ADLER Real Estate Aktiengesellschaft Berlin WKN 500 800 ISIN DE0005008007 Invitation to 2017 Annual General Meeting Dear Shareholders, You are hereby cordially invited to the Annual General Meeting of ADLER Real Estate Aktiengesellschaft to be held at Sofitel Berlin Kurfürstendamm, Augsburger Str. 41, 10789 Berlin, at 10.00 a.m. (CET) on June 7, 2017. Agenda 1. Presentation of the adopted annual financial statements and approved consolidated financial statements as of 31 December 2016, the management reports of ADLER Real Estate Aktiengesellschaft and the Group for the financial year as of 31 December 2016, the Supervisory Board report and the Management Board report with explanatory comments on the disclosures made pursuant to 289 (4) and 315 (4) of the German Commercial Code (HGB) in each case for the financial year as of 31 December 2016 Consistent with statutory requirements ( 172 and 173 of the German Stock Corporation Act AktG), no resolution is required to be adopted for Agenda Item 1 as the Supervisory Board has approved the annual financial statements and consolidated financial statements prepared by the Management Board. The annual financial statements are thus adopted. The conditions under which the Annual General Meeting would be required to pass resolutions on adopting the annual financial statements and approving the consolidated financial statements do not apply. Information about receipt of the aforementioned documents can be found under DOCUMENTS FOR SHAREHOLDERS. 2. Resolution approving the actions of the Management Board for the 2016 financial year The Management and Supervisory Boards propose the adoption of the following resolution: The actions of the members of the Management Board in office in the financial year as of 31 December 2016 are approved for this financial year. 3. Resolution approving the actions of the Supervisory Board for the 2016 financial year The Management and Supervisory Boards propose the adoption of the following resolution:
The actions of the members of the Supervisory Board in office in the financial year as of 31 December 2016 are approved for this financial year. 4. Election of auditor and group auditor for the 2017 financial year and of auditor for any audit review required for the half-year financial report in the 2017 financial year The Supervisory Board proposes the adoption of the following resolution: The audit company Ebner Stolz GmbH & Co. KG, Hamburg, is hereby elected as auditor and group auditor for the 2017 financial year and as auditor for any audit review required for the condensed financial statements and interim management report included in the half-year financial report pursuant to 37w (5) and 37y No. 2 of the German Securities Trading Act (WpHG) in the 2017 financial year. The company does not have an Audit Committee on whose recommendation this draft resolution might be based. 5. Resolution on amendments to the Articles of Association in respect of the Supervisory Board The Management and Supervisory Board propose the resolution of the following amendments to the Articles of Association in order to modernise and simplify individual regulations in respect of the Supervisory Board: 12 Chairman and Deputy Chairman 1. Subsequent to any Annual General Meeting at which one Supervisory Board member is newly elected, a Supervisory Board meeting will be held without any requirement to notify members of the convening of such. At this meeting, the Supervisory Board will elect a Chairman and a Deputy Chairman from among its members. The terms in office of the Chairman and the Deputy Chairman correspond to their terms in office as Supervisory Board members unless shorter terms in office is specified at the election. 2. Should the Chairman or the Deputy Chairman retire from their respective positions prior to the expiry of the term in office, the Supervisory Board is required without delay to hold an election for the remaining term in office of the person thereby retiring. Corresponding application is made of 11 of the Articles of Association should the Chairman or Deputy Chairman retire from their respective positions. 3. The duties of the Chairman and the Deputy Chairman are laid down in the Code of Procedure for the Supervisory Board. 13 Convening of meetings and adoption of resolutions by the Supervisory Board 1. The Supervisory Board makes its decisions by adopting resolutions. Supervisory Board resolutions are generally adopted at meetings. Meetings in which individual or all members of the Supervisory Board participate by video conference also count as meetings in this respect. Supervisory Board meetings should be held once every calendar quarter and must be held twice in every calendar half-year. 2. The Chairman and, should he or she be prevented, the Deputy Chairman convenes the Supervisory Board meetings and determines the form of meeting. Further details, particularly those concerning the form and content of the notification of the convening of the meeting, the relevant deadline and, where necessary, the curtailing of such, are to be governed by the Code of Procedure for the Supervisory Board. 3. If so determined by the Supervisory Board Chairman or, should he or she be prevented, the
