German REIT Act. A brief Overview with a Regulatory Framework.

German REIT Act. A brief Overview with a Regulatory Framework.

The German REIT Act. German Real Estate Investment Trusts ( G-REITs ) Contents Where are we now? The current status Where are we now? 1 The draft act to introduce German real estate stock corporations with listed shares ( REIT Act ) was adopted by the Bundestag on and will be passed by the Bundesrat one week later. The REIT Act will enter into force with retroactive effect from 1 January 2007, as scheduled. The finance committee (Finanzausschuss) of the Bundestag passed a proposal for a resolution (Bundestag publication 16/4779 of 22 March 2007) ( Proposal ) in relation to the government draft (Bundestag publication 16/4026 of 12 January 2007) ( Draft ) and together the Proposal and the Draft form the full text of the REIT Act adopted by the Bundestag. As a courtesy, we have prepared a translation of the REIT Act. Text in bold print is the wording of the Proposal and the text in normal print is part of the Draft. Summary 2 Regulatory Framework of the G-REIT 8 German REIT Team 27 Since our last REIT updates of August, September and November 2006, the following important changes have been incorporated by the legislator: No exit tax in case of a sale of assets to real estate investment funds. Reduction of the period of prior possession (Vorbesitzzeit) by the seller for the purpose of claiming exit tax in the case of a sale to a REIT or a Pre-REIT from 10 years to 5 years. In the case of conversion into a REIT, the relevant real estate assets need to have been acquired prior to 1 January 2005. Permits participation of REITs in corporations acting as general partners of real-estate partnerships. This allows the creation of partnership structures with a REIT as a parent company. Minimum equity capital of 45 per cent of the immovable REIT assets. No distribution of depreciation amounts. 1

In the case of sale and lease-back structures, the seller may only hold (directly or indirectly) a maximum interest of 50 per cent in the REIT after the expiry of a period of two years since the registration as a REIT. Transitional provisions in relation to proceeds received by German investors from foreign REITs. Unfortunately, the following has not been implemented in spite of various proposals: Existing domestic rented residential real estate is still not permitted (however, foreign existing rented residential real estate is now permitted). There are no specific provisions regarding income that has already been subject to tax in order to prevent double taxation (such as income from foreign real estate or REIT service companies). We understand, however, that the legislator intends to implement some improvements in this respect later this year. Summary of the REIT Act The most important issues of the Act are summarised below: 1 Regulatory Framework of the G-REIT The REIT must be a German stock corporation having its legal seat and place of management in Germany will not be regulated in terms of products or management by the German Federal Financial Supervisory Authority (BaFin) must have a minimum stated capital of EUR 15 million must have a single class of (par value or no par value) shares with voting rights must be named as REIT-AG or REIT-Aktiengesellschaft ; domestic companies are only allowed to be named this way if they are REITs pursuant to the German REIT Act must be admitted to trading on an organised market in an EU or EEA Member State; non-listed REITs (private REITs such as in the United States) are not permitted; application for listing must be filed within 3 years after filing for registration as a Pre-REIT Pre-REITs are taxable stock corporations that do not yet have the shareholder structure, equity capital ratio and stock exchange listing required for a REIT. They are important as acquisition vehicles, because sales to Pre-REITs may be subject to a tax privilege (exit tax). Following the filing 2

for registration as a Pre-REIT, the company has up to 2 years to fulfil the requirements regarding assets and revenues (see below). The REIT must generate at least 75 per cent of its gross revenue from immovable assets and at least 75 per cent of its total assets must consist of immovable assets. Such thresholds are to be calculated on the basis of the IFRS; the real estate percentage will be determined on the basis of the current fair value under IAS 40. Non-consolidated partnership interests (possible e.g. in the case of joint ventures) will be deemed to be immovable assets. Immovable assets may either be held directly or indirectly through a partnership; immovable assets situated outside Germany may also be held through foreign special purpose corporations (SPCs). The foreign SPCs must be consolidated. Domestic rented residential real estate may not be held if built prior to 1 January 2007 (existing rented residential real estate). Residential real estate is real estate used predominantly for residential purposes (more than 50 per cent of usable floor space per building). The company is required to prepare (consolidated or non-consolidated) financial statements under IFRS. In addition, financial statements under the German Commercial Code (HGB) must be prepared for tax purposes. The REIT must distribute of at least 90 per cent of the distributable profits calculated under the provisions of the German Commercial Code until the end of the following fiscal year. The provisions regarding statutory reserves under section 150 of the German Stock Corporation Act (AktG) do not apply. Tax depreciation amounts may not be distributed (contrary to what was initially proposed). Scheduled tax depreciation is only permitted as linear depreciation; extraordinary tax depreciation remains possible. Up to 50 per cent of capital gains may be allocated to a reserve for the purposes of acquiring immovable assets for a period of up to 2 years, and thus need not be distributed. The auditor must state whether the requirements to qualify as a REIT are fulfilled in the course of auditing the annual financial statements; the results of the determinations made by the auditor must be summarised in a separate statement. 2 Entry Charge and Exit Tax Upon entry into the G-REIT status, there is no taxation of income irrespective of the existence of hidden reserves such as in the UK on fair market values ( entry charge ). In the case of a sale to a G-REIT or a Pre-REIT, hidden reserves in real estate that have been held as part of the operating assets of the taxpayer for a minimum period of 5 years prior to 1 January 2007 are only taxed on 50 per cent of the ordinary tax basis. This privileged taxation ( exit tax ) only applies until January 2010 and is intended to create an incentive to 3

realise hidden reserves. Sale and lease-back structures may also benefit from this kind of taxation. However, in order to prevent abuse, such benefit will cease to apply if, following the expiry of 2 years after registration as a REIT, the seller directly or indirectly continues to hold an interest of more than 50 per cent in the purchaser (the REIT-AG). In addition, the privilege also does not exist for other things to the extent that assets have been written down to the lower going concern value. An independent exit tax arrangement will apply if a company becomes subject to tax exemption under the REIT Act and needs to step up the tax basis of its assets. In that case, even real estate acquired prior to 1 January 2005 will benefit from such arrangement. This arrangement also applies in relation to hidden reserves in real estate partnerships. The privileged taxation of the so-called EK02 baskets for former tax exempt housing companies, which was contained in an earlier stage of the draft, is not contained in the REIT Act. There are no special provisions regarding Real Estate Transfer Tax ( Grunderwerbsteuer ). 3 Shareholder Structure No shareholder may hold 10 per cent or more of the shares of a REIT directly. This restriction is designed to avoid application of the affiliation privilege under Double Taxation Treaties and application of the European Parent Subsidiary Directive. Nevertheless a shareholder may hold more than 10 per cent of the shares of a REIT indirectly. The permanent free float of the shares must be at least 15 per cent, and at the time of stock exchange listing at least 25 per cent. Aggregate shares held of less than 3 per cent counts as free float. The compliance with the free-float rules is only ensured by the regular notification requirements under the German Securities Trading Act (WpHG), pursuant to which the shareholder of a listed company must notify the BaFin if his or her shareholding reaches, exceeds or falls below 3, 5, 10, 15, 20, 25, 30 or 75 per cent of the total shares. Under the amendments by the REIT Act, the notification duties now also include thresholds of 80 and 85 per cent. 4 Debt Financing Limitations The equity capital in the (consolidated or non-consolidated) financial statements under the IFRS may not be less than 45 per cent of the value of immovable assets, determined on the basis of the current fair value under IAS 40. This requirement aims to protect creditors of REITs, promises comparatively high distributions to the shareholders (and the tax authorities), is more practical than a limitation of debt capital (which is hard to define), and forces the REIT to finance growth with a significant portion of equity (such as through capital increases). 4

