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					2007/2008 Annual Report
as of 31 March 2008, including Sales Prospectus




                                                  Non-binding Translation of the Annual
                                                  Report as of 31 March 2008


/ Open-Ended Property Fund /
Contents



At a Glance  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 1
Management Report  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 2
Outlook  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 4
Fund Strategy  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 5
Real Estate Markets and Activities  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 6
Portfolio Structure  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 12
Acquisitions and Dispositions  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 14
Project Developments  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 16
Letting  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 19
Property Record  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 24
Notes on the Property Record  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 34
Additional Tenancy Information  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 36
Notes on the Additional Tenancy Information  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 41
Record of Participations  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 42
Return on Investment  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 44
Valuation and Returns  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 46
Distribution  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 52
Investor Structure  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 53
Investments in Liquid Assets  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 54
Foreign Currencies  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 56
Loans  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 58
Currency Hedging Transactions  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 60
Performance of Fund Assets  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 62
Statement of Assets and Liabilities  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 64
Statement of Revenues and Expenses  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 70
Calculation of Distribution and Notes  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 74
Auditor's Report  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 75
Notes on Taxation for Shareholders  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 76
Certification  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 86
Bodies  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 88
Special Notes for Investors  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 91
Corporate Governance and BVI Code of Conduct  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 92
Sales Prospectus, effective through 15 August 2008  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 95
Sales Prospectus, effective as of 16 August 2008  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 133

     Note:
     As of 8 April 2008, Commerz Grundbesitz-Investmentgesellschaft mbH was re-
     named Commerz Real Investmentgesellschaft mbH .
     The new name reflects the fact that the investment company forms an integral part
     of Commerz Real AG, one of the world's biggest real estate asset managers .
At a Glance



ISIN: DE 000 980 701 6                             as of 31 MAR 2005    as of 31 MAR 2006    as of 31 MAR 2007    as of 31 MAR 2008
WKN (securities no .): 980 701                        or financial year    or financial year    or financial year   or financial year
                                               1APR2004–31MAR2005 1APR2005–31MAR2006 1APR2006–31MAR2007 1APR2007–31MAR2008
                                                           million euro         million euro         million euro        million euro
Real estate                                                          10,334                             8,504                             7,407                             7,451
Interests held in real estate companies                                   1,221                         1,179                             1,236                             1,180
Investments in liquid assets                                              1,338                         1,115                             2,517                             3,677
Other assets                                                                591                           353                               508                               615
 ./ . Liabilities and provisions                                        -3,403                         -3,125                            -3,130                            -2,799
Fund assets                                                             10,081                          8,026                             8,538                           10,124
Real assets                                                             12,137                        10,144                              9,172                             9,208
   thereof directly held                                                10,334                          8,504                             7,407                             7,451
   thereof held through real estate companies                             1,803                         1,640                             1,765                             1,757
Real estate outside Germany                                               9,597                         7,959                             7,606                             7,562
   thereof directly held                                                  7,940                         6,460                             5,985                             6,016
   thereof held through real estate companies                             1,657                         1,499                             1,621                             1,546
Real estate inside Germany                                                2,540                         2,185                             1,566                             1,646
   thereof directly held                                                  2,394                         2,044                             1,422                             1,435
   thereof held through real estate companies                               146                           141                               144                               211
Changes in net funds                                                    -1,428                         -1,955                               392                             1,244
Number of Fund properties                                                   150                           124                                 81                                84
(directly and indirectly held)
   thereof held through real estate companies                                 9                               9                                 9                               13
   thereof abroad                                                            81                             63                                53                                56
Changes during the reporting period
(including transfers of costs and benefits)
Acquisitions (number)                                                         4 1)                           0 1)                               1                               10
Dispositions (number)                                                         7 2)                          26 5)                             44                                   7
Tenancy quota (by the key date)                                         89 .1%                        90 .6%                            91 .2%                            95.0 %
Redemption price per share, in euro                                       41 .46                        41 .11                            41 .66                            43.14
Issue price per share, in euro                                            43 .53                        43 .17                            43 .74                            45.30
Distribution in million euro 3)                                            269                            230                               276                               411
(coupon number)                                                              32                             33                                34                                35
Shares in circulation (in million pieces)                                   234                           195                               205                               235
Distribution date                                            13 . JUN 2005                    19 .JUN 2006                      18 . JUN 2007                    16. JUN 2008
Distribution per share, in euro                                            1 .15                         1 .20                              1 .35                             1.75
Total Expense Ratio (TER)                                               0 .61%                        0 .58%                             0 .71%                            0.74 %
Return on investment (BVI method)                  4)
                                                                          1 .9%                         2 .0%                             4 .4%                             7.0 %
Profit on real estate (equity capital)                                    2 .4%                         2 .3%                             5 .4%                             9.0 %
Profit on liquidity                                                       3 .0%                         3 .6%                             3 .7%                             4.4 %
Tax-free share of the ROI 6)                                            56 .8%                        64 .1%                            77 .4%                            73.0 %
Performance since Fund                                                    671%                         686%                              721%                              778 %
was launched in 1972 (BVI method) 4)

1) In addition, part of a lot was acquired in the case of one property.                     4) Not counting the up-front fee, with distribution instantly reinvested. Past perform-
2) In the case of two properties, one partial lot each was also sold.                          ance is not indicative of future returns.

3) On the basis of the shares in circulation by the distribution date (previous years) or   5) In addition, partial lots were sold in the case of three properties; moreover one
   by the key date of 31 March 2008, respectively                                              property was sold where the transfer of costs and benefits to the Property Fund
                                                                                               had not yet been effected.
                                                                                            6) Not included in the Auditor's Report.


                                                                                                                                                                                   1
                                 Management Report



                                 Dear
                                 investor,
Substantially improved           By the key date of 31 March 2008, hausInvest europa had achieved an annual perform-
performance: 7.0% calculated     ance of 7 .0 % (calculated according to the BVI method) . The Fund raised its return on
according to the BVI method.     investment by nearly 60 % compared to the same period last year (31 March 2007:
                                 4,4 %), and reached its highest figure in nearly 14 years . The decisive factor for the great
                                 performance was the above-average contribution to profits that was delivered by real
                                 estate at 9 .0 % . Similarly, the 4 .4 % interest on liquid assets made a positive contribution
                                 that far exceeded the industry average . This overall development was in no small way
                                 influenced by the merger of Commerz Grundbesitzgesellschaft mbH and CommerzLeas-
                                 ing und Immobilien AG to form Commerz Real AG in September 2007, as it enhanced
                                 the group‘s competitive position .

Active Portfolio Management:     During the reporting period just concluded, a total of ten investments in four different
10 new acquisitions – 7 dispo-   countries was added to the fund portfolio, four of these being directly held and six being
sitions                          held through real estate companies . On the whole, the investment company sold five
                                 properties and two real estate companies . The real estate portfolio comprised 84 proper-
                                 ties in a volume of 9 .21 billion euros (status: 31 March 2008) . At 82 .1 %, a high share of it
                                 was situated in European countries other than Germany .

1.24 billion euros in net cash   Investor interest in hausInvest europa, Germany’s biggest open-ended property fund,
inflows. Fund volume ex-         runs high . By the end of the financial year concluded on 31 March 2008, the Fund volume
ceeded 10 billion euros          had crossed the mark of 10 billion euros again, and totalled 10 .12 billion euros on the key
                                 date . The figure reflects the high net cash inflow of 1 .24 billion euros .

Professional asset manage-       Using a professional asset management approach, we were able to let a total rental
ment: tenancy quota of           space of more than 185,000 m2 in new or follow-up leases . Thus, the tenancy quota rose
95.0 % through high take-up      to 95 .0 % by the key date . It was one of the factors enhancing the Fund’s stable income
                                 situation

Decisive tax benefits: 73.0 %    As a safety-oriented capital investment, hausInvest europa earns solid returns that com-
income tax-free share in the     bine with a low tax load . For the 2007/2008 financial year, the tax-free share of the return
return on investment             on investment for private investors equalled 73 .0 % .

Excellent ratings                In May 2008, the independent rating agency Scope Analysis certified that hausInvest
                                 europa excels in all areas, offering solid quality and a best-of-class financial structure
                                 among the top products . Simultaneously, Commerz Real Investmentgesellschaft mbH 1)
                                 scored an “excellent” (AA+) in the management rating . Earlier, in September 2007, haus-
                                 Invest europa had already distinguished itself as best open-ended property fund in the
                                 “Open-Ended Property Funds Europe” category . On top of that, Morningstar, an inde-
                                 pendent provider for investment analyses, confirmed the quality of hausInvest europa in
                                 its latest rating of April 2008 by awarding four stars .




                                 1) As of 8 April 2008, Commerz Grundbesitz-Investmentgesellschaft mbH was renamed
                                    Commerz Real Investmentgesellschaft mbH.



2
Nagelsweg, Hamburg



                3
                               Outlook



Sustained positive perform-    hausInvest europa has embarked on a growth course . Accordingly, we have planned new
ance                           investments in economically thriving locations that will contribute to a sustained positive
                               performance . After all, the high net cash inflows of the past financial year have paved the
                               way for new investment options . At the same time, we regularly review our inventory for
                               potential sales in line with our active portfolio management . Another important aspect
                               is our conservative and sustainable valuation practice, which contributes to a stable per-
                               formance . It is a tradition the Fund will continue to uphold .

Solid yield expectations       Today, the consequences of the so-called subprime crisis are clearly felt on the interna-
despite the turmoil on the     tional real estate markets . However, these market parameters will not directly impact
financial markets              the revenue power of the hausInvest europa properties . For instance, the long-term
                               leases we signed for our portfolio properties in the UK – where the repercussions of the
                               financial crisis are impossible to overlook – ensure stable cash flows . Moreover, we re-
                               frain from investing liquid capital in money market funds or risk-prone securities, such as
                               asset-backed securities constructions . As security-oriented financial investment, hausIn-
                               vest europa will continue to offer its proven combination of stable returns and compara-
                               tively low risks .

New legislation with favour-   The re-enactment of the German Investment Act makes additional investment options
able prospects                 available to open-ended property funds, and this new development will enhance the
                               competitive edge of hausInvest europa on the international real estate markets . Even
                               after the imminent introduction of the flat rate withholding tax on 1 January 2009, the
                               Fund's more than 360,000 investors will continue to benefit from favourable tax arrange-
                               ments .




                               Wiesbaden, in May 2008




                               Hubert Spechtenhauser                 Dr . Heiko Beck                        Eberhard Graf
                               (Spokesman)




                               Hans-Joachim Kühl                    Roland Potthast                           Günter Ress



4
Fund Strategy



The investment goals of the hausInvest europa open-ended property funds are to ensure
regular earnings through an inflow of rent and interest payments, and to achieve a steady
appreciation . True to its goal, the Fund's track record shows an annual performance of
about 6 .2 % on average (calculated according to the BVI method) for the entire time be-
tween the Fund inception about 36 years ago and 31 March 2008 .

hausInvest europa prefers to invest in commercially used real estate in European loca-
tions that are marked by high economic momentum and development potential . The
criteria used in the selection of real estate include – in addition to sustained revenue
power – the diversification by property features such as location, size, type of usage, and
sector diversity . Economic and site-related risks and opportunities also enter into a given
appraisal . Investments outside the Euro zone, finally, are reviewed in regard to changes
in exchange rates and to fiscal aspects . In line with an ongoing portfolio optimisation, the
Fund properties are modernised, restructured or reviewed for sale in keeping with mar-
ket requirements .

Within the framework of the Fund strategy, we pursue an active portfolio management
in order to exploit cyclical developments on the European real estate markets in a re-
sponsible manner . It is in the nature of the business that the actual diversification of the
real estate portfolio does not always match the allocation by country and sector that has
been defined by the Fund Management .




Sector allocation in %                                                      Status: 31 March 2008


Office                                                                                  70.6 %

Retail                                      18.6 %

Other (hotel, logistics)           10.8 %


                           0      10       20        30   40      50         60        70        80 %




Country allocation in %                                                     Status: 31 March 2008



Germany                                                           17.9 %

France                                                                        22.1 %

United Kingdom                                                                              27.0 %

Benelux                                                        16.4 %

Other EU/EEA countries                                         16.6 %


                           0           5        10        15           20         25             30 %   = Targeted investment spectrum




                                                                                                                                  5
     Real Estate Markets
     and Activities


     With an expected economic growth of 1 .5 % in the Euro zone in 2008, Europe's national
     economies remain on growth course on the whole – if on a lower level than during the
     previous two years . More than elsewhere, the robust economic performance of recent
     years is felt on the labour market . In turn, the risen number of new jobs in the office sec-
     tor generated a record floor space take-up by expanding companies . The sustained high
     demand for Grade A floor space has created extreme bottleneck situations on the major-
     ity of relevant markets .


       Investment Transaction Volume in European Commercial Real Estate

                       300
                       250
    in billion euros




                       200
                       150
                       100
                        50
                         0
                                    2003   2004           2005          2006         2007
       Source: Jones Lang LaSalle



     Meanwhile, the ramifications of the loan and liquidity crisis on the international financial
     markets have begun to impact real estate markets, too . Starting in mid-2007, the first
     visible effect was the retreat of those investors who used to operate with a high degree
     of leverage to finance their bids . This in turn took some of the pressure off real estate
     prices .

     Growth of the gross domestic product in selected European countries

                                                  2007       Forecast for 2008     Forecast for 2009
     Belgium                                       2 .7                     1 .8                 1 .0
     Germany                                       2 .5                     1 .8                 1 .3
     France                                        1 .8                     1 .6                 1 .6
     United Kingdom                                3 .0                     1 .8                 1 .7
     Italy                                         1 .6                     0 .5                 1 .2
     Netherlands                                   3 .5                     2 .4                 1 .7
     Poland                                        6 .5                     5 .3                 4 .3
     Sweden                                        2 .8                     2 .5                 2 .3
     Spain                                         3 .8                     1 .5                 1 .0
     Czech Republic                                6 .5                     4 .7                 5 .4
     Figures in %                                                Source: Commerzbank, Consensus, EIU




6
                                                                                              R e A l estAte M A R kets




OVErVIEw OF tHE EurOPEAN OFFIcE MArkEtS

BElGIuM

Brussels Compared to the previous year, the take-up in Brussels recovered notably in
2007 . While the public sector and the EU generated office space demand particularly
in the inner city, privately owned companies focused on floor space in the outskirts of
town . As far as the supply side goes, project developers are placing next to no new
rental space on the market . On the whole, the vacancy quotas declined sharply in recent
years .

Trend 2008 – 2009:       Rent                   Return                Vacancy


GErMANy

Berlin The 2007 net absorption lagged behind that of the previous year because of a
scarcity of large-space lettings of office space . Accordingly, the vacancy quota changed
but minimally, and currently stands at just below 10 % . Remarkably, the demand for
rental space in proximity to inner city locations is greater than that for space in central
locations because of the relatively favourable ratio of rent rates to features . Top rents
rose but slightly in the course of 2007 . Since the number of office jobs is unlikely to
change dramatically in the medium term, we assume that demand for new office space
will stagnate, and that rent rates will remain stable .

Trend 2008 – 2009:       Rent                   Return                Vacancy


Frankfurt am Main The office real estate market in Germany's financial metropolis ex-
perienced a marked decline in the vacancy quota down to about 13 %, one of the highest
take-up volumes in the city's history and an increase in top rents by 5 % . As in previous
years, demand focused on space to let in Frankfurt's financial district . Since companies
have an increasingly hard time to find connected high-end floor space contingents on
this submarket, rent rates remain exposed to upward pressure . The low number of new-
ly completed buildings, on the one hand, and the high forward commitment quota, on
the other hand, suggest that the market situation for prime space is not likely to change .


Trend 2008 – 2009:       Rent                   Return                Vacancy


Hamburg A record take-up, declining vacancies, and rising rent rates characterised
Hamburg's office market in 2007 . The high attractiveness of the Hanseatic city as a
preferred business location for a number of industries has driven demand for local office
floor space: With a vacancy quota of less than 7 %, Hamburg reports the lowest rate of
any major German real estate market . Unsurprisingly, top rents rose by 4 % last year .

Trend 2008 – 2009:       Rent                   Return                Vacancy


Munich The demand for office space in Munich has maintained its high level . In fact,
the 2007 take-up for office floor space reached a volume not seen since 2001 . Especially
areas southwest of downtown attracted the interest of corporate leads . By contrast, Mu-
nich's suburban office market continues to show extensive floor space vacancies . On the


                                                                                                                     7
R e A l estAte M A R kets




                            whole, vacancies declined noticeably, with the quota now hovering at 8 % . The increase
                            in top rents by 5 % mirrors the high interest in office floor space in central locations . In the
                            medium term, we expect the dynamic of Munich's real estate market to level out a bit .

                            Trend 2008 – 2009:         Rent                   Return                 Vacancy


                            FrANcE

                            Paris With a take-up of about 2 .7 million m2 in office space last year, Paris more or less
                            matched the record figures of 2006 . The high demand caused top rents to soar by more
                            than 10 % in the course of the year . The vacancy quota dropped to a level just below
                            5 %, one of the lower figures within the European average . The fact that the floor space
                            demand in central locations, especially in La Défense, is virtually impossible to satisfy
                            anymore has moved outskirts of the metropolis increasingly into the focus of companies
                            wishing to relocate . In face of the repercussions of the loan crisis on the French banking
                            sector, it is safe to assume that the net absorption will level out . Analogously, top rates
                            are unlikely to rise by more than a fraction any time soon .

                            Trend 2008 – 2009:         Rent                   Return                 Vacancy


                            uNItED kINGDOM

                            London The ramifications of the loan crisis have noticeably impacted London's real
                            estate market . The take-up of about 1 million m2 in 2007, while slightly exceeding the
                            long-term mean, lagged behind the previous year's figure by 6 % . Particularly the last
                            quarter — traditionally the one with the highest take-up rate – performed rather poorly .
                            The situation is explained by a reticent corporate demand for additional floor space, most
                            notably in the financial and banking sector . In the course of the year, the vacancy quota
                            dropped down to 5 % . Prime floor space is hard to find, yet the increasing supply of
                            newly completed venues over the coming years will ensure that the demand generated
                            by expanding companies will be met . Top rents for prime floor space rose by more than
                            25 % during the past year . Then again, there is reason to expect rent rates to decline on
                            all of London's submarkets in the medium term .

                            Trend 2008 – 2009:         Rent                   Return                 Vacancy


                            ItAly

                            Milan Due to the high demand for office space, the inner city of Milan is thoroughly de-
                            pleted of prime floor space to let . New and expanding companies have responded to the
                            bottleneck by considering alternative locations outside the inner city . Despite the short
                            supply, rent rates for prime space in the inner city have remained unchanged since late
                            2005 . This reflects the increased attractiveness of office locations in the city's peripheral
                            districts . Over the year, the vacancy rate has somewhat declined und currently stands
                            at just below 7 % . Since a major share of the floor space on the market is obsolete, new
                            office space attracts forward commitments by tenant lead far ahead of the completion
                            date . In the medium term, the slowing momentum of the Italian economy will result in a
                            very slow growth of rent rates and in a slight increase in vacancy rates in antiquated of-
                            fice buildings .

                            Trend 2008 – 2009:         Rent                   Return                 Vacancy


8
                                                                                             twin towers, Amsterdam



NEtHErlANDS

Amsterdam In the Netherlands, the office market in Amsterdam benefits from the
sound economic situation . Thus, the vacancy rate dropped from about 15 % down to
12 % in the course of 2007 . A closer look will qualify what appears to be a rather high
vacancy rate: A large part of the vacant floor space represents not marketable properties
from the 1970s and 1980s . Especially the city's southern axis, where the highest rent
rates are paid, is marked by a strong demand for space to let . In the medium term, the
top rents will continue to grow at a moderate pace .

Trend 2008 – 2009:       Rent                  Return               Vacancy


POlAND

Warsaw The economic growth of Poland has definitely made itself felt on the office
market of Warsaw . Top rents for prime floor space that matches western standards rose
by 30 % in 2007 . The steady increase in rent rates has generated a positive trend that
has lasted longer than any development seen since the early 1990s . What is more, there
is no danger that the current rise in rent rates will be matched by an extended slump like
that of 1992 . This assumption is backed by the high demand generated by expanding
companies, which caused the vacancy rate in Warsaw to drop from 5 .4 % (by the end of
2006) to 3 .1 % (by the end of 2007) . The high demand for floor space is matched by an
adequate construction volume . In the years to come, the real estate stock will increase


                                                                                                                 9
     by 8 % annually, which would substantially enhance the dynamics of the letting market .
     In the medium term, the relaxed situation in the letting market will manifest itself in a
     one-digit growth rate for top rents .

     Trend 2008 – 2009:        Rent                  Return                Vacancy


     SwEDEN

     Stockholm Stockholm, the largest office market in Scandinavia, is experiencing a keen
     demand for office space, generated by expanding companies . Owners of newly com-
     pleted office buildings benefit from the situation most of all, as the rents paid for these
     run about 10 % higher than they did at the end of 2006 . Since construction activity is
     minimal, vacancy rates are expected to go down and top rents to go up .

     Trend 2008 – 2009:        Rent                  Return                Vacancy


     SPAIN

     Madrid In recent years, the office market has seen massive rent hikes and a soaring
     demand for floor space . This explains why there is virtually no vacant space left in the in-
     ner city of the Spanish capital . Corporate tenants have therefore begun to look for office
     space in the outskirts of town . The high demand has pushed the vacancy quota below
     the figure of 4 % for the entire metropolitan area . However, the economic prospects and
     the increasing problems experienced by project developers make a substantial correction
     of top rents seem likely .

     Trend 2008 – 2009:        Rent                  Return                Vacancy


     czEcH rEPuBlIc

     Prague The considerable increase in office space supply was not fully matched by a
     proportionate demand on the real estate market . This caused the vacancy quota to rise
     slightly to just short of 6 % by the end of 2007 . The supply side will remain diversified
     and well-stocked as new office buildings are added to the market . This will enhance the
     bargaining position of prospective tenants when negotiating a lease . Over the coming
     two years, we will most likely see a stable rent rate level in central downtown locations .
     Particularly the southern parts of Prague will gain in attractiveness and thus drive local
     rent rents in an upward direction .

     Trend 2008 – 2009:        Rent                  Return                Vacancy




10
                                                                                                                                      R e A l estAte M A R kets




  rEtAIl rEAl EStAtE MArkEtS

  The economic conditions for long-term growth in the retail segment remain favourable .
  Assuming a swift recovery of the global economy in 2009, we expect to see further
  improvements of the stats in regard to new jobs, higher wages, and higher consumer
  spending along with these . This will precipitate increasing retail sales, even though these
  may develop along different lines due to the local growth pace on each market . Particu-
  larly the emerging national economies of Eastern Europe are reporting fast economic
  growth . Nonetheless, the Western European countries will continue to have a markedly
  higher consumer level in the long run .


    Retail Business Sales                                                                                 2007 - 2017 forecast


                              120%
Retail sales growth by 2017




                              100%


                              80%               Central
                                                Europe
                              60%


                              40%


                              20%                                                        Western Europe

                               0%
                                 0€   1.000 €    2.000 €   3.000 €   4.000 €   5.000 €    6.000 €   7.000 €   8.000 €     9.000 €

  Source: King Sturge, EIU                                                                           Per capita retail sales (2006)



  This is reflected in the volumes of investments in shopping centres . During the first six
  months of 2007, Germany, France, and Spain topped the list here . For investors, com-
  mitments in retail real estate have proven more lucrative in recent years than office real
  estate . Having said this, we nonetheless expect profits to go down in the coming years
  – this being a development already under way in the UK .

  Following a hefty increase in floor space by about 4 million m2 last year, the European
  shopping mall industry is now forecasting a combined growth by more than 6 .5 million
  m2 for 2008 and 2009 . The emergent markets of Central Europe, where the building
  activities are dangerously close to overheating in some areas, will account for half of this
  contingent .

  The internationalisation of the European retail business in recent years has prompted
  considerable shifts in the tenancy structure . Cross-border retailers, such as IKEA of Swe-
  den, Tesco, and Carrefour, do have the financial leverage to pay higher rent rates than
  local or regional retail companies . The trend is particularly pronounced in Central Europe
  where up to 60 % of the retail sales are transacted by foreign companies in some places .




                                                                                                                                                           11
     Portfolio Structure



     StABlE INcOME SItuAtION tHrOuGH BAlANcED INVEStMENt BlEND

     By 31 March 2008, the real estate portfolio of hausInvest europa included 84 properties .
     Of these, 13 properties were held indirectly through real estate companies owned to at
     least 67 .0 % by the Fund . The real estate portfolio value equalled 9 .21 billion euros, with
     an 82 .1 % share of all portfolio properties located in European countries other than Ger-
     many .

     In addition to the wide spread of the fund properties across a variety of investment loca-
     tions, the balanced distribution of the real estate portfolio across various types of usage
     and size categories also contributes to the Fund's stable income situation . hausInvest
     europa focuses mainly on office and retail properties, and these accounted for a real
     estate portfolio share of 70 .6 % and 18 .6 % share, respectively .




     Geographic spread of the Fund real estate 1)                                                                Status: 31 March 2008
                                                                                                           2)                                  3)
                                                                               Property market value            Number of       Total floor
                                                                                  euros in thousand             properties      space in m2

     United Kingdom 27.0%                                                                     2,485,276                 7            279,067

     France             22.1%                                                                 2,035,681                14            363,751

     Germany            17.9%                                                                 1,645,561                28            400,518

     Netherlands        12.4%                                                                 1,138,669                16            340,697

     Italy                7.6%                                                                   703,180                8            191,923

     Sweden               5.9%                                                                   542,570                2            108,979

     Luxembourg           2.0%                                                                   189,126                3             32,608

     Belgium              2.0%                                                                   183,790                1             47,784

     Portugal             2.0%                                                                   181,700                2             36,167

     Austria              1.1%                                                                   102,280                3             40,358

     Total                                                                                    9,207,833                84        1,841,852

     1) Basis: Market values of real estate directly and indirectly held, including properties under construction and vacant lots.
     2) Pro-rata, referring to the participation quota.
     3) Referring to the property as a whole.




     Main types of usage for Fund real estate 1)                                                                 Status: 31 March 2008

     Other usage 2.8 %
     Residential 0.4 %
     Automotive 4.1 %
     Industrial 0.1 %
     Hotel 2.8 %                                                                                                             Office 70.6 %

     Recreational 0.6 %
     Retail / gastronomy 18.6 %




     1) Pro-rata, referring to the participation quota.



12
                                                                                                                                               P O RtFO lI O stR u Ctu R e




On top of that, an even distribution of investments across a large number of tenants who
represent a variety of industries helps to minimise possible dependencies from econom-
ic developments of specific industries . This enables us to counterbalance unfavourable
market tendencies and to stabilise the profitability of the real estate portfolio . At present,
hausInvest europa has about 1,000 tenants .

MODErN rEAl EStAtE

The Fund Management’s goal is to assemble a modern, high-yield real estate portfolio .
The advantages of an unusually young real estate portfolio manifest themselves both in
low maintenance costs and in the superior chances in regard to future lettings, increases
in value or possible dispositions . The present age structure shows that 81 .7 % of the
Fund real estate is less than ten years old . Properties of older provenience are thoroughly
redeveloped, where required, so as to bring them up to the same modern standards .




Size categories for Fund real estate (market values) 1)                                                   Status: 31 March 2008

0.4 % up to € 10m 8                                                                                        0 = number of properties
2.1 % € 10 – 25 million 8
7.2 % € 25 – 50 million 13
                                                                                               8 32.9 % more than € 200 million

18.7 % € 50 – 100 million 18




20.3 % € 100 – 150 million 12
                                                                                                     8 18.4 % € 150 – 200 million



1) asis: Market values of real estate directly and indirectly held, excluding properties under construction and vacant lots.




Geographic spread of the Fund real estate 1)                                                               Status: 31 March 2008
                                                                                                    3)                                    4)
                                                                         Property market value           Number of        Total floor
                                                                              EUR in thousand            properties       space in m2

< 5 years          45.5%                                                                 3,263,637               34             687,416

5–10 years         36.2%                                                                 2,597,872               22             494,708

10–15 years        14.2%                                                                 1,022,030               12             172,598

15–20 years          3.3%                                                                  233,930                3              86,241

> 20 years           0.8%                                                                   57,016                4              50,567

Total                                                                                    7,174,485               75         1,491,530
1) Basis: Market values of real estate directly and indirectly held, excluding properties under construction and vacant lots.
2) Pro-rata, referring to the participation quota.
3) Referring to the property as a whole.




                                                                                                                                                                      13
                                  Acquisitions and Dispositions



                                  In line with our active portfolio management, ten properties were added with costs
                                  and benefits to the portfolio of hausInvest europa during the 2007/2008 financial year .
                                  Six of the new acquisitions represent project developments that were still under con-
                                  struction by the key date . In total, real estate with an aggregate market value of approxi-
                                  mately 942 million euros was added to the Fund portfolio . Inversely, the Fund sold five
                                  properties and two real estate companies .




Acquisitions and dispositions, including transfers of costs and benefits
                                                                              Usage 1)        Floor space                    Total
                                                                                                     in m2        investment costs
                                                                                                                           in euro

I. Directly held real estate
  A. Acquisitions
  Berlin, Behrensstr . / Hedwigskirchgasse / Französische Str .               H                   14,385            80,497,932 .09
  Meudon, Avenue du Maréchal Juin                                             u .c ./O            53,631           264,932,700 .00
  Orio al Serio – Bergamo, Via Portico                                        H                     5,237           12,528,841 .77
  Milan, Sesto San Giovanni, Viale Tommaso Edison                             u .c ./O            23,039            84,597,673 .00
  B. Dispositions
  Amsterdam, Hoogoorddreef 3 – 15                                             O                   75,513           145,005,362 .02
  Berlin, Kurt-Schumacher-Damm 1     2)
                                                                              SC                  21,415            59,935,797 .72
  Berlin, Scharnweberstr . 139a, 140 2)                                       OB                    2,304            6,482,121 .48
  The Hague, Zuid-Hollandplein 1                                              O                   39,967            74,079,635 .70
  León, Calle Rio Silván                                                      SC                  43,744           102,048,434 .69


II. Real estate held through real estate companies
  A. Acquisitions 3)
  Luxembourg, Avenue John F . Kennedy / Rue Albert Borschette                 u . c ./O           10,999 4)         76,422,878,94
  Luxembourg, Avenue John F . Kennedy / Rue Albert Borschette                 u . c ./O             9,586 4)        67,205,364 .80
  Luxembourg, Avenue John F . Kennedy / Rue Albert Borschette                 u . c ./O           12,023     4)
                                                                                                                    83,896,977 .26
  Milan, Viale Fulvio Testi 280                                               O                   16,415            60,018,717 .28
  Milan (San Donato), Via dell‘Unione Europea 6                               O                   21,082            81,941,668 .62
  Schweinfurt, Schrammstr . 5                                                 u . c ./SC          31,238 4)        127,800,992 .40
  B. Dispositions of equity investment companies
  Forum Almada, Gestao de Centro Comercial Sociedade Unipessoal,
  Lda . II & Commandita, Avenida da Liberdade 224, 1250 – 148 Lisbon          –                              –      97,853,648 .87
  Forum Montijo, Gestao de Centro Comercial Brafero - Sociedade
  Imobiliária, SA, Avenida da Liberdade 224, 1250 – 148 Lisbon                –                              –      55,721,131 .11




14
                                                                                                                      A C q u I s ItI O N s A N d d I s P O s ItI O N s




  The aggregate sales prices of the directly owned properties came to 410 .1 million euros
  before ancillary sales costs and taxes . Sales of real estate companies involved sales pric-
  es in a total amount of 553 .0 million euros for properties whose appraised market value
  actually totaled 546 .5 million euros . These transactions contribute to the ongoing optimi-
  sation of the real estate portfolio, which in turn will be reflected in a sustained stable
  income situation for the Fund .




                                                                                                                                          Status: 31 March 2008
            Market value or                         Purchase price /                   Ancillary costs                 Date deed                 Transfer of costs
pro rata interest at time of                             sale price                            in euro            was signed over                    and benefits
 acquisition or disposition                                 in euro
                     in euro




              81,300,000 .00                         75,075,000 .00                      5,422,932 .09               08 DEZ 2003                     21 MAY 2007
             263,000,000 .00                        259,500,000 .00                      5,432,700 .00               07 SEP 2007                      07 SEP 2007
              12,580,000 .00                         11,531,477 .41                        997,364 .36               27 FEB 2008                      27 FEB 2008
              81,710,000 .00                         80,897,673 .00                      3,700,000 .00               28 FEB 2007                       30 JUL 2007


             122,200,000 .00                        124,500,000 .00                      2,298,942 .55               27 APR 2007                      04 OCT 2007
              53,900,000 .00                         65,276,816 .61                      1,671,184 .49              22 MAY 2007                      01 AUG 2007
                3,900,000 .00                          4,723,183 .39                       114,963 .50              22 MAY 2007                      01 AUG 2007
             111,710,000 .00                        111,560,000 .00                      1,845,603 .21              19 MAR 2008                      19 MAR 2008
             104,000,000 .00                        104,000,000 .00                      1,278,111 .91              22 OCT 2007                       31 OCT 2007




              78,610,000 .00                         73,784,382 .89                      2,638,496 .05              29 MAR 2007                      31 MAY 2007
              68,930,000 .00                         64,145,131 .43                      3,060,233 .37              29 MAR 2007                      31 MAY 2007
              86,330,000 .00                         82,177,286 .23                      1,719,691 .03              29 MAR 2007                      31 MAY 2007
              60,400,000 .00                         59,125,215 .00                        893,502 .28              25 MAY 2007                       04 JUL 2007
              82,000,000 .00                         79,998,700 .00                      1,942,968 .62               27 SEP 2007                     05 NOV 2007
             126,975,000 .00                        125,310,722 .40                      2,490,270 .00               18 JUN 2007                     29 AUG 2007



             248,983,102 .51                        249,110,538 .12                      3,975,470 .00               19 OCT 2007                      31 OCT 2007


             110,693,272 .18                        118,239,100 .05                      1,879,270 .00              19 OCT 2007                       31 OCT 2007


  1) For a list of the acronyms, see the Property Record.   3) For more details on the real estate companies,     4) Area as planned
  2) this transaction represents a package sale.               please see the Record of Participations (p. 42).




                                                                                                                                                                  15
     Project Developments



     cOMPlEtED POrtFOlIO PrOPErtIES

     The project development on Via Portico in Orio al Serio (Bergamo) was the only property
     under construction that was completed during the 2007/2008 financial year and added
     to the property portfolio of hausInvest europa . The hotel building with a usable area of
     more than 5,200 m2 was completed in March 2008 .

     PENDING trANSActIONS

     During the second half of the concluded financial year, the deed for the Theresien-Center
     project development in Straubing/Bavaria was signed . Following its prospective comple-
     tion in March 2009, this shopping mall in the inner city of Straubing will present itself to
     the public as a modern district centre on a planned usable area of about 21,000 m2 . In
     addition to the high quality of location and its great accessibility, the project development
     stands out thanks to its stylish architecture . Both the high tenant demand and the long-
     term leases will enhance the Fund's stable income situation .

     The deed for the “Parc Cézanne 1” office complex in Aix-en-Provence was signed during
     the 2007/2008 financial year . The planned usable area of more than 11,500 m2 is spread
     across five high-end office properties whose completion is scheduled for December
     2010 . The attractiveness of the this investment property is enhanced by its conveniently
     accessed location . The location Aix-en-Provence counts among the most important and
     most active office market in France, characterised by an increasing demand .

     Also, the deed for the Porte de Clichy project development on 18 – 22 Boulevard Victor
     Hugo was signed before the end of the reporting period . Located in Clichy/France, this
     multi-functional office complex is raised according to latest standards, and offers exten-
     sive options for alternative usage options thanks to its technical flexibility . The building’s
     features, combined with its first-rate architecture and the great accessibility of its loca-
     tion at the Périphérique orbital, gives us every reason to expect a high tenant demand
     ahead of the prospective completion in September 2009 .

     Signing the deed for the project development in Montrouge near Paris in June 2008 will
     add a technically first rate property to the portfolio of hausInvest europa . The property
     has a usable area of about 12,500 m2 and comes with a superior site potential within an
     economically vibrant environment . This ensures a good long-term lettability of the prop-
     erty . On top of that, the project development is marked by great traffic connections .

     Another deed that hausInvest europa signed during the reporting period was for the “Ar
     Mor Plaza” project development in St . Herblain near Nantes . This high-end property fea-
     tures state-of-the-art facilities . Its high technical flexibility and equipment will favourably
     influence the future rental situation . Located on the periphery of Nantes inside the “Ar
     Mor” office park, the complex has all the location benefits of the economically thriving
     region of Pays de Loire, the largest trading zone in Western France . The completion is
     scheduled for December 2008 .




16
                                                                                                                    P R Oj eCt d ev elO P M e Nts




Project developments during the 2007/2008 financial year                                    Status: 31 March 2008
Properties completed and added to the                      Usage      1)    Floorspace               Completion
portfolio during the reporting period                                             in m²
Italy
Orio al Serio (Bergamo), Via Portico 2)                          H                5,237              March 2008


Properties under construction,                             Usage 1)        Planned floor            (Prospective)
added to the portfolio                                                       space in m²              completion
Germany
Schweinfurt, Schrammstrasse 3)                            u .c ./SC              31,238            February 2009
France
Meudon, Avenue du Maréchal Juin                            u .c ./O              53,631          September 2009
United Kingdom
London, White City                                        u .c ./SC             144,130             October 2008
Belfast, Victoria Square 3)                               u .c ./SC              65,677                May 2008
Italy
Sesto San Giovanni (Milan),
Viale Tommaso Edison                                       u .c ./O              23,039             October 2009
Luxembourg
Luxembourg, Avenue John F . Kennedy 3)                     u .c ./O              10,999              March 2009
Luxembourg, Avenue John F . Kennedy       3)
                                                           u .c ./O               9,586              March 2009
Luxembourg, Avenue John F . Kennedy 3)                     u .c ./O              12,023              March 2009
Netherlands
Amsterdam, Gustav Mahlerplein                             u .c ./OU                  – 4)              May 2008


Properties under construction,                             Usage 1)        Planned floor            (Prospective)
pending transactions                                                         space in m²              completion
Germany
Munich, Ganghoferstrasse 68 – 70                          u .c ./OB              31,375          September 2009
Straubing, Theresien Center                               u .c ./SC              20,687              March 2009
France
Aix-en-Provence, Avenue Archimede                          u .c ./O              11,516           December 2010
Clichy, 12, 18 – 22 Boulevard Victor Hugo                 u .c ./OB              13,324          September 2009
Paris, Montrouge, Cap Sud Montrouge                        u .c ./O              12,421                June 2008
St . Herblain (Nantes), Rue de Cochardières                u .c ./O              11,379           December 2008
Austria
Vienna, Erdbergstrasse 137, Thomas-Klestil-Platz 1 3)     u .c ./OB               6,227                June 2008
Vienna, Erdbergstrasse 135, Thomas-Klestil-Platz 2 3)     u .c ./OB               5,127                June 2008
Vienna, Erdbergstrasse 133, Thomas-Klestil-Platz 3   3)
                                                          u .c ./OB               4,872                June 2008
Vienna, Erdbergstrasse 131, Thomas-Klestil-Platz 4   3)
                                                          u .c ./OB               6,732                June 2009
Vienna, Würtzlerstrasse 3, Thomas-Klestil-Platz 5,        u .c ./OB               8,799                June 2009
Erdbergstr . 129 3)                                                                                                  1) For a list of the acronyms, see
                                                                                                                        the Property Record.
Vienna, Würtzlerstrasse 1, Thomas-Klestil-Platz 6,        u .c ./OB               9,232                June 2009
                                                                                                                     2) Properties added to the portfo-
Schnirchgasse . 10 3)                                                                                                   lio upon completion
Portugal                                                                                                             3) Properties held through real
                                                                                                                        estate companies.
Montijo, Afonsoeiro (retail park) 3)                      u .c ./SC              17,728                June 2008
                                                                                                                     4) underground car park with 709
                                                                                                                        parking spaces.


                                                                                                                                                       17
rue Balzac, Paris



18
Lettings



Our active asset management represents a major contribution to the good rental income
situation and to the success of hausInvest europa . The asset management focuses on
the negotiation of long-term leases and on establishing a balanced tenancy structure and
industry mix, thereby definitively bolstering the stability of hausInvest europa . The suc-
cessful negotiation of leases with tenants as prestigious as Apple and Lehman Brothers
– at top rent rates by Paris standards – before the previous tenant A .T .Kearney had even
cleared out of the building on Place d'Iena in Paris confirms the successful implementa-
tion of our active asset management . By the key date of 31 March 2008, 79 .7 % of all
leases had remaining terms of more than three years, while 58 .3 % had more than five
years to go, and 20 .0 % more than ten years .

Achieving a high tenancy quota is another aspect of major importance . With a take-up
of 185,119 m² during the past financial year, hausInvest europa managed to raise the
tenancy quota to 95 .0% by 31 March 2008 (compared to 91 .2% by 31 March 2007) . On
average, the Fund realised 93 .4% during the financial year (compared to 90 .3% during
the 2006/2007 financial year) .



Breakdown of tenants by industries and net rents 1)                                           Status: 31 March 2008


Banks, insurance companies and                                                                Consumer goods industry
financial service providers 21.8 %                                                            and retail business 18.5 %

                                                                                            Hotel and gastronomy 4.3 %
Corporate-, legal- and
tax consulting 10.3 %                                                                                   Technology and
                                                                                              software companies 8.8 %

Other 27.0 %                                                                                              Utilities and
                                                                                    telecommunication companies 9.3 %


1) Pro-rata, referring to the participation quota.




Remaining lease terms                                                                         Status: 31 March 2008

            79.7 %                                             58.3 %                                  20.0 %
with a lifetime of more than                         with a lifetime of more than            with a lifetime of more than
            3 years                                              5 years                                10 years




                                                                                                                            19
let tI N G s




               Buildings with a vacancy rate of more than 33%                       Vacancy 1)   Percentage of fund 2)
                                                                                 31 MAR 2008           31 MAR 2008
               Frankfurt, Mainzer Landstrasse 41 – 45                                  79 .9 %                 0 .2 %
               The tenant demand has remained low . In early 2008, we
               were able to close a deal over 450 m² with a management
               consulting company .
               Berlin, Nahmitzer Damm 12                                               65 .6 %                 0 .4 %
               This property represents a gutted plant/warehouse for which
               there is currently next to no demand, so that there is reason
               to expect an extended marketing period . The incumbent
               tenant “Finanz IT” did not extend its lease . Options currently
               reviewed include alternative usage scenarios or a decommis-
               sioning of the area for the sake of cost optimisation .
               Neu-Isenburg, Martin-Behaim-Strasse                                     41 .5 %                 0 .2 %
               In spite of comprehensive marketing efforts, the slow local
               market environment of this property suggests that the
               property will see lengthy vacancy periods before approach-
               ing a full tenancy level again .
               Frankfurt, Junghofstr. 16                                               39 .7 %                 0 .6 %
               Although the property's location and the building quality
               are excellent, the recent market development within the
               relevant tenant target group when seen in context of the
               building concept and floor plan make an extended market-
               ing period seem likely .
               Roissy-en-France, Rue de la Belle Etoile                                51 .3 %                 0 .2 %
               The size of the floor area, the rent level, and the distance to
               public transportation make it rather difficult to market this
               location, not least because the latter manifests a demand
               for smaller floor areas of medium quality . The property is
               defined by an outstanding architecture, a high quality level,
               and an efficient floor plan, as well as a large supply in park-
               ing space on location . The last characteristic represents a
               unique sales proposition that complements these criteria .
               1082 LA Amsterdam, Gustav-Mahlerplein                                   50 .9 %                 0 .4 %
               In recent months, we were able to sign leases with an
               international consulting firm and a Dutch project developer
               whose lease term did not begin before the end of the re-
               porting period . Due to the robust remand at the location in
               South Amsterdam, the Fund Management expects further
               leases to be signed in the coming months .


               1) share in the targeted gross rent return of the property
               2) share in the set gross rent return of the Fund.




20
Hagaporten, Solna



             21
     Types of usage of Fund properties
                                                                     D              UK               NL                F          A
     Annual rental income, office                              66 .5 %         92 .8 %         89 .9 %          87 .4 %      87 .3 %
     Annual rental income, retail/gastronomy                   12 .4 %           4 .8 %          0 .2 %           1 .5 %      1 .3 %
     Annual rental income, hotel                               10 .5 %           0 .0 %          0 .0 %           3 .5 %      0 .0 %
     Annual rental income, recreational                         0 .0 %           0 .0 %          0 .4 %           0 .1 %      0 .0 %
     Annual rental income, industrial                           0 .3 %           0 .0 %          0 .0 %           0 .0 %      0 .0 %
     Annual rental income, automotive                           3 .2 %           0 .6 %          6 .5 %           5 .4 %      8 .4 %
     Annual rental income, residential                          0 .9 %           0 .0 %          0 .0 %           0 .0 %      0 .0 %
     Annual rental income, other usage                          6 .2 %           1 .8 %          3 .0 %           2 .1 %      3 .0 %


     Vacancy, office                                          14 .0 %            0 .0 %          4 .9 %           1 .1 %     18 .5 %
     Vacancy, retail/gastronomy                                 0 .2 %           0 .3 %          0 .0 %           0 .0 %      0 .0 %
     Vacancy, hotel                                             0 .0 %           0 .0 %          0 .0 %           0 .0 %      0 .0 %
     Vacancy, recreational                                      0 .0 %           0 .0 %          0 .0 %           0 .0 %      0 .0 %
     Vacancy, industrial                                        0 .0 %           0 .0 %          0 .0 %           0 .0 %      0 .0 %
     Vacancy, automotive                                        0 .6 %           0 .0 %          0 .2 %           0 .2 %      2 .1 %
     Vacancy, residential                                       0 .1 %           0 .0 %          0 .0 %           0 .0 %      0 .0 %
     Vacancy, other usage                                       2 .8 %           0 .0 %          0 .8 %           0 .0 %      0 .5 %


     Vacancy quota                                            17 .7 %            0 .3 %          5 .9 %           1 .3 %     21 .1 %
     Tenancy quota      1)
                                                               82 .3 %         99 .7 %         94 .1 %          98 .7 %      78 .9 %

     1) the tenancy quota is assessed on the basis of the figures for March 2008. this may result in minor deviations when
        subtracting the annual rental income and vacancies that were determined for the key date.




     Remaining lease terms
                                                                     D              UK               NL                F          A
     Unlimited                                                  1 .4 %           0 .0 %          0 .0 %           0 .0 %     14 .1 %
     2008                                                       4 .1 %           0 .0 %          2 .8 %           4 .3 %      2 .8 %
     2009                                                       2 .0 %           0 .0 %          4 .8 %           4 .2 %      1 .8 %
     2010                                                       8 .6 %           0 .0 %        21 .3 %            0 .4 %      2 .5 %
     2011                                                     30 .0 %            0 .0 %          3 .0 %           1 .4 %     65 .5 %
     2012                                                       8 .0 %           0 .0 %        14 .4 %          11 .0 %       3 .0 %
     2013                                                       9 .4 %           0 .0 %          7 .4 %           4 .5 %      0 .3 %
     2014                                                       7 .2 %           5 .9 %        17 .4 %          13 .9 %       0 .0 %
     2015                                                       1 .7 %           3 .0 %          4 .4 %           7 .5 %     10 .0 %
     2016                                                       3 .6 %           3 .7 %          5 .8 %         38 .4 %       0 .0 %
     2017                                                       5 .9 %           1 .1 %        13 .7 %          10 .8 %       0 .0 %
     2018 +                                                   18 .1 %          86 .3 %           5 .0 %           3 .6 %      0 .0 %




22
                                                                                  let tI N G s




                                                          Status: 31 March 2008
      P          I        S    Direct investments    Interest        Sum total
  0 .0 %   28 .8 %   62 .1 %              75 .0 %     54 .6 %           70 .6 %
 88 .3 %   64 .1 %   23 .7 %              12 .9 %     39 .6 %           18 .6 %
 10 .9 %    2 .4 %    0 .0 %               3 .6 %      0 .0 %            2 .8 %
  0 .0 %    0 .7 %    1 .9 %               0 .4 %      1 .4 %            0 .6 %
  0 .0 %    0 .0 %    0 .0 %               0 .1 %      0 .0 %            0 .1 %
  0 .8 %    3 .1 %    5 .0 %               4 .3 %      3 .4 %            4 .1 %
  0 .0 %    0 .0 %    3 .7 %               0 .6 %      0 .0 %            0 .4 %
  0 .0 %    0 .9 %    3 .6 %               3 .1 %      1 .0 %            2 .8 %


  0 .0 %    0 .0 %    0 .0 %               5 .0 %      0 .0 %            3 .9 %
  0 .0 %    0 .9 %    0 .0 %               0 .2 %      0 .0 %            0 .1 %
  0 .0 %    0 .0 %    0 .0 %               0 .0 %      0 .0 %            0 .0 %
  0 .0 %    0 .0 %    0 .0 %               0 .0 %      0 .0 %            0 .0 %
  0 .0 %    0 .0 %    0 .0 %               0 .0 %      0 .0 %            0 .0 %
  0 .0 %    0 .0 %    0 .0 %               0 .3 %      0 .0 %            0 .2 %
  0 .0 %    0 .0 %    0 .0 %                0 .0 %     0 .0 %            0 .0 %
  0 .0 %    0 .0 %    0 .2 %                0 .8 %     0 .0 %            0 .8 %


  0 .0 %    0 .9 %    0 .2 %                6 .3 %     0 .0 %            5 .0 %
100 .0 %   99 .1 %   99 .8 %              93 .7 %    100 .0 %           95 .0 %




                                                          Status: 31 March 2008
      P          I        S    Direct investments    Interest        Sum total
 88 .3 %    0 .0 %    3 .8 %               1 .7 %      0 .1 %            1 .3 %
  0 .0 %    1 .0 %    6 .5 %               3 .2 %      5 .9 %            3 .9 %
  0 .0 %    1 .2 %    8 .5 %               3 .4 %      3 .8 %            3 .5 %
  0 .0 %   46 .9 %    5 .8 %              11 .4 %     12 .2 %           11 .6 %
  0 .0 %    6 .2 %   11 .9 %              10 .2 %      8 .1 %            9 .7 %
  0 .0 %    7 .1 %   17 .5 %               9 .7 %     18 .2 %           11 .7 %
  0 .0 %   25 .8 %   29 .8 %              10 .1 %     12 .6 %           10 .7 %
  0 .0 %    0 .5 %    2 .7 %               9 .4 %      2 .2 %            7 .7 %
  0 .0 %    0 .0 %    3 .0 %               3 .9 %      1 .3 %            3 .3 %
  0 .0 %    2 .6 %    1 .3 %              11 .7 %      1 .7 %            9 .4 %
  0 .0 %    0 .0 %    9 .2 %               7 .7 %      5 .8 %            7 .2 %
 11 .7 %    8 .7 %    0 .0 %              17 .6 %     28 .1 %           20 .0 %




                                                                                          23
Property Record
location of property, usable floor space, tenancy information, and appraised values




       Property location                                                                                                                 Floor space
Se-    Property address                                   Type of       Type of    Date of acquisi-   Year built/   Plot size in m   2
                                                                                                                                            Total floor    Floor space,
rial                                                      property *)   usage *)   tion               remodeled                            space in m2     commercial,
no.                                                                                                                                                                in m2



I. Directly held real estate in countries inside the Euro zone

Germany (D)
1      10117 Berlin                                       H                        05/2007            1887/2006              3,800             14,385             14,385
       Behrenstrasse / Hedwigskirchgasse /
       Französische Strasse

2      10117 Berlin                                       OB            O: 78 %    06/2002            2002                     989              4,927              4,927
       Dorotheenstrasse 33 / Charlottenstrasse 42
3      10117 Berlin                                       OB            O: 76 %    01/2002            2003                   2,665             12,027              9,655
       Leipziger Platz 9
4      10627 Berlin                                       OB            B: 72 %    12/1999            2002                   1,277              5,350              4,368
       Wilmersdorfer Strasse 117 / Pestalozzistrasse 77
5      12277 Berlin                                       W/VL 7)       W: 99 %    11/1994            1972/1987            167,314             34,295             34,295
       Nahmitzer Damm 12
6      40212 Düsseldorf                                   OB            O: 63 %    12/1993            1972/1998              1,671              7,009              7,009
       Königsallee 92 a                                                 B: 30 %
7      60311 Frankfurt am Main                            O                        07/2002            2003                   2,610             14,421 6)          14,421
       Junghofstrasse 14
8      60311 Frankfurt am Main                            O                        07/2002            2003                   3,852             17,617             17,617
       Junghofstrasse 16
9      60311 Frankfurt am Main                            OH            O: 87 %    07/1996            2000                   1,890             21,163             21,163
       Neue Mainzer Strasse 60 – 66
10     60311 Frankfurt am Main                            O                        06/2002            1996                   2,105             25,869             25,869
       Taunusstrasse 2
11     60313 Frankfurt am Main                            OB            O: 39 %    01/1995            1890/1995              2,182             13,861             13,861
       Börsenstrasse 2 – 4                                              B: 59 %
12     60313 Frankfurt am Main                            OB            O: 54 %    12/2003            2004                   2,510             12,524             11,357
       Schillerstrasse 18 – 20                                          B: 34 %
13     60329 Frankfurt am Main                            O                        03/1994            1998                   1,560              6,642 6)           6,642
       Mainzer Landstrasse 41 – 45                                                 12/1995
14     60437 Frankfurt am Main                            R                        09/1996            1993                     773                599                  0
       Homburger Landstrasse 869
15     60439 Frankfurt am Main                            R 1)                     06/2000            2000                   3,267                 67                  0
       Oberurseler Weg 3 / Spielsgasse 22
16     60439 Frankfurt am Main                            R 1)                     06/2000            2000                   3,267                 61                  0
       Oberurseler Weg 3 / Spielsgasse 22
17     60486 Frankfurt am Main                            O                        12/1987            1984/2001             15,114             33,235             33,235
       Theodor-Heuss-Allee 80
18     60596 Frankfurt am Main                            H                        05/2006            1905/2006              7,220             15,018             15,018
       Kennedyallee 70
19     20097 Hamburg                                      O                        01/1988            1989/2005              5,384             13,509             13,509
       Nagelsweg 33, 35
20     20354 Hamburg                                      OB            B: 64 %    10/2003            1978/2003              1,774              9,625              9,018
       Gerhofstrasse 1 – 3
21     50672 Cologne                                      OB            O: 48 %    01/1994            1993                     432              2,242              2,242
       Ehrenstrasse 2 / St. Apernstrasse 1                              B: 52 %
22     80335 Munich                                       O                        06/2003            2003                   6,903             21,919             21,919
       Karlstrasse 64 – 68 / Seidlstrasse 21 – 23
23     63263 Neu-Isenburg                                 O                        12/1993            1993                   8,829             15,882             15,882
       Martin-Behaim-Strasse 4 – 6




24
                              Tenancy information                  Appraised market values
      Floor    Facilities,       Vacancy quota/      Remaining     Remaining      Currency         Appraised          Appraised    Debt financ-   Comments
     space,    features **)   lost user fee quota          lease    useful life              rent rate (as of      market value      ing quota
residential,                      (as of key date)         terms    (in years)                      key date)   (as of key date)
       in m2                                (in %)    (in years)                              (in thousands)     (in thousands)          (in %)




          0    AC, E                           0.0          30.0            79        EUR               4,500             81,200              –



          0    AC, E                         10.1            4.5            65        EUR               1,058             17,500              –


      2,372    AC, E                           5.5           2.8            66        EUR               2,436             44,800              –


        982    AC, E                           1.0           4.2            65        EUR               1,983             32,600              –


          0    AC, E                         65.6            1.6            31        EUR               2,183              7,460              –


          0    E                               0.0           3.9            55        EUR               1,621             28,800              –


          0    AC, E                         20.4            7.0            66        EUR               5,688            108,000              –


          0    AC, E                         39.7           10.0            66        EUR               7,033            125,300              –


          0    AC, E                           0.0           3.9            63        EUR               7,579            146,150              –


          0    AC, E                         20.8            4.0            59        EUR             10,339             169,900              –


          0    AC, E                         15.2            5.3            58        EUR               5,819            110,000              –


      1,167    AC, E                         26.7            4.8            67        EUR               3,977             70,500              –


          0    AC, E                         79.9            8.7            62        EUR               1,433             20,050              –


        599    –                               0.0           1.0            65        EUR                  62                930              –


         67    –                               0.0           1.0            73        EUR                   6                125              –


         61    –                               0.0           1.0            73        EUR                   6                120              –


          0    AC, E                         29.1            3.7            53        EUR               6,053             97,000              –


          0    AC, E                           0.0          28.6            68        EUR               4,600             82,000              –


          0    E                               9.9          10.5            58        EUR               1,864             29,500              –


        607    AC, E, Es                       0.3           9.0            56        EUR               4,716             81,880              –


          0    E                               0.0           8.6            66        EUR                499               8,950              –


          0    AC, E                           0.5           5.3            66        EUR               4,432             79,890              –


          0    AC, E                         41.5            4.7            56        EUR               1,646             21,520              –




                                                                                                                                                             25
Property Record
location of property, usable floor space, tenancy information, and appraised values




        Property location                                                                                                               Floor space
Se-     Property address                                 Type of       Type of    Date of acquisi-   Year built/   Plot size in m   2
                                                                                                                                           Total floor    Floor space,
rial                                                     property *)   usage *)   tion               remodeled                            space in m2     commercial,
no.                                                                                                                                                               in m2



I. Directly held real estate in countries inside the Euro zone

Germany (D)
24      63067 Offenbach                                  OOU           OU: 91 %   03/1979            1950/1973             10,374              5,118              5,035
        Nordring 144 / Goethering 60
25      70174 Stuttgart                                  OB            O: 26 %    12/1993            1982                   1,345              4,145              4,145
        Theodor-Heuss-Strasse 11 / Calwer Strasse 26                   B: 66 %
26      65843 Sulzbach                                   O                        07/1991            2001                  16,216             20,695             20,695
        Limespark 2

France (F)
27      92300 Levallois-Perret                           O                        08/2001            2000                   7,161             28,082 6)          28,082
        Quai Michelet
28      92360 Meudon                                     u.c./O                   09/2007            2009 4)               34,861             53,631 5)          53,631
        Avenue du Maréchal Juin
29      92200 Neuilly                                    O                        05/2003            2005                   2,914              9,661              9,661
        127 Avenue Charles de Gaulle
30      75008 Paris                                      O                        02/1998            1993                   4,846             28,201             28,201
        21 – 25 Rue Balzac
31      75014 Paris                                      O                        05/2003            2004                  10,872             33,134             33,134
        1 – 11 Boulevard Romain Rolland
32      75016 Paris                                      O                        05/2002            2000                   4,797             11,739             11,739
        7 Place d’Iéna
33      92800 Puteaux                                    O                        12/2002            2005                   4,810             22,430             22,430
        Rue de Valmy
34      95700 Roissy-en-France                           H                        09/2002            2002                  19,019             17,724             17,724
        Allée du Verger
35      95700 Roissy-en-France                           O                        12/2001            2003                   6,059              2,246              2,246
        165 Avenue du Bois de la Pie
36      95700 Roissy-en-France                           O                        10/2000            2002                  23,072              7,802              7,802
        Rue de la Belle Etoile
37      93400 Saint-Ouen                                 O                        06/2002            2004                   2,980             17,555             17,555
        164 Quartier Victor Hugo

Italy (I)
38      24050 Orio al Serio – Bergamo                    SC 1)                    06/2000            1998/2005             47,159             51,868 6)          51,868
        Via Portico 71
39      24050 Orio al Serio – Bergamo                    H                        03/2008            2008                   7,274              5,237              5,237
        Via Portico
40      20090 Segrate                                    O                        09/2004            2004                 121,099             34,520             34,520
        Via Circonvallazione Idroscalo
41      20099 Sesto San Giovanni                         O                        06/2001            2001                  11,564             27,008             27,008
        Viale Edison 50
42      20099 Sesto San Giovanni                         u.c./O                   07/2007            2009 4)                8,420             23,039 5)          23,039
        Viale Tommaso Edison
43      30172 Venice – Mestre                            SC 2)                    01/2002            1996                   2,454             12,754             12,754
        Piazza XXVII Ottobre

Netherlands (NL)
44      1181 ZA Amstelveen                               O                        12/2001            2004                   8,649             14,080 6)          14,080
        Handelsweg 41 – 59
45      1185 MC Amstelveen                               O                        04/1997            1990                  51,467             47,459             47,459
        Burgemeester Rijnderslaan 10 – 30




26
                              Tenancy information                  Appraised market values
      Floor    Facilities,       Vacancy quota/      Remaining     Remaining      Currency         Appraised          Appraised    Debt financ-   Comments
     space,    features **)   lost user fee quota          lease    useful life              rent rate (as of      market value      ing quota
residential,                      (as of key date)         terms    (in years)                      key date)   (as of key date)
       in m2                                (in %)    (in years)                              (in thousands)     (in thousands)          (in %)




         83    E                             19.2            1.0             –        EUR                   0                 16              –


          0    AC, E                         15.2            4.3            45        EUR               1,242             20,740              –


          0    AC, E                         29.0            5.3            64        EUR               3,504             49,820              –




          0    AC, E                           0.0           5.0            62        EUR             11,717             198,750           42.3


          0    –                                –              –            70        EUR               3,580             66,125              –


          0    AC, E                           0.0           7.0            58        EUR               4,611             82,840           46.7


          0    AC, E                           0.8           7.0            66        EUR             16,628             305,000           35.0


          0    AC, E                           0.0           9.0            67        EUR             15,367             276,600           40.0


          0    AC, E                           0.0           9.0            64        EUR               8,260            151,660              –


          0    AC, E                           0.1           7.8            67        EUR             10,766             193,800              –


          0    AC, E                           0.0          20.0            45        EUR               2,992             43,830           43.4


          0    AC                            20.5            6.1            66        EUR                414               5,640              –


          0    AC, E                         51.3            5.0            65        EUR               1,454             18,930              –


          0    AC, E                           0.0           6.6            66        EUR               5,434             89,700           55.7




          0    AC, E, Es                       1.7           3.6            53        EUR             18,717             292,180           43.3


          0    AC, E                           0.0           9.0            70        EUR                890              12,580              –


          0    AC, E                           0.0           6.0            67        EUR               7,164            112,310              –


          0    AC, E                           0.0           3.0            64        EUR               4,530             70,590           45.3


          0    –                                –              –            70        EUR               1,725             29,010              –


          0    E                               0.0          16.0            58        EUR               2,904             44,410              –




          0    AC, E                           0.0           7.9            77        EUR               2,879             43,000           48.8


          0    AC, E                           0.0           3.0            53        EUR               9,355            133,150              –




                                                                                                                                                             27
Property Record
location of property, usable floor space, tenancy information, and appraised values




       Property location                                                                                                                 Floor space
Se-    Property address                                   Type of       Type of    Date of acquisi-   Year built/   Plot size in m   2
                                                                                                                                            Total floor     Floor space,
rial                                                      property *)   usage *)   tion               remodeled                            space in m2      commercial,
no.                                                                                                                                                                 in m2



I. Directly held real estate in countries inside the Euro zone

Netherlands (NL)
46     1043 NX Amsterdam                                  O 2)                     07/2004            2004                  7,800              41,469 6)           41,469
       Radarweg 29
47     1077 ZZ Amsterdam                                  O 2)                     08/1996            1992                  8,033              23,979 6)           23,979
       Strawinskylaan 2001 – 2041/ 2501 – 2631
48     1081 PM Amsterdam                                  O 2)                     04/2002            2002                  4,196              12,539 6)           12,539
       Jachthavenweg 121
49     1082 LA Amsterdam                                  OB 3)         O: 97 %    12/2002            2005                  4,095 6)           17,460 6)           17,460
       Gustav-Mahlerplein
50     1082 LS Amsterdam                                  OB 3)         O: 94 %    12/2002            2005                  2,655 6)           34,548              34,548
       Gustav-Mahlerplein
51     1083 LA Amsterdam                                  u.c./OU 3)               12/2002            2008 4)              11,065                    0 5)               0
       Gustav-Mahlerplein
52     1101 BH Amsterdam                                  O 2)                     02/2001            2001                    967              19,962 6)           19,962
       De Entree 11 – 97
53     1101 HG Amsterdam                                  O 2)                     04/2002            2002                  1,179              19,679              19,679
       De Entree 201
54     2132 WT Hoofddorp                                  O                        07/1998            1999                 12,581              11,130              11,130
       Siriusdreef 30 – 72                                                         12/2001
55     3011 TA Rotterdam                                  O                        05/2000            2000                  3,212              17,070 6)           17,070
       Blaak 28 – 34
56     3072 AP Rotterdam                                  O 2)                     10/1998            2000                  3,542              18,500              18,500
       Wilhelminakade 123
57     3454 PV Utrecht                                    O 2)                     12/2001            2004                 12,151              39,653              39,653
       Orteliuslaan 1000
58     3454 PV Utrecht                                    O                        02/2004            2004                  4,878 6)            6,657               6,657
       Rijnzathe 16, De Meern
59     3526 KS Utrecht                                    O 2)                     02/1999            2001                  8,145              16,482              16,482
       Europaplein 40

Austria (A)
60     1020 Vienna                                        O                        10/2000            2000                  3,337              17,023 6)           17,023
       Dresdner Strasse 81 – 85 / Traisengasse 1
61     1020 Vienna                                        O                        11/1996            1978/2002             1,771              17,788 6)           17,788
       Praterstrasse 31
62     1100 Vienna                                        OW            O: 48 %    06/1997            1989                  4,277               5,547               5,547
       Erlachgasse 134 – 140                                            W: 46 %

Portugal (P)
63     1200-094 Lisbon                                    SCH           SC: 89 %   12/1997            2000                  3,145              12,594 6)           12,594
       Rua do Carmo 2



II. Directly held real estate in countries outside the Euro zone

United Kingdom (GB)
64     London                                             O                        02/1999            1999                  4,700              30,110              30,110
       EC2V 7RF, 10 Aldermanbury
65     London                                             O                        03/2001            2003                  1,633              11,788              11,788
       EC3, 10 – 15 Lombard Street
66     London                                             O 2)                     09/2001            2003                  1,790               7,595               7,595
       EC4, 65 St. Paul’s Churchyard



28
                              Tenancy information                  Appraised market values
      Floor    Facilities,       Vacancy quota/      Remaining     Remaining      Currency         Appraised          Appraised    Debt financ-   Comments
     space,    features **)   lost user fee quota          lease    useful life              rent rate (as of      market value      ing quota
residential,                      (as of key date)         terms    (in years)                      key date)   (as of key date)
       in m2                                (in %)    (in years)                              (in thousands)     (in thousands)          (in %)




          0    AC, E                           0.0           7.0            77        EUR               8,436            133,100           44.0


          0    AC, E                           0.0           6.6            65        EUR               7,113            107,000              –


          0    AC, E                           0.0           5.0            65        EUR               4,080             64,400              –


          0    AC, E                         50.9            8.9            68        EUR               4,776             66,560              –


          0    AC, E                           1.2           9.3            68        EUR             10,016             156,100              –


          0    –                                –              –            70        EUR               1,614             26,229              –


          0    AC, E                         29.0            4.3            63        EUR               3,365             48,600              –


          0    AC, E                           0.0           5.0            75        EUR               3,647             61,000              –


          0    AC, E                           0.0           2.7            62        EUR               1,899             28,520              –


          0    AC, E                           3.5           7.1            63        EUR               2,442             36,780              –


          0    AC, E                           0.0          10.0            63        EUR               3,408             55,620              –


          0    AC, E                         15.7            5.9            77        EUR               7,286            112,800           53.1


          0    AC, E                           0.0           6.4            67        EUR               1,088             17,110              –


          0    AC, E                           0.0           3.0            73        EUR               3,180             48,700              –




          0    AC, E                         15.8            4.0            63        EUR               2,549             39,800              –


          0    AC, E                         24.2            4.1            65        EUR               3,677             58,700              –


          0    E                             26.2            1.3            52        EUR                387               3,780              –




          0    AC, E, Es                       0.0           3.8            62        EUR               4,510             71,100           23.4




          0    AC, E                           0.0          17.0            73        GBP             15,250             291,300              –
                                                                                      EUR             19,263             367,942           34.3
          0    AC, E                           1.7          10.4            76        GBP               5,252             88,600              –
                                                                                      EUR               6,634            111,911           45.9
          0    AC, E                           0.0           8.3            76        GBP               3,892             69,970              –
                                                                                      EUR               4,916             88,379           43.8



                                                                                                                                                             29
Property Record
location of property, usable floor space, tenancy information, and appraised values




        Property location                                                                                                                    Floor space
Se-     Property address                                  Type of       Type of        Date of acquisi-   Year built/   Plot size in m   2
                                                                                                                                                Total floor    Floor space,
rial                                                      property *)   usage *)       tion               remodeled                            space in m2     commercial,
no.                                                                                                                                                                    in m2



II. Directly held real estate in countries outside the Euro zone

United Kingdom (GB)
67      London                                            O 2)                         09/2001            2003                    721               1,898 6)           1,898
        EC4, 1 Paternoster Square
68      London                                            O                            03/2003            1998                  3,501              17,869             17,869
        WC2, 4 Temple Place
69      London                                            u.c./SC 2)                   08/2004            2008 4)             161,000             144,130 5)        144,130
        White City

Sweden (S)
70      16967 Solna                                       O                            11/2003            2001                 13,100              43,536             43,536
        Rasundavägen 2 – 16 / Brahelund 2
71      11121 Stockholm                                   OB            O: 48 %        12/2003            2003                 11,050              65,443 6)          59,017
        Drottninggatan 53                                               B: 38 %




III. Properties held through real estate companies in countries inside the Euro zone

Belgium (B)
72      1210 Brussels                                     O                            12/2002            2003                  6,960              47,784             47,784
        Rue du Progrès 50 – 56

Germany (D)
73      93053 Regensburg                                  SC                           11/2002            2002                 25,223 6)           37,075 6)          37,075
        Friedenstrasse 23
74      97421 Schweinfurt                                 u.c./SC                      08/2007            2009 4)              29,712              31,238 5)          31,238
        Schrammstrasse 5

France (F)
75      92200 Boulogne-Billancourt                        O                            08/2000            2001                 16,595              47,064             47,064
        32 – 34 Quai du Pont du Jour
76      94220 Charenton-le-Pont                           O                            11/2001            2003                 16,374 6)           32,012 6)          32,012
        Quai de Bercy
77      92400 Courbevoie                                  O                            06/1999            1999                  7,696              52,470             52,470
        20 Avenue André Prothin

Italy (I)
78      20097 Milan (San Donato)                          O                            11/2007            2003                  3,750              21,082             21,082
        Via dell’Unione Europea 6
79      20126 Milan                                       O                            07/2007            1989/2005            11,750              16,415             16,415
        Viale Fulvio Testi 280

Luxembourg (L)
80      2540 Luxembourg                                   u.c./O                       05/2007            2009 4)               4,566              10,999 5)          10,999
        Avenue John F. Kennedy /
        Rue Albert Borschette

81      2540 Luxembourg                                   u.c./O                       05/2007            2009 4)               4,211               9,586 5)           9,586
        Avenue John F. Kennedy /
        Rue Albert Borschette

82      2540 Luxembourg                                   u.c./O                       05/2007            2009 4)               4,744              12,023 5)          12,023
        Avenue John F. Kennedy /
        Rue Albert Borschette




30
                              Tenancy information                  Appraised market values
      Floor    Facilities,       Vacancy quota/      Remaining     Remaining      Currency         Appraised          Appraised    Debt financ-   Comments
     space,    features **)   lost user fee quota          lease    useful life              rent rate (as of      market value      ing quota
residential,                      (as of key date)         terms    (in years)                      key date)   (as of key date)
       in m2                                (in %)    (in years)                              (in thousands)     (in thousands)          (in %)




          0    AC, E                           0.4          11.3            76        GBP               1,011             18,160              –
                                                                                      EUR               1,276             22,938           43.8
          0    AC, E                           0.0          16.0            60        GBP             10,316             182,200              –
                                                                                      EUR             13,030             230,138           40.5
          0    –                                –              –            60        GBP             64,636           1,065,532              –
                                                                                      EUR             81,642           1,345,878           34.1


          0    AC, E                           0.0           5.3            74        SEK             89,216           1,341,200              –
                                                                                      EUR              9,511             142,988           47.0
      6,426    AC, E                           0.3           4.9            65        SEK            230,579           3,748,000              –
                                                                                      EUR             24,582             399,582           42.7




          0    AC, E                           0.0          14.0            65        EUR               9,626            183,790           43.5   Percentage interest 100.0 %




          0    AC, E, Es                       0.0           5.8            55        EUR             10,975             168,800              –   Percentage interest 90.0 %


          0    –                                –              –            60        EUR               4,203             78,520              –   Percentage interest 75.0 %




          0    AC, E                           0.0           2.8            64        EUR             19,942             340,380           39.4   Percentage interest 67.0 %


          0    AC, E                           0.0           4.0            65        EUR             10,206             171,890           44.2   Percentage interest 67.0 %


          0    AC, E                           0.0           5.0            62        EUR             23,042             387,440           43.8   Percentage interest 67.0 %




          0    AC, E                           0.0           4.8            66        EUR               4,603             82,000              –   Percentage interest 100.0 %


          0    AC, E                           0.0           5.0            59        EUR               3,556             60,100              –   Percentage interest 100.0 %




          0    –                                –              –            70        EUR               3,321             64,445              –   Percentage interest 100.0 %



          0    –                                –              –            70        EUR               2,847             55,257              –   Percentage interest 100.0 %



          0    –                                –              –            70        EUR               3,578             69,423              –   Percentage interest 100.0 %




                                                                                                                                                                           31
Property Record
location of property, usable floor space, tenancy information, and appraised values




       Property location                                                                                                                       Floor space
Se-    Property address                                  Type of        Type of          Date of acquisi-   Year built/   Plot size in m   2
                                                                                                                                                  Total floor    Floor space,
rial                                                     property *)    usage *)         tion               remodeled                            space in m2     commercial,
no.                                                                                                                                                                      in m2



III. Properties held through real estate companies in countries inside the Euro zone

Portugal (P)
83     8000 Faro                                         SC 1)                           05/2000            2001                  35,415             23,573             23,573
       Estrada National 125



III. Real estate held through real estate companies in countries outside the Euro zone

United Kingdom (GB)
84     Belfast                                           u.c./SC                         06/2004            2008 4)               44,470             65,677 5)          65,677
       Victoria Square




32
                              Tenancy information                     Appraised market values
      Floor    Facilities,       Vacancy quota/         Remaining     Remaining       Currency          Appraised           Appraised      Debt financ-     Comments
     space,    features **)   lost user fee quota             lease    useful life                rent rate (as of       market value        ing quota
residential,                      (as of key date)            terms    (in years)                        key date)    (as of key date)
       in m2                                (in %)       (in years)                                (in thousands)      (in thousands)             (in %)




          0    AC, E, Es                       0.0              6.6            54          EUR                7,369            110,600               31.7   Percentage interest 100.0 %




          0    –                               0.0             15.6            70         GBP              15,687              252,084                  –   Percentage interest 99.9 %
                                                                                          EUR              19,814              318,408               61.5   The Victoria Square building
                                                                                                                                                            in Belfast is currently still
                                                                                                                                                            under construction.
                                                                                                                                                            For this reason, the land
                                                                                                                                                            value plus activated con-
                                                                                                                                                            struction costs are posted as
                                                                                                                                                            market value. Accordingly,
                                                                                                                                                            the debt financing quota
                                                                                                                                                            equalling 61.50 % refers to
                                                                                                                                                            the part completed by
                                                                                                                                                            31 March 2008 and will be
                                                                                                                                                            proportionately lower when
                                                                                                                                                            set in relation to the final
                                                                                                                                                            value of the building
                                                                                                                                                            (prospectively about 44.00 %).