Deputy Chairman, Supervisory Board resolutions may also be adopted using suitable media, and in particular by members casting votes verbally, by telephone, in writing, by fax, using electronic media (especially e-mail) or by way of a conference call, with all such possibilities being governed by the further details set out in the Code of Procedure for the Supervisory Board. Such resolutions are confirmed in writing by the Chairman and subsequently forwarded to all members. 4. The Supervisory Board has a quorum when at least half of its constituent members pursuant to the requirements of law or the Articles of Association, and at least three members, participate in the adoption of resolutions. When determining the quorum, Supervisory Board members are also deemed to participate in the adoption of a resolution in cases when they abstain. Absent members may participate in the adoption of the resolution by having their written vote cast by another member. A written vote also includes a voting intention communicated by fax or using electronic media (especially e-mail). 5. Unless mandatorily required by law, Supervisory Board resolutions are adopted on the basis of a simple majority of the votes cast. Abstention does not count as a vote cast. In the event of a parity of votes, the Chairman has the casting vote. 6. The Chairman is authorised to submit the declarations of intent necessary to implement Supervisory Board resolutions and to take receipt of declarations of intent on behalf of the Supervisory Board. Should the Chairman be prevented from doing so, the Deputy Chairman has the same powers. 14 Code of Procedure and committees 1. Within the framework of mandatory statutory requirements and the requirements of these Articles of Association, the Supervisory Board is required to stipulate a Code of Procedure for its activities. 2. The Supervisory Board may form committees from among its members. To the extent permitted by law, decision-making powers held by the Supervisory Board may be assigned to such committees. The powers and procedures for committees should be stipulated by the Supervisory Board in the Code of Procedure. Unless otherwise determined by the Supervisory Board, corresponding application is made of 13 for committee procedures. 6. Resolution on an amendment to the Articles of Association in respect of the Annual General Meeting The Management and Supervisory Board propose to amend 21 (2) of the Articles of Association (Chairing of the Annual General Meeting) and to reformulate this paragraph as follows: 2. The Annual General Meeting is chaired by the Supervisory Board Chairman, another Supervisory Board member selected by the Supervisory Board, or a third party selected by the Supervisory Board. Members of the Management Board and the attesting notary public may not be elected to chair the meeting. 7. Resolution on the level of compensation paid to the Supervisory Board The company s ongoing economic development and the associated variety and increased scope of requirements in the Supervisory Board in its capacity as the supervisory body make it appropriate to increase the compensation paid to the Supervisory Board compared with previous years. The Management and Supervisory Boards therefore propose the adoption of the following resolutions: 7.1 In addition to the reimbursement of expenses, each Supervisory Board member shall
receive annual compensation of EUR 50,000.00 for the current 2017 financial year and for each of the following financial years. 7.2 The Supervisory Board Chairman shall receive EUR 100,000.00. 7.3 The Deputy Supervisory Board Chairman shall receive EUR 75,000.00. 8. Resolution on adjustments to the amounts of conditional capitals pursuant to 4 (4) and (5) of the Articles of Association Pursuant to 4 (4) of the Articles of Association and as a result of the resolution adopted by the Annual General Meeting on 28 June 2012, supplemented by the resolution adopted by the Extraordinary General Meeting on 15 October 2013, the company has conditional capital of EUR 8,250,000.00 (in Articles: Conditional Capital II ; in Commercial Register: Conditional Capital 2012/I ). Due to the exercising of conversion rights from the 2013/2017 convertible bond issued by the company (EUR 10 million; 6.0%; divided into 5.0 million bonds each entitling their holder to one new ADLER share) and from the 2013/2018 convertible bond (EUR 11.25 million; divided into 3.0 million bonds each entitling their holder to one new ADLER share), upon the convening of the Annual General Meeting this actually only amounted to EUR 7,568.446. As the 2013/2017 convertible bond is due to expire at the end of June 2017, the company expects this to be fully converted prior to the Annual General Meeting and that a further EUR 5.0 million of Conditional Capital 2012/I will become obsolete. The Annual General Meeting should therefore adopt a corresponding reduction in conditional capital. At the same time, pursuant to 4 (5) of the Articles of Association and as a result of the resolution adopted by the Annual General Meeting on 22 May 2015, amended by resolutions adopted by the Annual General Meetings on 15 October 2015 and 9 June 2016, the company has conditional capital of EUR 4,850,000.00 (in Articles: Conditional Capital 2015/I ). This serves to secure the conversion rights for the 2016/2021 convertible bond (EUR 137.9 million; 2.5%; divided into 10.0 million bonds each entitling their holder to one new ADLER share). As existing Conditional Capital 2015/I is insufficient to satisfy all conversion rights, it should be increased to EUR 10 million. Finally, pursuant to 4 (6) of the Articles of Association and as a result