 1% underlines the high expectations from European Union membership in This anticipation effect did not occur in the other countries prior to their EU accession. Based on expert opinions prices should now remain at a stable level in the interim. Nevertheless yields remain still higher than in the new EU member countries. Some companies have already recognized the high potential of Romania after all one of the larger and most highly populated Eastern European countries. Based on market studies, Meinl European Land expects, that these companies will significantly enlarge their engagement in Romania in the following years. Moreover it is expected that the proposed fiscal reform, in which corporate and private income taxes will be decreased to 16%, will significantly bolster foreign investment in Romania. These factors will have a further positive impact on economic activity in Romania. Income levels will improve, leading to increased purchasing power and in consequence a higher demand for consumer products. This development will motivate additional retailers to establish themselves in the Romanian market. As a result of its early market entry, Meinl European Land will be able to offer these companies attractive locations while obtaining attractive yields at the same time. Tenants Romania rental income annualised in EUR in % Metro 1,084,000 80% Domo 271,000 20%

28 Zilina Kosice Overview Slovakia

29 25 Market development 2004 For the smallest country in the region, 2004 was also a year of robust growth: GDP climbed up by 5.2%, a significantly stronger increase than in the year before. The main reason for this favourable development are substantial reforms untertaken by the present government, such as the decrease of the tax rate from 25% to 19%. This tax reduction caused, togehther with increased competition in retail trade and a more conservative pricing policy, a fall of inflation to 7,5% (2003: 8,5%). For 2005, a further considerable reduction to a rate of 2.5% is forecast. In 2004 the unemployment rate was 14.3%. Even though this is still higher than in most of the other EU countries, unemployment in Slovakia has fallen significantly during the last few years. Due to increasing foreign investment unemployment should continue to decline in future years; for 2005 unemployment is forecast at less than 12%. Retail market International interest in Slovakia is still below that in neighboring countries, but has increased significantly since the accession to the EU. Nevertheless, most interest remains concentrated on Western Slovakia. The main reason for this East-West decline is a different economic situation and accordingly income levels are lower in the Eastern regions. Following the recent economic and political developments, such as the tax reduction and the increase in international investment, an economic upswing is also expected in Eastern Slovakia during the next few years. As a result purchasing power will grow, which will further stimulate demand in this region. The supply in the Slovak retail market also contributes to the East- West decline: Until this date most of the centres operated by large European retailers are located in the Western part of the country. The anticipated increase in retail demand should also adjust the balance in the supply of retail properties. With respect to the the market format, the sector is dominated by large supermarkets and hypermarkets. The companies trading in these markets are also the anchor tenants in the few shopping centres in the country. Rental levels range from EUR 6-8 / sqm per month for food retailing property and EUR / sqm for non-food areas, still below the levels in other new EU member countries, but again with material regional differences: In prime retail locations in Bratislava, monthly rents reach up to EUR 35 / sqm for non-food units. Investments 2004 Slovakia was the first new country in which Meinl European Land invested in The first acquisition was a shopping centre in Zilina in Western Slovakia with a purchase price of EUR 20 million. The shopping mall has a total area of 18,000 sqm and has long leases to 80 local and international companies. An important pull for customers is the attached hypermarket, which is owned by the French Carrefour group. Shortly thereafter the company acquired the second property, a shopping centre in Kosice in Eastern Slovakia with a total letable area of more than 32,000 sqm and with an investment of EUR 35 million. The shopping centre is leased longterm to Ahold and several other local and international tenants. There is an additional 59,000 sqm of expansion area. At the end of 2004, the Slovak portfolio included these two shopping centres with a total area of 50,000 sqm. The estimated value is more than EUR 55 million. Both properties were acquired on yields above 10%. Occupancy rate At the end of 2004, the occupancy rate in Slovakia was over 96%. The unlet space is mostly attributable to the property in Kosice, which, when acquired, had a vacancy rate of more than 15%. It is important to note, that the vacant spaces have been taken into account in the calculation of the purchase price. Prior to the deadline of this report Meinl European Land had managed to acquire several new tenants and consequently the occupancy rate has increased to more than 94%. Meinl European Land is confident to lease the remaining vacant spaces, especially as the company has excellent contacts with numerous international retail companies. Outlook The economic and political reforms initiated in 2004 will significantly increase foreign investment over the next years. The international automotive industry has, for example, established factories in the region above Kosice. This economic activity should generate rising incomes and consequently increased demand for space from international retailers. In general, the Slovak retail market does not offer as large a potential for expansion as most of the neighbouring countries due to its size, but Meinl European Land expects to be able to enlarge the local portfolio in 2005 with some attractive properties. Before year-end the company intends to double the portfolio value to EUR 100 million. In the longer-term and with increasing economic recovery Slovakia will also converge to Western European market valuations. This is likely to result in decreasing yields and, as a consequence, a significant increase in value of the portfolio. Top 5 Tenants Slovakia rental income annualised in EUR in % Ahold 1,305,000 23% Datart 256,800 5% Intersport 190,000 3% Kenvelo 163,200 3% Slovak Telecom 108,000 2%