    1)   Residential and partially owned property                 *)                                                              sM supermarket, super store
    2)   Ground lease                                             u. c. Building under construction                               vl vacant lot
    3)   Partial ground lease                                     H     Hotel building                                            W Warehouse
    4)   Planned date of completion                               O     Office building
    5)   Area as planned                                          OB Office and business building                                 **)
    6)   New survey                                               OH Office including hotel usage                                 AC     Air conditioning
    7)   Market value assessed in expert opinion per unit         Ou Other usage                                                  e      elevator (passenger, freight)
                                                                  OW Office and warehouse building                                es     escalator
                                                                  OOu Office building including other usage
                                                                  R     Residential building                                      exchange rate as of 28 March 2008
                                                                  sC shopping centre                                              1.00 euR = 0.7917 GBP
                                                                  sCH shopping centre including hotel usage                       1.00 euro = 9.3798 sek




                                                                                                                                                                                       33
     Notes on the
     Property Record


     n   remaining lease terms
         This column lists the mean weighted remaining lease term for the respective property
         in years . The weighting is based on the share that a given lease represents within the
         targeted annual net rent total .

     n   remaining useful life
         This column lists the market value that an expert assessed by the key date of the
         most recent valuation .

     n   Debt financing quota
         The debt financing quota represents the leverage in degrees of the external funds that
         were borrowed to finance a given real estate investment . It is calculated as the ratio
         (in %) between the leverage and the market value of the property investments . The
         figure breaks down into direct and indirect property investments, as well as into the
         currencies of the external loans taken out in each case .

                                      External funds
         Calculation:                                                    x 100
                        Market value of the real estate investments

     n   Appraised rent rating
         This column reflects the gross annual income, assuming full tenancy, on the basis of
         the rent rate that an expert assessed by the key date of the most recent valuation .
         Properties under construction are posted in pro-rata relation to their stage of comple-
         tion .

     n   Appraised market value
         This column lists the market value an expert assessed by the key date of the most
         recent valuation . Properties under construction are posted in pro-rata relation to their
         stage of completion .

     n   n. / a.
         To protect the privacy of a given tenant, the tenant data is omitted whenever the prop-
         erty at issue had less than five tenants by the key date, or whenever the rent revenues
         from that particular property were paid to 75 % or more by a single tenant .

     n   Parking spaces
         Parking spaces are included in the rent revenues, but are not reported in the floor
         space statistics .

     n   real estate held through real estate companies
         All data quoted on a given property relates to the property as a whole, regardless of
         the pro-rata interest the Fund holds in it .




34
Japan-center, Frankfurt



                   35
Additional Tenancy Information



       Property location                                         Tenancy information
Se-    Property address                                           Currency   Rent revenues        Rent revenues         Comments
rial                                                                             of previous     forecast for the
no.                                                                           financial year       next financial
                                                                             (in thousands)                 year
                                                                                                  (in thousands)
I. Directly held real estate in countries inside the Euro zone                                    Not included in the
                                                                                                    Auditor’s Report


Germany (D)
1      10117 Berlin                                                   EUR              n. / a.                n. / a.
       Behrenstrasse / Hedwigskirchgasse /
       Französische Strasse

2      10117 Berlin                                                   EUR              1,133                     897
       Dorotheenstrasse 33 / Charlottenstrasse 42
3      10117 Berlin                                                   EUR              n. / a.                n. / a.
       Leipziger Platz 9
4      10627 Berlin                                                   EUR              2,185                  2,217
       Wilmersdorfer Strasse 117 / Pestalozzistrasse 77
5      12277 Berlin                                                   EUR              n. / a.                n. / a.
       Nahmitzer Damm 12
6      40212 Düsseldorf                                               EUR              1,750                  1,571
       Königsallee 92a
7      60311 Frankfurt am Main                                        EUR              n. / a.                n. / a.
       Junghofstrasse 14
8      60311 Frankfurt am Main                                        EUR              n. / a.                n. / a.
       Junghofstrasse 16
9      60311 Frankfurt am Main                                        EUR              n. / a.                n. / a.
       Neue Mainzer Strasse 60 – 66
10     60311 Frankfurt am Main                                        EUR              5,713                  8,386     Reduction of the rent-free period
       Taunusstrasse 2
11     60313 Frankfurt am Main                                        EUR              5,130                  5,459
       Börsenstrasse 2 – 4
12     60313 Frankfurt am Main                                        EUR              2,350                  2,905     Reduction of vacancy rate
       Schillerstrasse 18 – 20
13     60329 Frankfurt am Main                                        EUR              n. / a.                n. / a.
       Mainzer Landstrasse 41 – 45
14     60437 Frankfurt am Main                                        EUR                 55                      55
       Homburger Landstrasse 869
15     60439 Frankfurt am Main                                        EUR              n. / a.                n. / a.
       Oberurseler Weg 3 / Spielsgasse 22
16     60439 Frankfurt am Main                                        EUR              n. / a.                n. / a.
       Oberurseler Weg 3 / Spielsgasse 22
17     60486 Frankfurt am Main                                        EUR              n. / a.                n. / a.
       Theodor-Heuss-Allee 80
18     60596 Frankfurt am Main                                        EUR              n. / a.                n. / a.
       Kennedyallee 70
19     20097 Hamburg                                                  EUR              1,659                  1,850
       Nagelsweg 33, 35
20     20354 Hamburg                                                  EUR              4,883                  4,878
       Gerhofstrasse 1 – 3
21     50672 Cologne                                                  EUR              n. / a.                n. / a.
       Ehrenstrasse 2 / St. Apernstrasse 1
22     80335 Munich                                                   EUR              5,042                  5,016
       Karlstrasse 64 – 68 / Seidlstrasse 21 – 23
23     63263 Neu-Isenburg                                             EUR                983                     997
       Martin-Behaim-Strasse 4 – 6




36
        Property location                                        Tenancy information
Se-     Property address                                          Currency   Rent revenues        Rent revenues         Comments
rial                                                                             of previous     forecast for the
no.                                                                           financial year       next financial
                                                                             (in thousands)                 year
                                                                                                  (in thousands)

I. Directly held real estate in countries inside the Euro zone                                    Not included in the
                                                                                                    Auditor’s Report


Germany (D)
24      63067 Offenbach                                               EUR              n. / a.                n. / a.
        Nordring 144 / Goethering 60
25      70174 Stuttgart                                               EUR                902                  1,129
        Theodor-Heuss-Strasse 11 / Calwer Strasse 26
26      65843 Sulzbach                                                EUR              2,217                  2,704     Reduction of the rent-free period
        Limespark 2

France (F)
27      92300 Levallois-Perret                                        EUR             10,860                 12,043     Reduction of the rent-free period
        Quai Michelet
28      92360 Meudon                                                  EUR                   –                      –
        Avenue du Maréchal Juin
29      92200 Neuilly                                                 EUR              n. / a.                n. / a.
        127 Avenue Charles de Gaulle
30      75008 Paris                                                   EUR             14,425                 14,269
        21 – 25 Rue Balzac
31      75014 Paris                                                   EUR              n. / a.                n. / a.
        1 – 11 Boulevard Romain Rolland
32      75016 Paris                                                   EUR              n. / a.                n. / a.
        7 Place d’Iéna
33      92800 Puteaux                                                 EUR              n. / a.                n. / a.
        Rue de Valmy
34      95700 Roissy-en-France                                        EUR              n. / a.                n. / a.
        Allée du Verger
35      95700 Roissy-en-France                                        EUR              n. / a.                n. / a.
        165 Avenue du Bois de la Pie
36      95700 Roissy-en-France                                        EUR              n. / a.                n. / a.
        Rue de la Belle Etoile
37      93400 Saint-Ouen                                              EUR              n. / a.                n. / a.
        164 Quartier Victor Hugo

Italy (I)
38      24050 Orio al Serio – Bergamo                                 EUR             19,988                 20,219
        Via Portico 71
39      24050 Orio al Serio – Bergamo                                 EUR              n. / a.                n. / a.
        Via Portico
40      20090 Segrate                                                 EUR              n. / a.                n. / a.
        Via Circonvallazione Idroscalo
41      20099 Sesto San Giovanni                                      EUR              n. / a.                n. / a.
        Viale Edison 50
42      20099 Sesto San Giovanni                                      EUR                   –                      –
        Viale Tommaso Edison
43      30172 Venice – Mestre                                         EUR              n. / a.                n. / a.
        Piazza XXVII Ottobre

Netherlands (NL)
44      1181 ZA Amstelveen                                            EUR              2,070                  3,133     Rent loss covered through developer’s guaran-
        Handelsweg 41 – 59                                                                                              tee (through 2008; reduced price of purchase)
45      1185 MC Amstelveen                                            EUR              n. / a.                n. / a.
        Burgemeester Rijnderslaan 10 – 30


                                                                                                                                                                  37
Additional Tenancy Information



       Property location                                           Tenancy information
Se-    Property address                                             Currency   Rent revenues        Rent revenues         Comments
rial                                                                               of previous     forecast for the
no.                                                                             financial year       next financial
                                                                               (in thousands)                 year
                                                                                                    (in thousands)

I. Directly held real estate in countries inside the Euro zone                                      Not included in the
                                                                                                      Auditor’s Report


Netherlands (NL)
46     1043 NX Amsterdam                                                EUR              n. / a.                n. / a.
       Radarweg 29
47     1077 ZZ Amsterdam                                                EUR              3,277                  7,536     Reduction of the rent-free period
       Strawinskylaan 2001 – 2041/ 2501 – 2631
48     1081 PM Amsterdam                                                EUR              n. / a.                n. / a.
       Jachthavenweg 121
49     1082 LA Amsterdam                                                EUR                456                     395    Rent revenues diminished by rent-free
       Gustav-Mahlerplein                                                                                                 periods
50     1082 LS Amsterdam                                                EUR              7,745                 10,343     Reduction of the rent-free period
       Gustav-Mahlerplein
51     1083 LA Amsterdam                                                EUR                   –                      –
       Gustav-Mahlerplein
52     1101 BH Amsterdam                                                EUR              2,494                  2,785
       De Entree 11 – 97
53     1101 HG Amsterdam                                                EUR              n. / a.                n. / a.
       De Entree 201
54     2132 WT Hoofddorp                                                EUR              2,312                  2,580
       Siriusdreef 30 – 72
55     3011 TA Rotterdam                                                EUR              2,484                  2,550
       Blaak 28 – 34
56     3072 AP Rotterdam                                                EUR              n. / a.                n. / a.
       Wilhelminakade 123
57     3454 PV Utrecht                                                  EUR              n. / a.                n. / a.
       Orteliuslaan 1000
58     3454 PV Utrecht                                                  EUR              n. / a.                n. / a.
       Rijnzathe 16, De Meern
59     3526 KS Utrecht                                                  EUR              n. / a.                n. / a.
       Europaplein 40

Austria (A)
60     1020 Vienna                                                      EUR              2,085                  2,280
       Dresdner Strasse 81 – 85 / Traisengasse 1
61     1020 Vienna                                                      EUR              2,061                  2,868     Reduction of the rent-free period
       Praterstrasse 31
62     1100 Vienna                                                      EUR              n. / a.                n. / a.
       Erlachgasse 134 – 140

Portugal (P)
63     1200-094 Lisbon                                                  EUR              n. / a.                n. / a.
       Rua do Carmo 2



II. Directly held real estate in countries outside the Euro zone

United Kingdom (GB)
64     London                                                           GBP              n. / a.                n. / a.
       EC2V 7RF, 10 Aldermanbury                                        EUR              n. / a.                n. / a.
65     London                                                           GBP              2,506                  5,157     Reduction of the rent-free period
       EC3, 10 – 15 Lombard Street                                      EUR              3,166                  6,514




38
        Property location                                                    Tenancy information
Se-     Property address                                                       Currency      Rent revenues        Rent revenues         Comments
rial                                                                                             of previous     forecast for the
no.                                                                                           financial year       next financial
                                                                                             (in thousands)                 year
                                                                                                                  (in thousands)

II. Directly held real estate in countries outside the Euro zone                                                  Not included in the
                                                                                                                    Auditor’s Report


United Kingdom (GB)
66      London                                                                         GBP             3,556                  3,798
        EC4, 65 St. Paul’s Churchyard                                                  EUR             4,491                  4,797
67      London                                                                         GBP             n. / a.                n. / a.
        EC4, 1 Paternoster Square                                                      EUR             n. / a.                n. / a.
68      London                                                                         GBP             n. / a.                n. / a.
        WC2, 4 Temple Place                                                            EUR             n. / a.                n. / a.
69      London                                                                         GBP                  –                      –
        White City                                                                     EUR                  –                      –

Sweden (S)
70      16967 Solna                                                                    SEK             n. / a.                n. / a.
        Rasundavägen 2 – 16 / Brahelund 2                                              EUR             n. / a.                n. / a.
71      11121 Stockholm                                                                SEK           226,296               228,838
        Drottninggatan 53                                                              EUR            24,126                24.397




III. Properties held through real estate companies in countries inside the Euro zone

Belgium (B)
72      1210 Brussels                                                                  EUR             n. / a.                n. / a.
        Rue du Progrès 50 – 56

Germany (D)
73      93053 Regensburg                                                               EUR            10,016                 10,232
        Friedenstrasse 23
74      97421 Schweinfurt                                                              EUR                  –                      –
        Schrammstrasse 5

France (F)
75      92200 Boulogne-Billancourt                                                     EUR             n. / a.                n. / a.
        32 – 34 Quai du Pont du Jour
76      94220 Charenton-le-Pont                                                        EUR             n. / a.                n. / a.
        Quai de Bercy
77      92400 Courbevoie                                                               EUR            15.458                 16,097
        20 Avenue André Prothin

Italy (I)
78      20097 Milan (San Donato)                                                       EUR             1,351                  4,718     The property was added to the portfolio in
        Via dell’Unione Europea 6                                                                                                       October 2007.
79      20126 Milan                                                                    EUR             n. / a.                n. / a.
        Viale Fulvio Testi 280

Luxembourg (L)
80      2540 Luxembourg                                                                EUR                  –                      –
        Avenue John F. Kennedy /
        Rue Albert Borschette

81      2540 Luxembourg                                                                EUR                  –                      –
        Avenue John F. Kennedy /
        Rue Albert Borschette

82      2540 Luxembourg                                                                EUR                  –                      –
        Avenue John F. Kennedy /
        Rue Albert Borschette



                                                                                                                                                                                     39
Additional Tenancy Information



       Property location                                                     Tenancy information
Se-    Property address                                                        Currency      Rent revenues        Rent revenues          Comments
rial                                                                                             of previous     forecast for the
no.                                                                                           financial year       next financial
                                                                                             (in thousands)                 year
                                                                                                                  (in thousands)
III. Properties held through real estate companies in countries inside the Euro zone                               Not included in the
                                                                                                                     Auditor’s Report


Portugal (P)
83     8000 Faro                                                                       EUR             7,339                   7,598
       Estrada National 125



III. Real estate held through real estate companies in countries outside the Euro zone

United Kingdom (GB)
84     Belfast                                                                         GBP             n. / a.               21,221
       Victoria Square                                                                 EUR             n. / a.               26,804




                                                                                                                                exchange rates on 28 March 2008
                                                                                                                                1.00 euR = 0.7917 GBP
                                                                                                                                1.00 euro = 9.3798 sek




40
Notes on the Additional Tenancy
Information


n   rent revenues of the financial year concluded
    These are the total target positions (target net rents), with vacancy periods and con-
    tractually agreed rent-free times set to zero . For properties that were transferred into
    the portfolio in the course of the financial year, the rent revenues posted reflect the
    period following the date of transfer .

    Rent revenues from properties in countries with currencies other than euro were con-
    verted at the valid exchange rate of the respective month, and then summed up . The
    conversion was undertaken at the foreign exchange rates of 28 March 2008 .

n   rent revenues forecast for the following financial year
    This is the total of the rent revenues forecast (target net rents), assuming no vacancy
    periods and contractually agreed rent-free periods .

    The rent revenue forecast is detailed for each property — in individual cases as drill-
    down to the level of the rental unit — while taking the respective region and market
    into account . General forecasts regarding national economies, such as, e . g ., the devel-
    opment of index values, are based on the estimates issued by the National Economy
    Department of Commerzbank .

    Rent revenues from properties in countries with currencies other than euro were
    planned in the foreign currency and converted into euro at a projected mean annual
    exchange rate .

    The forecast rent revenues of the following financial year are not included in the Audi-
    tor's Report .

n   n. / a.
    To protect the privacy of a given tenant, the tenant data is omitted whenever the prop-
    erty at issue had less than five tenants by the key date, or whenever the rent revenues
    from that particular property were paid to 75 % or more by a single tenant .

n   representation according to percentage interest
    All figures are pro-rata, referring to the respective percentage interest .

n   Deviations in rent revenues
    Deviations between the rent revenues of the concluded financial year, or the forecast
    rent revenues of the following financial year, respectively, and the appraised rent rat-
    ings (Property Record) may occur for any of the following reasons:

    – The negotiated target net rent exceeds or undercuts the appraised rent .

    – The target net rent is reported without taking the vacant or rent-free periods into
      account, whereas an expert opinion would rate this rent loss as a reduction in value
      and exclude it from the appraised rent rating .

    – The target net rents are subject to periodic accounting, whereas the appraised rent
      ratings are reported as of a certain key date . Significant deviations for a given prop-
      erty are detailed in the Property Record .




                                                                                                  41
Record of Participations
as of 31 March 2008



Company and corporate seat/                                        Company equity 1)   Interest   Shareholder loans   Date of acquisition 2)
property number according to property record                               in euro                          in euro
plus property address

Belgium (B)

Immobilière des Croisades S.A.                                             4,957,871   100.00 %                  –                  12/2002
Avenue Hermann-Debroux 40
1160 Brussels
     72 1210 Brussels, Rue du Progrès 50 – 56

Germany (D)
CGI Grundstück GmbH & Co.                                                 16,500,000    90.00 %                  –                  11/2002
Regensburg Arcaden KG
Kreuzberger Ring 56
65205 Wiesbaden

     73 93053 Regensburg, Friedenstrasse. 23

Kommanditgesellschaft PANTA                                               92,060,000    75.00 %                  –                  08/2007
Achtundzwanzigste Grundstücksgesellschaft GmbH & Co. 3)
Heegbarg 30
22391 Hamburg

     74 97421 Schweinfurt, Schrammstrasse 5

France (F)
CeGeREAL S.A.                                                            398,178,332    67.00 %                  –                  06/1999
21 – 25 Rue Balzac
75008 Paris

     75 92200 Boulogne-Billancourt, 32 – 34 Quai du Pont du Jour

     76 94220 Charenton-le-Pont, Quai de Bercy

     77 92400 Courbevoie, 20 Avenue André Prothin

Italy (I)
Alfa S.r.l.                                                                   10,000   100.00 %          41,000,000                 11/2007
Via Cordusio 2
20123 Milan

     78 20097 Milan (San Donato), Via dell’Unione Europea 6

Lacerta Immobiliare S.r.l.                                                    10,000   100.00 %          30,200,000                 07/2007
Via Cordusio 2
20123 Milan

     79 20126 Milan, Viale Fulvio Testi 280

CGI S.r.l. 4)                                                                 30,000   100.00 %                  –                  11/2007
Via Cordusio 2
20123 Milan




42
 Company and corporate seat/                                                      Company equity 1)                Interest       Shareholder loans     Date of acquisition 2)
 property number according to property record                                             in euro                                           in euro
 plus property address

 Luxembourg (L)
 President A S.A.                                                                            31,000               100.00 %                        –                   05/2007
 20 Rue de la Poste
 2346 Luxembourg

    80 2540 Luxembourg, Avenue John F. Kennedy / Rue Albert Borschette

 President B S.A.                                                                            31,000               100.00 %                        –                   05/2007
 20 Rue de la Poste
 2346 Luxembourg

     81 2540 Luxembourg, Avenue John F. Kennedy / Rue Albert Borschette

 President C S.A.                                                                            31,000               100.00 %                        –                   05/2007
 20 Rue de la Poste
 2346 Luxembourg

     82 2540 Luxembourg, Avenue John F. Kennedy / Rue Albert Borschette

 Portugal (P)
 Forum Algarve, Gestao de Centro Comercial                                               10,000,000                99.99 %                        –                   05/2000
 Sociedade Unipessoal, Lda. II & Comandita
 Avenida da Liberdade 224
 1250 – 148 Lisbon

     83 8000 Faro, Estrada National 125

 United Kingdom (GB)
 CGI Victoria Square Partnership                                                          100 GBP                  99.90 %                        –                   06/2004
 3 More London Riverside
 London SE1 2AQ

     84 Belfast BT1 4QG, 1 Victoria Square




1) total company equity                      2) In the case of newly formed companies:   3) Renamed stadtgalerie schweinfurt kG      4) the company does not own any
                                                date company was formed                     in April 2008                               property at the moment and is to be
                                                                                                                                        dissolved,




                                                                                                                                                                           43
     Return on Investment



     rEturN ON INVEStMENt SuBStANtIAlly INcrEASED

     hausInvest europa was able to raise its annual return on investment for the financial year
     ending 31 March 2008 to 7 .0 % (calculated according to the BVI method), which is a ma-
     jor increase . Compared to the key date of the previous financial year, the Fund boosted
     its return by about 60 % . The positive result is essentially due to the active portfolio man-
     agement efforts the Fund implemented . In addition, the steady increase of the return on
     investment during the financial year just concluded was complemented by the sustained
     positive situation on Europe's real estate markets .

     POSItIVE rEturNS FOr 36 yEArS

     Particularly as a long-term form of investment, hausInvest europa represents an excel-
     lent choice . Because the Fund has finished every financial year since it was launched in
     1972 with a positive return on investment . Moreover, regular profits and interest earn-
     ings as well as the appreciation of the Fund real estate ensure that fluctuations in value
     remain low . The stable performance of hausInvest europa suggests as much .



     Average annual performance 1)
     3 years                                                                                                           +    4 .4 %
     5 years                                                                                                           +    3 .7 %
     10 years                                                                                                          +    4 .6 %
     20 years                                                                                                          +    5 .6 %
     since Fund inception 36 years ago                                                                                 +    6 .2 %



     Absolute performance over different periods of time 1)
     3 years                                                                                                           + 13 .9 %
     5 years                                                                                                           + 20 .0 %
     10 years                                                                                                          + 56 .6 %
     20 years                                                                                                          + 197 .2%
     since Fund inception 36 years ago                                                                                 + 778 .2 %


     1) Calculated according to the BvI method (excluding up-front fee, assuming immediate reinvestment of distributions)
        as of 31 March 2008. Past performance is not indicative of future returns.




44
                                                                                                                     R etu R N O N I N v estM e Nt




HIGHEr AFtEr-tAX rEturNS BEcAuSE OF tAX-FrEE rOI PErcENtAGE 1)

The full meaning of the achieved return on investment reveals itself in the comparison
with other long-term forms of investment that are characterised by similarly low risks . In
such comparisons, e . g . with Federal German bonds, hausInvest europa regularly comes
out on top, particularly when seen from the after-tax perspective .

This is due to the fact that the returns of fixed-income securities are principally taxable
in Germany . In the case of hausInvest europa, by contrast, a considerable percentage of
the return on investment remains exempt from (corporate) income tax . This goes back
to the fact that the income from real estate located abroad and from foreign real estate
companies is normally taxed in situ pursuant to existing double taxation treaties, mean-
ing it is exempt from further immediate taxation for German investors . This can also
apply to the sale of Fund shares to foreign real estate partnerships . Depending on the
country, however, foreign income may be subject to the progressivity proviso . The tax
treatment of the income from open-ended property funds will be subject to significant
changes once the flat rate withholding tax enters into force on 1 January 2009 (for more
details on this issue, see page 85 "Note on the Flat Rate Withholding Tax") . Notwith-
standing the changed situation, investors of hausInvest europa will continue to benefit
from tax breaks .

Fund shares held as part of corporate assets also benefit from substantial tax breaks .
Appreciations that may occur whenever shares are sold or redeemed, for instance, re-
main tax-exempt to a large extent . This is due, above all, to the high share of foreign real
estate in the overall portfolio . Accordingly, some of the so-called "Aktiengewinn" (stock
profits) and of the so-called "Immobiliengewinn" (real estate profits) remains tax-exempt
(for more details, see pages 83+) . In addition to the tax exemption, the taxable portion of
the appreciated shares remains subject to a tax deferment until the time of sale .

In the case of the concluded 2007/2008 financial year, 73 .0 % of the Fund's return on
investment remained tax-free for private investors . Here, it needs to be remembered that
the higher a person's marginal tax bracket is, the higher will be the financial advantage .
The following model calculation is based on the current tax regulations:

Return for a comparable, fully taxed type of investment
Tax rate (including solidarity surcharge of 5 .5 %)                       30 %      35 %        40 %    47,48 % 2)
A comparable, fully-taxed investment would have                          9 .16 %   9 .72 %   10 .37 %   11 .58 %
to show this return before taxes to match the
return of hausInvest europa .

1) Not included in the Auditor's Report.
2) Highest tax bracket of 45 % + 5.5 % solidarity surcharge = 47.48 %.




                                                                                                                                              45
     Valuation and Returns



     rEturNS

     In addition to the information mandated by the BVI Federal Investment and Asset Man-
     agement Association, the ROI ratios and capital information are represented in fully
     consolidated form on the national level and independently of the selected investment
     structure in order to enhance the transparency of the investment success factors .

     In the time between 1 April 2007 and 31 March 2008, the hausInvest global property
     fund earned an overall fund return of 7 .0 % after the deduction of fund costs . This trans-
     lates into an increase of about 60 % compared to the previous financial year . Seen over
     a ten-year period, hausInvest europa achieved a result of 4 .59 % and clearly topped the
     3 .46 % performance index published by IPD 1) for the fund returns of open-ended prop-
     erty funds (OFIX – 10) during Q1 2008

     The total fund return before the deduction of fund costs equalled 7 .4 % . It is defined by
     the real estate investments and the high share of 33 % in liquid funds . Real estate invest-
     ments generated 9 .0 % profits during the concluded financial year . Liquid assets contrib-
     uted to the performance at an average of 4 .4 % .

     Belgium

     The City Atrium office property in Brussels boosted the total returns with a real estate
     yield of 11 .1 % on the mean committed capital . This figure breaks down into the real
     estate profit of 8 .7 % and the positive leverage effect of the debt financing .

     1) IPd (Investment Property databank ltd.) 2008.




     Information on changes in value                                                    D             UK            NL               F
     during the reporting period. in million euro
     Real assets, portfolio as of 31 March 2008 1)                              1,434 .7        2,167 .2      1,138 .6        1,432 .9
     Appraised rent ratings, portfolio         2)
                                                                                    84 .3         129 .9          74 .4          81 .2
        Positive reappraisals according to expert opinion                           13 .5           30 .9         58 .5        122 .4
        Other positive reappraisals 3)                                              11 .3             0 .0          3 .0          0 .0
        Negative reappraisals according to expert opinion                          -24 .6            -0 .3        -22 .8          0 .0
        Other negative reappraisals 3)                                               -1 .6            0 .0         -4 .2          -0 .1
     Sum total of reappraisals according to expert opinion                         -11 .1           30 .6         35 .7        122 .4
     Sum total of other reappraisals 3)                                               9 .7            0 .0         -1 .2          -0 .1
     Other changes in value due to capital income tax                                 0 .0            0 .0        -10 .0        -51 .9


     1) Properties under construction are posted at their land value plus capitalised construction costs.
     2) Appraised rent rating, adjusted to the progressive stage of completion in the case of properties under construction
     3) Including sales profits/losses without currency


46
                                                                                                 vA luAtI O N A N d R etu R N s




Germany

With a gross income of 5 .4 %, the Fund realised a very positive result in Germany . When
directly compared to last year, the real estate profit in Germany rose from -4 .4 % to cur-
rently 4 .5 % . The benchmark provided in the form of the IPD index for 2007 was thus
upheld . Both the block sale (Nero Portfolio) in the previous financial year and the succes-
sive letting of vacant floor space facilitated this development . Selling the Clou property
prompted a positive increase in value and an average real estate yield of 6 .4 % p . a . over
a ten-year period of ownership . This performance level exceeds the ten-year benchmark
of 4 .6 % that IPD issued for shopping centres . With the acquisition of the Hotel Rocco
Forte in Berlin during the reporting period and the purchase of the Stadtgalerie Schwein-
furt property we consistently continued the diversification of the Germany portfolio .

France

The French portfolio reported a performance of 7 .9 % for the 2007/2008 financial year .
On the whole, the Fund earned a return on equity of 14 % . Both the dynamic investment
market and the positive development of the rent rates contributed to this result . The
attractiveness of the location was confirmed by the property valuation and the re-letting
of the Place d’Iena prime building for a top rent rate of more than 800 euros per m2 annu-
ally . This had a positive impact on the Fund performance .

united kingdom

The performance of the British real estate portfolio, which reports 4 .3 % interest on the
committed equity, continues to be paced by the White City project development . The
shopping centre Victoria Square in the heart of Belfast opened for business in March
2008 after a construction period of nearly four years, and has become a popular success .




    A          P           I         E          S           Direct      Interest    Sum total
                                                      investments
102 .3     71 .1     561 .1        0 .0     542 .6         7,450 .5     1,757 .3      9,207 .8
  6 .6      4 .5      35 .9        0 .0      34 .1           450 .9       103 .4        554 .3
  1 .6      5 .5      19 .5        1 .0      43 .0           295 .9       109 .1        405 .0
  0 .0      0 .0       0 .1        0 .8       0 .0            15 .2        13 .8         29 .0
  -0 .5     0 .0       0 .0        0 .0       0 .0           -48 .2         -0 .3       -48 .5
  -0 .3     -0 .1      -0 .2      -1 .3       -0 .8            -8 .6        -6 .2       -14 .8
  1 .1      5 .5      19 .5        1 .0      43 .0           247 .7       108 .8        356 .5
  -0 .3     -0 .1      -0 .1      -0 .5       -0 .8            6 .6          7 .6        14 .2
  0 .0      -0 .9      -8 .0       3 .9     -14 .5           -81 .4          0 .2       -81 .2




                                                                                                                           47
     Serving as hub of one Europe's largest urban renewal projects, it will represent a mile-
     stone in the successful revitalisation of the city's centre and further raise the attractive-
     ness and diversification of the UK portfolio of hausInvest europa .

     Italy

     The acquisition of two office properties in Milan helped to push the diversification proc-
     ess for the Italian real estate portfolio . At 6 .2 %, the total return was definitely in the
     positive range . The sustained dynamic of the Italian retail sector and the resultant posi-
     tive change in value of the Orio-Center retail property played a decisive part in realising
     this track record .

     luxembourg

     The return on the committed equity for the office project development Le President in
     Kirchberg equalled -0 .9 % . Due to the continued positive outlook for the Luxembourg
     real estate market, this property will also contribute to a promising future development .
     The acquisition of Le President expanded the hausInvest europa portfolio to include an-
     other extremely attractive office location .

     Netherlands

     In the Netherlands, the return on equity equalled 8 .5 % . An essential driver of this per-
     formance was the excellent performance yield of 3 .1 % and the positive leverage effect .
     The portfolio benefited both from the declining purchase yield and from the rising rent
     rates . At 94 .1 %, the tenancy quota compares rather favourably to last year's figure of
     80 .8 % .

     Austria

     The consistent reduction of the vacancy rate from 35 .5 % down to 21 .1 % boosted the
     contribution of the three Viennese office properties to the income of the concluded fi-
     nancial year . Before the background of the ongoing positive development of the property
     real estate market in Vienna, it is safe to assume that the recovery will continue .

     Portugal

     The total real estate yield on the mean capital committed in Portugal equalled 35 .9 % for
     the concluded financial year . An essential driver of the result was the positive change in
     value combined and the realised sales proceeds for the shopping centres Forum Almada
     and Forum Montijo . In the case of the investment in the Almada shopping mall, we man-
     aged to achieve an average return on equity of about 14 .3 % during an ownership period
     of seven years . The Forum Montijo mall actually showed an above-average performance
     of 16 .4 % during an ownership period of five years .

     Sweden

     The investments in Sweden made a positive contribution to the overall result, showing a
     16 .8 % real estate yield on the mean committed equity . This result reflects the rent rate
     development and the sustained momentum on the investment market . The result was
     negatively impacted by the capital income tax, for which a provision of 100 % was set
     aside .


48
                                                                                               vA luAtI O N A N d R etu R N s




Spain

With the sale of the Spanish shopping centre in Leon and the associated market exit we
were able to achieve a total return on the committed equity of 5 .4 % . At present, hausIn-
vest europa has no other investments in Spain .

VAluAtION

By 31 March 2008, the real estate portfolio of hausInvest europa totaled 9,207 .8 million
euros . It is calculated as the sum of the market values of the properties, assessed ac-
cording to the respective percentage interests, and converted according to the foreign
exchange rates of 28 March 2008 . This assessment is formed on the basis of appraised
rent ratings – which represent an essential valuation component – in the total amount
of 554 .3 million euros . An appraised rent rating is defined as the sum of the sustainable
earnings that is established by the valuation report regarding the market value of each
property . Normally, these ratings are based on actual earnings . These, however, need to
be checked against their sustainability in the near future .

For the reporting period, the expert opinions reported market value adjustments in the
amount of 356 .5 million euros, converted at the foreign exchange rate of 28 March 2008 .
This reappraisal contains mark-ups in the amount of 405 .0 million euros and mark-downs
in the amount of 48 .5 million euros .

Positive reappraisals based on expert opinions resulted from the high demand that inter-
national investors have generated on foreign real estate markets .

Other reappraisals in a total amount of 14 .2 million euros reflect changes in the book
value of the real estate in question that are not based on the current valuation, while also
reflecting profits from real estate sales . The reasons for the changes in book value are
normally readjustments of the purchase price and ancillary acquisition costs, as well as
revaluations of plots and buildings undertaken by the real estate companies .

In some countries, the sale of the Fund’s local real estate is subject to sales profit taxa-
tion on the Fund level (capital income tax) . The Fund Management set aside provisions
to meet this risk to 100 % .




                                                                                                                         49
ROI ratios of the 2007/2008 FY in % 1)                                                                         D                  UK                    NL          F
Fully consolidated approach (direct investments and interests)
    Real estate
    Gross income                                                                                          5 .4 %               4 .5 %               8 .1 %      6 .2 %
    Management costs                                                                                     -1 .2 %              -0 .1 %              -1 .3 %     -0 .6 %
    Net income                                                                                            4 .1 %               4 .4 %               6 .7 %      5 .6 %
    Change in value      3)
                                                                                                          0 .4 %               1 .4 %               3 .1 %      7 .9 %
    Real estate profits                                                                                   4 .5 %               5 .8 %               9 .9 %     13 .5 %
    Foreign income tax                                                                                    0 .0 %               0 .2 %              -0 .8 %     -0 .4 %
    Deferred foreign taxes                                                                                0 .0 %               0 .0 %              -0 .9 %     -2 .8 %
    Result before loan costs                                                                              4 .5 %               6 .0 %               8 .1 %     10 .3 %
    Result after loan costs                                                                               4 .5 %               6 .1 %               8 .5 %     14 .0 %
    Currency changes                                                                                      0 .0 %              -1 .8 %               0 .0 %      0 .0 %
    Total result real estate (EC)                                                                         4.5 %                4.3 %                 8.5 %     14.0 %
II. Liquidity 4)
III. Result of entire Fund before fund costs

Result of the entire Fund after fund costs (BVI method)

Capital information in million euros (mean figures) 2)
Real estate                                                                                               1,601                2,164                1,103       1,877
Loan volume                                                                                                     0                878                   205        723
Liquidity
Fund volume


ROI ratios for the 2007/2008 FY in % 1)                                                                        D                  GB                    NL          F


I. Real estate
    Gross income                                                                                          5 .2 %               4 .2 %               8 .1 %      6 .0 %
    Management costs                                                                                     -1 .1 %              -0 .1 %              -1 .3 %     -0 .6 %
    Net income                                                                                            4 .1 %               4 .1 %               6 .7 %      5 .4 %
    Change in value 3)                                                                                   -0 .1 %               1 .6 %               3 .1 %      9 .6 %
    Real estate profit                                                                                    4 .0 %               5 .7 %               9 .9 %     15 .0 %
    Foreign income tax                                                                                    0 .0 %               0 .2 %              -0 .8 %     -0 .6 %
    Deferred foreign taxes                                                                                0 .0 %               0 .0 %              -0 .9 %     -4 .1 %
    Result before loan costs                                                                              4 .0 %               5 .9 %               8 .1 %     10 .4 %
    Result after loan costs                                                                               4 .0 %               6 .4 %               8 .5 %     13 .0 %
    Currency changes                                                                                      0 .0 %              -0 .8 %               0 .0 %      0 .0 %
    Total result real estate (EC)                                                                         4.0 %                5.7 %                 8.5 %     13.0 %
II. Liquidity 4)
III. Result of entire Fund before fund costs

Result of the entire Fund after fund costs (BVI method)

Capital information in million euros (mean figures) 2)
Real estate                                                                                               1,434                1,950                1,103       1,272
Loan volume                                                                                                     0                854                   205        409
Liquidity
Fund volume

1) On the basis of mean figures
2) the mean figures for the financial year are calculated on the basis of 13 month-end figures (31 March 2007 – 31 March 2008).
3) Including sales profits/losses without currency
4) Changes in exchange rate (as well as currency hedging costs) that originate in liquid assets in foreign currency are assigned to the respective property.




50
                                                                                 vA luAtI O N A N d R etu R N s




     A         P          I         E         S       LU                    B                            Total




4 .8 %     6 .8 %    8 .0 %   10 .2 %     7 .5 %    1 .0 %              6 .5 %                           6 .0 %
-1 .7 %   -1 .4 %   -1 .1 %    -3 .0 %   -1 .2 %   -0 .9 %             -0 .3 %                          -0 .8 %
3 .1 %     5 .4 %    6 .9 %    7 .2 %     6 .3 %    0 .1 %              6 .2 %                           5 .2 %
0 .9 %    16 .6 %    2 .9 %    1 .1 %     8 .5 %    4 .0 %              2 .6 %                           4 .2 %
4 .0 %    21 .9 %    9 .8 %    8 .2 %    14 .8 %    4 .1 %              8 .7 %                           9 .4 %
0 .0 %    -0 .7 %   -1 .1 %   -11 .3 %   -0 .8 %    0 .0 %             -0 .6 %                          -0 .4 %
0 .0 %     1 .8 %   -1 .9 %    7 .5 %    -2 .9 %   -4 .6 %              0 .0 %                          -0 .9 %
4 .0 %    23 .1 %    6 .8 %     4 .4 %   11 .1 %   -0 .4 %              8 .2 %                           8 .1 %
4 .0 %    35 .9 %    6 .2 %     5 .4 %   16 .2 %   -0 .9 %             11 .1 %                           9 .3 %
0 .0 %     0 .0 %    0 .0 %     0 .0 %    0 .6 %    0 .0 %              0 .0 %                          -0 .3 %
 4.0 %    35.9 %     6.2 %      5.4 %    16.8 %    -0.9 %              11.1 %                            9.0 %
                                                                                                         4 .4 %
                                                                                                         7 .4 %

                                                                                                         7 .0 %



    99       490       577         52       495       139                 178                            8,775
     0       197       181         32       240        74                  90                            2,609
                                                                                                         3,075
                                                                                                         9,241


     A         P          I         E         S          Direct                   Interest          Sum total
                                                   investments


4 .8 %     5 .7 %    7 .1 %   10 .2 %     7 .5 %             5 .9 %                  6 .6 %              6 .0 %
-1 .7 %   -0 .3 %   -0 .9 %    -3 .0 %   -1 .2 %             -0 .8 %                -1 .0 %             -0 .8 %
3 .1 %     5 .5 %    6 .2 %     7 .2 %    6 .3 %             5 .1 %                  5 .6 %              5 .2 %
0 .9 %     7 .9 %    3 .8 %     1 .1 %    8 .5 %             3 .6 %                  6 .5 %              4 .2 %
4 .0 %    13 .3 %   10 .0 %     8 .2 %   14 .8 %             8 .7 %                 12 .1 %              9 .4 %
0 .0 %     0 .4 %   -1 .1 %   -11 .3 %   -0 .8 %             -0 .4 %                -0 .3 %             -0 .4 %
0 .0 %    -1 .3 %   -1 .6 %     7 .5 %   -2 .9 %             -1 .2 %                 0 .0 %             -0 .9 %
4 .0 %    12 .4 %    7 .3 %     4 .4 %   11 .1 %             7 .2 %                 11 .8 %              8 .1 %
4 .0 %    16 .3 %    8 .4 %     5 .4 %   16 .2 %             7 .9 %                 15 .6 %              9 .3 %
0 .0 %     0 .0 %    0 .0 %     0 .0 %    0 .6 %             -0 .1 %                -1 .3 %             -0 .3 %
 4.0 %    16.3 %     8.4 %      5.4 %    16.8 %              7.8 %                  14.3 %               9.0 %
                                                                                                         4 .4 %
                                                                                                         7 .4 %

                                                                                                         7 .0 %



    99        69       503         52       495              6,978                   1,798               8,775
     0        20       183         32       240              1,943                     667               2,609
                                                                                                         3,075
                                                                                                         9,241




                                                                                                           51
                        Distribution



                        ANOtHEr DIStrIButION INcrEASE

                        At 1 .75 euro per hausInvest europa share, the distributed amount exceeds that of the
                        previous financial year . The total distribution to investors for the 2007/2008 financial year
                        amounts to 410 .7 million euros .

                        DISBurSEMENt AND rEINVEStMENt

                        The distribution will be paid out upon submission of coupon No . 35 on 16 June 2008 .
                        For shares held by Commerz Grundbesitz-Investment GmbH 1) in a so-called
                        Bausteinkonto component account, the distributed amount will be retained and
                        reinvested in new hausInvest europa shares at the current redemption price –
                        automatically and free of charge .

                        1) As of 8 April 2008, Commerz Grundbesitz-Investmentgesellschaft mbH was renamed Commerz Real Investmentgesellschaft
                           mbH.




Van Doorne, Amsterdam
Investor Structure



hausInvest europa established itself primarily as a mutual fund for private investors .
67 .9 % of all investors committed amounts of less than 100k euros to the Fund . When
including investors with investment volumes of up to 1 million euros, this figure actually
comes to 87 .1 % . It is safe to assume that a sizable share of the remaining 12 .9 % (in-
vested amounts of more than 1 million euros) is held by institutional investors, corporate
clients, and asset management companies . Thus, hausInvest europa shows a balanced
investor structure .


Structure of investors by size of investment 1)                       Status: 31 March 2008

10.0 % more than € 5m
2.9 % € 1m – 5m
2.1 % € 500,000 – € 1m



17.1 % € 100,000 – € 500,000                                            67.9 % up to € 100,000




1) Representing 89.4% of the Fund assets as of 31 March 2008.




                                                                                                 limespark, Sulzbach
     Investments in Liquid Assets



     By 31 March 2008, the liquidity quota of hausInvest europa stood at 36 .31 % . The legally
     prescribed minimum liquidity of 5 %, as well as the liquidity ceiling of 49 %, were main-
     tained for the Fund assets throughout the entire reporting period .

     The total investments in liquid assets equalled 3,676 .7 million euros by the key date . Out
     of these assets, 39 .7 million euros were invested in British Pound, 20 .9 million euros in
     Swedish Crowns .

     The investments in liquid assets consist exclusively of cash in banks, invested in call
     money and fixed-term deposits with terms of less than one year . The sole exception is
     a fixed-term deposit in the amount of 80 .0 million euros and a term ending in December
     2012 .

     OutlOOk

     The economy in the Euro zone has lost momentum . The risen money market interest
     rates, the stagnant US economy, the massive inflation of energy prices, and the ongoing
     crisis on the financial market will most likely slow the growth during the coming quar-
     ters, too . Notwithstanding these market depressants we do not expect the economy to
     slide into a recession .

     In May 2008, the inflation rate climbed to 3 .6 % . It is the highest figure since the begin-
     ning of the currency union . The inflation rate is not likely to drop back down below 3 %
     before next year . Then again, there is reason to believe that it will somewhat decline
     before the end of 2008 . Particularly the core rate (consumer prices, excluding energy and
     food) should undercut the 2 % mark .

     Because of the relatively weak economy in the Euro zone and a comparatively high infla-
     tion rate, the key interest rates show no uniform development . Accordingly, we assume
     that the level will remain unchanged at 4 % in the coming months .

     Before the background of the above-mentioned market expectations, the portfolio man-
     agement will continue to favour short- and medium-term investments in liquid assets in
     the new financial year .




     Composition of the Fund's liquidity                                    Status: 31 March 2008
     Type                                              million euros           in % of Fund assets
     Call money                                             278 .78                          2 .75
     Fixed-term deposit                                    3,363 .69                        33 .23
     Current accounts                                         32 .06                         0 .32
     Distribution accounts                                     2 .15                         0 .02
     Sum total                                             3,676.68                         36.32


     Fund assets                                         10,124.07




54
                                                     I N v estM e Nts I N lI q u I d A s s ets




                                                            Aldermanbury,
                                                            london




Composition of Liquid Assets    Status: 31 March 2008

Call money 7.6 %
Current and
distribution accounts 0.9 %


                               Fixed-term deposits 91.5 %




                                                                                          55
     Foreign Currencies



     currENcy HEDGING StrAtEGIES

     By the key date, the foreign currency risks incurred by our British and Swedish proper-
     ties were hedged through forward exchange transactions in British Pound as well as in
     Swedish Crowns . As in previous years, we continued to pursue our successful strategy
     of largely hedging any foreign currency item . During the past financial year, the portfolio
     included forward exchange sales with a volume of 1,090 .2 million GBP and 2,617 .5 mil-
     lion SEK, the key date being 31 March 2008 . The lifetime structure of the currency hedg-
     ing reflects the medium-term currency hedging strategy that the portfolio management
     pursues . It is particularly suited for securing the necessary optimisation of the currency
     hedging costs, and enables us to adjust our strategy flexibly to changes on the interna-
     tional currency markets, and to the needs of imminent real estate transactions .

     OutlOOk

     The exchange rate of the British Pound against the Euro dropped substantially . The rea-
     son behind the deterioration was the crisis on the financial markets and the associated
     depressants impacting the British economy . Nonetheless, we expect to see a 1 .8 %
     growth in the United Kingdom in 2008 . Accordingly, market expectations to get lower
     interest rates in 2008 might be exaggerated . We believe that the interest policy will be
     gradually eased through the end of 2009, making a GBP exchange rate of 0 .78 seem
     likely by the end of this year, of 0 .76 by the end of June 2009, and of 0 .74 by the end of
     2009 .

     The subprime crisis in the United States exerted pressure on the Swedish Crown during
     the winter months, causing a devaluation vis-à-vis the Euro . The unexpected raising of
     the key interest rate by the Riksbank in February brought no more than temporary relief .
     During the months to come, the Crown will most likely benefit from the gradual stabilisa-
     tion of the markets . From a fundamental point of view, the still robust growth and the
     interest benefit compared to the Euro zone suggest an imminent mark-up of the Crown .
     We expect to see a SEK exchange rate of 9 .25 before the end of 2008 .



     Non-hedged foreign currency items by the key date
                                                      United Kingdom                      Sweden
     Total assets                                1,929.30 million GBP       5,305.53 million SEK
     Provisions                                      4 .17 million GBP        307 .65 million SEK
     Liabilities                                   819 .11 million GBP      2,344 .72 million SEK
     Net assets                                  1,106.03 million GBP       2,653.16 million SEK


     Forward exchange transactions               1,090 .20 million GBP      2,617 .50 million SEK


     Non-hedged positions                           15 .83 million GBP         35 .66 million SEK
                                                    19 .99 million EUR          3 .80 million EUR


     In % of Fund assets                                          0 .20                       0 .04


     Fund assets in million EUR                 10,124.07




56
city Atrium, Brussels



                 57
     Loans



     The loan balance by the key date totalled 2,288 .1 million euros . Out of this total credit
     volume, 1,723 .0 million euros are accounted for by directly held real estate, and
     565 .1 million euros by real estate companies .

     Altogether, there are 26 loans, taken out in Euro, British Pound and Swedish Crowns for
     the purpose of partial purchase price financing . At the same time, such loans as were
     taken out in the respective national currency served the purpose of hedging the debt
     capital share .

     Benefits of partial outside financing include the tax optimisation through deductibility of
     the interest rates abroad and the attendant use of the leverage effect . Loans are princi-
     pally taken out in the local currency of the property to be financed . Accordingly, we took
     47 .8 % of the loans out in Euro, and 52 .2 % in foreign currencies .

     Half of the loans are secured by mortgages . In order to take long-term advantage of the
     tax optimisation as well as of the leverage effect throughout the entire loan term, outside
     financing is almost exclusively structured for repayment at final maturity .

     In order to be able to exploit current interest development (for more details, see the
     “Outlook” on page 54), loans are concluded with short- and medium-term fixed interest
     rates .




58
                                                                                                               lO A N s




Loans overview (euro in thousands)                                                  Status: 31 March 2008
                                Loan volume       % of the total     Loan volume real       % of the total
                                   real estate    market values        estate indirect      market values
                          direct investments             (net) 1)        investments               (net) 2)
Loans in EUR (domestic)                     –                   –                     –                  –
Loans in EUR (foreign)               723,517               9 .71 %           369,532              21 .03 %
Loans in GBP                         761,715           10 .22 %              195,585              11 .13 %
Loans in SEK                         237,745               3 .19 %                    –                  –
Sum total                          1,722,977            23.12 %              565,117              32.16 %

1) euR 7,450,512k
2) euR 1,757,321k




Structure of the loan interest fixings                                              Status: 31 March 2008
Remaining time until maturity              Loans in EUR              Loans in GBP            Loans in SEK
Less than 1 year                                  1 .52%                 71 .98%                 100 .00%
1 – 2 years                                       3 .54%                        –                         –
2 – 5 years                                      63 .77%                 14 .83%                          –
5 – 10 years                                     31 .17%                 13 .19%                          –
more than 10 years                                     –                        –                         –
Average interest rate                             4 .68%                   6 .23%                   5 .72%




Loan volume by country                                                           Status: 31 March 2008

Belgium 3.5 %                                                                                    Italy 6.9 %
Sweden 10.4 %                                                                             Netherlands 6.1 %
Portugal 2.3 %




France 29.0 %                                                                        United Kingdom 41.8 %




                                                                                                                   59
Currency Hedging Transactions
as of 31 March 2008


Open positions
  Forward exchange contracts                              Quoted value, sold          Quoted value, key date Profit by key date (EUR)
  (sold against EUR)                                                  (EUR)                           (EUR)
  GBP 1,090,200,000 .00                                       1,481,229,549 .60              1,372,403,554 .50                  108,825,995 .10
  SEK 2,280,000,000 .00                                        245,174,030 .53                 242,692,019 .24                      2,482,011 .29
  SEK    337,500,000 .00                                         35,805,979 .33                  35,901,963 .70                        -95,984 .37
Transactions concluded and already expired or sold during the reporting period
  Forward exchange contracts                              Quoted value, sold
  (sold against EUR)                                                  (EUR)
  GBP 380,000,000 .00                                          506,775,264 .53




tHE cOMPArAtIVE POrtFOlIO (Art. 9, SEc. 5,                       POtENtIAl rISk AllOcAtION FOr tHE MArkEt
SENt. 4, German Derivative Ordinance) IS cOM-                    rISk PurSuANt tO Art. 10, SEc. 1, SENt. 2
POSED AS FOllOwS:                                                AND 3, German Derivative Ordinance

Securities and cash in banks are represented at their mar-       Smallest potential amount at risk .  .  .  .  .  .  .  .  .  .  .  .  . 0 .014 %
ket value . Items that cannot be subsumed under securi-          Largest potential amount at risk  .  .  .  .  .  .  .  .  .  .  .  .  .0 .085 %
ties and cash in banks (real estate, derivatives and other       Mean potential amount at risk  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .0 .025 %
assets, other liabilities and loans) are taken into account
as fictitious cash in banks in the respective national cur-      The amount at risk is calculated once a month . In order
rency and in the same amount they represent in the Fund          to calculate the potential amount at risk, properties and
volume .                                                         loans are taken into account as fictitious cash in banks in
                                                                 the respective national currency and in the same amount
                                                                 they represent in the Fund volume . In this sense, the
                                                                 reported amounts at risk deviate from the actual amounts
                                                                 at risk for the Property Fund .




60
Viale Edison, Sesto San Giovanni



                            61
Performance of the Fund Assets
1. April 2007 through 31 March 2008


                                                                    EUR                     EUR                   EUR                  EUR
Fund assets at the beginning of the financial year                                                                         8,537,692,354 .87
Distribution for the previous year 1)                                                                                       -276,661,006 .65
Setoff items for shares issued or returned before
the day of distribution                                                                                                          349,790 .40
Cash inflow from share sales                                                                        2,644,741,772 .42
Cash outflow from share redemptions                                                                 -1,400,250,072 .57
Cash inflow/outflow (net) 2)                                                                                               1,244,491,699 .85
Income equalisation   3)
                                                                                                                             -80,194,729 .76
Regular net income 4)                                                                                                       458,889,612 .48
Realised profits minus non-realised changes in value from previous years 5)
  for real estate                                         87,795,557 .21          -80,655,420 .32       7,140,136 .89
  (thereof in foreign currency                                      0 .00                   0 .00                0 .00)
  for interests held in real estate companies            207,920,118 .19         -193,864,149 .93      14,055,968 .26
  (thereof in foreign currency                                      0 .00                   0 .00                0 .00)
  for investments in liquid assets                                  0 .00                   0 .00                0 .00
  (thereof in foreign currency                                      0 .00                   0 .00                0 .00)       21,196,105 .15
Realised losses minus non-realised changes in value from previous years     6)


  for real estate                                          -5,613,056 .56           5,614,114 .01            1,057 .45
  (thereof in foreign currency                                      0 .00                   0 .00                0 .00)
  for interests held in real estate companies                       0 .00                   0 .00                0 .00
  (thereof in foreign currency                                      0 .00                   0 .00                0 .00)
  for investments in liquid assets                                  0 .00                   0 .00                0 .00
  (thereof in foreign currency                                      0 .00                   0 .00                0 .00)            1,057 .45
Changes in the value of non-realised profits 7)
  for real estate                                                                                     213,705,316 .69
  (thereof in foreign currency                                                                         58,581,882 .90)
  for interests held in real estate companies                                                          79,714,743 .96
  (thereof in foreign currency                                                                          8,789,485 .90)
  for investments in liquid assets                                                                               0 .00
  (thereof in foreign currency                                                                                   0 .00)     293,420,060 .65
Changes in the value of losses not realised 8)
  for real estate                                                                                      -47,942,077 .83
  (thereof in foreign currency                                                                            -290,514 .08)
  for interests held in real estate companies                                                           -5,885,147 .41
  (thereof in foreign currency                                                                                   0 .00)
  for investments in liquid assets                                                                               0 .00
  (thereof in foreign currency                                                                                   0 .00)      -53,827,225 .24
Changes in exchange rate   9)


  Effects of the changes in exchange rate                                                            -214,772,027 .43
  Exchange rate gains included in the real estate
  profits and losses realised                                                                                    0 .00
  Result from forward exchange transactions                                                           193,485,234 .04
  Result from currency option transactions                                                                       0 .00       -21,286,793 .39
Fund assets by the end of the financial year                                                                              10,124,070,925.81



62
Notes on the Performance
of the Fund Assets


The performance of the Fund assets shows which busi-           6) The realised losses are determined in the same man-
ness events during the reporting period are responsible           ner as the realised profits .
for the new assets reported in the Statement of Assets
                                                               7) For the Fund’s real estate and interests held in real
and Liabilities . It represents a breakdown of the differ-
                                                                  estate companies, the net changes in value due to
ence between the Fund assets at the beginning and the
                                                                  non-realised gains result from revaluations for further
end of the financial year, respectively .
                                                                  accounting and changes in market value, and from
                                                                  the allocation or release of tax contingency provisions
FOOtNOtES ON tHE PErFOrMANcE OF tHE FuND
                                                                  for capital gains still to come during the financial year .
ASSEtS
                                                                  The Report captures changes in market value based
                                                                  on revaluations, re-measurement gains, as well as on
1) The distribution amount represents the distribution
                                                                  any other changes in the book value of real estate/
   according to last year's Annual Report (in the “State-
                                                                  interests . These may stem, e . g ., from the formation
   ment of Revenues and Expenses,” under “Calculation
                                                                  or dissolution of provisions, from retroactive purchase
   of Distribution,” see “Total Distribution”) .
                                                                  price adjustments or expense reimbursements, the
2) The cash inflow due to the sale of share certificates,         acquisition of small space annexes, etc .
   and the cash outflow due to the redemption of share
                                                                  In the case of the liquid assets, the net changes in the
   certificates, are directly determined by the redemption
                                                                  value of non-realised profits are based on the currency
   price of the day, multiplied by the number of shares
                                                                  changes affecting securities, money market instru-
   sold or redeemed, respectively, by that date . The re-
                                                                  ments, and investment shares included in the portfolio
   demption price includes the return per share, which is
                                                                  during the financial year .
   referred to as income equalisation .
                                                               8) The net changes in the value of non-realised losses are
3) The amounts of the income equalisation are deducted
                                                                  based on adjustments and changes in the book value
   from the cash inflow and outflow, so that the
                                                                  of the properties and of the interests in real estate
   latter are reduced to the change in asset value .
                                                                  companies that occurred in the course of the financial
4) The regular net income is listed in the Statement of           year . The elaborations provided on the aforementioned
   Revenues and Expenses .                                        changes in value of non-realised profits apply mutatis
                                                                  mutandis.
5) The realised gains or losses from real estate and in-
   terests held in real estate companies represent the            In the case of the investments in liquid assets, the net
   difference resulting from the sales profits at their book      changes in the value of non-realised losses are based
   values pursuant to the German depreciation regula-             on the currency changes affecting securities, money
   tions, including exchange rate changes . The changes           market instruments, and investment shares included in
   in property values from previous years that were not           the portfolio during the financial year .
   realised are the result of the revaluations carried for-
                                                               9) Exchange rate changes are listed as the difference be-
   ward and changes in market value, as well as of cur-
                                                                  tween the valuation of assets held in foreign currency
   rency changes . For an overview of the properties sold,
                                                                  at the exchange rate quoted at the beginning, and the
   see pages 14 and 15 .
                                                                  valuation at the exchange rate quoted at the end, of
  The realised profits from investments in liquid assets          the reporting period – not reflecting the result of the
  (securities/money market instruments/investment                 revaluations for further accounting . For real estate and
  shares) mark the difference between the lower pur-              interest held in real estate companies, the result of
  chase price and the price at the time of sale or matu-          the revaluation – assessed at the going exchange rate
  rity, respectively . Last year’s non-realised changes in        at the end of the reporting period – is included in the
  the value of the liquid assets contain the changes in           net change of non-realised profits/losses . For assets
  quoted value for securities/money market instruments/           acquired during the reporting year, the difference in
  investment shares that were sold or matured up to the           valuation is listed together with the quoted value at the
  end of the previous year . The profits realised during          time of the capitalisation and the quoted value at the
  the reporting period are determined by deducting last           end of the reporting period .
  year’s non-realised profits .

                                                                                                                           63
N Otes O N tH e P eR FO R M A N C e O F tH e Fu N d A s s ets




   Moreover, profits and losses resulting from handling
   current transactions through foreign currency clearing
   accounts are taken into account here, as are fluctua-
   tions in value for derivative currency transactions that
   had not yet been concluded by the report key date .
   Realised gains and losses from the closing of deriva-
   tive currency transactions during the reporting period
   are also taken into account, minus the net changes of
   the previous year .

   Changes in exchange rate precipitated a profit from for-
   ward exchange transactions upon reaching final matu-
   rity in the amount of 78 .08 million euros . The realised
   changes in value result from the difference between
   the original forward exchange rate and the spot ex-
   change rate on the day the option was exercised .




