DHI - Deutsche Hauptstadt Immobilien GmbH is a Berlin-based Asset & Portfolio Manager specialized in residential real estate investments in Berlin. Recently established as a new investment platform by 3 individuals with deep knowledge and long experience in the international real estate and finance fields DHI and its international multi-lingual team is ready to assist their investors right from the very beginning.

1. 1

2. CONT
01 THE SITUATION 02 OUR OFFER
2

3. A CUSTOM-TAILORED SOLUTION TO INVESTING IN RESIDENTIAL REAL ESTATE IN BERLIN
ENTS
03 BUY-AND-HOLD STRATEGIES 04 PARTITIONING APARTMENT BLOCKS INTO
CONDOMINIUMS FOR RESALE 05 THE BERLIN RESIDENTIAL REAL ESTATE
MARKET 06 GERMAN INCOME TAXATION
3

4. 01
THE SITUATION
4

5. RESIDENTIAL
REAL ESTATE IS BACK
IN FOCUS
5

6. 01
THE SITUATION
REAL ASSETS
As a result of the financial crisis real assets are back in focus in particular diversified portfolios of residential
real estate
REAL ASSETS AS A WAY TO PRESERVE VALUE
• First a flight from capital markets as stock and corporate credit markets tumbled
• Then a flight from cash as fears of bank failures mounted
• Resulting in a flight to the safety of real assets such as gold and real estate
STABLE RETURNS FROM RESIDENTIAL REAL ESTATE
• In times of economic crisis, residential is safer than commercial real estate – provided it is a quality object in the right location bought at the right price
OPTIMISATION THROUGH DIVERSIFICATION
• An intelligently diversified portfolio of carefully chosen residential real estate assets spreads the risk and is thus safer than larger single assets
6

7. PERFORMANCE
Real assets have consistently outperformed other asset classes in times of crisis
YEAR CRISIS REAL ASSETS GLOBAL STOCKS US GOVERNMENT
BONDS
1987 STOCKMARKET CRASH 5.10% -15.5% +8.6%
1990 GULF WAR I 5.70% -11.3% +0.7%
1997 ASIAN CRISIS 6.02% -11.3% +4.6%
1998 RUSSIA AND LTCM CRISIS 5.97% -2.4% +5.1%
2001 SEPT 11TH 6.20% -14.2% +4.9%
2003 GULF WAR II 6.80% -3.7% +4.2%
Source: Infinanz Research 08/2002, Prof. Dr. Busse Infinanz GmbH in: Beteiligungsreport 04/2008
7

8. RISK VS. RETURN
Retail and office real estate moves with the economic cycle - residential real estate offers stable returns
at comparatively low risk
GOAL SPECIAL SITUATIONS REAL ESTATE
RETURN
COMMERCIAL REAL ESTATE
RESIDENTIAL REAL ESTATE GOAL
THE SITUATION
RISK
8

9. DIVERSIFICATION
Intelligently assembling a large portfolio of residential real estate assets diminishes the risk of single acquisitions
RISK
NO. OF OBJECTS
9

10. PROTECTION
Residential real estate offers good protection against inflation as demand is inelastic
Institut der deutschen Wirtschaft Köln: “…all in all, direct investments offer better protection from inflation than stocks. In particular
residential real estate offers good protection, followed by retail and office. The reason is that demand for living space is independent
of inflationary forces.”
160
% RETURN
RETAIL
140 RESIDENTIAL
OFFICE
120 INFLATION
100
1998 2000 2002 2004 2006 2008
YEAR
Source: Deutsche Bundesbank, Investment Property Databank, Institut der deutschen Wirtschaft Köln
10

11. IN SUMMARY
• REAL ASSETS ARE BACK, IN PARTICULAR DIVERSIFIED PORTFOLIOS OF RESIDENTIAL REAL ESTATE
• IN TIMES OF CRISIS, REAL ASSETS HAVE CONSISTENTLY OUTPERFORMED OTHER ASSET CLASSES
• RESIDENTIAL REAL ESTATE OFFERS STABLE RETURNS AT COMPARATIVELY LOW RISK & GOOD PROTECTION AGAINST INFLATION
• INTELLIGENTLY ASSEMBLING A PORTFOLIO OF RESIDENTIAL REAL ESTATE ASSETS DIMINISHES THE RISK OF SINGLE ACQUISITIONS
11

12. 02
OUR OFFER
12

13. AN INDIVIDUAL
PORTFOLIO
& A CUSTOMIZED
STRATEGY
13

14. 02
OUR OFFER
WHY BERLIN?
Berlin is a highly attractive location to invest in real estate
RANKED IN TOP 10 OF EUROPEAN CITIES TO INVEST IN EMERGING TRENDS IN REAL ESTATE 2009 SURVEY
GROWING ATTRACTIVENESS OF THE CITY SINCE GERMAN REUNIFICATION RESULTING IN RISING POPULATION AND WEALTH
• Structural change from manufacturing to diversified modern service economy
• Seat of Government (since 1999) attracting wide array of businesses and institutions
• Large and diversified cultural offering attracting both tourists and new residents
HIGHLY ATTRACTIVE FUNDAMENTALS FOR RESIDENTAL PROPERTY
• High rental yields in international comparison
• Comparatively low but rising rents
• Comparatively low per-square-meter prices
• Very low latent vacancy combined with growing population
BERLIN IS LESS AFFECTED BY THE CRISIS THAN OTHER CITIES
• Good mix of growing service industries with relatively low export orientation
• Did not participate in the bubble so little downside
14