30 Ekaterinburg Volgograd Overview Russia

31 27 Market development 2004 With a total area of 17 million squarekilometres Russia is not only the biggest country in the world, but is also a nation with the largest natural resources and has the second highest oil reserves in the world. Moreover Russia has a large number of population rich metropolitan areas: 15 cities have more than 1 million inhabitants and 100 cities have more than 200,000 inhabitants. Besides these, there are hundreds of cities with more than 50,000 inhabitants. Due to these facts Russia will be one of the retail growth markets in the future. In 2004 the Russian economy was dominated by further political and economic reforms. Due to the positive investment climate, foreign investments increased significantly and reached the highest level since The food trade and the oil sector remained the most attractive businesses for international investors. Combined with the strong domestic demand, GDP grew by 6.9%. Inflation has declined slowly, but at 11.7% today, it is now nearly 9% below the inflation rate in As a result of further economic and political changes, the trend should continue in The forecast inflation rate is 8.5%. The employment market in Russia is also showing a positive development. Unemployment declined by more than 3% over the past few years and at 7.1% at year-end 2004 was below the European average. Retail market The continuing economic growth is an ideal foundation for the development of the retail trade, as the Russia market is not very developed and consequently offers significant potential for expansion. The demand from international retailers for space outside of Moscow is still low, but increasing. In Moscow itself demand is strong. One of the reasons for the low international demand is the low income level and logistics problems in most parts of Russia. However, there are also regions with relatively strong purchasing power. Furthermore the economic stabilisation during the last few years has already caused a significant increase in demand for retail space, especially in the food sector. Since 2003 several big European retailers have entered the Russian market. Due to the low level of international engagement, the supply of space was also low in the past. Even until today, only few Western style shopping centres exist, even in big cities. Moscow has always been an exception and the stock has increased significantly in recent years. At the end of 2004 the total area in shopping centres in Moscow was 2.5 million sqm. However, most of the other regions offer still a substantial potential for real estate investors and developers. Rents differ between Moscow and other regions in Russia: In Moscow the rental level for food retail space is EUR / sqm per month, which is higher but still comparable to other Eastern European countries. For non-food space rents are up to EUR 100 / sqm above those even in Western European countries. Regional rents are comparable to the levels in the new EU members and reach approximately EUR / sqm for food retailing and EUR / sqm for other spaces per month. Investments 2004 In September 2004 Meinl European Land expanded its activities into Russia. The first property was a shopping centre in Volgograd with a purchase price of approximately EUR 55 million, generating a yield of more than 14%. The centre has a total letable area of 41,000 sqm and is the only modern shopping centre within a hub of a million inhabitants. Because of this, the centre has a footfall which is much higher than in comparable properties in Western Europe.The Anchor tenants are the food retailer Perekryostok and the electronic equipment group Technosila, both local companies which belong to the leading Russian retail groups. In addition, the shopping centre has 80 other units, which are leased by local and international companies. Meinl European Land has deliberately invested outside of Moscow, as the rental levels in Moscow are currently so high that it seems unlikely that rents can remain at this level longer-term. This may lead to falling property values even as yields decline. Occupancy rate Meinl European Land has a vacancy rate of approximately 2% in Russia. Since the second phase of the Volgograd property was opened only shortly before year-end, the company expects that this will only be temporary as a strong demand for spaces in the shopping centre exists. Meinl European Land expects the occupancy rate to be almost 100% in the future. Outlook Meinl European Land intends to intensify its activities in Russia in order to take advantage of the full potential offered by the current high yields as long as they prevail. The general risk in Russia is still is a bit higher than in other countries due to different legal and poticical conditions. Nevertheless the company considers the higher yields to be reflective of the risks and are adequate. Moreover the experience of Meinl European Land with its first property has been positive throughout. The Russian project pipeline of Meinl European Land consists of properties with a total value of several hundred million Euro, that all generate similar yields as the shopping centre in Volgograd. At year-end, a large shopping centre in Ekaterinburg had been identified, subject to due diligence. Prior to the deadline of this report the contracts for this shopping centre were signed. With increasing economic activity conditions in the property market in Russia will start to converge towards Western Europe. The company expects that in a few years time yields in Russia will reach current yield levels in new EU member countries. Top 5 Tenants Russia rental income annualised in EUR in % Perekryostok 720,000 10% Technosila 580,000 8% Sportsmaster 329,000 5% Stari Hatabic 265, Karlo Pasolini 191,000 3%