64
Quai Michelet, levallois-Perret



                           65
Statement of Assets and Liabilities
as of 31 March 2008


                                                                          EUR                  EUR                  EUR      Share of
                                                                                                                            the Fund
                                                                                                                              assets
                                                                                                                                in %
I. Real estate
   1 . Residential rental property                                                       930,000 .00                            0 .01
     (thereof in foreign currency                                         0 .00)
   2 . Commercial properties                                                       5,467,254,780 .54                           54 .00
     (thereof in foreign currency                            1,363,878,780 .54)
   3 . Properties under development                                                1,467,242,157 .43                           14 .49
     (thereof in foreign currency                            1,345,878,164 .95)
   4 . Other property and titles (Art . 67, Sec . 2, InvA)                          515,085,000 .00                             5 .09
     (thereof in foreign currency                                         0 .00)
                                                                                                        7,450,511,937 .97      73 .59
   (sum total in foreign currency                            2,709,756,945 .49)
II. Interests held in real estate companies
   1 . Majority interests                                                          1,109,377,064 .97                           10 .96
   2 . Minority interests                                                             70,832,259 .24                            0 .70
                                                                                                        1,180,209,324 .21      11 .66
     (sum total in foreign currency                           196,362,964 .21)
III. Investments in liquid assets
   1 . Cash in banks                                                               3,676,680,778 .91                           36 .32
     (thereof in foreign currency                               60,583,576 .87)
                                                                                                        3,676,680,778 .91      36 .32
IV. Other assets
   1 . Accounts receivable resulting from property                                    56,468,610 .84                            0 .56
       management
     (thereof in foreign currency                                4,903,522 .82)
   2 . Accounts receivable from real estate companies                                 71,624,157 .67                            0 .71
     (thereof in foreign currency                                         0 .00)
   3 . Interest claims                                                                34,375,718 .46                            0 .34
     (thereof in foreign currency                                   57,885 .46)
   4 . Other                                                                        452,865,317 .52                             4 .47
     (thereof in foreign currency                               30,876,977 .99)
                                                                                                          615,333,804 .48       6 .08
   Total                                                                                               12,922,735,845 .57     127 .65




66
                                                                                      stAteM e Nt O F A s s ets A N d lIA B I lItI es




                                                                         EUR                  EUR                   EUR     Share of
                                                                                                                           the Fund
                                                                                                                             assets
                                                                                                                               in %
V. Liabilities arising from
    1 . loans                                                                    1,722,976,907 .42                             17 .02
        (thereof, secured loans [Art . 82, Sec . 3, InvA]   1,722,976,907 .42)
    (sum total in foreign currency                           999,460,237 .46)
    2 . lot sales and construction projects                                       347,240,519 .89                               3 .43
        (thereof in foreign currency                         253,497,963 .60)
    3 . property management                                                         97,092,279 .77                              0 .96
        (thereof in foreign currency                           26,367,528 .98)
    4 . other debts                                                               229,506,637 .73                               2 .27
        (thereof in foreign currency                            5,267,447 .26)
                                                                                                       2,396,816,344 .81       23 .68
VI. Provisions                                                                    401,848,574 .95        401,848,574 .95        3 .97
    (thereof in foreign currency                               38,063,573 .10)


Total                                                                                                  2,798,664,919.76        27.65


Fund assets                                                                                          10,124,070,925.81       100.00


Share value (in euro)                                                                                              43.14
Shares in circulation (pieces)                                                                              234,688,255




exchanges rates on the key date:
British Pound (GBP)        1.00 euR = 0.7917 GBP
swedish Crown (sek)        1.00 euro = 9.3798 sek




                                                                                                                                 67
Notes on the Statement of Assets and
Liabilities


tOtAl FuND ASSEtS                                                mandita Semplice di SachsenFonds Italia S .r .l . (afterwards
                                                                 renamed Alfa S .r .l .) . For the purpose of this transaction,
In the course of the 2007/2008 financial year, Fund as-          the newly formed CGI S .r .l . initially acquired 23 % of the
sets increased by 1,586 .38 million euros or 18 .58 % to a       shares, and then resold them to the Fund's Italian branch
total or 10,124 .07 million euros . On balance, 29,754,176       office in the next step . At present, preparations for the
new shares were issued . This resulted in a cash inflow of       liquidation of CGI S .r .l . are under way . In August 2007,
1,244 .49 million euros into the Property Fund . The distri-     the Fund moreover acquired 75 % of the equity shares
bution for the 2006/2007 financial year in the amount of         of a partnership limited by shares, namely PANTA Ach-
276 .31 million euros or 1 .35 euros per share took place        tundzwanzigste Grundstücksgesellschaft GmbH & Co . (re-
on 18 June 2007 . The distribution was largely reinvested        named Stadtgalerie Schweinfurt KG in April 2008) . As the
in hausInvest europa shares .                                    Fund does not own the majority voting rights necessary
                                                                 to change the charter, this interest is posted as minority
I. rEAl EStAtE                                                   interest . By 31 March 2008, the Fund thus part-owned
                                                                 eleven real estate companies in the form of majority inter-
The real estate the Property Fund acquired and sold dur-         ests and one real estate company in the form of a minority
ing the reporting period is listed on pages 14 and 15 . The      interest, and therefore thirteen indirectly held properties .
portfolio of real assets comprised 71 directly held proper-
ties by 31 March 2008 . When taking into account the real        Since, in the case of real estate companies, the total in-
estate transactions during the reporting period, plus the        vestment costs for construction projects are frequently
revaluations of properties by the valuation committees,          not just incurred on the shareholder level, but on the Fund
the changes in value due to progressing construction             level, too, the property valuation for newly acquired com-
work in the case of properties under development, and            panies was changed to the effect that the market value
the currency changes, then the total value of the real as-       forecast by the expert opinion of the valuation committee
sets increased by 43 .17 million euros or 0 .58 % to a grand     is posted minus the construction costs still pending . This
total of 7,450 .51 million euros since 31 March 2007 . Our       value assessment, however, is matched on the Fund level
foreign real assets, having a total value of 6,015 .76 million   by a liability in the amount of the pro-rata payments yet
euros, breaks down into assets worth 2,167 .19 million eu-       to be made under the company's contract of sale . Re-
ros in the UK, assets worth 542 .57 million euros in Swe-        measurement gains that may result from the investment
den, and assets worth 3,306 .00 million euros in member          are not posted among the Fund assets until after the
states of the Euro zone . Real estate listed under “Other        conclusion of the construction project and on the basis
property and titles” includes business or residential rental     of the market value expert opinion . Up to that time, they
property held in partial ownership or in the form of partial     are posted as value-impacting factor among the provi-
ground leases . The Property Record on pages 24 through          sions . For the three companies acquired in Luxembourg,
33 profiles the composition of the portfolio of real assets,     the new procedure results in an assessed value in the
including detailed information on each property .                amount of 187 .5 million euros for the property – assum-
                                                                 ing a forecast total market value of 233 .9 million euros by
II. INtErEStS HElD IN rEAl EStAtE cOMPANIES                      the time of completion – that is matched by a liability in
                                                                 the amount of 87 .5 million euros on the Fund level . In the
During the reporting period, the Fund acquired or formed         case of the PANTA Achtundzwanzigste Grundstücksges-
majority interests in six real estate companies outside          ellschaft GmbH & Co . partnership, the forecast market
Germany, plus one minority interest in Germany . Also,           value by the time of completion equals 127 .0 million eu-
two Portuguese real estate companies were sold . In May          ros, while the assessed value of the property equals 58 .9
2007, we took over three 100% interests, each of which           million euros, and the liability on the Fund level 1 .2 million
is realising one part of a project . Three interests were        euros (these being pro-rata figures reflecting the Fund's
acquired or formed through the Fund's Italian branch             75% interest) .
office: In July 2007, 100 % of the shares of Lacerta Im-
mobiliare S .r .l ., a company owning one property in Milan,     On the whole, the real estate companies included in the
were added to the Fund assets . In November 2007, the            portfolio by the key date reported construction costs and
Fund acquired a 100 % interest in Alfa Societa‘ in Acco-         pro-rata market values in an aggregate value of 1,757 .32


68
                                                                  N Otes O N tH e stAteM e Nt O F A s s ets A N d lIA B I lItI es




million euros . When taking the other assets and liabilities    management, 33 .11 million euros are accounted for
as well as the provisions into account, the total participat-   abroad, breaking down into 3 .76 million euros in the UK,
ing investments equalled 1,180 .21 million euros by 31          1 .14 million euros in Sweden, and 28 .21 million euros in
March 2008 . Participating interests outside Germany, to-       member states of the Euro zone .
talling 941 .20 million euros, subdivide into 744 .84 million
euros in member states of the Euro zone and 196 .36 mil-        The accounts receivable from real estate companies in
lion euros in the UK . For details on the equity investment     the amount 71 .20 million euros reflect essentially two
companies, as well as on the real estate held by them,          shareholder loans to the Italian holding companies .
see the Property Record on pages 24 through 43 .
                                                                Interest claims as of 31 March 2008 represent accrued
III. INVEStMENtS IN lIQuID ASSEtS                               interest from fixed-term deposits and call money (32 .97
                                                                million euros) as well as interest claims from the share-
The cash in banks breaks down into 3,363 .69 million eu-        holder loans granted to the Italian shareholdings . Out of
ros in fixed-term assets and 278 .78 million euros in call      the total interest claims, 1 .50 million euros are accounted
money, as well as of 32 .06 million euros in current ac-        for abroad, 1 .44 million thereof in EU member states .
counts and in one savings account for security deposits,
plus of 2 .15 million euros in distribution accounts . Out of   The other assets, totalling 452 .87 million euros, include
the fixed-term deposits, 473 .69 million euros reached          189 .95 million euros in accounts receivable arising out of
maturity in April 2008; 2,810 .00 million euros will reach      pending transactions in connection with the acquisition of
maturity between May and December 2008; another                 real estate located in Germany, France, Portugal, and Aus-
80 .00 million euros will reach maturity on 17 December         tria; the corresponding liabilities being included in the “Li-
2012 . Out of the total cash in banks, 127 .97 million euros    abilities arising from other debt” item . The market value
are accounted for abroad, breaking down into 39 .73 mil-        of the forward exchange transactions in British Pound and
lion euros in the UK, 20 .86 million euros in Sweden, and       Swedish Crowns accounts for 108 .83 and 2 .39 million
67 .38 million euros in member states of the Euro zone .        euros, respectively . The accounts receivable from foreign
                                                                revenue authorities break down into 48 .62 million euros
The minimum liquidity pursuant to Art . 80, Sec . 1, Ger-       in turnover tax, 23 .15 million euros in prepaid income
man Investment Act, equals 35 .53 % of the total Fund           tax, and 10 .93 million euros in capitalised taxes in con-
assets . Liquid assets in the amount of 1,634 .74 million       nection with the commitments in Italy and the UK . Other
euros have been set aside for imminent real estate ac-          essential items of the Report include accounts receiv-
quisitions and for construction or restructuring projects .     able in the amount of 4 .64 million euros from advanced
The list also includes capital for interest and repayment       service charges and other items associated with property
encumbrances during the next 24 months, totalling               management, accounts receivable in the amount of 2 .26
892 .25 million euros, and capital for securing the ongo-       million euros from real estate transactions, as well as 2 .08
ing property management, totalling 57 .43 million euros .       million euros in expenses for construction or restructur-
On top of that, the next pro-rata distribution will require     ing projects involving various properties, plus 2 .04 million
capital in a total amount of 410 .70 million euros . The free   euros in operative and business equipment costs . To
liquidity therefore equals 5 .9 % of the Fund assets .          the real estate companies in Luxembourg, 56 .92 million
                                                                euros out of the Property Fund were made available as
IV. OtHEr ASSEtS                                                participatory capital . Due to their equity-like structuring,
                                                                these participatory rights are posted among “Other .” The
Out of the accounts receivable from property manage-            valuation reflects the nominal value . The other assets,
ment, 51 .06 million euros represent claims vis-à-vis           with a total value of 286 .24 million euros, are accounted
tenants that arise out of recoverable operating costs .         for abroad, subdividing into 29 .82 million euros in the UK,
Advance payments received from the tenants are listed           1 .06 million euros in Sweden, and 255 .36 million euros in
in item V (Section 3, “Liabilities arising from property        Euro zone member states other than Germany .
management”) . In addition, the Report includes 4 .94 mil-
lion euros in accounts receivable from rents and assess-
ments . Out of the accounts receivable from property


                                                                                                                             69
N Otes O N tH e stAte M e Nt O F A s s ets A N d lIA B I lItI es




V. lIABIlItIES                                                     the Portuguese real estate company vis-à-vis the parent
                                                                   company, 2 .53 million Euros in custodian bank fees yet to
The liabilities due to borrowing consist entirely of loans         be remitted, 2 .14 million euros in obligations arising out
taken out for the purpose of partially financing real              of coupons not yet cashed, 1 .76 million euros in purchase
estate located abroad . Out of these loans, 761 .72 million        price adjustments from the sales of the two Portuguese
euros are accounted for in the UK, 237 .74 million euros in        companies, 1 .23 million euros for the leasing contract for
Sweden, and 723 .52 million euros in Euro zone member              the hotel equipment at the property at Allée du Verger
states . Except for those loans that are secured by re-            in Roissy-en-France, and 0 .98 million euros in liabilities
course guarantees or by bonds on land charges, all loans           vis-à-vis foreign revenue authorities . Out of the total ac-
are secured by mortgages on real estate . For an overview          counts payable for other reasons, 151 .47 million euros are
of the loans taken out, see page 59 .                              accounted for abroad, subdividing into 2 .73 million euros
                                                                   in the UK, 2 .54 million euros in Sweden, and 146 .20 mil-
The liabilities arising out of real estate acquisitions and        lion euros in member states of the Euro zone .
construction projects account for 346 .92 million euros
in anticipated acquisition costs and ancillary acquisition         VI. PrOVISIONS
costs for assets acquired recently or in recent years .
Other items reported include essentially 0 .32 million             The provisions largely represent 21 .48 million euros in
euros in liabilities from retained guaranteed amounts              construction costs not yet invoiced, 9 .77 million euros in
for construction measures performed in Germany and                 maintenance costs, 7 .31 million euros in predicted operat-
Austria . Liabilities arising out of property acquisitions and     ing costs, and finally 349 .21 million euros in income taxes
construction projects account for 344 .06 million euros            including the tax provisions set aside toward future capital
abroad, subdividing into 253 .50 million euros in the UK,          gains taxation on sales we may transact abroad . This sum
and 90 .56 million euros in member states of the Euro              includes provisions for losses in the amount of 18 .00 mil-
zone . Out of the liabilities in the UK, 5 .43 million euros       lion euros for potential encumbrances that might arise out
reflect management fees plus interest withheld for the             of a dispute with the Dutch revenue authorities, as well
White City property in London .                                    as 22 .20 million euros for other value-impacting factors in
                                                                   connection with our participating interests in real estate
The liabilities from property management include                   companies . In addition, we set aside provisions in suffi-
34 .84 million euros in prepaid rents and assessments . In         cient amounts for all foreseeable administrative and other
addition, 51 .32 million euros are reported in tenants’ ad-        costs . Out of the total provisions, 382 .37 million euros are
vance payments for recoverable heating and utility costs           accounted for abroad, breaking down into 5 .26 million eu-
yet to be settled, and 10 .93 million euros in paid-in secu-       ros in the UK, 32 .80 million euros in Sweden, and 344 .31
rity deposits . Out of the total liabilities associated with       million euros in member states of the Euro zone .
property management and upkeep, 76 .44 million euros
are accounted for abroad, subdividing into 16 .67 mil-
lion euros in the UK, 9 .70 million euros in Sweden, and
50 .07 million euros in member states of the Euro zone .

The liabilities for other reasons, totalling 229 .51 million
euros include 186 .21 million euros in liabilities from pend-
ing transactions in conjunction with the acquisition of real
estate and real estate companies . In addition, this item
includes 21 .90 million euros in liabilities owed to the Fund
Management Company . The latter amount reflects essen-
tially the management fees that are retroactively balanced
every quarter, and outstanding turnover tax payments
paid by the Management Company . Other items include
8 .50 million euros in accrued interest expenditures for
loans taken out, 2 .85 million euros in income tax debts of


70
                                                                                                Armazens do chiado, lisbon




PrOVISIONS FOr lOSSES DuE tO FuturE cAPI-                    any CGT to 100 % . These provisions come to a total of
tAl GAINS tAXAtION ABrOAD                                    193 .49 million euros, based on the current market value
                                                             of the real estate . We thereby ensure that the Fund yield
In some countries, selling real estate locally owned by      already reflects the full tax load potentially arising out of
the Fund is subject to sales profit taxation on the Fund     real estate sales abroad and subject to capital gains taxa-
level (capital gains tax – CGT) . By 31 March 2008, we had   tion, the tax load in each case being calculated on the
set aside sufficient provisions on the Fund level to cover   basis of the most recent market value assessment .


                                                                                                                        71
Statement of Revenues and Expenses
1. April 2007 through 31 March 2008


                                                                        EUR                EUR              EUR
I, Revenues
  1, Real estate revenues                                                        351,257,618 .26
     (thereof in foreign currency                             83,090,631 .42)
  2, Revenues from interests held in real estate companies                        92,434,324 .25
     (thereof in foreign currency                                       0 .00)
  3, Revenues from investments in liquid assets
     3,1 Revenues from cash in banks                                             129,316,843 .79
         (thereof in foreign currency                          6,635,259 .26)
  4, Yield on common equity (interest for building finance)                       13,741,772 .21
     (thereof in foreign currency                             12,548,816 .77)
  5, Other revenues                                                               28,923,496 .95
     (thereof in foreign currency                              4,375,737 .60)
  Grand total, revenues                                                                            615,674,055.46


II, Expenses
  1, Administration costs
     1,1 Operating costs                                                          12,361,374 .32
         (thereof in foreign currency                          1,582,423 .99)
     1,2 Maintenance costs                                                        20,235,185 .30
         (thereof in foreign currency                          3,452,129 .22)
     1,3 Costs of real estate management 1)                                        5,786,476 .70
         (thereof in foreign currency                            448,188 .71)
     1,4 Other expenses                                                           16,971,708 .17
         (thereof in foreign currency                          1,348,688 .33)
  2, Ground rent, life annuities and temporary annuities                               1,649 .62
     (thereof in foreign currency                                  1,649 .62)
  3, Interest expenditures                                                        80,636,719 .44
     (thereof in foreign currency                             35,273,964 .79)
  4, Foreign taxes                                                                32,706,231 .93
     (thereof in foreign currency                              3,839,989 .07)




72
                                                                                     stAteM e Nt O F R ev e N u es A N d e x P e N s es




                                                                                       EUR                   EUR                  EUR
    5, Administrative overhead for the Property Fund
       5,1 Remuneration of Fund Management 2)                                                      63,323,152 .65
       5,2 Remuneration of custodian bank                                                           2,531,017 .73
       5,3 Valuation committee costs                                                                1,035,930 .94
       5,4 Other expenditures pursuant to Art, 13, General Fund Rules                               1,389,725 .94
            (thereof up-front fees / redemption charges for the acquisi-
            tion/redemption of investment shares                                      0 .00)
            (thereof management fees for investment shares charged by
            the investment management company/ a company affiliated
            with it                                                                   0 .00)


III, Grand total expenses                                                                                             236,979,172.74
    Income equalisation                                                                                                80,194,729.76
    Regular net income                                                                                                458,889,612.48


    Total Expense Ratio (TER) = 0.74 %




1) thereof proprietary expenditures pursuant to Art. 14, General Fund Rules,
   euR 2,553,000.00.
2) In addition, the company received fees pursuant to Art. 14, sec 2, special Fund
   Rules.
Out of the management remuneration paid in, the investment management com-
pany grants so-called “follow-up commissions” as brokerage fee to brokers (e. g.
financial institutions) on a regular basis, in most cases annually.




                                                                                                                                   73
Notes on the Statement of Revenues and
Expenses


Revenues and expenditures from the UK and Sweden                  Other major items include a contract penalty in the
were converted into Euro at the respective mean ex-               amount of 2 .05 million euros to be paid by one seller,
change rate of the month .                                        contractual income during the construction phase in
                                                                  the amount of 1 .23 million euros from a property under
rEVENuES                                                          construction in France, revenues in the amount of 1 .24
                                                                  million euros from reimbursed damages, revenues from
Compared to the previous year, the rental income sank             the dissolution of value-adjustments in the amount of
– specifically because real assets were regrouped – by            0 .89 million euros, revenues from rented parking lots in
25 .24 million euros or 6 .70 % down to a total of 351 .26 mil-   the amount of 0 .63 million euros, and revenues from a
lion euros . Included here are the other rent revenues, from      settlement with a contractor in the amount of 0 .60 million
3 .41 million euros last year up to 5 .25 million euros this      euros . Out of the other revenues, 25 .21 million euros are
year, which mainly represent indemnities and shared main-         accounted for abroad, breaking down into 3 .99 million
tenance costs paid by tenants . Out of the total revenues,        euros in the UK, 0 .39 million euros in Sweden, and 20 .83
71 .39 million euros are accounted for in Germany, and            million euros in member states of the Euro zone .
279 .87 million euros abroad, subdividing into 46 .16 mil-
lion euros in the UK, 36 .93 million euros in Sweden, and         EXPENSES
196 .78 million euros in member states of the Euro zone .
                                                                  The regrouping of the real assets reduced the non-
The revenues from interests held in real estate compa-            recoverable operating costs by 2 .60 million euros down to
nies increased by 84 .51 million euros up to 92 .43 million       12 .36 million euros . Properties inside Germany account
euros . The reporting period saw distributions from one           for 4 .02 million euros thereof, properties abroad for 8 .34
German, one French, and two Portuguese companies .                million euros .

Compared to last year’s figures, the income from invest-          Maintenance efforts undertaken in conjunction with the
ments in liquid assets increased by 63 .19 million euros up       active portfolio management, and in order to improve the
to 129 .32 million euros because of the strongly increased        sustainable lettability of the real estate, accounted for
liquid asset holdings . These are mainly accounted for by         expenditures in the amount of 20 .24 million euros, down
call money and fixed-term deposits . The interest from            from 24 .51 million euros last year . The amount includes
cash in banks breaks down into 116 .85 million euros              2 .37 million euros in maintenance expenditures borne
worth of assets in Germany, assets worth 6 .01 million            by third parties, up from last year’s 1 .28 million euros .
euros in British Pounds, assets worth 0 .63 million euros         The corresponding revenues are reported as other rent
in Swedish Crowns, and assets worth 5 .83 million euros           revenues among the real estate revenues or among the
in member states of the Euro zone .                               other revenues .

The amounts reported as income on common equity, to-              Administrative costs dropped by 0 .45 million euros
talling 13 .74 million euros, represent the imputed interest      compared to last year, down to 5 .79 million euros . This
on Fund equity tied up during the time of construction;           amount includes 2 .55 million euros in fees, charged by
out of this amount, 12 .55 million euros are accounted for        the Fund Management Company to the Fund for property
by a property in the UK, 1 .19 million euros by a property in     management and upkeep . Another 3 .14 million euros are
the Netherlands .                                                 accounted for by external management costs, which in
                                                                  turn subdivide into 2 .92 million euros for property man-
The other revenues increased by 1 .80 million euros up to         agement and 0 .22 million euros for technical manage-
28 .92 million euros . They include 12 .88 million euros in       ment .
revenues from dissolved provisions, 3 .98 million euros
in capitalised deferred taxes in the context of the Fund’s        The other expenses come to 16 .97 million euros, down
commitments in the UK, and 2 .72 million euros in reve-           from 30 .65 million euros last year . These are accounted
nues from shareholder loans and equity lent to real estate        for by 6 .64 million euros in expenses for first and new
companies .                                                       lettings, 1 .94 million euros depreciations on rent claims,



74
                                                               N Otes O N tH e stAte M e Nt O F R ev e N u es A N d e x P e N s es




1 .61 million euros in tax consultancy fees, and 1 .17 mil-    The 2 .53 million euros in fees due to the custodian bank
lion euros for insurance covered damages . Another 1 .00       equal 0 .025% of the Fund volume existing as of 31 March
million euros represent expenditures in connection with        2008, as stipulated in the respective contract . The costs
arbitrage proceedings in the Netherlands . Other expenses      of the valuation experts amounted to 1 .04 million euros .
include 0 .87 million euros in non-recoverable input VAT
pursuant to Art . 15a, German Turnover Tax Act, 0 .77 mil-     The other expenditures pursuant to Art . 14, General Fund
lion euros in legal fees and legal consultancy fees, 0 .73     Rules, include auditing and publishing costs in the amount
million euros in depreciations of accounts receivable, 0 .67   of 0 .69 million euros, plus costs related to the cashing of
million euros in expenses for rented parking spaces, and       coupons in the amount of 0 .70 million euros .
0 .45 million euros in depreciations on operative and busi-
ness equipment costs .                                         INcOME EQuAlISAtION

Out of the total administration costs, 36 .78 million euros    The reported income equalisation in the amount of 80 .19
are accounted for abroad, breaking down into 0 .82 million     million euros represents revenues and changes in value
euros in the UK, 6 .01 million euros in Sweden, and 29 .95     that accrued since the beginning of the financial year, and
million euros in member states of the Euro zone .              that were paid by share buyers through the issue price, or
                                                               were remunerated by the Fund through the redemption
Out of the interest expenditures in the amount of 80 .64       price when redeeming shares . The income equalisation
million euros, 75 .45 million euros account for loans taken    in the amount of 28 .12 million euros covers the revenues
out for partial financing of foreign real estate . This sum    of the ongoing year (including sales profits from real es-
breaks down into 21 .08 million euros in British Pounds,       tate sales in the amount of 3 .59 million euros as well as
13 .70 million euros in Swedish Crowns, and 40 .67 mil-        capital gains from derivatives reaching final maturity in
lion euros in other capital borrowed abroad . Other items      the amount of 2 .68 million euros) and the profits carried
include essentially 2 .11 million euros in interest expendi-   forward from the previous year in the amount of 52 .07
tures from the arbitrage proceedings in the Netherlands,       million euros .
1 .02 million euros in interest expenditures for a purchase
price adjustment involving the Orio-Center in Italy, 0 .84     rEGulAr NEt INcOME
million euros in commissions for bank guarantees for
French properties, and 0 .45 million euros in security de-     The regular net income rose to a total of 458 .89 million
posit interest .                                               euros, up from 247 .33 million euros the year before . The
                                                               increase is mainly explained by the revenues from real
The foreign taxes in the amount of 32 .71 million euros        estate companies which rose by 84 .51 million euros
(compared to 68 .93 million euros the year before) include     compared to the year before, by an increase in interest
revenue taxes for the real assets in France, the UK, Italy,    earnings in the amount of 63 .19 million euros, and by the
Portugal, Spain, Sweden, and the Netherlands .                 income equalisation whose value increased by 43 .95 mil-
                                                               lion euros .
The contractually agreed remuneration paid to the Fund
Management Company came to 63 .32 million euros, with
2 .48 million euros accounted for by pro-rata expenditures
for the CeGeREAL S .A . real estate company; this share
was deducted from the fees at 0 .65% of the net Fund
volume . In keeping with the terms of contract, the Fund
was moreover invoiced 8 .69 million euros in fees for the
acquisition and the construction services for Fund real
estate and real estate companies . In return for the dis-
posal of real estate and real estate companies, the Fund
Management Company received 9 .63 million euros .




                                                                                                                              75
Calculation of Distribution
and Notes


Calculation of the Distribution                                                                         Total              per share
1 APR 2007 – 31 MAR 2008                                                                                EUR                     EUR
Regular net income                                                                           458,889,612 .48                   1 .955
Realised profits
  for real estate                                                                             87,795,557 .21                   0 .373
  for interests held in real estate companies                                                207,920,118 .19                   0 .886
  for forward exchange transactions                                                           97,606,045 .66                   0 .416
Account carried forward from last year                                                       358,634,638 .25                   1 .528
Surplus retained pursuant to Art, 15, Sec, 2, Special Fund Rules                               -3,500,000 .00                 -0 .015
Available for distribution                                                                 1,207,345,971 .79                   5 .143
Reinvested into Fund pursuant to Art, 15, Sec, 5, Special Fund Rules                        -385,937,079 .29                  -1 .643
Carry-forward to new account                                                                -410,704,446 .25                  -1 .750
Total distribution for 234,688,255 issued shares                                             410,704,446.25                    1.750




rEAlISED PrOFItS                                                       rEINVEStMENt

In addition to the regular net income in the amount of                 In the interest of conserving the asset value, 385 .94 mil-
458 .89 million euros, the Fund realised profits from real             lion euros were reinvested pursuant to Art . 15, Sec . 5,
estate sales in the amount of 87 .80 million euros . The               Special Fund Rules .
profits realised through real estate were determined on
the basis of residual book values pursuant to the German               cArry-FOrwArD tO NEw AccOuNt
depreciation regulations . The Fund realised profits from
selling real estate companies in an amount of 207 .92 mil-             The carry-forward to new account rose from 358 .63 mil-
lion euros .                                                           lion euros up to 410 .70 million euros, or 1 .75 euro per
                                                                       share, by the end of the financial year . The carry-forward
Profits in an amount of 97 .61 million euros were earned               will become available again for distribution in the coming
from forward exchange transactions that reached final                  years .
maturity, these being denominated in British Pound and
Swedish Crowns .                                                       DIStrIButION

rEtENtIONS                                                             The distribution for the 2007/2008 financial year
                                                                       amounts to a total of 410 .70 million euros for a total of
Pursuant to Art . 15, Sec . 2, Special Fund Rules, 3 .5 mil-           234,688,255 shares in circulation, the distribution equal-
lion euros were retained from the result of the financial              ling 1 .75 euro per share . The distribution date is 16 June
year for future maintenance efforts and to balance prop-               2008 .
erty depreciations .




76
Auditor's Report



According to § (Article) 44 paragraph 5 InvG (Invest-        are detected with reasonable assurance . Knowledge of
mentgesetz: “Investment Act”) we have audited the            the administration of the fund and expectations as to
annual report (Jahresbericht) of the fund (Sondervermö-      possible misstatements are taken into account in the
gen) hausInvest europa for the financial year from April     determination of audit procedures . The effectiveness
1st, 2007 to March 31st, 2008 . The preparation of the       of the accounting-related internal control system and
annual report in accordance with the provisions of the       the evidence supporting the disclosures in the annual
Investment Act is the responsibility of the investment       report are examined primarily on a test basis within the
management company’s (Kapitalanlagegesellschaft)             framework of the audit . The audit includes assessing
Managing Directors . Our responsibility is to express an     the accounting principles for the annual report used and
opinion on the annual report based on our audit .            significant estimates made by the investment manage-
                                                             ment company’s Managing Directors . We believe that
We conducted our audit in accordance with § (Article)        our audit provides a reasonable basis for our opinion .
44 paragraph 5 InvG and German generally accepted
standards for the audit of financial statements prom-        Our audit has not led to any reservations .
ulgated by the Institut der Wirtschaftsprüfer (Institute
of Public Auditors in Germany) (IDW) . Those standards       In our opinion based on the findings of our audit, the an-
require that we plan and perform the audit such that         nual report complies with the legal requirements .
misstatements materially affecting the annual report




                                          Frankfurt am Main, June 5th, 2008

                                               PricewaterhouseCoopers
                                                   Aktiengesellschaft
                                            Wirtschaftsprüfungsgesellschaft




                     /s/ Eva Handrick                                          /s/ ppa . Martin Strücker
                     Wirtschaftsprüfer                                             Wirtschaftsprüfer
                  (German Public Auditor)                                      (German Public Auditor)




                                                                                                                      77
Notes on Taxation for Shareholders



The distribution for the 2007/2008 financial year in the                                  spouses) or 1,602 .00 euros (for jointly assessed spouses) .
amount of 1 .75 euro per share will be distributed on 16
June 2008 .                                                                               If your income consists wholly or partially of employment
                                                                                          income from which taxes are directly deducted, an as-
FuND lEVEl tAXAtION                                                                       sessment for your income taxation is performed only if
                                                                                          your taxable income that is not subject to payroll deduc-
The German legislature has exempted property funds                                        tion (e . g ., the taxable share of the Fund distribution), or
from any income tax and capital levy . The income of such                                 if your income that is subject to the progressivity proviso
funds is taxed through the income taxation of each inves-                                 (e . g ., the pro-rata tax-free foreign real estate income from
tor .                                                                                     the Fund), amounts to more than 410 euros each .

tAXAtION ON tHE PrIVAtE INVEStOr lEVEl                                                    Domestic and foreign dividends, including those of real
                                                                                          estate corporations, that are distributed or reinvested by
If shares are held as part of a private portfolio, the tax-                               the Property Fund, are only taxable to 50% on the inves-
able income derived from the Fund represents income                                       tor side (the so-called half-income procedure) .
from capital assets . In Germany, such income is princi-
pally taxable in the year in which it accrued, and must be                                In particular rental, interest and dividend income that is
declared among domestic capital income in Annex KAP                                       not used for the distribution is deemed distributed for
of the investor’s income tax return, provided that this                                   investors .
income exceed, together with other capital income, the
tax allowance for savers, including the flat rate allowance                               The Fund assets include real estate situated abroad . Rent-
for income-related expenses, of 801 .00 euros annually                                    al income derived from such real estate normally accrues
(for unmarried/single tax payers or separately assessed                                   tax-free in Germany on account of existing double-taxa-




Personal or Corporate Income Tax Procedure for the Distribution
in euro                                                                          For shares held                  For shares held                        For shares held
                                                                                as private assets             as corporate assets                 as corporate assets of
                                                                                                                                                           corporations
Distribution per share 1)                                                                       1 .7500                         1 .7500                                 1 .7500
minus the tax-exempt income pursuant to Art . 3,
No . 40, ITA, or Art . 8b, Sec . 1, CITA 2)                                                   -0 .0547                          -0 .0547                               -0 .1038
Tax-free foreign income 3)                                                                    -0 .9348                          -0 .9348                               -0 .9348
Taxable share of the distribution                                                               0.7605                          0.7605                                  0.7114
Deemed-distributed income
(tax-free foreign income) 3)                                                                    0 .0465                         0 .0465                                 0 .0465
Foreign income
subject to the progressivity proviso 3)                                                         0 .9813                         0 .9813                                           –
Creditable foreign withholding tax                                                              0 .0155                         0 .0155                                 0 .0155


1) Including non-deductible income-related expenses pursuant to Art. 3, sec. 3. No. 2, InvtA.
2) For shares held as private assets and for shares held as corporate assets, half of this income is tax-exempt (so-called half income procedure). For shares held as assets of
   corporations, 95 % of this income remains tax-exempt.
3) this item exclusively represents rental and leasehold income, sales profits from real estate located abroad and sold within the 10 year speculation period, sales of interests
   in foreign real estate partnerships, as well as any other income for which the German income taxation has been waived on account of existing double-taxation treaties. the
   distribution includes 0.9348 euros per share in tax-free foreign income. As a legal fiction, an additional 0.0465 euros per share is considered foreign income that accrues
   tax-free for the investor. thus, the resulting tax-free foreign income that is subject to the application of a progressive tax rate equals 0.9813 euros per share. separate
   reporting of the tax-free income for each country in order to determine the applicability of the progressivity proviso is not required.




78
                                                                                                                  N Otes O N tA x AtI O N FO R s H A R eH O ld eR s




Income subject to capital income taxation (interest income tax)
Basis of assessment                                                                                                                                0.7059 euro per share
                                                                                                               Safe custody (30 %)                   Home custody (35 %)
Capital income tax (interest income tax)                                                                                         0 .2118                                0 .2471
Solidarity surcharge (5 .5 %)                                                                                                    0 .0116                                0 .0136
                                                                                                                                 0 .2234                                0 .2607


By order of the German Inland Revenue Office, the capital income tax (Art. 7. sec. 1 and 2, InvtA) withheld from the individual investor is calculated as follows:
First, the returns included in the distribution that are subject to capital income tax (0.7059 euros per share) must be multiplied with the number of shares held by the investor
on the date of distribution (16 june 2008). Next, the capital income tax withheld is calculated on the basis of the resultant sum and depending on the type of custody. In
addition, the solidarity surcharge is levied on the latter amount. upon submission of a non-assessment note (Nv-Bescheinigung) or substantiation of a non-resident German
tax status, the capital income tax will be waived. upon submission of a valid exemption order (tax allowance for savers, plus the allowance for income-related expenses), the
capital income tax is only applied to that part of the income subject to capital income taxation that exceeds the exemption order allowance. Whenever the capital income tax
is applied, the investor receives a tax note to be filed with the Inland Revenue Office.




tion treaties . It is, however, subject to the progressivity                               tAXAtION At tHE cOrPOrAtE INVEStOr lEVEl
proviso, i . e ., the taxable income must be taken into ac-
count when assessing the individual tax rate that is deter-                                Investors holding their shares as corporate assets gen-
mined for the taxable income of each investor . Income of                                  erally have to report earnings from these as business
this kind must be reported as an aggregate sum in Annex                                    income .
AUS of your German income tax return .
                                                                                           Domestic and foreign dividends, including those paid
Profits from the sales of domestic and foreign real estate                                 by real estate corporations, that are distributed by the
realised on the Property Fund level more than 10 years                                     Property Fund or retained, are only taxable to 50% (the
after the acquisition are always considered tax-free for                                   so-called half-income procedure) for investors with a resi-
the investor .                                                                             dent German income tax status . For investors subject to
                                                                                           corporate income tax, this income generally remains tax-
Profits from sales of domestic real estate inside the ten                                  free (though 5 % of the dividends count as non-deductible
year speculation period that are realised on the Property                                  operating expenses) .
Trust fund level always need to be assessed as taxable
for the investor . This applies regardless of whether such                                 Dividends, interest earnings, and rental income that are
profits are distributed or retained .                                                      not used for the distribution are deemed distributed . For
                                                                                           tax purposes, an active balancing item must be created in
Profits from the sales of foreign real estate inside a ten-                                the amount of any income that is deemed distributed .
year period are also tax-exempt wherever Germany has
waived taxation on the grounds of existing double-taxation                                 The active balancing item must be dissolved at the time
treaties . Nevertheless, any income that accrues abroad,                                   the shares are disposed of or redeemed, or else whenev-
and is exempt from a second, domestic taxation due to                                      er the retained amount is used for distribution purposes .
existing double-taxation treaties, remains subject to the
progressivity proviso . Profits of this kind must be reported                              Income that remains tax-free pursuant to double-taxation
in Annex AUS of the investor’s German income tax return .                                  treaties, as well as income subject to the half-income
                                                                                           procedure, must be reduced by the profit sum as re-
Capital disbursements (in the form of interest on building                                 ported in the trade or tax balance sheet when preparing
finance) are not taxable .                                                                 your income tax or corporate income tax return (income


                                                                                                                                                                             79
to which the half-income procedure is applied and which         be credited against the personal income tax debt if the
accrues for investors who are subject to income taxation,       investor files, together with his or her tax return, the tax
is to be reduced by just 50 %) .                                note issued by the bank that is safe-keeping the shares .

cAPItAl INcOME tAX/INtErESt INcOME tAX                          By order of the German Inland Revenue Authorities, the
                                                                capital income tax withheld from each investor is calcu-
Taxable income from the Property Fund is principally            lated as follows:
subject to the German Interest Income Tax (Zinsabschlag-
steuer) .                                                       First, multiply the Fund distribution portion of the share
                                                                that is subject to capital income tax with the number of
The financial institution keeping your shares in custody        shares you hold on the date of distribution; next, calculate
is principally required to withhold and transfer to the Ger-    the equivalent 30 % of the resultant sum to obtain the
man Inland Revenue Office (Finanzamt) 30 % of any in-           amount of the interest income tax to be withheld . The
come that is subject to interest income taxation, and that      same procedure applies to the capital income tax on divi-
is paid out to private clients with a resident German tax       dends . Here, the share of the dividend imputed to each
status . For OTC transactions, the interest income with-        investor is multiplied by 20 % in order to obtain the capital
held equals 35 % .                                              income tax rate .

No tax is withheld from the distribution of investors with      If the shares are held as corporate assets, you have the
non-resident German tax status who keep their shares in         option of waiving the withholding procedure, or of claim-
safe custody accounts at a domestic or foreign bank .           ing remuneration of the interest income tax and a reim-
                                                                bursement of the capital income tax, only if a non-assess-
Each investor is notified of the interest tax remitted, and     ment note has been filed . Otherwise, you will receive a
should enter this amount as a tax credit (domestic capital      corresponding tax assessment note .
income tax) into Annex KAP, and impute it against the
income tax assessment . Upon submission of a non-               SOlIDArIty SurcHArGE
assessment note (NV-Bescheinigung) or of evidence for
a non-resident German tax status at the bank in whose           The German solidarity surcharge on income tax and cor-
custody the respective shares are held, any share of the        porate income tax equals 5 .5 % . If distributions from Fund
distributed income that is subject to interest income taxa-     shares are subject to the capital income tax/ interest in-
tion remains fully exempt from the interest income tax .        come tax, the capital income tax withheld enters into the
Upon submission of an exemption order, such income              tax base for the solidarity surcharge .
is exempt up to the full amount of the tax allowance for
savers including the flat rate allowance for income-related     The solidarity surcharge is separately listed in your tax
expenses (801 .00 euros / 1,602 .00 euros) .                    assessment note, and can be credited against the final
                                                                solidarity surcharge dues as assessed in your income tax
Domestic dividends, whether distributed or retained, are        return or corporate income tax return, respectively . Over-
fully taxable, subject to a capital income tax rate of 20 % .   paid solidarity surcharge dues will be refunded
The capital income tax is immediately reimbursed to pri-
vate investors if their shares are safe-kept by the invest-     PrIVAtE SAlES trANSActIONS
ment company or by another domestic financial institu-
tion, and if an exemption order over a sufficient amount        If a private investor resells the shares held in a property
or a non-assessment note has been filed . For private           fund within a year of their subscription (speculation pe-
investors, only half of the domestic dividends are imputed      riod), the capital gains are principally taxable as income
against such an exemption order (so-called half-income          from private sales transactions . If such shares are dis-
procedure) . Even if the investor fails to submit an exemp-     posed of after the speculation period, the profits remain
tion order or a non-assessment note in time, the capital        tax-free for the private investor .
income tax withheld plus the solidarity surcharge may still



80
                                                                              N Otes O N tA x AtI O N FO R s H A R eH O ld eR s




When assessing the capital gains, you should reduce the       Also, the “Zwischengewinn” is regularly listed in bank
figure of the purchase price by the “Zwischengewinn”          statements and bank income compilations .
(interim profits) at the time of purchase, and should
in turn reduce the figure of the sales price by the           “IMMOBIlIENGEwINN” AND “AktIENGEwINN”
“Zwischengewinn” at the time of sale, lest you report the
“Zwischengewinn” twice in your income tax assessment          The provisions governing “Immobiliengewinn” (real es-
(see below) . The half-income procedure does not apply to     tate profits) and “Aktiengewinn” (stock profits) apply only
capital gains .                                               to those investors whose shares are held as corporate
                                                              assets .
tAXAtION ON “zwIScHENGEwINN”
                                                              The Fund’s real estate income includes foreign rents not
“Zwischengewinn” (interim profit) is defined as that re-      yet accrued, or not yet counting as accrued, as well as
muneration for interest collected through the sales price     realised and non-realised changes in value for foreign real
or the redemption price, or for accrued interest that has     estate owned by the property fund, provided Germany
not yet been distributed or retained, and that therefore      has waived taxation of these items in accordance with
has not yet become taxable for the investor (perhaps          existing double-taxation treaties .
comparable to the accrued interest on fixed-income se-
curities) . The interest and interest claims earned by the    The Investment Company publishes the Fund’s real es-
property fund become subject to income taxation and           tate income as percentage of the respective investment’s
capital income taxation upon the redemption or sale of        share value .
the shares by investors with a resident German tax sta-
tus . The capital income tax on “Zwischengewinn” equals       The Fund’s “Aktiengewinn” includes the investor’s divi-
30 % for shares held in safe custody, or 35 % for shares      dend income not yet accrued, or not yet counting as
held in home custody (with a solidarity surcharge of 5 .5 %   accrued, including income from real estate corporations,
to be added to the capital income tax in either case) . The   realised or non-realised gains and losses from the Prop-
tax withheld represents an advance payment on your in-        erty Fund’s participations, particularly those in real estate
come tax, and should be entered into Annex KAP of your        corporations .
German income tax return .
                                                              The investment management company publishes the
“Zwischengewinn” included in the share subscription           Fund’s “Aktiengewinn” as percentage of the respective
price may be deducted from the investor’s income tax          investment’s share value on each trading day .
debt as negative income for the year in which it was
paid . It is also considered deductible in your German        On the day the shares are bought or sold (as well as on
income tax return . Moreover, no taxes shall be withheld      the balance key date), the investor must multiply the re-
at source if the taxable amount remains within the limit      ported percentages with the current redemption price in
of an existing exemption order, or if a non-assessment        order to determine his or her absolute real estate profits
note has been filed . Investors with a non-resident Ger-      or stock profits as shareholder .
man tax status are principally exempt from this type
of taxation . The following items shall not enter into the    The difference between the two figures represents the
“Zwischengewinn” assessment: rental and leasehold             investor’s tax-relevant pro-rata “Immobiliengewinn” or
income, as well as income from the valuation and disposi-     “Aktiengewinn”, respectively, for the shares owned .
tion of properties . “Zwischengewinn” is assessed when-
ever the share price is determined, and is published on       For corporate investors, the profits from sales of invest-
each valuation day . The investor should report the sum of    ment shares remain fully tax-free, inasmuch as they result
the “Zwischengewinn” in Annex KAP, which sum is ob-           from the investor’s absolute pro-rata “Immobiliengewinn”
tained by multiplying the respective “Zwischengewinn”         from the shares owned .
per share with the number of shares reported in the in-
vestor’s balance of subscriptions or sales, respectively .    For those investors who keep their shares as corporate



                                                                                                                           81
assets, and who are subject to corporate income taxation,       Responsible for this kind of taxation is the Inland Revenue
the profits from selling investment shares – inasmuch as        Office Vienna 1 / 23 (Finanzamt Wien 1 / 23) .
these result from the investor’s absolute pro-rata “Ak-
tiengewinn” on shares held – remain fully tax-free, though      That part of the income which is subject to limited taxa-
5 % of these tax-free profits are rated as non-deductible       tion in Austria amounts to 0 .013088 euros per share for
operating expenses .                                            the calendar year of 2008 . This amount must be multi-
                                                                plied with the number of shares the investor holds at the
For those investors subject to income taxation who keep         time of distribution .
their shares as corporate assets, half of the profits from
sales of investment shares remain tax-free if they result
from the investor’s pro-rata “Aktiengewinn” for the
shares owned .

To help you solve practical problems, we have posted the
letter by the Federal Ministry of Finance dated 2 June
2005 on our Internet pages at www .hausinvest .de .

lIMItED tAXAtION IN AuStrIA

The Austrian Real Estate Investment Fund Act (ImmoIn-
vFG) has been in force since 1 September 2003 . This
law introduced a limited taxation on the profits a foreign
investor earns from Austrian real estate through an open-
ended property fund .

Continuous management profits that arise from the let-
ting and from the increase in value due to the annual
valuation of Austrian real estate are subject to taxation .
The person subject to this limited taxation in Austria is the
individual investor who has neither his permanent nor his
habitual residence (in the case of a corporation, neither
the company’s seat nor the location of its management)
in Austria .

For natural persons, the tax rate for this type of income
equals 25 % in Austria . If a given investor realises no
more than a maximum of 2,000 euros in taxable income
in Austria, no tax return needs to be filed, and the income
remains tax-free . However, the investor will have to file
a tax return in Austria if he or she exceeds this ceiling, or
if he or she is prompted by the relevant Austrian Inland
Revenue Office to do so .

The corporate tax rate in Austria currently equals 25 % .
Unlike with natural persons, there is no statutory tax al-
lowance .




82
                                                                                 N Otes O N tA x AtI O N FO R s H A R eH O ld eR s




Note on the Flat Rate Withholding Tax
(Abgeltungssteuer)


On 6 July 2007, the German upper house (Bundesrat) passed the 2008 Corporate Tax Reform Act . Under this law, a flat
rate withholding tax will enter into force in Germany as of 1 January 2009 . Please be aware that the introduction of the
flat rate withholding tax will most likely involve changes in the above-described tax treatment of income from invest-
ment funds for private investors

Specifically, the current version of the Corporate Tax Reform Act stipulates that any distributed income and deemed-
distributed income (particularly reinvested interest and dividends) shall be subject to the flat rate tax regime at a tax
rate of 25 % (with church tax, where applicable, and solidarity surcharge to be added) . Dividends will be fully taken into
account (eliminating the half-income procedure) .

The tax shall be regularly retained by the investment company or by the bank safe-keeping the shares (in the case of
domestic custody), so that in many cases it will not be necessary to re-enter this information in the personal income
tax return . Information will still have to be provided in the tax return whenever no tax was deducted and whenever
extraordinary personal expenses are asserted in the tax return, among other scenarios . Also, information for church tax
purposes, where applicable, may be required even if the 25 % tax has already been deducted . Given certain circum-
stances, it might also be sensible to enter the information into your tax return . For instance, if your personal tax bracket
is lower than 25 % and information on capital income is included in the tax return, then your lower tax rate will be ap-
plied .

It will no longer be possible to assert income-related expenses in connection with capital income . The tax allowance
for savers and the allowance for income-related expenses will be replaced by a lump sum deduction in the amount of
801 euros (or 1,602 euros for jointly assessed spouses) .

Distributed capital gains from sales of securities or forward transactions are subject to special regulations . If securities
are sold or forward transactions closed that were acquired or entered into before 1 January 2009, the profits resulting
from these will remain tax-exempt when distributed to private investors .

Distributed profits from the sales of German real estate where the ownership period (between buying and reselling
the property) exceeds 10 years will remain tax-exempt, and will not be subject to the flat rate withholding tax . Foreign
rental income and profits from the sale of foreign real estate will also remain tax-exempt, provided that they are tax-
exempt pursuant to an existing double-taxation treaty, which is usually the case . This kind of foreign income will no
longer be subject to the progressivity proviso as of 1 January 2009 .

Profits from the sales of a private investor's investment shares will become subject to the flat rate tax regardless of the
length of ownership . However, sales of fund shares that were acquired before 1 January 2009 will remain tax-exempt,
provided the shares are sold no less than one year after their acquisition .

Profits from sales of a private investor's investment shares that were acquired after 31 December 2008 will remain
tax-exempt to the extent that such profits are attributable to foreign rental income not yet accrued or net yet deemed
accrued, as well as to realised and non-realised profits from the sale of foreign real estate (provided these are not
subject to German taxation because of existing double-taxation treaties, which is usually the case) on the Fund level .
Whenever the shares are held in custody in Germany, the bank safe-keeping the shares will take these tax-exemptions
directly into account .




                                                                                                                              83
“Aktiengewinn,” “Immobiliengewinn,” and “Zwischengewinn”
(1 April 2007 through 31 March 2008)
Date quoted   Redemption “Aktien-      “Immo- “Zwischen-     Date quoted   Redemption “Aktien-      “Immo- “Zwischen-
                   price gewinn”         bilien- gewinn”                        price gewinn”         bilien- gewinn”
                           in % 1)    gewinn” per share.                                in % 1)    gewinn” per share.
                                         in % 1)  in euro                                             in % 1)  in euro
02 APR 2007         41 .67    1 .25        4 .84     0 .33   05 JUL 2007         41 .01    1 .44       2 .44      0 .13
03 APR 2007         41 .67    1 .25        4 .85     0 .33   06 JUL 2007         41 .02    1 .44       2 .44      0 .13
04 APR 2007         41 .68    1 .25        4 .85     0 .33   09 JUL 2007         41 .03    1 .44       2 .45      0 .13
05 APR 2007         41 .68    1 .25        4 .86     0 .33   10 JUL 2007         41 .03    1 .44       2 .45      0 .13
10 APR 2007         41 .70    1 .25        4 .87     0 .34   11 JUL 2007         41 .03    1 .44       2 .46      0 .13
11 APR 2007         41 .70    1 .25        4 .88     0 .34   12 JUL 2007         41 .04    1 .44       2 .46      0 .14
12 APR 2007         41 .70    1 .25        4 .88     0 .34   13 JUL 2007         41 .04    1 .45       2 .46      0 .14
13 APR 2007         41 .71    1 .25        4 .89     0 .34   16 JUL 2007         41 .05    1 .45       2 .47      0 .14
16 APR 2007         41 .72    1 .26        4 .90     0 .34   17 JUL 2007         41 .06    1 .45       2 .48      0 .14
17 APR 2007         71 .72    1 .26        4 .90     0 .35   18 JUL 2007         41 .06    1 .45       2 .48      0 .14
18 APR 2007         41 .73    1 .26        4 .90     0 .35   19 JUL 2007         41 .07    1 .45       2 .48      0 .14
19 APR 2007         41 .74    1 .26        4 .90     0 .35   20 JUL 2007         41 .07    1 .45       2 .49      0 .15
20 APR 2007         41 .74    1 .26        4 .91     0 .35   23 JUL 2007         41 .08    1 .45       2 .50      0 .15
23 APR 2007         41 .78    1 .33        4 .91     0 .35   24 JUL 2007         41 .08    1 .45       2 .50      0 .15
24 APR 2007         41 .79    1 .33        4 .92     0 .35   25 JUL 2007         41 .09    1 .45       2 .50      0 .15
25 APR 2007         41 .79    1 .33        4 .92     0 .36   26 JUL 2007         41 .09    1 .45       2 .51      0 .15
26 APR 2007         41 .81    1 .33        4 .95     0 .36   27 JUL 2007         41 .13    1 .45       2 .63      0 .15
27 APR 2007         41 .85    1 .33        5 .05     0 .36   30 JUL 2007         41 .21    1 .45       2 .79      0 .16
30 APR 2007         41 .88    1 .34        5 .00     0 .36   31 JUL 2007         41 .21    1 .45       2 .79      0 .16
02 MAY 2007         41 .89    1 .34        5 .00     0 .37   01 AUG 2007         41 .21    1 .46       2 .80      0 .16
03 MAY 2007         41 .89    1 .34        5 .01     0 .37   02 AUG 2007         41 .27    1 .46       2 .79      0 .16
04 MAY 2007         41 .89    1 .34        5 .01     0 .37   05 AUG 2007         41 .27    1 .46       2 .80      0 .17
07 MAY 2007         41 .90    1 .34        5 .02     0 .37   06 AUG 2007         41 .28    1 .46       2 .81      0 .17
08 MAY 2007         41 .91    1 .34        5 .02     0 .37   07 AUG 2007         41 .28    1 .46       2 .81      0 .17
09 MAY 2007         41 .91    1 .34        5 .03     0 .38   08 AUG 2007         41 .29    1 .46       2 .81      0 .17
10 MAY 2007         41 .95    1 .34        5 .11     0 .38   09 AUG 2007         41 .29    1 .46       2 .82      0 .17
11 MAY 2007         41 .96    1 .34        5 .12     0 .38   10 AUG 2007         41 .29    1 .46       2 .82      0 .17
14 MAY 2007         41 .97    1 .35        5 .13     0 .38   13 AUG 2007         41 .30    1 .46       2 .83      0 .18
15 MAY 2007         41 .97    1 .35        5 .13     0 .38   14 AUG 2007         41 .31    1 .46       2 .83      0 .18
16 MAY 2007         41 .98    1 .35        5 .13     0 .39   15 AUG 2007         41 .31    1 .46       2 .84      0 .18
18 MAY 2007         41 .99    1 .35        5 .15     0 .39   16 AUG 2007         41 .32    1 .47       2 .84      0 .18
21 MAY 2007         42 .07    1 .35        5 .30     0 .39   17 AUG 2007         41 .32    1 .47       2 .84      0 .18
22 MAY 2007         42 .08    1 .35        5 .31     0 .39   20 AUG 2007         41 .33    1 .47       2 .85      0 .19
23 MAY 2007         42 .09    1 .35        5 .31     0 .39   21 AUG 2007         41 .33    1 .47       2 .85      0 .19
24 MAY 2007         42 .09    1 .35        5 .32     0 .40   22 AUG 2007         41 .34    1 .47       2 .85      0 .19
25 MAY 2007         42 .09    1 .35        5 .30     0 .40   23 AUG 2007         41 .34    1 .47       2 .85      0 .19
29 MAY 2007         42 .10    1 .36        5 .31     0 .40   24 AUG 2007         41 .34    1 .47       2 .86      0 .19
30 MAY 2007         42 .11    1 .36        5 .31     0 .40   27 AUG 2007         41 .36    1 .47       2 .87      0 .20
31 MAY 2007         42 .10    1 .36        5 .34     0 .41   28 AUG 2007         41 .37    1 .47       2 .90      0 .20
01 JUN 2007         42 .10    1 .36        5 .33     0 .41   29 AUG 2007         41 .42    1 .61       2 .90      0 .20
04 JUN 2007         42 .12    1 .36        5 .35     0 .41   30 AUG 2007         41 .45    1 .61       1 .96      0 .20
05 JUN 2007         42 .13    1 .36        5 .36     0 .41   31 AUG 2007         41 .46    1 .61       2 .97      0 .20
06 JUN 2007         42 .13    1 .36        5 .36     0 .41   03 SEP 2007         41 .47    1 .61       2 .98      0 .21
08 JUN 2007         42 .14    1 .37        5 .37     0 .42   04 SEP 2007         41 .48    1 .61       3 .00      0 .21
11 JUN 2007         42 .15    1 .37        5 .38     0 .42   05 SEP 2007         41 .49    1 .61       3 .01      0 .21
12 JUN 2007         42 .15    1 .37        5 .38     0 .42   06 SEP 2007         41 .49    1 .61       3 .01      0 .21
13 JUN 2007         42 .16    1 .37        5 .39     0 .42   07 SEP 2007         41 .50    1 .61       3 .01      0 .21
14 JUN 2007         42 .16    1 .37        5 .39     0 .42   10 SEP 2007         41 .51    1 .62       3 .02      0 .22
15 JUN 2007         42 .16    1 .37        5 .39     0 .43   11 SEP 2007         41 .51    1 .62       3 .03      0 .22
18 JUN 2007         40 .83    1 .42        2 .13     0 .11   12 SEP 2007         41 .52    1 .62       3 .03      0 .22
19 JUN 2007         40 .83    1 .42        2 .14     0 .11   13 SEP 2007         41 .52    1 .62       3 .03      0 .22
20 JUN 2007         40 .84    1 .42        2 .14     0 .11   14 SEP 2007         41 .52    1 .62       3 .03      0 .22
21 JUN 2007         40 .84    1 .42        2 .13     0 .11   17 SEP 2007         41 .53    1 .62       3 .05      0 .23
22 JUN 2007         40 .84    1 .42        2 .13     0 .11   18 SEP 2007         41 .53    1 .62       3 .05      0 .23
25 JUN 2007         40 .87    1 .44        2 .14     0 .11   19 SEP 2007         41 .54    1 .62       3 .05      0 .23
26 JUN 2007         40 .88    1 .44        2 .14     0 .12   20 SEP 2007         41 .54    1 .62       3 .05      0 .23
27 JUN 2007         40 .87    1 .44        2 .13     0 .12   21 SEP 2007         41 .56    1 .67       3 .06      0 .23
28 JUN 2007         40 .87    1 .44        2 .13     0 .12   24 SEP 2007         41 .71    1 .67       3 .37      0 .24
29 JUN 2007         40 .99    1 .44        2 .42     0 .12   25 SEP 2007         41 .71    1 .67       3 .37      0 .24
02 JUL 2007         41 .00    1 .44        2 .43     0 .12   26 SEP 2007         41 .81    1 .67       3 .59      0 .24
03 JUL 2007         41 .01    1 .44        2 .43     0 .12   27 SEP 2007         41 .83    1 .67       3 .65      0 .24
04 JUL 2007         41 .01    1 .44        2 .43     0 .13   30 SEP 2007         41 .86    1 .68       3 .68      0 .25


84
                                                                                    N Otes O N tA x AtI O N FO R s H A R eH O ld eR s




Date quoted   Redemption “Aktien-      “Immo- “Zwischen-     Date quoted         Redemption “Aktien-           “Immo- “Zwischen-
                   price gewinn”         bilien- gewinn”                              price gewinn”              bilien- gewinn”
                           in % 1)    gewinn” per share.                                      in % 1)         gewinn” per share.
                                         in % 1)  in euro                                                        in % 1)  in euro
01 OCT 2007         41 .87    1 .68       3 .68      0 .25   03 JAN 2008                   42 .62     1 .95        4 .74        0 .40
02 OCT 2007         41 .87    1 .68       3 .68      0 .25   04 JAN 2008                   42 .62     1 .95        4 .74        0 .41
04 OCT 2007         41 .88    1 .68       3 .69      0 .25   07 JAN 2008                   42 .63     1 .95        4 .75        0 .41
05 OCT 2007         41 .88    1 .68       3 .69      0 .25   08 JAN 2008                   42 .64     1 .95        4 .75        0 .41
08 OCT 2007         41 .89    1 .68       3 .70      0 .26   09 JAN 2008                   42 .64     1 .95        4 .75        0 .41
09 OCT 2007         41 .89    1 .68       3 .70      0 .26   10 JAN 2008                   42 .64     1 .95        4 .76        0 .42
10 OCT 2007         41 .90    1 .69       3 .70      0 .26   11 JAN 2008                   42 .65     1 .95        4 .76        0 .42
11 OCT 2007         41 .90    1 .69       3 .70      0 .26   14 JAN 2008                   42 .66     1 .95        4 .76        0 .42
12 OCT 2007         41 .90    1 .69       3 .70      0 .26   15 JAN 2008                   42 .66     1 .95        4 .77        0 .43
15 OCT 2007         42 .07    1 .67       4 .08      0 .27   16 JAN 2008                   42 .66     1 .96        4 .77        0 .43
16 OCT 2007         42 .13    1 .79       4 .08      0 .27   17 JAN 2008                   42 .67     1 .96        4 .77        0 .43
17 OCT 2007         42 .13    1 .79       4 .09      0 .27   18 JAN 2008                   42 .67     1 .96        4 .77        0 .43
18 OCT 2007         42 .13    1 .79       4 .09      0 .27   21 JAN 2008                   42 .68     1 .96        4 .78        0 .44
19 OCT 2007         42 .14    1 .79       4 .10      0 .27   22 JAN 2008                   42 .69     1 .96        4 .78        0 .44
22 OCT 2007         42 .15    1 .79       4 .11      0 .28   23 JAN 2008                   42 .69     1 .96        4 .78        0 .44
23 OCT 2007         42 .15    1 .79       4 .11      0 .28   24 JAN 2008                   42 .69     1 .96        4 .78        0 .44
24 OCT 2007         42 .16    1 .79       4 .11      0 .28   25 JAN 2008                   42 .70     1 .96        4 .78        0 .44
25 OCT 2007         42 .16    1 .79       4 .11      0 .28   28 JAN 2008                   42 .71     1 .96        4 .79        0 .45
26 OCT 2007         42 .16    1 .79       4 .12      0 .28   29 JAN 2008                   42 .71     1 .96        4 .79        0 .45
29 OCT 2007         42 .17    1 .80       4 .13      0 .29   30 JAN 2008                   42 .71     1 .96        4 .79        0 .45
30 OCT 2007         42 .18    1 .80       4 .13      0 .29   31 JAN 2008                   42 .77     2 .03        4 .86        0 .46
31 OCT 2007         42 .20    1 .80       4 .19      0 .29   01 FEB 2008                   42 .78     2 .03        4 .86        0 .46
01 NOV 2007         42 .31    1 .91       4 .31      0 .29   04 FEB 2008                   42 .79     2 .03        4 .87        0 .46
02 NOV 2007         42 .31    1 .91       4 .31      0 .29   05 FEB 2008                   42 .79     2 .03        4 .87        0 .47
05 NOV 2007         42 .33    1 .91       4 .32      0 .30   06 FEB 2008                   42 .80     2 .03        4 .87        0 .47
06 NOV 2007         42 .32    1 .90       4 .33      0 .30   07 FEB 2008                   42 .80     2 .03        4 .87        0 .47
07 NOV 2007         42 .33    1 .91       4 .33      0 .30   08 FEB 2008                   42 .80     2 .03        4 .87        0 .47
08 NOV 2007         42 .33    1 .90       4 .33      0 .30   11 FEB 2008                   42 .82     2 .03        4 .88        0 .48
09 NOV 2007         42 .33    1 .91       4 .33      0 .30   12 FEB 2008                   42 .82     2 .03        4 .88        0 .48
12 NOV 2007         42 .34    1 .91       4 .34      0 .31   13 FEB 2008                   42 .82     2 .04        4 .89        0 .48
13 NOV 2007         42 .35    1 .91       4 .34      0 .31   14 FEB 2008                   42 .85     2 .04        4 .92        0 .48
14 NOV 2007         42 .35    1 .91       4 .34      0 .31   15 FEB 2008                   42 .85     2 .04        4 .92        0 .48
15 NOV 2007         42 .35    1 .91       4 .35      0 .31   18 FEB 2008                   42 .86     2 .04        4 .93        0 .49
16 NOV 2007         42 .36    1 .91       4 .35      0 .32   19 FEB 2008                   42 .86     2 .04        4 .93        0 .49
19 NOV 2007         42 .37    1 .91       4 .36      0 .32   20 FEB 2008                   42 .87     2 .04        4 .93        0 .49
20 NOV 2007         42 .37    1 .92       4 .36      0 .32   21 FEB 2008                   42 .87     2 .04        4 .94        0 .49
21 NOV 2007         42 .37    1 .92       4 .36      0 .32   22 FEB 2008                   42 .87     2 .04        4 .94        0 .50
22 NOV 2007         42 .37    1 .92       4 .36      0 .32   25 FEB 2008                   42 .88     2 .04        4 .95        0 .50
23 NOV 2007         42 .38    1 .92       4 .36      0 .33   26 FEB 2008                   42 .96     2 .04        5 .12        0 .50
26 NOV 2007         42 .39    1 .92       4 .36      0 .33   27 FEB 2008                   42 .97     2 .04        5 .12        0 .51
27 NOV 2007         42 .39    1 .92       4 .36      0 .33   28 FEB 2008                   43 .01     2 .04        5 .20        0 .51
28 NOV 2007         42 .39    1 .92       4 .37      0 .34   29 FEB 2008                   43 .01     2 .02        5 .20        0 .52
29 NOV 2007         42 .41    1 .93       4 .39      0 .34   03 MAR 2008                   43 .02     2 .02        5 .21        0 .52
30 NOV 2007         42 .41    1 .93       4 .39      0 .34   04 MAR 2008                   43 .02     2 .03        5 .21        0 .53
03 DEC 2007         42 .42    1 .93       4 .39      0 .35   05 MAR 2008                   43 .03     2 .03        5 .21        0 .53
04 DEC 2007         42 .42    1 .93       4 .40      0 .35   06 MAR 2008                   43 .03     2 .03        5 .21        0 .53
05 DEC 2007         42 .43    1 .93       4 .40      0 .35   07 MAR 2008                   43 .03     2 .03        5 .21        0 .53
06 DEC 2007         42 .43    1 .93       4 .40      0 .35   10 MAR 2008                   43 .03     2 .03        5 .21        0 .54
07 DEC 2007         42 .43    1 .93       4 .41      0 .35   11 MAR 2008                   43 .03     2 .03        5 .20        0 .54
10 DEC 2007         42 .44    1 .94       4 .41      0 .36   12 MAR 2008                   43 .03     2 .03        5 .20        0 .54
11 DEC 2007         42 .44    1 .94       4 .41      0 .36   13 MAR 2008                   43 .04     2 .03        5 .20        0 .54
12 DEC 2007         42 .45    1 .94       4 .41      0 .36   14 MAR 2008                   43 .04     2 .03        5 .20        0 .54
13 DEC 2007         42 .45    1 .94       4 .41      0 .36   17 MAR 2008                   43 .05     2 .03        5 .20        0 .55
14 DEC 2007         42 .45    1 .94       4 .42      0 .37   18 MAR 2008                   43 .05     2 .03        5 .20        0 .55
17 DEC 2007         42 .47    1 .94       4 .43      0 .37   19 MAR 2008                   43 .05     2 .03        5 .20        0 .55
18 DEC 2007         42 .47    1 .94       4 .43      0 .37   20 MAR 2008                   43 .05     2 .04        5 .20        0 .56
19 DEC 2007         42 .47    1 .94       4 .44      0 .37   25 MAR 2008                   43 .06     2 .04        5 .68        0 .57
20 DEC 2007         42 .48    1 .94       4 .44      0 .38   26 MAR 2008                   43 .06     2 .04        5 .68        0 .57
21 DEC 2007         42 .52    1 .94       4 .52      0 .38   27 MAR 2008                   43 .07     2 .04        5 .68        0 .57
27 DEC 2007         42 .60    1 .94       4 .72      0 .39   28 MAR 2008                   43 .08     2 .04        5 .68        0 .57
28 DEC 2007         42 .62    1 .95       4 .73      0 .40   31 MAR 2008                   43 .14     2 .04        5 .77        0 .59
02 DEC 2008         42 .62    1 .95       4 .74      0 .40   1) Of the redemption price.



                                                                                                                                 85
Verification of Tax Base
pursuant to Art. 5, Sec. 1, Sent. 1, No. 1 and 2,
German Investment Tax Act (InvTA)

Partial Distribution
Name of the investment company:                   Commerz Real Investmentgesellschaft mbH         Begin of financial year:            1 APR 2007
Name of the investment portfolio:                 hausInvest europa                               End of financial year:            31 MAR 2008
ISIN:                                             DE 000 980 701 6                                Resolution day:                   19 MAY 2008
WKN (securities no.):                             980 701                                         Ex day:                            16 JUN 2008
                                                                                                  Pay day:                           16 JUN 2008
                                                                             Private assets Corporate assets Income Corporate assets, Corporate
                                                                           amount per share    Tax Act (ITA) amount      Income Tax Act (CITA)
                                                                                   (in euro)      per share (in euro) amount per share (in euro)

Art. 5, Sec. 1, Sent. 1, No. 1 and 2, InvTA, Letter
a) Amount distributed                                                         1.7500                        1.7500                        1.7500
b) Amount of distributed income                                               1.7500 1)                     1.7500 1)                     1.7500 1)
  Amount of deemed distributed income                                         0.0465                        0.0465                        0.0465
c) Out of the distribution, the amount of:
  aa) deemed distributed income of previous years                             0.0000                        0.0000                        0.0000
  bb) tax-free sales profits pursuant to Art. 2, Sec. 3, No. 1, Sent. 1,
      InvTA                                                                   0.0000
  cc) sales profits pursuant to Art. 3, No. 40, ITA                           0.1093 2)                     0.1093 2)
  dd) income pursuant to Art. 8b, Sec.1, CITA                                                                                             0.1093
  ee) sales profits pursuant to Art 3, No. 40, ITA
                                                                                                            0.0000 2)
  ff) sales profits pursuant to Art. 8b, Sec. 2, CITA
                                                                                                                                          0.0000
  gg) income pursuant to Art. 2, Sec. 3, No. 1, Sent. 2, InvTA,
      provided the income does not represent capital earnings
      pursuant to Art. 20, ITA                                                0.0000
  hh) tax-free sales profits pursuant to Art. 2, Sec. 3, No. 2, InvTA         0.0000
  ii)   income pursuant to Art. 4, Sec. 1, InvTA                              0.9348                        0.9348                        0.9348
  jj)   income pursuant to Art. 4, Sec. 2, InvTA, for which no deduc-
        tion as defined in Sec. 4 was filed                                   0.1870 3)                     0.1870 3)                     0.1870 3)
  kk) income pursuant to Art. 4, Sec.2, InvTA, which entitles to
      credit for taxes considered paid from your income tax or
      corporate income tax pursuant to treaties for the prevention
      of double taxation                                                      0.0000 4)                     0.0000 4)                     0.0000 4)
  ll)   income pursuant to Art. 2, Sec. 1, InvTA                                    –                       0.5141   8)
                                                                                                                                          0.5141 8)
  Deemed distributed income that includes:
  cc) sales profits pursuant to Art. 3, No. 40, ITA                           0.0000 2)                     0.0000 2)
  dd) income pursuant to Art. 8b, Sec.1, CITA                                                                                             0.0000
  ii)   income pursuant to Art. 4, Sec. 1, InvTA                              0.0465                        0.0465                        0.0465
  jj)   income pursuant to Art. 4, Sec. 2, InvTA, for which no deduc-
        tion as defined in Sec. 4 was filed                                   0.0000                        0.0000                        0.0000
  kk) income pursuant to Art. 4, Sec.2, InvTA, which entitles to
      credit for taxes considered paid from your income tax or
      corporate income tax pursuant to treaties for the prevention
      of double taxation                                                      0.0000 4)                     0.0000 4)                     0.0000 4)
  ll)   income pursuant to Art. 2, Sec. 1, InvTA                                    –                       0.0000   8)
                                                                                                                                          0.0000 8)




86
                                                                                                                N Otes O N tA x AtI O N FO R s H A R eH O ld eR s




                                                                               Private assets                 Corporate assets,                      Corporate assets,
                                                                             amount per share             Income Tax Act (ITA)         Corporate Income Tax Act (CITA)
                                                                                     (in euro)        amount per share (in euro)             amount per share (in euro)

 d) That part of the distribution and deemed distributed
    income that entitles to a capital income tax credit
    or refund pursuant to:
    aa) Art. 7, Sec. 1 and 2, InvTA                                                     0.7059                           0.7059                                  0.7059
    bb) Art. 7, Sec. 3, InvTA                                                           0.0000                           0.0000                                  0.0000
 e) Amount of the capital income tax to be credited
    or refunded, pursuant to:
    aa) Art. 7, Sec. 1 and 2, InvTA                                                     0.2118 5)                        0.2118 5)                              0.2118 5)
    bb) Art. 7, Sec. 3, InvTA                                                           0.0000   5)
                                                                                                                         0.0000   5)
                                                                                                                                                                0.0000 5)
 f) Amount of foreign taxes due on income included
    in the distributed and deemed distributed income,
    as defined by Art. 4, sec. 2, InvTA, and
    aa) is creditable pursuant to Art. 34, Sec. 1, ITA, or pursuant
        to a treaty for the prevention of double taxation                               0.0155 6)                        0.0155 6)                              0.0155 6)
    bb) is deductible pursuant to Art. 34c, Sec. 3, ITA, if no deduction
        pursuant to Art. 4, Sec. 4, InvTA, was effected                                 0.0000                           0.0000                                  0.0000
    cc) is considered paid pursuant to an existing
        double taxation treaty                                                          0.0000 7)                        0.0000 7)                              0.0000 7)
 g) Amount deducted for wear/accrued depletion pursuant to
    Art. 3, Sec. 3, Sent. 1, InvTA                                                      0.4045                           0.4045                                  0.4045
 h) Amount of the corporate income tax reduction claimed
    by the distributing corporation,
    pursuant to Art. 37, Sec. 3, CITA                                                                                                                            0.0000




1) Including the fiscal rollover amount                                        0.0000
2) the income is reported to 100 % (half of this amount being tax-exempt).
3) thereof interest income/rental income                                       0.0777
   thereof dividend income                                                     0.1093
4) thereof interest income/rental income                                       0.0000
   thereof dividend income                                                     0.0000
5) subject to an additional 5.5 % solidarity surcharge
6) thereof withholding tax on interest income/rental income                    0.0133
   thereof withholding tax on dividend income                                  0.0023
7) thereof fictitious withholding tax on interest income/rental income         0.0000
   thereof fictitious withholding tax on dividend income                       0.0000
8) Net amount




                                                                                                                                                                    87
Certification
pursuant to Art. 5, Sec. 1, Sent. 1, No. 3, German Investment Tax Act (InvTA), on
the auditing of the tax data

This is an English Translation of the German text, which is the sole authoritative version
To the Commerz Grundbesitz-Investmentgesellschaft mbH capital investment company (hereinafter: the Company)


The Company has engaged us to examine in accordance with Art . 5, Sec . 1, No . 3, German Investment Tax Act,
whether the disclosures to be published by the Company pursuant to Art . 5, Sec . 1, Sent . 1, No . 1 and 2, InvTA, for the
hausInvest europa portfolio of investments for the period from 1 April 2007 to 31 March 2008 were ascertained accord-
ing to the rules of German tax law .


Responsibility for ascertaining the tax-related disclosures pursuant to Art . 5, Sec . 1, Sent . 1, No . 1 and 2 InvTA, in con-
junction with the provisions of German tax law lies with the legal representatives of the Company . Ascertainment of
the tax-related disclosures was done by drawing on the accounting and records and the the annual report pursuant to
Art . 44, Sec . 1, InvA, for the respective period . Components of the review include reconciliation accounts in compli-
ance with fiscal provisions as well as the compilation of the tax disclosures intended for publication pursuant to Art . 5,
Sec . 1, Sent . 1, No . 1 and 2, InvTA . To the extent that the company invested in shares of other investment funds (target
funds), the company used the tax data available from the target funds .