15. WHY DHI ?
DHI provides investors a ‘no-worries’ custom-made vehicle to realise their investment strategy
• DHI IS INVESTING IN RENTED RESIDENTIAL BUILDINGS IN BERLIN
• BERLIN MARKET IS OFFERING ATTRACTIVE RISK-ADJUSTED RETURNS
• EACH INVESTOR’S PORTFOLIO TAILORED TO THEIR SPECIFIC INVESTMENT STRATEGY
• DHI PROVIDES FULL SERVICE COVERING THE WHOLE LIFE CYCLE OF THE PORTFOLIO
» Detailed analysis of the property market in each micro location by Engel&Völkers Commercial Research and other sources
» Prospection of target properties
» Due diligence
» Asset management as well as property management
» Eventual disposal
15

16. STRATEGIES
DHI offers tailor-made investment strategies ranging from buy-and-hold to condo conversion
BUY-AND-HOLD
• Buy for current income
• Buy for capital appreciation
• Opportunistic buy
• Buy for modernisation / development
CONDO CONVERSION
• Buy apartment building
• Refurbish if needed
• Split into individual condominiums
• Sell individual units
16

17. IN SUMMARY
• BERLIN RANKED IN TOP 10 EUROPEAN CITIES TO INVEST IN REAL ESTATE 2009 SURVEY
• DHI IS INVESTING IN RENTED RESIDENTIAL BUILDINGS IN BERLIN
• DHI PROVIDES INVESTORS A ‘NO-WORRIES’ CUSTOM-MADE VEHICLE TO REALISE THEIR INVESTMENT STRATEGY
• DHI FOCUSES ON BUY-AND-HOLD & CONDO CONVERSION STRATEGIES
17

18. 03
BUY-AND-HOLD STRATEGIES
18

19. WE COVER
THE FULL SCOPE
OF SERVICES
19

20. 03
BUY-AND-HOLD STRATEGIES
PROPERTY PORTFOLIO
DHI will assemble a diversified Berlin residential property portfolio for each investor which will display some or all of the following
characteristics, their degree depending on the chosen overall strategy outlined before
• GENERALLY LOCATED IN GOOD AND UPCOMING NEIGHBOURHOODS
• BUILDINGS IN GOOD STRUCTURAL CONDITION
• MOSTLY TO FULLY RENTED WITH MID-RANGE RENTALS, OFFERING UPSIDE POTENTIAL THROUGH TENANT MANAGEMENT AND RENT INCREASES
• OFFERING ATTRACTIVE INITIAL YIELDS WITH STRONG OPERATING CASH-FLOW HISTORIES
• INCORPORATING RETAIL AND/OR COMMERCIAL SPACE (OF LESS THAN 20% OF INCOME) IN ADDITION TO THE RESIDENTIAL SPACE
20

21. CUSTOMIZED STRATEGY
DHI covers the full scope of services, offering the convenience of a fund combined with the customized strategy of an individual portfolio
ACQUISITION PHASE OWNERSHIP & DISPOSAL PHASE
CONCEPTION PROSPECTION ANALYSIS DUE DILIGENCE OWNERSHIP DISPOSAL
PORTFOLIO INDIVIDUALLY DHI THEN IDENTIFIES INVESTMENT THE REAL-TIME MARKET KNOWLEDGE ONCE THE ACQUISITION OBJECTS DURING THE OWNERSHIP PHASE, DURING THE DISPOSAL PHASE,
STRUCTURED BASED ON THE OPPORTUNITIES, USING ENGEL&VÖLKERS THAT E&V AND BATO GROUP GAIN IN ARE IDENTIFIED, DHI MANAGES THE SERVICES COMPRISE TENANT DHI IS AGAIN COVERING ALL ASPECTS,
INVESTOR’S DESIRED COMMERCIAL'S EXTENSIVE NETWORK BUYING, SELLING, FINANCING AND ALL (TECHNICAL, LEGAL ETC.) MANAGEMENT AND RENT OPTIMISATION, ENSURING VALUE OPTIMISATION
RISK/RETURN PROFILE, AS WELL AS OTHER SOURCES, VALUING PROPERTIES IN THE BERLIN ASPECTS OF THE DUE-DILIGENCE REFURBISHMENT AND MODERNISATION FOR THE INVESTOR ACCORDING TO
TIME HORIZON AND OTHER EVALUATING BOTH FINANCIAL AS MARKET IS GATHERED, ANALYZED, PROCESS IN CONCERT WITH INCLUDING FINANCIAL AND TECHNICAL THEIR INVESTMENT STRATEGY
INDIVIDUAL CHARACTERISTICS WELL AS PHYSICAL BUILDING CONDITIONS AND APPLIED FOR THE BENEFIT OF ESTABLISHED AND WELL-KNOWN PROJECT MANAGEMENT AS WELL AS
AS PART OF THE SELECTION PROCESS OUR INVESTORS STRATEGIC PARTNERS CONTROLLING AND INVESTOR REPORTING
DURING THE INVESTMENT PHASE,
OUR INVESTORS BENEFIT FROM THE
MARKET INSIGHT THAT RESULTS FROM
THE FULL RANGE OF ENGEL&VÖLKERS
COMMERCIAL'S AND BATO
GROUP‘S ACTIVITIES
21