5 Prohibited Activities REITs must not trade in their immovable assets. If a REIT, within a period of 5 years, receives proceeds from the sale of immovable assets representing more than 50 per cent of the value of its average holdings of immovable assets within the same period, the REIT is deemed to have traded in its immovable assets. This is calculated on the basis of any or all annual financial statements of the REIT within the most recent 5 years. REITs may only perform non-gratuitous activities that are real estateoriented. Real estate-oriented means those activities that serve an administrative purpose or serve to ensure the maintenance and continued development of real estate. Real estate-oriented activities for third parties may only be provided through fully taxable, wholly-owned subsidiaries of the REIT ( REIT service companies ). Gross revenue and assets of such REIT service companies must not exceed 20 per cent of the revenue and assets of the REIT. 6 Taxation and (Penalty) Payments at REIT Level G-REITs are fully exempt from corporate and trade taxation. If the REIT fails to meet the above requirements, the tax authorities may impose (penalty) payments on the REIT in their discretion as follows: (i) an amount equal to 1 to 3 per cent of the sum by which the share of immovable assets falls short of a share of 75 per cent of the assets of the REIT; (ii) an amount equal to 10 to 20 per cent of the sum by which the gross revenue derived from immovable assets falls short of a share of 75 per cent of the total gross revenue; (iii) an amount equal to 20 to 30 per cent of the sum by which the actual distribution falls short of the minimum distribution requirement of 90 percent; and (iv) an amount equal to 20 to 30 per cent of the income achieved with non-gratuitous ancillary activities provided by the REIT or a real estate partnership to third parties. Any such payments do not qualify as taxes. If a REIT consistently fails to meet the requirements to qualify as a REIT (that is shareholder structure, stock exchange listing, minimum equity, real estate trading), it may lose its status as a REIT. If the REIT-AG is unable to determine whether it has met the shareholder structure requirements based on the notification requirement under the Securities Trading Act (WpHG), the REIT-AG has until the end of the business year following the business year of the determination of the breach to meet the shareholder structure requirements without sanctions. Following a loss of the tax exemption by a REIT, such tax exemption may not be granted again for a period of 4 years. 7 Taxation at the Shareholder Level Any income received from a REIT by its shareholders is fully taxable at the shareholder level; the half-income system and the 95 per cent tax exemption for corporations do not apply. 5

The REIT is required to withhold tax of 25 per cent (plus 5.5 per cent solidarity surcharge on the withholding tax) on any distributions. However, certain shareholders are entitled to receive distributions without deductions of tax and certain other shareholders enjoy reduced withholding tax rates. Shareholders resident in Germany are entitled to obtain a tax credit for, or refund of, the withholding tax deducted. Generally, for shareholders not resident in Germany the German withholding tax is final. However, depending on Double Taxation Treaties, a refund may be available. The European Parent Subsidiary Directive is not applicable in this case, because a REIT is not a taxable entity and holdings of 10 per cent or more in a REIT are not permitted. For this reason, affiliation privileges under Double Taxation Treaties also do not apply. Generally, capital gains stemming from the sale of shares of a REIT are fully taxable. Accordingly, losses economically related thereto are also fully recognised. However, such losses may only be set-off against profits derived from holdings in REITs (such as price gains and dividend income). Private investors benefit from regular tax exemption after a holding period of 1 year. The REIT Act defines the term foreign REIT for the first time in legal terms ( other REIT corporations, associations of persons or conglomerations of assets ). Investors in foreign REITs are to be taxed in the same manner as they would be taxed if they were investing in a German REIT. For reasons of the protection of confidence, this provision will not apply to proceeds received from foreign REITs before 1 January 2008. In addition, the REIT Act amends the German Foreign Tax Act (Außensteuergesetz) in order to ensure the taxation of German shareholders holding shares in a REIT through a foreign vehicle. 6

If the plans to introduce a final withholding tax (Abgeltungsteuer) in 2009 are considered, the German REIT may be very attractive to German private investors. The final withholding tax has been proposed to impact any dividends including dividends derived from fully taxable corporations by abolishing the half-income system and then tax dividends at a flat rate of 25 per cent. If no special provisions are introduced in relation to REITs, REIT shareholders will be subject to the same tax charge as normal shareholders. However, normal private investors receive dividends which already have been taxed at the level of the corporation, whereas no income tax is incurred by the REIT-AG at the level of the corporation. Authors: Dr. Florian Schultz, E-Mail: florian.schultz@linklaters.com Olaf Thießen, E-Mail: olaf.thiessen@linklaters.com Berlin Rankestraße 21 10789 Berlin Tel: (49-30) 21496-0 Fax: (49-30) 21496-100 Cologne Börsenplatz 1 50667 Cologne Tel: (49-221) 2091-0 Fax: (49-221) 2091-435 This publication is intended merely to highlight issues and not to be comprehensive, nor to provide legal advice. Should you have any questions on issues reported here or on other areas of law, please contact one of your regular contacts at Frankfurt Linklaters, or contact the editors. Mainzer Landstraße 16 Linklaters. All Rights reserved 2006 60325 Frankfurt/Main Please refer to www.linklaters.com/regulation for important information on the regulatory position of the firm. Tel: (49-69) 71003-0 We currently hold your contact details, which we use to send you newsletters such as this and for other marketing and Fax: (49-69) 71003-333 business communications. We use your contact details for our own internal purposes only. This information is available to our offices worldwide and Munich to those of our associated firms. Prinzregentenplatz 10 If any of your details are incorrect or have recently changed, or if you no longer wish to receive this newsletter or other 81675 Munich marketing communications, please let us know by emailing us at marketing.database@linklaters.com Tel: (49-89) 41808-0 Fax: (49-89) 41808-100