Our responsibility is to express an opinion, on the basis of our examination, as to whether the disclosures made by
the Company pursuant to the provisions of the German Investment Tax Act were determined according to the rules of
German tax law . Our examination was based on the annual report examined by an auditor pursuant to Art . 44, Sec . 5,
InvA, as well as on the Company's underlying accounting and other records . The object of our opinion were the rec-
onciliation accounts based upon these, and the disclosures intended for publication . In particular, our examination cov-
ered the fiscal qualification of capital investments, of revenues and expenses, including their designation as income-
related expenses, as well as other tax records .


We were not engaged to review the records and information submitted to us for completeness and accuracy in anal-
ogy to an audit of financial statements under commercial law; accordingly, we relied on the auditor's report on the
portfolio of investments without undertaking any further review . Moreover, we assumed that the records and informa-
tion the Company submitted to us are complete and accurate over and beyond the auditor's report .


To the extent that the Company invested in units of a target fund, our review was limited to the correct transfer of
data made available for these funds according to the available accompanying tax certificates . The data itself was not
reviewed by us .


We conducted our examination in accordance with the generally accepted standards in Germany for the audit of finan-
cial statements promulgated by the Institut der Wirtschaftsprüfer (Institute of German Certified Public Accountants) .




88
Those standards require that we plan and perform the audit such that it can be assessed with reasonable assurance
whether the disclosures pursuant to Art . 5, Sec . 1, Sent . 1, No . 1 and 2, InvTA, are free from material misstatements .
Knowledge of the management of the investment as well as evaluations of possible misstatements is taken into ac-
count in the determination of the audit procedures . The effectiveness of the internal control system relating to the
determination of the disclosures pursuant to Art 5, Sec . 1, Sent . 1, No . 1 and 2, InvTA, as well as evidence supporting
the tax-related disclosures are examined primarily on a sampling basis within the framework of the audit .


The examination also includes assessing the Company’s interpretation of the tax laws applied . The interpretation cho-
sen by the Company did not give rise to reservation if it was reasonably supported by the statuary instruments, court
decisions, relevant legal literature and opinions published by the fiscal administration . We point out that a future evolu-
tion of the body of law, especially of legal precedents, may require a different opinion on the interpretation adopted by
the Company . Without limiting our certification we hereby point out that the tax-free share of the distribution includes
profits from the sale of partnership interest, to which we applied Art . 4, Sec . 1, InvTA .


We believe that our audit provides a reasonable basis for our opinion .


On this basis we certify to the Company in accordance with Art . 5, Sec . 1, Sent . 1, No . 3, InvTA, that the disclosures
submitted pursuant to Art . 5, Sec . 1, Sent . 1, No . 1 and 2, InvTA, were ascertained according to the rules of German tax
law .




Frankfurt am Main, 5 June 2008


PwC FS Tax GmbH
Wirtschaftsprüfungsgesellschaft
Steuerberatungsgesellschaft


Dr . Hans Ulrich Lauermann                                      M . Oliver Schachinger
Tax consultant




                                                                                                                          89
                                         Bodies



                                         INVEStMENt cOMPANy

                                         Commerz Grundbesitz-Investmentgesellschaft mbH 1)
                                         Kreuzberger Ring 56
                                         65205 Wiesbaden/Germany
                                         Tel .:   +49 (0)611 7105-0
                                         Fax:     +49 (0)611 7105-189
                                         E-mail: info@commerzreal .com
1) As of 8 April 2008, Commerz
   Grundbesitz-Investmentgesellschaft
   mbH was renamed Commerz Real
                                         District Court Wiesbaden, commercial register number, HRB 8440
   Investmentgesellschaft mbH.
2) until 15 september 2007 member
                                         Established on 25 March 1992
   of the management of Commerz
   Grundbesitzgesellschaft mbH as        Subscribed capital  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 5 .2 million euros
   well as chairman of the supervisory
   board of Commerz Grundbesitz-spe-     Paid-in capital  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 5 .2 million euros
   zialfondsgesellschaft mbH (renamed    Liable equity capital  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 21 .059 million euros
   Commerz Real spezialfondsgesells-
   chaft mbH as of 9 April 2008).        Status: 31 December 2007
3) Board spokesman of Commerz
   Real AG, member of the board of
   Bundesverband deutscher leasing-
   unternehmen, and chairman of the
   supervisory board of COMuNItHY
                                         MANAGEMENt
   Immobilien GmbH.
4) Member of the board of Com-           Dr . Frank Pörschke (Spokesman) 2) (until 15 September 2007)
   merz Real AG, chairman of the
   supervisory board of Commerz          Hubert Spechtenhauser (Spokesman) 3) (as of 1 October 2007)
   Grundbesitz-spezialfondsgesells-
   chaft mbH (renamed Commerz Real
                                         Dr . Heiko Beck 4)
   spezialfondsgesellschaft mbH as of    Eberhard Graf 5) (as of 1 January 2008)
   9 April 2008), and chairman of the
   supervisory board of GO German        Leo A . J . Lousberg 6) (until 30 June 2007)
   Office AG.
                                         Hans-Joachim Kühl 7) (as of 1 July 2007)
5) Member of the board of Commerz
   Real AG, member of the manage-        Roland Potthast 8) (as of 1 January 2008)
   ment of Commerz Real vertrieb
                                         Günter Ress 9) (as of 1 January 2008)
   GmbH and member of the manage-
   ment of Ilv Immobilien-leasing
   verwaltungsgesellschaft düsseldorf
   mbH.
6) until 30 september 2007, member       SHArEHOlDErS
   of the management of Commerz
   Grundbesitzgesellschaft mbH as
   well as member of the board of        Commerz Grundbesitzgesellschaft mbH (until 25 September 2007)
   Commerz Grundbesitz-spezialfonds-
   gesellschaft mbH (renamed Com-        (a Commerzbank AG company)
   merz Real spezialfondsgesellschaft
   mbH as of 9 April 2008).              Commerz Real AG (as of 26 September 2007)
7) Member of the board of Commerz
   Real AG, member of the manage-
                                         (a Commerzbank AG company)
   ment of Commerz Real France
   GmbH and member of the manage-        Commerz Grundbesitz Beteiligungsgesellschaft mbH & Co . KG (as of 30 March 2007)
   ment of Commerz Real Benelux
   GmbH.
                                         (a Commerzbank AG company)
8) Member of the board of Commerz
   Real AG.
9) Member of the board of Commerz
   Real AG and member of the man-        cuStODIAN BANk
   agement of Commerz Real Fonds
   Beteiligungsgesellschaft mbH.         Commerzbank AG, Frankfurt am Main
                                         District court Frankfurt am Main, commercial register no . HRB 32000
                                         Liable capital pursuant to Art . 10, Banking Act  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 19,836 million euros
                                         Status: 31 December 2007




90
                                                                                       B O d I es




SuPErVISOry BOArD

Bernd Knobloch 1) 2), Chairman
Member of the Board of Directors, Commerzbank AG, Frankfurt am Main,
and Chairman of the Board, Eurohypo AG, Eschborn

Wolfgang Hartmann 1) 2), Deputy Chairman (until 31 August 2007)
Member of the Board of Directors, Commerzbank AG, Frankfurt am Main

Dirk Wilhelm Schuh 1) 2), Deputy Chairman (as of 1 September 2007)
Group Head (ZCC) of Global Credit Risk Management Corporates & Markets,
Commerzbank AG, Frankfurt am Main

Markus Beumer 1) 2)
Member of the Board of Directors, Commerzbank AG, Frankfurt am Main

Michael Mandel
Chairman of the Board, comdirekt Bank AG, Quickborn

Dr. Bernhard Fuhrmann
Chief Operating Officer Commercial Real Estate, Commerzbank AG,
Frankfurt am Main

Dr. Thorsten Reitmeyer
Global Head of Corporate Banking, Commerzbank AG, Frankfurt am Main

1) Member of the Real estate Investment Committee

2) Member of the securities Investment Committee.




Wiesbaden, in May 2008




Hubert Spechtenhauser                               Dr . Heiko Beck    Eberhard Graf
(Spokesman)




Hans-Joachim Kühl                                   Roland Potthast     Günter Ress




                                                                                            91
B O d I es




             VAluAtION cOMMIttEE

             Uwe Ditt, MBA
             Publicly appointed and sworn expert for the appraisal of developed and undeveloped
             property, Hochheim

             Dr. Ralf Hans Engel, Cert.En.
             Publicly appointed and sworn expert for building damages, and for the appraisal of devel-
             oped and undeveloped property, Münster

             Dr. Klaus P. Keunecke, D.En.Sci.
             Publicly appointed and sworn expert for the appraisal and rent rates of developed and
             undeveloped property, Berlin

             Horst Rittershaus, B.Com.
             Publicly appointed and sworn expert for the valuation of property, rent rates, and leases,
             Düsseldorf (public appointment ended on 31 December 2007)

             Dr. Günter Schäffler
             Publicly appointed and sworn expert for construction costing and cost controlling,
             the appraisal of developed and undeveloped property, and for rent rates (for plots and
             buildings), Stuttgart

             Michael Schlarb, Cert.En.
             Publicly appointed and sworn expert for the appraisal of developed and undeveloped real
             estate, Essen

             Prof. Jürgen Simon, Cert.En.Archi.
             Publicly appointed and sworn expert for the appraisal of developed and undeveloped real
             estate, Hanover

             Klaus Thelen, Cert.En.
             Publicly appointed and sworn expert for the appraisal of developed and undeveloped
             property, Gladbeck

             Stefan Wicht, Cert.En. Architect
             Publicly appointed and sworn expert for the appraisal of developed and undeveloped
             property, Hochheim




             AuDItOr

             PricewaterhouseCoopers Aktiengesellschaft
             Wirtschaftsprüfungsgesellschaft, Frankfurt am Main




92
Special Notes for Investors



PErFOrMANcE IS SuBJEct tO FluctuAtIONS

As investment vehicles, open-ended property funds are grouped with investment funds,
and manifest a noticeably lower rate of fluctuation in terms of performance than many
other capital investment vehicles . For open-ended property funds, such fluctuations as
do occur are caused by a variety of developments on the real estate markets .

Unperturbed by such market fluctuations, hausInvest europa has shown positive results
every year since the fund's inception in 1972 . Nonetheless, it can never be ruled out for
the future that even hausInvest europa may have to report a negative return one day .

rEAl EStAtE VAluAtIONS INFluENcE tHE PErFOrMANcE

The cyclical development of the real estate markets – which includes particularly the
location-driven changes in regard to the average rent rates, the demand, as well as the
sales and purchase prices for real estate – necessitate a continuous revaluation of the
Fund properties . The valuation of real estate is legally required, and is performed for
each property at least once a year by an independent valuation committee of publicly
appointed and sworn experts . Depending on the market situation at the time, the re-
valuation of properties may precipitate a mark-up or a markdown, thus causing either an
increase or a decrease of returns, as the case may be .

SuSPENSION OF SHArE cErtIFIcAtE rEDEMPtIONS GIVEN
SPEcIAl cIrcuMStANcES

The liquidity of open-ended property funds is subject to varying degrees of cash inflows
and outflows . A major increase in net cash inflows can therefore cause the fund liquid-
ity to rise and put pressure on returns in times of low interest rates . Naturally, investing
liquid capital in real estate does take a certain amount of time .

In anticipation of a potential short-term increase in net capital outflow, a fund is legally
held to keep a minimum liquidity equivalent to 5 % of the fund assets in order to accom-
modate share certificate redemptions . Under the self-obligating policy of its Investment
Company, the liquidity ceiling for hausInvest europa is no less than 10 % .

In the unlikely event that the statutory minimum liquidity is undercut, or that the liquid
capital of the Fund does not suffice to accommodate redemption requests, the Fund
Management may temporarily suspend the redemption of share certificates in the inter-
est of all investors (see the item, “Suspension of Redemptions” in the Sales Prospectus,
Art . 12, General Fund Rules) . In special cases, the Fund Management is actually obliged
to do so .




                                                                                                93
     Corporate Governance
     and BVI Code of Conduct


     BVI (Federal Investment and Asset Management Association), the leading association
     of the German investment fund industry, formulated – in cooperation with its members
     – the so-called BVI Code of Conduct for the protection of fund investors, which orients
     itself to the principles of good corporate governance . This self-obligating policy goes
     beyond the anyway strict regulations under German law, and is directly available in the
     Internet at www .bvi .de .

     In managing its Funds, Commerz Grundbesitz-Investmentgesellschaft mbH 1) (CGI) has
     committed itself to a consistent implementation of the BVI Code of Conduct . Compli-
     ance with the provisions of the BVI Code of Conduct is therefore subject to constant
     internal control . In regard to the endorsement of the Code we would like to make explicit
     mention of the fact that CGI relies, in addition to its in-house experts, on the advice pro-
     vided by external experts (attorneys, tax consultants, real estate analysts, among others)
     regarding the management of its funds .

     As it considers them binding, CGI applies the BVI Code of Conduct, and commissioned
     the auditors of PricewaterhouseCoopers (PwC) to review the company’s implementation
     of the code in May 2006 .

     As a result, the auditors stated that CGI relies on a printed regulatory catalogue that is
     principally suited to define such standards for the underlying property fund in order to
     pursue and promote the investors’ interests . The audit has not led to any reservations .
     The catalogue of mandatory documents (including an overview of all documents whose
     submission CGI deems necessary in order to implement the BVI Code of Conduct) is
     also available at www .hausinvest .de .

     1) As of 8 April 2008, Commerz Grundbesitz-Investmentgesellschaft mbH was renamed
        Commerz Real Investmentgesellschaft mbH.




94
95
Victoria Square, Belfast




                           96
Sales Prospectus
and Fund Rules
Status: 1 April 2008




                                                     gh:
                                               h rou
                                          ve t      08
                                  e ffecti ust 20
                                          ug
                                     15 A




Non-binding Translation of the
Sales Prospectus and Fund Rules




/ Open-Ended Property Fund /
Sales Prospectus



Shares are purchased on the basis of this Sales Prospectus and          in conjunction with the fiduciary relation, if the investor has no
the General Fund Rules in conjunction with the Special Fund Ru-         general place of jurisdiction in Germany. Pursuant to Art. 123,
les. This Sales Prospectus is a legally prescribed sales document       German Investment Act (InvA), all sales documents must be made
and must be made available to the buyer of shares together with         out in the German language. Moreover, the Investment Company
the latest Annual Report; and – if more than eight months have          shall conduct all communication with its investors in German.
passed since the key date of the last Annual Report – the most
recent Semi-Annual Report must also be made available before            In the case of any dispute arising in connection with the enforce-
the sales contract is signed.                                           ment of the provisions of the German Civil Code in the version that
                                                                        has been in force since 8 December 2004, inasmuch as they con-
No information or explanations shall be provided that are at vari-      cern long-distance sales contracts for financial services, the par-
ance with the contents of this Sales Prospectus. Any share acqui-       ties involved may turn to the Arbitration Office of Deutsche Bun-
sition based on information or explanations not contained in this       desbank, PO Box 11 12 32, 60047 Frankfurt, phone:
Sales Prospectus is undertaken exclusively at the buyer’s risk.         +49 (0) 69/2388-1907 or -1906, fax: +49 (0) 69/2388-1919. The right to
                                                                        file a suit of law will not be affected by doing so.
Due to certain restrictions inherent in US supervisory legislation,
neither the information provided in this Sales Prospectus, nor the      The current Annual Report or Semi-Annual Report, respectively,
Property Fund itself, are intended for sales activities in the United   contains current information on the bodies and liable capital of
States or involving US citizens. The term “US citizen” covers any       Commerz Grundbesitz-Investmentgesellschaft mbH, the liable ca-
person who is a legal citizen of the United States, or who perman-      pital of the custodian bank, as well as on the appointed auditing
ently resides in the United States, and/or who is subject to US         company.
taxation. The term “US citizen” may also cover partnerships or
corporations that have been incorporated under the laws of the          This Sales Prospectus, the General Fund Rules, as well as the cur-
United States or of any one US state, US territory or US possessi-      rent Annual Report and Semi-Annual Report are available as free
on.                                                                     Internet download on the Investment Company’s website at www.
                                                                        hausinvest.de. Additional information on the investment limitations
The fiduciary relations between the Investment Company and the          of the risk management of this Property Fund, the risk manage-
investor, as well as the relations preceding the actual ratification    ment methods, and the latest developments in regard to risks and
of any agreement, shall be governed by German law. Pursuant to          returns, are available in printed form from the Investment Compa-
Art. 18, Sec. 2, General Fund Rules, the seat of the Investment         ny or as Internet download at www.hausinvest.de.
Company shall be the place of jurisdiction for any dispute arising




This Sales Prospectus, including the General and Special Fund
Rules has been effective since 1 April 2006. The amended ver-
sion of Art. 14, Sec. 6, Special Fund Rules, entered into force on
1 February 2007.
The latter section represents a revised version of the text in com-
pliance the German Investment Act (InvA) and the German
Investment Tax Act (InvTA). These laws entered into force on
15 December 2003.

98
Contents



Sales Prospectus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97-123           Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .111
Investment Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101            Management Fees and Other Charges . . . . . . . . . . . . . . . . . . . . .111

Code of Conduct . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101       Statement of Total Expense Ratio (TER) . . . . . . . . . . . . . . . . . . . .112

Custodian Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101      Particulars in Connection with the
                                                                                                          Acquisition of Investment Shares . . . . . . . . . . . . . . . . . . . . . . . . .112
Valuation Committee and
Valuation Methods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101         Partial Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .112

Property Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102     Share Classes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .112

Typical Investor Profile . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102          Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .112

Definition of Investment Objectives and Investment Policy . . . 102                                       Issuance of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .112

      Real Estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102   Redemption of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .112

      Interests Held in Real Estate Companies . . . . . . . . . . . . . . . 103                           Valuation/Issue Price and Redemption Price. . . . . . . . . . . . . . . .112

      Encumbrance with a Ground Lease . . . . . . . . . . . . . . . . . . . . 104                               Real Estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113

      Risks Attached to Real Estate Investments, to                                                             Executed Construction Work. . . . . . . . . . . . . . . . . . . . . . . . . . 113
      Participations in Real Estate Companies, and to                                                           Interests Held in Real Estate Companies . . . . . . . . . . . . . . . 113
      Encumbrances with a Ground Lease . . . . . . . . . . . . . . . . . . 104
                                                                                                                Investments in Liquid Assets . . . . . . . . . . . . . . . . . . . . . . . . . . 113
      Investments in Liquid Assets . . . . . . . . . . . . . . . . . . . . . . . . . . 105
                                                                                                          Special Valuation Rules for Particular
      Cash in Banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105       Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .113
            Money Market Instruments . . . . . . . . . . . . . . . . . . . . . . . 105                          Non-Listed Debenture Bonds, and
            Investment Ceilings for Securities                                                                  Promissory Note Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
            and Money Market Instruments . . . . . . . . . . . . . . . . . . . 106                              Money Market Instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
            Minimum Liquidity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107                 Derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
            Risks Attached to Investments in Liquid Assets . . . . . . 107                                      Option Rights and Forward Contracts . . . . . . . . . . . . . . . . . . 113
      Encumbrance of Fund Assets,                                                                               Cash Balances, Investment Shares,
      and Borrowing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107             and Securities Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
      Derivatives for Hedging Purposes . . . . . . . . . . . . . . . . . . . . . 107                            Assets Denominated in
            Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108         Foreign Currencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114

            Forward Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109                 Securities Repurchase Agreements . . . . . . . . . . . . . . . . . . . 114
                                                                                                                Composite Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114
            Swaps . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109
                                                                                                                Up-Front Fee, and Redemption Charge . . . . . . . . . . . . . . . . . 114
            Swaptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109
                                                                                                          Publication of Issue Price
            Credit Default Swaps. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109
                                                                                                          and Redemption Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114
            Securitised Derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . 109
                                                                                                          Charges for the Issuance and Redemption of Shares . . . . . . . . 114
            Listed and Non-Listed Derivatives . . . . . . . . . . . . . . . . . 109
                                                                                                          Suspension of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114
            Real Estate as Underlying Instrument
                                                                                                          Calculation of Earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115
            for Derivative Transactions . . . . . . . . . . . . . . . . . . . . . . . 109
                                                                                                          Income Equalisation Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . 115
            Currency Risks, and Derivative Transactions
            for Hedging these Risks . . . . . . . . . . . . . . . . . . . . . . . . . . 110               Distribution of Earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115
            Summary of the Risks of Loss Involved                                                         Effects of the Distribution on the Share Value . . . . . . . . . . . . . . . 116
            in Derivative Transactions . . . . . . . . . . . . . . . . . . . . . . . . 110
                                                                                                          Cashing of Coupons . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116
            Securities Lending . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110
                                                                                                          Notes on Tax Regulations Relevant
            Securities Repurchase Agreements . . . . . . . . . . . . . . . . 111                          for Investors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116


                                                                                                                                                                                                              99
Shares in Private Ownership (Resident German Tax Status). . . 116                                      Solidarity Surcharge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119
      Domestic Rental Income and Interest Earnings,                                                    Investors with Non-Resident German Tax Status . . . . . . . . . . . . 119
      as well as Interest-Related Earnings . . . . . . . . . . . . . . . . . . . 116
                                                                                                       Foreign Withholding Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120
      Profits from the Sale of Domestic and
                                                                                                       Separate Assessment, External Audit . . . . . . . . . . . . . . . . . . . . . . 120
      Foreign Real Estate 10 Years
      after its Acquisition or Later . . . . . . . . . . . . . . . . . . . . . . . . . . 116           Taxation of “Zwischengewinn“ . . . . . . . . . . . . . . . . . . . . . . . . . . . 120
      Profits from Sales of Domestic                                                                   Transparent, Semi-Transparent, and
      Real Estate 10 Years after                                                                       Non-Transparent Taxation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120
      its Acquisition or Later . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116
                                                                                                       EU Interest Directive/German Interest
      Foreign Rental Income, and Profits                                                               Information Regulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120
      from Sales of Foreign Real Estate
                                                                                                       Merging Property Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121
      Less than 10 Years after its Acquisition . . . . . . . . . . . . . . . . . 116
                                                                                                       Real Estate Transfer Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121
      Profits from Securities Sales, and
      Profits from Forward Transactions . . . . . . . . . . . . . . . . . . . . . 116                  Legal and Fiscal Risks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121
      Domestic and Foreign Dividends                                                                   Consulting and Outsourcing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121
      (in Particular those from
      Real Estate Corporations) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117            Reports, Financial Year, Auditors . . . . . . . . . . . . . . . . . . . . . . . . . . 121

      Income from Participations in                                                                    Prerequisites for the Liquidation
      Domestic and Foreign                                                                             of the Property Fund. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122
      Real Estate Partnerships . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117           Procedure for Liquidating the Property Fund . . . . . . . . . . . . . . . . 122
      Negative Tax Earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117          Transfer of all Assets Belonging to
      Disbursement of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117           the Property Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122

      Sales Profits on the Investor Level . . . . . . . . . . . . . . . . . . . . . 117                Procedure for the Transfer of all
                                                                                                       Assets Belonging to a
Shares in Corporate Ownership                                                                          Property Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122
(Resident German Tax Status) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117
                                                                                                       Other Property Funds Managed by
      Domestic Rental Income and Interest Earnings,                                                    the Investment Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122
      as well as Interest-Related Earnings . . . . . . . . . . . . . . . . . . . 117
                                                                                                       Revocation Right of Share Buyer, pursuant
      Foreign Rental Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117          to Art. 126, German Investment Act . . . . . . . . . . . . . . . . . . . . . . . . 122
      Profits from the Sale of Domestic and                                                            General Fund Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 124
      Foreign Real Estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117
                                                                                                       Special Fund Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129
      Profits from Securities Sales, and
      Profits from Forward Transactions . . . . . . . . . . . . . . . . . . . . . 118
      Domestic and Foreign Dividends
      (in Particular those from
      Real Estate Corporations) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118
      Income from Participations in
      Domestic and Foreign
      Real Estate Partnerships . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118
      Negative Tax Earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118
      Disbursement of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118
      Sales Profits on the
      Investor Level . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118
Interest Income Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118
Capital Income Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119



100
                                                                                                                        sales Prospectus




Capital Investment Company                                               ons comply with InvA regulations and the Fund Rules. If so, the
                                                                         custodian bank shall approve the investment.
The capital investment company managing the hausInvest europa
property fund (hereinafter “Fund” or “Property Fund”) that is de-
                                                                         A blocking entry in favour of the custodian bank must be made in
scribed in detail in this Sales Prospectus is the Commerz Grund-
                                                                         the land register for each piece of real estate, unless it is held for
besitz Investmentgesellschaft mbH (hereinafter “Investment Com-
                                                                         the account of the Property Fund through a real estate company.
pany”), established on 25 March 1992, and having its legal seat in
                                                                         Thus, real estate cannot be disposed of without the custodian
Wiesbaden/Germany. It is a capital investment company pursuant
                                                                         bank’s approval. If, in the case of foreign real estate, the restriction
to the provisions of the German Investment Act (InvA), and takes
                                                                         on disposals cannot be entered in a land register or comparable
the legal form of a private limited company (GmbH).
                                                                         register, the Investment Company will ensure that the restriction
                                                                         on disposals is enforced in some other appropriate form.
Information on the members of the Management Board, of the
Supervisory Board, of the valuation committee, and on the inves-
                                                                         Moreover, the custodian bank must ensure that participations in
tors, as well as on the subscribed, paid-in and liable capital of the
                                                                         real estate companies comply with the legal provisions as subse-
Investment Company and the custodian bank pursuant to Art. 10,
                                                                         quently defined. Sales of interests in real estate companies by the
German Banking Act (KWG), are set out in tabular form in the “Bo-
                                                                         Investment Company require the custodian bank’s approval. Real
dies” chapter.
                                                                         estate sales by such a real estate company, and amendments to
                                                                         that real estate company‘s partnership agreement or articles of
Code of Conduct
                                                                         association, must be approved by the custodian bank, provided
The Investment Company has committed itself to observe the Code          the Investment Company holds the majority interest in that real es-
of Conduct published by the Federal German Association for In-           tate company.
vestment und Asset Management (BVI) based in Frankfurt am
Main. The Code of Conduct articulates a standard for handling the        The custodian bank shall handle the issuance and redemption of
capital and the investor rights in a sound and responsible manner.       shares, while also monitoring the valuation of both the Property
It defines the ways in which investment companies meet their obli-       Fund and of the shares by the Investment Company. The custodian
gations vis-à-vis their investors, and the ways in which they repre-     bank shall ensure that the equivalent value of the transactions
sent the latter’s interests vis-à-vis third parties. By observing this   conducted for the joint account of the investors is placed in its
code in terms of reliability, integrity and transparency, participa-     custody within the usual time frame. In addition, the custodian
ting companies seek to deepen the trust on the part of investors         bank must ensure that earnings from the Property Fund are used in
and the public, and to meet the increased need for information.          accordance with the provisions of both the aforementioned law
Inasmuch as the Code of Conduct suggests a need to adjust this           and the Fund Rules, and it has to disburse the earnings allocated
Sales Prospectus, the necessary changes will be reflected in the         for distribution.
respectively next issue of the latter.
                                                                         Valuation Committee, and Valuation Method
Custodian Bank
                                                                         The Investment Company shall appoint at least one valuation com-
Commerzbank AG, having its legal seat in Frankfurt am Main, Ger-         mittee to evaluate the real estate, consisting of at least three mem-
many, has assumed the role of custodian bank for the Property            bers and one deputy member. The experts must be independent,
Fund. The custodian bank is a financial institution under German         reliable and technically competent individuals with specific expe-
law. As a universal bank, it is active in the clearing, deposit and      rience in the field of real estate appraisal.
lending business, as well as in the securities business. The cus-
todian bank is entrusted with the constant monitoring of the real        The Investment Company has appointed a valuation committee for
estate portfolio, interests in real estate companies, and other as-      the purpose of appraising the entire real estate belonging to the
sets not suitable for safe custody, as well as with the safekeeping      Property Fund. Each expert is principally appointed for a term of
of cash in banks belonging to the Property Fund and not deposited        two years, with the possibility of re-election. No Investment Com-
at other banks, money market instruments, securities and invest-         pany committee expert may serve beyond the end of the fifth ca-
ment shares held as investments in liquid assets. This complies          lendar year after his or her initial appointment. After that, the In-
with the regulations set forth in the InvA, which stipulates separa-     vestment Company may extend the term by one year each, though
te management and custody for a given property fund.                     only if the expert’s earnings from his activity as a member of the
                                                                         committee, or from other activities on behalf of the Investment
The custodian bank holds securities of the Property Fund in blo-         Company, in the last 4 years preceding the last year of the respec-
cked custody accounts and cash in banks in blocked accounts,             tive permitted term of activity did not exceed 30% of that person’s
unless they are not deposited in blocked accounts at other banks.        mean total income, and only after the expert submitted an affidavit
The custodian bank safeguards the investor interests insofar as          to the Investment Company confirming this fact during the last
the disposal or encumbrance of any piece of real estate requires         year of that person‘s permitted active term. The activity of the va-
its approval. Moreover, the custodian bank must verify whether           luation committee appointed by the Investment Company is gover-
investments held in blocked accounts at other financial instituti-       ned by set rules of procedure. The committee drafts expert opini-


                                                                                                                                           101
ons in accordance with the set rules of procedure. The latter            Typical Investor Profile
define the regional responsibility of each expert. The experts are       The Property Fund is suitable for any investor, including investors
organised in several valuation bodies, with each body consisting         who are unfamiliar with capital investment in real estate, and who
of a chief expert and two assistant experts who evaluate the entire      wish to take advantage of the Property Fund as a comfortable sa-
real estate belonging to the Property Fund. If one expert is unable      vings proposition in the form of real estate values. Investing in the
to attend a committee meeting, another committee member shall            Property Fund requires no previous experience with real estate
take that person’s place on the respective valuation committee.          investment, nor capital market experience.

Specifically, the valuation committee shall evaluate:                    It is also intended for experienced investors looking for a product
                                                                         with just such an investment strategy as is pursued by the Proper-
P   the real estate that the Investment Company or a real estate         ty Fund. The recommended investment horizon is a minimum of
    company intends to acquire;                                          five years. A given investor should be in a position to parry slight
                                                                         temporary losses. The Property Fund pursues a profit-oriented in-
P   a real estate company’s real estate prior to the acquisition of      vestment strategy, and is suitable for any investment portfolio.
    an interest in that real estate company;
                                                                         Definition of Investment Objectives and
P   at least every 12 months, the real estate belonging to the Pro-      Investment Policy
    perty Fund or owned by a real estate company;
                                                                         Real Estate
P   the real estate that the Investment Company or a real estate
    company intends to sell, if the annually compiled expert opinion     1. The Investment Company may acquire for the Property Fund the
    is deemed outdated.                                                  following types of real estate situated in any member state of the
                                                                         European Union or in another member state of the Treaty on the
The valuation committee shall determine the market value of each         European Economic Area:
piece of real estate, which, as a rule, is assessed using the income
                                                                         a) rental housing real estate, commercial real estate, and real es-
value appraisal method based on the German Evaluation Ordinan-
                                                                            tate used for mixed purposes;
ce (Wertermittlungsverordnung). The crucial aspect when using
this method is the sustainable rental income, minus the operating        b) real estate under development;
costs, which include maintenance and administrative overhead as
                                                                         c) undeveloped real estate intended, and suitable, for the Invest-
well as the imputed risk represented by loss of rent. The earning-
                                                                            ment Company’s own development in the near future, pursuant
capacity value is derived from the thus calculated net rent, multi-
                                                                            to a), above;
plied by a factor reflecting a normal market interest rate for the
real estate to be assessed, while taking into account the location,      d) ground leases or legally and economically similar rights in any
condition and remaining useful life of the building.                        member state of the European Union or in another member sta-
                                                                            te of the Treaty on the European Economic Area, subject to
Special factors influencing the value of a piece of real estate can         conditions a) to c);
be accounted for by mark-ups or markdowns.                               e) other real estate and other ground leases, as well as rights in
                                                                            the form of residential real estate ownership, partial owners-
Before any encumbrance with a ground lease can be created, the              hip, residential ground leases and partial ground leases.
valuation committee has to confirm that the conditions set out in
the contract terms have been met, and that the set ground rent is        2. At the time of its acquisition, no single piece of real estate may
appropriate. A new valuation of such real estate shall be made           exceed a value equivalent to 15% of the Property Fund’s total va-
within two months after the encumbrance was created.                     lue. The aggregate value of all real estate whose individual value
                                                                         equals more than 10% of the Property Fund’s total value must not
Property Fund                                                            exceed a value equivalent to 50% of the Property Fund’s total va-
The Property Fund bears the name hausInvest europa. It was laun-         lue. Loans taken out may not be deducted for the calculation of the
ched on 7 April 1972 for an indefinite period of time. The assets be-    total value of the Property Fund; as a result, loans raise the basis
longing to the Property Fund are owned by the Investment Company,        of assessment for calculating ceilings. The investment target is to
who manages them in trust for its investors.                             achieve regular earnings from rent revenues and interest, as well
                                                                         as a steady increase in added value.
The share certificates are registered in the bearer‘s name, and do-
cument the owner‘s claims vis-à-vis the Investment Company. They         The main criteria in selecting real estate for the Property Fund are
may represent one or several shares, being issued in denominations       sustainable revenue power and diversification in terms of location,
of one, ten, fifty or one hundred shares. The share certificates are     size, use and tenants. The Investment Company currently invests
transferable. Upon transfer, the rights documented by a given share      in locations capable of development, mainly in commercial real
certificate will pass to the bearer. In any case, the bearer counts as   assets as well as in business and office buildings for administrati-
the beneficiary in the eyes of the Investment Company. The shares        on, the retail business, and services, and in shopping centres. The-
confer no voting rights. All shares issued entail equal rights.          se properties vary greatly in terms of location and size, with invest-


102
                                                                                                                      sales Prospectus




ments concentrated at economic hubs. In addition to existing or         change that real estate company’s partnership agreement or its
currently constructed buildings, the Investment Company acqui-          articles of association. A real estate company in this sense is a
res properties to be developed either by the Investment Company         company that by virtue of its partnership agreement or articles of
itself or by suitable companies acting on behalf of the Investment      association:
Company so as to minimise possible risks.
                                                                        a) is restricted in its business object to activities that the Invest-
                                                                           ment Company itself may undertake on behalf of the Property
When selecting real estate to be acquired, economic and locally
                                                                           Fund;
specific opportunities and risks enter into each valuation. Invest-
ments outside Germany permitted by the Fund Rules are subjected         b) may only acquire such real estate and managed assets whose
to special scrutiny, not least with a view to possible currency fluc-      direct acquisition for the Property Fund is permitted by the
tuations and tax aspects.                                                  Fund Rules;
                                                                        c) may acquire no more than three pieces of real estate, and
The real-estate portfolio is optimised to meet market requirements
by modernising, restructuring or selling buildings. Expenditures for    d) may acquire real estate only if the value of the real estate, inas-
restructuring and modernisation measures must be in proportion             much as it is equivalent to the participation, does not exceed a
to the projected increase in revenues. Business policy reflects            value equivalent to 15% of the Property Fund’s total value.
market conditions, and changes in market conditions, to the legal-
ly permitted extent. The benchmarks of the current investment           2. Moreover, any participation in a real estate company is subject to
policy are defined in the respective Annual Report.                     the condition, inter alia, that the real estate company‘s legal form
                                                                        rules out any obligation to make additional contributions over and
The Investment Company may acquire objects for the Property             above the contribution already paid in.
Fund to the extent that these are required for the management and
upkeep of the assets, particularly real assets, that belong to the      3. The shareholders’ deposits in a real estate company in which the
Property Fund.                                                          Investment Company holds an interest for the account of the Pro-
                                                                        perty Fund must be fully paid in.
Any investment in real estate and other assets made during the
period of the most recent Annual Report shall be listed in the An-      4. The aggregate value of the real estate owned by any real estate
nual Report or Semi-Annual Report, whichever is more recent.            company in which the Investment Company participates for the ac-
                                                                        count of the Property Fund may not exceed a value equivalent to
3. The Investment Company may amend the Fund Rules. Except for          49% of the Property Fund’s total value. The value of the real estate
the provisions governing management fees and other charges,             belonging to real estate companies in which the Investment Com-
amendments to the Fund Rules are subject to approval by the In-         pany holds a stake for the account of the Property Fund while not
vestment Company’s supervisory board and by the German Super-           holding the voting majority nor the capital majority required to
visory Authority for Financial Services (Bundesanstalt für Finanz-      change the articles of association or the partnership agreement,
dienstleistungsaufsicht – BaFin). Any intended amendments shall         may not exceed the equivalent of 20% of the Property Fund’s total
be announced in the electronic Federal Gazette (Bundesanzeiger)         value.
and moreover in a business paper or daily, or in the Internet under
www.hausinvest.de, and shall become effective three months af-          5. Loans taken out may not be deducted for the calculation of the
ter its announcement in the electronic Federal Gazette at the ear-      total value of the Property Fund; as a result, loans raise the basis of
liest. The German Supervisory Authority for Financial Services          assessment for calculating ceilings.
may rule that a given amendment become effective at an earlier
date. Amendments to regulations concerning management fees              6. The Investment Company may grant to a real estate company in
and other expenses do not require prior approval by the German          which the Investment Company holds an interest for the account of
Supervisory Authority for Financial Services, and will become ef-       a given property fund loans for the account of the respective pro-
fective 13 months after their announcement in the electronic Fede-      perty fund if the terms are in line with market standards, and if suf-
ral Gazette. Revisions of the existing investment principles for the    ficient collateral has been furnished. Moreover, it must be agreed
Property Fund will become effective no earlier than 13 months af-       that, in case the interest is sold, the loan shall be repaid within six
ter their announcement, and are permissible only on the condition       months after the date the interest was sold. The total sum the In-
that the Investment Company gives investors the option to swap          vestment Company may lend to any real estate company must not
their shares for shares in another property fund with comparable        exceed the equivalent of 25% of the total value of the property fund
investment principles, inasmuch as the Investment Company actu-         for whose account it holds such an interest; at the same time, the
ally manages such other property funds.                                 Investment Company needs to make sure that the aggregate value
                                                                        of any loans it may have granted to any single real estate company
Interests Held in Real Estate Companies                                 does not exceed 50% of the value of the real estate held by that
                                                                        company. These conditions shall apply even if a third party was to
1. The Investment Company may acquire and hold stakes in real
                                                                        grant a loan on behalf of the Investment Company to the real estate
estate companies for the account of the Property Fund, even if it
                                                                        company in its own name but for the account of the Property Fund.
does not have the majority of votes and capital majority required to

                                                                                                                                         103
Encumbrance with a Ground Lease                                          P   Risks can arise during project development, e.g. due to chan-
                                                                             ges in the general development plans and delays in the issuing
Real estate may be encumbered with a ground lease. Whenever a
                                                                             of building permits. As far as possible, higher construction
new ground lease is granted, the total value of the real estate en-
                                                                             costs and completion risks are countered by appropriate ar-
cumbered with that ground lease, and held for the account of the
                                                                             rangements with contractual partners and the careful selection
Property Fund, must not exceed the equivalent of 10% of the Pro-
                                                                             of such partners. Nonetheless, residual risks must not be neg-
perty Fund’s total value. Even if a ground lease is merely extended,
                                                                             lected, nor the fact that a successful first letting depends on
it is considered newly created.
                                                                             the market situation at the time of the building’s completion.
Real estate may only be encumbered with a ground lease if unfo-
reseen circumstances prevent the property from being used as             P   Real estate may always have structural defects. Such risks
originally intended, or if economic disadvantages for the Property           cannot be wholly ruled out even after a thorough technical in-
Fund are thereby avoided, or if doing so creates options for an              spection of the property and the procurement of expert opini-
economically sensible use of the property.                                   ons prior to the acquisition, where applicable.
                                                                         P   When real estate is acquired abroad, risks may arise that are
Risks Attached to Real Estate Investments, to Participa-
                                                                             associated with the place where the real estate is situated (e.g.
tions in Real Estate Companies, and to Encumbrances
                                                                             a different legal and fiscal system, divergent interpretations of
with a Ground Lease
                                                                             double-taxation treaties, and fluctuating currencies). In the
Real estate investments are subject to risks that may affect the             case of foreign real estate, other factors, such as the increa-
share value through changes in the returns on, the expenditures              sed administrative risk and possible technical difficulties, in-
for, and market value of, that real estate. The same applies to in-          cluding the transfer risk for current earnings or sales proceeds,
vestments in real estate held by real estate companies. The exem-            must also be taken into account.
plary risks detailed below do not represent an exclusive list.
                                                                         P   Real estate sales, even when the principles of a prudent busi-
P   Aside from changes in the overall economic conditions, there             nessman are applied, may occasion warranty claims on the
    are also risks peculiar to property ownership, such as vacan-            part of the buyer or a third party for which the Property Fund
    cies, rents in arrears, and losses of rent caused, among other           shall be liable.
    possible causes, by changes in the quality of the location or
                                                                         P   Among the risks to be considered when acquiring a stake in a
    tenant net worth. The condition of any given building may ne-
                                                                             real estate company are those arising from the company‘s le-
    cessitate maintenance expenditures that are not always fore-
                                                                             gal form, risks in connection with the possible defaults of part-
    seeable. In order to contain these risks, the Investment Compa-
                                                                             ners, and risks of changes in the legal parameters of taxation
    ny strives to provide a high number of options for third-party
                                                                             and incorporation. This applies in particular to real estate com-
    usage of its real estate, and to ensure a diversified tenancy
                                                                             panies with legal seat outside Germany. Moreover, it needs to
    structure covering a variety of industries. Continual maintenan-
                                                                             be taken into account when acquiring an interest in a real es-
    ce and modernisation or restructuring of the real estate is in-
                                                                             tate company that this interest could be encumbered with liabi-
    tended to preserve or improve its competitiveness.
                                                                             lities that are difficult to identify. Finally, if the interest is to be
P   The risks of damage by fire, storm and natural forces (flooding,         sold, it might turn out that no secondary market with sufficient
    high water, earthquake) and terrorism applies internationally,           liquidity exists.
    and is covered by insurance policies to the extent that relevant
                                                                         P   Real estate investments outside Germany generally involve
    insurance capacities are actually available, and provided it is
                                                                             debt financing. This approach is taken for the sake of currency
    within economic reason and in response to any realistic need.
                                                                             hedging (granting loans in the local currency of the situs state)
P   Properties, particularly in conurbations, may be subject to a            on the one hand, and/or in order to achieve a leveraging effect
    risk of war and terrorism. Even if a given piece of real estate is       (boosting the equity capital return by borrowing outside capital
    not directly affected by an act of terrorism, it may lose in eco-        at an interest rate below the return of the respective property).
    nomic value if the real estate market of an area affected by             Since the Property Fund is subject to taxation outside Germany,
    terrorism is subject to a long-term decline, rendering the               loan interest is principally tax-deductible in the country of the
    search for tenants either difficult or impossible. However, real         respective Fund object. When using debt financing, any chan-
    estate can be insured even against terrorism to the extent that          ge in value for the real estate at issue will have a more pro-
    insurance coverage is available, and provided that such cover-           nounced effect on the Property Fund’s equity capital used. For
    age remain within economic reason and respond to a realistic             instance, in case of 50% loan financing, the effect of a gain or
    need.                                                                    loss in value for a given piece of real estate will double for the
P   The risk of contamination (such as ground contamination, in-             Fund capital used when compared to full equity capital finan-
    terior asbestos fittings) is examined with particular care prior         cing, the latter being the predominant method for domestic real
    to any real estate acquisition (by procuring adequate expert             estate acquisitions. Thus, a change in value has a much grea-
    opinions, where applicable). Notwithstanding the diligence in            ter importance when using debt financing – which is often used
    trying to eliminate them, risks of this sort cannot be ruled out         abroad – than it does for equity-financed objects, which is the
    altogether.                                                              standard domestic scenario. The investor will therefore derive
                                                                             a greater benefit from any added value, and will be more sever-

104
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    ely burdened by depreciations, than would be the case with full       P   funds that will be required to meet liabilities arising from legal-
    equity financing. In the event of short-term liquidity bottle-            ly effective real estate deeds, loan agreements necessary for
    necks, e.g. due to share redemptions on a massive scale, ex-              pending investments in specific real estate and for specific
    tensive debt financing also reduces the options to procure the            construction measures, as well as liabilities arising from cons-
    necessary capital through object sales or short-term loans.               truction contracts, inasmuch as these liabilities will become
    The risk of having to suspend the redemption of shares there-             due within two years’ time.
    fore increases (see page 127).
                                                                          Cash in Banks
P   Whenever a piece of real estate is encumbered with a ground
    lease, there is the risk that the party holding this right may fail   Pursuant to the legal regulations (Art. 66, 49, InvA), the Investment
    to meet its obligations, and specifically that it may fail to pay     Company may only invest in cash in banks at such financial institu-
    the ground rent. This and other cases may result in a premature       tions that have their seat in a member state of the European Union
    reversion of the ground lease. The Investment Company must            or a member state of the Treaty on the European Area. Cash in
    then seek to put the real estate to different commercial use,         banks may only be kept at financial institutions with seat in anot-
    which can be difficult, as the case may be. This applies mutatis      her country if the banking supervision regulations in that country
    mutandis to a reversion following the contract expiration. Final-     match those of the EU in the eyes of the German Supervisory
    ly, encumbrance of a given property with a ground lease may           Authority for Financial Services (BaFin).
    compromise its fungibility; i.e. the property may not be as easy
    to sell as it would be without such an encumbrance.                   The Investment Company may invest no more than 20% of the Pro-
                                                                          perty Fund’s value in cash in banks at any single financial institu-
Investments in Liquid Assets                                              tion.
Aside from the acquisition of real estate and interests in real esta-
                                                                          Money Market Instruments
te companies, investments in liquid assets are also permitted and
intended.                                                                 Money market instruments are instruments normally traded on the
                                                                          money market, as well as fixed interest securities that have a life-
The Investment Company may keep no more than 49% of the Pro-
                                                                          time or remaining lifetime of no more than 12 months at the time
perty Fund’s value (maximum liquidity) in the form of:
                                                                          they are acquired for the Property Fund. If their lifetime exceeds 12
P   cash in banks;                                                        months, their interest rate must be adjusted at least once within a
                                                                          12-month period to reflect the current market standard.
P   money market instruments;
P   securities that are eligible in the eyes of the European Central      Money market instruments for the Property Fund may be acquired
    Bank or the Deutsche Bundesbank as collateral for the lending         from the following issuers:
    transactions specified in Art. 18, Sec. 1 of the protocol on the
                                                                          1. from the Federal German government, a Federal German trust
    Charter of the European System of Central Banks and the Euro-
                                                                          fund, one of the German states, another member state of the Euro-
    pean Central Bank, or whose eligibility has been applied for
                                                                          pean Union or another member state of the Treaty on the European
    according to the terms of issuance, inasmuch as they become
                                                                          Economic Area,
    eligible within one year of their issue;
P   investment shares pursuant to Art. 50, InvA, or shares in insti-      2. from another domestic territorial entity or a regional government
    tutional property funds pursuant to Art. 50, Sec. 1, Sent. 2, InvA,   or municipality of another member state of the European Union or
    whose fund rules specify that investments must be made ex-            another member state of the Treaty on the European Economic
    clusively in the form of cash in banks, money market instru-          Area,
    ments and securities as defined under Bullets 1 through 3, ab-
    ove;                                                                  3. from the European Union or a member state of the Organisation
                                                                          for Economic Cooperation and Development,
P   securities admitted for trade at a stock exchange in one of the
    member states of the European Union or for trade at an official
                                                                          4. from the central bank of a member state of the European Union
    market in a member state of the Treaty on the European Econo-
                                                                          or a member state of the Treaty on the European Economic Area,
    mic Area, or fixed-income securities, provided that these do
                                                                          the European Central Bank, or the European Investment Bank,
    not exceed a value equivalent to 5% of the Property Fund’s total
    value.
                                                                          5. from an international organisation to which the Federal Republic
                                                                          of Germany has been admitted as a full member,
The following committed funds must be deducted when the maxi-
mum liquidity ceiling is calculated:
                                                                          6. from a company whose securities have been admitted for trade
P   The funds required to secure a properly functioning real estate       to a domestic or foreign stock exchange for an official or organi-
    management;                                                           sed market,
P   the funds set aside for the next distribution;
                                                                          7. from a financial institution in a member state of the European

                                                                                                                                           105
Union or another member state of the Treaty on the European Eco-         P   derivatives acquired from this institution that have not been
nomic Area, or from a financial institute with seat in any third state       admitted for trade at a stock exchange, nor have been placed
whose banking supervisory regulations match those of the Euro-               on any other organised market. The ceiling applicable in each
pean Union in the eyes of the German Supervisory Authority for               case remains unaffected by the ceiling for this combination.
Financial Services (BaFin),
                                                                         The credit for the securities and money market instruments of a
8. from a company whose equity capital amounts to no less than 10        given issuer against the ceilings defined above can be reduced by
million euros, and which compiles its annual report in compliance        the use of market-contrary derivatives whose underlying instru-
with the Fourth Council Directive 78/660/EEC dated 25 July 1978,         ments are securities or money market instruments by the same
regarding the annual report of corporations of certain legal forms,      issuer. This means that securities and money market instruments
last revised by Directive 2003/51/EC of the European Parliament          of a given issuer may be acquired for the account of the Property
and Council, dated 18 July 2003,                                         Fund even beyond the ceiling defined above if the increased issu-
                                                                         er-specific risk is covered by hedge transactions.
9. from a group subsidiary pursuant to Art. 18, German Corporation
Act (Aktiengesetz), if another subsidiary of the group that satisfies    The Investment Company may invest up to 35% of the Property
the requirements listed under Items 6, 7 or 8 has guaranteed the         Fund’s value in debenture bonds and promissory note loans of the
interest rate and the repayment of these money market instru-            following issuers: the Federal German government, European
ments,                                                                   communities, member states of the European Union, other mem-
                                                                         ber states of the Treaty on the European Economic Area, or other
10. from a legal entity whose business operation aims at placing         member states of the Organisation for Economic Cooperation and
securities-based liabilities on the market, provided a financial in-     Development. The 35% ceiling also applies to debenture bonds
stitution granted credit lines to said legal entity for the purpose of   and promissory note loans for which one of the listed issuers has
liquidity safeguarding.                                                  provided guarantee collateral.

The issues or the issuing institutions must come with sufficient         The Investment Company may invest up to 25% each of the Proper-
protection of assets and investors, e.g. in the form of an invest-       ty Fund’s value in mortgage bonds and municipal bonds issued by
ment grade rating. The term “investment grade” refers to a rating        financial institutions seated in a member state of the European
of no less than “BBB” or “Baa” in the context of a net worth re-         Union or in another member state of the Treaty on the European
view by a rating agency. The Investment Company may also acqui-          Economic Area, provided that these financial institutions are sub-
re those kinds of money market instruments for the account of the        ject to a separate public supervision legally instituted for the pro-
Property Fund that come with a warranty on its interest rate and         tection of the owners of these debenture bonds, and provided that
repayment, provided said warranty has been issued by an issuer           the capital raised by issuing these debenture bonds is invested in
of a type listed under Items 1 through 5 or Item 7 above.                compliance with legal regulations in assets that cover the liabili-
                                                                         ties arising out of the debenture bonds for their entire lifetime, and
Moreover, the Investment Company may invest up to 10% of the             that these assets are prioritised for the coverage of the repayment
Property Fund’s value in money market instruments of issuers who         of the bonds and of the payment of the interest upon maturity in
fail to meet the conditions defined above.                               case the issuer defaults on these payments.

Investment Ceilings for Securities and Money Market                      Minimum Liquidity
Instruments
                                                                         The Investment Company must ensure that an amount equivalent
The value of securities and money market instruments bought from         to at least 5% of the Property Fund‘s total value is available in sight
any single issuer must not exceed the equivalent of 5% of the Pro-       deposits (minimum liquidity).
perty Fund’s total value. In individual cases, securities and money
market instruments, including any securities bought from the same        Risks Attached to Investments in Liquid Assets
issuer under a repurchase agreement, may be acquired up to the
equivalent of 10% of the Property Fund’s total value. In such an         If the Property Fund holds securities, money market instruments or
event, the total value of the securities and money market instru-        investment fund shares for the sake of liquidity, it should be noted
ments bought from the respective issuer must not exceed 40% of           that these investments entail risks along with the chances for an
the Property Fund’s total value.                                         increase in value. It is possible for the market prices of securities
                                                                         and money market instruments to fall below the cost price, due, for
No more than 20% of the Property Fund’s total value may be inves-        instance, to developments on the money and capital markets, or
ted into any combination of the following assets at any single insti-    special developments affecting the issuers. The same applies mu-
tution:                                                                  tatis mutandis to the performance of the investment shares.

P   securities and money market instruments floated by this insti-       The price of fixed-income securities is influenced by developments
    tution,                                                              on the capital market, i.e., if long-term interest rates rise the quo-
P   cash in banks at this institution,                                   ted prices of fixed-income securities will fall. These fluctuations in

106
                                                                                                                          sales Prospectus




market price also depend on the lifetimes of fixed-income securi-        man Derivative Ordinance (DerivateV) in order to determine the
ties. As a rule, fixed income securities with shorter lifetimes entail   degree of utilisation of the market risk limit for the use of derivati-
fewer price risks than fixed interest securities with longer lifeti-     ves pursuant to Art. 51, Sec. 2, InvA.
mes; in turn, the returns of the former are generally lower as a re-
sult. Additional exchange-rate risks and transfer risks should also      1. Inasmuch as the Investment Company uses the simple appro-
be taken into account in the case of liquid assets held in foreign       ach, it may invest only in derivatives derived from assets that may
currencies.                                                              be acquired pursuant to Art. 6, Sec. 2, Letters b) to e), General Fund
                                                                         Rules, or from real estate that may be acquired pursuant to Art. 2,
By analogy, the above risks apply to any property fund that, in turn,    Sec. 1, Special Fund Rules. In this context, and pursuant to Art. 6,
invests in securities and money market instruments.                      Sec. 2, German Derivative Ordinance, it limits itself to the exclusive
                                                                         use of the following basic forms of derivatives, or combinations of
In addition to the chances for price gains, equities also contain        these derivatives, or combinations of assets that may be acquired
risks; they are subject to the unpredictable influence that the deve-    for the Property Fund, together with the aforementioned types of
lopment of the capital markets may have, and the particular deve-        derivatives inasmuch as they are already part of the Property
lopment of a given issuer. Even the most careful selection of equi-      Fund:
ties bought cannot rule out the eventuality of a loss due to price
                                                                         P   forward contracts on assets pursuant to Art. 6, Sec. 2, Letters
fluctuations or a dwindling of assets on the part of the issuer.
                                                                             b) to e), General Fund Rules, as well as on real estate pursuant
                                                                             to Art. 2, Sec. 1, Special Fund Rules, interest rates, exchange
Encumbrance of Fund Assets, and Borrowing
                                                                             rates or currencies;
The Investment Company may encumber real estate belonging to             P   options and subscription warrants on assets pursuant to Art. 6,
the Property Fund, or may assign and encumber claims arising                 Sec. 2, Letters b) to e), General Fund Rules, as well as on real
from legal relationships involving real estate if this is compatible         estate pursuant to Art. 2, Sec. 1, Special Fund Rules, interest
with diligent and proper business management, and if the custod-             rates, exchange rates or currencies, and on forward contracts
ian bank approves these measures because it considers the inten-             pursuant to Letter a), provided they have the following charac-
ded terms and conditions to be in line with market standards.                teristics:
When acquiring real estate, it may also take over encumbrances
                                                                                  •	 They	 can	 be	 exercised	 at	 any	 time	 during	 their	 entire	
associated with that real estate. Any given piece of real estate
                                                                                     lifetime or at the end of their lifetime, and
may only be or become encumbered inasmuch as continuous ear-
nings from that property are guaranteed. Overall, the various en-                 •	 The	 option	 value	 depends,	 at	 the	 time	 it	 is	 exercised,	
cumbrances may not exceed 50% of the total market value of the                       and in a linear sense, on the positive or negative diffe-
real estate held in the Property Fund. Encumbrances in connection                    rence between exercise price and market price of the
with the suspension of redemption pursuant to Art. 12, Sec. 5, Ge-                   underlying instrument, and becomes nil if the difference
neral Fund Rules, are not taken into account, nor are ground                         bears the opposite sign;
rents.
                                                                         P   interest swaps, currency swaps or interest currency swaps;
On top of that, the Investment Company may take out, for the joint
account of the investors, short-term loans of up to 10% of the Pro-      P   options in swaps of the type defined in Letter c), provided they
perty Fund’s total value, provided the conditions of borrowing are           manifest the characteristics defined in Letter b) under Sub-Let-
in line with market standards, and that the custodian bank appro-            ters aa) and bb) (swaptions);
ves such borrowing. Any amount that the Investment Company ,             P   credit default swaps on assets pursuant to Art. 6, Sec. 2, Let-
acting as repo lender, received in conjunction with a repurchase             ters b) to e), General Fund Rules, as well as on real estate pur-
agreement must be set off against this ceiling.                              suant to Art. 2, Sec. 1, Special Fund Rules, inasmuch as they
                                                                             serve exclusively and manifestly to hedge the loan risk of pre-
The asset performance will be impaired if the borrowing costs ex-            cisely associable Property Fund assets;
ceed the real estate returns. Special circumstances may never-
theless make borrowing seem advisable, such as maintaining a             P   forward contracts, options and subscription warranties on in-
long-term source of income and performance in face of just tem-              vestment shares pursuant to Art. 6, Sec. 2, Letter d), General
porary bottlenecks in terms of liquidity, or tax considerations, or          Fund Rules, must not be concluded.
the limiting of currency risks abroad.
                                                                         The imputed value of:
Derivatives for Hedging Purposes                                         P   financial futures contracts is defined by the contract value mul-
                                                                             tiplied by the forward price calculated each trading day,
The Investment Company may use derivatives in conjunction with
the management of the Property Fund. The Investment Company              P   options or subscription warranties whose underlying instrument
may, in keeping with the type and volume of the deployed derivati-           is a security, a money market instrument or a derivative, is defi-
ve, use the simple or the qualified approach in line with the Ger-           ned by the value of the instrument underlying the option right,


                                                                                                                                              107
P   options and subscription warranties whose underlying instru-         This means that the Investment Company may, against remunera-
    ments are interest rates, exchange rates or currencies, is defi-     tion (the option premium), acquire the right from a third party to
    ned by the value of the underlying instrument, multiplied by the     demand within, or at the end of, a certain period of time, and at a
    multiplication factor defined in the option terms.                   price agreed in advance (the exercise price), the acceptance of
                                                                         securities or payment of the balance between the exercise price
In addition, the determined values must be multiplied with the cor-      and closing market value, for instance. The Investment Company
responding delta. This delta represents the ratio between the            may also acquire, against remuneration, such rights from a third
change in the derivative’s value and a change – presumably minor         party.
– in the value of the underlying instrument.
                                                                         Specifically, the following rules shall apply, whereas:
2. Inasmuch as the Investment Company uses the qualified appro-
ach, and assuming a suitable risk management is in place, the In-        The subscription of a put option (in-the-money position – long put)
vestment Company may, for hedging purposes, invest in any deri-          entitles the buyer, against payment of a premium, to demand from
vative derived from assets that have been acquired pursuant to           the seller to buy certain assets at the exercise price or pay the
Art. 6, Sec. 2, Letters b) to e), General Fund Rules, or from real es-   balance between that price and the closing market value. The sub-
tate that has been acquired pursuant to Art. 2, Sec. 1, Special Fund     scription of such put options makes it possible to hedge, e.g., the
Rules, or from interest rates, exchange rates or currencies. This        securities held in the Property Fund against price losses during the
includes in particular options, financial forward contracts, and         exercise period. If the securities drop below the exercise price,
swaps, as well as combinations thereof. Under no circumstances           the put options can be exercised, thus realising sales proceeds
may the Investment Company deviate from the General and Spe-             that are higher than their current market prices. Instead of exerci-
cial Fund Rules, nor from the investment goals defined in this Sales     sing the option, the Investment Company may also sell the option
Prospectus, when engaging in the above transactions.                     right at a profit.

The risks associated with the use of derivatives are controlled by       On the other hand, there is the risk that the option premiums paid
a risk management procedure pursuant to the German Derivative            may be lost if it does not seem economically sound to exercise the
Ordinance (DerivateV) when pursuing a qualified approach, which          put option at the previously agreed exercise price because market
procedure allows the monitoring of risks associated with the in-         prices have not fallen as expected. Such fluctuations in fair value
vestment item, as well as its respective share in the overall risk       for securities underlying the option right can reduce its value out
profile of the asset portfolio at any time.                              of all proportion, and even render it worthless. In view of the limi-
                                                                         ted exercise period, there is no guarantee that the price of the
3. Inasmuch as the Investment Company invests in derivatives pur-        option will recover again in time. Profit expectations have to ref-
suant to Art. 51, InvA, the Investment Company currently applies         lect the costs involved in the subscription, exercise or sale of the
the qualified approach pursuant to the German Derivative Ordi-           option, or in the conclusion of an offsetting transaction (closing). If
nance in order to determine the market risk potential. Pursuant to       expectations are not met, and if the frustrated expectations cause
Art. 7, German Derivative Ordinance, however, the Investment             the Investment Company to forego the exercising of its option
Company may switch at any given time from a qualified to a simple        right, that right will expire unexercised at the end of its exercise
approach. Switching to a simple approach requires the approval           period.
by the German Supervisory Authority for Financial Services (Ba-
Fin), and must be announced in the next Annual or Semi-Annual            Forward Contracts
Report.
                                                                         Forward contracts may only be used for hedging purposes. For-
Transactions involving derivatives may only be performed for the         ward contracts are mutually and absolutely binding agreements
purpose of protecting the assets held in the Property Fund, for the      between two parties to buy or sell, at a specified future date (the
purpose of covering changes in the interest rates and currency           maturity date) or within a specific period, a specific quantity of a
risks, and for the purpose of protecting rent claims. The German         specific underlying instrument (e.g. bonds, equities) at a previous-
Investment Act and the German Derivative Ordinance provide the           ly agreed price (exercise price). As a rule, this is done by receiving
option to double the market risk potential of a given property fund      or paying the balance between the exercise price and the market
through the use of derivatives. The market risk is defined here as       price at the time the transaction is closed or at maturity.
that risk which results from an unfavourable development of mar-
ket prices from the perspective of the Property Fund. Since the          The Investment Company may, e.g., hedge the securities portfolio
Property Fund may employ derivatives only for hedging purposes,          belonging to the Property Fund by selling forward contracts on
any attendant leverage option is principally out of the question.        these securities for the lifetime of the contracts.


Options                                                                  In particular, the Investment Company may sign, for the account of
                                                                         the Property Fund, forward contracts via investment shares that it
The Investment Company may participate in the option trade for           would also be permitted to acquire directly for the Property Fund.
the account of the Property Fund and within the parameters of the        This means, it may assume the obligation to buy or sell a certain
investment principles, provided it does so for hedging purposes.

108
                                                                                                                       sales Prospectus




quantity of shares in another property fund at a certain price and       rivatives that have been admitted for trade at a stock exchange, or
at a certain time or within a certain time, respectively. (Changed as    have been placed on another organised market. Transactions in-
of 1 April 2006)                                                         volving derivatives that have not been admitted for trade at a stock
                                                                         exchange, nor have been placed on any other organised market
If the Investment Company enters into transactions of this kind, the     (OTC transactions), may only be conducted with suitable banks or
Property Fund must, if the expectations of the Investment Compa-         financial service providers on the basis of standardised outline
ny are not realised, meet the cost of the balance between the price      agreements. The specific risks of these individual transactions lie
at which the transaction was concluded and the market price at           in the absence of an organised market, and thus the problems in-
the time of closing or at maturity. This would represent a loss for      volved in selling them to a third party. The customised nature of
the Property Fund. The risk of loss cannot be determined in advan-       such commitments can make it difficult or very costly to close
ce and could exceed any collateral that may have been provided.          them. In case such derivatives are traded outside the stock ex-
It also needs to be taken into account that costs are incurred by        change, the counterpart risk in regard to a given contract partner
selling forward contracts on securities and, where applicable, by        shall be limited to the equivalent of 5% of the Property Fund’s total
concluding an offsetting transaction (closing).                          value. If the contract partner is a financial institution with seat in-
                                                                         side the European Union, the European Economic Area or any third
Swaps                                                                    state with comparable banking supervision standards, the coun-
                                                                         terpart risk may go as high as the equivalent of 10% of the Proper-
For the account of the Property Fund, within the parameters of its
                                                                         ty Fund’s value. Transactions in derivatives that are concluded
investment principles, and provided it does so for hedging purpo-
                                                                         outside a stock exchange, but with the central clearing house of a
ses, the Investment Company may conclude:
                                                                         stock exchange or of another organised market as contract part-
P   interest rate swaps,                                                 ner, shall not be set off against the counterpart limits, if such deri-
                                                                         vatives are subject to a daily market price rating, including a daily
P   currency swaps, and
                                                                         margin balance. This will substantially reduce, though not elimina-
P   credit default swap transactions.                                    te, the credit solvency risk of the counterpart.
Swap transactions are defined as contracts concluded between
                                                                         Real Estate as Underlying Instrument for Derivative
two parties for swapping the assets or risks underlying the trans-
                                                                         Transactions
action. If the price and value changes for the instruments underly-
ing a given swap develop contrary to the Investment Company’s            The Investment Company may engage in such derivative transac-
expectations, the transaction may incur a loss for the Property          tions for the account of the Property Fund as are based on real
Fund.                                                                    estate that could actually be acquired for the Property Fund, or on
                                                                         the development of the returns of such real estate. Specifically,
Swaptions                                                                this kind of transaction enables the Investment Company to pro-
                                                                         tect rental income and other earnings from real estate held in the
A swaption is defined as an option on a swap. A swaption repre-
                                                                         name of the Property Fund against default and exchange rate
sents the right, though not an obligation, to enter, at a certain time
                                                                         risks.
or within a certain period of time, into a swap whose conditions
have been precisely specified.
                                                                         Currency Risks, and Derivative Transactions for Hedging
                                                                         these Risks
Credit Default Swaps
                                                                         Investments and transactions in foreign currencies involve both
Credit default swaps are credit derivatives that provide the option
                                                                         currency opportunities and currency risks. It also needs to be re-
to transfer a potential credit default volume to another party. In
                                                                         membered that foreign-currency assets are subject to a so-called
return for accepting the credit default risk, the seller of the risk
                                                                         transfer risk. The Investment Company may, for the purpose of ex-
pays a premium to the contract partner. Other than that, the above
                                                                         change rate hedging in regard to assets and rent claims for the
details on swaps apply by analogy.
                                                                         account of the Property Fund, engage in derivative transactions on
                                                                         the basis of currencies or exchange rates.
Securitised Derivatives
The Investment Company may also subscribe derivatives in secu-           These currency-hedging transactions that, as a rule, hedge only part
ritised form. The subscription of derivatives is permissible even if     of the Property Fund serve to reduce the currency risks. However,
the transaction is only partially securitised. The above details on      they cannot rule out the possibility that, despite currency hedges,
chances and risks also apply mutatis mutandis to securitised de-         fluctuating exchange rates will adversely affect the performance of
rivatives, if based on the premise that the loss involved in securiti-   the Property Fund. The costs incurred through currency hedges, and
sed derivatives is limited to the value of a given security.             also possible losses, reduce the result of the Property Fund.