of the resolution adopted by the Extraordinary General Meeting on 15 October 2015, the company has conditional capital of EUR 10,606,060.00 (in Articles: Conditional Capital 2015/2 ). This serves to secure the conversion rights for the 2015/2018 mandatory convertible bond (EUR 175 million; 0.5%) issued upon the acquisition of shares in MountainPeak Trading Limited and thus (indirectly) in conwert Immobilien Invest SE. Overall, the company thus has conditional capitals totalling EUR 23,606,000, corresponding to just under 50% of the company s share capital of EUR 47,702,374.00 pursuant to the Articles of Association as of 31 December 2016 and upon the convening of the Annual General Meeting. The Management and Supervisory Boards therefore propose the adoption of the following resolution: 8.1 4 (4) Sentences 1 and 2 of the Articles of Association shall be amended and reformulated as follows: The company s share capital is conditionally increased by up to EUR 3,000,000.00 by issuing up to 3,000,000 new individual bearer shares (Conditional Capital 2012/1). This conditional capital increase serves exclusively to grant shares to the bearers of warrant or convertible bonds issued until 27 June 2017 pursuant to the authorisation provided by the Annual General Meeting on 28 June 2012 as amended by resolution of the Annual General Meeting on 15 October 2013. 8.2 4 (5) Sentences 1 and 2 of the Articles of Association shall be amended and reformulated as follows:
The company s share capital is conditionally increased by up to EUR 10,000,000.00 by issuing up to 10,000,000 new individual bearer shares (Conditional Capital 2015/1). This conditional capital increase serves exclusively to grant shares to the bearers of warrant or convertible bonds issued until 21 May 2020 pursuant to the authorisation provided by the Annual General Meeting on 22 May 2015 in the version included in the authorisation provided by the Annual General Meeting on 9 June 2016. 9. Resolution on the increase in share capital from company funds by issuing new shares and corresponding amendment to the Articles of Association Given its positive performance in recent years and its substantial capital reserve, the company intends to execute a capital increase from company funds and grant bonus shares at a ratio of 10:1 to its shareholders and thus enable them to participate in its success. The Management and Supervisory Boards therefore propose the adoption of the following resolution: 9.1. The company s share capital pursuant to its Articles of Association shall be increased by EUR 4,770,237.00 from EUR 47,702,374 to EUR 52,472,611.00, with this increase being executed from company funds by issuing 4,770,237 new no-par ordinary bearer shares. The new shares shall be allocated to shareholders in proportion to their respective shares of existing share capital. All new shares shall be entitled to participate in profit from 1 January 2017 onwards. The capital increase shall be executed by converting a portion of EUR 4,770,237.00 of the capital reserve recognised in the company s balance sheet as of 31 December 2016 into share capital. The resolution on the capital increase from company funds shall be based on the company s adopted annual balance sheet as of 31 December 2016. This audited and adopted annual balance sheet has been provided with an unqualified audit opinion by the company s auditors, Wirtschaftsprüfungsgesellschaft Ebner Stolz GmbH & Co. KG, Hamburg. Subject to approval by the Supervisory Board, the Management Board shall be authorised to determine the further details of the capital increase. 9.2. 4 (1) of the Articles of Association shall be amended and reformulated as follows: 1. The company s share capital amounts to EUR 52,472,611 and is divided into 52,472,611 individual shares. 9.3 In respect of 218 AktG, the resolution adopted by the Annual General Meeting for the capital increase from company funds must be submitted for entry in the Commercial Register such that the amendments to the Articles of Association pursuant to Agenda Item 8 are entered in the Commercial Register prior to the capital increase. Should the registration court refuse to enter the resolutions adopted in respect of Agenda Item 8, then this Agenda Item 9 shall immediately be submitted for entry in the Commercial Register. The increase in share capital from company funds at a ratio of 10:1 is based on the company s share capital pursuant to the Articles of Association at the date of the Annual General Meeting, which also accounts for subscription shares issued upon the exercising of conversion rights for convertible bonds issued by the company as of 31 December 2016. Should further subscription shares arise in the period from 1 January 2017 to the entry of the resolution on the capital increase from company funds due to the exercising of conversion rights in connection with convertible bonds issued by the company, and should the company s share capital increase as a result, the bearers of these new subscription shares shall also be entitled to new shares from the capital increase in accordance with their previous share of share capital. Due to the increased volume of share capital, however, the subscription ratio will then not amount to exactly 10:1 but will rather exceed 10 shares for each new share. Fractional rights will not be settled in cash but are assignable. The company will not act as intermediary for trading in fractional rights.