Consolidated text of the resolution of the finance committee of the Bundestag (BT publication 16/4779 of 22 March 2007) and the government draft (BT publication16/4026 of 12 January 2007) unofficial courtesy translation Article 1 Act on German Real-Estate Stock Corporations with Listed Shares (REIT Act) Part 1 General Provisions Section 1 Essential Character of REIT Stock Corporations (1) REIT Stock Corporations shall be stock corporations whose corporate objective is restricted to 1. acquiring and holding ownership or in-rem rights of use to (a) (b) German and immovable assets with the exception of existing rented residential real estate, foreign immovable assets if, in the state where these are situate, they are permitted to be in the ownership of a REIT Corporation, association of persons or conglomeration of assets or of a corporation, association of persons or conglomeration of assets equivalent to a REIT and (c) other assets within the meaning of Section 3, para. 7 or to administering and selling said ownership or rights within the framework of renting and leasing including any necessary property-related ancillary activities, 2. acquiring, holding, administering and selling interests in real-estate partnerships, 3. acquiring, holding, administering and selling shares in REIT service companies, 4. acquiring, holding, administering and selling shares in foreign property companies and 8

5. acquiring, holding, administering and selling shares in corporations which are general partners of a partnership within the meaning of no. 2 and do not participate in its assets, and whose shares are admitted for sale on an organised market within the meaning of Section 2, para. 2 of the Securities Trading Act in a Member State of the European Union or in another contracting state of the Treaty on the European Economic Area. (2) The REIT Stock Corporation may perform non-gratuitous ancillary activities for third parties only through a REIT service company. (3) REIT Stock Corporations shall be subject to the general provisions applicable to stock corporations, unless this act stipulates anything to the contrary. (4) The auditor of the annual financial statement shall, in the course of the audit of the annual accounts, determine whether the REIT Stock Corporation s calculation of the free-floating quota and the maximum shareholding per shareholder pursuant to Section 11, para. 1 and 4 is in keeping with the notifications pursuant to Section 11 para. 5 on the balance sheet date. He shall also comment on adherence to Section 13; with regard to Section 13, para. 1, these comments refer to the distribution paid out during the business year for the previous business year. If no group financial statement is compiled, the auditor shall also determine whether Sections 12, 14 and 15 were adhered to on the balance sheet date. The auditor shall summarise the findings of his auditing activities in a special note. In the group auditing activities, the group auditor shall examine whether the requirements of Sections 12, 14 and 15 were adhered to on the balance sheet date and shall compile a special note to this effect. Sec. 323 of the Commercial Code (Handelsgesetzbuch HGB) shall be applicable to auditor s or group auditor s special note accordingly. Section 2 Pre-REITs A Pre-REIT shall be a stock corporation with its legal seat within the scope of application of this Act, which is registered with the Federal Central Office for Taxation (Bundeszentralamt für Steuern) as a Pre-REIT. At the end of the business year following registration, the Pre- REIT shall provide the Federal Central Office for Taxation with proof that its corporate objective is limited within the meaning of section 1, paragraph 1, sentence 1. At the end of the year following the year of registration and at the end of every year thereafter, the Pre-REIT must provide the Federal Central Office for Taxation on request and within the period defined in the request, with proof in the form of suitable documents attested by an auditor, of the fact that it fulfils the requirements pursuant to section 12. If, at the end of the year following the year of registration and at the end of every year thereafter, the Pre-REIT does not fulfil or fails to fulfil the requirements of section 12 and of section 1, paragraph 1, sentence 1, the Pre-REIT status shall lapse at the end of that business year. 9

Section 3 Definition (1) Real-Estate Partnerships shall be partnerships whose corporate objective is limited within the meaning of Section 1, paragraph 1, nos. 1 and 2 and which, in accordance with their partnership agreement, are only able to acquire assets within the meaning of paragraph 7 with the exception of participations in foreign property companies and REIT services companies. (2) REIT Service Companies shall be corporations whose entire shares are held by the REIT Stock Corporation and whose corporate objective is restricted to the performance of nongratuitous, real estate-oriented ancillary activities on behalf of the REIT Stock Corporation for third parties. (3) Foreign Property Companies shall be corporations whose entire shares are held by the REIT Stock Corporation and whose immovable assets 1. constitute at least 90% of its total assets, 2. are solely located outside the scope of application of this Act, and 3. only comprise those assets which, in the state where these are situated, are permitted to be in the ownership of a REIT Corporation, association of persons or conglomeration of assets or of a corporation, association of persons or conglomeration of assets equivalent to a REIT. (4) Auxiliary Activities shall be activities that serve the principal activity, i.e. one s own investment assets. (5) Ancillary Activities shall be activities that serve another s investment assets. (6) Real estate-oriented shall refer to those activities which serve an administrative purpose or serve to ensure the maintenance and continued development of the real-estate portfolio (in particular technical and commercial portfolio management, rent portfolio management, procurement activities, project control and project development). (7) Assets within the meaning of this Act shall be immovable assets within the meaning of paragraph 8 and items required for the management of these assets, as well as bank balances, financial market instruments, debts and liabilities arising from the use or sale of immovable assets or held, entered into or established for the purpose of value preservation, control or change of base of these assets, and participations in Real-Estate Partnerships, Foreign Property Companies, REIT Service Companies and corporations within the meaning of Section 1, para. 1, no. 5. (8) Immovable Assets shall be real estate and rights equivalent to real estate as well as comparable rights under the law of other states. Ships and aircraft shall not be deemed immovable assets. (9) Existing rented residential real estate shall be real estate that is used predominantly for residential purposes if built prior to 1 January 2007. 10

Section 4 Minimum Nominal Amount of Share Capital The minimum nominal amount of share capital of a REIT Stock Corporation shall be 15 million euro. Section 5 Form of Shares (1) All shares of the REIT Stock Corporation must be established as shares of the same class carrying voting rights. They may be issued only upon payment in full of the issue price. (2) The shareholder shall have no claim to certification of his share. Section 6 Company Name The company name of a REIT Stock Corporation must contain the designation REIT- Aktiengesellschaft or REIT-AG, even if it is continued in accordance with Section 22 of the Commercial Code or in accordance with other statutory provisions. Section 7 Protection of Designation A company which has its domicile within the scope of application of this Act may only use the designation REIT-Aktiengesellschaft, or a designation in which the term Real Estate Investment Trust or the abbreviation REIT appear in isolation or in combination with other words, in its company name, as an addition to the company name and for business or advertising purposes if it is a REIT Stock Corporation within the meaning of this Act and fulfils the requirements of Sections 8 to 15. 11