Listed and Non-Listed Derivatives                                        If the currency risks exceed the Property Fund’s total value by 30%
                                                                         and more, the Investment Company must resort to options of this
The Investment Company may conclude transactions involving de-
                                                                         type. In addition, the Investment Company shall make use of this

                                                                                                                                          109
option if, and to the extent that, it is deemed necessary in the inves-   must be returned to the Property Fund within five trading days of
tors’ interest.                                                           the termination. The borrower of a loan shall be obliged to return,
Summary of the Risks of Loss Involved in Derivative                       at the end of the loan’s lifetime or upon its termination, securities
Transactions                                                              of the same kind, quality and quantity. The borrower is obliged to
                                                                          pay the interest on the borrowed securities, whenever due, to the
Since the chances of earning a profit through derivative transacti-
                                                                          custodian bank for the account of the Property Fund. In the inter-
ons are balanced by high risks of loss, investors should note that:
                                                                          est of risk diversification, the total number of securities transfer-
                                                                          red to any single borrower in the context of securities lending
P   for instance, the temporary rights acquired through forward
                                                                          transfers may not exceed 10% of the total value of the Property
    transactions may lapse or decline in value;
                                                                          Fund. However, before any securities may be transferred by way of
P   the risk of loss may be not be quantifiable and may even ex-          lending, the Property Fund must be guaranteed sufficient collate-
    ceed the collateral that has been provided;                           ral. This can involve the transfer or pledging of credit or the pled-
                                                                          ging of securities. Such credit shall be denominated in Euro or in
P   it may not be possible to engage in transactions intended to
                                                                          the currency in which the shares of the Property Fund were issu-
    eliminate or reduce the risks of derivative transactions already
                                                                          ed, and shall be deposited at the custodian bank or, assuming the
    engaged in, or to effect them only at a market price tantamount
                                                                          latter’s consent, in blocked accounts at other financial institutions
    to a loss;
                                                                          with seat in a member state of the European Union, in another
P   the risk of loss increases if loans are taken out to cover com-       member state of the Treaty on the European Economic Area, or in
    mitments from derivative transactions, or if the commitment           any third state with comparable banking supervision standards.
    from derivative transactions or the consideration to which they       They may also be deposited in the form of money market instru-
    entitle are denominated in a foreign currency or account unit.        ments in the sense of Art. 48, InvA, in the currency of the credit at
                                                                          issue. This surety must be defined by taking into account the finan-
Exercising derivative transactions consisting of a combination of         cial circumstances of the borrower of the securities. However, the
two basic forms (e.g., options on financial futures) can give rise to     amount may be no less than the security pledge, which is calcula-
additional risks as defined by the ratified contract, which can far       ted by adding up the quoted value of the lent securities with the
exceed the amount originally at risk, e.g. in the form of the price       corresponding income, plus a premium in line with the market
paid for an option.                                                       standard. The Investment Company may also use an organised
                                                                          system for providing and handling securities lendings. When using
OTC transactions entail the following additional risks:                   such an organised system for providing and handling securities
                                                                          loans, the furnishing of a collateral can be dispensed with becau-
P   There is no organised market, so that it may be hard to sell de-
                                                                          se the interests of investors are safeguarded by the system terms.
    rivatives acquired on the OTC market to a third party; closing
                                                                          Moreover, if the lending is transacted through an organised sys-
    such commitments can be difficult or involve significant costs
                                                                          tem, the borrowing limit of 10% need not be applied to the organi-
    because of the unique nature of the contract (liquidity risk);
                                                                          sed system.
P   The economic success of the OTC transaction may be threate-
    ned by default of the contractual partner (contractual partner        Securities Repurchase Agreements
    risk).
                                                                          The Investment Company may conclude, for the account of the
The risks involved in derivative transactions vary in proportion to       Property Fund, securities repurchase agreements (repos) with fi-
   the position taken out for the Property Fund.                          nancial institutions and financial service providers for a maximum
                                                                          lifetime of twelve months. Under such an agreement, the Invest-
As a result, the losses for the Property Fund may                         ment Company may both transfer securities of the Property Fund
P   be limited, e.g. to the price paid for an option right, or            to a repo lender within the borrowing limits, thereby temporarily
                                                                          increasing liquidity, and purchase securities under a repurchase
P   far exceed any collateral that has been provided (e.g. margins        agreement within the applicable limits for cash in banks and mo-
    paid) and may necessitate extra collateral;                           ney market securities, thereby temporarily investing liquid capital.
P   cause liabilities and thus impose a burden on the Fund Assets,        Repurchase agreements are permitted only in the form of so-cal-
    which poses a risk that cannot always be quantified in advance.       led genuine repurchase agreements. In the case of a genuine re-
                                                                          purchase agreement, the borrower pledges to return the securi-
Securities Lending                                                        ties at a specified time or at a time determined by the repo lender.
                                                                          If the Property Fund acts as lender, the Property Fund bears the
The securities held in the Property Fund may be transferred to            risk of interim price losses, whereas as a borrower the Property
third parties on a loan basis and in return for a consideration in line   Trust may be prevented from benefiting from interim price gains by
with market standards. To this end, the Property Fund’s entire se-        the obligation to return the securities.
curities portfolio may be transferred for an indefinite period in the
form of securities lending. In this case, the Investment Company is       There is no guarantee that the investment policy goals will be
entitled to terminate a given loan at any time, subject to contractu-     realised.
al agreement that securities of the same type, quality and quantity

110
                                                                                                                       sales Prospectus




Performance                                                              P   the costs of printing and mailing the Annual and Semi-Annual
                                                                             Reports intended for investors;
 1997/1998                  4.8%
                                                                         P   the costs of announcing the Annual and Semi-Annual Reports,
 1998/1999                   5.3%                                            the issue and redemption prices, and, as the case may be, the
 1999/2000                  5.0%                                             distributions and the liquidation report;
 2000/2001                    5.8%
                                                                         P   the costs for auditing the Property Fund by the Investment
 2001/2002                     6.3%
                                                                             Company’s auditor, as well as the costs for publishing the tax
 2002/2003                  4.9%                                             base and the note stating that the tax information provided has
 2003/2004              3.5%                                                 been compiled in compliance with German tax laws.
 2004/2005           1.9%
                                                                         P   the costs of cashing the coupons;
 2005/2006           2.0%

 2006/2007                  4.4%                                         P   the costs of renewing the coupon sheet;
 2007/2008                      7.0%                                     P   possible taxes incurred in connection with the costs of ma-
                                                                             nagement and custody.
The past performance of the Property Fund is not indicative of its
                                                                         The aforementioned rules for the reimbursement of expenses ap-
future performance.
                                                                         ply mutatis mutandis to the real estate companies held by the In-
                                                                         vestment Company for the account of the Property Fund, as well as
                                                                         their real estate holdings. In this context, the value of the real es-
Management Fees and Other Charges
                                                                         tate companies, or the value of the real estate held, respectively,
Fees and reimbursements for expenditures in favour of the Invest-        shall be assessed on a pro-rata basis in an amount equivalent to
ment Company, the custodian bank and third parties are not sub-          the interest quota. In deviation of this provision, expenditures in-
ject to approval by the German Supervisory Authority for Financial       curred by the real estate company due to special requirements
Services (BaFin). For managing the Property Fund, the Investment         pursuant to the German Investment Act shall be charged in full,
Company receives an annual remuneration of up to 0.65% of the            rather than on a pro-rata basis, to the Property Fund.
Property Fund’s value, as assessed at the end of each financial
year. The Investment Company is entitled to levy quarterly pro-rata      The Investment Company shall, in its Annual and Semi-Annual Re-
advance payments on this fee.                                            port, declare the sum total of any up-front fee and redemption
If real estate is purchased, sold, developed or restructured for the     charges that have been charged to the Property Fund for the ac-
Property Fund, the Investment Company may levy a non-recurring           quisition and redemption of shares pursuant to Art. 50, InvA, during
charge of 1% of the purchase or sales price, or up to 2% of the          the reporting period. When acquiring shares that are directly or
construction costs and ancillary costs for the project development       indirectly managed by the Investment Company itself or by anot-
conducted on behalf of the Property Fund. This applies mutatis           her company affiliated with the Investment Company through a
mutandis to the real estate companies, as well as their real estate,     direct or indirect material interest, the Investment Company or the
that are held by the Investment Company for the account of the           other company may charge no up-front fee and redemption charge
Property Fund. In this context, the value of the real estate compa-      for the acquisition or redemption of shares, respectively. The In-
nies, or the value of the real estate held, respectively, shall be as-   vestment Company must, in its Annual Report and Semi-Annual
sessed on a pro-rata basis in an amount equivalent to the interest       Report, identify the remuneration that was charged to the Property
quota. The custodian bank shall receive for its activity an annual       Fund by the Investment Company itself, by another mutual fund, by
remuneration of up to 0.25‰ of the total value of the Property Fund      an investment joint stock company with variable capital, or by an-
as determined at the end of each financial year. On top of the afo-      other company affiliated with the Investment Company through a
rementioned remunerations, the following expenditures shall be           direct or indirect material interest, or by a foreign investment com-
charged to the Property Fund:                                            pany, including the sum charged by its management company as
                                                                         administrative remuneration for the shares held in the Property
P   ancillary costs arising in connection with the acquisition, deve-
                                                                         Fund.
    lopment, sale and encumbrance of real estate (including ta-
    xes);
                                                                         Statement of Total Expense Ratio (TER)
P   borrowing and management costs arising from the manage-
                                                                         The Annual Report shall identify the management costs (minus the
    ment of the real estate (administrative, maintenance, operating
                                                                         transaction costs) incurred on behalf of the Property Fund, listing
    and legal costs);
                                                                         such expenses as the quota of the mean Fund Volume (total expen-
P   costs arising in connection with the acquisition and sale of ot-     se ratio – TER). Said management costs subdivide into the remu-
    her assets;                                                          neration of the custodian bank and any additional expenditures
                                                                         charged to the Property Fund. Not included here are the expenses
P   standard custody-account charges;
                                                                         arising out of acquisitions and sales of portfolio assets.
P   the costs for the valuation committee;

                                                                                                                                          111
In conjunction with the business affairs conducted on behalf of the       issue these at the issue price, which represents the net asset va-
Property Fund, the Investment Company may reap cash value be-             lue per share (share value) plus an up-front fee (issue price). The
nefits (broker research, financial analyses, market and price infor-      Investment Company reserves the right to discontinue the issuan-
mation systems) that are used to make investment decisions in the         ce of shares, be it temporarily or permanently.
interest of the investors. The Investment Company shall receive no
refunds for any remunerations and reimbursements that have                Redemption of Shares
been paid out of the Property Fund to the custodian bank or any
                                                                          At any time, investors may principally request the redemption of
third party.
                                                                          shares either by submitting the share certificates or by placing a
                                                                          redemption request. The custodian bank shall serve as redemption
The Investment Company uses portions of the remuneration it re-
                                                                          agent. Shares may also be redeemed through third-party broker-
ceives out of the Property Fund toward recurring share brokerage
                                                                          age, which may generate extra costs. The Investment Company is
remunerations in the sense of a brokerage follow-up commission
                                                                          obliged to redeem shares for the account of the Property Fund at
to brokers.
                                                                          the current redemption price, which is identical to the going share
                                                                          value. Express reference is made to the consequences of a tempo-
Particulars in Connection with the Acquisition of In-
                                                                          rary suspension of redemption (see p. 128).
vestment Shares
Apart from the remuneration for managing the Property Fund, a             Valuation/Issue Price and Redemption Price
further management remuneration is charged to the Property Fund
for the investment shares held in the Property Fund. The Annual           To calculate the issue price and the redemption price of share cer-
and Semi-Annual Report shall each identify the sum total of up-           tificates, the Investment Company determines – while monitored
front fees and redemption charges that have been charged to the           by the custodian bank – the value of the assets belonging to the
Property Fund for the acquisition and the redemption of shares in         Property Fund on each trading day, deducting any loans taken out
property funds during the reporting period. In addition, the remu-        and other liabilities of the Property Fund (net asset value). Dividing
neration shall be reported that was charged to the Property Fund          the net asset value by the number of shares issued will yield the
by the Investment Company itself, by another investment compa-            net asset value per share. The share value will not be determined
ny, by another company affiliated with the Investment Company             on New Year‘s Day, Good Friday, Easter Monday, May Day, Ascen-
through a direct or indirect material interest, or by a foreign invest-   sion, Whitsun Monday, Corpus Christi, German Unity Day, Christ-
ment company, including the sum charged by its management                 mas Eve, Christmas Day, Boxing Day, and New Year‘s Eve.
company as administrative remuneration for the shares held in the
Property Fund. When acquiring investment shares that are directly         Issue Price and Redemption Price shall be rounded up or down
or indirectly linked to the Investment Company through a substan-         according to common business practice.
tial direct or indirect participation, the Investment Company or that
other company shall charge no offering premiums and redemption            The procedure in detail:
charges for the acquisition or redemption, respectively, of such
shares.                                                                   Real Estate
                                                                          Real estate shall be reported at the value most recently assessed
Partial Fund                                                              by the valuation committee. This value shall be determined for
The Property Fund does not represent a partial fund under an um-          each piece of real estate at least once every 12 months. Valuations
brella structure.                                                         shall be spread as evenly as possible over the year in order to avo-
                                                                          id a concentration of new valuations on certain key dates. A new
Share Classes                                                             valuation may be undertaken at an earlier time whenever circums-
                                                                          tances arise that have a significant impact on the value of any gi-
All shares issued entail equal rights. No share classes shall be set      ven property. The valuation committee must reappraise the value
up.                                                                       of a given property within two months after that property was en-
                                                                          cumbered with a ground lease.
Shares
                                                                          Executed Construction Work
The share certificates are bearer certificates, each representing
one or several investment shares. Along with the transfer of ow-          Executed construction work is shown at book value, unless it was
nership, the rights vested in each share certificate are passed on        taken into account at the time the real estate was valuated.
too.
                                                                          Interests Held in Real Estate Companies
Issuance of Shares
                                                                          The value of interests held in a real estate company are assessed
Principally, the number of shares issued shall be unlimited. Shares       on the basis of the monthly statement of assets of that real estate
may be subscribed from the Investment Company, the custodian              company. The real estate reported in said statement shall be as-
bank or through third party brokerage. The custodian bank shall           sessed at the value determined by the Valuation Committee for the


112
                                                                                                                       sales Prospectus




real estate of the Property Fund. The resulting value of the real       Property Fund. Margins deposited on behalf of the Property Fund
estate company shall be assessed as pro-rata value, reflecting the      are added to the value of the Property Fund, including an allowan-
extent of the participation, with other value-sensitive factors taken   ce for the valuation gains and losses established on a given tra-
into account.                                                           ding day.

Investments in Liquid Assets                                            Cash in Banks, Investment Shares,
                                                                        and Securities Loans
Assets Admitted for Trade at a Stock Exchange/at an
                                                                        Cash in banks shall principally be assessed at its face value.
Organised Market
Assets that are officially registered at a stock exchange or have       Time deposits shall be reported as yield on maturity, provided that
been placed on another organised market, are assessed at their          a corresponding contract has been signed between the Invest-
current market price, unless otherwise specified under the Special      ment Company and the respective financial institution to the effect
Valuation Rules below.                                                  that the time deposit may be terminated any time, and repayment
                                                                        upon termination may be equal to the yield on maturity. The market
Assets Not Registered at a Stock Exchange or Traded at                  interest rate used to determine the quoted yield is determined on a
an Organised Market or Assets Without Marketable                        case-to-case basis. The corresponding interest claims shall be
Price                                                                   reported separately.
Assets that are neither listed at a stock exchange, nor have been
                                                                        Claims, e.g. deferred interest claims, and liabilities shall principally
placed on another organised market, or for which no marketable
                                                                        be assessed at their face value.
price is available, are valuated at their current market value as
appropriate upon careful appraisal, using suitable valuation mo-
                                                                        Investment shares shall be assessed at their redemption price.
dels and taking into account the current market situation, unless
otherwise specified in the Special Valuation Rules below.
                                                                        The respective quoted value of the securities lent is relevant for
                                                                        redemption claims arising from securities lending.
Special Valuation Rules for Particular Assets

                                                                        Assets Denominated in Foreign Currencies
Non-Listed Debenture Bonds and
Promissory Note Loans                                                   Assets denominated in foreign currencies shall be converted into
                                                                        Euro at the exchange rate determined for the respective currency
For the valuation of debenture bonds not admitted to the official
                                                                        by the Euro FX system (Reuters page EUROFX/1) on the same day.
market, nor placed on an organised market (e.g. non-listed bonds,
                                                                        If the exchange rate of a foreign currency is not determined by the
commercial papers and bank certificates of deposit), as well as for
                                                                        Euro FX system, the assets denominated in this foreign currency
the valuation for promissory note loans, the prices negotiated for
                                                                        are converted to Euro on the same day, using the morning fixing of
comparable debenture bonds and promissory note loans, and the
                                                                        Reuters AG (EUROCROSS) at 10:00 am CET, or the midday fixing of
market prices for loans of comparable issuers with matching lifeti-
                                                                        Reuters AG at 1:30 pm CET.
me and interest rate, where available, are used, including a possi-
ble mark-down to make up for the limited marketability of these
                                                                        Securities Repurchase Agreements
items, where required.
                                                                        If securities are sold under repurchase agreements for the ac-
Money Market Instruments                                                count of the Property Fund, they shall nonetheless enter into the
                                                                        valuation. In addition, the amount received under the repurchase
The accounting for money market instruments that are part of the
                                                                        agreement for the account of the Property Fund must be reported
Property Fund include the interest rate and interest-related inco-
                                                                        as part of the liquid funds (cash in banks). Moreover, any liability
me, as well as expenditures (e.g., management remuneration, cus-
                                                                        arising from repurchase agreements that is equal in amount to the
todian bank remuneration, audit costs, publication costs, etc.) up
                                                                        discounted repayment obligations shall be reported.
to and including the day preceding the value date.

                                                                        If any securities were subscribed under a repurchase agreement
Derivates
                                                                        for the account of the Property Fund, these shall not enter into the
                                                                        valuation. Due to the payment made by the Property Fund, a claim
Option Rights and Forward Contracts
                                                                        against the repo lender equal in the amount of the discounted re-
The options held by the Property Fund, and the liabilities resulting    payment claims must be taken into account.
from options granted to a third party, that have been admitted for
trade at a stock exchange or placed on another organised market         Composite Assets
are valuated at the most recent prices quoted.
                                                                        Assets consisting of various component assets shall be assessed
                                                                        on a pro-rata basis according to the aforementioned rules.
The same goes for accounts receivables and accounts payable
resulting from forward contracts bought for the account of the

                                                                                                                                          113
Up-Front Fee and Redemption Charge                                       of the share redemption, investors will be paid the current redemp-
                                                                         tion price.
An up-front fee to cover the costs of issuance shall be added to
the share value at the time the issue price is fixed. The up-front fee
                                                                         As the paid-in funds are primarily invested, in accordance with the
shall equal 5% of the share value.
                                                                         investment principles, in real estate, the Investment Company mo-
                                                                         reover reserves the right to refuse to redeem shares temporarily
An investor who has acquired shares will not realise a profit from
                                                                         (Art. 12, Sec. 5, General Fund Rules) if the cash in banks and pro-
the sale of these shares unless the increase in value exceeds the
                                                                         ceeds from sales of securities for paying the redemption price and
up-front fee paid at the time of subscription. For this reason, sha-
                                                                         ensuring a proper management are no longer sufficient to sustain
res acquired should be intended for long-term investment, where-
                                                                         a proper management, or else are not immediately available, due
ver possible. The up-front fee represents essentially remuneration
                                                                         to extensive requests for redemptions. The Investment Company
for the sales effort involved in selling the Property Fund shares. It
                                                                         reserves the right to refuse to redeem shares at the current re-
is used to cover the issuance costs incurred by the Investment
                                                                         demption price until it has sold without delay, though in a manner
Company, as well as the sales services rendered by the Invest-
                                                                         safeguarding the investors’ interests, sufficient assets to permit
ment Company and any third party.
                                                                         redemption. The permitted period for refusing to redeem shares is
                                                                         up to 3 months.
There shall be no redemption charge.

                                                                         If the funds held for liquidity purposes remain insufficient to cover
Publication of Issue Price and Redemption Price
                                                                         redemptions even after the expiration of this period, the real estate
Information on issue price and redemption price shall be available       held in the Property Fund shall be sold. The Investment Company
at the legal seats of the Investment Company and the custodian           can refuse to redeem shares until these assets are sold at reaso-
bank. The prices are published regularly in at least one daily or        nable conditions, or for up to one year after shares were presen-
business paper with an adequate circulation or on the Internet at        ted for redemption. By announcement to the investors, to be pu-
www.hausinvest.de.                                                       blished in the electronic Federal Gazette (Bundesanzeiger) and
                                                                         moreover in a business paper or daily paper with adequate circu-
Charges for the Issuance and Redemption of Shares                        lation, or on the Internet at www.hausinvest.de, the aforementio-
                                                                         ned suspension period of up to one year may be extended by anot-
Shares are issued and redeemed by the Investment Company or
                                                                         her year. Upon expiration of this period, the Investment Company
the custodian bank at the issuing or redemption price, respective-
                                                                         can use the real estate of the Property Fund as collateral for a loan
ly, without further charges.
                                                                         irrespective of the loan ceiling and beyond the encumbrance limit
                                                                         specified in Art. 10, Special Fund Rules, in order to procure the fi-
Additional costs may be incurred if shares are issued or redeemed
                                                                         nancial means required for redeeming the shares.
through third party brokerage.

                                                                         The Investment Company shall inform investors about any suspen-
Suspension of Redemption
                                                                         sion and the resumption of the share redemption by announce-
The Investment Company can temporarily suspend the redemption            ment in the electronic Federal Gazette (Bundesanzeiger) and mo-
of shares under exceptional circumstances that make suspension           reover in a business paper or daily paper with sufficient circulation,
advisable in the investors’ interest (Art. 12, Sec. 4, General Fund      or on the Internet at www.hausinvest.de. Following the resumption
Rules).                                                                  of the share redemption, investors will be paid the current redemp-
Exceptional circumstances exist specifically whenever:                   tion price.
P   a stock exchange at which a significant portion of the Property
                                                                         Calculation of Earnings
    Fund’s securities is traded (except at normal weekends and pu-
    blic holidays) is closed, or trading on the exchange is restricted   The Property Fund realises proper earnings in the form of rent re-
    or suspended;                                                        ceived and not used to cover costs associated with the real estate,
                                                                         from interests in real estate companies, as well as in the form of
P   it is not possible to dispose of assets;
                                                                         interest and dividends from investments in liquid assets. The ba-
P   the proceeds from transacted sales cannot be transferred;            lance shall accrue by accounting period.

P   the net asset value cannot be properly determined, or                In addition, there is interest for building finance (interest paid on
P   essential assets cannot be valued.                                   the own building project funds), inasmuch as it is applied as impu-
                                                                         ted interest rate to the building project funds of the Property Fund,
The Investment Company shall inform investors about any suspen-          rather than the usual market interest rate.
sion and the resumption of the share redemption by announce-
ment in the electronic Federal Gazette (Bundesanzeiger) and mo-          Extra earnings may be generated by the sale of real estate, inter-
reover in a business paper or daily paper with sufficient circulation,   ests in real estate companies, and liquid assets. Profits or losses
or on the Internet at www.hausinvest.de. Following the resumption        resulting from selling real estate and interests in real estate com-


114
                                                                                                                      sales Prospectus




panies are calculated by comparing the sale proceeds (minus the         4. Inasmuch as it lies within the normal market limits for building
costs incurred by the sale itself) with the acquisition costs for the   finance interest, any interest saved from the Investment Compa-
piece of real estate or participation in a real estate company (book    ny’s own building project funds may also be distributed.
value), reduced by the depreciation fiscally permitted and possib-
le.                                                                     5. Income from liquid assets that has accrued during the reporting
                                                                        period shall also be included in the distribution.
Realised sales losses are not set off against realised sales pro-
fits.                                                                   6. The income eligible for distribution may be carried forward for
                                                                        distribution in later financial years if the total income carried for-
The sales profits or sales losses incurred by selling or redeeming      ward does not exceed 10% of the respective value of the Property
securities shall be assessed separately for each sale or redemp-        Fund at the end of the financial year.
tion. The average value established for all purchases in the re-
spective class of securities is used as basis for determining the       7. In the interest of conserving the asset value, the income can be
disposal profits or losses (the so-called average value or adjusted     partly – and, in special cases, fully – allocated for reinvestment in
value method).                                                          the Property Fund.

Income Equalisation Procedure                                           8. The distribution takes place annually, immediately upon publica-
                                                                        tion of the Annual Report, against presentation of the called cou-
The Investment Company applies a so-called “income equalisation
                                                                        pon, and free of charge.
procedure” to the Property Fund. This means that the Investment
Company constantly recalculates the pro-rata share of income ac-
                                                                        Effects of the Distribution on the Share Value
crued during the financial year up to the subscription or sale
(rents, interest, etc.), which share buyers must pay as part of the     As the amount distributed is taken out of the Property Fund in its
issue price and which share sellers receive as part of the redemp-      respective volume, the share value will decrease on the day of
tion price. The accrued expenses also enter into the calculation of     distribution (ex-day) by the share dividend total.
the income equalisation. The income equalisation scheme is used
to smooth out fluctuations in the ratio between the earnings and        Cashing of Coupons
other assets caused by the net inflow or net outflow of capital that
                                                                        Any Commerzbank AG branch will cash the coupons free of char-
results from the issuance or redemption of shares. Otherwise,
                                                                        ge. Cashing the coupons at other banks or saving & loans instituti-
every net inflow of liquidity would reduce the share of earnings in
                                                                        ons may incur additional costs.
the Property Fund value, whereas every net outflow would increa-
se it.
                                                                        Notes on Tax Regulations Relevant for Investors
Ultimately, the income equalisation scheme ensures that the             Any information on tax regulations provided herein applies only
amount to be distributed per share is not affected by the share         to investors subject to full taxation in Germany. Foreign investors
circulation. It is tolerated in this context that investors who, for    are advised to confer with their tax consultants before acquiring
example, subscribe shares shortly before the distribution date re-      any shares in the Property Fund detailed in this Sales Prospectus,
ceive, through the distribution, that portion of the issue price that   and to identify the fiscal consequences the acquisition of such
reflects the share income, even though their paid-in capital did not    shares may have in the investor’s country of residence.
help to generate this share income.
                                                                        As a special purpose fund, the Property Fund is exempt from cor-
                                                                        porate income tax and trade tax. However, taxable income from
Distribution of Earnings
                                                                        the Property Fund are subject to income taxation for private inves-
1. The Investment Company principally distributes – subject to the      tors, inasmuch as it exceeds, when combined with other capital
attendant income equalisation – the income resulting from real          earnings, the tax allowance for savers including the flat rate all-
estate, interests in real estate companies, from liquid assets and      owance for income-related expenses (see Notes on Taxation for
from other assets, inasmuch as it is earned for the account of the      Shareholders).
Property Fund in the course of the financial year, and not used to
cover expenses.                                                         Wherever the shares are held in the form of corporate assets, the
                                                                        earnings are taxed as business income. German tax legislation re-
2. Amounts required for future maintenance and for offsetting any       quires a differentiated account of the income components in order
decline in property value shall be deducted from the income thus        to assess taxable earnings, or earnings subject to the capital inco-
calculated, and shall be retained.                                      me tax, respectively.

3. Sales profits may be distributed, provided the attendant income      Shares in Private Ownership
equalisation has been taken into account. Sales profits from spe-       (Resident German Tax Status)
cific classes of securities may be distributed even if other security
classes report losses.

                                                                                                                                        115
Domestic Rental Income and Interest Earnings, as well                    Domestic and Foreign Dividends (in Particular those
as Interest-Related Earnings                                             Paid by Real Estate Corporations)
The positive balance made up by domestic rental, interest or inter-      If the (real estate) corporations fail to distribute a dividend, inves-
est-related earnings and the attendant expenditures (in particular       tors need not report any earnings on the Property Fund level.
deductions for wear or accrued depletion) is taxable on the part of
the investor. This applies regardless of whether these earnings are      Domestic and foreign dividends of (real estate) corporations that
retained or distributed.                                                 are distributed or retained by the Property Fund, are only taxable
                                                                         to 50% (the so-called half-income procedure). Under certain con-
Profits from the Sale of Domestic and Foreign Real                       ditions, the dividends paid by foreign (real estate) corporations
Estate 10 Years after its Acquisition or Later                           may be fully tax-exempt – if subject to the progressivity proviso –
                                                                         as dividend received from an interrelated company.
Profits from the sales of domestic and foreign real estate outside
the ten-year period that are realised on the Property Fund level are
                                                                         Income from Participations in Domestic and Foreign
not subject to taxation for the investor (tax-free).
                                                                         Real Estate Partnerships
Profits from Sales of Domestic Real Estate Effected                      Earnings from participations in domestic and foreign real estate
Less than 10 Years after its Acquisition                                 partnerships should be included in the tax statement on the Pro-
                                                                         perty Fund level no later than by the end of the financial year of
Profits from sales of domestic real estate inside the ten-year peri-
                                                                         that partnership. Such earnings must be assessed according to
od that are realised on the Property Fund level are always taxable
                                                                         general tax principles.
for the investor. This applies regardless of whether such profits
are distributed or retained.
                                                                         Negative Tax Earnings
Foreign Rental Income, and Profits from Sales of Fo-                     If the sum total of the taxable income from the Property Fund is
reign Real Estate Less than 10 Years after its Acquisition               negative, this figure shall be carried forward on the Property Fund
                                                                         level, to be set off on that same level against positive taxable ear-
Foreign rental income and profits from the sales of foreign real
                                                                         nings in years to come. It is not possible to credit the negative ta-
estate for which Germany has waived taxation (this being the
                                                                         xable earnings directly to the investor’s account. Thus, these ne-
standard) because of existing double-taxation treaties (exemption
                                                                         gative amounts will not affect the investor’s income tax base
method), are also tax-free. Foreign earnings that are not subject to
                                                                         before the assessment period (fiscal year) in which the financial
German taxation due to the double-taxation treaties remain nonet-
                                                                         year of the Property Fund ends, or in which the distribution for the
heless subject to the progressivity proviso. This means that even
                                                                         financial year of the Property Fund takes place, and for which the
tax-exempt income must enter into the assessment of the tax rate
                                                                         negative tax earnings on the Property Fund level have been set off.
that shall be applied to the respective investor’s taxable income.
                                                                         It is not possible for the investor to claim such negative earnings in
However, as some of the foreign income is subject to the progres-
                                                                         an earlier income tax report.
sivity proviso only up to the amount that would have been genera-
ted by the foreign real estate after its depreciation, as permitted
                                                                         Disbursement of Assets
under German tax law, the German investor’s tax return needs to
report only a pro-rata amount per share in order to determine his        Capital disbursements (e.g. as interest on building finance) remain
or her personal tax rate. For details on the applicable tax rate, see    tax-exempt.
the Notes on Taxation appended to this Annual Report.
                                                                         Sales Profits on the Investor Level
If, by way of exception, the respective double-taxation treaty sti-
                                                                         If an investor resells the shares held in a property fund within a
pulates the tax credit method, or if no double-taxation treaty has
                                                                         year of their purchase (speculation period), the sales profits are
been ratified, taxes paid in the country of origin may still be credi-
                                                                         principally taxable as income from private sales transactions. If
ted against the German income tax, provided the taxes paid have
                                                                         such shares are disposed of after the speculation period, the pro-
not already been accounted for on the Property Fund level as inco-
                                                                         fits remain tax-free for the private investor.
me-related expenses.
                                                                         When assessing the capital gains, you should reduce the figure of
Profits from Securities Sales, and Profits from Forward
                                                                         the purchase price by the “Zwischengewinn” (interim profit) at the
Transactions
                                                                         time of purchase, and should in turn reduce the figure of the sales
Profits from the sales of securities, and profits from forward trans-    price by the “Zwischengewinn” at the time of sale, lest you report
actions that were earned on the Property Fund level, always re-          the “Zwischengewinn” twice in your income tax assessment (see
main tax-free for the investor (Art. 2, Sec. 3, No. 1, InvTA).           below). The half-income procedure does not apply to capital gains.
                                                                         If the total profits yielded by private sales transactions amounts to
                                                                         less than 512.00 euros within a given calendar year, the amount
                                                                         remains tax-free (exemption limit). If the exemption limit is excee-
                                                                         ded, the private sales profits become taxable in their entirety.

116
                                                                                                                     sales Prospectus




Shares in Corporate Ownership (Resident German Tax                     investor if they are retained. If, however, such profits are distribu-
Status)                                                                ted, they must be reported as taxable income on the investor level.
                                                                       By contrast, profits from equity sales remain fully tax-free (for in-
Domestic Rental Income and Interest Earnings, as well                  corporated investors) or 50% tax-free (for all other business inves-
as Interest-Related Earnings                                           tors, e.g. sole proprietors). Sales profits from fixed interest securi-
                                                                       ties, and profits resulting from forward transactions, however, are
Domestic rental income, interest earnings, and interest-related
                                                                       fully taxable.
earnings are principally taxable for corporate investors. This ap-
plies regardless of whether these earnings are retained or distri-
                                                                       Domestic and Foreign Dividends (in Particular those
buted.
                                                                       Paid by Real Estate Corporations)
Foreign Rental Income                                                  Dividends paid by domestic and foreign real estate corporations,
                                                                       and distributed by shares held in the corporate assets or retained,
Germany generally waives taxation on rental income from foreign
                                                                       remain tax-free for corporations. For individual proprietors, such
real estate (exemption on account of double-taxation treaties).
                                                                       earnings are taxable at 50% (half-income procedure), as is the
However, investors other than corporations need to remember
                                                                       case with private investors.
that such exemption is subject to the progressivity proviso.
                                                                       Under certain conditions, the dividends paid by foreign (real esta-
If, by way of exception, the tax credit method is stipulated by the
                                                                       te) corporations may be fully tax-exempt as dividend received from
respective double-taxation treaty, or if no double-taxation treaty
                                                                       an interrelated company. In such a case, sole proprietors just need
has been ratified, taxes on earnings that were paid in the countries
                                                                       to remember that such exemption is subject to the progressivity
of origin may still be credited against the German income or corpo-
                                                                       proviso.
rate tax debt, provided the taxes paid have not already been ac-
counted for as income-related expenses on the Property Fund le-
                                                                       Earnings from Interests in Domestic and Foreign Real
vel.
                                                                       Estate Partnerships
Profits from the Sale of Domestic and Foreign Real                     Earnings from interests held in domestic and foreign real estate
Estate                                                                 partnerships should be included in the tax statement on the Pro-
                                                                       perty Fund level no later than by the end of the financial year of
The investor need not report retained profits from the sales of do-
                                                                       that partnership. Such earnings must be assessed according to
mestic and foreign real estate, provided that the real estate is re-
                                                                       general tax principles.
sold no earlier than 10 years after its acquisition. Profits do not
become taxable prior to their distribution, while Germany normally
                                                                       Negative Tax Earnings
waives the taxation of foreign profits (exemptions on account of
double-taxation treaties).
                                                                       If the sum total of the taxable income from the Property Fund is
                                                                       negative, this figure shall be carried forward on the Property Fund
Retained or distributed profits from the sale of domestic and fo-
                                                                       level, to be set off on that same level against positive taxable ear-
reign real estate within said ten year period need to be reported as
                                                                       nings in years to come. It is not possible to credit the negative ta-
taxable on the investor level. By contrast, profits from the sale of
                                                                       xable earnings directly to the investor’s account. Thus, these ne-
domestic real estate are fully taxable.
                                                                       gative amounts will not affect the investor’s income tax base or
                                                                       corporate tax base before the assessment period (fiscal year) in
Germany generally waives taxation on profits from the sale of fo-
                                                                       which the Property Fund’s financial year ends, or in which the dis-
reign real estate (exemption on the basis of double-taxation trea-
                                                                       tribution for the Property Fund’s financial year takes place, and for
ties). However, investors other than corporations need to remem-
                                                                       which the negative tax earnings on the Property Fund level have
ber that such exemption is subject to the progressivity proviso.
                                                                       been set off. It is not possible for the investor to claim such nega-
                                                                       tive earnings in an earlier income tax or corporate tax report.
If, by way of exception, the tax credit method is stipulated by the
respective double-taxation treaty, or if no double-taxation treaty
                                                                       Disbursement of Assets
has been ratified, taxes on earnings that were paid in the countries
of origin may still be credited against the German income tax or
                                                                       Capital disbursements (e.g. as interest on building finance) remain
corporate tax, provided the taxes paid have not already been ac-
                                                                       tax-exempt. For an investor preparing his or her accounts, this
counted for as income-related expenses on the Property Fund le-
                                                                       means that the disbursements of assets must be received on the
vel.
                                                                       earnings side of the trade balance, while a passive balancing item
                                                                       must be entered on the expenditure side of the tax balance so as
Profits from Securities Sales, and Profits from Forward
                                                                       to technically diminish the historic acquisition costs in a fiscally
Transactions
                                                                       equitable way.
Profits from the sale of securities, and profits resulting from for-
ward transactions, need not be reported as taxable income by the


                                                                                                                                        117
Sales Profits on the Investor Level                                      an appropriate non-assessment note has been filed. Otherwise,
                                                                         the investor will receive a tax note on the creditable interest di-
Profits from the selling of shares held as corporate assets are tax-     scount and creditable capital income tax withheld.
free for corporate investors, provided they consist of foreign ren-
tal income not yet accrued or not counting as accrued, as well as        If an investor keeps his or her shares of a fully or partially distribu-
realised and not realised profits of the Property Fund from foreign      ting property fund in domestic safe custody with the Investment
real estate, inasmuch as Germany has waived their taxation (so-          Company or at another financial institution (safe custody option),
called real estate profits).                                             the financial institution keeping the shares in safe custody and
                                                                         functioning as paying agent will exempt the shares from the inter-
Each trading day, the Investment Company shall publish the Fund’s        est income tax, including the share due for the retained part, if an
real estate profits as percentage of the respective investments’         official exemption order over a sufficient amount or a non-assess-
share value.                                                             ment note, granted by the Inland Revenue Office for three years, is
                                                                         presented prior to the distribution date. In this case, the entire dis-
Moreover, profits deriving from the sales of shares held in the          tributed amount is credited to the investor without deductions.
form of corporate assets remain tax-free for corporations, provi-
ded they consist of foreign dividends not yet accrued or not coun-       In the case of a (fully) retaining property fund, the respective in-
ting as accrued, as well as realised and not realised profits of the     vestment company itself shall withhold the interest discount on
Property Fund from domestic or foreign real estate corporations          the earnings of the retaining property fund that are subject to in-
(so-called stock profits). Sales profits of this sort are to 50% taxa-   terest income taxation in an amount equivalent to 30%, plus soli-
ble for sole proprietors.                                                darity surcharge. By the end of each financial year, the issue and
                                                                         redemption price is thus reduced by the interest income tax and
Each trading day, the Investment Company shall publish the Fund’s        the solidarity surcharge. If the shares are kept in safe custody by
stock profits as percentage of the respective investments share          a domestic financial institution, the investor account will be credi-
value.                                                                   ted with any interest income tax and solidarity surcharge that was
                                                                         withheld, provided an exemption order over a sufficient amount or
Interest Income Tax                                                      a non-assessment note was filed by the investor prior to the expi-
                                                                         ration of the Property Fund’s financial year.
Some of the distributed or retained earnings of the Property Fund
are subject to an interest income tax of 30%, as well as to a soli-      If the exemption order or non-assessment note is not filed, or not
darity surcharge (5.5% on the interest income tax) in Germany.           filed in time, the respective custodian bank will issue a tax note to
Taxes withheld at source under this provision merely represent a         the investor over the withheld and transferred interest income tax
tax advance payment that can be credited against the investor’s          and solidarity surcharge. Investors then have the option to have
eventual income tax debt. They do not, however, cover the entire         the interest income tax credit against their tax debt in conjunction
taxable distribution or all retained earnings of the Property Fund,      with their income tax return. The same goes for income that ex-
but specifically domestic rental income and interest earnings.           ceeds the limit of the exemption order.
Exempt from the interest income tax are domestic and foreign di-
vidends, profits from the sales of securities and subscription rights    If the shares of distributing (including reinvesting) property funds
on shares in corporations, profits from forward transactions, pro-       are not kept in safe custody, and coupons are presented to a do-
fits from sales of real estate and real estate-related rights outside    mestic financial institution (home custody) instead, interest inco-
the ten-year grace period, for which the Federal Republic of Ger-        me tax in an amount equivalent to 35% plus the applicable solida-
many has waived its taxation rights due to an existing double-ta-        rity surcharge will be withheld. Upon request, the investor will be
xation treaty.                                                           issued a tax assessment note in order to be able to credit the in-
                                                                         terest income tax and the solidarity surcharge when filing his or
For details on interest income taxation of distributed and retained      her income tax return. For shares in (fully) retaining property funds
earnings of the Property Fund, see the Annual Report as well as          that are kept in home custody, the interest income tax rate equals
any announcement regarding tax bases.                                    30%. Unlike with shares kept in safe custody, these interest inco-
                                                                         me tax payments will not be refunded. Rather, the investor must
Withholding of the interest income tax can be waived if a private        file appropriate evidence together with his or her income tax re-
investor is a German resident and submits a non-assessment note          turn in order to have the withheld interest income tax and the so-
(NV-Bescheinigung) or files an exemption order (Freistellungsan-         lidarity surcharge credited.
trag), and if the income share subject to interest income taxation
does not exceed the tax allowance for savers including the flat          Capital Income Tax
rate allowance for income-related expenses.
                                                                         Domestic dividends are subject to a capital income tax of 20% and
For shares held as corporate assets, to have the interest income         a solidarity surcharge (5.5% of the capital income tax amount) at
tax waived, or claiming a remuneration of the interest discount          the time they are distributed or retained. The capital income tax is
and a reimbursement of the capital income tax, is possible only if       immediately reimbursed to investors if their shares are safe-kept

118
                                                                                                                         sales Prospectus




by the Investment Company or at another domestic financial insti-          Foreign Withholding Tax
tution, and if an exemption order over a sufficient amount or a
non-assessment note has been submitted. For private investors,             Some of the foreign earnings of the Property Fund are subject to
only half of the domestic dividends are imputed against such an            taxes withheld at source in the countries of origin.
exemption order (so-called half-income procedure). Even if the
investor fails to submit an exemption order or a non-assessment            The Investment Company may deduct any creditable withholding
note in time, the capital income tax withheld plus the solidarity          tax as income-related expense on the Property Fund level. In this
surcharge may still be credited against the personal income tax            case, the foreign withholding tax can neither be credited nor de-
debt if the investor files, together with his or her tax return, the tax   ducted on the investor level.
note issued by the bank that is safe-keeping the shares.
                                                                           If the Investment Company fails to exercise its option to deduct
Solidarity Surcharge                                                       the foreign withholding tax on the Fund level, then the creditable
                                                                           withholding tax can, upon the investor’s request, be deducted
A solidarity surcharge of 5.5% shall be levied on distributed or re-       when assessing the total income, or can be credited against that
tained shares, inasmuch as they are subject to the capital income          part of the investor’s German income tax or corporate tax that re-
tax or the interest income tax. The solidarity surcharge can be            presents the respective foreign income.
credited against the income tax.
                                                                           Separate Assessment, External Audit
If no interest income tax is due, or if the interest income tax is re-
munerated in the case of retention (e.g. in case an exemption or-          The tax bases determined on the Property Fund level must be as-
der over a sufficient amount, a non-assessment note or evidence            sessed separately. The Investment Company must file a self-as-
of a non-resident German tax status is filed), the solidarity sur-         sessment declaration at the appropriate Inland Revenue Office.
charge need not be paid, or will be remunerated, respectively.             Adjustments to self-assessment declarations, e.g. occasioned by
                                                                           an external audit (Art. 11, Sec. 3, InvTA) by the taxation authorities
Investors with Non-Resident German Tax Status                              will become effective in that financial year in which the adjusted
                                                                           assessment can no longer be appealed. The tax allocation of the
If an investor with non-resident German tax status safe-keeps              adjusted assessment on the investor side is effected at the end, or
shares of a fully or partially distributing property fund at a domes-      the distribution date, of that financial year.
tic financial institution (deposit option), the interest income tax,
including the share due for partial retention, shall not be withheld       Taxation on “Zwischengewinn”
at source if the investor substantiates his or her non-resident Ger-
man tax status. If the safekeeping financial institution is not aware      Since 1 January 2005, so-called “Zwischengewinn” (interim pro-
of the investor’s non-resident tax status or has not received evi-         fit) has been subject to taxation again. “Zwischengewinn” (inte-
dence for such a status in time, the foreign investor shall be obli-       rim profit) is defined as that remuneration for interest collected
ged to file for reimbursement of the withheld interest income tax          through the sales price or the redemption price, or for accrued
through a repayment procedure pursuant to Art. 37, Sec. 2, Ger-            interest that has not yet been distributed or retained, and that the-
man Fiscal Code (AO). Such requests should be addressed to the             refore has not yet become taxable for the investor (perhaps com-
Inland Revenue Office at the established place of business of the          parable to the accrued interest on fixed-income securities). The
safekeeping financial institution or the safekeeping investment            interest and interest claims earned by the Property Fund become
company. To what extent the capital income tax on dividends can            subject to income taxation and capital income taxation upon the
be credited or reimbursed to foreign investors depends on whet-            redemption or sale of the shares by investors with resident Ger-
her a double-taxation treaty exists between the investor’s country         man tax status. The capital income tax on “Zwischengewinn”
of residence and the Federal Republic of Germany.                          equals 30% for shares held in safe custody, or 35% for shares held
                                                                           in home custody (with a solidarity surcharge of 5.5% to be added
If a foreign investor keeps shares of a (fully) retaining property         to the capital income tax in either case). The tax withheld repre-
fund in safe custody at a domestic financial institution, the with-        sents an advance payment on your income tax, and should be
held interest income tax of 30% will be reimbursed to that investor        entered into Annex KAP of your German income tax return.
if said investor substantiates his or her non-resident German tax
status. If the application for reimbursement is filed late, the inves-     “Zwischengewinn” included in the share subscription price may
tor has the option to file for reimbursement pursuant to Art. 37,          be deducted from the investor’s income tax debt as negative inco-
Sec. 2, German Fiscal Code (AO), in analogy to the belated sub-            me for the year in which it was paid. It is also considered deducti-
stantiation a non-resident German tax status.                              ble in your German income tax return. Moreover, taxes will not be
                                                                           withheld at source if the taxable amount remains within the limit
In order to be able to substantiate the claim for creditable ear-          of an existing exemption order, or if a non-assessment note has
nings, the investor is issued, upon request, a tax note listing the        been presented. Investors with a non-resident German tax status
remitted taxes (capital income tax/solidarity surcharge).                  are principally exempt from this type of taxation. The following
                                                                           items shall not enter into the “Zwischengewinn” assessment: ren-


                                                                                                                                           119
tal and leasehold income, as well as income from the valuation             This regulation consequently affects any private investor residing
and disposition of properties. “Zwischengewinn” is assessed                within the European Union or in any of the affiliated EU third coun-
whenever the share price is determined, and is published on each           tries who keeps safe custody accounts or other accounts in anot-
valuation day. The investor should report the sum of the “Zwi-             her EU member state and thereby generates interest earnings.
schengewinn” in Annex KAP, which sum is obtained by multiplying
the respective “Zwischengewinn” per share with the number of               Luxembourg and Switzerland, among other countries, have pla-
shares reported in the investor’s balance of subscriptions or sa-          ced themselves under the obligation to apply a withholding tax of
les, respectively. Also, the “Zwischengewinn” is regularly listed in       15 percent (20 percent after 1 July 2008, and 35 percent after
bank statements and bank income compilations.                              1 July 2011) to interest earnings. Within the framework of their tax
                                                                           documentation, the investor receives a tax note that permits the
Transparent, Semi-Transparent, and Non-Transparent                         deduction of the tax withheld to be credited against the investor’s
Taxation                                                                   income tax return.

The aforementioned taxation principles (the so-called transparent          Alternatively, private investors have the option to exempt themsel-
taxation) apply only if the entire tax base pursuant to Art. 5, Sec. 1,    ves from the application of the withholding tax by authorising the
InvTA, has been disclosed (the so-called duty to disclose tax infor-       foreign bank to disclose the interest earnings, thus enabling the
mation). This applies even if the Property Fund acquired shares in         respective institute to forgo collection of the withholding tax and
another domestic or foreign investment fund (target fund pursuant          to report the earnings to the legally specified revenue office inste-
to Art. 10, InvTA), and if these funds have fulfilled the duty to disc-    ad.
lose their tax information.
                                                                           Pursuant to the German Interest Information Regulation, the In-
The Investment Company will disclose its entire tax base, inas-            vestment Company is held to state for each domestic and foreign
much as the required information is available.                             fund whether it is in or out of scope in regard to the Interest Infor-
                                                                           mation Regulation. The Interest Information Regulation includes
Nonetheless, the required announcement cannot be guaranteed                two definitive investment limits in order to make this assessment.
inasmuch as the Property Fund may have acquired target funds
that fail to disclose their tax information as legally required. In this   If the assets of a given fund consist of no more than 15% accounts
case, the distributions and the “Zwischengewinn” of each target            receivable pursuant to the Interest Information Regulation, the
fund (though in no case less than 6% of the redemption price) are          paying agents – who ultimately rely on the data reported by the
assessed as taxable earnings on the level of the Property Fund.            respective investment company – need not report to the Federal
                                                                           German Tax Authority. Otherwise, exceeding the 15% threshold
EU Interest Directive/German Interest Information Re-                      will oblige the paying agents to report the interest share included
gulation (ZIV)                                                             in the dividend to the Federal German Tax Authority.

On 1 July 2005, the German Interest Information Regulation (ZIV)           The interest share included in redemptions or sales of fund shares
went into effect. The Interest Information Regulation (Council Di-         needs to be reported if the 40% threshold is exceeded. If the fund
rective 2003 48/EC of 3 June 2003, EU Official Journal L157, p. 38) is     at issue is a distributing fund, the share of interest included in the
intended to ensure that interest earnings of natural persons are           distribution also needs to be reported to the Federal German Tax
effectively taxed throughout the EU territory. The EU has signed           Authority. Analogously, if the fund at issue retains its earnings,
treaties with EU Third Countries (in particular with Switzerland,          only fund share redemptions or sales need to be reported.
Liechtenstein, the Channel Islands, Monaco, and Andorra) that
largely match the EU Interest Directive.                                   Merging Property Funds

To this end, interest earnings that a German bank (acting as pay-          In cases where all assets of a given property fund have been
ing agent in this context) credits to a natural person residing in         transferred pursuant to Art. 40, InvA, no hidden reserves are disc-
another EU member state or affiliated third party state are repor-         losed, be it on the investor level or on the level of the involved
ted by that German bank to the Federal German Tax Authority                property fund; that is, this process remains fiscally equitable.
(Bundeszentralamt für Steuern), to be ultimately reported to the
local inland revenue office in the respective person’s home coun-          Real Estate Transfer Tax
try.
                                                                           The sale of shares in the Property Fund is not subject to real esta-
Analogously, interest earnings that a natural person residing in Ger-      te transfer taxation.
many receives from a foreign bank in another European country or
certain third party states are reported to that person’s local Inland      Note:
Revenue Office by the respective bank. Alternatively, some foreign         Any tax detail elaborated here is based on the interpretation of
countries apply withholding taxes that can be credited in Germany.         current tax legislation. However, no guarantee is offered against
                                                                           changes in the principles of tax appraisal, be they effected

120
                                                                                                                    sales Prospectus




through new legislation, court decisions, or decrees issued by         3. PricewaterhouseCoopers Aktiengesellschaft Wirtschaftsprü-
the Inland Revenue Authorities.                                        fungsgesellschaft, auditors, have been, and will continue to be,
                                                                       commissioned to perform the annual audit.
Details on the taxation of income resulting from the Property
Fund are published in each Annual Report.                              Prerequisites for the Liquidation of the Property Fund

Legal and Fiscal Risks                                                 Investors shall not have the right to request liquidation of the Pro-
                                                                       perty Fund. However, the Investment Company may terminate the
In the event that the correction of incorrect tax bases for the Fund   management of the Property Fund, while observing a 13 months’
in regard to past financial years (e.g. as revealed through an ex-     notice period, by announcement in the electronic Federal Gazette
ternal audit) precipitates principally a fiscal disadvantage for the   (Bundesanzeiger) and in the next Annual Report or Semi-Annual
investor inasmuch as the investor may have to shoulder the tax         Report, respectively.
burden from past financial years that results from the correction,
even if he or she had not invested in the Property Fund at the time,   Moreover, the right of the Investment Company to manage the
as the case may be. Inversely, an investor may not benefit from a      Property Fund shall expire if insolvency proceedings are opened
correction principally precipitating a fiscal tax advantage for the    against the Investment Company‘s assets or if an insolvency peti-
current financial year, or past financial years, in which he had in-   tion has been rejected on grounds of insufficient assets. The Pro-
vested in the Fund, if he or she redeemed or sold the shares befo-     perty Fund is not a part of the Investment Company’s insolvency
re the attendant correction was implemented.                           estate.

A correction of tax data may moreover have the effect that taxa-       In such cases, the Property Fund shall pass into the ownership of
ble earnings or tax benefits are actually assessed for an assess-      the custodian bank, which shall liquidate the Property Fund and
ment period other than the originally applicable one, and that this    distribute the proceeds among the shareholders.
may have negative repercussions for the investor.
                                                                       Procedure for Liquidating the Property Fund
Consulting and Outsourcing
                                                                       If the Property Fund is liquidated, this will be announced in the
The Investment Company has notified the German Banking Super-          electronic Federal Gazette (Bundesanzeiger) and in daily papers
visory Authority (BaFin) that the following areas have been out-       and business papers with an adequate circulation, or at www.
sourced to other enterprises:                                          hausinvest.de. The issuance and redemption of shares will then
P internal auditing,                                                   be terminated. The proceeds from the sale of the Property Fund’s
P automatic account call process,                                      asset values, minus the costs yet to be borne by the Property Fund
P calculation of the risk benchmarks in conjunction with the im-       and the costs incurred by the liquidation, will be divided among
   plementation of the German Derivative Ordinance (DerivateV).        the investors on a pro-rata basis reflecting their quota of the Pro-
                                                                       perty Fund’s total number of shares. Liquidating the Property Fund
Reports, Financial Year, Auditors                                      may take a considerable length of time. The investors will be kept
                                                                       informed on the progress of the liquidation by way of liquidation
1. Annual Reports and Semi-Annual Reports can be requested             reports that will be issued on the same key dates as the former
from the Investment Company, Commerzbank AG, and the follo-            report publication dates, and will be available at the custodian
wing banks:                                                            bank. Once the Property Fund is liquidated, investors shall be no-
                                                                       tified of the fact by publications in the electronic Federal Gazette
    Baden-Württembergische Bank AG,                                    and in business papers and dailies, or at www.hausinvest.de, as
                                                                       to which liquidation proceeds are to be distributed, and where
    Berliner Bank AG
                                                                       and at what time these may be claimed.
    Sales offices of Landesbank Berlin,
    Bankhaus Gebrüder Bethmann,                                        Unclaimed liquidation proceeds can be deposited at the district
                                                                       court in whose jurisdiction the Investment Company is located.
    GE Money Bank GmbH,
    von der Heydt-Kersten & Söhne,                                     Investor rights are governed by the provisions of the Deposit Or-
                                                                       der of 10 March 1937 (Hinterlegungsverordnung).
    National-Bank AG,
    Vereins- und Westbank AG.                                          Transfer of all Assets Belonging to the Property Fund

                                                                       The Property Fund assets may be transferred in their entirety to
2. The financial year of the Property Fund ends on 31 March of
                                                                       another property fund at the end of each financial year. Inversely,
each year.
                                                                       the assets from another property fund may be transferred to the



                                                                                                                                      121
Property Fund in their entirety at the end of that other property        ve that the buyer subscribed the shares in the course of operating
fund‘s financial year.                                                   a business, or that the seller visited the buyer for the negotiations
                                                                         that led to the sale of shares as a result of a previous subscription
The other property fund must also be under the management of             order (Art. 55, Sec. 1, German Industrial Code [Gewerbeord-
the Investment Company. The investment principles and limits of          nung]).
the other fund, its up-front fees or redemption charges, as well as
the remunerations due to the Investment Company and the cus-             If the sale was revoked, but the buyer already made payments, the
todian bank, must not deviate substantially from those of the Pro-       Investment Company shall be obliged to pay back to the buyer –
perty Fund.                                                              incrementally, apace with the subscribed shares being returned,
                                                                         if necessary – any expenses paid plus an amount equivalent to the
Procedure for the Transfer of all Assets Belonging to a                  value of the paid shares on the day after the letter of revocation
Property Fund                                                            was received.

On the transfer key date, all assets of the property fund to be          The right of revocation cannot be waived.
transferred, as well as all assets of the property fund receiving
these transferred assets, shall be assessed, after which the ex-         This information applies mutatis mutandis to the sale of shares by
change rate shall be set and the entire merger process be revie-         the investor.
wed by a qualified auditor. The exchange rate is determined on
the basis of the ratio between the net inventory value of both the
accepted and the accepting property fund at the time of the trans-
fer. Investors shall be issued the balance of shares in the new
property fund that equals the value of their former shares in the
transferred property fund. The transfer of all assets of one proper-
ty fund to another property fund is exclusively subject to the ap-
proval by the German Supervisory Authority for Financial Services
(BaFin).

Other Property Funds Managed by the Investment
Company

The following public property fund, which is not the subject of this
Sales Prospectus, is also managed by the Investment Company:

hausInvest global
WKN (securities no.): 254 473
ISIN: DE 000 254 473 1

Revocation Right of Share Buyer, pursuant to Art. 126,
German Investment Act

If a buyer of shares has been induced by oral negotiations outside
the permanent place of business of the party who sold the shares,
or who brokered their sale, to make a declaration of intent with
regard to a subscription, then the buyer is bound by this declara-
tion only unless he or she revokes it in writing vis-à-vis the Invest-
ment Company within two weeks; this provision applying even if
the party selling or brokering the subscription of shares has no
permanent place of business.

The revocation shall be deemed to be within the grace period if it
is sent off in good time. The grace period does not begin until the
Sales Prospectus is handed over to the buyer. If it is subject to
dispute whether or when the Sales Prospectus was handed over
to the buyer, the burden of proof shall rest on the seller.

A buyer shall not have the right of revocation if the seller can pro-



122
                                                                                                                    G e n e r a l Fu n d Ru l e s




General Fund Rules



governing the legal relationship between the investors and Com-          c) at least once a year, the real estate belonging to the property
merz Grundbesitz-Investmentgesellschaft mbH, Wiesbaden, Ger-                funds or owned by a real estate company;
many, (hereinafter referred to as the “Company”), with regard to
the Property Funds launched by the Company, these rules being            d) the real estate that the Company or a real estate company in-
effective only in conjunction with the Special Fund Rules defined           tends to sell.
for the respective property fund, whereas:
                                                                         4. Moreover, the valuation committee must confirm the propriety of
Article 1, General Provisions                                            the ground rent before a ground lease is granted, and must reas-
                                                                         sess the value of the respective real property within two months
1. The Company is a capital investment company, subject to the           after such a lease has been granted.
provisions of the German Investment Act (InvA).
                                                                         Article 4, Fund Management
2. In accordance with the principle of risk diversification, the Com-
pany invests the capital deposited in its accounts in its own name       1. The Company shall acquire and manage the assets in its own
for the joint account of the investors, and in assets pursuant to the    name for the joint account of the investors, and with the diligence
InvA, said assets being separate from the Company’s own assets,          of a prudent businessman. In discharging its duties, the Company
and taking the form of separate property funds. The Company issu-        shall act independently of the custodian bank, and exclusively in
es certificates (share certificates) in evidence of the resulting in-    the best interest of the investors and of the market’s integrity.
vestor rights.
                                                                         2. The Company is entitled to acquire assets, using the funds in-
3. The Company owns the assets.                                          vested by investors, to dispose of such assets, and to invest the
                                                                         proceeds in other assets. It is also authorised to perform any other
4. Real property, ground leases, as well as rights in the form of re-    legal acts that the management of these assets involves.
sidential property ownership, partial ownership, residential ground
leases, and partial ground leases are collectively referred to her-      3. The Company shall make any decision regarding real estate sa-
einafter as real estate.                                                 les or interests held in real estate companies according to the
                                                                         standards of proper management (Art. 9, Sec. 1, Sent. 1, InvA). Sa-
Article 2, Custodian Bank                                                les following the suspension of redemptions pursuant to Art. 12,
                                                                         Sec. 5, below, shall remain unaffected by this.
1. The Company shall appoint a financial institution to act inde-
pendently of the Company and exclusively in the investors’ interest      4. The Company shall neither grant money loans nor assume obli-
as custodian bank.                                                       gations arising from a surety- or indemnity agreement for the joint
                                                                         account of the investors; and, moreover, shall not sell any assets
2. The custodian bank shall own the monitoring and control tasks         pursuant to Art. 47, 48 and 50, InvA, that do not belong to the Pro-
under the InvA and these Fund Rules.                                     perty Fund at the time such a transaction is concluded. The effec-
                                                                         tiveness of Art. 51, InvA, shall remain unaffected by this. In devia-
Article 3, Valuation Committee                                           tion of Sent. 1, the Company, or any third party acting on its behalf,
                                                                         may grant a loan to a real estate company for the account of the
1. The Company shall appoint at least one valuation committee            Property Fund if the Company holds an interest in that real estate
consisting of no less than three members plus one deputy member          company for the account of the Property Fund. Such a loan shall
for the valuation of real estate.                                        not exceed the equivalent of 50% of the market value of the real
                                                                         estate owned by that real estate company.
2. The members must be independent, reliable and technically
competent persons with specific experience in valuating real es-         Article 5, Investment Principles
tate. Their financial independence is subject to Art. 77, Sec. 2, Sen-
tences 2 and 3, InvA.                                                    1. In its Special Fund Rules, the Company shall define:

3. The valuation committee owns the tasks entrusted to it pursuant       a) what type of real estate may be acquired for the Property
to the InvA and these Fund Rules in accordance with rules of pro-           Fund;
cedure to be issued in agreement with the Company. In particular,
the valuation committee shall evaluate on short notice:                  b) whether, and to what extent, interests in real estate companies
                                                                            may be acquired for the account of the Property Fund;
a) the real estate that the Company or a real estate company in-
   tends to acquire;                                                     c) whether, and under what conditions, the real estate of the Pro-
                                                                            perty Fund may be encumbered with a ground lease;
b) a real estate company’s real estate prior to the acquisition of
   an interest in that real estate company;                              d) whether, and to what extent, derivatives pursuant to Art. 51,

                                                                                                                                           123
   InvA, may be invested in for the account of the Property Fund.        5. No more than 20% of the Property Fund’s total value may be in-
   When using derivatives, the Company shall observe the Ger-            vested into any combination of the following assets at any single
   man Derivative Ordinance on risk management and risk as-              institution:
   sessment in property funds (DerivateV), passed pursuant to
   Art. 51, Sec. 3, InvA.                                                P securities or money market instruments floated by this institu-
                                                                         tion,
2. The real estate and interests in real estate companies intended
for acquisition must imply the prospect of continuous returns.           P cash in banks from this institution,

Article 6, Liquidity, Investment Ceilings, Issuer Ceilings               P derivatives acquired from this institution that have not been ad-
                                                                         mitted for trade at a stock exchange, nor have been placed on any
1. The Company must observe the ceilings and restrictions esta-          other organised market.
blished by the German Investment Act and by these Fund Rules
when acquiring, managing and selling assets for the Property             The respectively applicable ceilings shall remain unaffected by
Fund.                                                                    this.

2. Unless otherwise specified in the Special Fund Rules, the Com-        6. The Company may invest up to 35% of the Property Fund’s total
pany may keep funds of the following type, within the legal para-        value each into debenture bonds and promissory note loans that
meters (Art. 80, Sec. 1, InvA) and within the set ceilings:              have been issued or guaranteed by the Federal German Govern-
                                                                         ment, one of the German states, the European communities, a
a) cash in banks pursuant to Art. 49, InvA;                              member state of the European Union, another member state of the
                                                                         Treaty on the European Economic Area, or another member state
b) money market instruments pursuant to Art. 48 and 52, No. 2,           of the Organisation for Economic Cooperation and Development.
   InvA;                                                                 The Company may invest up to 25% each of the Property Fund’s
                                                                         value in mortgage bonds and municipal bonds issued by financial
c) securities that are eligible in the eyes of the European Central      institutions seated in a member state of the European Union or in
   Bank or the Deutsche Bundesbank as collateral for the lending         another member state of the Treaty on the European Economic
   transactions specified in Art. 18, Sec. 1 of the protocol on the      Area, provided that these financial institutions are subject to a se-
   Charter of the European System of Central Banks and the Euro-         parate public supervision legally instituted for the protection of the
   pean Central Bank, or whose eligibility will be applied for ac-       owners of these debenture bonds, and provided that the capital
   cording to the terms of issuance, inasmuch as they become             raised by issuing these debenture bonds is invested in compliance
   eligible within one year of their issuance;                           with legal regulations in assets that cover the liabilities arising out
                                                                         of the debenture bonds for their entire lifetime, and that these as-
d) investment shares pursuant to Art. 50, InvA, or shares in insti-      sets are prioritised for the coverage of the repayment of the bonds
   tutional property funds pursuant to Art. 50, Sec. 1, Sent. 2, InvA,   and of the payment of the interest upon maturity in case the issuer
   which, pursuant to these Fund Rules, must be exclusively in-          defaults on these payments.
   vested in assets defined under Letters a), b) and c), above;
                                                                         7. The ceiling defined in Section 6, Sentence 1, above, may be ex-
e) securities admitted for trade at a stock exchange in one of the       ceeded for securities and money market instruments of a single
   member states of the European Union or for trade at an official       issuer pursuant to Art. 60, Section 2, Sentence 1, InvA, provided
   market in a member state of the Treaty on the European Econo-         the Special Fund Rules permit this while specifying the eligible is-
   mic Area, or fixed-income securities, provided that these do          suers. In such cases, the securities and money market instruments
   not exceed a value equivalent to 5% of the respective Property        held for the account of the respective Property Fund must origina-
   Fund’s total value.                                                   te from at least six different issues, with no more than 30% of the
                                                                         Property Fund’s total value being held in any one issue.
3. The part of the Property Fund that may be held in the form of
cash in banks shall be defined in the Special Fund Rules. The Com-       8. The Company shall keep an amount at least the equivalent of 5%
pany may invest no more than 20% of the Property Fund’s total va-        of each Property Fund’s value in sight deposits.
lue in cash in banks at any single financial institution.
                                                                         Article 7, Securities Lending
4. In individual cases, securities and money market instruments,
including securities and money market instruments acquired un-           1. The Company may lend, for the account of the Property Fund,
der repurchase agreements, of any single issuer may be acquired          securities against adequate collateral to a borrower in return for a
over and above the value of 5%, and up to 10%, of the total value of     fair market consideration for an indeterminate period of time, pro-
the Property Fund; however, the total value of securities and mo-        vided that the quoted value of the securities to be transferred,
ney market instruments from issuers of this type may not exceed          combined with the quoted value of the securities already transfer-
40% of that Property Fund’s total value.                                 red to the same borrower of securities for the account of the Pro-

124
                                                                                                                     G e n e r a l Fu n d Ru l e s




perty Fund, does not exceed 10% of the Property Fund’s total va-          Article 10, Transfer of all Assets of one Property Fund to
lue.                                                                      another Property Fund

2. If the collateral for the transferred securities is furnished by the   1. The Company may transfer all assets of this Property Fund into
securities borrower in the form of cash in banks, the Company re-         another of its property funds, or integrate all assets of another pro-
serves the right to invest such cash in money market instruments          perty fund into this Property Fund, if:
pursuant to Art. 48, InvA, and in the currency of said cash. The
Property Fund shall be entitled to the collateral earnings.               a) both property funds are managed by the Company,

3. In order to broker and process the lending of securities, the          b) the investment principles and ceilings set forth in the respecti-
Company may also use a system deviating from the requirements                ve fund rules for these property funds do not deviate substanti-
defined in Articles 54 and 55, InvA, and organised by a securities           ally from each other,
clearing and deposit bank or by another company specified in the
Special Fund Rules whose business object is to perform interna-           c) the remuneration due to the Company and the custodian bank,
tional security transactions on behalf of others, provided that the          as well as the up-front fees and the redemption charges, do not
investors’ interests are safeguarded by the conditions of this sys-          deviate substantially from each other,
tem.
                                                                          d) the transfer of all assets of the Property Fund is effected at the
Article 8, Securities Repurchase Agreements                                  end of the financial year of the transferring property fund
                                                                             (transfer key date), and if all assets of the property fund to be
1. In return for a consideration, the Company may enter into secu-           transferred, as well as all assets of the property fund accepting
rities repurchase agreements pursuant to Art. 340b, Sec. 2, Ger-             these transferred assets, are valuated on the transfer key date,
man Commercial Code, with credit institutions or financial service           and if the exchange rate is set, and if the assets and liabilities
providers for the account of the Property Fund.                              have been accepted, and if the entire transfer process is revie-
                                                                             wed by an auditor, and if the German Supervisory Authority for
2. The securities repurchase agreements must be based on secu-               Financial Services (BaFin) has approved the transfer of assets
rities of the sort that may be acquired for the Property Fund pursu-         based on the assumption that the investor interests are suffi-
ant to these Fund Rules.                                                     ciently protected.

3. The securities repurchase agreements shall have a lifetime of          2. The exchange rate is determined on the basis of the ratio bet-
no more than 12 months.                                                   ween the net inventory value of both the accepted and the accep-
                                                                          ting property fund at the time of the transfer. Investors of the trans-
Article 9, Encumbrance of Real Estate, and Borrowing                      ferring property fund may consider the new shares of the accepting
                                                                          property fund as issued by the day following the transfer key
1. The Company may encumber real estate belonging to the Pro-             date.
perty Fund, and may also cede and encumber claims under legal
relationships that relate to real estate (encumbrances), if doing so      3. Section 1, Letter c), above, shall not apply to the merger of indi-
is compatible with diligent and proper business management, and           vidual property funds into a single property fund with different sha-
provided the custodian bank approves the encumbrances becau-              re classes. In this case, the share of the share class within the
se it deems the negotiated terms to be in line with market stan-          Property Fund shall be determined, rather than the exchange rate
dards. When acquiring real estate, it may also take over encum-           pursuant to Sec. 2, Sent. 1, above.
brances associated with that real estate. Any given piece of real
estate may only be or become encumbered inasmuch as continu-              Article 11, Share Certificates
ous earnings from that property are guaranteed. Overall, such en-
cumbrances may not exceed the percentage of the total market              1. The share certificates are bearer certificates, each represen-
value of the real estate belonging to the Property Fund, as speci-        ting one or several investment shares.
fied in the Special Fund Rules. Encumbrances in connection with
the suspension of redemption pursuant to Art. 12, Sec. 5 are not          2. The shares can confer various rights regarding income distribu-
taken into account, nor are ground rents.                                 tion, up-front fee, redemption charge, the currency of the share
                                                                          value, the management fee, or a combination of these characteris-
2. On top of that, the Company may take out, for the joint account        tics (share classes). The details shall be defined in the Special
of the investors, short-term loans of up to 10% of the Property           Fund Rules.
Fund’s total value, provided the conditions for borrowing are in line
with market standards, and that the custodian bank has approved           3. The share certificates shall bear at least the hand-written or
such borrowing. Any amount that the Company, acting as repo len-          facsimile signatures of the Company and the custodian bank. In
der, received in conjunction with a repurchase agreement must be          addition, they shall also bear the hand-written signature of a con-
set off against this ceiling.                                             trolling person at the custodian bank.


                                                                                                                                            125
4. The shares are transferable. The rights vested in each share          Article 13, Issue Price and Redemption Price
certificate are passed on with the transfer of ownership. In any
event, the Company shall regard the holder of the share certificate      1. In order to calculate the issue price and the redemption price of
as the entitled party.                                                   the shares, the value of the assets held in a given Property Fund
                                                                         (net asset value) shall be determined on the dates stated in its
5. If the investor rights at the time the respective property fund is    Special Fund Rules, and shall be divided by the number of shares
launched, or the rights of investors belonging to a share class          in circulation (share value). If, pursuant to Art. 11, Sec. 2, different
whenever share classes are introduced, are to be chartered not in        share classes are introduced for the Property Fund, the share va-
the form of a global certificate, but in single or multiple share cer-   lue and the issue price and the redemption price shall be determi-
tificates, this shall be defined in the Special Fund Rules.              ned separately for each share class. Valuation of the assets is
                                                                         performed according to the principles for establishing the fair va-
Article 12, Issuance and Redemption of Share Certifica-                  lue and the market price as stipulated in the InvA and in the Ordi-
tes, Suspension of Redemption                                            nances passed on the basis of that Act.

1. There is principally no limit to the number of shares and atten-      2. When establishing the issue price, an up-front fee designed to
dant share certificates issued. The Company reserves the right to        cover issue costs may be added to the share value. Apart from the
discontinue the issuance of shares, be it temporarily or perman-         up-front fee, the Company shall use further amounts from pay-
ently.                                                                   ments made by the share buyers for the purpose of covering ex-
                                                                         penses, though only inasmuch as the Special Fund Rules provide
2. Share certificates may be subscribed from the Company, the            for this.
custodian bank, or through third party brokerage.
                                                                         3. The redemption price shall be the share value determined pur-
3. Investors shall have the right to demand the redemption of their      suant to Section 1, above, with the reservation to apply a redemp-
share certificates by the Company. The Company shall be obliged          tion charge. If the Special Fund Rules provide for a redemption
to redeem the share certificates for the account of the Property         charge, the custodian bank shall pay the share value, minus the
Fund at the current redemption price. The custodian bank shall           redemption charge, to the investor, and shall forward the redemp-
serve as redemption agent.                                               tion charge to the Company. The details shall be defined in the
                                                                         Special Fund Rules.
4. However, the Company reserves the right to suspend the re-
demption of share certificates under extraordinary circumstances         4. The key date for settling calls for shares and placing requests
that make such a suspension seem necessary, though not without           for redemptions shall be the valuation day following the receipt of
taking the investors’ interests into account.                            the respective share call or redemption order at the latest.