10. Resolution on the rescission of existing authorised capitals pursuant to 4 (2) and 4 (7) of the Articles of Association and on the creation of new authorised capital and a corresponding amendment to the Articles of Association Upon the date of the Annual General Meeting being convened, the company s share capital pursuant to the Articles of Association (including the increase in share capital due to the issue of subscription shares for the exercising of conversion rights in connection with convertible bonds as of 31 December 2016, which have been submitted for entry in the Commercial Register pursuant to 201 AktG but not yet entered in the Commercial Register as of the current date) amounts to EUR 47,702,374.00 and is divided into 47,702,374 no-par ordinary bearer shares with a prorated share in the share capital of EUR 1.00 each. Pursuant to the Articles of Association, the company currently has three authorised capitals By resolution adopted by the Annual General Meeting on 15 October 2013, the Management Board is authorised until 14 October 2018, subject to approval by the Supervisory Board, to increase the company s share capital on one or several occasions by a total of up to EUR 8,250,000.00 by issuing new individual bearer shares in return for cash and/or non-cash contributions (c.f. 4 (2) of the Articles of Association; in Commercial Register: Authorised Capital 2013/II ). By resolution adopted by the Annual General Meeting on 22 May 2015, the Management Board is authorised up to and including 21 May 2020, subject to approval by the Supervisory Board, to increase the company s share capital on one or several occasions by a total of up to EUR 13,300,000.00 by issuing new individual bearer shares in return for cash and/or non-cash contributions (c.f. 4 (3) of the Articles of Association; in Commercial Register: Authorised Capital 2015/I ). By resolution adopted by the Annual General Meeting on 15 October 2015, the Management Board is authorised up to and including 21 May 2020, subject to approval by the Supervisory Board, to increase the company s share capital on one or several occasions by a total of up to EUR 1,400,000.00 by issuing new individual bearer shares in return for cash and/or non-cash contributions (c.f. 4 (7) of the Articles of Association; in Commercial Register: Authorised Capital 2015/II ). The capital increase from company funds pursuant to Agenda Item 9 will not only increase the company s share capital by 10%; pursuant to 218 AktG this measure will by law also increase the authorised capitals pursuant to the Articles of Association by the same ratio (i.e. 10:1). To achieve this effect for existing authorised capitals while also simplifying the structure of authorised capitals, the existing authorised capitals pursuant to 4 (2) and 4 (7) of the Articles of Association (Authorised Capital 2013 and Authorised Capital 2015/II) are to be rescinded and replaced by new authorised capital of EUR 12,500,000. This amount already accounts for the capital increase from company funds pursuant to Agenda Item 9. The Management and Supervisory Boards therefore propose the adoption of the following resolution: 10.1. The existing authorised capital pursuant to 4 (2) of the Articles of Association shall be rescinded. 10.2 The Management Board shall be authorised up to and including 6 June 2022, subject to approval by the Supervisory Board, to increase the company s share capital on one or several occasions by a total of up to EUR 12,500,000.00 by issuing up to 12,500,000 new no-par ordinary bearer shares in return for cash and/or non-cash contributions (Authorised Capital 2017/I). Shareholders shall in principle be granted subscription rights. The statutory subscription right may also be granted in such a way that the new shares are taken over by a consortium of banks obliged to offer such shares indirectly for subscription by
shareholders pursuant to 186 (5) AktG. The Management Board shall nevertheless be authorised, subject to approval by the Supervisory Board, to exclude shareholders statutory subscription rights in the following cases: i. to the extent necessary to settle residual amounts arising due to the subscription ratio ii. iii. iv. if the capital increase is executed in return for cash contributions and if the prorated amount of share capital attributable to the new shares for which subscription rights are excluded does not exceed a total of 10% of the company s share capital either at the time at which this authorisation becomes effective or, if lower, at the time at which this authorisation is exercised. In this respect, the issue price of the new shares may not fall short of the market price of listed shares of the same class that are furnished with the same rights by any amount that is defined as material pursuant to 203 (1) and (2) and 186 (3) Sentence 4 AktG. Shares already issued or still to be issued to service convertible or warrant bonds must be imputed to the maximum limit of 10% of share capital to the extent that such bonds were issued to the exclusion of subscription rights during the term of the respective authorised capital with corresponding application of 186 (3) Sentence 4 AktG. Furthermore, treasury stock shares must also be imputed to the maximum limit of 10% of share capital to the extent that such are disposed of to the exclusion of shareholders subscription rights during the term of the respective authorised capital pursuant to 71 (1) No. 8 Sentence 5 and 186 (3) Sentence 4 AktG for capital increases executed in return for non-cash contributions to grant shares for the purpose of acquiring companies, parts thereof or interests in such or other assets to the extent required to compensate for dilution by granting subscription rights to new shares in the company to the bearers of conversion or option rights, or corresponding obligations, resulting from convertible or warrant bonds issued by the company, and to the extent that the bearers of such instruments would be entitled to such in their capacity as shareholders having exercised their conversion or option rights or met their conversion obligations. Subject to approval by the Supervisory Board, the Management Board shall be authorised to determine the further details for the execution of the capital increase. The Supervisory Board shall be authorised to amend the Articles of Association in accordance with the respective degree of utilization of authorised capital. 