22. SUMMARY
Summary of terms buy-and-hold strategies
STRATEGY CORE CORE PLUS OPPORTUNITY INCOME ORIENTATED
PURCHASE PRICE PER M *1,500-2.000 *900-1,000 *650-850 *500
7.9% - 6.7% / 12.7 -
INITIAL YIELD /FACTOR *5.7% - 4.5% / 17.5 - 22 6.9% - 6.8% / 14.5 - 14.75 x 9.6%/10.4 x
14.75 x
LEVERAGE RATIO 45% / 40% 60% / 55% 70% / 65% 75%
ACQUISITION PHASE 1 YEAR 1 YEAR 1 YEAR 1 YEAR
RENT INCREASE TARGET
3.7% / 4.0% 3.7% / 3.8% 3.7% / 3.8% 3.2%
(COMMERCIAL/RESIDENTIAL)
REFURBISHMENT BUDGET *10K / FLAT FOR 20% *10K / FLAT FOR 50% *10K / FLAT FOR 50% -
KREUZBERG, NEUKÖLLN,
KÜFURSTENDAMM, PRENZLAUER BERG, NEUKÖLLN, WEDDING, WEDDING, MOABIT,
EXAMPLE AREAS
MITTE PRENZLAUER BERG FRIEDRICHSHAIN, MOABIT, TIERGARTEN REINICKENDORF,
CHARLOTTENBURG HOHENSCHÖNHAUSEN
22

23. TARGET RETURN
Target return and expected performance for each strategy
CORE CORE PLUS OPPORTUNITY INCOME ORIENTATED
IRR ON EQUITY 9.5%-11% 13.5% 14.19% 21%
CASH-ON-CASH
2%-3.5% Ca. 4% 3.5-5.75% 8.25%
(BEFORE SALES)
ROE (BEFORE SALES) 12-22% Ca. 25% 21%-38%% 64%
DISTRIBUTION MINIMUM & 1.75%-3.0%, 2.5%, 2.5%-5.0%, 8.0%,
TIME FRAME DISTRIB. AFTER 2ND YEAR DISTRIB. AFTER 2ND YEAR DISTRIB. AFTER 2ND YEAR DISTRIB. AFTER 2ND YEAR
23

24. RISK FACTORS
Risk factors of the presented buy-and-hold strategies
CORE CORE PLUS OPPORTUNITY INCOME ORIENTATED
ADVERSE DEVELOPMENT
OF THE AREA
LOW LOW-MEDIUM MEDIUM MEDIUM-HIGH
CAPITAL GAIN MEDIUM MEDIUM HIGH LOW-MEDIUM
TENANT RISK LOW LOW-MEDIUM MEDIUM-HIGH MEDIUM-HIGH
24

25. IN SUMMARY
• DHI WILL ASSEMBLE A DIVERSIFIED & STRUCTURED BERLIN RESIDENTIAL PROPERTY PORTFOLIO TO SUIT INVESTORS’ NEEDS
• GENERALLY LOCATED IN GOOD AND UPCOMING NEIGHBOURHOODS, BUILDINGS ARE IN GOOD STRUCTURAL CONDITION
• DHI COVERS THE FULL SCOPE OF SERVICES WORKING WITH EACH INVESTOR THROUGH THE ACQUISTION TO DISPOSAL PHASE
• TARGET RETURNS ARE HIGH, RISK FACTORS ARE LOW
25

26. 04
PARTITIONING APARTMENT BLOCKS
INTO CONDOMINIUMS FOR RESALE
26

27. WE OFFER A CARE-FREE
PACKAGE COVERING
ALL ASPECTS
27

28. 04
PARTITIONING APARTMENT BLOCKS
INTO CONDOMINIUMS FOR RESALE
AUFTEILUNG
Another strategy is buying properties for immediate partitioning into condominiums and selling them to
investors or owner-occupiers
• BERLIN HAS A VERY LOW HOME-OWNERSHIP RATE OF ABOUT 13%
• DEMAND FOR CONDOMINIUMS („EIGENTUMSWOHNUNGEN“) IS RISING
» Small investors seeking safety of real assets in manageable volume
» As rents are rising and capital costs are low, buying becomes more attractive for tenants
• PER-SQUARE-METER PRICES OF CONDOS ARE SIGNIFICANTLY ABOVE THOSE OF APARTMENT BUILDINGS
EVEN AFTER ASSOCIATED COSTS, OFFERERING ATTRACTIVE PROFIT POTENTIAL
• TIME HORIZON FOR INVESTMENT IS SHORTER THAN THE BUY-AND-HOLD STRATEGY AT ABOUT 2-5 YEARS,
DEPENDING ON VOLUME
28