Part 2 Qualification as a REIT Stock Corporation Section 8 Application The company name of the REIT Stock Corporation (Section 6) in the Commercial Register must be filed to the competent court. Section 9 Residency A REIT Stock Corporation must have its legal seat and its management in Germany. Section 10 Stock Market Quotation (1) The shares of the REIT Stock Corporation must be authorised to trade on an organised market within the meaning of section 2, paragraph 5 of the Securities Trading Act in a Member State of the European Union or in another contracting state of the Treaty on the European Economic Area. (2) The application for authorisation pursuant to paragraph 1 must be submitted within three years of the application of the REIT Stock Corporation as a Pre-REIT. The three-year period of sentence 1 may be extended on request by one year by the Federal Supervisory Office for Financial Services if circumstances outside the scope of responsibility of the Pre-REIT warrant such an extension. (3) If no application is submitted within the period defined in paragraph 2 or if an application filed within this period is finally and absolutely rejected, the corporation shall lose its status as a Pre- REIT. This status shall be reinstated upon the submission of a new application. Section 11 Free-Float of Shares (1) At least 15 percent of the shares in a REIT Stock Corporation must be free-floating. At the time of admission to the stock exchange, however, at least 25 percent of shares must be free-floating. The shares of those shareholders who are each entitled to less than 3 percent of voting rights in the REIT Stock Corporation are free-floating shares. This is calculated pursuant to Sections 22 and 23 of the Securities Trading Act. 12

(2) The REIT Stock Corporation shall inform the Federal Supervisory Office for Financial Services on 31 December annually of its shareholders free-floating quota. The Federal Supervisory Office for Financial Services shall inform the Federal Central Office for Taxation when the free-floating quota falls below 15%. (3) The REIT Stock Corporation shall make provision in its articles of association for a compensation payable to all shareholders entitled to less than 3 percent of the voting rights, in the event that the tax exemption comes to an end pursuant to Section 18, para. 3. (4) No investor shall hold directly 10 percent or more of the shares, or hold directly shares such that he holds 10 percent or more of the voting rights. For the application of this paragraph, shares that are held for the account of a third party shall be deemed to be held by the third party directly. (5) The notification obligation pursuant to section 21, paragraph 1 of the Securities Trading Act and the information obligation pursuant to section 25, paragraph 1 of the Securities Trading Act shall also apply if a party obliged to give notification achieves, exceeds or falls below 3 percent, 80 percent or 85 percent of the voting rights in a REIT Stock Corporation as a result of acquisition or sale or for any other reason. Section 12 Requirements concerning Assets and Earnings (1) If the REIT Stock Corporation is obliged to draw up a group financial statement pursuant to Section 315a of the Commercial Code, reference should be made for the purpose of this provisions or of Sections 14 and 15 to the group financial statement, otherwise to the individual financial statement pursuant to Section 325, para. 2a of the Commercial Code. For this purpose of this provision or of Sections 14 and 15, the market value shall be authoritative within the meaning of IAS 40 for immovable assets held as financial investments. Participations in Real Estate Partnerships shall be deemed to be immovable assets for the purpose of this provision and for Sections 14 and 15, and shall be evaluated at the current fair value. (2) With regard to the sum of assets pursuant to the individual or group financial statement pursuant to paragraph 1, less the distribution obligation within the meaning of Section 13, para. 1 and the reserves within the meaning of Section 13, para. 5, (a) at least 75 percent of the assets must belong to the immovable assets at the end of every business year, and (b) the assets that belong to the assets of the REIT Service Companies to be considered in the group financial statement of the REIT Stock Corporation must not amount to more than 20% at the end of every business year. (3) With regard to the sales revenue plus other earnings from immovable assets in any one business year in accordance with the individual or group financial statement pursuant to paragraph 1, 13

(a) at least 75 percent of the sales revenues plus other earnings from immovable assets in any one business year must come from the renting, leasing including real-estate-oriented activities and sale of immovable assets, and (b) the sum of sales revenues plus other earnings from the immovable assets of REIT Service Companies that are to be considered in the group financial statement of the REIT Stock Corporation in any one business year must not amount to more than 20 percent. (4) Other earnings from immovable assets within the meaning of paragraph 3 shall include infrequently occurring sums, valuation profits and losses treated as income, realised capital losses and earnings from the renting, leasing and sale of immovable assets where these are not classed as sales revenue. Valuation profits and losses are profits and losses from the amount of immovable assets held as a financial investment that are included in the individual or group financial statement in accordance with paragraph 1 with the current fair value within the meaning of IAS 40. If the immovable assets held as a financial investment are included in the individual or group financial statement of the REIT Stock Corporation pursuant to IAS 40 with the amortised costs, the valuation profits and losses within the meaning of sentence 2 must be determined in an ancillary calculation and added to the other earnings. Section 13 Distribution to Investors (1) The REIT Stock Corporation shall be obliged to distribute as a dividend to the shareholders at least 90 percent of the distributable profits of its commercial annual surplus within the meaning of sec. 275 of the Commercial Code, reduced by the allocation to reserves pursuant to paragraph 3, sentence 1 and increased by the dissolution of the reserves pursuant to paragraph 3, sentence 2. Section 150 Stock Corporation Act (Aktiengesetz AktG) shall not be applicable. (2) Only scheduled depreciation in equal annual instalments shall be admissible for the determination of the annual surplus. (3) In the commercial annual financial statement, up to half the profits of a REIT Stock Corporation from the sale of immovable assets may be placed in a reserve. The reserve shall be dissolved by the close of the second business year after the year in which the profits were placed in the reserve and shall increase the distributable amount pursuant to paragraph 1, insofar as the reserve has not been deducted from the historical acquisition or manufacturing costs of immovable assets procured or created in the first or second business year after the year in which the profits were placed in the reserve. If the sold immovable assets already formed part of the assets of the REIT Stock Corporation at the start of the tax exemption, the sale profits should be calculated as the sum of Sale Profits I and Sale Profits II. Sale Profits I shall be the difference between the book value in the commercial balance 14

sheet and the value established as part of the determination of profits for tax purposes before tax exemption for landed property or for the building. Residual sale profits shall be Sale Profits II. Only Sale Profits II may be used for reserves pursuant to sentence 1. Section 14 Exclusion of Real-Estate Trade (1) The REIT Stock Corporation shall not trade in its immovable assets. (2) Trade within the meaning of paragraph 1 shall be deemed to take place if in the past five years, the REIT Stock Corporation and any subsidiaries to be included in its group financial statement have achieved revenue from the sale of immovable assets that represents more than half the value of the average immovable asset portfolio within the same period. The calculation of the average asset base shall refer to the bases that are included in the REIT Stock Corporation s individual or group financial statement pursuant to Section 12, paragraph 1 at the end of those business years to be included in the five-year period. If the REIT Stock Corporation has not yet existed for 5 years, reference should be made to the individual or group financial statements for the previous business years. Section 15 Minimum Equity Capital The equity capital of the REIT Stock Corporation disclosed in the individual or group financial statement at the end of the business year pursuant to Section 12, para. 1 must not be less than 45 percent of the amount assessed for the immovable assets in the individual or group financial statement pursuant to Section 12, para. 1. 15