10.3 The current version of 4 (2) of the Articles of Association shall be rescinded and reformulated as follows: 2. The Management Board is authorised up to and including 9 May 2022, subject to approval by the Supervisory Board, to increase the company s share capital on one or several occasions by a total of up to EUR 12,500,000.00 by issuing up to 12,500,000 new no-par ordinary bearer shares in return for cash and/or non-cash contributions (Authorised Capital 2017/I). Shareholders are in principle to be granted subscription rights. The statutory subscription right may also be granted in such a way that the new shares are taken over by a consortium of banks obliged to offer such shares indirectly for subscription by shareholders pursuant to 186 (5) AktG. However, the Management Board is authorised, subject to approval by the Supervisory Board, to exclude shareholders statutory subscription rights in the following cases: i. to the extent necessary to settle residual amounts arising due to the subscription ratio ii. if the capital increase is executed in return for cash contributions and if the prorated amount of share capital attributable to the new shares for which subscription rights are excluded does not exceed a total of 10% of the company s share capital either at the time at which this authorisation becomes
effective or, if lower, at the time at which this authorisation is exercised. In this respect, the issue price of the new shares may not fall short of the market price of listed shares of the same class that are furnished with the same rights by any amount that is defined as material pursuant to 203 (1) and (2) and 186 (3) Sentence 4 AktG. Shares already issued or still to be issued to service convertible or warrant bonds must be imputed to the maximum limit of 10% of share capital to the extent that such bonds were issued to the exclusion of shareholders subscription rights during the term of the respective authorised capital with corresponding application of 186 (3) Sentence 4 AktG. Furthermore, treasury stock shares must also be imputed to the maximum limit of 10% of share capital to the extent that such are disposed of to the exclusion of shareholders subscription rights during the term of the respective authorised capital pursuant to 71 (1) No. 8 Sentence 5 and 186 (3) Sentence 4 AktG. iii. iv. for capital increases executed in return for non-cash contributions to grant shares for the purpose of acquiring companies, parts thereof or interests in such or other assets to the extent required to compensate for dilution by granting subscription rights to new shares in the company to the bearers of conversion or option rights, or corresponding obligations, resulting from convertible or warrant bonds issued by the company, and to the extent that the bearers of such instruments would be entitled to such in their capacity as shareholders having exercised their conversion or option rights or met their conversion obligations. Subject to approval by the Supervisory Board, the Management Board is authorised to determine the further details for the execution of the capital increase. The Supervisory Board is authorised to amend the Articles of Association in accordance with the respective degree of utilization of authorised capital. 10.4 4 (7) of the Articles of Association shall be rescinded. 10.5 The resolution adopted by the Annual General Meeting in respect of Agenda Item10 shall be submitted for entry in the Commercial Register such that the capital increase from company funds pursuant to Agenda Item 9 shall be entered prior to the amendments to the Articles of Association pursuant to this agenda item. Report of the Management Board pursuant to 203 (2) Sentence 2 in conjunction with 186 (4) Sentence 2 AktG on Agenda Item 10 in respect of the reasons for excluding shareholders subscription rights For Agenda Item 10, the Management Board has compiled a written report on the reasons for excluding subscription rights and for the issue amount pursuant to 203 (2) AktG in conjunction with 186 (4) Sentence 2 AktG. This report is published as follows: The Management Board is to be authorised up to and including 6 June 2022, subject to approval by the Supervisory Board, to increase the company s share capital on one or several occasions by a total of up to EUR 12,500,000.00 by issuing up to 12,500,000 new no-par ordinary bearer shares in return for cash and/or non-cash contributions (Authorised Capital 2017/I). 1. In the first case, the Management Board is to be authorised, subject to approval by the Supervisory Board, to exclude shareholders subscription rights to the extent necessary to settle residual amounts. The exclusion of subscription rights for the settlement of residual amounts of authorised capital is necessary to achieve a technically feasible and straight subscription ratio. The residual shares excluded from shareholders subscription rights are put to the best possible use for the company. Given the restriction to such residual amounts, the potential dilutive effect for shareholders is low.