32 Acquisitions 2004 Property Portfolio

33 29 Shopping Centre Futurum Brno Czech Republic Interspar Markets Pardubice & Ostrava Czech Republic Market value 36,600,000 EUR Rental income p.a. 3,240,000 EUR Letable area 16,600 sqm (plus 8,000 sqm hypermarket owned by Carrefour) Anchor tenant Approx. 60 local and international tenants, moreover Carrefour as owner of the hypermarket Occupancy rate % Lease term Contracts until 2012 Indexing based on EUR-CPI Parking 1,500 parking spaces Description Shopping centre on the Brno city limit with good road access, built in The shopping mall consists of 60 units, which are leased on long-term contracts. A hypermarket on the same land is in the ownership of Carrefour. Market value ,000 EUR Rental income p.a. 2,955,000 EUR Letable area 45,000 sqm (14,800 sqm Ostrava, sqm Pardubice) Anchor tenant Spar with Interspar hypermarket plus some local tenants. In Pardubice moreover Rewe group with an interior outfitting chain and Baumax as tenant of part of the land plot Occupancy rate 99.00% Lease term Contracts until 2014/2016 Indexing based on EUR-CPI Parking 1,400 parking spaces Description Portfolio of 2 retail warehouses with Interspar hypermarkets and some additional units. The properties are located on the city limit of these two regional cities and have a good road access.

34 Hypernova Hypermarket Pilsen Czech Republic Supermarkets Karlovy Vary & Nejdek Czech Republic Market value 5,348,300 EUR Rental income p.a. 459,200 EUR Letable area 5,870 sqm Anchor tenant Ahold as tenant of the whole project, up to 10 sub units Occupancy rate % Lease term Contract until 2019 Indexing based on EUR-CPI Parking approx. 500 parking spaces Description The hypermarket has been built in 2001 and is located in a residental area of the 4th largest city in the Czech Republic. The project is completely leased to Ahold, which has contracts with up to 10 sub tenants Market value 4,502,000 EUR Rental income p.a. 422,000 EUR Letable area 4,500 sqm Anchor tenant Ahold Occupancy rate % Lease term Contracts until 2019 Indexing based on EUR-CPI Parking 300 parking spaces Description The supermarkets are located in the centre of the 2 regional cities and leased by Ahold group on a long-term contract basis. Especially Karlsbad has a high purchasing power due to the strong tourism activities.

35 31 Julius Meinl Supermarket Prague-Vestec Czech Republic Portfolio of 5 Penny and Plus Markets Czech Republic Market value 8,955,700 EUR Rental income p.a. 758,000 EUR Letable area 5,080 sqm Anchor tenant Julius Meinl a.s. Occupancy rate % Lease term Contract until 2019 Indexing based on EUR-CPI Parking approx. 300 parking spaces Description The supermarket is located in Vestec, a suburb of Prague, and has a good road access. The property has been completely reconstructed in 2000 and is long-term leased to Czech Julius Meinl a.s. Market value 5,340,900 EUR Rental income p.a. 485,400 EUR Letable area 5,650 sqm Anchor tenant Rewe & Tengelmann Occupancy rate % Lease term Contracts until 2014/2016 Indexing based on EUR-CPI Parking 100 parking spaces per property Description Portfolio of 5 discount markets in different local cities in the Czech Republic. The markets are leased to Rewe and Tengelmann on long-term contracts. 3 of the projects contain 1 or 2 additional smaller units.

36 Portfolio of 5 Penny Markets Hungary Retail Warehouse Militarii Center Bucharest Romania Market value 5,080,000 EUR Rental income p.a. 449,500 EUR Letable area 4,760 sqm Anchor tenant Rewe Occupancy rate % Lease term between 2011 and 2016 Indexing based on EUR-CPI Parking parking spaces per property Description Portfolio of 5 discount markets in different local cities in Hungary, which have been constructed between 1996 and The markets are located on the city limits and have good road access. All properties have only one unit, anchor tenant is Rewe. Market value 21,748,900 EUR Rental income p.a. 1,350,100 EUR Letable area 14,000 sqm (plus 150,000 sqm expansion area) Anchor tenant Metro Occupancy rate % Lease term Contracts until 2018 Indexing based on EUR-CPI Parking 1,500 parking spaces currently Description Retail warehouse at the western border of Bucharest with direct access to the newly built city highway. The land plot has further expansion possibilities of 150,000 sqm, which shall be developed during the next years. The existing property is longterm leased to Metro with its do-it-yourself chain Praktiker and to a local electronics retailer.