Part 3 Tax Provisions Section 16 Tax Exemption of the REIT Stock Corporation (1) A REIT Stock Corporation that meets the requirements of Sections 8 to 15, is subject to unlimited corporate income tax and is not deemed under a Double Taxation Treaty to be resident in another contracting state, shall be exempt from corporate income tax. A REIT Stock Corporation that fulfils the requirements of Sections 8 to 15 shall be exempt from trade tax. (2) If shares in the amount of not less than 10 percent of capital are directly attributable to a shareholder pursuant to sec. 20 of the German Income Tax Act (Einkommenssteuergesetz EStG), the REIT Stock Corporation shall, contrary to paragraph 1, not lose its tax exemption. Nor shall it cause the shareholder to lose its claim to a dividend or to its voting rights; however, on the basis of its participation, it may otherwise only assert the rights to which it would be entitled on the basis of a participation of not more than 10 percent. This shall also apply where a Double Taxation Treaty is applied. The provisions of the Securities Trading Act shall remain unaffected. (3) If at the end of a business year, less than 75 percent of the total assets of the German REIT Stock Corporation are made up of immovable assets in accordance with the calculation pursuant to Section 12, the competent fiscal authority shall impose a payment upon the Stock Corporation. This payment shall amount to at least 1 percent and not more than 3 percent of the sum by which the share of immovable assets falls short of the 75 percent share. In imposing the payment, the fiscal authority shall take consideration of whether the immovable assets have fallen short of the prescribed 75 percent share in previous business years and, if so, how often this has occurred. A payment under this paragraph may also be imposed in addition to a payment subject to paragraphs 4 or 5 if any of the requirements for the relevant payment are met. (4) If, in any business year, less than 75 percent of the gross revenue of the German REIT Stock Corporation is derived from the renting and leasing or the sale of immovable assets in accordance with the calculation pursuant to Section 12, the competent fiscal authority shall impose a payment upon the stock corporation. This payment shall amount to at least 10 percent and not more than 20 percent of the sum by which the share of gross revenue derived from renting and leasing or the sale of immovable assets falls short of the requirement of 75 percent of gross revenue. Paragraph 3, sentence 3 and 4 shall be correspondingly applicable. (5) If a German REIT Stock Corporation distributes less than 90 percent of the annual surplus calculated in accordance with Section 13, para. 1 to its investors by the end of the subsequent business year, the competent fiscal authority shall impose a payment upon the corporation. This payment shall amount to at least 20 percent and not more than 30 percent of the sum by which the actual distribution falls short of the requirement of 90 percent of the annual surplus calculated in accordance with Section 13, para. 1. Paragraph 3, sentences 3 and 4 shall be correspondingly applicable. 16

(6) If the REIT Stock Corporation or a Real Estate Partnership subordinate to it performs nongratuitous ancillary activities for third parties, the competent fiscal authority shall impose a payment upon the REIT Stock Corporation. The payment shall amount to at least 20 percent and not more than 30 percent of the income achieved with the non-gratuitous ancillary activities. Paragraph 3, sentences 3 and 4 shall be correspondingly applicable. Section 17 Start of Tax Exemption (1) Tax exemption shall start from the beginning of the business year in which the REIT Stock Corporation is entered into the Commercial Register following application pursuant to Section 8 under a company name pursuant to Section 6. (2) When applying Section 13 paragraph 1 and paragraph 3, sentence 1 of the Corporate Income Tax Act (Körperschaftssteuergesetz KStG), Section 3 no. 70, sentence 1, letter b, sentences 2 and 3, and Section 3c, paragraph 3 of the Income Tax Act shall apply accordingly. (3) If the taxable stock corporation holds participations in Real Estate Partnerships, the immovable assets of the Real Estate Partnerships should, corresponding to the participation of the stock corporation in the Real Estate Partnership, be assessed at the going-concern value of individual assets. Decisive in this case should be the date of the closing balance sheet of the stock corporation within the meaning of Section 13 paragraph 1 and paragraph 3, sentence 1 of the Corporate Income Tax Act. An indirect participation via one or more partnerships shall be equivalent to a direct participation. Section 15, paragraph 1, sentence 1, no. 2, sentence 2 of the Income Tax Act shall apply accordingly. (4) Following the loss of tax exemption within the meaning of Section 18, tax exemption cannot be revived or recommence until four years have passed since its loss. Section 18 End of Tax Exemption (1) Tax exemption pursuant to Section 16 paragraph 1 shall end upon the close of the business year that precedes the loss of its listing to official trading pursuant to Section 10. (2) If the REIT Stock Corporation trades in immovable assets within the meaning of Section 14, the tax exemption shall first lapse in the business year in which the threshold pursuant to Section 14 paragraph 2 is exceeded. (3) If less than 15 percent of the shares of the REIT Stock Corporation are free-floating for three consecutive business years, the tax exemption shall end at the close of the third business year. If the provision on maximum participation pursuant to Section 11, para. 4 is violated for three consecutive business years, the tax exemption shall end at the close of the third business year. As long as the REIT Stock Corporation is unable to infer the violation from the notifications in accordance with the Securities Trading Act (Wertpapierhandelsgesetz WpHG), sentences 1 and 2 shall not be applicable. Following the discovery of 17