2. Furthermore, the Management Board is to be authorised, subject to approval by the Supervisory Board, to exclude shareholders subscription rights when the volume and other requirements for excluding subscription rights as stipulated in 186 (3) Sentence 4 AktG are met. This authorisation to exclude subscription rights for cash capital increases offers the Management Board the possibility, subject to approval by the Supervisory Board, to exclude shareholders subscription rights pursuant to 203 (1) and (2) and 186 (3) Sentence 4 AktG for an amount of up to 10% of the company s share capital. The proposal is thus within the statutory framework. This authorisation allows share placements to be executed at short notice, i.e. without complying with the two-week subscription period otherwise necessary, prior to which a securities prospectus would also require publication. This allows the company to react flexibly to favourable market circumstances. The faster reaction times thereby achieved generally result in substantially higher inflows of funds than are the case for share placements with subscription rights as, when determining the issue amount and price, the company does not have to account for price movement risks during the subscription period. This arrangement therefore protects the legitimate interests of the company and its shareholders. With this form of capital increase, the Management Board should be enabled to strengthen the equity resources on optimal terms for the company s future business performance. Upon definitive determination, the issue price of the new shares may not fall short of the market price of listed shares of the same class and furnished with the same rights by any amount that is defined as material pursuant to 203 (1) and (2) and 186 (3) Sentence 4 AktG. This accounts for shareholders interests by offering protection against dilution in the value of their shareholdings. The Management Board will determine the issue price at a level that is as close to the applicable market price as possible in the respective capital market situation and will make efforts to ensure that new shares are placed in such a way as to protect the market price. This possibility to exclude shareholders subscription rights is limited to a maximum of 10% of share capital. Shares already issued or still to be issued to service convertible or warrant bonds must be imputed to the maximum limit of 10% of share capital to the extent that such bonds were issued to the exclusion of subscription rights during the term of the respective authorised capital with corresponding application of 186 (3) Sentence 4 AktG. Furthermore, treasury stock shares must also be imputed to the maximum limit of 10% of share capital to the extent that such are disposed of to the exclusion of shareholders subscription rights during the term of the respective authorised capital pursuant to 71 (1) No. 8 Sentence 5 and 186 (3) Sentence 4 AktG. These imputations are intended to protect shareholders interests by ensuring the lowest possible dilution in their respective shareholdings. 3. In the context of authorised capital, the Management Board is also to be authorised, subject to approval by the Supervisory Board, to exclude subscription rights for capital increases executed in return for non-cash contributions to grant shares for the purpose of acquiring companies, parts thereof or interests in such or other assets. This authorisation to exclude subscription rights is intended to facilitate the acquisition of companies, parts thereof or interests in such or of other assets (e.g. plant, rights, intellectual property) in return for the granting of shares in the company. The company is in competition with other players worldwide. In the interests of its shareholders, it must at all times be able to act quickly and flexibly on the international markets. This also involves having the option of acquiring companies, parts thereof or interests in such or other assets to improve its competitive position. The optimal implementation of this option in the interests of the company and its shareholders would in the individual case involve acquiring a company, parts thereof or interests in such or other assets by granting shares in the acquiring company. Practice shows that the owners of attractive acquisition objects frequently call for the provision of voting shares in the acquiring company as consideration upon any sale to enable them to continue to participate (indirectly) in the return on the assets thereby sold. To be able to execute this type of acquisition as well, the company has to be able to offer treasury stock as consideration. The proposed authorisation to exclude subscription rights is intended to provide the company with the flexibility needed to react quickly and flexibly to any opportunities arising to acquire companies, parts thereof or interests in such or other assets. The exclusion of subscription rights does reduce the relative level of shareholding and relative share of voting rights at existing shareholders (but does not result in any
dilution in the value of their shareholdings as the value of ADLER Real Estate AG increases). However, granting unrestricted subscription rights would make it impossible to acquire companies, parts thereof or interests in such or other assets. The associated benefits for the company and its shareholders would thus not be achievable. Should any specific opportunities arise to acquire companies, parts thereof or interests in such or other assets the Management Board will carefully review whether it should draw on authorised capital to execute the acquisition in return for issuing new shares. It will only draw on this option when the acquisition of the company, parts thereof or interests in such or of other assets in return for the issuing of shares is in what it deems to be the company s best interests. The Supervisory Board will also only grant the necessary approval if this condition is met. The company shares on the one hand and the companies, parts thereof or interests in such or other assets on the other hand will both be measured by reference to independent surveys compiled by audit companies and/or prestigious international investment banks. 4. Finally, the draft resolution provides for authorising the Management Board to exclude shareholders subscription rights, subject to approval by the Supervisory Board, to the extent required to compensate for dilution by granting subscription rights to new shares in the company to the bearers of conversion or option rights, or corresponding obligations, resulting from convertible or warrant bonds issued by the company, and to the extent that the bearers of such instruments would be entitled to such in their capacity as shareholders having exercised their conversion or option rights or met their conversion obligations. To facilitate their placement on the capital market, the corresponding convertible or warrant bonds offer protection against dilution by including the possibility of their bearers or creditors being granted the same subscription rights to new shares that are enjoyed by shareholders upon any subsequent share issues. The bearers or creditors of such instruments are thus treated as if they were already shareholders. Furnishing bonds with protection against dilution in this way makes it necessary to exclude shareholders subscription rights to these shares. This facilitates the placement of bonds and is thus consistent with shareholders interest in the company having an optimal financing structure. Having weighed up all the aforementioned circumstances, due to the considerations outlined above the Management and Supervisory Boards deem it legitimate and appropriate to exclude subscription rights in the aforementioned cases, taking due account of any dilutive effects that may arise to the detriment of shareholders. The company currently does not have any plans to draw on authorised capital. The Management Board will report to the Annual General Meeting on any utilisation of Authorised Capital 2017/1. ENTITLEMENT TO PARTICPATE To be entitled to participate in the Annual General Meeting and exercise their voting rights at the Annual General Meeting, shareholders must register at the following address by midnight (24:00 CEST) on 31 May 2017 ADLER Real Estate Aktiengesellschaft c/o Link Market Services GmbH Landshuter Allee 10 80637 Munich Fax: +49 89 210 27 289 E-mail: inhaberaktien@linkmarketservices.de. Furthermore, they must provide the company with documentary evidence that they were shareholders in the company at midnight (0:00 CEST) on Wednesday, 17 May 2017 (record date) by forwarding corresponding certification from their depositary financial institution to the company at the above address by midnight (24:00 CEST) on 31 May 2017. Registration and proof of shareholding must be submitted in writing ( 126b of the German Civil Code BGB) and must be formulated in German or English.