29. DHI PACKAGE
DHI is again offering a care-free package, covering all aspects of the process
DETAILED ANALYSIS AND VALUATION OF THE OBJECT
• Location, analysis of vicinity, assessment of marketability
• Condition of the building
• Opportunities to add value (e.g. building extension, roof conversion)
• Analysis of tenant structure
DEVELOPMENT OF THE MARKETING CONCEPT
• Total modernisation and redevelopment, e.g. with branding of the object
• Partial modernisation (e.g. only renovation of flats, not common space)
• Partitioning without extensive renovation
PROVISION OF DEBT FINANCING
• Introduction to banks offering debt financing
• Negociation of terms
• Presentation of detailed project planning
TENANT MANAGEMENT
• Negociation with current tenants to vacate flats
• Provision of temporary accomodation during renovation work for tenants turned owners
• Provision of alternative accomodation for tenants willing to move out
• Management of rent increases
29

30. DHI PACKAGE
DHI is again offering a care-free package, covering all aspects of the process
OPTIMISATION OF FLOORPLAN DESIGN (PARTITIONING, OPTIMISATION, MERGING FLATS)
FLAT-BY-FLAT ANALYSIS OF ANTICIPATED RE-SALE PRICES BASED ON FLAT CHARACTERISTICS (FLOOR, LOCATION, LIGHTING, CONDITION,
FURNISHINGS ETC.)
OBTAINING CERTIFICATE OF SELF-CONTAINED CONDITION („ABGESCHLOSSENHEITSBESCHEINIGUNG“)
PREPARATION OF DECLARATION OF PARTITION („TEILUNGSERKLÄRUNG“), DRAFT OF SALES CONTRACT AND CONSTRUCTION SPEC LIST
PREPARATION OF (FUTURE) FLAT OWNERS ASSOCIATION RULES (CREATION OF RESERVE FUND ETC.)
CALCULATION / PLANNING OF NECESSARY CONSTRUCTION WORK AND REQUEST FOR QUOTATIONS
AWARD OF CONTRACT
SUPERVISION OF CONSTRUCTION/RENOVATION WORK
MANAGEMENT OF SALE PROCESS
30

31. SUMMARY
Summary of terms condo conversion strategy
PURCHASE PRICE PER M2 *1,100
INITAL YIELD / FACTOR 6.5% / 15.4x
LEVERAGE RATIO 65 / 35
ACQUISITION PHASE 1 YEAR
SALES PERIOD 3-5 YEARS
REFURBISHMENT COST *10K / UNIT FOR 70% (RESIDENTIAL) & 50% (COMMERCIAL)
COST FOR BUYING OUT TENANTS *6,000 / UNIT FOR 70%
CONDO SALES PRICE PER M 2
*2,200
31

32. RISK FACTORS
Risk factors condo conversion strategy
• THE MAIN RISK IS PURCHASING PROPERTIES THAT HAVE CHARACTERISTICS HINDERING A SALE OF THE CONDOS AT
THE PROJECTED PRICES
» Wrong orientation of the property (lack of light)
» Wrong micro-location, e.g. too noisy
» Lack of elevator
» Lack of outside space / balcony
• WE INTEND TO COUNTER THIS RISK BY CAREFULLY SELECTING PROPERTIES THAT FULFIL THE NECESSARY CRITERIA
• IN ADDITION, PROBLEMATIC UNITS CAN BE SOLD TO INVESTORS (AS OPPOSED TO OWNER-OCCUPIERS) AS RENTING
TENDS TO BE LESS PROBLEMATIC
32

33. TARGET RETURN
Target return and expected performance for condo conversion strategy
CASH-ON-CASH 40%
ROE (BEFORE SALES) 80%
DISTRIBUTION MINIMUM & TIME FRAME 10% DISTRIB. 3RD YEAR
33

34. THE TEAM
The DHI Team, Expertise and Track Record
ANDREA BARBATO
• Founder and MD of BATO Group Real Estate Investments (total investment volume in Berlin 45mio euros, acquiring, financing,
managing of the assets)
• Previous assignments with Enstar Capital and Garbe Real Estate in London
RACKHAM F. SCHRÖDER
• Managing Director of Engel & Völkers Commercial Berlin (largest broker of residential buildings in Berlin), has accompanied about
2.5bn euros in residential and commercial real estate deals
MATTHIAS DUX
• 10 years banking experience with Deutsche Bank in London and Tokyo
• Previous assignments in Private Equity with Paribas bank in Paris and management consulting with Booz Allen & Hamilton in Chicago
• Insead MBA
34

35. IN SUMMARY
• CHOICE OF STRATEGY FROM MENU OF BUY-AND-HOLD OR CONDOMINIUM STRATEGIES
• FULL-SERVICE PACKAGE DURING ALL PHASES OF THE PORTFOLIO LIFE CYCLE
• COMBINATION OF BENEFITS OF CUSTOMISED STRATEGY WITH SCALE AND EXPERIENCE OF LARGER ORGANISATION
• EXPERIENCED TEAM WITH PROVEN TRACK RECORD
35