a violation against the provisions on free float and maximum participation, the REIT Stock Corporation must adhere to the provisions on free float and maximum participation until the end of the business year after the year in which the violation was discovered. If it is unable to do so, the tax exemption shall end with retroactive effect to the end of the business year in which the violation was discovered. (4) If the requirements of Section 15 are not fulfilled in three subsequent business years, the tax exemption shall lapse with the close of the third business year. (5) If a REIT Stock Corporation fulfils the requirements of the same paragraph of Section 16, para. 3 to 6 for three consecutive business years, the tax exemption shall end at the close of the third business year. If a REIT Stock Corporation fulfils the requirements of various paragraphs, but at least one of paragraphs 3 to 6 of Section 16 for five consecutive business years, the tax exemption shall end at the close of the fifth business year. The competent fiscal authority may stipulate in an exceptional case that the tax exemption will not lapse; in this case, it shall impose the highest possible payments pursuant to Section 16, paragraphs 3 to 6. (6) Section 13, paragraph 2 of the Corporate Income Tax Act shall be applicable in the cases specified in paragraphs 1 to 4 and para. 5, sentences 1 and 2, such that assets and liabilities are stated in the initial balance sheet at the value that would arise on the basis of the initial balance sheet of the German REIT Stock Corporation with an uninterrupted tax liability subject to the provisions on the determination of taxable income. (7) In the cases specified in paragraphs 1 to 4 and para. 5, sentences 1 and 2, the reserve pursuant to Section 13, paragraph 3 shall be dissolved and shall, together with the nondistributed parts of the annual surplus calculated in accordance with Section 13, para. 1 for the business years in which the German REIT Stock Corporation was exempted from tax, increase the profits of the taxable Stock Corporation in the first year of tax liability. Section 19 Taxation of the Shareholders (1) The income from the capital assets within the meaning of Section 20, para. 1, no. 1 of the Income Tax Act shall comprise the distributions of the REIT Stock Corporation and other REIT corporations, associations of persons or conglomerations of assets as well as other benefits granted in addition to or instead of the distributions, unless they constitute operating revenue of the shareholder. Section 20, para. 1, no. 2 of the Income Tax Act shall be correspondingly applicable; Section 20, para. 2, sentence 1, no. 2, letter a of the Income Tax Act shall not be applicable. (2) With regard to the sale of shares in REIT Stock Corporations and shares in other REIT Corporations, associations of persons or conglomerations of assets that do not form part of business assets, Section 17, Section 22, no. 2 and Section 23, paragraph 1, sentence 1, no. 2 of the Income Tax Act shall be applicable; otherwise, profits shall be calculated in accordance with Section 4 or Section 5 of the Income Tax Act. 18

(3) Section 3, no. 40 of the Income Tax Act and Section 8 b of the Corporate Income Tax Act shall not be applicable. (4) Business asset reductions, operating expenses or disposal costs that are economically related to shares of a REIT Stock Corporation or shares in other REIT corporations, associations of persons or conglomerations of assets may only be equalised by business asset increases, operating income or income from the disposal of the shares of a REIT Stock Corporation or shares in other REIT corporations, associations of persons or conglomerations of assets; Section 10d of the Income Tax Act shall apply accordingly. (5) Other REIT Corporations, associations of individuals, or conglomerations of assets within the meaning of this provision shall be all corporations, associations of individuals, or conglomerations of assets that are not resident in Germany; whose gross assets are made up of not less than two thirds from immovable assets; whose gross revenue is made up of not less than two thirds from renting, leasing and the sale of immovable assets; that are not subject to any investment supervision in their country of residency; whose shares are traded on a regulated market; and whose profits or distributions to its investors are not subject to prior foreign tax in the country of residency that is comparable to German corporate income tax (Körperschaftsteuer). Section 20 Deduction of Dividend Withholding Tax (1) Distributions, other benefits and gains following the capital reduction or dissolution of a German REIT Stock Corporation shall be subject to income tax or corporate income tax by way of deduction from the proceeds from capital (dividend withholding tax). The applicable provisions relating to the tax deduction of proceeds from capital pursuant to Section 43, para. 1, sentence 1, no. 1 and sentence 2 of the Income Tax Act shall apply accordingly. (2) In derogation of Section 43a, para. 1, no. 1 of the Income Tax Act, dividend withholding tax corresponds to 25% of proceeds from capital if the creditor bears the dividend withholding tax and to 33⅓% of the sum actually paid if the dividend withholding tax is assumed by the debtor. Creditors within the meaning of Section 44a, para. 8 of the Income Tax Act shall be subject to Section 45b of the Income Tax Act subject to the proviso that 2/5 of the dividend withholding tax prescribed in sentence 1 is refunded. (3) The tax certificate pursuant to Section 45a of the Income Tax Act shall state that the proceeds derive from a German REIT Stock Corporation. (4) The provisions of the Income Tax Act shall apply accordingly to the set-off of retained and paid dividend withholding tax pursuant to Section 36, para. 2 of the Income Tax Act or to the refunding thereof pursuant to Section 50d of the Income Tax Act. If 10 percent or more of shares, shares carrying voting rights, or voting rights are held or controlled indirectly, then, where a double-taxation treaty is applied and irrespective of any further benefits contained therein or agreed for its application, distributions shall be subject to German tax levied at source at the rate specified by the double-taxation treaty for cases in which 19

less than 10 percent of shares, shares carrying voting rights, or voting rights are indirectly held or controlled. Sentence 2 shall also apply if less than 10 percent of shares, voting shares or voting rights are indirectly held or controlled, if, at the same time, shares in accordance with Section 16, para. 2 are directly attributable to the shareholder and if, when added together, 10 percent or more of the shares, voting shares or voting rights are held or controlled. Section 21 Procedural Provisions (1) The payments pursuant to Section 16 shall be subject to the German Fiscal Code (Abgabenordnung) provisions applicable to corporate income tax. In public-law disputes regarding a payment, resort to the tax courts is assured. The Federal government and the state in which the REIT Stock Corporation is resident shall each be entitled to half the revenue accruing from the payment. (2) The REIT Stock Corporation shall submit a tax return for the expired assessment period. In addition to details of fulfilling the prerequisites for tax exemption, this tax return shall also provide information on the adherence to the requirements concerning the composition of assets and revenue, the fulfilment of the minimum distribution obligation and the amount of equity capital compared to immovable assets. Section 152 of the German Fiscal Code shall be applicable subject to the proviso that an additional penalty for the delayed submission of the tax return may be imposed even if the requirements for tax exemption have been met. The basis for assessment within the meaning of Section 152, para. 2 of the Fiscal Code shall be the amount for distribution calculated pursuant to Section 13, para. 1. A certified copy of the special note pursuant to Section 1, para. 4 must be attached to the tax return. (3) Upon request by the fiscal authority, the REIT Stock Corporation shall disclose the way in which the information provided pursuant to para. 2 was calculated. The fiscal authority determines extent and form of the disclosure. The fiscal authority may demand that the relevant auditor confirm the accuracy of particular items of information. This shall not affect the right of the fiscal authority to ensure further clarification of the facts, and in particular to order an external audit or to consult an expert. 20

