The document provides an initial overview and analysis of an Edeka Market property located in Amberg, Germany that is being considered for investment. The summary includes: 1) The location of Amberg and region of Bavaria are described, noting the population sizes and economic strength of the area. 2) Details are given about the tenant, Edeka, which is Germany's largest grocery retailer. Financial information shows it to be a strong and stable company. 3) The property is analyzed and found to meet Edeka's site requirements. 4) The projected yield of 7.32% is evaluated against debt rates, retail park yields in German cities, and a comparable Edeka

1. Edeka Market
Amberg, Germany
Initial Overview
March 2010

2. The approach…
In order to give an opinion regarding the property in question, I reviewed:
• In genral - the location/region and its econmoical steadfastness;
• The tenant and it’s nature (as well as the match of the site to his requirments);
• The adequateness of the yield;
• The attractiveness of the financial terms;
Prepared by: Tomi Deutsch (C.P.A., EMBA) tomi@imagine-inv.com 2

3. The location/region - general info.
Amberg, Germany:
• Located in the Upper Palatinate (German: Oberpfalz), Bavaria, some 150 Km N-NE to Munich
• Population: 44,756 (2008) (1)
Bavaria:
• Population: 12,519,312 (30/6/2008) (2)
• GDP per capita: 33,200 € (2006). Bavaria has long had one of the largest and healthiest
economies of any region in Germany, or Europe for that matter. Its GDP in 2007
exceeded 434 billion Euros. This makes Bavaria itself one of the largest economies in
Europe and the 18th largest in the world.
• Some large companies headquarted in Bavaria (BMW, Siemens, Audi, Munich Re, Allianz,
Infineon, MAN, Puma AG,and Adidas AG).
Reference:
1. http://en.wikipedia.org/wiki/Amberg 3
2. http://en.wikipedia.org/wiki/Bavaria

4. The tenant… EDEKA
• EDEKA Group: The #1 food retailer in Germany ! (i.e. - strong recession-robust
retailer)
• Type of entity: co-operative society, private
• Market Share: 26%
• Founded: 1907 (more than 100 years of activity !!!)
• 2008 FS:
• Turnover: € 36.6 billion
• # of stores throught Germany: ~ 12,000
• # of Employees: ~ 280,000
• Rating: A1 Highest rating, lowest risk of default (2, 3)
Reference:
1. Various sources, mainly from the company’s web site, http://www.edeka.de/EDEKA/Content/Presse/Englisch.jsp
2. http://www.lgpropertyreport.com/propertydetails.php?propertyid=78; 4
3. http://www.lgpropertyreport.com/propertydetails.php?propertyid=79

5. The site…
Based on the comparison of the general site requirments of EDEKA Südbayern (as they
are presented in the “EDEKA expansion brochure” (1)) and the presented scheme it is
fair to say that:
The site in Amberg meets in full the EDEKA requirments
Reference:
1. http://mhis.edeka.de/MHIS/Content/DE/Service/PDF/ImageBroschuere.pdf., p. 16 5

6. The yield…
For the purpose of drawing a conclusion regarding the presented opportunity, the
reference yield was based on the worst case scenario (as it was submitted in the Excel
file and derived from the annual rent of € 506,100). i.e. 7.32%
In order to establish the adequateness of the yield in the reviewed opportunity, several
methods/benchmarks were used:
1. Cost of debt/copoun on long-term bonds (as EDEKA is a privately held entity, the
information referred to is of EDEKA’s competitor);
2. Aggregated yields of retail parks in six major German cities/hubs;
3. Yields on another property which was recently leased to EDEKA in Bavaria
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7. Yield benchmarks
Debt Capital Market
Rating
In the framework of their Debt Issuance Programme (DIP) for long-term funding bonds
with maturities of up to 30 years can be issued under German law in any currency.
http://www.metrogroup.de/servlet/PB/menu/1011206_l2/index.html#a3 7

8. Yield benchmarks - cont.
Aggregated yields of retail parks in six major German cities/hubs
6.5%
http://www.joneslanglasalle.de/ResearchLevel1/JLL_Germany_CapitalMarketsNewsletter_Q4%202009EN.pdf
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9. Yield benchmarks - cont.
AXA Property Trust Limited - Half Year Report and Consolidated Financial Statements for
the six months ended 31 December 2009 1
“Commitments
On 19 November 2009, the Group entered into a lease with the German supermarket retailer Edeka for a new
anchor store at its Phoenix Center retail park at Fuerth(*) in Bavaria, Germany. The lease with Edeka
Grundstücksgesellschaft Nordbayern-Sachsen-Thüringen mbH is for a fixed term of 15 years and six months and is
conditional upon achieving a building permit to develop the 3,737m² unit. Receipt of the permit is anticipated in
the first quarter of 2010 and delivery of the new unit is expected by October 2010.
Edeka currently occupy a 2,500m² unit, which will be refurbished and let to other existing tenants keen to expand
within the retail park, as well as being marketed to new occupiers which will improve the tenant mix and the retail
destination for the catchment population. The development project and the new lease to Edeka will secure the
long-term prospects of the wider centre and is expected to have a positive impact on rental levels across the
scheme.
The budgeted cost for the development of the 3,737m² unit and refurbishment of the 2,500m² unit is £4.3 million
(€4.8 million), of which £3.24 million (€3.65 million) is committed under the terms of the Edeka lease. The project
shows a yield on total cost (including current valuation of land and the former Edeka unit) of9.43% . The
Investment Managers believe that implementation of this project will provide exciting capital and income growth
potential”
* Fuerth (in terms of population) is more than twice bigger than Amberg (114,351 vs. 44,756) 2
Reference:
1. http://telegraph.uk-wire.com/cgi-bin/articles/201002261235167594H.html?epic=APT
2. http://en.wikipedia.org/wiki/F%C3%BCrth 9

10. Conclusion*
Based on the:
• Nature of the tenant;
• Attractiveness of the financial terms: LTV > 70%,
amortization = 1%;
• Adequate yield (taking into consideration the location of
the property and the other bencmarks used)
I’d “green light” the deal…
* The basis of this conclusion is by nature rather limited, due to the fact that it relies solely on information obtained via the internet
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