36. 05
THE BERLIN RESIDENTIAL
REAL ESTATE MARKET
36

37. BERLIN IS GROWING
DESPITE THE OVERALL
ECONOMIC SITUATION
37

38. 05
THE BERLIN RESIDENTIAL
REAL ESTATE MARKET
BERLIN AT A GLANCE
• CAPITAL OF GERMANY AND SINCE 1999 SEAT OF GOVERNMENT
• 3.4 MILLION INHABITANTS
• 128,000 RESIDENTIAL AND COMMERCIAL BUILDINGS
» Vacancy rate 2006: 5.1%
» Vacancy rate 2007: 4.6 %
• 1,882,000 RESIDENTIAL UNITS
• 18 MILLION SQUARE METRES OFFICE SPACE
• 4.3 MILLION SQUARE METRES RETAIL SPACE
38

39. ATTRACTIONS
Furthermore, Berlin provides a wide scientific and cultural offer
• 7 UNIVERSITIES
• 20 PUBLIC AND PRIVATE COLLEGES
• 80 RESEARCH INSTITUTIONS (E.G., MAX-PLANCK AND FRAUNHOFER INSTITUTES)
• LEADING EUROPEAN TRADE FAIR AND CONVENTION LOCATION
• 3 OPERA HOUSES
• 326 THEATRES AND CINEMAS
• 175 MUSEUMS AND 400 ART GALLERIES
• MORE THAN 3,400 RESTAURANTS
• MORE THAN 120 CLUBS
• HERTHA BSC FOOTBALL, ALBA BERLIN BASKETBALL, EISBÄREN ICE HOCKEY, BERLIN MARATHON
39

40. RADICAL CHANGE
Berlin has experienced a radical structural change from a production location to a well-diversified service
location since German reunification
1991 2008
TOTAL 57,428 MILLION EUROS TOTAL 75,523 MILLION EUROS
6% 7%
15%
7%
21% MANUFACTURING SECTOR
9%
5% CONSTRUCTION INDUSTRY
3%
TRADE, HOSPITALITY AND
7%
TRANSPORT
10%
6%
FINANCE, LETTING AND CORPORATE
SERVICE PROVIDERS
16%
PUBLIC ADMINISTRATION
9%
17% EDUCATIONAL SECTOR
28% HEALTH CARE
PUBLIC AND PRIVATE SERVICE
PROVIDERS
34%
Source: Office for Statistics Berlin Brandenburg, March 2009
40

41. NEW JOBS
New jobs are created in various innovative and growing sectors in Berlin
2%
13% HEALTHCARE
TOURISM
30%
MEDIA, INFORMATION AND COMMUNICATION
TRAFFIC ENGINEERING AND MOBILITY
CULTURE
22% ENVIRONMENTAL TECHNOLOGY
11% 22%
Source: Engel & Völkers Research & Consulting 2008
41

42. GROWTH POTENTIAL
Berlin has enormous potential for growth
Purchasing power per capita in euros (2009) - Berlin has enormous potential for growth
26,000
24,000
EUROS
22,000
20,000
18,000
16,000
MUNICH DUSSELDORF STUTTGART FRANKFURT MAIN COLOGNE HAMBURG HANOVER BERLIN
CITY
Source: Engel & Völkers Research according to MB Research 2009
42

43. PEAK RENTS
Peak rents for office space in international comparison
1400
1200 Q3 2007
1000
Q3 2008
EUROS
800
600
400
200
0
LONDON PARIS MADRID BERLIN FRANKFURT HAMBURG DUSSELDORF MUNICH
CITY
43

44. OFFICE MARKETS
Office markets in national comparison
18,000
HOUSING STOCK LET IN 1,000 M2
16,000
14,000
VACANCY RATE IN 1,000 M2
1,000 M2
12,000
10,000
8000
6000
4000
2000
0
BERLIN DUSSELDORF FRANKFURT HAMBURG COLOGNE MUNICH (CITY) STUTTGART
CITY
44

45. BERLIN VACANCY
Berlin has practically no latent vacancy
100%
ACTIVE SUPPLY SURPLUS
90%
STRUCTURAL VACANCY
80%
LATENT VACANCY
70%
FLUCTUATION RESERVE
1,000 M2
60%
50% ACTIVE SUPPLY SURPLUS
40% STRUCTURAL VACANCY
30% LATENT VACANCY
20% FLUCTUATION RESERVE
10%
0%
BERLIN DUSSELDORF FRANKFURT HAMBURG KOH MUNICH STUTTGART
CITY
45

46. GROWTH POTENTIAL
Berlin rents are increasing – but there is still potential for further increases compared to other German cities
12 MUNICH
STUTTGART
10 FRANKFURT
DUSSELDORF
EUROS
8 HAMBURG
KOLN
BERLIN-WEST
6 BELIN-EAST
4
2
0
1990 1994 1998 2002 2006 2010
YEAR
46

47. PROPERTY YIELDS
German property yields are among the highest in Europe
9 GERMANY
FRANCE
8 ITALY
YIELD %
ENGLAND
7 SPAIN
6
5
4
3
1992 1994 1996 1998 2000 2002 2004 2006 2008
YEAR
Source: Engel & Völkers Research according to Feri Research 2009
47