37 33 Shopping Centre Duben Zilina Slovakia Shopping Centre Optima Kosice Slovakia Market value 19,997,000 EUR Rental income p.a. 2,020,100 EUR Letable area 18,000 sqm (plus 9,000 sqm hypermarket owned by Carrefour) Anchor tenant Approx. 60 local and international tenants, moreover Carrefour as owner of the hypermarket Occupancy rate 99.00% Lease term Contracts until 2012 Indexing based on EUR-CPI Parking 1,800 parking spaces Description Shopping centre with excellent access to the main routes, which was built in The shopping mall consists of 60 units, which are leased on long-term contracts. A hypermarket on the same land is in the ownership of Carrefour. Market value 36,133,600 EUR Rental income p.a. 3,546,900 EUR Letable area 32,300 sqm (plus 59,000 sqm expansion area) Anchor tenant Ahold, plus 80 other tenants Occupancy rate 94.00% Lease term Contracts until 2019 Indexing based on EUR-CPI Parking 1,500 parking spaces Description The shopping centre is located on the city limit of the second largest city in Slovakia and has a good road access. Anchor tenant is Ahold with a 15,000 sqm hypermarket. The mall is leased to 80 local and international tenants. The land plot has further expansion possibilities of 59,000 sqm, which shall be developed during the next years. Currently the remaining land plot is used for open air events.

38 Portfolio of 7 Shopping Centres Poland Supermarket Minimal Srem Poland Market value 62,000,000 EUR Rental income p.a. 5,900,000 EUR Letable area 50,900 sqm Anchor tenant Approx. 10 units per centre, e.g. Ahold, Carrefour, Deichmann, Nomi Occupancy rate 99.00% Lease term Contracts until 2010/2012 Indexing based on EUR-CPI Parking approx. 400 parking spaces per shopping centre Description Portfolio of 7 neighbourhood shopping centres with a letable area of approx. 9,000 sqm each. Good road access. Anchor tenants are big names such as Ahold and Carrefour, the Polish do-it-yourself group Nomi and other international and local companies. Market value 2,400,000 EUR Rental income p.a. 234,600 EUR Letable area 2,500 sqm Anchor tenant Rewe Occupancy rate % Lease term Contract until 2019 Indexing based on EUR-CPI Parking 300 parking spaces Description Supermarket in central location in Srem, a city with 30,000 inhabitants in the South-West of Poland. Good road access. The market is leased by the German based Rewe group with its Minimal supermarket format on a long-term basis.

39 35 Development Project for a Shopping Centre Torun Poland Shopping Centre Parkhouse Volgograd Russia Market value at opening 47,000,000 EUR Rental income p.a. 4,300,000 EUR Letable area 30,000 sqm Anchor tenant Metro with Mediamarkt & Real, 70 additional tenants Occupancy rate currently more than 80.00% pre-letting Lease term Contracts until 2020 Indexing based on EUR-CPI Parking approx. 1,000 parking spaces Description Shopping centre project near the inner city of Torun, a city with 200,000 inhabitants. Good road access. The contracts for the centre have been signed in December 2004, the opening is scheduled for October Most of the lease contracts have been signed already. Anchor tenant is the German based Metro group with its retail chains Mediamarkt and Real Market value 55,000,000EUR Rental income p.a. 7,300,000 EUR Letable area 41,055sqm Anchor tenant Perekryostok (food), Technosila (electronic equipment) Occupancy rate 98.00% Lease term Contracts until 2015 Indexing based on USD-CPI Parking More than 1,500 parking spaces Description Shopping centre in central position in Volgograd, which has been built in 2003 and The shopping centre is the only Western style centre in a hub of one million inhabitants. Anchor tenants are local retail groups, which are among the market leaders in Russia.

40 Financial Statements

41 37

42 Meinl Europea 100% 100% 100% Manhattan Development a.s. (Prague) Company Registration: Prague Form of Incorporation: Joint Stock Company Date of Incorporation: 19 April 1995 Headquaters: Politických vè zǹ u Praha 1 Management: Petr Dolezal Filip Fediuk (until 26. August 2004) Miroslav Ludvik Nikola Mitosinkova (since 26. August 2004) Manhattan Development Kft. (Budapest) Company Registration: Budapest Form of Incorporation: Limited Liability Company Date of Incorporation: 14 October 1997 Headquaters: Bécsi út Budapest Management: Imre Gyaraki Eduard Precht Manhattan Development Sp. zo.o (Poznan) Company Registration: Poznan Form of Incorporation: Limited Liability Company Date of Incorporation: 29 July 2004 Headquaters: Ul. Wroclawska, nr Poznan Management: Johann Mantler Zbeniew Maruszewski Magnus D'Oldenburg Peter Weinzierl