Part 4 Final Provisions Section 22 Interim Provision for Section 7 In derogation of Section 7, a company whose company name is admissibly registered in the Commercial Register by [] may use the term REIT Stock Corporation, or a designation in which the term Real Estate Investment Trust or the abbreviation REIT appears alone or in combination with other words, in its company name or as an addition to its company name only until 31 December 2007. After 31 December 2007, the registration shall be inadmissible within the meaning of Section 142, para. 1, sentence 1 of the German Ex Parte Jurisdiction Act (Gesetz über die Angelegenheiten der freiwilligen Gerichtsbarkeit FGG) and may be deleted under this provision. Section 23 Rules of Application (1) Section 19 shall first be applicable to earnings that flow to the shareholder after the beginning of the tax exemption of the REIT Stock Corporation. In derogation of sentence 1, profit distributions based on a profit distribution resolution under corporate-law provisions for a past business year shall not be subject to Section 19 during the first business year of the tax-exempt REIT Stock Corporation. (2) Section 19 shall first be applicable to earnings of another REIT corporation, association of individuals, or conglomeration of assets that flow to the investor after 31 December 2007. (3) With the loss of tax exemption, Section 19 shall be applicable to profit distributions based on a profit distribution resolution under corporate-law provisions for a past business year to which the tax exemption of the REIT Stock Corporation applied. (4) Section 19 shall no longer be applicable to earnings that flow to the investor after the end of the business year in which the foreign corporation, association of individuals or conglomeration of assets no longer fulfils the requirements of Section 19, paragraph 5. (5) Section 19, paragraph 4 shall be applicable to the sale or valuation of shares in a REIT Stock Corporation or other REIT corporation, association of individuals or conglomeration of assets as long as the REIT Stock Corporation is tax-exempt or the other REIT corporation, association of individuals or conglomeration of assets fulfils the requirements of Section 19, paragraph 5. 21

Article 2 Amendment of the Income Tax Act The Income Tax Act in the version of the announcement of 19 October 2002 (Federal Gazette I p. 4210, 2003 I p. 179), last amended by Article [ ] of the Act of [ ] (Federal Gazette I p. ) is amended as follows: 1 In Section 3 no. 69, the final full stop shall be replaced by a semicolon and the following no. 70 added: 70. half (a) (b) of the business asset increases or income from the sale of landed property and buildings which have belonged to the fixed assets of a domestic business of the taxpayer for at least five years by 1 January 2007, if these are sold on the basis of an obligatory contract concluded with legally binding effect after 31 December 2006 and before 1 January 2010, to a REIT Stock Corporation or a Pre-REIT, of business asset increases arising from the registration of a taxable person in the Commercial Register as a REIT Stock Corporation within the meaning of the REIT Act of [ ] (Federal Law Gazette I, p. [insert date of issue and page number of the promulgation of the present principal act under Article 1]) by application of Section 13, para. 1 and para. 3, sentence 1 of the Corporate Income Tax Act to landed property and buildings, if these assets were procured or built before 1 January 2005 and if the closing balance sheet within the meaning of Section 13, paragraphs 1 and 3 of the Corporate Income Tax Act must be compiled before 1 January 2010. Sentence 1 is not applicable (a) if the taxpayer sells or relinquishes the business and the sale profits are taxable subject to Section 34, (b) insofar as the taxpayer makes use of the provisions of Sections 6b and 6c, (c) (d) insofar as the application of a lower going-concern value has resulted to the fullest extent in a reduction in profits and insofar as this reduction in profits has not been equalised by the application of a value arising from Section 6, para. 1, no. 1, sentence 4, if, in the case of sentence 1, letter a, the book value including the sales costs exceed the sales proceeds or in the case of sentence 1, letter b, the book value exceeds the going-concern value of individual assets. If the taxpayer determines the profit pursuant to Section 4 para. 3, the book value is replaced by the historical acquisition or manufacturing costs, reduced by the depreciations made for wear and tear or depletion of assets, 22

(e) (f) insofar as deductions from the historical acquisition or manufacturing costs of assets within the meaning of sentence 1 pursuant to Section 6b or similar deductions have been made with full fiscal effect by the taxpayer, if a transfer is made in connection with legal processes that are subject to the Mergers and Reorganisation Tax Act (Umwandlungssteuergesetz UmwStG) and if the transfer is below the fair market value. The tax exemption lapses with retroactive effect if (a) (b) (c) (d) (e) the REIT Stock Corporation sells the landed property and the building within a period of four years from conclusion of the agreement within the meaning of sentence 1, letter a, or within a period of four years from the closing balance sheet date within the meaning of sentence 1, letter b, the Pre-REIT or another pre-reit as its successor is not registered as a REIT Stock Corporation in the Commercial Register within a period of four years from the conclusion of the agreement within the meaning of sentence 1, letter a, the REIT Stock Corporation does not fulfil the requirements for tax exemption in any assessment period within a four-year period from conclusion of the agreement within the meaning of sentence 1, letter a, or from the closing balance sheet date within the meaning of sentence 1, letter b, the tax exemption of the REIT Stock Corporation ends within a period of four years from the conclusion of the agreement within the meaning of sentence 1, letter a, or from the closing balance sheet date within the meaning of sentence 1, letter b, the Federal Central Office for Taxation (Bundeszentralamt für Steuern) has revoked the status of the purchaser within the meaning of sentence 1, letter a, as a pre-reit within the meaning of Section 2, sentence 4 of the REIT Act of [ ] (Federal Law Gazette I, p. [insert date of issue and page number of the promulgation of the present principal act under Article 1]). The tax exemption shall also lapse with retroactive effect if the assets within the meaning of sentence 1, letter a are leased or rented by the purchaser to the seller or a party associated with it within the meaning of Section 1, para. 2 of the Act on External Taxation (Außensteuergesetz AStG) and if the seller or a party associated with it within the meaning of Section 1, para. 2 of the Act on External Taxation holds, after the expiry of a period of two years since the registration of the purchaser as a REIT Stock Corporation in the Commercial Register, a direct or indirect participation of more than 50% in this REIT Stock Corporation. The real estate acquirer is liable for the taxes arising out of the retroactive lapse of the tax exemption. 23