48. HOMEOWNERSHIP
Low homeownership rate in Berlin offers high potential for partitioning apartment block buildings into
individual flats
100
HOMEOWNERSHIP RATE %
90
80
70
60
50
40
30
20
HOMEOWNERSHIP RATE
OF 13% IN BERLIN
10
0
SPAIN
NORWAY
IRELAND
PORTUGAL
POLAND
ITALY
GREAT BRITAIN
BELGIUM
SWEDEN
FINLAND
FRANCE
AUSTRIA
THE NETHERLANDS
DENMARK
CZECH REPUBLIC
GERMANY
SWISS
Source: Engel & Völkers Research according to Feri Research 2009
48

49. PRICES
Favourable purchase price level for apartment block buildings
3,000
EUROS PER M2
2,500
2,000
1,500
1,000
500
0
BERLIN DUSSELDORF FRANKFURT AM MAIN HAMBURG COLOGNE MUNICH STUTTGART
CITY
Source: Engel & Völkers Research according to empirica rental and purchase price ranking in the 3rd quarter of 2008
49

50. MIGRATION
Promising economic sectors and an attractive cultural offer have led to a positive balance of migration in
Berlin in recent years
14,000
12,000
MIGRATION
10,000
8,000
6,000
4,000
2,000
0
2003 2004 2005 2006 2007
YEAR
Source: E&V Research according to GENESIS Online, Office for Statistics Berlin Brandenburg, 2009
50

51. HOUSEHOLDS
Berlin – increasing number of households predicted due to singularization and new residents
moving to Berlin
2,100
HOUSEHOLDS (1,000’S)
2,050
2,000
1,950
1,900
1,850
1,800
2006 2010 2015
YEAR
Source: E&V Research according to GENESIS Online, Office for Statistics Berlin Brandenburg, 2009
51

52. DEMAND
Demand for living space per capita is increasing
50
HOUSEHOLDS
GERMANY WEST
GERMANY EAST
45 GERMANY
40
35
30
25
20
2000 2010 2020 2030 2040 2050
YEAR
52

53. POOR OFFERING
The increasing demand for living space meets a stagnating offer
COMPLETED APARTMENTS
35,000
30,000
25,000
20,000
15,000
10,000
5,000
0
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
YEAR
Source: E&V Research according to State Office for Statistics Berlin Brandenburg 2009
53

54. 54

55. Reasons for Berlin:
• GERMANY’S INFRASTRUCTURE IS EXCELLENT
• BERLIN IS SITUATED IN A UNIQUE GEOSTRATEGIC LOCATION IN THE EU
• BERLIN IS GROWING BECAUSE IT IS ATTRACTIVE
• INDUSTRIES OF THE FUTURE ARE GROWING DESPITE DIFFICULT OVERALL ECONOMIC SITUATION
• NUMBER OF HOUSEHOLDS AND DEMAND FOR LIVING SPACE WILL EXCEED THE OFFER IN THE MEDIUM TERM
• RENTS AND PURCHASE PRICES ARE STILL LOW; THEY WILL, HOWEVER, INCREASE
• HOMEOWNERSHIP RATE OF MERELY 13%
55

56. 06
GERMAN INCOME TAXATION
56

57. WE OFFER
TAILOR-MADE
INVESTMENT
STRATEGIES
57

58. 06
GERMAN INCOME TAXATION
TAX FACTS
Special Real Estate Based Tax Non-recurring Tax
REAL ESTATE TRANSFER TAX
• Triggered primarily by conclusion of a sales contract
• Tax Basis: purchase price
• Tax Rate: 3.5 % (except Berlin: 4.5 %)
Special Real Estate Based Tax Current Tax
LAND TAX
• Levied on any German real estate held for private or business purposes
• Tax Basis: special value assessed (only) for tax purposes
• Tax Rate: municipal rate fixed by the municipality amount depends on type and age of the
building (as part of the service charge regularly borne by the tenants)
58

59. GERMAN INCOME TAX
Calculation of Income
• FINANCIAL ACCOUNTING OR CASH BASED ACCOUNTING DEPENDING ON LEGAL STRUCTURE AND STRATEGY
• TAX DEPRECIATION
• 2.0 – 3.0 % p.a. on buildings
• no depreciation on land
• DEDUCTIBLE EXPENSES
• Finance Costs
» fully deductible in case of private investment
» in case of business investment (with trading income) fully deductible if not exceeding 1 mill. EUR p.a.
• Costs for Maintenance and Repair
» in general fully deductible if no extension or material improvement
» except for costs following closely upon the acquisition (3 years period) if the expenditure exceeds 15 % of the acquisition costs of the building
59