5. In particular, the Company reserves the right to refuse redemp-       Article 14, Expenses
tion of share certificates temporarily for liquidity reasons and for
the protection of the investors. The Company may refuse redemp-          The Special Fund Rules shall specify the expenditures and remu-
tion for a period of up to three months if the cash in banks and the     nerations due to the Company, custodian bank, and any third party,
proceeds from selling money market papers and securities are not         that can be charged to the Property Fund. In addition, the Special
sufficient for paying the redemption price and ensuring a proper         Fund Rules shall specify the method and the amount of payment
management, or if they are not immediately available. If, upon ex-       and the basis of calculation for the remunerations defined in Sen-
piration of the aforementioned period, the liquid funds remain in-       tence 1, above.
sufficient to cover redemptions, the real estate belonging to the
Property Fund shall be sold. The Company can refuse to redeem            Article 15, Accounting
shares until the real estate is sold at reasonable conditions, or for
up to one year after the shares at issue were presented for re-          1. The Company shall publish an Annual Report including a state-
demption. The aforementioned grace period may be extended by             ment of earnings and expenditures pursuant to Art. 44, Sec. 1, and
another year as announced to investors pursuant to Sent. 7. Upon         Art. 79, Sections 1 and 2, InvA, no later than three months after the
expiration of this grace period, the Company can use real estate as      end of each financial year of the Property Fund.
loan collateral irrespective of the borrowing principles and beyond
the encumbrance ceiling specified in the Special Fund Rules, in          2. The Company shall publish a Semi-Annual Report pursuant to
order to procure the financial means for redeeming the shares.           Art. 44, Sec. 2 and Art. 79, Sections 1 and 2, InvA, no later than two
Whenever the redemption of shares is resumed, the new issuance           months after the end of the first six months of the financial year.
and redemption prices shall be published in the electronic Federal
Gazette (Bundesanzeiger) and moreover in a business paper or             3. If the right to transfer the Property Fund during the financial year
daily with adequate circulation, or in the electronic information        to another mutual fund is exercised, the Company shall compile an
media designated in the Sales Prospectus.                                Interim Report as of the transfer key date, which report shall satis-



126
                                                                                                                      G e n e r a l Fu n d Ru l e s




fy the requirements for annual reports pursuant to Art. 44, Sec. 1,        three months after their announcement in the electronic Federal
and Art. 79, Sec. 1 and 2, InvA.                                           Gazette at the earliest, unless an earlier date is specified, subject
                                                                           to approval by the German Supervisory Authority. Any publication
4. The reports shall be available from the Company and the custod-         pursuant to Sent. 1, above, shall refer to the intended amendments
ian bank and other institutions listed in the Sales Prospectus; they       and the date of their effectiveness.
shall also be made public in the electronic Federal Gazette (Bun-
desanzeiger) and moreover in a business paper or daily with ade-           4. Amendments to the provisions governing the expenditures and
quate circulation, or in the electronic information media designa-         the remunerations due to the Company, the custodian bank and
ted in the Sales Prospectus.                                               any third party (Art. 41, Sec. 1, Sent. 1, InvA) shall become effective
                                                                           13 months after their announcement. The publication shall be ef-
Article 16, Termination Notice, Liquidation of a Property                  fected pursuant to Sec. 3, Sent. 2, above.
Fund
                                                                           5. Amendments to the existing investment principles of the Proper-
1. The Company may terminate the management of the Property                ty Fund shall become effective 13 months after their announce-
Fund, while observing a notice period of at least thirteen months,         ments. The publication shall be effected pursuant to Sec. 3, Sent. 2,
by announcement in the electronic Federal Gazette (Bundesanzei-            above.
ger) and moreover in the next Annual or Semi-Annual Report, re-
spectively.                                                                Article 18, Place of Performance, Place of Jurisdiction

2. The Company is obliged to terminate management of the Proper-           1. The place of performance shall be the Company’s legal seat.
ty Fund at the request of the German Supervisory Authority (BaFin)         2. For investors not subject to general jurisdiction in Germany, the
if the total value of the Property Fund falls below 150 million euros      place of jurisdiction shall be the Company’s legal seat.
following the passage of four years after it was set up.

3. The right of the Company to manage the Property Fund shall ex-
pire as soon as such termination becomes effective. In this case,
the Property Fund shall pass into the ownership of the custodian
bank, which shall liquidate the Fund and distribute the liquidation
proceeds among the investors. During the liquidation period, the
custodian bank may claim the remuneration formerly due to the
Company.

4. The Company shall compile a liquidation report as of the day its
management rights expire pursuant to Art. 38, InvA, which report
shall satisfy the requirements for an Annual Report pursuant to
Art. 44, Sec. 1, and Art. 79, Sec. 1 and 2, InvA.

Article 17, Amendments to these Fund Rules

1. The Company may amend the Fund Rules.

2. Amendments to these Fund Rules, including the Appendix to the
Special Fund Rules, while excepting the rules governing the ex-
penditures and the remunerations due to the Company, the cus-
todian bank and any third party out of a given Property Fund
(Art. 43, Sec. 2, Sent. 1, in combination with Art. 41, Sec. 1, Sent. 1,
InvA), require the approval of the German Supervisory Authority
(BaFin). Inasmuch as such amendments under Sent. 1, above, con-
cern the investment principles of the Property Fund, they require
prior approval by the Company’s supervisory board.

3. All intended amendments shall be published in the electronic
Federal Gazette (Bundesanzeiger) and moreover in a business pa-
per or daily with sufficient circulation, or in the electronic informa-
tion media designated in the Sales Prospectus, and shall becomes
effective – excepting any amendment under Sections 4 and 5 –



                                                                                                                                             127
Special Fund Rules



for regulating the legal relationship between investors and Com-        a) the loan conditions are in line with market standards;
merz Grundbesitz-Investmentgesellschaft mbH, Wiesbaden, (her-
einafter referred to as the “Company”), with regard to the hausIn-      b) the loan is secured by sufficient collateral;
vest europa Property Fund launched by the Company. These
Special Fund Rules shall be effective only in conjunction with the      c) agreements regarding the sale of interests exist to the effect
General Fund Rules defined by the Company for its property funds,          that the loan will be due for repayment within six months after
whereas:                                                                   that sale;

Article 1, Custodian Bank                                               d) the sum total of loans granted to a given real estate company
                                                                           for the account of the Property Fund does not exceed 50% of
The custodian bank for the Property Fund shall be Commerzbank              the total value of the real estate held by that real estate compa-
AG, with legal seat in Frankfurt am Main.                                  ny;

Investment Principles and Investment Ceilings                           e) the sum total of loans granted to real estate companies for the
                                                                           account of the Property Fund does not exceed 25% of the Pro-
Article 2, Real Estate                                                     perty Fund’s total value. Loans taken out shall not be deducted
                                                                           for the calculation of the ceiling.
1. The Company may acquire, within the legal limits (Art. 67, Sec. 1
and 2, InvA), for the Property Fund the following real estate, situa-   Article 4, Encumbrance with a Ground Lease
ted in any member state of the European Union or in another mem-
ber states of the Treaty on the European Economic Area:                 1. The Company may encumber real estate belonging to the Pro-
                                                                        perty Fund as defined in Art. 2, Sec. 1, Let. a), b), c) and e), above,
a) rental housing real estate, commercial real estate, and real es-     with ground leases.
   tate used for mixed purposes;
                                                                        2. Real estate may only be encumbered with a ground lease if un-
b) real estate under development;                                       foreseen circumstances prevent the property from being used as
                                                                        originally intended, or if economic disadvantages for the Property
c) undeveloped real estate intended and suitable for development        Fund is thereby avoided, or if an economic sensible usage is there-
   in the near future, pursuant to a);                                  by made possible.

d) ground leases, subject to the conditions a) to c);                   Article 5, Maximum Liquidity

e) other real estate and other ground leases, as well as rights in      1. Up to 49% of the Property Fund’s total value may be held in the
   the form of residential real estate ownership, partial owner-        form of assets pursuant to Art. 6, Sec. 2, General Fund Rules (ma-
   ship, residential ground leases and partial ground leases.           ximum liquidity). The following committed funds shall be deducted
                                                                        whenever this ceiling is calculated:
2. Loans taken out do not enter into the calculation of the value of
the Property Fund to assess the legal and contractual investment        P The funds required to secure a properly functioning real estate
ceilings pursuant to Sec. 1, Let. b), c) and e).                        management;

Article 3, Participations in Real Estate Companies                      P the funds set aside for the next distribution;

1. Within the legal parameters (Art. 68 to 72, InvA), the Company       P funds that will be required to meet liabilities arising from legally
may acquire interests in real estate companies whose business           effective real estate deeds, loan agreements necessary for pen-
object is restricted by its partnership agreement or articles of as-    ding investments in specific real estate and for specific construc-
sociation to those activities that the Company may undertake on         tion measures, as well as liabilities arising from construction con-
behalf of the Property Fund. According to its partnership agree-        tracts, inasmuch as these liabilities will become due within two
ment or articles of association, the real estate company at issue       years’ time.
may acquire only assets as defined in Art. 2, above, or the items re-
quired for managing the assets. Interests in real estate companies      2. Under the restriction defined in Sec. 1, above, up to 5% of the
shall be taken into account in the context of investment ceilings       Property Fund’s total value may be held in equities or fixed-income
pursuant to Art. 2, above, and when calculating the applicable le-      securities of German and foreign issuers which are admitted for
gal limits.                                                             trade at a stock exchange in a member state of the European
                                                                        Union or in another member state of the Treaty on the European
2. To the extent that a real estate company is granted a loan pursu-    Economic Area, provided that the minimum liquidity requirement
ant to Art. 4, Sec. 4, Sent. 3, General Fund Rules, the Company must    pursuant to Art. 6, Sec. 8, General Fund Rules, is satisfied.
ensure that:

128
                                                                                                                      s p e c i a l Fu n d Ru l e s




3. The Property Fund assets pursuant to Sections 1 and 2, above,           e) credit default swaps on assets pursuant to Art. 6, Sec. 2, Let. b)
may also be denominated in a foreign currency of a member state               to e), General Fund Rules, as well as on real estate pursuant to
of the Treaty on the European Economic Area.                                  Art. 2, Sec. 1, above, inasmuch as they serve exclusively and
                                                                              manifestly to hedge the loan risk of precisely associable Pro-
Article 6, Currency Risk                                                      perty Fund assets; At the same time, the creditable amount of
                                                                              the Property Fund to be assessed, pursuant to Art. 16, German
Assets held for the account of the Property Fund may only be ex-              Derivative Ordinance, shall, in the context of the interest rate
posed to currency risks to the extent that the value of assets sub-           risk or equity price risk or the exchange rate risk, at no time
ject to such risks does not exceed 30% of the Property Fund’s total           exceed a value equalling two times the Property Fund’s total
value.                                                                        value.

Article 7, Derivatives for Hedging Purposes                                3. Forward contracts, options and subscription warranties on in-
                                                                           vestment shares pursuant to Art. 6, Sec. 2, Let. d), General Fund
1. The Company may use derivatives in conjunction with the ma-             Rules, must not be concluded.
nagement of the Property Fund. It may, in keeping with the type
and volume of the deployed derivative, use the simple or the quali-        4. Inasmuch as it uses the qualified approach, and assuming a sui-
fied approach in line with the German Derivative Ordinance (Deri-          table risk management is in place, the Company may, for hedging
vateV) in order to determine the degree of utilisation of the market       purposes, invest in any derivative derived from assets that have
risk limit for the use of derivatives pursuant to Art. 51, Sec. 2, InvA.   been acquired pursuant to Art. 6, Sec. 2, Let. b) to e), General Fund
The details shall be specified in the Sales Prospectus.                    Rules, or from real estate that has been acquired pursuant to
                                                                           Art. 2, Sec. 1, above, or from interest rates, exchange rates or cur-
2. If the Company uses the simple approach, it may invest only in          rencies. This includes in particular options, financial forward con-
derivatives derived from assets that may be acquired pursuant to           tracts, and swaps, as well as combinations thereof. At the same
Art. 6, Sec. 2, Let. b) to e), General Fund Rules, or from real estate     time, the potential risk amount of the market risk may at no time
that may be acquired pursuant to Art. 2, Sec. 1, above. In this con-       exceed a value equalling two times the potential risk amount for
text, and pursuant to Art. 6, Sec. 2, German Derivative Ordinance,         the market risk of the attendant composition estate pursuant to
it limits itself to the exclusive use of the following basic forms of      Art. 9, German Derivative Ordinance.
derivatives, or combinations of these derivatives, or combinations
of assets that may be acquired for the Property Fund, together with        5. Under no circumstances may the Company deviate from the Ge-
the aforementioned types of derivatives inasmuch as they are al-           neral and Special Fund Rules, nor from the investment principles
ready part of the Property Fund:                                           and limits defined in the Sales Prospectus, when engaging in the
                                                                           above transactions.
a) forward contracts on assets pursuant to Art. 6, Sec. 2, Let. b) to
   e), General Fund Rules, as well as on real estate pursuant to           6. The Company shall use derivatives only for hedging purposes.
   Art. 2, Sec. 1, above, interest rates, exchange rates or curren-
   cies;                                                                   7. When assessing the market risk limit for the use of derivatives,
                                                                           the Company may switch from a simple to a qualified approach
b) options and subscription warrants on assets pursuant to                 pursuant to Art. 7, German Derivative Ordinance, at any time. The
   Art. 6, Sec. 2, Let. b) to e), General Fund Rules, as well as on        switch to a qualified approach does not require the approval by
   real estate pursuant to Art. 2, Sec. 1, above, interest rates, ex-      the German Supervisory Authority, though the Company is held to
   change rates or currencies, and on forward contracts pursuant           report such a switch to the German Supervisory Authority without
   to Letter a), provided they have the following characteristics:         delay, and to announce it in the next Semi-Annual or Annual Re-
                                                                           port, respectively.
aa) they can be exercised at any time throughout their entire lifetime
    or at the end of their lifetime, and                                   Article 8, Securities Lending and Securities Repurchase
                                                                           Agreements
bb) the option value depends, at the time it is exercised, and in a
    linear sense, on the positive or negative difference between           Articles 7 and 8, General Fund Rules, must be observed in regard
    exercise price and market price of the underlying instrument,          to the investment principles and ceilings.
    and becomes nil if the difference bears the opposite sign;
                                                                           Article 9, Investment Committee
c) interest swaps, currency swaps, or interest currency swaps;
                                                                           In the process of selecting real estate to be acquired or sold for
d) options on swaps of the type defined in Letter c), above, provi-        the Property Fund, the Company may consult an investment com-
   ded they manifest the characteristics defined in Letter b) under        mittee to be appointed by the Company‘s Supervisory Board.
   Sub-Letters aa) and bb), above, (swaptions);



                                                                                                                                            129
Article 10, Encumbrances                                                c) the costs arising in connection with the acquisition and sale of
                                                                           other assets;
Encumbrances must not exceed 50% of the market value of the
real estate held in the Property Fund.                                  d) standard custody-account charges;

Share Classes                                                           e) the costs of the valuation committee;

Article 11, Share Classes                                               f) the costs of printing and mailing the Annual and Semi-Annual
                                                                           Reports intended for investors;
All shares confer equal rights; the Company shall not create diffe-
rent share classes pursuant to Art. 11, Sec. 2, General Fund Rules.     g) the costs of announcing the Annual and Semi-Annual Reports,
                                                                           the issue and redemption prices, and, as the case may be, the
Redemption Price and Redemption Costs                                      distributions and the liquidation report;

Article 12, Share Certificates                                          h) the costs for auditing the Property Fund by the Company’s audi-
                                                                           tor, as well as the costs for publishing the tax base and the note
Investor rights shall be securitised exclusively in the form of share      stating that the tax information provided has been compiled in
certificates at the time the Property Fund is set up.                      compliance with German tax laws.

Article 13, Issue Price and Redemption Price                            i) the costs involved in cashing the coupons;

1. The issue and redemption prices are calculated on each trading       j) the costs of renewing the coupon sheets;
day. The Company and custodian bank may refrain from assessing
the value for trading days that are public holidays, as well as on      k) the taxes possibly incurred in connection with the costs of ma-
December 24 and 31 of each year; details being specified in the            nagement and custody.
Sales Prospectus. 2. The up-front fee shall equal 5% of the share
value. The Company shall be at liberty to charge a lower up-front       5. The rules set forth in Sections 2 and 4, above, shall apply mutatis
fee. There shall be no redemption charge.                               mutandis to real estate companies and their real estate, such as
                                                                        are held by the Company for the account of the Property Fund. In
Article 14, Expenses*                                                   this context, the value of the real estate companies, or the value of
                                                                        the real estate held, respectively, shall be assessed on a pro-rata
1. For its management of the Property Fund, the Company shall re-       basis in an amount equivalent to the interest quota. In deviation of
ceive an annual remuneration of up to 0.65% of the total value of       this provision, expenditures pursuant to Sec. 4, above, that are in-
the Property Fund as determined at the end of each financial year.      curred by the real estate company due to special provisioned defi-
The Investment Company is entitled to levy quarterly pro-rata ad-       ned by the InvA are charged in full – rather than on a pro-rata basis
vance payments on this fee.                                             – to the Property Fund.

2. If real estate is purchased, sold, developed or modified on behalf   6. The Company shall, in its Annual and Semi-Annual Report, iden-
of the Property Fund, the Company can in each case levy a non-          tify the sum total of up-front fees and redemption charges that
recurring charge of 1% of the purchase or sales price, or up to 2%      have been charged to the Property Fund for the acquisition and
of the construction costs and ancillary costs of project develop-       redemption of shares pursuant to Art. 50, InvA, during the repor-
ments conducted by the Company on behalf of the Property Fund.          ting period. When acquiring shares that are directly or indirectly
                                                                        managed by the Company itself or by another company affiliated
3. The custodian bank shall receive for its activity an annual remu-    with the Company through a direct or indirect material interest, the
neration of up to 0.25‰ of the total value of the Property Fund as      Company or the other company shall charge no up-front fees and
determined at the end of each financial year.                           redemption charges for the acquisition or redemption of shares,
                                                                        respectively. The Company shall, in its Annual Report and Semi-
4. On top of the aforementioned remunerations, the following ex-        Annual Report, identify the remuneration that was charged to the
penditures shall be charged to the Property Fund:                       Property Fund by the Company itself, by another investment com-
                                                                        pany, by an investment joint stock company with variable capital,
a) ancillary costs arising in conjunction with the acquisition, de-     or by another company affiliated with the Company through a di-
   velopment, sale, and encumbrance of real estate (including           rect or indirect material interest, or by a foreign investment com-
   taxes);                                                              pany, including the sum charged by its management company as
                                                                        administrative remuneration for the shares held in the Property
b) borrowing and management costs arising in conjunction with           Fund.
   the real estate management (administration, maintenance and
   operating costs, as well as legal fees);                             * This provision is not subject to approval by the German Supervi-

130
                                                                        s p e c i a l Fu n d Ru l e s




sory Authority for Financial Services (BaFin).
Income Distribution, Financial Year, and Fund Name

Article 15, Distribution

1. Principally, the Company distributes – subject to the attendant
income equalisation – any earnings resulting from real estate and
from other assets, that have accrued for the account of the Pro-
perty Fund in the course of each financial year, and that have not
been used to cover expenses.

2. The amount that is required for future maintenance and for off-
setting the decline in real estate value shall be deducted from the
earnings calculated pursuant to Sec. 1, above, and shall be retai-
ned.

3. With the attendant income equalisation taken into account, sa-
les profits and the interest received on the Company’s own cons-
truction project funds may also be distributed, if the saved interest
lies within the normal market limits for saved interest for building
finances.

4. The income eligible for distribution pursuant to Sections 1 to 3
may be carried forward for distribution in later financial years if
the total income carried forward does not exceed 10% of the re-
spective value of the Property Fund at the end of the financial year.
Earnings from short financial years may be carried forward in their
entirety.

5. In the interest of conserving the asset value, income can be
partly – and, in special cases, fully – allocated for reinvestment in
the Property Fund.

6. The distribution shall take place annually, immediately upon pu-
blication of the Annual Report, and against presentation of the
called coupon to the paying agents identified in the distribution
announcements.

Article 16, Financial Year

The financial year for the Property Fund begins on each 1 April,
and ends on 31 March of the next calendar year.

Article 17, Fund Name

The rights of investors holding share certificates with the original
Fund name, HAUS-INVEST, shall remain unaffected. Such share
certificates continue to be valid.




                                                                                              131
Sales Prospectus
and Fund Rules
Status: 16 August 2008 / 16 February 2009

An open-ended property fund pursuant to the
German Investment Act (InvA)




                                                          of:
                                                      e as 08
                                                  ctiv    0
                                              effe gust 2
                                                   u
                                              16 A




Non-binding Translation of the
Sales Prospectus and Fund Rules




/ Open-Ended Property Fund /
Sales Prospectus



Shares are subscribed on the basis of this Sales Prospectus and         in conjunction with the fiduciary relation, if the investor has no
the General Fund Rules in conjunction with the Special Fund Ru-         general place of jurisdiction in Germany. Pursuant to Art. 123,
les. This Sales Prospectus is a legally prescribed sales document       German Investment Act (InvA), all sales documents must be made
and must be made available to any person interested in acquiring        out in the German language. Moreover, the Investment Company
shares together with the latest Annual Report and Semi-Annual           shall conduct all communication with its investors in German.
Report before the sales contract is signed.
                                                                        In the case of any dispute arising in connection with the enforce-
No information or explanations shall be provided that are at vari-      ment of the provisions of the German Civil Code, inasmuch as they
ance with the contents of this Sales Prospectus. Any share acqui-       concern long-distance sales contracts for financial services, the
sition based on information or explanations not contained in this       parties involved may turn to the Arbitration Office of Deutsche
Sales Prospectus is undertaken exclusively at the buyer’s risk.         Bundesbank, PO Box 11 12 32, 60047 Frankfurt, phone:
                                                                        +49 (0) 69/2388-1907 or -1906, fax: +49 (0) 69/2388-1919. The right to
Due to certain restrictions inherent in US supervisory legislation,     file a suit of law will not be affected by doing so.
neither the information provided in this Sales Prospectus, nor the
Property Fund itself, are intended for sales activities in the United   The current Annual Report or Semi-Annual Report, respectively,
States or involving US citizens. The term “US citizen” covers any       contains current information on the bodies and liable capital of
person who is a legal citizen of the United States, or who perman-      Commerz Real Investmentgesellschaft mbH, the liable capital of
ently resides in the United States, and/or who is subject to US         the custodian bank, as well as on the auditing company appointed
taxation. The term “US citizen” may also cover partnerships or          for the auditing of the Property Fund.
corporations that have been incorporated under the laws of the
United States or of any one US state, US territory or US possessi-      This Sales Prospectus, the General Fund Rules, as well as the cur-
on.                                                                     rent Annual Report and Semi-Annual Report are available as free
                                                                        Internet download on the Investment Company’s website at www.
The fiduciary relations between the Investment Company and the          hausinvest.de. Additional information on the investment limitations
investor, as well as the relations preceding the actual ratification    of the risk management of this Property Fund, the risk manage-
of any agreement, shall be governed by German law. Pursuant to          ment methods, and the latest developments in regard to risks and
Art. 18, Sec. 2, General Fund Rules, the seat of the Investment         returns, are available in printed form from the Investment Compa-
Company shall be the place of jurisdiction for any dispute arising      ny or as Internet download at www.hausinvest.de.




This Sales Prospectus including the General and Special Fund Ru-        The revisions of the regulations for indirectly held interests in real
les enters into force on 16 August 2008. It represents a revised        estate companies and the management remuneration in the Sales
version that reflects the changes caused by the Act Amending the        Prospectus, and the amended versions of Art. 3, Sec. 1, Art. 13,
Investment Act (Investmentänderungsgesetz), the name change             Sec. and Sec. 5, Special Fund Rules will not enter into force until
of the company, the expansion of the outsourcing facts, and the         16 February 2009. All passages revised have been highlighted by
requirements for sales in Switzerland.                                  underlining.


134
Contents



Sales Prospectus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133–178                Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 149
Investment Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 138                Management Fees and Other Charges . . . . . . . . . . . . . . . . . . . . . 149
Code of Conduct . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 138           Statement of Total Expense Ratio (TER) . . . . . . . . . . . . . . . . . . . . 150
Custodian Bank. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 138           Particulars in Connection with the
                                                                                                              Acquisition of Investment Shares . . . . . . . . . . . . . . . . . . . . . . . . . 150
Experts and Valuation Method . . . . . . . . . . . . . . . . . . . . . . . . . . . . 138
                                                                                                              Partial Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150
Property Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139
                                                                                                              Share Classes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150
Typical Investor Profile . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139
                                                                                                              Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150
Definition of Investment Objectives and Investment Policy . . . 139
                                                                                                              Issuance of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150
Real Estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 140
                                                                                                              Redemption of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150
Interests Held in Real Estate Companies . . . . . . . . . . . . . . . . . . . 140
                                                                                                              Valuation/Issue Price and Redemption Price . . . . . . . . . . . . . . . 150
Encumbrance with a Ground Lease . . . . . . . . . . . . . . . . . . . . . . . 141
                                                                                                              Real Estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150
Risks Attached to Real Estate Investments, to
Participations in Real Estate Companies, and to                                                               Executed Construction Work . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 151
Encumbrances with a Ground Lease . . . . . . . . . . . . . . . . . . . . . . 141
                                                                                                              Interests Held in Real Estate Companies . . . . . . . . . . . . . . . . . . . 151
Investments in Liquid Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 142
                                                                                                              Investments in Liquid Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 151
Cash in Banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 143
                                                                                                              Special Valuation Rules for Particular
Money Market Instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 143                      Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 151
Investment Ceilings for Securities                                                                            Non-Listed Debenture Bonds, and
and Money Market Instruments . . . . . . . . . . . . . . . . . . . . . . . . . . 144                          Promissory Note Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 151
Minimum Liquidity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 144             Money Market Instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 151
Risks Attached to Investments in Liquid Assets . . . . . . . . . . . . . 144                                  Derivates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 151
Borrowing, and Encumbrance of                                                                                 Option Rights and Forward Contracts . . . . . . . . . . . . . . . . . . . . . . 151
Fund Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 145
                                                                                                              Cash in Banks, Investment Shares,
Derivatives for Hedging Purposes . . . . . . . . . . . . . . . . . . . . . . . . . 145                        and Securities Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 151
Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 146   Assets Denominated in
                                                                                                              Foreign Currencies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 151
Forward Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 146
                                                                                                              Securities Repurchase Agreements . . . . . . . . . . . . . . . . . . . . . . . 152
Swaps . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 147
                                                                                                              Composite Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 152
Swaptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 147
                                                                                                              Up-Front Fee, and Redemption Charge. . . . . . . . . . . . . . . . . . . . . 152
Credit Default Swaps . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 147
                                                                                                              Publication of Issue Price
Securitised Derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 147
                                                                                                              and Redemption Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 152
Listed and Non-Listed Derivatives . . . . . . . . . . . . . . . . . . . . . . . . 147
                                                                                                              Charges for the Issuance and Redemption of Shares . . . . . . . . 152
Real Estate as Underlying Instrument for
                                                                                                              Suspension of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 152
Derivative Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 147
                                                                                                              Calculation of Earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 153
Currency Risks, and Derivative Transactions
for Hedging these Risks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 147                 Income Equalisation Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . 153
Summary of the Risks of Loss Involved                                                                         Distribution of Earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 153
in Derivative Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 148
                                                                                                              Effects of the Distribution
Securities Lending . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 148            on the Share Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 153
Securities Repurchase Agreements . . . . . . . . . . . . . . . . . . . . . . . 148                            Cashing of Coupons . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 154



                                                                                                                                                                                                                135
Notes on Tax Regulations Relevant                                                                         Foreign Withholding Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 158
for Investors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 154
                                                                                                          Income Equalisation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 158
Shares in Private Ownership (Resident German Tax Status) . . 154
                                                                                                          Separate Assessment, External Audit . . . . . . . . . . . . . . . . . . . . . 158
Domestic Rental Income and Interest Earnings,
                                                                                                          Taxation of “Zwischengewinn“ . . . . . . . . . . . . . . . . . . . . . . . . . . . 158
as well as Interest-Related Earnings . . . . . . . . . . . . . . . . . . . . . . 154
                                                                                                          Transparent, Semi-Transparent, and
Profits from the Sale of Domestic and
                                                                                                          Non-Transparent Taxation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 158
Foreign Real Estate 10 Years
after its Acquisition or Later . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 154            EU Interest Directive/German Interest
                                                                                                          Information Regulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 159
Profits from Sales of Domestic
Real Estate 10 Years after                                                                                Merging Property Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 159
its Acquisition or Later . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 154
                                                                                                          Real Estate Transfer Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 159
Foreign Rental Income, and Profits
                                                                                                          Legal and Fiscal Risks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 159
from Sales of Foreign Real Estate
Less than 10 Years after its Acquisition . . . . . . . . . . . . . . . . . . . . 154                      New Tax Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 159
Profits from Securities Sales, and                                                                        Shares in Private Ownership
Profits from Forward Transactions . . . . . . . . . . . . . . . . . . . . . . . . 154                     (Resident German Tax Status) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 160
Domestic and Foreign Dividends (in particular                                                             Domestic Rental Income, Interest Earnings,
those Paid by Real Estate Corporations) . . . . . . . . . . . . . . . . . . . 154                         Interest-Related Earnings, Foreign Dividends
                                                                                                          (particularly those from Real Estate Corporations)
Income from Participations in Domestic and Foreign
                                                                                                          as well as Profits from Sales of Domestic Real
Real Estate Partnerships. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155
                                                                                                          Estate within the first Ten Years after their
Negative Tax Earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155           Acquisition. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 160
Disbursement of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155              Profits from the Sale of Domestic and
                                                                                                          Foreign Real Estate 10 Years
Sales Profits on the Investor Level . . . . . . . . . . . . . . . . . . . . . . . . 155
                                                                                                          after its Acquisition or Later . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 161
Shares in Corporate Ownership
                                                                                                          Foreign Rental Income, and Profits
(Resident German Tax Status) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155
                                                                                                          from Sales of Foreign Real Estate
Domestic Rental Income and Interest Earnings,                                                             Less than 10 Years after
as well as Interest-Related Earnings . . . . . . . . . . . . . . . . . . . . . . 155                      its Acquisition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 161
Foreign Rental Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155             Profits from Securities Sales, and
                                                                                                          Profits from Forward Transactions . . . . . . . . . . . . . . . . . . . . . . . . 161
Profits from the Sale of Domestic and
Foreign Real Estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155         Domestic Dividends (particularly those from
                                                                                                          Real Estate Corporations) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 161
Profits from Securities Sales, and
Profits from Forward Transactions . . . . . . . . . . . . . . . . . . . . . . . . 156                     Income from Participations in Domestic and Foreign
                                                                                                          Real Estate Partnerships. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 161
Domestic and Foreign Dividends (in particular
those Paid by Real Estate Corporations) . . . . . . . . . . . . . . . . . . . 156                         Negative Tax Earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 161
Income from Participations in Domestic and Foreign                                                        Disbursement of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 161
Real Estate Partnerships. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 156
                                                                                                          Sales Profits on the Investor Level . . . . . . . . . . . . . . . . . . . . . . . . 162
Negative Tax Earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 156
                                                                                                          Investors with Non-Resident German Tax Status . . . . . . . . . . . . 162
Disbursement of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 156
                                                                                                          Church Tax. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 162
Sales Profits on the Investor Level . . . . . . . . . . . . . . . . . . . . . . . . 156
                                                                                                          Taxation of “Zwischengewinn“ . . . . . . . . . . . . . . . . . . . . . . . . . . . 162
Interest Income Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 156
                                                                                                          Shares in Corporate Ownership
Capital Income Tax. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 157         (Resident German Tax Status) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 163
Solidarity Surcharge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 157          Domestic Rental Income and Interest Earnings,
                                                                                                          as well as Interest-Related Earnings . . . . . . . . . . . . . . . . . . . . . . 163
Investors with Non-Resident German Tax Status . . . . . . . . . . . . 157


136
                                                                                                                                                                  sales Prospectus




Foreign Rental Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 163         Publications for Investors in Switzerland. . . . . . . . . . . . . . . . . . . 168
Profits from the Sale of Domestic and                                                                 Use of the Management Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 168
Foreign Real Estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 163
                                                                                                      Place of Performance and Place of Jurisdiction . . . . . . . . . . . . 168
Profits from Securities Sales, and
                                                                                                      General Fund Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 169
Profits from Forward Transactions . . . . . . . . . . . . . . . . . . . . . . . . 163
                                                                                                      Special Fund Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 175
Domestic and Foreign Dividends (in particular
those Paid by Real Estate Corporations) . . . . . . . . . . . . . . . . . . . 163
Income from Participations in Domestic and Foreign
Real Estate Partnerships. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 163
Negative Tax Earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 163
Disbursement of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 164
Sales Profits on the Investor Level . . . . . . . . . . . . . . . . . . . . . . . . 164
Solidarity Surcharge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 164
Foreign Withholding Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 164
Separate Assessment, External Audit . . . . . . . . . . . . . . . . . . . . . 164
Transparent, Semi-Transparent, and
Non-Transparent Taxation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 164
EU Interest Directive/German Interest
Information Regulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 165
Merging Property Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 165
Real Estate Transfer Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 165
Legal and Fiscal Risks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 165
Consulting and Outsourcing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 166
Reports, Financial Year, Auditors . . . . . . . . . . . . . . . . . . . . . . . . . . 166
Prerequisites for the Liquidation
of the Property Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 166
Procedure for Liquidating the Property Fund . . . . . . . . . . . . . . . 166
Transfer of all Assets Belonging to
the Property Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 166
Procedure for the Transfer of all
Assets Belonging to a Property Fund . . . . . . . . . . . . . . . . . . . . . . 167
Other Property Funds Managed by
the Investment Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 167
Revocation Right of Share Buyer, pursuant
to Art. 126, German Investment Act. . . . . . . . . . . . . . . . . . . . . . . . 167
Additional Information for Investors
Residing in Switzerland . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 167
Particularities of German Property
Funds under the German Investment Act. . . . . . . . . . . . . . . . . . . 167
Representatives and Paying Agents in Switzerland . . . . . . . . . . 168
Sale and Redemption of Shares in Switzerland . . . . . . . . . . . . . 168




                                                                                                                                                                                         137
Capital Investment Company                                               deposited in blocked accounts at other financial institutions. The
                                                                         custodian bank safeguards the investor interests insofar as the
The capital investment company managing the hausInvest europa            disposal or encumbrance of any piece of real estate requires its
property fund (hereinafter “Fund” or “Property Fund”) that is de-        approval. Moreover, the custodian bank must verify whether in-
scribed in detail in this Sales Prospectus is the Commerz Grund-         vestments held in blocked accounts at other financial institutions
besitz Investmentgesellschaft mbH, now Commerz Real Invest-              comply with InvA regulations and the Fund Rules. If so, the custod-
mentgesellschaft mbH (hereinafter “Investment Company”),                 ian bank shall approve the investment.
established on 25 March 1992, and having its legal seat in Wies-
baden/Germany. It is a capital investment company pursuant to            A blocking entry in favour of the custodian bank must be made in
the provisions of the German Investment Act (InvA), and takes the        the land register for each piece of real estate, unless it is held for
legal form of a private limited company (GmbH).                          the account of the Property Fund through a real estate company.
                                                                         Thus, real estate cannot be disposed of without the custodian
Information on the members of the Management Board, of the               bank’s approval. If, in the case of foreign real estate, the restriction
Supervisory Board, of the valuation committee, and on the share-         on disposals cannot be entered in a land register or comparable
holders, as well as on the subscribed, paid-in and liable capital of     register, the Investment Company will ensure that the restriction
Investment Company and the custodian bank, are set out in tabular        on disposals is enforced in some other appropriate form.
form in the “Bodies“ chapter.
                                                                         Moreover, the custodian bank must ensure that participations in
Code of Conduct                                                          real estate companies comply with the legal provisions as subse-
                                                                         quently defined. Sales of interests in real estate companies by the
The Investment Company has committed itself to observe the Code          Investment Company require the custodian bank’s approval. Real
of Conduct published by the Federal German Association for In-           estate sales by such a real estate company, and amendments to
vestment und Asset Management (BVI) based in Frankfurt am                that real estate company‘s partnership agreement or articles of
Main. The Code of Conduct articulates a standard for handling the        association, must be approved by the custodian bank, provided
capital and the investor rights in a sound and responsible manner.       the Investment Company holds the majority interest in that real es-
It defines the ways in which investment companies meet their obli-       tate company.
gations vis-à-vis their investors, and the ways in which they repre-
sent the latter’s interests vis-à-vis third parties. By observing this   The custodian bank shall handle the issue and redemption of sha-
code in terms of reliability, integrity and transparency, participa-     res, and shall moreover monitor the Investment Company’s valua-
ting companies seek to deepen the trust on the part of investors         tion of the Property Fund and of the individual share. The custodian
and the public, and to meet the increased need for information.          bank shall ensure that the equivalent value of the transactions
Inasmuch as the Code of Conduct suggests a need to adjust this           conducted for the joint account of the investors is placed in its
Sales Prospectus, the necessary changes will be reflected in the         custody within the usual time frame. In addition, the custodian
respectively next issue of the latter.                                   bank must ensure that earnings from the Property Fund are used in
                                                                         accordance with the provisions of both the aforementioned law
Custodian Bank                                                           and the Fund Rules, and it has to disburse the earnings allocated
                                                                         for distribution.
Commerzbank AG, having its legal seat in Frankfurt am Main, Ger-
many, has assumed the role of custodian bank for the Property            Experts, and Valuation Method
Fund. The custodian bank is a financial institution under German
law. As a universal bank, it is active in the clearing, deposit and      Valuation Committees
lending business, as well as in the securities business.
                                                                         The Investment Company shall appoint at least one valuation com-
The custodian bank is entrusted with the constant monitoring of          mittee to evaluate the real estate, consisting of three members
the real estate portfolio, interests in real estate companies, and       and one deputy member. Each member should be of independent,
other assets not suitable for safe custody, as well as with the safe-    impartial, and reliable character, and should possess adequate
keeping of cash in banks belonging to the Property Fund and not          technical know-how as well as sufficient hands-on experience in
deposited at other banks, money market instruments, securities           regard to the specific type of property to be appraised and to the
and investment shares held as investments in liquid assets. This         respective regional real estate market. The Investment Company
complies with the regulations set forth in the InvA, which stipula-      has appointed three valuation committees for the purpose of ap-
tes separate management and custody for a given property fund.           praising the entire real estate belonging to the Property Fund.
                                                                         Each expert is principally appointed for a term of two years, with
The custodian bank holds the securities and the certificates of de-      the possibility of re-election. No investment company committee
posit of the Property Fund in blocked custody accounts, provided         expert may serve beyond the end of the fifth calendar year after
these are not deposited in blocked custody accounts of other cus-        his or her initial appointment. After that, the Investment Company
todians. The custodian bank keeps the cash in banks of the Pro-          may extend the term by one year each, though only if the expert’s
perty Fund in blocked custody accounts, provided these are not           earnings from his activity as a member of the committees, or from

138
                                                                                                                     sales Prospectus




other activities on behalf of the Investment Company, in the last       Ordinance (Wertermittlungsordnung). The crucial aspect when
four years preceding the last year of the respective permitted term     using this method is the sustainable rental income, minus the ope-
of activity did not exceed 30% of that person’s average total inco-     rating costs, which include maintenance and administrative over-
me, and only after the expert submitted an affidavit to the Invest-     head as well as the imputed risk represented by loss of rent. The
ment Company confirming this fact during the last year of that          earning-capacity value is derived from the thus calculated net
person‘s permitted active term. The activity of the valuation com-      rent, multiplied by a factor reflecting a normal market interest rate
mittees appointed by the Investment Company is governed by set          for the real estate to be assessed, while taking into account the
rules of procedure. The respective committee drafts expert opini-       location, condition and remaining useful life of the building. Spe-
ons in accordance with the set rules of procedure.                      cial factors influencing the value of a piece of real estate can be
                                                                        accounted for by mark-ups or markdowns.
Specifically, the valuation committee shall evaluate:
                                                                        Property Fund
P at least every twelve months, the real estate belonging to the
  Property Fund or owned by a real estate company;                      The Property Fund bears the name hausInvest europa. It was laun-
                                                                        ched on 7 April 1972 for an indefinite period of time. The assets
P the real estate that the Investment Company or a real estate          belonging to the Property Fund are owned by the Investment Com-
  company intends to sell, if the annually compiled expert opini-       pany, who manages them in trust for its investors.
  on is deemed outdated.
                                                                        Typical Investor Profile
Moreover, the valuation committee shall re-appraise the value of a
given property within two months after a ground lease has been          The Property Fund is intended for any investor, including investors
granted.                                                                who are unfamiliar with capital investment in real estate, and who
                                                                        wish to take advantage of the Property Fund as a comfortable sa-
Valuation prior to Acquisition                                          vings proposition in the form of real estate values. Investing in the
                                                                        Property Fund requires no previous experience with real estate
A property may be acquired for the Property Fund or for a real es-      investment, nor capital market experience. It is also intended for
tate company in which the Property Fund holds direct or indirect        experienced investors looking for a product with just such an in-
interest only after it was appraised by an expert pursuant to Art. 2,   vestment strategy as is pursued by the Property Fund. The recom-
Sent. 1, above, who is not a member of the valuation committee          mended investment horizon is a minimum of five years. A given
formed by the Investment Company, and only if the consideration         investor should be in a position to parry slight temporary losses.
to be paid out of the Property Fund does not or not significantly       The Property Fund pursues a profit-oriented investment strategy,
exceed the appraised asset value.                                       and is suitable for any investment portfolio.

An interest in a real estate company may only be directly or indi-      Definition of Investment Objectives and Investment
rectly acquired for the Property Fund, after the real estate repor-     Policy
ted in the annual accounts or in the portfolio of investments of that
real estate company was appraised by an expert pursuant to              The Property Fund invests primarily in countries that are members
Art. 77, Sec. 2, Sent. 1, InvA, who is not a member of the valuation    of the European Economic and Currency Union. As a rule, fluctua-
committee formed by the Investment Company.                             tions in the exchange rate between various currencies therefore
                                                                        have no significant impact on the Property Fund’s value. As a rule,
A property belonging to the Property Fund may only be encumbe-          borrowings on foreign currencies in order to hedge the exchange
red with a ground lease if the propriety of the ground rent has been    rate risk are not required except on a moderate scale. In addition
confirmed by an expert pursuant to Art. 77, Sec. 2, Sent. 1, InvA,      to existing buildings or building under construction, the Investment
who is not a member of the valuation committee formed by the In-        Company also acquires real estate for project developments.
vestment Company.                                                       Whenever existing buildings situated in locations the Company
                                                                        deems worthy of development fail to match the investment strate-
Valuation Method                                                        gy of the Property Fund or cannot be acquired at favourable condi-
                                                                        tions, the ceilings defined by law and Fund Rules regarding the
The valuation committee or the expert responsible for acquisition       acquisition of vacant lots or property under construction shall also
valuations shall determine the market value of a given property,        be more or less exhausted.
using a value assessment procedure that is recognised on the re-
spective real estate market. For plausibility purposes, other, addi-    The Investment Company may amend the Fund Rules. Except for
tional valuation procedures that are recognised on the respective       the provisions governing management fees and other charges,
real estate market can be used if doing so seems necessary and/         amendments to the Fund Rules are subject to approval of the Ger-
or expedient for an objective valuation of the property in the com-     man Supervisory Authority for Financial Services (BaFin). Inas-
mittee‘s opinion. As a rule, the market value is determined using       much as such amendments under Sent. 1, above, concern the in-
the income capitalisation method based on the German Evaluation         vestment principles of the Property Fund, they require prior

                                                                                                                                       139
approval by the Investment Company‘s supervisory board. Any in-         of assessment for calculating ceilings.
tended amendment shall be announced in the electronic Federal
Gazette (Bundesanzeiger) and moreover in a business paper or            The investment target is to achieve regular earnings from rent re-
daily, or in the Internet under www.hausinvest.de, and shall beco-      venues and interest, as well as a steady increase in added value.
me effective the day after its announcement in the electronic Fe-
deral Gazette at the earliest. Amendments to regulations concer-        The main criteria in selecting real estate for the Property Fund are
ning management fees and other expenses do not require prior            sustainable revenue power and diversification in terms of location,
approval by the German Supervisory Authority for Financial Ser-         size, use and tenants. The Investment Company currently invests
vices, and will become effective six months after their announce-       in locations capable of development, mainly in commercial real
ment in the electronic Federal Gazette. Revisions of the existing       assets as well as in business and office buildings for administrati-
investment principles for the Property Fund will become effective       on, the retail business, and services, and in shopping centres. The-
no earlier than six months after their announcement, and are only       se properties vary greatly in terms of location and size, with invest-
permissible subject to the condition that the Investment Company        ments concentrated at economic hubs. In addition to existing or
submits an offer to investors to swap their shares for shares in        currently constructed buildings, the Investment Company acqui-
another property fund with comparable investment principles, as-        res properties to be developed either by the Investment Company
suming the Investment Company actually manages such other               itself or by suitable companies acting on behalf of the Investment
property funds.                                                         Company so as to minimise possible risks.

Real Estate                                                             When selecting real estate to be acquired, economic and locally
                                                                        specific opportunities and risks enter into each valuation. Invest-
1. The Investment Company may acquire for the Property Fund the         ments outside Germany permitted by the Fund Rules are subjected
following types of real estate situated in any member state of the      to special scrutiny, not least with a view to possible currency fluc-
European Union or in another member state of the Treaty on the          tuations and tax aspects.
European Economic Area:
                                                                        The real-estate portfolio is optimised to meet market requirements
a) residential real estate, commercial real estate, and mixed pur-      by modernising, restructuring or selling buildings. Expenditures for
   pose real estate;                                                    restructuring and modernisation measures must be in proportion
                                                                        to the projected increase in revenues.
b) real estate under development;
                                                                        Business policy reflects market conditions, and changes in market
c) undeveloped real estate intended, and suitable, for the Invest-      conditions, to the legally permitted extent.
   ment Company’s own development in the near future, pursuant
   to a), above;                                                        The benchmarks of the current investment policy are defined in
                                                                        the respective Annual Report.
d) ground leases or legally and economically similar rights in any
   member state of the European Union or in another member sta-         The Investment Company may acquire objects for the Property
   te of the Treaty on the European Economic Area, subject to           Fund to the extent that these are required for the management and
   conditions a) to c);                                                 upkeep of the assets, particularly real assets, that belong to the
                                                                        Property Fund.
e) other real estate and other ground leases, as well as rights in
   the form of residential real estate ownership, partial owners-       Any investment in real estate and other assets made during the
   hip, residential ground leases and partial ground leases.            period of the most recent Annual Report shall be listed in the An-
                                                                        nual Report or Semi-Annual Report, whichever is more recent.
2. The Investment Company may, within the statutory parameters
(Art. 67, Sec. 2, Sent. 3, InvA), acquire for the Property Fund usuf-   Interests Held in Real Estate Companies
ruct to properties, subject to Sec. 1, Let. a), above, that serve the
execution of public tasks.                                              1. The Investment Company may acquire and hold stakes in real
                                                                        estate companies for the account of the Property Fund, even if it
3. At the time of its acquisition, no single piece of real estate may   does not have the majority of votes and capital majority required to
exceed a value equivalent to 15% of the Property Fund’s total va-       change that real estate company’s partnership agreement or its
lue. The aggregate value of all real estate whose individual value      articles of association. A real estate company in this sense is a
equals more than 10% of the Property Fund’s total value must not        company that by virtue of its partnership agreement or articles of
exceed a value equivalent to 50% of the Property Fund’s total va-       association:
lue.
                                                                        a) is restricted in its business object to activities that the Invest-
Loans taken out may not be deducted for the calculation of the             ment Company itself may undertake on behalf of the Property
total value of the Property Fund; as a result, loans raise the basis       Fund;

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b) may only acquire such real estate and managed assets whose              ply even if a third party was to grant a loan on behalf of the Invest-
   direct acquisition for the Property Fund is permitted by the Fund       ment Company to the real estate company in its own name but for
   Rules as well as interests in other real estate companies;              the account of the Property Fund.

c) may acquire a given property or a given interest in another real        Encumbrance with a Ground Lease
   estate company only if the property value or the value of the
   interest in another real estate company that equals the scope           Real estate may be encumbered with a ground lease.
   of the interest does not exceed 15% of the Property Fund’s total
   value.                                                                  Whenever a new ground lease is granted, the total value of the
                                                                           real estate encumbered with that ground lease, and held for the
2. Moreover, any participation in a real estate company is subject         account of the Property Fund, must not exceed the equivalent of
to the condition, inter alia, that the real estate company‘s legal         10% of the Property Fund’s total value. Even if a ground lease is
form rules out any obligation to make additional contributions over        merely extended, it is considered newly created.
and above the contribution already paid in.
                                                                           Real estate may only be encumbered with a ground lease if unfo-
3. The shareholders’ deposits in a real estate company in which            reseen circumstances prevent the property from being used as
the Investment Company holds an interest for the account of the            originally intended, or if economic disadvantages for the Property
Property Fund must be fully paid in.                                       Fund are thereby avoided, or if doing so creates options for an
                                                                           economically sensible use of the property.
4. If a given real estate company acquires an interest in another
real estate company, that interest must directly or indirectly inclu-      Risks Attached to Real Estate Investments, to Participa-
de 100% of the capital and all of the voting rights.                       tions in Real Estate Companies, and to Encumbrances
                                                                           with a Ground Lease
5. The aggregate value of the assets owned by all real estate com-
panies in which the Investment Company participates for the ac-            Real estate investments are subject to risks that may affect the
count of the Property Fund may not exceed a value equivalent to            share value through changes in the returns on, the expenditures
49% of the Property Fund’s total value. The value of the assets that       for, and market value of, that real estate. The same applies to in-
belong to the portfolio of the real estate company in which the In-        vestments in real estate held by real estate companies. The exem-
vestment Company holds an interest equalling 100% of the capital           plary risks detailed below do not represent an exclusive list.
and all of the voting rights shall not enter into the calculation of the
ceiling pursuant to Sent. 1, above. The value of the real estate be-       P Aside from changes in the overall economic conditions, there
longing to real estate companies in which the Investment Compa-              are also risks peculiar to property ownership, such as
ny holds a stake for the account of the Property Fund while not              vacancies, rents in arrear, and losses of rent caused, among
holding the voting majority nor the capital majority required to             other possible causes, by changes in the quality of the
change the articles of association or the partnership agreement,             location or tenant net worth. The condition of any given
may not exceed the equivalent of 30% of the Property Fund’s total            building may necessitate maintenance expenditures that are
value.                                                                       not always foreseeable. In order to contain these risks, the
                                                                             Investment Company strives to provide a high number of
6. Loans taken out may not be deducted for the calculation of the            options for third-party usage of its real estate, and to ensure
total value of the Property Fund; as a result, loans raise the basis         a diversified tenancy structure covering a variety of
of assessment for calculating ceilings.                                      industries. Continual maintenance and modernisation or
                                                                             restructuring of the real estate is intended to preserve or
7. The Investment Company may grant to a real estate company in              improve its competitiveness.
which the Investment Company holds a direct or indirect interest
for the account of a given property fund loans for the account of          P The risks of damage by fire, storm and natural forces
the respective property fund if the terms are in line with market            (flooding, high water, earthquake) and terrorism applies
standards, and if sufficient collateral has been furnished.                  internationally, and is covered by insurance policies to the
                                                                             extent that relevant insurance capacities are actually
Moreover, it must be agreed that, in case the interest is sold, the          available, and provided it is within economic reason and in
loan shall be repaid within six months after the date the interest           response to any realistic need.
was sold. The total sum the Investment Company may lend to any
real estate company must not exceed the equivalent of 25% of the           P	Properties, particularly in conurbations, may be subject to a
total value of the property fund for whose account it holds such an          risk of war and terrorism. Even if a given piece of real estate
interest; at the same time, the Investment Company needs to make             is not directly affected by an act of terrorism, it may lose in
sure that the aggregate value of any loans it may have granted to            economic value if the real estate market of an area affected
any single real estate company does not exceed 50% of the value              by terrorism is subject to a long-term decline, rendering the
of the real estate held by that company. These conditions shall ap-          search for tenants either difficult or impossible. However,

                                                                                                                                           141
   real estate can be insured even against terrorism to the                     currency hedging (granting loans in the local currency of the
   extent that insurance coverage is available, and provided                    situs state) on the one hand, and/or in order to achieve a
   that such coverage remain within economic reason and                         leveraging effect (boosting the equity capital return by
   respond to a realistic need.                                                 borrowing outside capital at an interest rate below the return
                                                                                of the respective property). Since the Property Fund is
P The risk of contamination (such as ground contamination,                      subject to taxation outside Germany, loan interest is
  interior asbestos fittings) is examined with particular care                  principally tax-deductible in the country of the respective
  prior to any real estate acquisition (by procuring adequate                   Fund object. When using debt financing, any change in value
  expert opinions, where applicable). Notwithstanding the                       for the real estate at issue will have a more pronounced
  diligence in trying to eliminate them, risks of this sort can not             effect on the Property Fund’s equity capital used. For
  be ruled out altogether.                                                      instance, in case of 50% loan financing, the effect of a gain or
                                                                                loss in value for a given piece of real estate will double for
P Risks can arise during project development, e.g. due to                       the Fund capital used when compared to full equity capital
  changes in the general development plans and delays in the                    financing, the latter being the predominant method for
  issuing of building permits. As far as possible, higher                       domestic real estate acquisitions. Thus, a change in value
  construction costs and completion risks are countered by                      has a much greater importance when using debt financing –
  appropriate arrangements with contractual partners and the                    which is often used abroad – than it does for equity-financed
  careful selection of such partners. Nonetheless, residual                     objects, which is the standard domestic scenario. The
  risks must not be neglected, nor the fact that a successful                   investor will therefore derive a greater benefit from any
  first letting depends on the market situation at the time of the              added value, and will be more severely burdened by
  building’s completion.                                                        depreciations, than would be the case with full equity
                                                                                financing. In the event of short-term liquidity bottlenecks,
P Real estate may always have structural defects. Such risks                    e. g. due to share redemptions on a massive scale, extensive
  cannot be wholly ruled out even after a thorough technical                    debt financing also reduces the options to procure the
  inspection of the property and the procurement of expert                      necessary capital through property sales or short-term loans.
  opinions prior to the acquisition, where applicable.                          The risk of having to suspend the redemption of shares
                                                                                therefore increases (see page 172-173).
P When real estate is acquired abroad, risks may arise that are
  associated with the place where the real estate is situated               P	Whenever a piece of real estate is encumbered with a
  (e.g. a different legal and fiscal system, divergent interpreta-            ground lease, there is the risk that the party holding this right
  tions of double-taxation treaties, and fluctuating currencies).             may fail to meet its obligations, and specifically that it may
  In the case of foreign real estate, other factors, such as the              fail to pay the ground rent. This and other cases may result in
  increased administrative risk and possible technical                        a premature reversion of the ground lease. The Investment
  difficulties, including the transfer risk for current earnings or           Company must then seek to put the real estate to different
  sales proceeds, must also be taken into account.                            commercial use, which can be difficult, as the case may be.
                                                                              This applies mutatis mutandis to a reversion following the
P Real estate sales, even when the principles of a prudent busi-              contract expiration. Finally, encumbrance of a given property
  nessman are applied, may occasion warranty claims on the                    with a ground lease may compromise its fungibility; i.e. the
  part of the buyer or a third party for which the Property Fund              property may not be as easy to sell as it would be without
  shall be liable.                                                            such an encumbrance.

P	Among the risks to be considered when acquiring a stake in a              Investments in Liquid Assets
  real estate company are those arising from the company‘s
  legal form, risks in connection with the possible defaults of             Aside from the acquisition of real estate and interests in real esta-
  partners, and risks of changes in the legal parameters of                 te companies, investments in liquid assets are also permitted and
  taxation and incorporation.                                               intended.

P	This applies in particular to real estate companies with legal            The Investment Company may keep no more than 49% of the Pro-
  seat outside Germany. Moreover, it needs to be taken into                 perty Fund’s value (maximum liquidity) in the form of:
  account when acquiring an interest in a real estate company
  that this interest could be encumbered with liabilities that are          P	cash in banks,
  difficult to identify. Finally, if the interest is to be sold, it might
  turn out that no secondary market with sufficient liquidity               P	money market instruments,
  exists.
                                                                            P	securities that are eligible in the eyes of the European Central
P	Real estate investments outside Germany generally involve                   Bank or the Deutsche Bundesbank as collateral for the
  debt financing. This approach is taken for the sake of                      lending transactions specified in Art. 18, Sec. 1 of the

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  protocol on the Charter of the European System of Central             Money Market Instruments
  Banks and the European Central Bank, or whose eligibility
  has been applied for according to the terms of issuance,              Money market instruments are instruments normally traded on the
  inasmuch as they become eligible within one year of their             money market, as well as fixed income securities that have a life-
  issue,                                                                time or remaining lifetime of no more than 397 days at the time they
P	investment shares pursuant to Art. 50, InvA, or shares in             are acquired for the Property Fund. If their lifetime exceeds twelve
  institutional property funds pursuant to Art. 50, Sec. 1, Sent. 2,    months, their interest rate must be adjusted at least once within a
  InvA, whose fund rules specify that investments must be               397 days period in conformance with market standards. Moreover,
  made exclusively in the form of cash in banks, money market           money market instruments are interest-bearing securities whose
  instruments and securities as defined under Bullets 1 through         risk profile matches that of the aforementioned securities.
  3, above,
                                                                        Money market instruments may be acquired for the Property Fund
P	securities that have been admitted for trading at an                  only,
  organised market pursuant to Art. 2, Sec. 5, German
  Securities Trade Act, for trading, or fixed-income securities,        1. if they have been admitted for trading at a stock exchange within
  provided that these do not exceed the equivalent to 5% of the         a member state of the European union or in another member state
  Property Fund’s total value, and in addition                          of the Treaty on the European Economic Area or else have been
                                                                        admitted to another organised market or have been integrated into
P	stock of listed REIT companies or comparable shares of                it,
  foreign legal entities that have been admitted to the markets
  identified in Article 47, Section 1, Numbers 1 and 2 or have          2. if they have been admitted for trading at a stock exchange aut-
  been integrated in these, may be acquired as long as the              horised by the Supervisory Authority for Financial Services or have
  value of such stock or such shares does not exceed the                been admitted to an organised market authorised by the Supervi-
  equivalent of 5% of the property fund value, and provided the         sory Authority for Financial Services or have been integrated into
  criteria identified in Art. 2, Sec. 1, Directive 2007/16/EC are       it,
  met. The following committed funds must be deducted when
  the maximum liquidity ceiling is calculated.                          3. if they have been issued or are guaranteed by the European
                                                                        Communities, a Federal separate fund, one of the German states,
P	the funds required to secure a properly functioning real              another member state or another unitary-state, regional or local
  estate management,                                                    territorial entity, or by a central bank of a member state of the Eu-
                                                                        ropean Union or a member state of the Treaty on the European
P	the funds set aside for the next distribution,                        Economic Area, by the European Central Bank or the European
                                                                        Investment Bank, a third country or, if the latter is a federal state, a
P	funds that will be required to meet liabilities arising from          member state of the federation, or by an international public sec-
  legally effective real estate deeds, loan agreements                  tor institution of which at least one member state of the European
  necessary for pending investments in specific real estate and         Union is a member.
  for specific construction measures, as well as liabilities
  arising from construction contracts, inasmuch as these                4. if they have been issued by a company whose securities are
  liabilities will become due within two years’ time.                   traded on the markets designated under Numbers 1 and 2,

Cash in Banks                                                           5. if they have been issued or guaranteed by a financial institution
                                                                        that is subject to supervision as defined by the laws of the Europe-
Pursuant to the legal regulations (Art. 66, 49, InvA), the Investment   an Union, or by a financial institution that is subject to supervisory
Company may only invest in cash in banks at such financial institu-     regulations that in the opinion of the German Supervisory Authori-
tions that have their seat in a member state of the European Union      ty for Financial Services (BaFin) is equivalent to those under the
or a member state of the Treaty on the European Area. Cash in           European Community laws, and complies with these.
banks may only be kept at financial institutions with seat in anot-
her country if the banking supervision regulations in that country      6. if they have been issued by another issuer, provided that issuer
match those of the EU in the eyes of the German Supervisory             represents
Authority for Financial Services (BaFin).
                                                                        a) a company whose equity capital amounts to no less than 10
The Investment Company may invest no more than 20% of the Pro-             million euros, and which compiles and publishes its annual
perty Fund’s value in cash in banks at any single financial institu-       report in compliance with the Fourth Council Directive 78/660/
tion.                                                                      EEC dated 25 July 1978, regarding the annual report of
                                                                           corporations of certain legal forms, most recently revised by
                                                                           Directive 2003/51/EC of the European Parliament and Council,
                                                                           dated 18 July 2003,

                                                                                                                                          143
b) a legal entity that is responsible for the financing of a group      The Investment Company may invest no more than 20% of the Pro-
   consisting of one or more listed companies, or                       perty Fund’s total value in a combination of the following assets:

c) a legal entity that is supposed to finance the securities-ba-        P securities and money market instruments issued by any
   cked collateral for liabilities, using a credit line made              single institution,
   available by a bank, where the securities-backed collateral          P	deposits at this institution,
   and the credit line granted by the bank are subject to Art. 7,
   Directive 2007/16/EC.                                                P credit for the contractual partner risk that is associable with
                                                                          the transactions entered into with this institution in the form
None of the aforementioned money market instruments may be                of derivatives not admitted for trading at any stock exchange
acquired unless they satisfy the requirements of Art. 4, Sec. 1 and       or integrated into another organised market
2, Directive 2007/16/EC. Money market instruments under Sec. 1,
No. 1 and 2, are moreover subject to Art. 4, Sec. 3, Directive          No combination of assets listed in Sent. 1, above, may exceed the
2007/16/EC.                                                             equivalent of 35% of the Property Fund’s total value if these assets
                                                                        are issued by public issuers as defined in Art. 60, Sec. 2, InvA. The
Sufficient security to protect both the deposits and the investors      respective ceiling for each asset type shall in any case remain un-
must be provided for money market instruments pursuant to Sec. 1,       affected by this overall ceiling for the combined assets.
No. 3 through 6, above, e. g. in the form of an investment grade
rating, while the criteria defined in Art. 5, Directive 2007/16/EC      The credit for the securities and money market instruments of a
must be met at the same time. The term “investment grade” refers        given issuer against the ceilings defined above can be reduced by
to a rating of no less than “BBB” or “Baa” in the context of a net      the use of market-contrary derivatives whose underlying instru-
worth review by a rating agency. The acquisition of money market        ments are securities or money market instruments by the same
instruments which are issued by a regional or local territorial ent-    issuer. This means that securities and money market instruments
ity of a member state of the European Union, or by an international     of a given issuer may be acquired for the account of the Property
public sector institution as defined in Sec. 1, No. 3, above, but       Fund even beyond the ceiling defined above if the increased issu-
which are guaranteed neither by said member state nor, if the lat-      er-specific risk is covered by hedge transactions.
ter is a federal state, by a member state of this federal state, and
the acquisition of money market instruments pursuant to Sec. 1,         The Investment Company may invest up to 35% of the Property
No. 4 and 6, above, are subject to Art. 5, Sec. 2, Directive 2007/16/   Fund‘s value in debenture bonds, promissory note loans, and mo-
EC, whereas the acquisition of any other money market instrument        ney market instruments of the following issuers: the Federal Ger-
as defined in Sec. 1, No. 3, above, but not including money market      man Government, the German states, member states of the Euro-
instruments issued or guaranteed by the European Central Bank or        pean Union and their local authorities, other member states of the
the central bank of a member state of the European Union, are           Treaty on the European Economic Area, third states, or internatio-
subject to Art. 5, Sec. 4, Directive 2007/16/EC. The acquisition of     nal organisations of which at least one member state of the Euro-
money market instruments pursuant to Sec. 1, No. 5, above, is sub-      pean Union is a member.
ject to Art. 5, Sec. 3, and, whenever money market instruments are
involved that have been issued or guaranteed by a financial insti-      The Investment Company may invest up to 25% each of the Proper-
tution that is subject to, and complies with, supervisory regulati-     ty Fund’s value in mortgage bonds and municipal bonds issued by
ons that match those of the European Community law, is subject to       financial institutions seated in a member state of the European
Art. 6, Directive 2007/16/EC.                                           Union or in another member state of the Treaty on the European
                                                                        Economic Area, provided that these financial institutions are sub-
Moreover, the Investment Company may invest up to 10% of the            ject to a separate public supervision legally instituted for the pro-
Property Fund’s value in money market instruments of issuers who        tection of the owners of these debenture bonds, and provided that
fail to meet the conditions defined above.                              the capital raised by issuing these debenture bonds is invested in
                                                                        compliance with legal regulations in assets that cover the liabili-
Investment Ceilings for Securities and Money Market                     ties arising out of the debenture bonds for their entire lifetime, and
Instruments                                                             that these assets are prioritised for the coverage of the repayment
                                                                        of the bonds and of the payment of the interest upon maturity in
The value of securities and money market instruments bought from        case the issuer defaults on these payments.
any single issuer must not exceed the equivalent of 5% of the Pro-
perty Fund’s total value. In individual cases, securities and money     Minimum Liquidity
market instruments, including any securities bought from the same
issuer under a repurchase agreement, may be acquired up to the          The Investment Company must ensure that an amount equivalent
equivalent of 10% of the Property Fund’s total value. In such an        to at least 5% of the Property Fund‘s total value is available in sight
event, the total value of the securities and money market instru-       deposits (minimum liquidity).
ments bought from the respective issuer must not exceed 40% of
the Property Fund’s total value.                                        Risks Attached to Investments in Liquid Assets

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If the Property Fund holds securities, money market instruments or       When acquiring real estate, it may also take over encumbrances
investment fund shares for the sake of liquidity, it should be noted     associated with that real estate. Overall, the various encumbran-
that these investments entail risks along with the chances for an        ces may not exceed 50% of the total market value of the real esta-
increase in value. It is possible for the market prices of securities    te held in the Property Fund. Encumbrances in connection with the
and money market instruments to fall below the cost price, due, for      suspension of redemption pursuant to Art. 11, Sec. 4, General Fund
instance, to developments on the money and capital markets, or           Rules, are not taken into account, nor are ground rents.
special developments affecting the issuers. The same applies mu-
tatis mutandis to the performance of the investment shares.              Derivatives for Hedging Purposes

The price of fixed-income securities is influenced by developments       The Investment Company may use derivatives in conjunction with
on the capital market, i.e., if long-term interest rates rise the quo-   the management of the Property Fund. The Investment Company
ted prices of fixed-income securities will fall. These fluctuations in   may, in keeping with the type and volume of the deployed derivati-
market price also depend on the lifetimes of fixed-income securi-        ves, use the simple or the qualified approach in line with the Ger-
ties. As a rule, fixed income securities with shorter lifetimes entail   man Derivative Ordinance (DerivateV) in order to determine the
fewer price risks than fixed interest securities with longer lifeti-     degree of utilisation of the market risk limit for the use of derivati-
mes; in turn, the returns of the former are generally lower as a re-     ves pursuant to Art. 51, Sec. 2, InvA.
sult. Additional exchange-rate risks and transfer risks should also
be taken into account in the case of liquid assets held in foreign       1. If the Investment Company uses the simple approach, it may in-
currencies.                                                              vest only in derivatives derived from assets that may be acquired
                                                                         pursuant to Art. 6, Sec. 2, Let. b) to e), General Fund Rules, or from
By analogy, the above risks apply to any property fund that, in turn,    real estate that may be acquired pursuant to Art. 2, Sec. 1, Special
invests in securities and money market instruments.                      Fund Rules. In this context, and pursuant to Art. 6, Sec. 2, German
                                                                         Derivative Ordinance, it limits itself to the exclusive use of the fol-
In addition to the chances for price gains, equities also contain        lowing basic forms of derivatives, or combinations of these deriva-
risks; they are subject to the unpredictable influence that the deve-    tives, or combinations of assets that may be acquired for the Pro-
lopment of the capital markets may have, and the particular deve-        perty Fund, together with the aforementioned types of derivatives
lopment of a given issuer. Even the most careful selection of equi-      inasmuch as they are already part of the Property Fund:
ties bought cannot rule out the eventuality of a loss due to price
fluctuations or a dwindling of assets on the part of the issuer.         P forward contracts on assets pursuant to Art. 6, Sec. 2, Let. b)
                                                                           to e), General Fund Rules, as well as on real estate pursuant
Borrowing and Encumbrance of Fund Assets                                   to Art. 2, Sec. 1, Special Fund Rules, interest rates, exchange
                                                                           rates or currencies;
The Investment Company may for the joint account of the investors
take out loans in an amount equivalent to 50% of the total market        P options and subscription warrants on assets pursuant to
value of the real estate belonging to the Property Fund, provided          Art. 6, Sec. 2, Let. b) to e), General Fund Rules, as well as on
such borrowing is compatible with diligent and proper business             real estate pursuant to Art. 2, Sec. 1, Special Fund Rules,
management. Beyond that, the Company may take out for the joint            interest rates, exchange rates or currencies, and on forward
account of the investors short-term loans equalling up to 10% of           contracts pursuant to Let. a), provided they show the
the Property Fund‘s value. Any amount that the Company, acting as          following characteristics:
repo lender, received in conjunction with a repurchase agreement
must be set off against this ceiling. Loans may be taken out only if          •	They	can	be	exercised	at	any	time	during	their	entire	li-
they match market standards, and if they have been approved by                    fetime or at the end of their lifetime, and
the custodian bank at the time of the borrowing.
                                                                              •	The	option	value	depends,	at	the	time	it	is	exercised,	and	in	
The asset performance will be impaired if the borrowing costs ex-                 a linear sense, on the positive or negative difference
ceed the real estate returns. Special circumstances may never-                    between exercise price and market price of the
theless make borrowing seem advisable, such as maintaining a                      underlying instrument, and becomes nil if the difference
long-term source of income and performance in face of just tem-                   bears the opposite sign;
porary bottlenecks in terms of liquidity, or tax considerations, or
the limiting of currency risks abroad.                                   P interest swaps, currency swaps or interest currency swaps;

The Investment Company may encumber real estate belonging to             P options in swaps of the type defined in Let. c), provided they
the Property Fund, or may assign and encumber claims arising               manifest the characteristics defined in Let. b) under
from legal relationships involving real estate if this is compatible       Sub-Let. aa) and bb), above, (swaptions);
with diligent and proper business management, and if the custod-
ian bank approves these measures because it considers the inten-         P credit default swaps on assets pursuant to Art. 6, Sec. 2,
ded terms and conditions to be in line with market standards.              Let. b) to e), General Fund Rules, as well as on real estate

                                                                                                                                          145
    pursuant to Art. 2, Sec. 1, Special Fund Rules, inasmuch as          must be announced in the next Annual or Semi-Annual Report.
    they serve exclusively and manifestly to hedge the loan risk
    of precisely associable Property Fund assets;                        Transactions involving derivatives may only be performed for the
                                                                         purpose of protecting the assets held in the Property Fund, for the
P Forward contracts, options and subscription warranties on              purpose of covering changes in the interest rates and currency
  investment shares pursuant to Art. 6, Sec. 2, Let. d), General         risks, and for the purpose of protecting rent claims. The German
  Fund Rules, must not be concluded.                                     Investment Act and the German Derivative Ordinance provide the
                                                                         option to double the market risk potential of a given property fund
The imputed value of:                                                    through the use of derivatives. The market risk is defined here as
                                                                         that risk which results from an unfavourable development of mar-
P financial futures contracts is defined by the contract value           ket prices from the perspective of the Property Fund. Since the
  multiplied by the forward price calculated each trading day,           Property Fund may employ derivatives only for hedging purposes,
                                                                         any attendant leverage option is principally out of the question.
P options or subscription warranties whose underlying
  instrument is a security, a money market instrument or a               Options
  derivative, is defined by the value of the instrument underly-
  ing the option right,                                                  The Investment Company may participate in the option trade for
                                                                         the account of the Property Fund and within the parameters of the
P options and subscription warranties whose underlying                   investment principles, provided it does so for hedging purposes.
  instruments are interest rates, exchange rates or currencies,          This means that the Investment Company may, against remunera-
  is defined by the value of the underlying instrument,                  tion (the option premium), acquire the right from a third party to
  multiplied by the multiplication factor defined in the option          demand within, or at the end of, a certain period of time, and at a
  terms.                                                                 price agreed in advance (the exercise price), the acceptance of
                                                                         securities or payment of the balance between the exercise price
In addition, the determined values must be multiplied with the cor-      and closing market value, for instance. The Investment Company
responding delta. This delta represents the ratio between the            may also acquire, against remuneration, such rights from a third
change in the derivative’s value and a change – presumably minor         party.
– in the value of the underlying instrument.
                                                                         Specifically, the following rules shall apply, whereas:
2. Inasmuch as the Investment Company uses the qualified appro-
ach, and assuming a suitable risk management is in place, the In-        The subscription of a put option (in-the-money position – long put)
vestment Company may, for hedging purposes, invest in any deri-          entitles the buyer, against payment of a premium, to demand from
vative derived from assets that have been acquired pursuant to           the seller to buy certain assets at the exercise price or pay the
Art. 6, Sec. 2, Let. b) to e), General Fund Rules, or from real estate   balance between that price and the closing market value. The sub-
that has been acquired pursuant to Art. 2, Sec. 1, Special Fund          scription of such put options makes it possible to hedge, e.g., the
Rules, or from interest rates, exchange rates or currencies. This        securities held in the Property Fund against price losses during the
includes in particular options, financial forward contracts, and         exercise period. If the securities drop below the exercise price,
swaps, as well as combinations thereof. Under no circumstances           the put options can be exercised, thus realising sales proceeds
may the Investment Company deviate from the General and Spe-             that are higher than their current market prices. Instead of exerci-
cial Fund Rules, nor from the investment goals defined in this Sales     sing the option, the Investment Company may also sell the option
Prospectus, when engaging in the above transactions.                     right at a profit.

