Sentiment among Analysts Hits All-Time Low

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1 Press Release The Dr. ZitelmannPB Real Estate Stock Barometer Sentiment among Analysts Hits All-Time Low Berlin, May 24, 2011 The sentiment among analysts for real estate stock keep deteriorating. This is the upshot of the survey findings of the latest Dr. ZitelmannPB Real Estate Stock Barometer that involved the active participation of 14 renowned analysts. The short-term sentiment indicator for the next three months dropped to +0.4 points. As late as mid-october, the figure had still stood at Image 1: Three-month perspective for the Dr. ZitelmannPB Real Estate Stock Barometer expectations of analysts An index score of +2 would suggest that analysts expect to see price increases in excess of 15% during the next three months (short-term view) or twelve months (medium-term view). Inversely, a score of -2 would represent markdowns anticipated at a rate exceeding 15%. For the coming three months, six analysts predict price increases between 5% and 15%. Seven real estate stock experts predict stagnating values. One analyst actually believes that prices are slightly softening. All analysts agree, though, that prices for real estate stock will rise during the next twelve months. One respondent actually predicts price gains of more than 15%

2 Image 2: Price trend of German real estate stock according to analyst estimates Commercial Real Estate Stock: Sentiment Slumps Short-Term, and Improves in the Medium Term The indicator score for the three-month outlook for commercial real estate stock dropped from +0.6 to +0.9 points. Seven analysts assume that prices will climb, down from 13 analysts during the last quarter. Another six respondents believe that prices will stagnate. Only one respondent feels that prices will drop by up to 15%. Year-on-year, commercial real estate stock has hugely gained in the analysts favour again. The Barometer score dropped by 0.4 points and thus climbed back up to a sentiment score of Thirteen experts assume that prices will perk up, and five of these actually expect to see price gains in excess of 15%. Just one analyst anticipates a level performance

3 Image 3: Price trend of German commercial real estate stock according to analyst estimates Residential Real Estate Stock: Short-Term Sentiment Hits Rock Bottom The Barometer s three-month perspective for residential real estate stock dropped to an all-time low of At no other time since the launch of the Real Estate Stock Barometer was residential real estate stock as poorly rated by analysts as this past quarter. Only four analysts expect prices to climb by up to 15%. By contrast, seven experts feel that the residential real estate stock prices will stagnate. Another two analysts expect prices to soften slightly. The mid-term perspective looks much brighter. The twelve-month perspective saw an increase of the Barometer score from +0.9 to +0.5 points. Twelve of the analysts predict that the shares of residential real estate companies will rise. Two poll respondents forecast a stagnant price level

4 Image 4: Price trend of German residential real estate stock according to analyst estimates Statements by Eight out of a Total of 14 Analysts Polled Helmut Kurz, analyst at Ellwanger & Geiger: The capital increases of many companies have impacted the market for the time being because the number of investors in German who acquire real estate stock is still too low. It is striking to see that the shares of companies that satisfy the elevated liquidity requirements of foreign investors have a much easier time handling them. Frank Neumann, analyst at Bankhaus Lampe: All things considered, real estate stock ratings have re-approached the average of previous years, leaving scant upside potential in the industry overall. In my opinion, the stock picking has moved centre stage again in the meantime, because you will still find the odd bargain on the market

5 Jochen Rothenbacher, analyst at Equinet: The threats posed by rising interest rates, the natural disaster in Japan, and the issues in the Middle East/ North Africa are not adequately factored into the prices. This harbours the risk of a backlash potential even for real estate stock. Stefan Scharff, analyst at SRC Research: At the moment, you feel a certain sense of unease about the economic development in the Eurozone that coincides with speculations regarding possible billion-euro bailout packages for countries on Europe s periphery. This fact does have ramifications for the stock market and the performance of real estate stock, though the sentiment remains positive then as now, we find, particularly so when you have a demonstrable portfolio of prime locations, stable tenancy, and a sustainably high cash-flow. The fact that companies such as VIB Vermögen or YOUNIQ are be going ahead with capital increases at the moment or will be doing so in the near future, as is the case with Opera One or Prime Office, reflects the desire on the part of many players to pick up the pace of the profitable growth cycle. In addition to the issuance of new stock, loans with medium-term lifetimes between 3 to 5 years will play a greater role in the financing mix of real estate companies, and we for one welcome the fact. Peter-Thilo Hasler, analyst at Blättchen & Partner AG: The demand for office floor space has stabilised on a high level, which can be interpreted as expression of Germany s sustained economic recovery. Prime locations benefit from the fact more so than others, with selected Class B locations benefitting, too. Ulf van Lengerich, analyst at Solventis Wertpapierhandelsbank: Many listed real estate companies will shift their focus back toward growth. We believe the time is right for doing so. The fundamentals for the German real estate market are favourable, and are likely to boost real estate prices in the coming years. Kai Malte Klose, analyst at Berenberg Bank: Companies should use their Q1 figures to concretise their guidance as to whether the rather positive performance at the end of last year will continue and possibly even accelerate

6 Stefan Goronczy, Senior Analyst Equity at HSH Nordbank AG: In the short run, profit-taking could well keep impacting prices. Neither have the rising interest rates been adequately factored in yet. For the year as a whole, the stable fastgrowing economy will, however, have a positive impact on the operative profitability. Vacancies are likely to contract, and new signings will probably command higher rent rates. As a result, we are likely to see share prices rebound as the year progresses. Survey Method: The Dr. ZitelmannPB Real Estate Stock Barometer is the sentiment indicator for the German real estate stock market. Each Quarter, Dr. ZitelmannPB.GmbH interviews leading analysts for German real estate stock as to their estimate of how the real estate stock market will develop over the next three and twelve months. At the same time, the survey polls the analysts opinion on the prospective performance of commercial and residential real estate stock. The analysts respond using a scale from +2 (rising fast) to -2 (falling fast). The Barometer maps the median of all estimates returned by the analysts. The current survey included analysts from the following institutes: Baader Bank, Bankhaus Ellwanger & Geiger, Bankhaus Lampe, Berenberg Bank, Blättchen & Partner, Close Brothers Seydler, Equinet, GSC Research, HSBC Trinkaus, HSH Nordbank, Solventis Wertpapierhandelsbank, SRC Research, Warburg Research, and WestLB. All of the analysts also participated in the previous quarter s survey. This means that the sentiment readings may be directly compared. Dr. ZitelmannPB. GmbH: Dr. ZitelmannPB. GmbH is Germany s leading consulting company for the positioning and communication of real estate companies and fund companies. It advises national and international clients in the areas of strategic press and public relations work, capital market communication, and positioning. Other spheres of activity include the compilation of track records and statements of account, surveys and research documents, as well as the conceptualising of, and copywriting for, customer newspapers, newsletters, Internet presentations, and brochures. Dr. ZitelmannPB. GmbH supports the market entry of foreign companies in Germany, and brokers collaborations for real estate and fund companies. Contact for the Dr. ZitelmannPB Real Estate Stock Barometer: Dr. Alexander Knuppertz Rankestr. 17 D Berlin - 6 -

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