60. BUY-AND-HOLD
Direct Investment (no German SPV)
INCOME TAX
LEGAL FORM INDIVIDUAL PERSON LIMITED COMPANY
INCOME TAX
INCOME TAX CORPORATE INCOME TAX
(EINKOMMEN / KÖRPERSCHAFTSTEUE)
TAX LIABILITY / TAX BASIS 1) LIMITED TO GERMAN-SOURCED INCOME LIMITED TO GERMAN-SOURCED INCOME
26.25% - 44.31%
TAX RATE FOR CURRENT INCOME 15.83%
47.48% FOR INCOME EXCEEDING TEUR 250
ASSET DEAL:
STANDARD TAX RATE (SEE ABOVE)
STANDARD TAX RATE (SEE ABOVE) NO TAX EXEMPTION AVAILABLE
TAX RATE FOR GAIN REALISED BY SALE
TAX EXEMPTION IF HOLDING PERIOD > 10YRS
SHARE DEAL: 2)
NOT SUBJECT TO GERMAN INCOME TAX
TRADE TAX
LEGAL FORM INDIVIDUAL PERSON LIMITED COMPANY
TRADE TAX ONLY IN CASE OF PERMANENT
NOT APPLICABLE 3)
(GEWERBESTEUER) ESTABLISHMENT IN GERMANY
TRADING INCOME
TAX BASIS NOT APPLICABLE (INCOME PLUS SEVERAL SPECIFIC
ADDITIONS & REDUCTIONS)
MUNICIPAL RATE FIXED BY THE MUNICIPALITY
(E.G. IN BERLIN: EFFECTIVE TAX RATE APPROX.
TAX RATE NOT APPLICABLE 14.35%) ENHANCED REDUCTION OF RENTAL INCOME
AVAILABLE ON REQUEST SO THAT EFFECTIVE TRADE
TAX MAY BE REDUCED TO ZERO
1) Tax rate includes 5.5% solidarity surcharge.
2) Information for a shareholder having no German residence.
3) Provided that no commercial trade exists. A commercial trade is generally assumed if more than 3 objects are sold within a 5 year period (so-called “3-object-limit).
Special Note:
Taxation in the state of residence subject to the terms of the relevant double tax treaty.
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61. Indirect Investment (with German SPV)
INCOME TAX
LEGAL FORM GMBH LIMITED COMPANY GMBH & CO. KG LIMITED PARTNERSHIP 1)
INCOME TAX TRANSPARENT FOR GERMAN
CORPORATE INCOME TAX
(EINKOMMEN / KÖRPERSCHAFTSTEUE) INCOME TAX PURPOSES
TAX LIABILITY / TAX BASIS PRINCIPALLY TOTAL INCOME 2) PRINCIPALLY TOTAL INCOME 2)
INCOME PROPORTIONATELY ATTRIBUTED TO THE
PARTNERS ACCORDING TO THEIR RESPECTIVE
INTEREST
TAX RATE FOR CURRENT INCOME 3) 15.83%
TAX RATE FOR PARTNERS:
-INDIVIDUAL PARTNERS: 26.25% - 44.31%
(47.48% FOR INCOME > TEUR 250)
-LIMITED COMPANY PARTNERS: 15.83%
ASSET DEAL:
STANDARD TAX RATE (SEE ABOVE) STANDARD TAX RATE (SEE ABOVE) 4)
NO TAX EXEMPTION AVAILABLE
TAX RATE FOR GAIN REALISED BY SALE TAX EXEMPTION:
SHARE DEAL: 5) -FOR INDIVIDUALS IF HOLDING PERIOD >10 YRS
GENERALLY NOT SUBJECT TO GERMAN INCOME TAX, - NOT AVAILABLE FOR LIMITED COMPANIES
BUT DEPENDING ON DOUBLE TAX TREATY
TRADE TAX
LEGAL FORM GMBH LIMITED COMPANY GMBH & CO. KG LIMITED PARTNERSHIP 1)
TRADE TAX
ALWAYS SUBJECT TO TRADE TAX NOT APPLICABLE (6) (7)
(GEWERBESTEUER)
TRADING INCOME (INCOME PLUS SEVERAL SPECIFIC
TAX BASIS ADDITIONS & REDUCTIONS)
NOT APPLICABLE
MUNICIPAL RATE FIXED BY THE MUNICIPALITY
(E.G. IN BERLIN: EFFECTIVE TAX RATE APPROX. 14.35%)
TAX RATE ENHANCED REDUCTION OF RENTAL INCOME AVAILABLE NOT APPLICABLE
ON REQUEST SO THAT EFFECTIVE TRADE TAX MAY BE
REDUCED TO ZERO
1) Since, generally, the GmbH as general partner of the partnership does not have any business activity, it will not be contemplated in the following.
2) Except foreign-sourced income if applicable, the taxation of which depends on the respective double tax treaty.
3) Tax rate includes 5.5% solidarity surcharge.
4) Since the partnership is transparent for German income purposes, the gain realised by the sale of the interests in the partnership is taxed like the gain resulting from an
asset deal.
5) Information for a shareholder having no German residence.
6) Provided that no commercial trade exists. A commercial trade is generally assumed if more than 3 objects are sold within a 5 year period (so-called “3-object-limit).
7) Provided that partnership is structured as pure holding company.
Special Note:
Taxation in the state of residence subject to the terms of the relevant double tax treaty.
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62. CONDO CONVERSION
Direct Investment (no German SPV)
INCOME TAX
LEGAL FORM LIMITED COMPANY
INCOME TAX
CORPORATE INCOME TAX
(EINKOMMEN / KORPERSCHAFTSTEUE)
