Next Generation Real Estate HY 2008 Figures Colonia Real Estate AG HY 2008 Figures 15 th of August 2008 Cologne
Focused and Integrated Business Model Colonia Real Estate AG Investments Management Principal Investments 20k residential units Long term net buyer Active portfolio management Growing recurring cash flows Occupancy and rental income improvement Solar projects Co-Investments Commercial and residential Opportunistic approach Mainly into prime office Joint ventures with Merrill Lynch, Oaktree Capital Management, JPMorgan, Strategic Value Partners and UBS Asset Management Transaction, investment and exit management Active tenant and letting management Refurbishment and redevelopment Project development Condominium sale 3 rd party solar business Fund Management Creating and structuring tailor-made concepts Placement Portfolio management Ongoing product pipeline Target of annualized EUR 100 to 150mn placement volume c. EUR 937mn properties c. EUR 150mn Co-Investments c. EUR 3.1bn AuM* c. EUR 125mn placed funds * will be reduced to 1.5bn from the 1st of Jan 2009 on Colonia Real Estate AG HY 2008 Figures 15th of August 2008 Cologne Page 2
Company and Business Highlights HY 2008 Turnaround in Q2 2008 with net profit of EUR 8.1mn Rental income increased to EUR 18.4mn vs. EUR 15.5mn (1 st half 2007) Rental increased (l-f-l) from EUR 4.53sqm to EUR 4.62sqm ytd (target EUR 4.72 sqm) Vacancy dropped from 15.11% to 14.99% ytd (target of 12.8% at the end of 2008) EUR 52mn energetic renovation program completed late August Year to date c. EUR 210mn new asset management and co-investment mandates Positive indication for deal flow acceleration in the second half NAV of EUR 15.90 per share First time dividend payment of EUR 0.25 per share got paid on June 20th 2008 Colonia Real Estate AG HY 2008 Figures 15th of August 2008 Cologne Page 3
Financials HY 2008 - Highlights in mn EUR HY 2008 HY 2007 Revenue 51.6 95.3* Expenses -46.0-22.3 EBIT 5.6 73.0* Net interest (incl. swaps) -7.1-11.5 Net earnings after tax -2.0 47.3* Balance Sheet 1,046.3 1.064.9 Equity 320.9 319.4 Debt 725.4 745.6 Apartments held 19,800 18,700 Total Assets under Management 3,000 2,300 * incl. unrealized valuation gains of EUR 61.5mn Colonia Real Estate AG HY 2008 Figures 15th of August 2008 Cologne Page 4
Financials HY 2008 Segment Cash Revenues 40 35 in mn EUR Cash Revenues 30 HY 08 HY 07 % Rental Income 28.9 23.7 +22 Asset & Fund 3.7 9.4-61 Privatization 2.4 0.0 n/a TOTAL 35.0 33.1 +6 Non Cash Realized gain 0.0 0.0 IAS40 0.0 61.5 25 20 15 10 5 0 Rental Income A & F M Privatization Cash Revenues HY 2007 HY 2008 Colonia Real Estate AG HY 2008 Figures 15th of August 2008 Cologne Page 5
Financials H1 2008 Administrative Expenses Main items / One off s: Legal & consulting fees EUR 3.4mn Personal expenses EUR 3.0mn IFRS accounting for employee stock options * EUR 1.8mn Refinancing & bank charges EUR 1.4mn Accounting & audit fees EUR 0.4mn ---------------- EUR 10.0mn *non-cash relevant Colonia Real Estate AG HY 2008 Figures 15th of August 2008 Cologne Page 6
Residential Portfolio HY 2008 Developments EUR 52mn energetic renovation program completed late August Average new rents increased to EUR 5.65 sqm vs. EUR 4.65 sqm before renovation Stabilization of the high occupancy levels in Berlin of above 95% on average Vacancy reduction activities started in Salzgitter started in March with four consecutive months of reduced vacancy since then Year-end occupancy expected to be improved from 84.7% to 87,2% Low valuation of EV price/sqm at EUR 574.67 Colonia Real Estate AG HY 2008 Figures 15th of August 2008 Cologne Page 7
Case Study Residential I Berlin Capital 20,1% 20,0% 18,0% 16,0% 14,0% 12,0% 10,0% 8,0% 6,0% Colonia Real Estate AG HY 2008 Figures 15th of August 2008 Cologne Page 8 7,2% 605 in T /Monat 585 565 545 525 505 485 Jun 08 Mai 08 Apr 08 Mrz 08 Feb 08 Sep 06 Okt 06 Nov 06 Dez 06 Jan 07 Feb 07 Mrz 07 Apr 07 Mai 07 Jun 07 Jul 07 Aug 07 Sep 07 Okt 07 Nov 07 Dez 07 Jan 08 Istmiete Leerstandsquote
Residential Portfolio 5 Years of NOI and NAV growth on the current residential portfolio Increased Net Operating Income (NOI) through Decrease in vacancy Improvedrents Minimized operating costs Fixed interest rates (> 5 years) Fully hedged interest payments (90%) Market Cap shows significant discount to NAV even with 100bp yield increase! 600 500 400 300 200 100 0 70 60 50 40 30 20 10 0 364 253 44,3 12,8% Optimistic Scenario NAV Development 421 303 Optimistic Scenario NOI Development 48,8 461 9,6% 338 514 384 52,1 8,9% 571 2008 2009 2010 2011 2012 434 55,9 8,1% NAV at 7% yield in mn NAV at 8% yield in mn Current market cap: EUR 170mn 59,9 7,3% 2008 2009 2010 2011 2012 14,0% 12,0% 10,0% 8,0% 6,0% 4,0% 2,0% 0,0% NOI in mn Vacancy Rate Colonia Real Estate AG HY 2008 Figures 15th of August 2008 Cologne Page 9