Compliance with the registration deadline is based on the date on which registration is received at the company. SIGNIFICANCE OF THE RECORD DATE The record date determines the shareholder s eligibility to attend and exercise voting rights at the Annual General Meeting and forms the basis for determining the scope of such rights. From the company s perspective, only those persons or institutions who have presented proof of shareholding as of the record date are deemed shareholders entitled to attend the Annual General Meeting and exercise voting rights. Entitlement to attend the Annual General Meeting and the scope of voting rights are measured in terms of the shareholding held by the shareholder on the record date. The shares are not blocked on the record date or upon registration for the Annual General Meeting. Shareholders remain free to dispose over their shares after the record date and following registration. Even when such shareholding is disposed of completely or in part after the record date, shareholders right to attend and the scope of their voting rights are solely based on their shareholding on the record date. Providing they have registered within the respective deadline and submitted documentary evidence of their shareholding, shareholders who dispose of their shareholdings either completely or in part after the record date are equally entitled to attend the Annual General Meeting and exercise their voting rights. Accordingly, disposals of shares after the record date do not have any implications for entitlement to attend or for the scope of voting rights. The same applies for acquisitions of additional shares after the record date. Persons or institutions who do not own any shares on the record date and who only acquire their shareholdings following the record date are not entitled to attend the Annual General Meeting and are also not entitled to exercise voting rights unless they have been authorised or empowered to exercise such rights. The record date has no implications for potential dividend entitlement. DOCUMENTS FOR SHAREHOLDERS The documents referred to in Agenda Item 1 and the report compiled by the Management Board pursuant to 203 (2) Sentence 2 in conjunction with 186 (4) Sentence 2 AktG on Agenda Item 10 in respect of the reasons for excluding shareholders subscription rights can be viewed at the company premises of ADLER Real Estate Aktiengesellschaft at Joachimsthaler Strasse 34, 10719 Berlin, and in the Investor Relations/Annual General Meeting section of the company s website (http://www.adlerag.com). The provision of this information on the company s website suffices to meet the respective legal obligation. Upon request and submission of proof of shareholding, each shareholder is entitled to be sent a copy of the documents by standard post without delay, on a one-off basis and free of charge. The documents referred to will also be displayed at the Annual General Meeting. PROXY VOTING PROCEDURES Each shareholder is entitled to have his or her voting rights exercised at the Annual General Meeting by an authorised party, e.g. a financial institution, a shareholders association, another person of their choice or the voting proxy appointed by the company. The granting of the power of attorney, any revocation of such, and the proof of such authorisation submitted to the company must be made in writing ( 126b BGB). Shareholders will be provided with corresponding templates and further information following correct registration. Financial institutions, shareholders associations and other equivalent persons, institutions or companies pursuant to 135 (8) AktG or 135 (10) AktG in conjunction with 125 (5) AktG may stipulate different requirements for the form of power of attorney used to authorise them. If they intend to authorise a financial institution, shareholders association or other equivalent person, institution or company pursuant to 135 (8) AktG or 135 (10) AktG in conjunction with 125 (5) AktG, shareholders are therefore requested to agree the respective form of authorisation with those organisations. Should the shareholder authorise more than one person, the company may reject one or several such persons. Registration and submission of proof of shareholding pursuant to the aforementioned requirements is also required in cases in which shareholders intend to be represented by other parties. Authorisations previously granted may also be revoked by the person who granted such authorisation attending the Annual General Meeting in person. To grant powers of attorney, shareholders may use the relevant section on the reverse side of the admission ticket forwarded to them following registration.