TAX LIABILITY / TAX BASIS 1) LIMITED TO GERMAN-SOURCED INCOME
TAX RATE FOR CURRENT INCOME 15.83%
ASSET DEAL:
STANDARD TAX RATE (SEE ABOVE)
NO TAX EXEMPTION AVAILABLE
TAX RATE FOR GAIN REALISED BY SALE
SHARE DEAL: 2)
NOT SUBJECT TO GERMAN INCOME TAX
TRADE TAX
LEGAL FORM LIMITED COMPANY
TRADE TAX ONLY IN CASE OF PERMANENT
(GEWERBESTEUER) ESTABLISHMENT IN GERMANY
TRADING INCOME
TAX BASIS (INCOME PLUS SEVERAL SPECIFIC
ADDITIONS & REDUCTIONS)
MUNICIPAL RATE FIXED BY THE MUNICIPALITY
TAX RATE (E.G. IN BERLIN: EFFECTIVE TAX RATE APPROX. 14.35%)
NO TAX EXEMPTION AVAILABLE
1) Tax rate includes 5.5% solidarity surcharge.
2) Information for a shareholder having no German residence.
Special Note:
Taxation in the state of residence subject to the terms of the relevant double tax treaty.
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63. Indirect Investment (with German SPV)
INCOME TAX
LEGAL FORM GMBH LIMITED COMPANY GMBH & CO. KG LIMITED PARTNERSHIP 1)
INCOME TAX TRANSPARENT FOR GERMAN
CORPORATE INCOME TAX
(EINKOMMEN / KÖRPERSCHAFTSTEUE) INCOME TAX PURPOSES
TAX LIABILITY / TAX BASIS PRINCIPALLY TOTAL INCOME 2) PRINCIPALLY TOTAL INCOME 2)
INCOME PROPORTIONATELY ATTRIBUTED TO THE
PARTNERS ACCORDING TO THEIR RESPECTIVE INTEREST
TAX RATE FOR CURRENT INCOME 3) 15.83% TAX RATE FOR PARTNERS:
-INDIVIDUAL PARTNERS: 26.25% - 44.31%
(47.48% FOR INCOME > TEUR 250)
-LIMITED COMPANY PARTNERS: 15.83%
ASSET DEAL:
STANDARD TAX RATE (SEE ABOVE)
NO TAX EXEMPTION AVAILABLE STANDARD TAX RATE (SEE ABOVE) 4)
TAX RATE FOR GAIN REALISED BY SALE
SHARE DEAL: 5) NO TAX EXEMPTION AVAILABLE
GENERALLY NOT SUBJECT TO GERMAN INCOME TAX,
BUT DEPENDING ON DOUBLE TAX TREATY
TRADE TAX
LEGAL FORM GMBH LIMITED COMPANY GMBH & CO. KG LIMITED PARTNERSHIP 1)
TRADE TAX
ALWAYS SUBJECT TO TRADE TAX
(GEWERBESTEUER)
TAX BASIS TRADING INCOME (INCOME PLUS SEVERAL SPECIFIC ADDITIONS & REDUCTIONS)
MUNICIPAL RATE FIXED BY THE MUNICIPALITY MUNICIPAL RATE FIXED BY THE MUNICIPALITY
TAX RATE (E.G. IN BERLIN: EFFECTIVE TAX RATE APPROX. 14.35%) (E.G. IN BERLIN: EFFECTIVE TAX RATE APPROX. 14.35%)
NO TAX EXEMPTION AVAILABLE TAX EXEMPT AMOUNT: EUR 24,500
1) Since, generally, the GmbH as general partner of the partnership does not have any business activity, it will not be contemplated in the following.
2) Except foreign-sourced income if applicable, the taxation of which depends on the respective double tax treaty.
3) Tax rate includes 5.5% solidarity surcharge.
4) Since the partnership is transparent for German income purposes, the gain realised by the sale of the interests in the partnership is taxed like the gain resulting from an asset deal.
5) Information for a shareholder having no German residence.
Special Note:
Taxation in the state of residence subject to the terms of the relevant double tax treaty.
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64. DISCLAIMER
Any description at this point may only be a rough outline about possible tax consequences, illustrated in consideration of main possible investment structures. The
information contained herein is not exhaustive and can only be of general nature, not being intended to address the circumstances of any particular individual or
entity. German tax law is furthermore subject to constant changes so that there can be no guarantee that such information is accurate as of the date it is received
or that it will continue to be accurate in the future. No one should therefore act on such information without appropriate professional advice after a thorough
examination of the particular situation.
It is therefore strictly recommended to enlist personal tax adviser‘s assistance in the run-up to any potential property investment!
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65. 65

66. DHI Deutsche Hauptstadt Immobilien Real Estate Investments
GmbHVoßstr. 22 10117 Berlin Germany
www.dhiinvestments.com
T: +49 (0) 30 33 93 59 40
F: +49 (0) 30 33 93 59 51
E: info@dhi.com
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