The risks associated with the use of derivatives are controlled by       On the other hand, there is the risk that the option premiums paid
a risk management procedure pursuant to the German Derivative            may be lost if it does not seem economically sound to exercise the
Ordinance (DerivateV) when pursuing a qualified approach, which          put option at the previously agreed exercise price because market
procedure allows the monitoring of risks associated with the in-         prices have not fallen as expected. Such fluctuations in fair value
vestment item, as well as its respective share in the overall risk       for securities underlying the option right can reduce its value out
profile of the asset portfolio at any time.                              of all proportion, and even render it worthless. In view of the limi-
                                                                         ted exercise period, there is no guarantee that the price of the
3. If the Investment Company invests in derivatives pursuant to          option will recover again in time. Profit expectations have to ref-
Art. 51, InvA, the Investment Company currently applies the quali-       lect the costs involved in the subscription, exercise or sale of the
fied approach pursuant to the German Derivative Ordinance in or-         option, or in the conclusion of an offsetting transaction (closing). If
der to determine the market risk potential. Pursuant to Art. 7, Ger-     expectations are not met, and if the frustrated expectations cause
man Derivative Ordinance, however, the Investment Company may            the Investment Company to forego the exercising of its option
switch at any given time from a qualified to a simple approach.          right, that right will expire unexercised at the end of its exercise
Switching to a simple approach requires the approval by the Ger-         period.
man Supervisory Authority for Financial Services (BaFin), and

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Forward Contracts                                                         Credit Default Swaps

Forward contracts are mutually and absolutely binding agree-              Credit default swaps are credit derivatives that provide the option
ments between two parties to buy or sell, at a specified future date      to transfer a potential credit default volume to another party. In
(the maturity date) or within a specific period, a specific quantity of   return for accepting the credit default risk, the seller of the risk
a specific underlying instrument (e.g. bonds, equities) at a previ-       pays a premium to the contract partner. Other than that, the above
ously agreed price (exercise price). As a rule, this is done by recei-    details on swaps apply by analogy.
ving or paying the balance between the exercise price and the             Securitised Derivatives
market price at the time the transaction is closed or at maturity.
                                                                          The Investment Company may also subscribe derivatives in secu-
The Investment Company may, e.g., hedge the securities portfolio          ritised form. The subscription of derivatives is permissible even if
belonging to the Property Fund by selling forward contracts on            the transaction is only partially securitised. The above details on
these securities for the lifetime of the contracts.                       chances and risks also apply mutatis mutandis to securitised de-
                                                                          rivatives, if based on the premise that the loss involved in securiti-
In particular, the Investment Company may sign, for the account of        sed derivatives is limited to the value of a given security.
the Property Fund, forward contracts via investment shares that it
would also be permitted to acquire directly for the Property Fund.        Listed and Non-Listed Derivatives
This means, it may assume the obligation to buy or sell a certain
quantity of shares in another property fund at a certain price and        The Investment Company may conclude transactions involving de-
at a certain time or within a certain time, respectively.                 rivatives that have been admitted for trade at a stock exchange, or
                                                                          have been placed on another organised market.
If the Investment Company enters into transactions of this kind, the
Property Fund must, if the expectations of the Investment Compa-          Transactions involving derivatives that have not been admitted for
ny are not realised, meet the cost of the balance between the price       trade at a stock exchange, nor have been placed on any other or-
at which the transaction was concluded and the market price at            ganised market (OTC transactions), may only be conducted with
the time of closing or at maturity. This would represent a loss for       suitable banks or financial service providers on the basis of stan-
the Property Fund. The risk of loss cannot be determined in advan-        dardised outline agreements. The specific risks of these individual
ce and could exceed any collateral that may have been provided.           transactions lie in the absence of an organised market, and thus
It also needs to be taken into account that costs are incurred by         the problems involved in selling them to a third party. The customi-
selling forward contracts on securities and, where applicable, by         sed nature of such commitments can make it difficult or very cost-
concluding an offsetting transaction (closing).                           ly to close them.

Swaps                                                                     In case such derivatives are traded outside the stock exchange,
                                                                          the counterpart risk in regard to a given contract partner shall be
For the account of the Property Fund, within the parameters of its        limited to the equivalent of 5% of the Property Fund’s total value. If
investment principles, and provided it does so for hedging purpo-         the contract partner is a financial institution with seat inside the
ses, the Investment Company may conclude:                                 European Union, the European Economic Area or any third state
                                                                          with comparable banking supervision standards, the counterpart
P interest rate swaps,                                                    risk may go as high as the equivalent of 10% of the Property Fund’s
P currency swaps, and                                                     value. Transactions in derivatives that are concluded outside a
P credit default swaps.                                                   stock exchange, but with the central clearing house of a stock ex-
                                                                          change or of another organised market as contract partner, shall
Swaps are defined as contracts concluded between two parties              not be set off against the counterpart limits, if such derivatives are
for swapping the assets or risks underlying the transaction. If the       subject to a daily market price rating, including a daily margin ba-
price and value changes for the instruments underlying a given            lance. This will substantially reduce, though not eliminate, the cre-
swap develop contrary to the Investment Company’s expectations,           dit solvency risk of the counterpart.
the transaction may incur a loss for the Property Fund.
                                                                          Real Estate as Underlying Instrument for Derivative
Swaptions                                                                 Transactions

A swaption is defined as an option on a swap. A swaption repre-           The Investment Company may engage in such derivative transacti-
sents the right, though not an obligation, to enter, at a certain time    ons for the account of the Property Fund as are based on real esta-
or within a certain period of time, into a swap whose conditions          te that could actually be acquired for the Property Fund, or on the
have been precisely specified.                                            development of the returns of such real estate. Specifically, this
                                                                          kind of transaction enables the Investment Company to protect
                                                                          rental income and other earnings from real estate held in the name
                                                                          of the Property Fund against default and exchange rate risks.


                                                                                                                                          147
Currency Risks, and Derivative Transactions for Hedging                      significant costs because of the unique nature of the contract
these Risks                                                                  (liquidity risk);

Investments and transactions in foreign currencies involve both          P The economic success of the OTC transaction may be
currency opportunities and currency risks. It also needs be re-            threatened by default of the contractual partner (contractual
membered that foreign currency investments are subject to a so-            partner risk).
called transfer risk. The Investment Company may, for the purpose
of exchange rate hedging in regard to assets and rent claims for         The risks involved in derivative transactions vary in proportion to
the account of the Property Fund, engage in derivative transacti-        the position taken out for the Property Fund.
ons on the basis of currencies or exchange rates.
                                                                         As a result, the losses for the Property Fund may
These currency-hedging transactions that, as a rule, hedge only
part of the Property Fund serve to reduce the currency risks. Ho-        P be limited, e.g. to the price paid for an option right, or
wever, they cannot rule out the possibility that, despite currency
hedges, fluctuating exchange rates will adversely affect the per-        P far exceed any collateral that has been provided (e.g.
formance of the Property Fund. The costs incurred through cur-             margins paid) and may necessitate extra collateral;
rency hedges, and also possible losses, reduce the result of the
Property Fund. If the currency risks exceed the Property Fund’s          P cause liabilities and thus impose a burden on the Fund
total value by 30% and more, the Investment Company must resort            Assets, which poses a risk that cannot always be quantified
to options of this type. In addition, the Investment Company shall         in advance.
make use of this option if, and to the extent that, it is deemed ne-
cessary in the investors’ interest.                                      Securities Lending

Summary of the Risks of Loss Involved in Derivative                      The securities held in the Property Fund may be transferred to
Transactions                                                             third parties on a loan basis and in return for a consideration in line
                                                                         with market standards. To this end, the Property Fund’s entire se-
Since the chances of earning a profit through derivative transacti-      curities portfolio may be transferred for an indefinite period in the
ons are balanced by high risks of loss, investors should note that:      form of securities lending. In this case, the Investment Company is
                                                                         entitled to terminate a given loan at any time, subject to contractu-
P for instance, the temporary rights acquired through forward            al agreement that securities of the same type, quality and quantity
  transactions may lapse or decline in value;                            must be returned to the Property Fund within five trading days of
                                                                         the termination. The borrower of a loan shall be obliged to return,
P the risk of loss may be not be quantifiable, and may even              at the end of the loan’s lifetime or upon its termination, securities
  exceed the collateral that has been provided;                          of the same kind, quality and quantity. The borrower is obliged to
                                                                         pay the interest on the borrowed securities, whenever due, to the
P it may not be possible to engage in transactions intended to           custodian bank for the account of the Property Fund. In the inter-
  eliminate or reduce the risks of derivative transactions               est of risk diversification, the total number of securities transfer-
  already engaged in, or to effect them only at a market price           red to any single borrower in the context of securities lending
  tantamount to a loss;                                                  transfers may not exceed 10% of the total value of the Property
                                                                         Fund. However, before any securities may be transferred by way of
P the risk of loss increases if loans are taken out to cover             lending, the Property Fund must be guaranteed sufficient collate-
  commitments from derivative transactions, or if the commit-            ral. This can involve the transfer or pledging of cash in banks or
  ment from derivative transactions or the consideration to              the signing over or pledging of securities. Such credit shall be de-
  which they entitle are denominated in a foreign currency or            nominated in Euro or in the currency in which the shares of the
  account unit.                                                          Property Fund were issued, and shall be deposited at the custod-
                                                                         ian bank or, assuming the latter’s consent, in blocked accounts at
Exercising derivative transactions consisting of a combination of        other financial institutions with seat in a member state of the Euro-
two basic forms (e. g., options on financial futures) can give rise to   pean Union, in another member state of the Treaty on the Europe-
additional risks as defined by the ratified contract, which can far      an Economic Area, or in any third state with comparable banking
exceed the amount originally at risk, e.g. in the form of the price      supervision standards. They may also be deposited in the form of
paid for an option.                                                      money market instruments in the sense of Art. 48, German Invest-
                                                                         ment Act, in the currency of the credit balances at issue. This su-
OTC transactions entail the following additional risks:                  rety must be defined by taking into account the financial circums-
                                                                         tances of the borrower of the securities. However, the amount may
P There is no organised market, so that it may be hard to sell           be no less than the security pledge, which is calculated by adding
  derivatives acquired on the OTC market to a third party;               up the quoted value of the lent securities with the corresponding
  closing such commitments can be difficult or involve                   income, plus a premium in line with the market standard. The In-

148
                                                                                                                     sales Prospectus




vestment Company may also use an organised system for provi-           For managing the Property Fund, the Investment Company recei-
ding and handling securities loans. When using such an organised       ves an annual remuneration of up to 1% of the Property Fund’s va-
system for providing and handling securities loans, the furnishing     lue, as assessed at the end of each financial year. The Investment
of a collateral can be dispensed with because the interests of in-     Company is entitled to levy quarterly pro-rata advance payments
vestors are safeguarded by the system terms. Moreover, if the len-     on this fee.
ding is transacted through an organised system, the borrowing li-
mit of 10% need not be applied to the organised system.                If real estate is purchased, sold, developed or restructured for the
                                                                       Property Fund, the Investment Company may levy a non-recurring
Securities Repurchase Agreements                                       charge of 1% of the purchase or sales price, or up to 2% of the
                                                                       construction costs and ancillary costs for the project development
The Investment Company may conclude, for the account of the            conducted on behalf of the Property Fund. This applies mutatis
Property Fund, securities repurchase agreements (repos) with fi-       mutandis to the real estate companies, as well as their real estate,
nancial institutions and financial service providers for a maximum     that are held by the Investment Company for the account of the
lifetime of twelve months. Under such an agreement, the Invest-        Property Fund. In this context, the value of the real estate compa-
ment Company may both transfer securities of the Property Fund         nies, or the value of the real estate held, respectively, shall be as-
to a repo lender within the borrowing limits, thereby temporarily      sessed on a pro-rata basis in an amount equivalent to the interest
increasing liquidity, and purchase securities under a repurchase       quota.
agreement within the applicable limits for cash in banks and mo-
ney market securities, thereby temporarily investing liquid capital.   The custodian bank shall receive for its activity an annual remune-
Repurchase agreements are permitted only in the form of so-cal-        ration of up to 0.25‰ of the Property Fund’s total value as determi-
led genuine repurchase agreements. In the case of a genuine re-        ned at the end of each financial year.
purchase agreement, the borrower pledges to return the securi-
ties at a specified time or at a time determined by the repo lender.   On top of the aforementioned remunerations, the following expen-
If the Property Fund acts as lender, the Property Fund bears the       ditures shall be charged to the Property Fund:
risk of interim price losses, whereas as a borrower the Property
Fund may be prevented from benefiting from interim price gains by      P ancillary costs arising in connection with the acquisition,
the obligation to return the securities.                                 development, sale and encumbrance of real estate (including
                                                                         taxes);
There is no guarantee that the investment policy goals will be
realised.                                                              P borrowing and management costs arising from the manage-
                                                                         ment of the real estate (administrative, maintenance,
Performance                                                              operating and legal costs);

                                                                       P costs arising in connection with the acquisition and sale of
 1997/1998                  4.8%                                         other assets;
 1998/1999                  5.3%
 1999/2000                  5.0%                                       P standard custody-account charges;
 2000/2001                   5.8%
 2001/2002                    6.3%                                     P the costs for the valuation committee;
 2002/2003                  4.9%
                                                                       P the costs of printing and mailing the Annual and Semi-Annual
 2003/2004             3.5%
                                                                         Reports intended for investors;
 2004/2005          1.9%
 2005/2006           2.0%
                                                                       P the costs of announcing the Annual and Semi-Annual
 2006/2007                 4.4%                                          Reports, the issue and redemption prices, and, as the case
 2007/2008                     7.0%                                      may be, the distributions and the liquidation report;

                                                                       P the costs for auditing the Property Fund by the Investment
The Property Fund’s past performance is not indicative of its futu-      Company’s auditor, as well as the costs for publishing the tax
re returns.                                                              base and the note stating that the tax information provided
                                                                         has been compiled in compliance with German tax laws.
Management Fees and Other Charges
                                                                       P the costs of cashing the coupons;
Fees and reimbursements for expenditures in favour of the Invest-
ment Company, the custodian bank and third parties are not sub-        P the costs of renewing the coupon sheet;
ject to approval by the German Supervisory Authority for Financial
Services (BaFin).

                                                                                                                                       149
P possible taxes incurred in connection with the costs of                commission to brokers.
  management and custody.
                                                                         Particulars in Connection with the Acquisition of In-
The aforementioned rules for the reimbursement of expenses ap-           vestment Shares
ply mutatis mutandis to the real estate companies held by the In-
vestment Company for the account of the Property Fund, as well as        Apart from the remuneration for managing the Property Fund, a
their real estate holdings. In this context, the value of the real es-   further management remuneration is charged to the Property Fund
tate companies, or the value of the real estate held, respectively,      for the investment shares held in the Property Fund. The Annual
shall be assessed on a pro-rata basis in an amount equivalent to         and Semi-Annual Report shall each identify the sum total of up-
the interest quota. In deviation of this provision, expenditures in-     front fees and redemption charges that have been charged to the
curred by the real estate company due to special requirements            Property Fund for the acquisition and the redemption of shares in
pursuant to the German Investment Act shall be charged in full,          property funds during the reporting period. In addition, the remu-
rather than on a pro-rata basis, to the Property Fund. The Invest-       neration shall be reported that was charged to the Property Fund
ment Company shall, in its Annual and Semi-Annual Report, disclo-        by the Investment Company itself, by another capital investment
se the sum total of any up-front fee and redemption charge that          company, by another company affiliated with the Investment Com-
have been charged to the Property Fund for the acquisition and           pany through a direct or indirect material interest, or by a foreign
redemption of shares pursuant to Art. 50, InvA, during the repor-        investment company, including the sum charged by its manage-
ting period. When acquiring shares that are directly or indirectly       ment company as administrative remuneration for the shares held
managed by the Company itself or by another company affiliated           in the Property Fund. When acquiring investment shares that are
with the Company through (a) a joint management, (b) control, or         directly or indirectly linked to the Investment Company through a
(c) a direct or indirect material interest of more than 10% of its       substantial direct or indirect participation, the Investment Compa-
equity or voting shares, the Investment Company or the other com-        ny or that other company shall charge no offering premiums and
pany may charge no up-front fee and redemption charge for the            redemption charges for the acquisition or redemption, respective-
acquisition or redemption of shares, respectively. The Investment        ly, of such shares.
Company shall, in its Annual Report and Semi-Annual Report, iden-
tify the remuneration that was charged to the Property Fund by the       Partial Fund
Investment Company itself, by another capital investment compa-
ny, by an investment joint stock company with variable capital, or       The Property Fund does not represent a partial fund under an um-
by another company affiliated with the Investment Company                brella structure.
through (a) a joint management, (b) control, or (c) a direct or indi-
rect material interest of more than 10% of its equity or voting sha-     Share Classes
res, or by a foreign investment company, including the sum char-
ged by its management company as administrative remuneration             All shares issued entail equal rights. No share classes shall be set
for the shares held in the Property Fund. The administrative remu-       up.
neration shall be limited to 0.25% maximum in such cases.
                                                                         Shares
Statement of Total Expense Ratio (TER)
                                                                         The share certificates are bearer certificates, each representing
The Annual Report shall identify the management costs (minus the         one or several investment shares. Along with the transfer of ow-
transaction costs) incurred on behalf of the Property Fund, listing      nership, the rights vested in each share certificate are passed on
such expenses as the quota of the mean Fund Volume (total expen-         too.
se ratio – TER). Said quota subdivides into the remuneration costs
for managing the Property Fund, the remuneration of the custodian        Issuance of Shares
bank and any additional expenditures charged to the Property
Fund. Not included here are the costs and ancillary costs arising        Principally, the number of shares issued shall be unlimited. Shares
out of acquisitions and sales of portfolio assets.                       may be subscribed from the Investment Company, the custodian
                                                                         bank or through third party brokerage. The custodian bank shall
In conjunction with the business affairs conducted on behalf of the      issue these at the issue price, which represents the net asset va-
Property Fund, the Investment Company may reap cash value be-            lue per share (share value) plus a up-front fee (issue price). The
nefits (broker research, financial analyses, market and price infor-     Investment Company reserves the right to discontinue the issuan-
mation systems) that are used to make investment decisions in the        ce of shares, be it temporarily or permanently.
interest of the investors. The Investment Company shall receive no
refunds for any remunerations and reimbursements that have               Redemption of Shares
been paid out of the Property Fund to the custodian bank or any
third party. The Investment Company uses portions of the remune-         At any time, investors may principally request the redemption of
ration it receives out of the Property Fund toward recurring share       shares either by submitting the share certificates or by placing a
brokerage remunerations in the sense of a brokerage follow-up            redemption request. The custodian bank shall serve as redemption

150
                                                                                                                     sales Prospectus




agent. Shares may also be redeemed through third-party broker-           the carry-forward method, then a new valuation must be underta-
age, which may generate extra costs. The Investment Company is           ken out of turn. The real estate listed in said statement of assets
obliged to redeem shares for the account of the Property Fund at         shall be reported at the value assessed by the valuation committee
the current redemption price, which is identical to the going share      for the Property Fund.
value. Explicit reference is made to the consequences of a tempo-
rary suspension of the share redemption (see p. 172).                    Investments in Liquid Assets

Valuation/Issue Price and Redemption Price                               Assets Admitted for Trade at a Stock Exchange or at an Organised
To calculate the issue price and the redemption price of share cer-      Market
tificates, the Investment Company determines – while monitored
by the custodian bank – the value of the assets belonging to the         Assets that are traded at a stock exchange or have been integra-
Property Fund on each trading day, deducting any loans taken out         ted into another organised market, are assessed at their most re-
and other liabilities of the Property Fund (net asset value). Dividing   cently quoted price, unless otherwise specified under the Special
the net asset value by the number of shares issued will yield the        Valuation Rules below.
net asset value per share. The share value will not be determined
on New Year‘s Day, Good Friday, Easter Monday, May Day, Ascen-           Assets Not Listed at a Stock Exchange or Traded at an
sion, Whitsun Monday, Corpus Christi, German Unity Day, Christ-          Organised Market or Assets Without Marketable Price
mas Eve, Christmas Day, Boxing Day, and New Year‘s Eve.
                                                                         Assets that are neither traded at a stock exchange, nor have been
Issue price and redemption price shall be rounded up or down ac-         placed on another organised market, or for which no marketable
cording to common business practice.                                     price is available, are valuated at their current market value as
                                                                         appropriate upon careful appraisal, using suitable valuation mo-
The procedure in detail:                                                 dels and taking into account the current market situation, unless
                                                                         otherwise specified in the Special Valuation Rules below.
Real Estate
                                                                         Special Valuation Rules for Particular Assets
Real estate shall be valuated at the purchase price at the time of
its acquisition though for no longer than twelve months thereafter,      Non-Listed Debenture Bonds, and Promissory Note
after which time it shall be reported at the value most recently as-     Loans
sessed by the valuation committee. This value shall be determined
for each piece of real estate at least once every twelve months.         For the valuation of debenture bonds not admitted to a stock ex-
Valuations shall be spread as evenly as possible over the year in        change, nor traded on an organised market (e.g. non-listed bonds,
order to avoid a concentration of new valuations on certain key          commercial papers and bank certificates of deposit), as well as for
dates. A new valuation may be undertaken at an earlier time whe-         the valuation for promissory note loans, the prices negotiated for
never essential valuation factors change that have a significant         comparable debenture bonds and promissory note loans, and the
impact on the value of any given property. The valuation commit-         market prices for loans of comparable issuers with matching lifeti-
tee must reappraise the value of a given property within two             me and interest rate, where available, are used, including a possi-
months after that property was encumbered with a ground lease.           ble markdown to make up for the limited marketability of these
                                                                         items, where required.
Executed Construction Work
                                                                         Money Market Instruments
Executed construction work is shown at book value, unless it was
taken into account at the time the real estate was valuated.             The accounting for money market instruments that are part of the
                                                                         Property Fund include the interest rate and interest-related inco-
Interests Held in Real Estate Companies                                  me, as well as expenditures (e.g., management remuneration, cus-
                                                                         todian bank remuneration, audit costs, publication costs, etc.) up
Interests held in real estate companies shall be valuated at the         to and including the day preceding the value date.
purchase price at the time of its acquisition though for no longer
than twelve months thereafter. Thereafter the valuation shall be         Derivatives
based upon the real estate companies‘ monthly statement of as-
sets. At least once every twelve months, the values of a given in-       Option Rights and Forward Contracts
terest shall be appraised by an auditor pursuant to Art. 319, Ger-
man Commercial Code, on the basis of the most recent statement           The options held by the Property Fund, and the liabilities resulting
of assets. Thereafter, the appraised value is carried forward by the     from options granted to a third party, that have been admitted for
Investment Company on the basis of the statement of assets until         trade at a stock exchange or placed on another organised market
the next value appraisal date. If a given interest is subject to a       are valuated at the most recent prices quoted.
change of essential valuation factors that cannot be captured by

                                                                                                                                       151
The same goes for accounts receivable and accounts payable re-         Up-Front Fee, and Redemption Charge
sulting from forward contracts bought for the account of the Pro-
perty Fund. Margins deposited on behalf of the Property Fund are       An up-front fee to cover the costs of issuance shall be added to
added to the value of the Property Fund, including an allowance for    the share value at the time the issue price is fixed. The up-front fee
the valuation gains and losses established on a given trading day.     shall equal 5% of the share value.
Cash in Banks, Investment Shares, and Securities
Loans                                                                  An investor who has acquired shares will not realise a profit from
                                                                       the sale of these shares unless the increase in value exceeds the
Cash in banks shall principally be assessed at its face value.         up-front fee paid at the time of subscription. For this reason, sha-
                                                                       res acquired should be intended for long-term investment, where-
Time deposits shall be reported as yield on maturity, provided that    ver possible. The up-front fee represents essentially remuneration
a corresponding contract has been signed between the Invest-           for the sales effort involved in selling the Property Fund shares. It
ment Company and the respective financial institution to the effect    is used to cover the issuance costs incurred by the Investment
that the time deposit may be terminated any time, and repayment        Company, as well as the sales services rendered by the Invest-
upon termination may be equal to the yield on maturity. The market     ment Company and any third party. There shall be no redemption
interest rate used to determine the quoted yield is defined on a       charge.
case-by-case basis. The corresponding interest claims shall be
reported separately. Accounts receivable, e.g. deferred interest       Publication of Issue Price and Redemption Price
claims, and accounts payable shall principally be reported at face
value.                                                                 Information on issue price and redemption price shall be available
                                                                       at the legal seats of the Investment Company and the custodian
Investment shares shall be assessed at their redemption price.         bank. The prices are published regularly in at least one daily or
                                                                       business paper with an adequate circulation or on the Internet at
The respective quoted value of the securities lent is relevant for     www.hausinvest.de.
redemption claims arising from securities lending.
                                                                       Charges for the Issuance and Redemption of Shares
Assets Denominated in Foreign Currencies
                                                                       Shares are issued and redeemed by the Investment Company or
Assets denominated in foreign currencies shall be converted into       the custodian bank at the issuing or redemption price, respective-
Euro at the exchange rate determined for the respective currency       ly, without further charges. Additional costs may be incurred if
by the Euro FX system (Reuters page EUROFX/1) on the same day.         shares are issued or redeemed through third party brokerage.
If the exchange rate of a foreign currency is not determined by the
Euro FX system, the assets denominated in this foreign currency        Suspension of Redemption
are converted to Euro on the same day, using the morning fixing of
Reuters AG (EUROCROSS) at 10:00 am CET, or the midday fixing of        The Investment Company can temporarily suspend the redemption
Reuters AG at 1:30 pm CET.                                             of shares under exceptional circumstances that make suspension
                                                                       advisable in the investors’ interest (Art. 12, Sec. 4, General Fund
Securities Repurchase Agreements                                       Rules). Exceptional circumstances exist specifically whenever:

If securities are sold under repurchase agreements for the ac-         P a stock exchange at which a significant portion of the
count of the Property Fund, they shall nonetheless enter into the        Property Fund’s securities is traded (except at normal
valuation. In addition, the amount received under the repurchase         weekends and public holidays) is closed, or trading on the
agreement for the account of the Property Fund must be reported          exchange is restricted or suspended;
as part of the liquid funds (cash in banks). Moreover, any liability
arising from repurchase agreements that is equal in amount to the      P it is not possible to dispose of assets;
discounted repayment obligations shall be reported.
                                                                       P the proceeds from transacted sales cannot be transferred;
If any securities were subscribed under a repurchase agreement
for the account of the Property Fund, these shall not enter into the   P the net asset value cannot be properly determined, or
valuation. Due to the payment made by the Property Fund, a claim
against the repo lender equal in the amount of the discounted re-      P essential assets cannot be valued.
payment claims must be taken into account.
                                                                       The Investment Company shall inform investors about any suspen-
Composite Assets                                                       sion and the resumption of the share redemption by announce-
                                                                       ment in the electronic Federal Gazette (Bundesanzeiger) and mo-
Assets consisting of various component assets shall be assessed        reover in a business paper or daily paper with sufficient circulation,
on a pro-rata basis according to the aforementioned rules.             or on the Internet at www.hausinvest.de. Following the resumption


152
                                                                                                                       sales Prospectus




of the share redemption, investors will be paid the current redemp-      sale itself) with the acquisition costs for the piece of real estate or
tion price.                                                              interest in a real estate company (book value), reduced by the de-
                                                                         preciation fiscally permitted and possible.
As the paid-in funds are primarily invested, in accordance with the
investment principles, in real estate, the Investment Company mo-        Realised sales losses are not set off against realised sales pro-
reover reserves the right to refuse to redeem shares temporarily         fits.
(Art. 12, Sec. 5, General Fund Rules) if the cash in banks and pro-
ceeds from sales of securities for paying the redemption price and       The sales profits or sales losses incurred by selling or redeeming
ensuring a proper management are no longer sufficient to sustain         securities shall be assessed separately for each sale or redemp-
a proper management, or else are not immediately available, due          tion. The average value established for all subscriptions in the re-
to extensive requests for redemptions. The Investment Company            spective class of securities is used as basis for determining the
reserves the right to refuse to redeem shares at the current re-         disposal profits or losses (the so-called average value or adjusted
demption price until it has sold without delay, though in a manner       value method).
safeguarding the investors’ interests, sufficient assets to permit
the redemption. The permitted period for refusing to redeem sha-         Income Equalisation Procedure
res is up to three months.
                                                                         The Investment Company applies a so-called “income equalisation
If the funds held for liquidity purposes remain insufficient to cover    procedure” to the Property Fund. This means that the Investment
redemptions even after the expiration of this period, the real estate    Company must continuously recalculate the balance of revenues
held in the Property Fund shall be sold. The Investment Company          and expenses accrued during the financial year up to the purcha-
can refuse to redeem shares until these assets are sold at reaso-        se or sale of shares, which a share buyer must pay as part of the
nable conditions, or for up to one year after shares were presen-        issue price, and which a share seller receives as part of the re-
ted for redemption. By announcement to the investors, to be pu-          demption price, and must post this amount as distributable item in
blished in the electronic Federal Gazette (Bundesanzeiger) and           his or her income statement. The purpose of the income equalisa-
moreover in a business paper or daily paper with adequate circu-         tion procedure is to safeguard the distribution potential of the sha-
lation, or on the Internet at www.hausinvest.de, the aforementio-        res in circulation from the repercussions of cash inflows and out-
ned suspension period of up to one year may be extended by anot-         flows. Otherwise, each cash inflow would to reduce the
her year. Upon expiration of this period, the Investment Company         distributable amount per share through the increase in the number
can use the real estate of the Property Fund as collateral for a loan    of shares, whereas each cash outflow would raise the distributa-
irrespective of the loan ceiling and beyond the encumbrance limit        ble amount per share through the decrease in the number of sha-
specified in Art. 10, Special Fund Rules, in order to procure the fi-    res. This procedure therefore prevents a dilution of the distribution
nancial means required for redeeming the shares.                         potential per share through cash inflows, and prevents an inflated
                                                                         distribution potential (“distribution of capital assets”) per share
The Investment Company shall inform investors about any suspen-          through cash outflows. It is tolerated in this context that investors
sion and the resumption of the share redemption by announce-             who, for example, subscribe shares shortly before the distribution
ment in the electronic Federal Gazette (Bundesanzeiger) and mo-          date receive, through the distribution, that portion of the issue pri-
reover in a business paper or daily paper with sufficient circulation,   ce that reflects the share income, even though their paid-in capital
or on the Internet at www.hausinvest.de. Following the resumption        did not help to generate this share income.
of the share redemption, investors will be paid the current redemp-
tion price.                                                              Distribution of Earnings

Calculation of Earnings                                                  1. The Investment Company shall principally distribute – subject to
                                                                         the attendant income equalisation – any earnings resulting from
The Property Fund realises proper earnings in the form of rent re-       real estate, interests held in real estate companies, liquid assets,
ceived and not used to cover costs associated with the real estate,      and from other assets, that have been earned for the account of
from interests in real estate companies, as well as in the form of       the Property Fund in the course of each financial year, and that are
interest and dividends from investments in liquid assets. The ba-        not used to cover expenses.
lance shall accrue by accounting period.
                                                                         2. The amount that is required for future maintenance shall be de-
In addition, there is interest for building finance (interest paid on    ducted from the earnings identified in this manner, and shall be
the own building project funds), inasmuch as it is applied as impu-      retained. Amounts required for offsetting the decline in real estate
ted interest rate to the building project funds of the Property Fund,    value may be retained.
rather than the usual market interest rate. Extra earnings may be
generated by the sale of real estate, interests in real estate com-      3. Sales profits may be distributed, provided the attendant income
panies, and liquid assets. Profits or losses resulting from selling      equalisation has been taken into account. Sales profits from spe-
real estate and interests in real estate companies are calculated        cific classes of securities may be distributed even if other security
by comparing the sale proceeds (minus the costs incurred by the          classes report losses.

                                                                                                                                          153
4. Inasmuch as it lies within the normal market limits for building      to assess taxable earnings, or earnings subject to the capital inco-
finance interest, any interest saved from the Investment Compa-          me tax, respectively.
ny’s own building project funds may also be distributed.
5. Income from liquid assets that has accrued during the reporting       Shares in Private Ownership (Resident German Tax
period shall also be included in the distribution.                       Status)

6. The income eligible for distribution may be carried forward for       Domestic Rental Income and Interest Earnings, as well
distribution in later financial years if the total income carried for-   as Interest-Related Earnings
ward does not exceed 10% of the respective value of the Property
Fund at the end of the financial year.                                   The positive balance made up by domestic rental, interest or inter-
                                                                         est-related earnings and the attendant expenditures (in particular
7. In the interest of conserving the asset value, the income can be      deductions for wear or accrued depletion) is taxable for the inves-
partly – and, in special cases, fully – allocated for reinvestment in    tor. This applies regardless of whether these earnings are retained
the Property Fund.                                                       or distributed.

8. The distribution takes place annually, immediately upon publica-      Profits from the Sale of Domestic and Foreign Real
tion of the Annual Report, against presentation of the called cou-       Estate 10 Years after its Acquisition or Later
pon, and free of charge.
                                                                         Profits from the sales of domestic and foreign real estate realised
Effects of the Distribution on the Share Value                           on the Property Fund level more than 10 years after the acquisition
                                                                         always remain tax-free for the investor.
As the amount distributed is taken out of the Property Fund in its
respective volume, the share value will decrease on the day of           Profits from Sales of Domestic Real Estate Effected
distribution (ex-day) by the share dividend total.                       Less than 10 Years after its Acquisition

Cashing of Coupons                                                       Profits from the sales of domestic real estate realised on the Pro-
                                                                         perty Fund level within 10 years after the acquisition, however, are
Any Commerzbank AG branch will cash the coupons free of char-            always taxable for the investor. This applies regardless of whether
ge. Cashing the coupons at other banks or saving banks may incur         such profits are distributed or retained.
additional costs.
                                                                         Foreign Rental Income, and Profits from Sales of Fo-
Notes on Tax Regulations Relevant for Investors                          reign Real Estate Less than 10 Years after its Acquisition

Any information on tax regulations provided herein applies only          Foreign rental income and profits from the sales of foreign real
to investors subject to full taxation in Germany. Foreign investors      estate for which Germany has waived taxation (this being the
are advised to confer with their tax consultants before acquiring        standard) because of existing double-taxation treaties (exemption
any shares in the Property Fund detailed in this Sales Prospectus,       method), are also tax-free. Nevertheless, any income that accrues
and to identify the fiscal consequences the acquisition of such          abroad, and is exempt from domestic taxation due to existing
shares may have in the investor’s country of residence.                  double taxation treaties, remains subject to the progressivity pro-
                                                                         viso. This means that even tax-exempt income must enter into the
The subsequent disquisition will start by profiling the current legal    assessment of the tax rate that shall be applied to the respective
situation. As substantial changes are imminent, most notably be-         investor’s taxable income. However, as foreign income is subject
cause of the introduction of the flat rate withholding tax, this will    to progression only up to the amount that would have been gene-
be succeeded by a consistent account of the future tax law.              rated by the foreign real estate after its depreciation, as permitted
                                                                         under German tax law, the German investor’s tax return needs to
As a special purpose fund, the Property Fund is exempt from cor-         report only a pro-rata amount per share in order to determine the
porate income tax and trade tax. However, taxable income from            individual tax rate. For details on the applicable tax rate, see the
the Property Fund are subject to income taxation for private inves-      Notes on Taxation appended to this Annual Report.
tors, inasmuch as it exceeds, when combined with other capital
earnings, the tax allowance for savers including the currently ap-       If, by way of exception, the respective double-taxation treaty sti-
plicable flat rate allowance for income-related expenses (see No-        pulates the tax credit method, or if no double-taxation treaty has
tes on Taxation for Shareholders).                                       been ratified, taxes paid in the country of origin may still be credi-
                                                                         ted against the German income tax, provided the taxes paid have
Wherever the shares are held in the form of corporate assets, the        not already been accounted for on the Property Fund level as inco-
earnings are taxed as business income. German tax legislation re-        me-related expenses.
quires a differentiated account of the income components in order



154
                                                                                                                       sales Prospectus




Profits from Securities Sales, and Profits from Forward                   When assessing the capital gains, you should reduce the figure of
Transactions                                                              the purchase price by the “Zwischengewinn” (interim profit) at the
                                                                          time of purchase, and should in turn reduce the figure of the sales
Profits from the sales of securities, and profits from forward            price by the “Zwischengewinn” at the time of sale, lest you report
transactions that were earned on the Property Fund level, always          the “Zwischengewinn” twice in your income tax assessment (see
remain tax-free for the investor (Art. 2, Sec. 3, No. 1, InvTA).          below). The half-income procedure does not apply to capital
                                                                          gains.
Domestic and Foreign Dividends (in Particular those
Paid by Real Estate Corporations)                                         If the total profits yielded by private sales transactions amounts to
                                                                          less than 512 euros within a given calendar year, the amount re-
If the (real estate) corporations fail to distribute a dividend, inves-   mains tax-free (exemption limit). If the exemption limit is excee-
tors need not report any earnings on the Property Fund level.             ded, the private sales profits become taxable in their entirety.

Domestic and foreign dividends of (real estate) corporations that         Shares in Corporate Ownership (Resident German Tax
are distributed or retained by the Property Fund, are only taxable        Status)
to 50% (the so-called half-income procedure). Under certain con-
ditions, the dividends paid by foreign (real estate) corporations         Domestic Rental Income and Interest Earnings, as well
may be fully tax-exempt – if subject to the progressivity proviso –       as Interest-Related Earnings
as dividend received from an interrelated company.
                                                                          Domestic rental income, interest earnings, and interest-related
Earnings from Interest Held in Domestic and Foreign                       earnings are principally taxable for corporate investors. This ap-
Real Estate Partnerships                                                  plies regardless of whether these earnings are retained or distri-
                                                                          buted.
Earnings from interests held in domestic and foreign real estate
partnerships should be included in the tax statement on the Pro-          Foreign Rental Income
perty Fund level no later than by the end of the financial year of
that partnership. Such earnings must be assessed according to             Germany generally waives taxation on rental income from foreign
general tax principles.                                                   real estate (exemption on account of double-taxation treaties).
                                                                          However, investors other than corporations need to remember
Negative Tax Earnings                                                     that such exemption is subject to the progressivity proviso.

If, following reconciliation with comparable positive income, a ne-       If, by way of exception, the tax credit method is stipulated by the
gative income balance remains on the level of the Property Fund it        respective double-taxation treaty, or if no double-taxation treaty
shall be carried forward on the Property Fund level. It may be set        has been ratified, taxes on earnings that were paid in the countries
off against comparable positive taxable earnings of later years on        of origin may still be credited against the German income or corpo-
the Property Fund level. It is not possible to credit the negative ta-    rate tax debt, provided the taxes paid have not already been ac-
xable earnings directly to the investor’s account. Thus, these ne-        counted for as income-related expenses on the Property Fund le-
gative amounts will not affect the investor’s income tax base befo-       vel.
re the assessment period (fiscal year) in which the financial year
of the Property Fund ends, or in which the distribution for the finan-    Profits from the Sale of Domestic and Foreign Real
cial year of the Property Fund takes place, and for which the nega-       Estate
tive tax earnings on the Property Fund level have been set off. It is
not possible for the investor to claim such negative earnings in an       The investor need not report retained profits from the sales of do-
earlier income tax report.                                                mestic and foreign real estate, provided that the real estate is re-
                                                                          sold no earlier than 10 years after its acquisition. Profits become
Disbursement of Assets                                                    taxable after their distribution, though Germany normally waives
                                                                          the taxation of foreign profits (exemptions on the basis of double-
Capital disbursements (e.g. as interest on building finance) remain       taxation treaties).
tax-exempt.
                                                                          Retained or distributed profits from the sale of domestic and fo-
Sales Profits on the Investor Level                                       reign real estate within said ten-year period need to be reported
                                                                          as taxable on the investor level. By contrast, profits from the sale
If an investor resells the shares held in a property fund within a        of domestic real estate are fully taxable.
year of their purchase (speculation period), the sales profits are
principally taxable as income from private sales transactions. If         Germany generally waives taxation on profits from the sale of fo-
such shares are disposed of after the speculation period, the pro-        reign real estate (exemption on the basis of double-taxation trea-
fits remain tax-free for the private investor.                            ties). However, investors other than corporations need to remem-

                                                                                                                                         155
ber that such exemption is subject to the progressivity proviso.                                                       xable earnings directly to the investor’s account. Thus, these ne-
                                                                                                                       gative amounts will not affect the investor’s income tax base or
If, by way of exception, the tax credit method is stipulated by the                                                    corporate tax base before the assessment period (fiscal year) in
respective double-taxation treaty, or if no double-taxation treaty                                                     which the Property Fund’s financial year ends, or in which the dis-
has been ratified, taxes on earnings that were paid in the countries                                                   tribution for the Property Fund’s financial year takes place, and for
of origin may still be credited against the German income tax or                                                       which the negative tax earnings on the Property Fund level have
corporate tax, provided the taxes paid have not already been ac-                                                       been set off. It is not possible for the investor to claim such nega-
counted for as income-related expenses on the Property Fund le-                                                        tive earnings in an earlier income tax or corporate tax report.
vel.
                                                                                                                       Disbursement of Assets
Profits from Securities Sales, and Profits from Forward
Transactions                                                                                                           Capital disbursements (e.g. as interest on building finance) remain
                                                                                                                       tax-exempt. For an investor preparing his or her accounts, this me-
Profits from the sale of securities, and profits resulting from for-                                                   ans that the disbursements of assets must be received on the ear-
ward transactions, need not be reported as taxable income by the                                                       nings side of the trade balance, while a passive balancing item
investor if they are retained. If, however, such profits are distribu-                                                 must be entered on the expenditure side of the tax balance so as
ted, they must be reported as taxable income on the investor level.                                                    to technically diminish the historic acquisition costs in a fiscally
By contrast, profits from equity sales remain fully1) tax-free (for                                                    equitable way.
incorporated investors) or 50% tax-free (for all other business in-
vestors, e.g. sole proprietors). Sales profits from fixed interest se-                                                 Sales Profits on the Investor Level
curities, and profits resulting from forward transactions, however,
are fully taxable.                                                                                                     Profits from the selling of shares held as corporate assets are tax-
                                                                                                                       free for corporate investors, provided they consist of foreign rental
1) 5% of these tax-free profits are rated as non-deductible operating expenses, and are therefore taxable.
                                                                                                                       income not yet accrued or not counting as accrued, as well as
                                                                                                                       realised and not realised profits of the Property Fund from foreign
Domestic and Foreign Dividends (in Particular those                                                                    real estate, inasmuch as Germany has waived their taxation (so-
Paid by Real Estate Corporations)                                                                                      called real estate profits).

Dividends paid by domestic and foreign real estate corporations,                                                       Each trading day, the Investment Company shall publish the Fund’s
and distributed by shares held in the corporate assets or retained,                                                    real estate profits as percentage of the respective investments’
remain tax-free for corporations.2) For sole proprietors, such ear-                                                    share value.
nings are taxable at 50% (half-income procedure), as is the case
with private investors.                                                                                                Moreover, profits deriving from the sales of shares held in the form
                                                                                                                       of corporate assets remain tax-free3) for corporations, provided
Under certain conditions, the dividends paid by foreign (real esta-                                                    they consist of foreign dividends not yet accrued or not counting
te) corporations may be fully tax-exempt as dividend received from                                                     as accrued, as well as realised and not realised profits of the Pro-
an interrelated company. In such a case, sole proprietors just need                                                    perty Fund from domestic or foreign real estate corporations (so-
to remember that the progressivity proviso applies.                                                                    called stock profits). Sales profits of this sort are to 50% taxable for
                                                                                                                       sole proprietors.
2) For corporations, 5% of these dividend are rated as non-deductible operating expenses, and are therefore taxable.

                                                                                                                       Each trading day, the Investment Company shall publish the Fund’s
Earnings from Interests in Domestic and Foreign Real                                                                   stock profits as percentage of the respective investments share
Estate Partnerships                                                                                                    value.

Earnings from interests held in domestic and foreign real estate                                                       3) For corporations, 5% of these sales profits from stocks are rated as non-deductible operating expenses, and are

partnerships should be included in the tax statement on the Pro-                                                       therefore taxable.

perty Fund level no later than by the end of the financial year of
that partnership. Such earnings must be assessed according to                                                          Interest Income Tax
general tax principles.
                                                                                                                       Some of the distributed or retained earnings of the Property Fund
Negative Tax Earnings                                                                                                  are subject to an interest income tax of 30%, as well as to a solida-
                                                                                                                       rity surcharge (5.5% on the interest income tax) in Germany. Taxes
If, following reconciliation with comparable positive income, a ne-                                                    withheld at source under this provision merely represent a tax ad-
gative income balance remains on the level of the Property Fund it                                                     vance payment that can be credited against the investor’s eventu-
shall be carried forward on the Property Fund level. It may be set                                                     al income tax debt. They do not, however, cover the entire taxable
off against comparable positive taxable earnings of later years on                                                     distribution or all retained earnings of the Property Fund, but spe-
the Property Fund level. It is not possible to credit the negative ta-                                                 cifically domestic rental income and interest earnings. Exempt

156
                                                                                                                          sales Prospectus




from the interest income tax are domestic and foreign dividends,           If the shares of distributing (including retaining) property funds are
profits from the sales of securities and subscription rights on sha-       not kept in safe custody, and coupons are presented to a domestic
res in corporations, profits from forward transactions, profits from       financial institution (home custody) instead, interest income tax in
sales of real estate and real estate-related rights outside the ten-       an amount equivalent to 35% plus the applicable solidarity sur-
year grace period, for which the Federal Republic of Germany has           charge will be withheld. Upon request, the investor will be issued
waived its taxation rights due to an existing double-taxation trea-        a tax assessment note in order to be able to credit the interest in-
ty.                                                                        come tax and the solidarity surcharge when filing his or her inco-
                                                                           me tax return. For shares in (fully) retaining property funds that are
For details on interest income taxation of distributed and retained        kept in home custody, the interest income tax rate equals 30%. Un-
earnings of the Property Fund, see the Annual Report as well as            like with shares kept in safe custody, these interest income tax
any announcement regarding tax bases.                                      payments will not be refunded. Rather, the investor must file ap-
                                                                           propriate evidence together with his or her income tax return in
Withholding of the interest income tax can be waived if a private          order to have the withheld interest income tax and the solidarity
investor is a German resident and submits a non-assessment note            surcharge credited.
(NV-Bescheinigung) or files an exemption order (Freistellungsan-
trag), and if the income share subject to interest income taxation         Capital Income Tax
does not exceed the currently applicable tax allowance for savers
including the flat rate allowance for income-related expenses.             Domestic dividends are fully subject to a capital income tax of 20%
                                                                           and a solidarity surcharge (5.5% of the capital income tax amount)
For shares held as corporate assets, to have the interest income           at the time they are distributed or retained. The capital income tax
tax waived, or claiming a remuneration of the interest discount            is immediately reimbursed to investors if their shares are safe-
and a reimbursement of the capital income tax, is possible only if         kept by the Investment Company or at another domestic financial
an appropriate non-assessment note has been filed. Otherwise,              institution, and if an exemption order over a sufficient amount or a
the investor will receive a tax note on the creditable interest di-        non-assessment note has been submitted. For private investors,
scount and creditable capital income tax withheld.                         only half of the domestic dividends are imputed against such an
                                                                           exemption order (so-called half-income procedure). Even if the
If an investor keeps his or her shares of a fully or partially distribu-   investor fails to submit an exemption order or a non-assessment
ting property fund in domestic safe custody with the Investment            note in time, the capital income tax withheld plus the solidarity sur-
Company or at another financial institution (safe custody option),         charge may still be credited against the personal income tax debt
the financial institution keeping the shares in safe custody and           if the investor files, together with his or her tax return, the tax note
functioning as paying agent will exempt the shares from the inter-         issued by the bank that is safe-keeping the shares.
est income tax, including the share due for the retained part, if an
official exemption order over a sufficient amount or a non-assess-         Solidarity Surcharge
ment note, granted by the Inland Revenue Office for three years, is
presented prior to the distribution date. In this case, the entire dis-    A solidarity surcharge of 5.5% is levied on distributed or retained
tributed amount is credited to the investor without deductions.            shares, inasmuch as they are subject to the capital income tax or
                                                                           the interest income tax. The solidarity surcharge can be credited
In the case of a (fully) retaining property fund, the respective in-       against the income tax.
vestment company shall itself withhold the interest discount on
the reinvested property fund earnings that are subject to interest         If no interest income tax is due, or if the interest income tax is re-
income taxation in an amount equivalent to 30% plus solidarity sur-        munerated in the case of retention (e.g. in case an exemption or-
charge. By the end of each financial year, the issue and redemp-           der over a sufficient amount, a non-assessment note or evidence
tion price is thus reduced by the interest income tax and the soli-        of a non-resident German tax status is filed), the solidarity sur-
darity surcharge. If the shares are kept in safe custody by a              charge need not be paid, or will be remunerated, respectively.
domestic financial institution, the investor account will be credited
with any interest income tax and solidarity surcharge that was             Investors with Non-Resident German Tax Status
withheld, provided an exemption order over a sufficient amount or
a non-assessment note was filed by the investor prior to the expi-         If an investor with non-resident German tax status safe-keeps
ration of the Property Fund’s financial year.                              shares of a fully or partially distributing property fund at a domes-
                                                                           tic financial institution (deposit option), the interest income tax,
If the exemption order or non-assessment note is not filed, or not         including the share due for partial retention, shall not be withheld
filed in time, the respective custodian bank will issue a tax note to      at source if the investor substantiates his or her non-resident Ger-
the investor over the withheld and transferred interest income tax         man tax status. If the safekeeping financial institution is not aware
and solidarity surcharge. Investors then have the option to have           of the investor’s non-resident tax status or has not received evi-
the interest income tax credited against their tax debt in conjunc-        dence for such a status in time, the foreign investor shall be obli-
tion with their income tax return. The same goes for income that           ged to file for reimbursement of the withheld interest income tax
exceeds the limit of the exemption order.                                  through a repayment procedure pursuant to Art. 37, Sec. 2, Ger-

                                                                                                                                             157
man Fiscal Code (AO). Such requests should be addressed to the            The tax bases established on the Property Fund level must be as-
Inland Revenue Office at the established place of business of the         sessed separately. The Investment Company must file a self-as-
safekeeping financial institution or the safekeeping investment           sessment declaration at the appropriate Inland Revenue Office.
company. To what extent the capital income tax on dividends can           Adjustments to self-assessment declarations, e.g. occasioned by
be credited or reimbursed to foreign investors depends on whet-           an external audit (Art. 11, Sec. 3, InvTA) by the taxation authorities
her a double-taxation treaty exists between the investor’s country        will become effective in that financial year in which the adjusted
of residence and the Federal Republic of Germany.                         assessment can no longer be appealed. The tax allocation of the
                                                                          adjusted assessment on the investor side is effected at the end, or
If a foreign investor keeps shares of a (fully) retaining property        the distribution date, of that financial year.
fund in safe custody at a domestic financial institution, the with-
held interest income tax of 30% will be reimbursed to that investor       This means that the correction of mistakes will economically im-
if evidence of his or her non-resident German tax status is submit-       pact the investors who are holding shares in the Property Fund at
ted. If the application for reimbursement is filed late, the investor     the time of the adjustments. The consequences can be either posi-
has the option to file for reimbursement pursuant to Art. 37, Sec. 2,     tive or negative.
German Fiscal Code (AO), in analogy to the belated substantiation
a non-resident German tax status.                                         Taxation on “Zwischengewinn”

Whenever a foreign investor whose shares are not kept by a do-            “Zwischengewinn” (interim profit) is defined as that remuneration
mestic financial institution submits coupons at a domestic finan-         for interest collected through the sales price or the redemption
cial institution for disbursement, a tax deduction equivalent to 35%      price, or for accrued interest that has not yet been distributed or
will be withheld at source. The 35% interest discount will be with-       retained, and that therefore has not yet become taxable for the
held even if the shares belong to a (fully) retaining fund. In these      investor (perhaps comparable to the accrued interest on fixed-in-
cases, the foreign investor still has the option to file for a reimbur-   come securities). The interest and interest claims earned by the
sement of the withheld interest income tax pursuant to Art. 37,           Property Fund become subject to income taxation and capital in-
Sec. 2, German Fiscal Code, with the Inland Revenue Office at the         come taxation upon the redemption or sale of the shares by inves-
established place of business of the safe-keeping financial institu-      tors with resident German tax status. The capital income tax on
tion or the safe-keeping capital investment company.                      “Zwischengewinn” equals 30% for shares held in safe-custody
                                                                          accounts, or 35% for shares held in home custody (with a solidari-
In order to be able to substantiate the claim for creditable ear-         ty surcharge of 5.5% to be added to the capital income tax). The
nings, the investor is issued, upon request, a tax note listing the       tax withheld represents an advance payment on your income tax,
remitted taxes (capital income tax/solidarity surcharge).                 and should be entered into Annex KAP of your German income tax
                                                                          return.
Foreign Withholding Tax
                                                                          “Zwischengewinn” included in the share subscription price may
Some of the foreign earnings of the Property Fund are subject to          be deducted from the investor’s income tax debt as negative inco-
taxes withheld at source in the countries of origin.                      me for the year in which it was paid. It is also considered deducti-
                                                                          ble in your German income tax return. Moreover, taxes will not be
The Investment Company may deduct any creditable withholding              withheld at source if the taxable amount remains within the limit of
tax as income-related expense on the Property Fund level. In this         an existing exemption order, or if a non-assessment note has been
case, the foreign withholding tax can neither be credited nor de-         presented. Investors with a non-resident German tax status are
ducted on the investor level.                                             principally exempt from this type of taxation. The following items
                                                                          shall not enter into the “Zwischengewinn” assessment: rental and
If the Investment Company fails to exercise its option to deduct the      leasehold income, as well as income from the valuation and dispo-
foreign withholding tax on the Fund level, then the creditable with-      sition of properties. “Zwischengewinn” is assessed whenever the
holding tax can, upon the investor’s request, be deducted when            share price is determined, and is published on each valuation day.
assessing the total income, or can be credited against that part of       The investor should report the sum of the “Zwischengewinn” in
the investor’s German income tax or corporate tax that represents         Annex KAP, which sum is obtained by multiplying the respective
the respective foreign income.                                            “Zwischengewinn” per share with the number of shares reported
                                                                          in the investor’s balance of subscriptions or sales, respectively.
Income Equalisation                                                       Also, the “Zwischengewinn” is regularly listed in bank statements
                                                                          and bank income compilations.
The portion of the issue price that reflects the share income and
that may be distributed (income equalisation procedure) are fi-
scally treated just like income for which this portion of the issue
price accounts.

Separate Assessment, External Audit

158
                                                                                                                        sales Prospectus




Transparent, Semi-Transparent, and Non-Transparent                        nings. Within the framework of their tax documentation, the inves-
Taxation                                                                  tor receives a tax note that permits the deduction of the tax with-
                                                                          held to be credited against the investor’s income tax return.
The aforementioned taxation principles (the so-called transparent
taxation) apply only if the entire tax base pursuant to Art. 5, Sec. 1,   Alternatively, private investors have the option to exempt themsel-
InvTA, has been disclosed (the so-called duty to disclose tax infor-      ves from the application of the withholding tax by authorising the
mation). This applies even if the Property Fund acquired shares in        foreign bank to disclose the interest earnings, thus enabling the
another domestic or foreign investment fund (target fund pursuant         respective institute to forgo collection of the withholding tax and
to Art. 10, InvTA), and if these funds have fulfilled the duty to disc-   to report the earnings to the legally specified revenue office inste-
lose their tax information.                                               ad.

The Investment Company strives to disclose its entire tax base to         Pursuant to the German Interest Information Regulation, the In-
the extent that the required information is available.                    vestment Company is held to state for each domestic and foreign
                                                                          fund whether it is in or out of scope in regard to the Interest Infor-
Nonetheless, the required announcement cannot be guaranteed               mation Regulation.
inasmuch as the Property Fund may have acquired target funds
that fail to disclose their tax information as legally required. In the   The Interest Information Regulation includes two definitive invest-
worst case, the distributions and the “Zwischengewinn” of a given         ment limits in order to make this assessment.
target fund as well as 70% of the appreciation of the respective
target fund in the most recent calendar year (though in no case           If the assets of a given fund consist of no more than 15% accounts
less than 6% of the redemption price) are assessed as taxable ear-        receivable pursuant to the Interest Information Regulation, the
nings on the level of the Property Fund.                                  paying agents – who ultimately rely on the data reported by the
                                                                          respective investment company – need not report to the Federal
EU Interest Directive/German Interest Information                         German Tax Authority. Otherwise, exceeding the 15% threshold
Regulation (ZIV)                                                          will oblige the paying agents to report the interest share included
                                                                          in the dividend to the Federal German Tax Authority.
The Interest Information Regulation (German acronym: ZIV) that
implements the Council Directive 2003 48/EC of 3 June 2003, EU            The interest share included in redemptions or sales of fund shares
Official Journal L157, p. 38, is intended to ensure that interest ear-    needs to be reported if the 40% threshold is exceeded. If the fund
nings of natural persons are effectively taxed throughout EU terri-       at issue is a distributing fund, the share of interest included in the
tory. The EU has signed treaties with EU Third Countries (in parti-       distribution also needs to be reported to the Federal German Tax
cular with Switzerland, Liechtenstein, the Channel Islands,               Authority. Analogously, if the fund at issue retains its earnings,
Monaco, and Andorra) that largely match the EU Interest Directi-          only fund share redemptions or sales need to be reported.
ve.
                                                                          Merging Property Funds
To this end, interest earnings that a German bank (acting as paying
agent in this context) credits to a natural person residing in anot-      In cases where all assets of a given property fund have been
her EU member state or affiliated third party state are reported by       transferred into another property fund pursuant to Art. 40, InvA, no
that German bank to the Federal German Tax Authority (Bundes-             hidden reserves are disclosed, be it on the investor level or on the
zentralamt für Steuern), to be ultimately reported to the local in-       level of the involved property funds; that is, this process remains
land revenue office in the respective person’s home country.              fiscally equitable.

Analogously, interest earnings that a natural person residing in          Real Estate Transfer Tax
Germany receives from a foreign bank in another European coun-
try or certain third party states are reported to that person’s local     The sale of shares in the Property Fund is not subject to real estate
Inland Revenue Office by the respective bank. Alternatively, some         transfer taxation.
foreign countries apply withholding taxes that can be credited in
Germany.                                                                  Note:
                                                                          Any tax detail elaborated here is based on the interpretation of
This regulation consequently affects any private investor residing        current tax legislation. The information provided is modelled on
within the European Union or in any of the affiliated EU third coun-      a person subject to unlimited income taxation or to unlimited
tries who keeps safe custody accounts or other accounts in anot-          corporate income taxation. However, no guarantee is offered
her EU member state and thereby generates interest earnings.              against changes in the principles of tax appraisal, be they
                                                                          effected through new legislation, court decisions, or decrees
Luxembourg and Switzerland, among other countries, have placed            issued by the Inland Revenue Authorities.
themselves under the obligation to apply a withholding tax of 15%         Details on the taxation of income resulting from the Property
(20% after 1 July 2008, and 35% after 1 July 2011) to interest ear-       Fund are published in each Annual Report.

                                                                                                                                          159
Legal and Fiscal Risks                                                   Scenarios in which the tax deduction loses its withholding effect
                                                                         includes personal tax brackets that remain below the flat rate
In the event that the correction of incorrect tax bases for the Fund     withholding tax rate of 25%. In this case, income from capital as-
in regard to past financial years (e.g. as revealed through an exter-    sets should be disclosed in the income tax return. The Inland Re-
nal audit) precipitates principally a fiscal disadvantage for the in-
                                                                          As of 2009, the saver‘s flat rate allowance will amount to 801 euros for single taxpay-
                                                                         4)

vestor inasmuch as the investor may have to shoulder the tax bur-        ers, and to 1,602 euros for jointly assessed couples.
den from past financial years that results from the correction, even
if he or she had not invested in the Property Fund at the time, as the   venue Service will then apply the lower personal tax rate, and cre-
case may be. Inversely, an investor may not benefit from a correc-       dit the tax deduction against the tax debt (the so-called “higher-
tion principally precipitating a fiscal tax advantage for the current    yield test”).
financial year, or past financial years, in which he had invested in     Wherever the income from capital assets were tax-exempt (e.g.
the Fund, if he or she redeemed or sold the shares before the at-        because the profits from fund share sales were generated by a
tendant correction was implemented.                                      portfolio held abroad), these need to be disclosed in the tax return.
                                                                         In the tax assessment context, this type of income from capital
A correction of tax data may moreover have the effect that taxable       assets is also subject to a 25% flat rate withholding tax or the lo-
earnings or tax benefits are actually assessed for an assessment         wer personal tax bracket, where applicable.
period other than the originally applicable one, and that this may
have negative repercussions for the investor.                            Even if the tax was deducted and the investor belongs to a higher
                                                                         personal tax bracket than 25%, the income from capital assets
New Tax Regulations                                                      needs to be disclosed whenever extraordinary personal expenses
                                                                         are asserted in the tax return. Moreover, disclosures on income
On 6 July 2007, the German upper house (Bundesrat) approved the          from capital assets may be made whenever donations are asser-
2008 Corporate Tax Reform. The new regulations include the intro-        ted as special personal deductions.
duction of a flat rate withholding tax for private investors and
changes in the taxation of corporate investors.                          Wherever the shares are held in the form of corporate assets, the
                                                                         earnings are taxed as business income.
The new regulations for private investors will enter into force on
1 January 2009, those for corporate investors entered into force on      Shares in Private Ownership (Resident German Tax
1 January 2008. Outlined below is the new legal situation these          Status)
changes will bring about.
                                                                         Domestic rental income, interest earnings, interest-
Any information on tax regulations provided herein applies only to       related earnings, foreign dividends (particularly those
investors subject to full taxation in Germany. Foreign investors are     from real estate corporations) as well as profits from
advised to confer with their tax consultants before acquiring any        sales of domestic real estate within the first ten years
shares in the Property Fund detailed in this Sales Prospectus, and       after their acquisition.
to identify the fiscal consequences the acquisition of such shares
may have in the investor’s country of residence.                         Domestic rental income, interest earnings, interest-related ear-
                                                                         nings, foreign dividends, and profits from sales of domestic real
As a special purpose fund, the Property Fund is exempt from cor-         estate within the first ten years after their acquisition are princi-
porate income tax and trade tax. At the same time, the taxable           pally taxable for the investor. This applies regardless of whether
earnings of the Property Fund rate as income from capital assets         these earnings are retained or distributed.
for private investors and are taxed accordingly to the extent that
these exceed – combined with other capital income – the current-         The Property Fund’s distributed or retained domestic rental inco-
ly applicable flat rate allowance for savers.4) Income from capital      me, interest earnings, interest-related earnings, foreign dividends
assets are principally subject to a 25% tax deduction (with solida-      as well as profits from sales of domestic real estate within the first
rity surcharge to be added as well as church tax, where applica-         ten years after their acquisition are subject to a tax deduction of
ble). Income from capital assets also includes the earnings distri-      25% (with solidarity surcharge to be added as well as church tax,
buted by the Property Fund, the deemed distributed income, and           where applicable) whenever these are held in custody on domes-
the “Zwischengewinn,” as well as the profits from buying and sel-        tic accounts.
ling Fund shares.
                                                                         The tax deduction may be waived whenever the investor has a re-
The tax deduction principally has a withholding effect (pursuant to      sident German tax status and submitted an exemption order, provi-
the flat rate withholding tax), so that income from capital asset        ded the taxable portions of the income do not exceed the currently
need no longer be disclosed in the income tax return on a regular        applicable saver‘s flat rate allowance. The same applies, mutatis
basis.                                                                   mutandis, whenever a non-assessment note has been submitted,
                                                                         or whenever a foreign investor substantiates his non-resident tax
                                                                         status.

160
                                                                                                                       sales Prospectus




If an investor keeps his or her shares of a fully distributing or par-   Profits from the Sale of Domestic and Foreign Real
tially retaining property fund in domestic custody with the Invest-      Estate 10 Years after its Acquisition or Later
ment Company or at another financial institution (safe custody
option), the financial institution keeping the shares in safe custody    Profits from the sales of domestic and foreign real estate realised
and functioning as paying agent will exempt the shares from the          on the Property Fund level more than 10 years after the acquisition
tax deduction if an official exemption order over a sufficient           always remain tax-free for the investor.
amount or a non-assessment note, granted by the Inland Revenue
Office for three years, is presented prior to the set distribution       Foreign Rental Income, and Profits from Sales of Fo-
date. In this case, the entire distributed amount is credited to the     reign Real Estate Less than 10 Years after its Acquisition
investor without deductions.
                                                                         Foreign rental income and profits from the sales of foreign real
In the case of a (fully) retaining property fund, the respective In-     estate for which Germany has waived taxation because of existing
vestment Company itself shall deduct the taxes due on the retai-         double-taxation treaties (exemption method), are also tax-free
ned taxable property fund earnings that are subject to a 25% tax         (this being the standard). The tax-exempt income does not impact
rate (plus solidarity surcharge). By the end of each financial year,     the tax rate to be applied (no progressivity proviso).
the issue and redemption price is thus reduced by this tax deduc-
tion. Since the investor identities are normally unknown to the In-      Wherever the respective double-taxation treaty stipulates the tax
vestment Company, the church tax cannot be withheld in the latter        credit method by way of exception, or wherever not double-taxa-
case, that that investors subject to church tax are obliged to make      tion treaty exists, the information regarding the tax treatment of
the relevant disclosures in their income tax return.                     profits from sales of domestic real estate within ten years after
                                                                         their acquisition applies mutatis mutandis. Taxes paid in the coun-
If the shares are kept in safe custody by a domestic financial insti-    try of origin may be credited against the German income tax debt,
tution, the investor account will be credited with any tax deduction     where applicable, unless the tax remittance is already reflected on
that was withheld, provided an exemption order over a sufficient         the Property Fund level in the form of income-related expenses.
amount or a non-assessment note was filed by the investor prior to
the expiration of the Property Fund’s financial year.                    Profits from Securities Sales, and Profits from Forward
                                                                         Transactions
If the exemption order or non-assessment note is not filed, or not
filed in time, the respective custodian bank will issue a tax note to    Profits from securities sales and from forward transactions earned
the investor over the taxes withheld at source and remitted. In-         on the Property Fund level are not assessed for the investor as
vestors then have the option to have this tax deduction credited         long as they are not distributed.
against their tax debt in conjunction with their income tax return.
                                                                         If profits from the sales of securities or from forward transactions
If the shares of distributing property funds are not kept in safe cus-   are distributed, these are principally taxable and are subject to a
tody, and if the coupons are submitted to a domestic financial in-       25% tax deduction at source in the case of domestic safe custody
stitution (home custody), the disbursed distribution will be subject     accounts (with solidarity surcharge to be added as well as church
to a 25% tax deduction plus solidarity surcharge. Upon request,          tax, where applicable). Distributed profits from the sales of securi-
the investor will be issued a tax assessment note in order to be         ties and from forward transactions remain tax-exempt if the secu-
able to credit the 25% tax deduction and the solidarity surcharge        rities were bought before 1 January 2009 or if the forward transac-
when filing his or her income tax return. For shares in retaining        tion was entered into before 1 January 2009.
property funds that are kept in home custody, the tax deduction
equals 25%. A refund of the tax deduction – an option open to in-        Domestic Dividends (Particularly from Real Estate
vestors keeping their shares in safe custody whenever their sa-          Corporations)
ver‘s flat rate allowance has not been exhausted or the personal
tax bracket is less than 25% – is not possible here. Rather, the in-     If the (real estate) corporations fail to distribute a dividend, inves-
vestor has the option to file appropriate evidence together with his     tors need not report any earnings on the Property Fund level.
or her income tax return in order to have the tax deduction and the
solidarity surcharge credited.                                           Domestic dividends of (real estate) corporations that are either
                                                                         distributed or retained by the Property Fund are taxable on the in-
Under certain conditions, the dividends paid by foreign (real esta-      vestor side. They are subject to a 25% tax deduction at source
te) corporations may be fully tax-exempt as dividend received from       (with solidarity surcharge to be added as well as church tax, whe-
an interrelated company.                                                 re applicable).