Investor Concerns Market and Portfolio Valuation German Housing Transactions Price Multiples (EUR p sqm) Colonia Real Estate Shares Share Price Residential Portfolio 22.825.600 7,00 Rental income 08e 59.500.000 Total sqm 1.251.000 per sqm per share Yield IAS 40 value 936.000.000 748 41,0 6,6% EV 790.779.200 574 34,6 7,8% Total Debt 631.000.000 504 27,6 Resi NAV 305.000.000 244 13,4 Market Cap 159.779.200 128 7,0 CRE IAS40 CRE at cost Average market valuation still stable Little transaction activity might indicate misleading low prices LEG transaction not a reference transaction Last CRE deal in May at 8.34% GRI and 6.67% NOI in line with historic acquistion yields of 8.5% GRI Colonia Real Estate AG HY 2008 Figures 15th of August 2008 Cologne Page 10
CRE Asset and Fund Management Asset Management Longer transaction procedure leads to postponed deal closings Positive deal indication - currently looking for c.eur 1bn of new assets for clients 3 exits expected in 2nd half of 2008 (first time incentive fees) Increased acquisition team further transactions and letting activities in 2008 Colonia Fund Management Signing of co-operation with HSH Nordbank/ HGA in April 2008 increases fund volume Approval for prospectus by BAFIN received, Distribution starts September 1st CRE Accentro Start of privatisation for third parties in Berlin with a contract volume of EUR 250mn Colonia Real Estate AG HY 2008 Figures 15th of August 2008 Cologne Page 11
Co-Investments Project Development Cover Projektentwicklung GmbH Long-term track record Trader and Service Developer Project volume of more then EUR 250mn in the last 5 years Expert in advising disposal strategies in the amount of more then EUR 330mn over the last four years Commercial properties - repositioning & modernization Cornerstone buildings in city centers Repositioning, new layout and attractive new facade Long term lease contracts with new tenants Development from value added to core+ investments Asset Management and Co-Investment strategies through CRE Group Colonia Real Estate AG HY 2008 Figures 15th of August 2008 Cologne Page 12
Co-Investments - Redevelopment Redevelopment - Office into premium apartments 1973 office building in Düsseldorf with 100% vacancy One of the best residential living areas, c. 15,000 sqm Office turns into 80 premium appartments (70-185sqm) Completion of redevelopment in 2008 with an total investment volume of around EUR 1,500 per sqm Expected sales proceeds of c. EUR 3,250 per sqm Commercial property - Repositioning and modernization Cornerstone building in the center of Cologne Repositioning, new layout and attractive new facade Long term lease contracts with new tenants Development from value added to core+ investment Asset Management and Co-Investment contract for CRE With 85% renting level put for sale in Q3 Colonia Real Estate AG HY 2008 Figures 15th of August 2008 Cologne Page 13
Debt Portfolio Overview Entire debt volume: EUR 631mn Long term debt: EUR 596mn Short term debt: EUR 35mn Avg. interest rate: 4.8% p.a. Average duration: 6.7 years Hedging ratio: 90% No near term refinancing risk 2 Refinancings in Q2 result in 0,5 years longer maturity Financing environment becomes less restricted EUR in mn Debt Duration 500 400 397 300 200 100 110 80 35 9 0 1 2 3 to 5 6 to 15 16 to 30 Maturity in years Colonia Real Estate AG HY 2008 Figures 15th of August 2008 Cologne Page 14
Colonia Real Estate Share Details Share details Price as of 14.08.08 EUR 7.35 Market Cap EUR 170mn Number of shares 22.8mn Freefloat c. 72% 1 year Colonia Real Estate AG (KBU GY) Index memberships SDAX, MSCI Germany Small Caps, EPRA, GPR 250 and E&G DIMAX Freefloat Swiss RE 71,70% 28,30% CRE Broker Recommendations 2008 17,66 Average Price Target: EUR 11,40 8,5 8 BUY (6) OVERWEIGHT (1) HOLD (1) EUR 20 18 16 14 12 10 8 6 4 2 0 Colonia Real Estate AG HY 2008 Figures 15th of August 2008 Cologne Page 15