Such authorisations may nevertheless also be granted in any other correct form. A universally applicable form for granting powers of attorney is also available for downloading from the Investor Relations/Annual General Meeting section of the company s website (http://www.adler-ag.com). Upon request, this form may also be forwarded to shareholders free of charge. Any powers of attorney, documentary evidence of such and any revocation of such may be communicated to the company at the following address: ADLER Real Estate Aktiengesellschaft c/o Link Market Services GmbH Landshuter Allee 10 80637 Munich Fax: +49 89 210 27 289 E-mail: inhaberaktien@linkmarketservices.de REPRESENTATION BY VOTING PROXIES APPOINTED BY COMPANY As an additional service, we provide our shareholders with the option of being represented and having their voting rights exercised in accordance with their instructions by voting proxies appointed by the company. The authorisation must be granted in writing ( 126b BGB) and include instructions for the exercising of voting rights. The form forwarded to shareholders together with the admission ticket can be used for this purpose. Should no instructions be issued for individual agenda items, the voting proxies will abstain on those items. Shareholders will find further instructions concerning the authorisation of company voting proxies in the documents forwarded to them following registration. Powers of attorney with voting instructions should be forwarded to the following address by 6 June 2017 (receipt by 18:00 CEST): ADLER Real Estate Aktiengesellschaft c/o Link Market Services GmbH Landshuter Allee 10 80637 Munich Fax: +49 89 210 27 289 E-mail: inhaberaktien@linkmarketservices.de On the day of the Annual General Meeting itself, powers of attorney and instructions may be issued, amended or revoked, in all cases in writing, and also at the entrance/exit gate, through to the end of the general debate. Shareholders entitled to attend the meeting and their representatives will be provided with a corresponding form on the day of the Annual General Meeting at the admissions control desk. The attendance of a shareholder or a suitably authorised third party automatically counts as the revocation of any powers of attorney and instructions previously granted to voting proxies. Should an individualised rather than collective vote be held for a given agenda item, the instruction issued to the voting proxy for this agenda item is taken to apply to each item of the individualised vote. TOTAL NUMBER OF SHARES AND VOTING RIGHTS Upon the convening of the Annual General Meeting, the company s share capital (share capital pursuant to Articles of Association and shares issued due to the exercising of conversion rights in connection with convertible bonds issued by the company and not yet entered in the Commercial Register) of 47,727,592 were divided into no-par ordinary bearer shares. The total number of shares corresponds to the total number of voting rights.
SHAREHOLDERS RIGHTS AND REFERENCES TO EXPLANATORY COMMENTS ON COMPANY WEBSITE Supplementary motions Pursuant to 122 (2) AktG, shareholders whose combined shareholdings are equivalent to one twentieth of the company s share capital or a prorated amount of EUR 500,000.00 are entitled to request the company to add items to the agenda and announce such. Each new item must be accompanied by a substantiation or a draft resolution. Such requests must be received by the company in writing ( 126b BGB) at the latest by midnight (24:00 CEST) on 7 May 2017. Further information about the threemonth prior ownership requirement and the documentation of such can be found on the internet (see Publications on Website below). Please address any such requests in writing to the following address: ADLER Real Estate Aktiengesellschaft - Management Board - c/o Link Market Services GmbH Landshuter Allee 10 80637 Munich The company will publish any additions to the agenda requiring announcement immediately upon receipt in the Federal Gazette (Bundesanzeiger) and forward these to media channels expected to circulate the information throughout the European Union. This information will also be published in the Investors Relations/Annual General Meeting section of the company s website (http://www.adler-ag.com). Countermotions and election proposals Pursuant to 126 and 127 AktG, shareholders are entitled to submit countermotions to proposals made by the Management Board and/or Supervisory Board and to nominate candidates for election. This also applies for candidates proposed for election as Supervisory Board members. Any countermotions, including substantiations and shareholders election proposals, should be exclusively addressed to the following address: ADLER Real Estate Aktiengesellschaft c/o Link Market Services GmbH Landshuter Allee 10 80637 Munich Fax: +49 89 210 27 298 E-mail: antraege@linkmarketservices.de Correct countermotions and election proposals received by the company by midnight (24:00 CEST) on 23 May 2017 will be published, including the name of the shareholder, the substantiation and any statement by the company s management, in the Investor Relations/Annual General Meeting section of the company s website (http://www.adler-ag.com). Shareholders rights to information Pursuant to 131 AktG, each shareholder is entitled upon request to receive information from the Management Board at the Annual General Meeting on matters relating to the company, including its legal and business dealings with affiliated companies, as well as the situation of the Group and the companies included in the consolidated financial statements provided that such information is necessary for the appropriate assessment of the respective agenda item and the Management Board is not entitled to refuse to provide such information. Publications on website Further information about shareholders rights pursuant to 122 (2) AktG (minority requests), 126 (1) AktG (countermotions), 127 AktG (election proposals) and 131 (1) AktG (information rights) and the information and documents pursuant to 124a AktG can be found in the Investor Relations/Annual General Meeting section of the company s website (http://www.adler-ag.com).
The voting results will be published at the same internet address following the Annual General Meeting. Berlin, April 2017 ADLER Real Estate Aktiengesellschaft The Management Board