                                                                                                                                          161
Earnings from Interests in Domestic and Foreign Real                      time of purchase, and should in turn reduce the figure of the sales
Estate Partnerships                                                       price by the “Zwischengewinn” at the time of sale, lest you report
                                                                          the “Zwischengewinn” twice in your income tax assessment (see
Earnings from interests held in domestic and foreign real estate          below). Any retained income that the investors already paid taxes
partnerships should be included in the tax statement on the Pro-          on need to be deducted from the sales price in order to avoid
perty Fund level no later than by the end of the financial year of        double taxation.
that partnership. Such earnings must be assessed according to
general tax principles.                                                   Profits from sales after 31 December 2008 remain tax-exempt to
                                                                          the extent that they are attributable to income not yet assessed on
Negative Tax Earnings                                                     the investor level and tax-free on account of existing double taxa-
                                                                          tion treaties (so-called pro-rata real estate profits).
If, following reconciliation with comparable positive income, a ne-
gative income balance remains on the level of the Property Fund it        Investors with Non-Resident German Tax Status
shall be carried forward on the Property Fund level. It may be set
off against comparable positive taxable earnings of later years on        If an investor with a non-resident German tax status keeps his or
the Property Fund level. It is not possible to credit the negative ta-    her shares in distributing property funds in safe custody at a do-
xable earnings directly to the investor’s account. Thus, these ne-        mestic financial institution (safe custody scenario), the tax deduc-
gative amounts will not affect the investor’s income tax base befo-       tion – excluding taxes paid on domestic dividends – will be waived
re the assessment period (fiscal year) in which the financial year        if the investor substantiates his or her non-resident tax status. The
of the Property Fund ends, or in which the distribution for the finan-    extent to which the tax deduction on domestic dividends can be
cial year of the Property Fund takes place, and for which the nega-       credited or reimbursed to foreign investors depends on whether a
tive tax earnings on the Property Fund level have been set off. It is     double-taxation treaty exists between the investor’s country of re-
not possible for the investor to claim such negative earnings in an       sidence and the Federal Republic of Germany. If the safe-keeping
earlier income tax report.                                                financial institution is not aware of the investor‘s non-resident tax
                                                                          status, or if the investor fails to substantiate this status in time, the
Disbursement of Assets                                                    foreign investor may apply for reimbursement of the tax deduction
                                                                          pursuant to Art. 37, Sec. 2, German Fiscal Code. Such requests
Capital disbursements (e.g. as interest on building finance) remain       should be addressed to the Inland Revenue Office at the establis-
tax-exempt.                                                               hed place of business of the safekeeping financial institution.

Sales Profits on the Investor Level                                       If a foreign investor keeps shares of a retaining property fund in
                                                                          safe custody at a domestic financial institution, the tax deduction
If a private investor sells Property Fund shares that he or she ac-       of 25% will be reimbursed to that investor once the investor sub-
quired after 31 December 2008, the sales profits are subject to a         stantiates his or her non-resident German tax status. If the appli-
flat rate withholding tax of 25%. If the respective shares are kept in    cation for reimbursement is filed late, the investor has the option to
domestic safe custody, the safe-keeping financial institution will        file for reimbursement pursuant to Art. 37, Sec. 2, German Fiscal
deduct the 25% tax at source (with solidarity surcharge to be ad-         Code (AO), in analogy to the belated substantiation a non-resident
ded as well as church tax, where applicable). The 25% tax deduc-          German tax status.
tion (with solidarity surcharge to be added as well as church tax,
where applicable) can be avoided by submitting an exemption or-           Whenever a foreign investor whose shares are not kept by a do-
der over a sufficient amount or a non-assessment note.                    mestic financial institution submits coupons at a domestic finan-
                                                                          cial institution for disbursement, a tax deduction equivalent to 25%
If a private investor resells property fund shares he or she bought       will be withheld at source. A 25% tax deduction will be withheld
before 1 January 2009 within a year of their subscription (specula-       even if the shares belong to a retaining fund. In these cases, the
tion period), the capital gains are principally taxable as income         foreign investor still has the option to file for a reimbursement of
from private sales transactions. If the total profits yielded by priva-   the tax deduction (though not for taxes paid on domestic dividends)
te sales transactions amounts to less than 600 euros within a given       pursuant to Art. 37, Sec. 2, German Fiscal Code, with the Inland
calendar year, the amount remains tax-free (exemption limit). If the      Revenue Office at the established place of business of the safe-
exemption limit is exceeded, the private sales profits become ta-         keeping financial institution or the safe-keeping capital investment
xable in their entirety.                                                  company.

If such shares that were subscribed before 1 January 2009 are dis-        In order to be able to substantiate the claim for creditable ear-
posed of after the speculation period, the profits remain tax-free        nings, the investor is issued, upon request, a tax note listing the
for the private investor.                                                 remitted taxes.

When assessing the capital gains, you should reduce the figure of
the purchase price by the “Zwischengewinn” (interim profit) at the

162
                                                                                                                               sales Prospectus




Church Tax                                                              Foreign Rental Income

If the income tax is already remitted by a domestic safe-keeping        Germany generally waives taxation on rental income from foreign
financial institution (tax deduction agent) by way of tax deduction,    real estate (exemption on account of double-taxation treaties).
the church tax due on this amount at a rate depending on the re-        However, investors other than corporations need to remember
spective church to which the respective taxpayer belongs is le-         that such exemption is subject to the progressivity proviso.
vied as tax surcharge on the tax deduction. For this purpose, tax-
payers subject to church taxation must disclose their church            If, by way of exception, the tax credit method is stipulated by the
membership vis-à-vis the tax deduction agent in a written applica-      respective double-taxation treaty, or if no double-taxation treaty
tion. Married couples must moreover disclose in said application        has been ratified, taxes on earnings that were paid in the countries
according to what ratio the total capital income is split between       of origin may still be credited against the German income or corpo-
the spouses, so that the church tax can be divided, retained, and       rate tax debt, provided the taxes paid have not already been ac-
remitted according to this ratio.                                       counted for as income-related expenses on the Property Fund le-
                                                                        vel.
The church tax will already be credited at the time of the tax de-
duction.                                                                Profits from the Sale of Domestic and Foreign Real
                                                                        Estate
Taxation on “Zwischengewinn”
                                                                        The investor need not report retained profits from the sales of do-
“Zwischengewinn” (Interim profits) are defined as that remunera-        mestic and foreign real estate, provided that the real estate is re-
tion for the earned of accrued interest included in the offering or     sold no earlier than 10 years after its acquisition. Profits become
redemption price that has not yet been distributed or reinvested,       taxable after their distribution, though Germany normally waives
and that therefore has not yet become taxable for the investor          the taxation of foreign profits (exemptions on the basis of double-
(perhaps comparable to the accrued interest on fixed-income se-         taxation treaties).
curities). The interest and interest claims earned by the Property
Fund become subject to income taxation and capital income taxa-         Retained or distributed profits from the sale of domestic and fo-
tion upon the redemption or sale of the shares by investors with        reign real estate within said ten-year period need to be reported
resident German tax status. The “Zwischengewinn” is subject to a        as taxable on the investor level. By contrast, profits from the sale
25% tax deduction (with solidarity surcharge to be added as well        of domestic real estate are fully taxable.
as church tax, where applicable).
                                                                        Germany generally waives taxation on profits from the sale of fo-
“Zwischengewinn” included in the share subscription price may           reign real estate (exemption on the basis of double-taxation trea-
be deducted from the investor’s income tax debt as negative inco-       ties). However, investors other than corporations need to remem-
me for the year in which it was paid. It is also considered deducti-    ber that such exemption is subject to the progressivity proviso.
ble in your German income tax return.
                                                                        If, by way of exception, the tax credit method is stipulated by the
Moreover, no taxes will be withheld at source if the taxable amount     respective double-taxation treaty, or if no double-taxation treaty
remains within the limit of an existing exemption order, or if a non-   has been ratified, taxes on earnings that were paid in the countries
assessment note has been filed. Investors with a non-resident           of origin may still be credited against the German income tax or
German tax status are principally exempt from this type of taxa-        corporate tax, provided the taxes paid have not already been ac-
tion. “Zwischengewinn” is assessed whenever the share price is          counted for as income-related expenses on the Property Fund le-
determined, and is published on each valuation day.                     vel.

Also, the “Zwischengewinn” is regularly listed in bank statements       Profits from Securities Sales, and Profits from Forward
and bank income compilations.                                           Transactions

Shares in Corporate Ownership (Resident German Tax                      Profits from the sale of securities, and profits resulting from for-
Status)                                                                 ward transactions, need not be reported as taxable income by the
                                                                        investor if they are retained. If, however, such profits are distribu-
Domestic Rental Income and Interest Earnings, as well                   ted, they must be reported as taxable income on the investor level.
as Interest-Related Earnings                                            By contrast, profits from equity sales remain fully5) tax-free (for
                                                                        incorporated investors) or 50% tax-free (for all other business in-
Domestic rental income, interest earnings, and interest-related         vestors, e.g. sole proprietors). Sales profits from fixed interest se-
earnings are principally taxable for corporate investors. This ap-      curities, and profits resulting from forward transactions, however,
plies regardless of whether these earnings are retained or distri-      are fully taxable.
buted.
                                                                         For corporations, 5% of these sales profits from stocks are rated as non-deductible
                                                                        5)

                                                                        operating expenses, and are therefore taxable.


                                                                                                                                                     163
Domestic and Foreign Dividends (in Particular those                                    called real estate profits).
Paid by Real Estate Corporations)
                                                                                       The Investment Company publishes the Fund’s real estate profits
Dividends paid by domestic and foreign real estate corporations,                       as percentage of the respective investments share value.
and distributed by shares held in the corporate assets or reinves-
ted, remain tax-free for corporations.6) For sole proprietors, this                    Moreover, profits deriving from the sales of shares held in the form
kind of income is subject to a 60% tax rate.                                           of corporate assets remain tax-free7) for corporations, provided
                                                                                       they consist of foreign dividends not yet accrued or not counting
Under certain conditions, the dividends paid by foreign (real esta-                    as accrued, as well as realised and not realised profits of the Pro-
te) corporations may be fully tax-exempt as dividend received from                     perty Fund from domestic or foreign real estate corporations (so-
an interrelated company. In such a case, sole proprietors just need                    called stock profits). For sole proprietors, sales profits of this sort
to remember that the progressivity proviso applies.                                    are to 60% taxable.
                                                                                       The Investment Company publishes the Fund’s stock profits as per-
 For corporations, 5% of these dividend are rated as non-deductible operating expen-
6)

ses, and are therefore taxable.                                                        centage of the respective investments share value.

Earnings from Interests in Domestic and Foreign Real                                   7)
                                                                                         For corporations, 5% of these tax-exempt profits from stock sales rate as non-deduc-
Estate Partnerships                                                                    tible operating expenses, and are therefore taxable.


Earnings from interests held in domestic and foreign real estate                       Solidarity Surcharge
partnerships should be included in the tax statement on the Pro-
perty Fund level no later than by the end of the financial year of                     Germany‘s so-called solidarity surcharge of 5.5% is levied on any
that partnership. Such earnings must be assessed according to                          tax deduction withheld at source for distributed or retained inco-
general tax principles.                                                                me. The solidarity surcharge can be credited against the assessed
                                                                                       income tax and church tax (where applicable). If no tax is deduc-
Negative Tax Earnings                                                                  ted or if the tax deduction is refunded through the retention – for
                                                                                       instance, if an exemption order over a sufficient amount, a non-
If, following reconciliation with comparable positive income, a ne-                    assessment note, or proof of a non-resident tax status has been
gative income balance remains on the level of the Property Fund it                     submitted – no solidarity surcharge needs to be remitted; alterna-
shall be carried forward on the Property Fund level. It may be set                     tively, it is refunded through the retained distribution.
off against comparable positive taxable earnings of later years on
the Property Fund level. It is not possible to credit the negative ta-                 Foreign Withholding Tax
xable earnings directly to the investor’s account. Thus, these ne-
gative amounts will not affect the investor’s income tax base or                       Some of the foreign earnings of the Property Fund are subject to
corporate tax base before the assessment period (fiscal year) in                       taxes withheld at source in the countries of origin.
which the Property Fund’s financial year ends, or in which the dis-
tribution for the Property Fund’s financial year takes place, and for                  The Investment Company may deduct any creditable withholding
which the negative tax earnings on the Property Fund level have                        tax as income-related expense on the level of the Property Fund. In
been set off. It is not possible for the investor to claim such nega-                  this case, the foreign withholding tax can neither be credited nor
tive earnings in an earlier income tax or corporate tax report.                        deducted on the investor level.

Disbursement of Assets                                                                 If the Investment Company chooses not to exercise its option to
                                                                                       withhold the foreign withholding tax at the fund level, then the cre-
Capital disbursements (e.g. as interest on building finance) remain                    ditable withholding tax will be taken into account as credit at the
tax-exempt. For an investor preparing his or her accounts, this me-                    time of the tax deduction. If the investor exercises his or her as-
ans that the disbursements of assets must be received on the ear-                      sessment option, then the creditable withholding tax can, upon the
nings side of the trade balance, while a passive balancing item                        investor’s request, be deducted when assessing the total income,
must be entered on the expenditure side of the tax balance so as                       or can be credited against that part of the investor’s German inco-
to technically diminish the historic acquisition costs in a fiscally                   me tax or corporate income tax that represents the respective fo-
equitable way.                                                                         reign income.

Sales Profits on the Investor Level                                                    Separate Assessment, External Audit

Profits from the selling of shares held as corporate assets are tax-                   The tax bases established on the Property Fund level must be as-
free for corporate investors, provided they consist of foreign rental                  sessed separately. The Investment Company must file a self-as-
income not yet accrued or not counting as accrued, as well as                          sessment declaration at the appropriate Inland Revenue Office.
realised and not realised profits of the Property Fund from foreign                    Adjustments to self-assessment declarations, e.g. occasioned by
real estate, inasmuch as Germany has waived their taxation (so-                        an external audit (Art. 11, Sec. 3, InvTA) by the taxation authorities


164
                                                                                                                        sales Prospectus




will become effective in that financial year in which the adjusted        foreign countries apply withholding taxes that can be credited in
assessment can no longer be appealed. The tax allocation of the           Germany.
adjusted assessment on the investor side is effected at the end, or
the distribution date, of that financial year.                            This regulation consequently affects any private investor residing
                                                                          within the European Union or in any of the affiliated EU third coun-
This means that the correction of mistakes will economically im-          tries who keeps safe custody accounts or other accounts in anot-
pact the investors who are holding shares in the Property Fund at         her EU member state and thereby generates interest earnings.
the time of the adjustments. The consequences can be either posi-
tive or negative.                                                         Luxembourg and Switzerland, among other countries, have placed
                                                                          themselves under the obligation to apply a withholding tax of 15%
Transparent, Semi-Transparent, and Non-Transparent                        (20% after 1 July 2008, and 35% after 1 July 2011) to interest ear-
Taxation                                                                  nings. Within the framework of their tax documentation, the inves-
                                                                          tor receives a tax note that permits the deduction of the tax with-
The aforementioned taxation principles (the so-called transparent         held to be credited against the investor’s income tax return.
taxation) apply only if the entire tax base pursuant to Art. 5, Sec. 1,   Alternatively, private investors have the option to exempt themsel-
InvTA, has been disclosed (the so-called duty to disclose tax infor-      ves from the application of the withholding tax by authorising the
mation). This applies even if the Property Fund acquired shares in        foreign bank to disclose the interest earnings, thus enabling the
another domestic or foreign investment fund (target fund pursuant         respective institute to forgo collection of the withholding tax and
to Art. 10, InvTA), and if these funds have fulfilled the duty to disc-   to report the earnings to the legally specified revenue office inste-
lose their tax information.                                               ad.

The Investment Company strives to disclose its entire tax base to         Pursuant to the German Interest Information Regulation, the In-
the extent that the required information is available.                    vestment Company must state for each domestic and foreign fund
                                                                          whether it is in or out of scope in regard to the Interest Information
Nonetheless, the required announcement cannot be guaranteed               Regulation.
inasmuch as the Property Fund may have acquired target funds
that fail to disclose their tax information as legally required. In the   The Interest Information Regulation includes two definitive invest-
worst case, the distributions and the “Zwischengewinn” of a given         ment limits in order to make this assessment.
target fund as well as 70% of the appreciation of the respective
target fund in the most recent calendar year (though in no case           If the assets of a given fund consist of no more than 15% accounts
less than 6% of the redemption price) are assessed as taxable ear-        receivable pursuant to the Interest Information Regulation, the
nings on the level of the Property Fund.                                  paying agents – who ultimately rely on the data reported by the
                                                                          respective investment company – need not report to the Federal
EU Interest Directive/German Interest Information                         German Tax Authority. Otherwise, exceeding the 15% threshold
Regulation (ZIV)                                                          will oblige the paying agents to report the interest share included
                                                                          in the dividend to the Federal German Tax Authority.
The Interest Information Regulation (German acronym: ZIV) that
implements the Council Directive 2003 48/EC of 3 June 2003, EU            The interest share included in redemptions or sales of fund shares
Official Journal L157, p. 38, is intended to ensure that interest ear-    needs to be reported if the 40% threshold is exceeded. If the fund
nings of natural persons are effectively taxed throughout EU terri-       at issue is a distributing fund, the share of interest included in the
tory. The EU has signed treaties with EU Third Countries (in parti-       distribution also needs to be reported to the Federal German Tax
cular with Switzerland, Liechtenstein, the Channel Islands,               Authority. Analogously, if the fund at issue retains its earnings,
Monaco, and Andorra) that largely match the EU Interest Directi-          only fund share redemptions or sales need to be reported.
ve.
                                                                          Merging Property Funds
To this end, interest earnings that a German bank (acting as paying
agent in this context) credits to a natural person residing in anot-      In cases where all assets of a given property fund have been
her EU member state or affiliated third party state are reported by       transferred into another property fund pursuant to Art. 40, InvA, no
that German bank to the Federal German Tax Authority (Bundes-             hidden reserves are disclosed, be it on the investor level or on the
zentralamt für Steuern), to be ultimately reported to the local in-       level of the involved property funds; that is, this process remains
land revenue office in the respective person’s home country.              fiscally equitable.

Analogously, interest earnings that a natural person residing in          Real Estate Transfer Tax
Germany receives from a foreign bank in another European coun-
try or certain third party states are reported to that person’s local     The sale of shares in the Property Fund is not subject to real estate
Inland Revenue Office by the respective bank. Alternatively, some         transfer taxation.


                                                                                                                                          165
Note:
Any tax detail elaborated here is based on the interpretation of         to Bank-Verlag GmbH, Cologne:
current tax legislation. The information provided is modelled on             P Automatic account call process,
a person subject to unlimited income taxation or to unlimited
corporate income taxation. However, no guarantee is offered              to Cominvest Asset Management GmbH, Frankfurt am Main:
against changes in the principles of tax appraisal, be they
                                                                             P calculation of the risk benchmarks in conjunction with
effected through new legislation, court decisions, or decrees
issued by the Inland Revenue Authorities. Details on the taxation                the implementation of the German Derivative Ordinance
of income resulting from the Property Fund are published in each                 (DerivateV).
Annual Report.
Legal and Fiscal Risks                                                   to Diamos AG, Sulzbach:

In the event that the correction of incorrect tax bases for the Fund
                                                                             P Operation of the computer centre for keeping the
in regard to past financial years (e.g. as revealed through an exter-
nal audit) precipitates principally a fiscal disadvantage for the in-            Baustein accounts
vestor inasmuch as the investor may have to shoulder the tax bur-
                                                                         Reports, Financial Year, Auditors
den from past financial years that results from the correction, even
if he or she had not invested in the Property Fund at the time, as the
                                                                         1. Annual Reports and Semi-Annual Reports can be requested
case may be. Inversely, an investor may not benefit from a correc-
                                                                         from the Investment Company, Commerzbank AG, and the follo-
tion principally precipitating a fiscal tax advantage for the current
                                                                         wing banks:
financial year, or past financial years, in which he had invested in
the Fund, if he or she redeemed or sold the shares before the at-
tendant correction was implemented.                                          Baden-Württembergische Bank AG,
                                                                             Berliner Bank AG
A correction of tax data may moreover have the effect that taxable
                                                                             Sales offices of Landesbank Berlin,
earnings or tax benefits are actually assessed for an assessment
period other than the originally applicable one, and that this may           Bankhaus Gebrüder Bethmann,
have negative repercussions for the investor.                                GE Money Bank GmbH,
                                                                             von der Heydt-Kersten & Söhne,
Consulting and Outsourcing
                                                                             National-Bank AG,
                                                                             Vereins- und Westbank AG.
The Investment Company has outsourced the following spheres of
responsibility to other companies:
                                                                         2. The financial year of the Property Fund ends on 31 March of
                                                                         each year.
to Commerz Real AG, Eschborn:
    P Fund controlling/valuation                                         3. PricewaterhouseCoopers Aktiengesellschaft Wirtschaftsprü-
    P Accounting of the private limited company (GmbH)                   fungsgesellschaft, auditors, have been, and will continue to be,
    P Marketing and sales; corporate communications                      commissioned to perform the annual audit.

    P Commercial asset management                                        Prerequisites for the Liquidation of the Property Fund
    P Technical asset management
    P Real estate acquisitions                                           Investors shall not have the right to request liquidation of the Pro-
    P Legal issues                                                       perty Fund. However, the Investment Company may terminate the
                                                                         management of the Property Fund, while observing a six-months’
    P Taxes
                                                                         notice period, by announcement in the electronic Federal Gazette
    P Human Resources                                                    (Bundesanzeiger) and in the next Annual Report or Semi-Annual
    P Research                                                           Report, respectively.
    P IT/services
                                                                         Moreover, the right of the Investment Company to manage the Pro-
    P Compliance/money laundering issues
                                                                         perty Fund shall expire if insolvency proceedings are opened
                                                                         against the Investment Company‘s assets or if an insolvency peti-
to KPMG Deutsche Treuhand-Gesellschaft Aktiengesellschaft
                                                                         tion has been rejected on grounds of insufficient assets. The Pro-
Wirtschaftsprüfungsgesellschaft, Frankfurt am Main:
                                                                         perty Fund is not a part of the Investment Company’s insolvency
    P Internal auditing,                                                 estate.




166
                                                                                                                      sales Prospectus




In such cases, the Property Fund shall pass into the ownership of       Procedure for the Transfer of all Assets Belonging to a
the custodian bank, which shall liquidate the Property Fund and         Property Fund
distribute the proceeds among the shareholders.
                                                                        On the transfer key date, all assets of the property fund to be trans-
Procedure for Liquidating the Property Fund                             ferred, as well as all assets of the property fund receiving these
                                                                        transferred assets, shall be assessed, after which the exchange
If the Property Fund is liquidated, this will be announced in the       rate shall be set and the entire merger process be reviewed by a
electronic Federal Gazette (Bundesanzeiger) and in daily papers         qualified auditor. The exchange rate is determined on the basis of
and business papers with an adequate circulation, or at www.            the ratio between the net inventory value of both the accepted and
hausinvest.de. The issuance and redemption of shares will then be       the accepting property fund at the time of the transfer. Investors
terminated. The proceeds from the sale of the Property Fund’s as-       shall be issued the balance of shares in the new property fund that
set values, minus the costs yet to be borne by the Property Fund        equals the value of their former shares in the transferred property
and the costs incurred by the liquidation, will be divided among the    fund. The issuance of the new shares in the transferred property
investors on a pro-rata basis reflecting their quota of the Property    fund to the investors is not deemed a switch. Rather, the issued
Fund’s total number of shares. Liquidating the Property Fund may        shares replace the shares of the property fund being transferred.
take a considerable length of time. The investors will be kept infor-   The transfer of all assets of one property fund to another property
med on the progress of the liquidation by way of liquidation reports    fund is exclusively subject to the approval by the German Supervi-
that will be issued on the same key dates as the former report pu-      sory Authority for Financial Services (BaFin).
blication dates, and will be available at the custodian bank.           Other Property Funds Managed by the Investment
                                                                        Company
Once the Property Fund is liquidated, investors shall be notified of
the fact by publications in the electronic Federal Gazette and in       The following public property fund, which is not the subject of this
business papers and dailies, or at www.hausinvest.de, as to which       Sales Prospectus, is also managed by the Investment Company:
liquidation proceeds are to be distributed, and where and at what
time these may be claimed.                                              hausInvest global
                                                                        WKN (securities no.): 254 473
Unclaimed liquidation proceeds can be deposited at the district         ISIN: DE 000 254 473 1
court in whose jurisdiction the Investment Company is located.
                                                                        Revocation Right of Share Buyer, pursuant to Art. 126,
Investor rights are governed by the provisions of the Deposit Order     German Investment Act
of 10 March 1937 (Hinterlegungsverordnung).
                                                                        If a buyer of shares has been induced by oral negotiations outside
Transfer of all Assets Belonging to the Property Fund                   the permanent place of business of the party who sold the shares,
                                                                        or who brokered their sale, to make a declaration of intent with
                                                                        regard to a subscription, then the buyer is bound by this declara-
The Property Fund assets may be transferred in their entirety to        tion only unless he or she revokes it in writing vis-à-vis the Invest-
another property fund at the end of each financial year. Inversely,     ment Company within two weeks; this provision applying even if
the assets from another property fund may be transferred to the         the party selling or brokering the subscription of shares has no
Property Fund in their entirety at the end of that other property       permanent place of business.
fund‘s financial year. Another key date for the transfer may be set,
subject to the approval of the German Supervisory Authority for         The revocation shall be deemed to be within the grace period if the
Financial Services (BaFin).                                             letter of revocation is sent off in good time. The revocation period
                                                                        does not commence until the carbon copy of the application for a
The other property fund must also be under the management of the        sales contract has been handed over to the buyer or the bought
Investment Company. The investment principles and limits of the         note been mailed to the buyer that includes instructions advising
other fund, its up-front fees or redemption charges, as well as the     the buyer of his or her right of revocation in a manner satisfying
remunerations due to the Investment Company and the custodian           the requirements of Art. 355, Sec. 2, Sent. 1, German Civil Code. If
bank, must not deviate substantially from those of the Property         the start of the grace period is subject to dispute, the burden of
Fund.                                                                   proof shall rest on the seller.

The Investment Company shall announce the decision to transfer          A buyer shall not have the right of revocation if the seller can pro-
said assets at www.hausinvest.de. The transfer shall be perfor-         ve that the buyer subscribed the shares in the course of operating
med three months after the announcement, unless the German              a business, or that the seller visited the buyer for the negotiations
Supervisory Authority for Financial Services (BaFin) defines an         that led to the sale of shares as a result of a previous subscription
earlier date.                                                           order (Art. 55, Sec. 1, German Industrial Code [Gewerbeordnung]).




                                                                                                                                        167
If the sale was revoked, but the buyer already made payments, the        Pursuant to the provisions of Swiss law, the representative repre-
Investment Company shall be obliged to pay back to the buyer –           sents the Investment Company vis-à-vis the investors and the su-
incrementally, apace with the subscribed shares being returned, if       pervisory authorities in Switzerland.
necessary – any expenses paid plus an amount equivalent to the
value of the paid shares on the day after the letter of revocation       Sale and Redemption of Shares in Switzerland
was received.
                                                                         Redemption requests for the Property Fund shares sold in Switzer-
The right of revocation cannot be waived.                                land may be submitted to the Swiss representative, who will hand-
                                                                         le the liquidation and disbursement of the redemption price in co-
This information applies, mutatis mutandis, to the sale of shares by     operation with the Investment Company and the custodian bank.
the investor.
                                                                         Publications for Investors in Switzerland
Additional Information for Investors Residing in Swit-
zerland                                                                  All notifications to shareholders will be published in the Neue Zür-
                                                                         cher Zeitung (NZZ) as well as in the Schweizerisches Handels-
Particularities of German Property Funds under the                       amtsblatt (SHAB).
German Investment Act                                                    The issue and redemption prices of shares or the net asset value
                                                                         will be published with the comment “exklusive Kommissionen”
German property funds differ from standard investment forms in           (excluding commissions) each time Property Fund shares are issu-
Switzerland. The property fund “hausInvest europa” is an open-           ed or redeemed, but at least every trading day, in the NZZ.
ended German property investment fund managed by Commerz
Real Investmentgesellschaft mbH seated in Wiesbaden (hereinaf-           Use of the Management Fee
ter “Investment Company” or “Fund Management”) for the ac-
count of its investors. The Investment Company acquires and ma-          The management fee is disclosed in the Annual and Semi-Annual
nages the assets belonging to the Property Fund in its own name          Reports. The maximum amount of the fee equals 1% of the net as-
but for the joint account of its investors. The assets belonging to      set value (see Art. 13, Special Fund Rules).
the Property Fund are owned by the Investment Company. The le-
gal relationship between the Investment Company and its inves-           In regard to the shares sold in Switzerland, the Investment Compa-
tors is subject to the German Investment Act (InvA) as well as to        ny may grant reimbursements and portfolio management commis-
the General and Special Fund Rules. According to their regulati-         sions only subject to the following provision: Reimbursements
ons, investors may demand the redemption of their share certifica-       shall be granted exclusively to the subsequently listed institutional
tes by the Company. In this case, the Company shall be obliged to        investors that hold the Property Fund shares on behalf of third par-
redeem the share certificates for the account of the Property Fund       ties, seen from an economic point of view: life insurance compa-
at the current redemption price. Pursuant to Art. 37, InvA, as well      nies, pension funds, and other pension schemes, investment foun-
as Art. 12, Sec. 4 and 5, General Fund Rules, the Investment Com-        dations, Swiss and foreign fund managements, as well as
pany reserves the right to refuse the redemption of share certifica-     investment companies. Portfolio management commissions shall
tes for a limited time whenever the extraordinary circumstances          exclusively be paid to the following sales organisations: authori-
identified in said provisions arise. In addition to the acquisition of   sed sales organisations pursuant to Art. 19, Sec. 1, of the Swiss
real estate and interests in real estate companies, German proper-       Federal Act on Collective Capital Investments; sales organisations
ty funds may invest the equivalent of up to 49% of the property fund     for which the authorisation requirement pursuant to Art. 19, Sec. 1,
in liquid assets, including cash in banks, money market securities,      of the Swiss Federal Act on Collective Capital Investments, has
fixed-income securities, and derivatives.                                been waived; sales partners selling the Property Fund shares ex-
                                                                         clusively to institutional investors; as well as sales partners who
Representatives and Paying Agents in Switzerland                         sell the Property Fund shares exclusively on the basis of a written
                                                                         and paid-for asset management commission to their clientele.
Representative and paying agent in Switzerland for shares of the         Granting such reimbursements and portfolio management com-
Property Fund publicly sold inside and from Switzerland is Com-          missions will not encumber the Property Fund with additional
merzbank (Schweiz) AG, Lintheschergasse 7, 8023 Zurich/Switzer-          costs.
land.
                                                                         Place of Performance and Place of Jurisdiction
Shareholders may order all sales documents, most notably the Sa-
les Prospectus including the Fund Rules as well as the Annual and        In regard to the shares sold in Switzerland, a place of performance
Semi-Annual Reports plus the simplified Sales Prospectus inten-          and a place of jurisdiction exist at the seat of the representative in
ded solely for distribution in Switzerland, free of charge from the      Switzerland. All communications in this context should be directed
representation in Switzerland.                                           to Commerzbank (Schweiz) AG, Lintheschergasse 7, 8023 Zurich/
                                                                         Switzerland.


168
General Fund Rules



governing the legal relationship between the investors and Com-         a) at least once a year, the real estate belonging to the Property
merz Real Investmentgesellschaft mbH, Wiesbaden, Germany,                  Fund or owned by a given real estate company;
(hereinafter referred to as the “Company”), with regard to the se-
parate property funds launched by the Company, these rules being        b) the real estate that the Company or a real estate company
effective only in conjunction with the Special Fund Rules defined          intends to sell.
for the respective property fund, whereas:
                                                                        4. Moreover, the valuation committee shall re-appraise the value
Article 1, General Provisions                                           of a given property within two months after a ground lease has
                                                                        been granted.
1. The Company is a capital investment company, subject to the
provisions of the German Investment Act (InvA).                         5. A property may be acquired for the Property Fund or for real
                                                                        estate company in which the Property Fund holds direct or indirect
2. In accordance with the principle of risk diversification, the Com-   interest only after it was valuated by an expert pursuant to Art. 2,
pany invests the capital deposited in its accounts in its own name      Sent. 1, above, who is not a member of the valuation committee
for the joint account of the investors, and in assets pursuant to the   formed by the Company.
InvA, said assets being separate from the Company’s own assets,
and taking the form of separate property funds. The Company issu-       6. An interest in a real estate company may only be directly or in-
es certificates (share certificates) in evidence of the resulting in-   directly acquired for the Property Fund after the real estate repor-
vestor rights.                                                          ted in the annual accounts or in the portfolio of investments of that
                                                                        real estate company was valuated by an expert pursuant to Art. 2,
3. The Company owns the assets.                                         Sent. 1, above, who is not a member of the valuation committee
                                                                        formed by the Company.
4. Real property, ground leases, as well as rights in the form of re-
sidential property ownership, partial ownership, residential ground     Article 4, Fund Management
leases and partial ground leases as well as usufruct in properties
are hereinafter collectively referred to in the General Fund Rules      1. The Company shall acquire and manage the assets in its own
and the Special Fund Rules as “real estate”.                            name for the joint account of the investors, and with the diligence
                                                                        of a prudent businessman. In discharging its duties, the Company
5. The legal relationship between the Investment Company and the        shall act independently of the custodian bank, and exclusively in
investors is subject to these Fund Rules and the InvA.                  the best interest of the investors and of the market’s integrity.

Article 2, Custodian Bank                                               2. The Company is entitled to acquire assets, using the funds in-
                                                                        vested by investors, to dispose of such assets, and to invest the
1. The Company shall appoint a financial institution to act inde-       proceeds in other assets. It is also authorised to perform any other
pendently of the Company and exclusively in the investors’ interest     legal acts that the management of these assets involves.
as custodian bank.
                                                                        3. The Company shall make any decision regarding real estate sa-
2. The custodian bank shall own the monitoring and control tasks        les or participations in real estate companies according to the
under the InvA and these Fund Rules.                                    standards of proper management (Art. 9, Sec. 1, Sent. 1, InvA). Sa-
                                                                        les following the suspension of redemptions pursuant to Art. 12,
Article 3, Experts                                                      Sec. 5, below, shall remain unaffected by this.

1. The Company shall appoint at least one valuation committee           4. The Company shall neither grant money loans nor assume obli-
consisting of no less than three members plus one deputy member         gations arising from a surety- or indemnity agreement for the joint
for the valuation of real estate.                                       account of the investors; and, moreover, shall not sell any assets
                                                                        pursuant to Art. 47, 48 and 50, InvA, that do not belong to the Pro-
2. Each member should be of independent, impartial, and reliable        perty Fund at the time such a transaction is concluded. The effec-
character, and should possess adequate technical know-how as            tiveness of Art. 51, InvA, shall remain unaffected by this. In devia-
well as sufficient hands-on experience in regard to the specific        tion of Sent. 1, above the Company, or any third party acting on its
type of property to be appraised and to the respective regional real    behalf, may grant a loan to a real estate company for the account
estate market. Their financial independence is subject to Art. 77,      of the Property Fund if the Company holds a direct or indirect inter-
Sec. 2, Sentences 3 and 4, InvA.                                        est in that real estate company for the account of the Property
                                                                        Fund. Such a loan shall not exceed the equivalent of 50 % of the
3. The valuation committee owns the tasks entrusted to it pursuant      market value of the real estate owned by that real estate compa-
to the InvA and these Fund Rules in accordance with rules of pro-       ny.
cedure to be issued by the Company. In particular, the valuation
committee shall evaluate on short notice:

                                                                                                                                       169
Article 5, Investment Principles                                            Securities Trade Act, for trading, or fixed-income securities,
                                                                            provided that these do not exceed the equivalent to 5% of the
1. In its Special Fund Rules, the Company shall define:                     Property Fund’s total value, and in addition

a) what type of real estate may be acquired for the Property            f) stock of listed REIT companies or comparable shares of
   Fund;                                                                   foreign legal entities that have been admitted to the markets
                                                                           identified in Article 47, Section 1, Numbers 1 and 2 or have
b) whether, and to what extent, interests in real estate                   been integrated in these, may be acquired as long as the
   companies may be acquired for the account of the Property               value of such stock or such shares does not exceed the
   Fund;                                                                   equivalent of 5% of the property fund value, and provided the
                                                                           criteria identified in Art. 2, Sec. 1, Directive 2007/16/EC are
c) whether, and under what conditions, the real estate of the              met.
   Property Fund may be encumbered with a ground lease;
                                                                        3. The part of the Property Fund that may be held in the form of
d) whether, and to what extent, derivatives pursuant to Art. 51,        cash in banks shall be defined in the Special Fund Rules. The Com-
   InvA, may be invested in for the account of the Property Fund.       pany may invest no more than 20 % of the Property Fund’s total
   When using derivatives, the Company shall observe the                value in cash in banks at any single financial institution.
   German Derivative Ordinance on risk management and risk
   assessment in property funds (DerivateV), passed pursuant to         4. In individual cases, securities and money market instruments,
   Art. 51, Sec. 3, InvA.                                               including securities and money market instruments acquired un-
                                                                        der repurchase agreements, of any single issuer may be acquired
2. The real estate and interests in real estate companies intended      over and above the value of 5%, and up to 10%, of the total value of
for acquisition must imply the prospect of continuous returns.          the Property Fund; however, the total value of securities and mo-
                                                                        ney market instruments from issuers of this type may not exceed
Article 6, Liquidity, Investment Ceilings, Issuer Ceilings              40% of that Property Fund’s total value.

1. The Company must observe the ceilings and restrictions esta-         5. No more than 20% of the Property Fund’s total value may be in-
blished by the German Investment Act and by these Fund Rules            vested into any combination of the following assets at any single
when acquiring, managing and selling assets for the Property            institution:
Fund.
                                                                        P securities or money market instruments floated by this
2. Unless otherwise specified in the Special Fund Rules, the Com-         institution,
pany may keep the following type of financial funds, within the le-
gal parameters (Art. 80, Sec. 1, German Investment Act) and within      P deposits at this institution,
the set ceilings:
                                                                        P credit for the contractual partner risk that is associable with
a) cash in banks pursuant to Art. 49, InvA;                               the transactions entered into with this institution in the form
                                                                          of derivatives not admitted for trading at any stock exchange
b) money market instruments pursuant to Art. 48 and 52, No. 2,            or integrated into another organised market
   InvA;
                                                                        For the issuers identified in Sec. 6, the Sent. 1 shall apply, provided
c) securities that are eligible in the eyes of the European Central     that the aggregate assets and credits do not exceed the equiva-
   Bank or the Deutsche Bundesbank as collateral for the                lent of 35% of the Property Fund’s value. The respectively applica-
   lending transactions specified in Art. 18, Sec. 1 of the             ble ceilings shall remain unaffected by this.
   protocol on the Charter of the European System of Central
   Banks and the European Central Bank, or whose eligibility            6. The Company may invest an equivalent of up to 35% of the Pro-
   will be applied for according to the terms of issuance,              perty Fund’s total value each into debenture bonds, non-bonded
   inasmuch as they become eligible within one year of their            loans, and money market instruments that have been issued or
   issuance;                                                            guaranteed by the Federal German Government, one of the Ger-
                                                                        man states, the European communities, a member state of the Eu-
d) investment shares pursuant to Art. 50, InvA, or shares in            ropean Union or its local authorities, another member state of the
   institutional property funds pursuant to Art. 50, Sec. 1, Sent. 2,   Treaty on the European Economic Area, a third-party country or an
   InvA, which, pursuant to these Fund Rules, must be exclusi-          international organisation to which at least one member state of
   vely invested in assets defined under Let a), b) and c), above;      the European Union belongs. The Company may invest up to 25 %
                                                                        each of the Property Fund’s value in mortgage bonds and munici-
e) securities that have been admitted for trading at an                 pal bonds issued by financial institutions seated in a member state
   organised market pursuant to Art. 2, Sec. 5, German                  of the European Union or in another member state of the Treaty on

170
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the European Economic Area, provided that these financial institu-        3. The securities repurchase agreements shall have a lifetime of
tions are subject to a separate public supervision legally instituted     no more than 12 months.
for the protection of the owners of these debenture bonds, and            Article 9, Borrowing, and Encumbrance of Real Estate
provided that the capital raised by issuing these debenture bonds
is invested in compliance with legal regulations in assets that co-       1. Unless the Special Fund Rules stipulate a lower percentage, the
ver the liabilities arising out of the debenture bonds for their entire   capital management company may take out, for the joint account
lifetime, and that these assets are prioritised for the coverage of       of the investors, loans equalling to 50% of the market value of the
the repayment of the bonds and of the payment of the interest             real estate held in the Property Fund, provided the ceiling defined
upon maturity in case the issuer defaults on these payments.              in Art. 82, Sec. 3, Sent. 2, InvA, is not exceeded. Beyond that, the
                                                                          Company may take out for the joint account of the investors short-
7. The ceiling defined in Sec. 6, Sent. 1, above, may be exceeded         term loans equalling up to 10% of the Property Fund‘s value. Any
for securities and money market instruments of a single issuer            amount that the Company, acting as repo lender, received in con-
pursuant to Art. 62, InvA, provided the Special Fund Rules permit         junction with a repurchase agreement must be set off against this
this while specifying the eligible issuers. In such cases, the secu-      ceiling. Loans may be taken out only if they match market stan-
rities and money market instruments held for the account of the           dards, and if they have been approved by the custodian bank at the
respective Property Fund must originate from at least six different       time of the borrowing.
issues, with no more than 30% of the Property Fund’s total value
being held in any one issue.                                              2. The Company may encumber real estate belonging to the Pro-
                                                                          perty Fund, and may also cede and encumber claims under legal
8. The Company shall keep an amount at least the equivalent of 5%         relationships that relate to real estate (encumbrances), if doing so
of each Property Fund’s value in sight deposits.                          is compatible with diligent and proper business management, and
                                                                          provided the custodian bank approves the encumbrances becau-
Article 7, Securities Lending                                             se it deems the negotiated terms to be in line with market stan-
                                                                          dards. When acquiring real estate, it may also take over encum-
1. The Company may lend, for the account of the Property Fund,            brances associated with that real estate. Unless the Special Fund
securities against adequate collateral to a borrower in return for a      Rules stipulate a lower percentage, the combined encumbrances
fair market consideration for an indeterminate period of time, pro-       of this type must not exceed the equivalent of 50% of the market
vided that the quoted value of the securities to be transferred,          value of all real estate held in the Property Fund. Encumbrances in
combined with the quoted value of the securities already transfer-        connection with the suspension of redemption pursuant to Art. 12,
red to the same borrower of securities for the account of the Pro-        Sec. 5 are not taken into account, nor are ground rents.
perty Fund, does not exceed 10% of the Property Fund’s total va-
lue.                                                                      Article 10, Transfer of all Assets of one Property Fund to
                                                                          another Property Fund
2. If the collateral for the transferred securities is furnished by the
securities borrower in the form of cash in banks, the Company re-         1. The Company may transfer all assets of this Property Fund into
serves the right to invest such cash in money market instruments          another of its property funds, or integrate all assets of another pro-
pursuant to Art. 48, InvA, and in the currency of said cash. The          perty fund into this Property Fund, if:
Property Fund shall be entitled to the collateral earnings.
                                                                          a) both property funds are managed by the Company,
3. In order to broker and process the lending of securities, the
Company may also use a system deviating from the requirements             b) the investment principles and ceilings set forth in the
defined in Art. 54 and 55, InvA, and organised by a securities clea-         respective fund rules for these property funds do not deviate
ring and deposit bank or by another company specified in the Spe-            substantially from each other,
cial Fund Rules whose business object is to perform international
security transactions on behalf of others, provided that the inves-       c) the remuneration due to the Company and the custodian
tors’ interests are safeguarded by the conditions of this system.            bank, as well as the up-front fees and the redemption
                                                                             charges, do not deviate substantially from each other,
Article 8, Securities Repurchase Agreements
                                                                          d) the transfer of all assets of the Property Fund is effected at
1. In return for a consideration, the Company may enter into secu-           the end of the financial year of the transferring property fund
rities repurchase agreements pursuant to Art. 340b, Sec. 2, Ger-             (transfer key date), and if all assets of the property fund to be
man Commercial Code, with credit institutions or financial service           transferred, as well as all assets of the property fund
providers for the account of the Property Fund.                              accepting these transferred assets, are valuated on the
                                                                             transfer key date, and if the exchange rate is set, and if the
2. The securities repurchase agreements must be based on secu-               assets and liabilities have been accepted, and if the entire
rities of the sort that may be acquired for the Property Fund pursu-         transfer process is reviewed by an auditor, and if the German
ant to these Fund Rules.                                                     Supervisory Authority for Financial Services (BaFin) has

                                                                                                                                            171
    approved the transfer of assets based on the assumption that          1. There is principally no limit to the number of shares and atten-
    the investor interests are sufficiently protected. Assuming the       dant share certificates issued. The Company reserves the right to
    approval of BaFin, the Company may set another key date for           discontinue the issuance of shares, be it temporarily or perman-
    the transfer; Art. 44, Sec. 3 and 6, InvA, apply mutatis              ently.
    mutandis.
                                                                          2. Shares may be subscribed from the Company, the custodian
2. The exchange rate is determined on the basis of the ratio bet-         bank, or through third party brokerage.
ween the net inventory value of both the accepted and the accep-
ting property fund at the time of the transfer. The Company‘s deci-       3. Investors shall have the right to demand the redemption of their
sion to transfer all assets of one property fund into another             share certificates by the Company any time, unless the Special
property fund should be announced; Art. 43, Sec. 5, Sec. 1, InvA,         Fund Rules stipulate another arrangement. The Company shall be
applies mutatis mutandis. The transfer should not be effected wit-        obliged to redeem the share certificates for the account of the
hin the next three weeks following its announcement unless an             Property Fund at the current redemption price. The custodian bank
earlier time is set, subject to the approval of BaFin. Investors of the   shall serve as redemption agent.
transferring property fund may consider the new shares of the ac-
cepting property fund as issued by the day following the transfer         4. However, the Company reserves the right to suspend the re-
key date.                                                                 demption of share certificates under extraordinary circumstances
                                                                          that make such a suspension seem necessary, though not without
3. Sec 1, Let. c), above, shall not apply to the merger of individual     taking the investors’ interests into account.
property funds into a single property fund with different share
classes. In this case, the share of the share class within the Pro-       5. In particular, the Company reserves the right to refuse redemp-
perty Fund shall be determined, rather than the exchange rate pur-        tion of shares temporarily for liquidity reasons and for the protec-
suant to Sec. 2, Sent. 1, above.                                          tion of the investors. The Company may refuse redemption for a
                                                                          period of up to three months if the cash in banks and the proceeds
4. The issuance of the new shares in the transferred property fund        from selling money market papers and securities are not sufficient
to the investors is not deemed a switch. Rather, the issued shares        for paying the redemption price and ensuring a proper manage-
replace the shares of the property fund being transferred.                ment, or if they are not immediately available. If, upon expiration of
                                                                          the aforementioned period, the liquid funds remain insufficient to
Article 11, Share Certificates                                            cover redemptions, the real estate belonging to the Property Fund
                                                                          shall be sold. The Company can refuse to redeem shares until the
1. The share certificates are bearer certificates, each represen-         real estate is sold at reasonable conditions, or for up to one year
ting one or several investment shares.                                    after the shares at issue were presented for redemption. The afo-
                                                                          rementioned grace period of one year can be extended by another
2. The shares can confer various rights regarding income distribu-        year. The extension shall be announced in the electronic Federal
tion, specifically up-front fee, redemption charge, the currency of       Gazette (Bundesanzeiger) and moreover in a business paper or
the share value, the management fee, the minimum investment               daily with sufficient circulation, or in the electronic information
sum, or a combination of these characteristics (share classes).           media designated in the Sales Prospectus. Upon expiration of this
The details shall be defined in the Special Fund Rules.                   grace period, the Company can use real estate as loan collateral
                                                                          irrespective of the borrowing principles and beyond the encum-
3. The share certificates shall bear at least the hand-written or         brance ceiling specified in the Special Fund Rules, in order to pro-
facsimile signatures of the Company and the custodian bank. In            cure the financial means for redeeming the shares. Whenever the
addition, they shall also bear the hand-written signature of a con-       redemption of shares is resumed, the new issuance and redemp-
trolling person at the custodian bank.                                    tion prices shall be published in the electronic Federal Gazette and
                                                                          moreover in a business paper or daily with adequate circulation,
4. The shares are transferable. The rights vested in each share           or in the electronic information media designated in the Sales Pro-
certificate are passed on with the transfer of ownership. In any          spectus.
event, the Company shall regard the holder of the share certificate
as the entitled party.                                                    Article 13, Issue Price and Redemption Price

5. If the investor rights at the time the respective property fund is     1. In order to calculate the issue price and the redemption price of
launched, or the rights of investors belonging to a share class           the shares, the value of the assets held in the Property Fund (net
whenever share classes are introduced, are to be chartered not in         asset value) shall be determined on the dates set in the Sec. 5 and
the form of a global certificate, but in single or multiple share cer-    divided by the number of shares in circulation (share value). If, pur-
tificates, this shall be defined in the Special Fund Rules.               suant to Art. 11, Sec. 2, different share classes are introduced for
                                                                          the Property Fund, the share value and the issue price and the re-
Article 12, Issuance and Redemption of Share Certifica-                   demption price shall be determined separately for each share class.
tes, Suspension of Redemption                                             Valuation of the assets is performed according to the principles for

172
                                                                                                                      G e n e r a l Fu n d Ru l e s




establishing the fair value and the market price as stipulated in the     report covering a financial year ending before 1 January 2009,
InvA and in the Ordinances passed on the basis of that Act.               shall moreover be made public in a business paper or daily with
2. When establishing the issue price, an up-front fee designed to         adequate circulation, or in the electronic information media desig-
cover issue costs may be added to the share value. Apart from the         nated in the Sales Prospectus).
up-front fee, the Company shall use further amounts from pay-
ments made by the share buyers for the purpose of covering ex-            Article 16, Termination Notice, Liquidation of a Property
penses, though only inasmuch as the Special Fund Rules provide            Fund
for this.
                                                                          1. The Company may terminate the management of the Property
3. The redemption price shall be the share value determined pur-          Fund, while observing a notice period of at least six months, by
suant to Sec. 1, above, with the reservation to apply a redemption        announcement in the electronic Federal Gazette (Bundesanzeiger)
charge. If the Special Fund Rules provide for a redemption charge,        and moreover in the next Annual or Semi-Annual Report, respecti-
the custodian bank shall pay the share value, minus the redempti-         vely.
on charge, to the investor, and shall forward the redemption char-
ge to the Company. The details shall be defined in the Special Fund       2. The Company is obliged to terminate management of the Proper-
Rules.                                                                    ty Fund at the request of the German Supervisory Authority (BaFin)
                                                                          if the total value of the Property Fund falls below 150 million euros
4. The key date for settling calls for shares and placing requests        following the passage of four years after it was set up.
for redemptions shall be the valuation day following the receipt of
the respective share call or redemption order at the latest.              3. The right of the Company to manage the Property Fund shall ex-
                                                                          pire as soon as such termination becomes effective. In this case,
5. The issue and redemption prices are calculated each trading            the Property Fund shall pass into the ownership of the custodian
day. The Company and custodian bank may refrain from assessing            bank, which shall liquidate the Fund and distribute the liquidation
the value for trading days that are public holidays, as well as on        proceeds among the investors. During the liquidation period, the
December 24 and 31 of each year; details being specified in the           custodian bank may claim the remuneration formerly due to the
Sales Prospectus.                                                         Company.

Article 14, Expenses                                                      4. The Company shall compile a liquidation report as of the day its
                                                                          management rights expire pursuant to Art. 38, InvA, which report
The Special Fund Rules shall specify the expenditures and remu-           shall satisfy the requirements for an Annual Report pursuant to
nerations due to the Company, custodian bank, and any third party,        Art. 44, Sec. 1, and Art. 79, Sec. 1 and 2, InvA.
that can be charged to the Property Fund. In addition, the Special
Fund Rules shall specify the method and the amount of payment             Article 17, Amendments to these Fund Rules
and the basis of calculation for the remunerations defined in Sent.
1, above.                                                                 1. The Company may amend the Fund Rules.

Article 15, Accounting                                                    2. Amendments to these Fund Rules, including the Appendix to the
                                                                          Special Fund Rules, while excepting the rules governing the ex-
1. The Company shall publish an Annual Report including a state-          penditures and the remunerations due to the Company, the cus-
ment of earnings and expenditures pursuant to Art. 44, Sec. 1, and        todian bank and any third party out of a given Property Fund (Art.
Art. 79, Sec. 1 and 2, InvA, no later than four months (in the case of    43, Sec. 2, Sent. 1, in combination with Art. 41, Sec. 1, Sent. 1, InvA),
financial years ending before 1 January 2009: no later than three         require the approval of the German Supervisory Authority (BaFin).
months) after the end of each financial year of the Property Fund.        If amendments pursuant Sent. 1, above, concern the investment
                                                                          principles of the Property Fund, they require prior approval by the
2. The Company shall publish a Semi-Annual Report pursuant to             Company’s supervisory board.
Art. 44, Sec. 2 and Art. 79, Sections 1 and 2, InvA, no later than two
months after the end of the first six months of each financial year.      3. 3. All intended amendments shall be published in the electronic
                                                                          Federal Gazette and moreover in a business paper or daily with
3. If the right to transfer the Property Fund during the financial year   sufficient circulation, or in the electronic information media desig-
to another mutual fund is exercised, the Company shall compile an         nated in the Sales Prospectus, including a reference to the date at
interim report as of the transfer key date, which report shall satisfy    which they enter into force, and shall become effective – excep-
the requirements for annual reports pursuant to Art. 44, Sec. 1, and      ting any amendment under Sec. 4 and 5, above – on the day after
Art. 79, Sec. 1 and 2, InvA.                                              their announcement in the electronic Federal Gazette at the ear-
                                                                          liest.
4. The reports shall be available from the Company and the custod-
ian bank and other institutions listed in the Sales Prospectus; they      4. Amendments to the provisions governing the expenditures and
shall also be made public in the electronic Federal Gazette (any          the remunerations due to the Company, the custodian bank and

                                                                                                                                             173
any third party (Art. 41, Sec. 1, Sent. 1, InvA) shall become effective
six months after their announcement unless an earlier date is defi-
ned subject to the approval of the German Supervisory Authority
(BaFin). The announcement shall be made pursuant to Sec. 3, ab-
ove.

5. Amendments to the existing investment principles for the Pro-
perty Fund shall become effective six months after their announ-
cements. They shall be published pursuant to Sec. 3, above.

Article 18, Place of Performance, Place of Jurisdiction

1. The place of performance shall be the Company’s legal seat.

2. For investors not subject to general jurisdiction in Germany, the
place of jurisdiction shall be the Company’s legal seat.




174
Special Fund Rules



for regulating the legal relationship between investors and Com-       items required for managing the assets, or interests in other real
merz Real Investmentgesellschaft mbH, Wiesbaden, (hereinafter          estate companies. Interests in real estate companies shall be ta-
referred to as the “Company”), with regard to the hausInvest euro-     ken into account in the context of investment ceilings pursuant to
pa Property Fund launched by the Company. These Special Fund           Art. 2, above, and when calculating the applicable legal limits.
Rules shall be effective only in conjunction with the General Fund     (Note: effective as of 16 February 2009)
Rules defined by the Company for its property funds, whereas:
                                                                       2. To the extent that a real estate company is granted a loan pursu-
Article 1, Custodian Bank                                              ant to Art. 4, Sec. 4, Sent. 3, General Fund Rules, the Company must
                                                                       ensure that:
The custodian bank for the Property Fund shall be Commerzbank
AG, with legal seat in Frankfurt am Main.                              a) the loan conditions are in line with market standards;

Investment Principles and Investment Ceilings                          b) the loan is secured by sufficient collateral;

Article 2, Real Estate                                                 c) agreements regarding the sale of interests exist to the effect
                                                                          that the loan will be due for repayment within six months
1. The Company may acquire, within the legal limits (Art. 67, secti-      after that sale;
ons 1 and 2, InvA), for the Property Fund the following real estate,
situated in any member state of the European Union or in another       d) the sum total of loans granted to a given real estate company
member states of the Treaty on the European Economic Area:                for the account of the Property Fund does not exceed 50% of
                                                                          the total value of the real estate held by that real estate
a) residential real estate, commercial real estate, and mixed             company;
   purpose real estate;
                                                                       e) the sum total of loans granted to real estate companies for
b) real estate under development, in a value equalling up to 20%          the account of the Property Fund does not exceed 25% of the
   of the Property Fund’s total value;                                    Property Fund’s total value. Loans taken out shall not be
                                                                          deducted for the calculation of the ceiling.
c) undeveloped real estate intended and suitable for develop-
   ment in the near future, pursuant to a), in a value equalling up    Article 4, Encumbrance with a Ground Lease
   to 20% of the Property Fund‘s total value;
                                                                       1. The Company may encumber real estate belonging to the Pro-
d) ground leases, subject to the conditions identified in Let. a) to   perty Fund as defined in Art. 2, Sec. 1, Let. a), b), c) and e), above,
   c), above;                                                          with ground leases, provided the value of the property for which a
                                                                       ground lease is to be granted does not, taken together with the
e) other real estate and other ground leases, as well as rights in     value of the properties for which ground leases have already been
   the form of residential real estate ownership, partial              granted, exceed 10% of the Property Fund’s total value. Loans ta-
   ownership, residential ground leases and partial ground             ken out may not be deducted for the calculation of the Property
   leases, in a value equalling up to 15% of the Property Fund’s       Fund’s total value.
   total value;
                                                                       2. Real estate may only be encumbered with a ground lease if un-
f) usufruct to real estate pursuant to Let. a), above, that serve      foreseen circumstances prevent the real estate from being used
   the execution of public tasks, in a value equalling up to 10%       as originally intended, or if an economically sensible usage is the-
   of the Property Fund’s total value.                                 reby made possible.

2. Loans taken out do not enter into the calculation of the value of   Article 5, Maximum Liquidity
the Property Fund to assess the legal and contractual investment
ceilings pursuant to Sec. 1, Let. b), c), e) and f).                   1. Up to 49 % of the Property Fund’s total value may be held in the
                                                                       form of assets pursuant to Art. 6, Sec. 2, General Fund Rules (ma-
Article 3, Participations in Real Estate Companies                     ximum liquidity). The following committed funds shall be deducted
                                                                       whenever this ceiling is calculated:
1. Within the legal parameters (Art. 68 to 72, InvA), the Company
may acquire interests in real estate companies whose business          P the funds required to secure a properly functioning real
object is restricted by its partnership agreement or articles of as-     estate management,
sociation to those activities that the Company may undertake on
behalf of the Property Fund. According to its partnership agree-       P the funds set aside for the next distribution,
ment or articles of association, the real estate company at issue
may acquire only assets as defined in Art. 2, above, as well as the    P funds that will be required to meet liabilities arising from

                                                                                                                                        175
    legally effective real estate deeds, loan agreements                           underlying instrument, and becomes nil if the difference
    necessary for pending investments in specific real estate and                  bears the opposite sign;
    for specific construction measures, as well as liabilities
    arising from construction contracts, inasmuch as these                 c) interest swaps, currency swaps, or interest currency swaps;
    liabilities will become due within two years’ time.
                                                                           d) options on swaps of the type defined in Let. c), above,
2. The Property Fund assets pursuant to Sec. 1, above, may also be            provided they show the characteristics defined in Let. b)
denominated in a foreign currency of a member state of the Treaty             under Sub-Let. aa) and bb), above, (swaptions);
on the European Economic Area.
                                                                           e) credit default swaps on assets pursuant to Art. 6, Sec. 2, Let.
Article 6, Currency Risk                                                      b) to e), General Fund Rules, as well as on real estate
                                                                              pursuant to Art. 2, Sec. 1, above, inasmuch as they serve
Assets held for the account of the Property Fund may only be ex-              exclusively and manifestly the purpose of hedging the loan
posed to currency risks to the extent that the value of assets sub-           risk of precisely associable Property Fund assets;
ject to such risks does not exceed 30% of the Property Fund’s total
value.                                                                     At the same time, the creditable amount of the Property Fund to be
                                                                           assessed, pursuant to Art. 16, German Derivative Ordinance, shall,
Article 7, Derivatives for Hedging Purposes                                in the context of the interest rate risk or equity price risk or the
                                                                           exchange rate risk, at no time exceed a value equalling two times
1. The Company may use derivatives in conjunction with the ma-             the Property Fund’s total value.
nagement of the Property Fund. It may, in keeping with the type
and volume of the deployed derivative, use the simple or the quali-        3. Forward contracts, options and subscription warranties on in-
fied approach in line with the German Derivative Ordinance (Deri-          vestment shares pursuant to Art. 6, Sec. 2, Let. d), General Fund
vateV) in order to determine the degree of utilisation of the market       Rules, must not be concluded.
risk limit for the use of derivatives pursuant to Art. 51, Sec. 2, InvA.
The details shall be specified in the Sales Prospectus.                    4. If it uses the qualified approach, and assuming a suitable risk
                                                                           management is in place, the Company may, for hedging purposes,
2. If the Company uses the simple approach, it may invest only in          invest in any derivative derived from assets that have been acqui-
derivatives derived from assets that may be acquired pursuant to           red pursuant to Art. 6, Sec. 2, Let. b) to f), General Fund Rules, or
Art. 6, Sec. 2, Let. b) to f), General Fund Rules, or from real estate     from real estate that has been acquired pursuant to Art. 2, Sec. 1,
that may be acquired pursuant to Art. 2, Sec. 1, above. In this con-       above, or from interest rates, exchange rates or currencies. This
text, and pursuant to Art. 6, Sec. 2, German Derivative Ordinance,         includes in particular options, financial forward contracts, and
it limits itself to the exclusive use of the following basic forms of      swaps, as well as combinations thereof. At the same time, the
derivatives, or combinations of these derivatives, or combinations         potential risk amount of the market risk may at no time exceed a
of assets that may be acquired for the Property Fund, together with        value equalling two times the potential risk amount for the market
the aforementioned types of derivatives inasmuch as they are al-           risk of the attendant composition estate pursuant to Art. 9, German
ready part of the Property Fund:                                           Derivative Ordinance.

a) forward contracts on assets pursuant to Art. 6, Sec. 2, Let. b)         5. Under no circumstances may the Company deviate from the Ge-
   to f), General Fund Rules, as well as on real estate pursuant           neral and Special Fund Rules, nor from the investment principles
   to Art. 2, Sec. 1, above, interest rates, exchange rates or             and limits defined in the Sales Prospectus, when engaging in the
   currencies;                                                             above transactions.

b) options and subscription warrants on assets pursuant to Art.            6. The Company shall use derivatives only for hedging purposes.
   6, Sec. 2, Let. b) to f), General Fund Rules, as well as on real
   estate pursuant to Art. 2, Sec. 1, above, interest rates,               7. When assessing the market risk limit for the use of derivatives,
   exchange rates or currencies, and on forward contracts                  the Company may switch from a simple to a qualified approach
   pursuant to Let. a), above, provided they show the following            pursuant to Art. 7, German Derivative Ordinance, at any time. The
   characteristics:                                                        switch to a qualified approach does not require the approval by
                                                                           the German Supervisory Authority, though the Company is held to
     aa)	 hey can be exercised at any time throughout their entire
        t                                                                  report such a switch to the German Supervisory Authority without
        lifetime or at the end of their lifetime, and                      delay, and to announce it in the next Semi-Annual or Annual Re-
                                                                           port, respectively.
        t
     bb)	 he option value depends, at the time it is exercised, and
        in a linear sense, on the positive or negative difference          Article 8, Securities Lending and Securities Repurchase
        between exercise price and market price of the                     Agreements



176
                                                                                                                   s p e c i a l Fu n d Ru l e s




Articles 7 and 8, General Fund Rules, must be observed in regard        a) ancillary costs arising in conjunction with the acquisition,
to the investment principles and ceilings.                                 development, sale, and encumbrance of real estate
                                                                           (including taxes);
Article 9, Investment Committee                                         b) borrowing and management costs arising in conjunction with
                                                                           the real estate management (administration, maintenance
In the process of selecting real estate to be acquired or sold for         and operating costs, as well as legal fees);
the Property Fund, the Company may consult an investment com-
mittee to be appointed by the Company‘s supervisory board.              c) the costs arising in connection with the acquisition and sale
                                                                           of other assets;
Share Classes
                                                                        d) standard custody-account charges;
Article 10, Share Classes
                                                                        e) the costs of the valuation committee and other experts;
All shares confer equal rights; the Company shall not create diffe-
rent share classes pursuant to Art. 11, Sec. 2, General Fund Rules.     f) the costs of printing and mailing the Annual and Semi-Annual
                                                                           Reports intended for investors;
Share Certificates, Issue Price, Redemption Price, Red-
emption of Shares, and Costs                                            g) the costs of announcing the Annual and Semi-Annual
                                                                           Reports, the issue and redemption prices, and, as the case
Article 11, Share Certificates                                             may be, the costs of announcing changes in the Fund Rules
                                                                           as well as of the distributions and the liquidation report;
Investor rights shall be securitised exclusively in the form of share
certificates at the time the Property Fund is set up.                   h) the costs for auditing the Property Fund by the Company’s
                                                                           auditor, as well as the costs for publishing the tax base and
Article 12, Issue Price and Redemption Price                               the note stating that the tax information provided has been
                                                                           compiled in compliance with German tax laws.
The up-front fee shall equal 5% of the share value. The Company
shall be at liberty to charge a lower up-front fee. There shall be no   i) the costs involved in cashing the coupons;
redemption charge.
                                                                        j) the costs of renewing the coupon sheets;
Article 13, Expenses*
                                                                        k) the taxes possibly incurred in connection with the costs of
1. For its management of the Property Fund, the Company shall re-          management and custody.
ceive an annual remuneration of up to 1.00% of the total value of
the Property Fund as determined at the end of each financial year.      5. The rules set forth in Sections 2 and 4, above, shall apply, muta-
The Investment Company is entitled to levy quarterly pro-rata ad-       tis mutandis, to interests in real estate companies and their real
vance payments on this fee. (Note: effective as of 16 February          estate, such as the Company holds directly or indirectly for the
2009)                                                                   account of the Property Fund. In this context, the value of a given
                                                                        real estate company, or the value of the real estate held, respecti-
2. If real estate is purchased, sold, developed or modified on behalf   vely, shall be assessed on a pro-rata basis in an amount equivalent
of the Property Fund, the Company can, in each case, levy a non-        to the interest quota. In deviation of this provision, expenditures
recurring charge of 1% of the purchase or sales price, or of the        pursuant to Sec. 4, above, that are incurred by the real estate com-
construction costs and ancillary construction costs.                    pany due to special provisioned defined by the InvA are charged in
                                                                        full – rather than on a pro-rata basis – to the Property Fund. (Note:
For project developments carried out for the account of the Pro-        effective as of 16 February 2009)
perty Fund (acquisition and development of real estate), the Com-
pany can levy a remuneration of up to 2% of the construction costs      6. The Company shall, in its Annual and Semi-Annual Report, iden-
and ancillary construction costs (including the purchase price of       tify the sum total of up-front fees and redemption charges that
the lot).                                                               have been charged to the Property Fund for the acquisition and
                                                                        redemption of shares pursuant to Art. 50, InvA, during the repor-
3. The custodian bank shall receive for its activity an annual remu-    ting period. When acquiring shares that are directly or indirectly
neration of up to 0.25‰ of the Property Fund’s total value as deter-    managed by the Company itself or by another company affiliated
mined at the end of each financial year.                                with the Company through (a) a joint management, (b) control, or
                                                                        (c) a direct or indirect material interest of more than 10% of its
4. On top of the aforementioned remunerations, the following ex-        equity or voting shares, the Investment Company or the other com-
penditures shall be charged to the Property Fund:                       pany may charge no up-front fee and redemption charge for the



                                                                                                                                         177
acquisition or redemption of shares, respectively. The Investment                         Article 15, Financial Year
Company shall, in its Annual Report and Semi-Annual Report, iden-
tify the remuneration that was charged to the Property Fund by the                        The financial year for the Property Fund begins on each 1 April,
Investment Company itself, by another capital investment compa-                           and ends on 31 March of the next calendar year.
ny, by an investment joint stock company with variable capital, or
by another company affiliated with the Investment Company                                 Article 16, Fund Name
through (a) a joint management, (b) control, or (c) a direct or indi-
rect material interest of more than 10% of its equity or voting sha-                      The rights of investors holding share certificates with the original
res, or by a foreign investment company, including the sum char-                          Fund name, “HAUS-INVEST,” and “HAUS-INVEST europa” shall
ged by its management company as administrative remuneration                              remain unaffected. Such share certificates continue to be valid.
for the shares held in the Property Fund. The administrative remu-
neration shall be limited to 0.25% maximum in such cases.

* This provision is not subject to approval by the German Supervisory Authority for Fi-
nancial Services (BaFin).


Income Distribution, Financial Year, and Fund Name

Article 14, Distribution

1. Principally, the Company distributes – subject to the attendant
income equalisation – any earnings resulting from real estate and
from other assets, that have accrued for the account of the Pro-
perty Fund in the course of each financial year, and that have not
been used to cover expenses.

2. The amount that is required for future maintenance shall be de-
ducted from the earnings identified pursuant to Sec. 1, above, and
shall be retained. Amounts required for offsetting the decline in
real estate value may be retained.

3. With the attendant income equalisation taken into account, sa-
les profits and the interest received on the Company’s own cons-
truction project funds may also be distributed, if the saved interest
lies within the normal market limits for saved interest for building
finances.

4. The income eligible for distribution pursuant to Sec. 1 to 3 may
be carried forward for distribution in later financial years if the to-
tal income carried forward does not exceed 10% of the respective
value of the Property Fund at the end of the financial year. Earnings
from short financial years may be carried forward in their entire-
ty.

5. In the interest of conserving the asset value, the income can be
partly – and, in special cases, fully – allocated for reinvestment in
the Property Fund.

6. The distribution shall take place annually, immediately upon pu-
blication of the Annual Report, and against presentation of the
called coupon to the paying agents identified in the distribution
announcements.




178
Nahmitzer Damm, Berlin
Commerz Real
Investmentgesellschaft mbH

Kreuzberger Ring 56
65205 Wiesbaden/Germany
Tel .: +49 (0)611 7105-0
Fax: +49 (0)611 7105-189

info@commerzreal .com
www .hausinvest .de




8500/00/24
AM-Gruppe 231 CGI 01
BB 5 100 738 9
DBV-Winterthur 850 502
DEVK 72701
W&W W 0370


06/2008

				
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