Company Outlook - 2008 Market Environment led to correction of guidance of EUR 20 25mn except any revaluation results Ongoing occupancy and rent improvements in line with business plan Strong deal pipeline for further deals on the asset management (Volume 1bn+) Solar project with high 3 rd party demand will lead to additional revenues of c. EUR 6mn in 2008 to 8mn from 2009 on Start of distribution of CareConcept I in September 2008 Solid balance sheet with positive outlook and improved financing ratios Rising NAV growth outlook through working assets approach and completion of modernization program in Q3 2008 Colonia Real Estate AG HY 2008 Figures 15th of August 2008 Cologne Page 16
Thank you for your attention. Stephan Rind, Chief Executive Officer Ingmar Schmitt, Chief Financial Officer Colonia Real Estate AG, Zeppelinstraße 4 8, 50667 Cologne/Germany Tel: +49 (0)221 7160 710, Internet: www.cre.ag, E-Mail: ir@cre.ag Colonia Real Estate AG HY 2008 Figures 15th of August 2008 Cologne Page 17
APPENDIX - Residential Portfolio Portfolio Details Total holdings: 19,800 units/ 1,250,000 sqm Average acquisition cost: EUR 570,- / sqm Average IAS 40 valuation: EUR 714,- / sqm Acquisition vs. valuation gross yield: 8.50% vs. 6.75% Maintenance cost: EUR 8.00 / sqm Management cost: EUR 220 per unit per year Rent levels for reletting: EUR 4.50 to EUR 7.50 / sqm Colonia Real Estate AG HY 2008 Figures 15th of August 2008 Cologne Page 18
Disclaimer This presentation is not a prospectus and, to the extent that it may constitute an advertisement, does not constitute an offer to sell or the solicitation of an offer to purchase the shares or other securities of Colonia Real Estate AG. This presentation is not an offer of securities for sale in the United States of America. Securities may not be offered or sold in the United States of America absent registration or an exemption from registration under the U.S. Securities Act of 1933, as amended. Any public offering of securities to be made in the United States of America will be made by means of a prospectus that may be obtained from Colonia Real Estate AG and that will contain detailed information about the company and management, as well as financial statements. This presentation is directed at and/or for distribution in the United Kingdom: only to (i) persons who have professional experience in matters relating to investments falling within article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "Order") or (ii) high net worth entities falling within article 49(2)(a) to (d) of the Order (all such persons being together referred to as "relevant persons"). This presentation is directed only at relevant persons. Any person who is not a relevant person should not act or rely on this presentation or any of its contents. Any investment or investment activity to which this presentation relates is available only to relevant persons and will be engaged in only with relevant persons. The information contained herein is not for publication or distribution in Canada, Australia or Japan and does not constitute an offer of securities for sale in Canada, Australia or Japan. This document contains certain forward-looking statements and information relating to the Colonia Real Estate AG Group that are based on beliefs of its management as well as assumptions made by and information currently available to Colonia Real Estate AG. When used in this document, the words anticipate, believe, estimate, expect, intend, plan and project and similar expressions, as they relate to the Colonia Real Estate AG Group or its management, are intended to identify forward-looking statements. Such statements reflect the current views of Colonia Real Estate AG with respect to future events and are subject to certain risks, uncertainties and assumptions. Many factors could cause the actual results, performance or achievements of the Colonia Real Estate AG Group to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements, including, among others, changes in general economic and business conditions, changes in currency exchange rates and interest rates, introduction of competing products by other companies, lack of acceptance of new products or services by the Group s targeted customers, changes in business strategy and various other factors, both referenced and not referenced in this annual report. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in this annual report as anticipated, believed, estimated, expected, intended, planned or projected. Colonia Real Estate AG does not intend, and does not assume any obligation, to update these forward-looking statements. This presentation is made solely for information purposes. Colonia Real Estate AG HY 2008 Figures 15th of August 2008 Cologne Page 19