2 The following para. 3 shall be added to Section 3c: (3) Business asset reductions, operating expenses or sales costs that are economically connected with the business asset increases or income within the meaning of Section 3 no. 70 may, irrespective of the assessment period in which the business asset increases or incomes accrue, only be deducted by half. Article 3 Amendment of the Foreign Tax Act The Foreign Tax Act in the version of the announcement of 8 September 1972 (Federal Gazette I p. 1713), last amended by Article of the Act of (Federal Gazette I p. ) is amended as follows: 1 After Section 7 para. 7 the following paragraph 8 shall be added: (8) If taxpayers subject to unlimited taxation participate in a foreign corporation and if the latter participates in a corporation within the meaning of Section 16 of the REIT Act (REIT-Gesetz) of [ ] (Federal Gazette I, p. [insert: execution date and page number of the promulgation of the original act [Stammgesetz] before 11 under Article 1]) in the relevant applicable version, paragraph 1 shall apply notwithstanding the scope of the respective participation in the foreign corporation, unless significant and frequent trade in the main type of shares in the foreign corporation takes place on a recognised stock exchange. 2 Section 8 para. 1 no. 9 shall be worded as follows: 9. the sale of a share in another corporation as well as from its dissolution or the reduction of its capital, to the extent the taxpayer proves that the sales profit is accountable to economic goods of the other corporation which are for the purpose of activities other than those in number 6 letter b, insofar as this concerns income of a corporation within the meaning of Section 16 of the REIT Act, or activities named in Section 7 para. 6a; this applies analogously to the extent the profit is accountable to the economic goods of a corporation in which the other corporation participates; losses from the sale of shares in the other corporation as well as from its dissolution or the reduction of its capital shall only be taken into consideration to the extent the taxpayer proves that they are accountable to economic goods which are for the purpose of activities within the meaning of number 6 letter b or, to the extent this concerns income of a corporation within the meaning of Section 16 of the REIT Act, within the meaning of Section 7 para. 6a. 3 Section 14 para. 2 is worded as follows: (2) If a foreign corporation pursuant to Section 7 participates in a corporation within the meaning of Section 16 of the REIT Act (sub-corporation), paragraph 1 shall apply analogously, also with respect to Section 8 para. 3. 24

4 Section 21 shall be amended as follows: After paragraph 12 the following paragraph 13 shall be added: (13) Section 7 para. 8, Section 8 para. 1 no. 9 and Section 14 para. 2 in the version of Article 5 of the Act of [ ] (Federal Gazette I p. [insert: execution date and page number of the promulgation of the present act]) shall first be applicable to 1. income and corporate income tax for the assessment period, and 2. trade tax for the tax collection period, to which inclusion income shall be added that accrues in a business year of the intermediate corporation or of the permanent establishment, beginning after 31 December 2006. Article 4 Amendment of the Fiscal Administration Act Section 5, para. 1 of the Fiscal Administration Act (Finanzverwaltungsgesetz) in the version of the notification of 4 April 2006 (Federal Gazette I, p. 846, 1202), most recently amended by Article of the Act of (Federal Gazette I, p. ), shall be amended as follows: After number 30, the full stop shall be replaced by a semi-colon and the following number 31 inserted: 31. the registration of a Pre-REIT pursuant to Section 2 of the REIT Act. Article 5 Amendment of the Investment Tax Act The Investment Tax Act of 15 December 2003 (Federal Gazette I p. 2672, 2724), last amended by Article of the Act of (Federal Gazette I p. ), is amended as follows: 1 Section 2 shall be amended as follows: (a) (b) In paragraph 2, the phrase Section 3, no. 40 of the Income Tax Act and Section 8b as well as Section 37, para. 3 of the Corporation Tax Act shall be replaced by Section 3, no. 40 of the Income Tax Act, Sections 8b and 37, para. 3 of the Corporation Tax Act and Section 19 of the REIT Act of (Federal Gazette I, p. [insert: execution date and page number of the promulgation of the original act [Stammgesetz] under Article 1]). In paragraph 3, no. 1, sentence 1, the phrase Section 3, no. 40 of the Income Tax Act and Section 8b as well as Section 37, para. 3 of the Corporation Tax Act shall be replaced by Section 3, no. 40 of the Income Tax Act, Section 8b, para. 3 of the Corporation Tax Act and Section 19 of the REIT Act. 25

2 Section 8 shall be amended as follows: (a) In paragraph 1, sentence 1, a comma and the wording but also Section 19 of the REIT Act shall be added after the phrase Section 4 para. 1. (b) The following sentence shall be added to paragraph 2: Sentences 1 and 2 shall not apply to participations of the pool of investment assets in domestic REIT Stock Corporations or other REIT Corporations, associations of individuals or conglomerations of assets within the meaning of the REIT Act. 3 In Section 18 the following paragraph shall be added: (4) Section 2 in the version of the Act of. (Federal Gazette I p. ) shall be first applicable to dividends and sales proceeds which accrue or are deemed to have accrued to the pool of investment assets after 31 December 2006. Section 8 in the version of the Act of. (Federal Gazette I p..) shall be first applicable upon the return or sale or evaluation of an investment share, after 31 December 2006. For assessment days after 31 December 2006, the investment corporation must take into consideration the new wording of Section 8 in the determination of the percentage rate pursuant to Section 5 para. 2. Article 6 Revision of Amended Acts and Regulations The wording of the Acts and Regulations amended by Articles 1 to 6 in the version applicable from the date of entry into force of the legal provisions may be announced in the Federal Gazette by the Federal Ministry of Finance. This Act shall enter into force on 1 January 2007. Article 7 Entry into Force 26

German REIT-Team For Real Estate Investments in Germany we have formed a dedicated team: capital market, corporate and tax lawyers with extensive experience in the structuring and handling of complex capital market transactions, in particular IPOs; real estate lawyers with expertise on large-scale portfolio acquisitions and tax-optimised financing; investment management experts with extensive funds know-how. We have been actively participating in the current German REIT debate and we are working closely with our clients to discuss opportunities for conversion and for the creation of new vehicles in Germany. We have developed solutions for various models and structural questions that will arise. For more information please contact: Dr. Florian Schultz Michael Steinbrecher Tel.: +49 69 71 00 3 352 Tel.: +49 69 71 00 3 382 E-Mail: florian.schultz@linklaters.com E-Mail: michael.steinbrecher@linklaters.com Dr. Herbert Harrer Christoph Vaupel Tel.: +49 69 71 00 3 375 Tel.: +49 69 71 00 3 454 E-Mail l: herbert.harrer@linklaters.com E-Mail: christoph.vaupel@linklaters.com Alexander Vogt Dr. Harald Gesell Tel.: +49 69 71 00 3 414 Tel.: +49 221 2091 403 E-Mail: alexander.vogt@linklaters.com E-Mail: harald.gesell@linklaters.com Hanns-William Mülsch Dr. Wolfram Pätzold Tel.: +49 69 71 00 3 592 Tel.: +49 69 71 00 3 172 E-Mail: hanns-william.muelsch@linklaters.com E-Mail: wolfram.paetzold@linklaters.com Roland Fabian Jens Bock Tel.: +49 69 71 00 3 356 Tel.: +49 30 21496 116 E-Mail: roland.fabian@linklaters.com E-Mail: jens.bock@linklaters.com 27