CRE_PresUSApril_2006_final

					 Investing in Real Estate
      Opportunities

WestLB Real Estate Day

   The Waldorf Astoria, New York

     Tuesday, April 25th 2006




                                   1
                                  Key Drivers
Drivers of German Real Estate Market
                                 Industry Level                Company Level                     Property Level
            Demographics




                                                                                      •   Population development
                                                                                      •   Age structure
                                                                                      •   Space consumption
                                                                                      •   Migration
Environment




                                                           • Capital gains taxation   • Changes in the new pension system
  Market




                                                           • Corporate purpose        • Unemployment benefit reform

                           • Capital markets (G-REIT)
Regulatory




                           • Relative undervalued          • Financing environment    • Financing & affordability
 Legal &




                           • Potential for rent increase                              • Overall economic situation
                           • Home ownership ratio
       Supply




                                                                                      • Construction costs
                                                                                      • Limited land reserves

Source Colonia Real Estate AG, Morgan Stanley



                                                                                                                            2
          Mission Statement

Colonia Real Estate AG aims to become a
market leader for opportunistic Investments and
Asset Management in German Real Estate.
We invest in real estate assets in the areas of
residential, hotel, retail and office with existing
high positive cash flows.
We intend to create a diversified, high cash flow
generating portfolio, which provides a base for
strong cash distribution to CRE„s shareholders.

                                                      3
           Content

• Company Overview
• Portfolio and Strategy
   – Residential Real Estate
   – Commercial Real Estate
• Asset & Fund Management Capabilities
• CRE‘s Financials
• Summary
• Appendix




                                         4
               Company overview: group highlights

 Specialized team with proven experience in
   • Real estate investments (Edgar Krauss, Markus Drews)
   • REAM - real estate asset management (Resolution GmbH)
   • Private Equity (Stephan Rind, Christian Grosch)
   • Capital Markets (Klaus Reichert)
   • Fund Management (Mario Liebermann)

 Nationwide local presence, offering in-depth local knowledge

 Fully integrated business model, covering the entire value chain in
  real estate investments and services




                                                                        5
               Company overview: group highlights

 Focus on small- and midsize portfolio‘s, off-market transactions
  and distressed situations
   • Niche approach allowing to avoid price increasing auctions
   • Exploiting own vast network and that of banks, lawyers and
     realtors
   • No compromise on key investment guidelines

 Active portfolio management targeting quality properties in
  undervalued markets that offer high value appreciation potential
   • Professional management improving tenant structures
   • Focus on vacancy reduction
   • Preparation for privatisation and/or block transaction

 High level of transparency and governance

                                                                     6
                           Company overview: structure

                                            Colonia Real Estate AG


                   Investments                                                Services




Residential        Office/Retail       Hotel             CFM                CRM               Resolution
Real Estate        Real Estate         Real Estate

• 100% CRE         • Mainly            • 94% CRE Hotel   • 56 % CRE         • 100% CRE        • 56% Resolution
  Wohnen GmbH        co-investments      Immobilien        Fonds              Research &        GmbH
• 99.68%             with Resolution     GmbH              Management         Management      • Asset
  Grasmus            clients                               GmbH               GmbH              Management
  Holding B.V.                                                                                  for 3rd Parties



Target:                                                  Target:
EUR 500 Mio. new Investments in 2006 (EUR 300 Mio.       EUR 2 bn assets under management until 2008
Residential; 200 Mio. Office- and Retail)                (currently EUR 700 Mio)


                                                                                                          7
             Company overview: network

• Our nationwide office network
  makes CRE group a key multi-
  local REAM in Germany
• 38 dedicated and experienced
  professionals in Cologne,
  Frankfurt, Hamburg Stuttgart,
  Munich and Berlin
• Local expertise and access in
  all relevant markets in
  Germany

 Higherdealflow and top
 research capabilities leads to
 superior performance


                                         8
                    Company overview: milestones
                                                                Foundation of CFM together
                                                                with senior management team
                                                                from DB Real Estate

                                                         Acquisition of Resolution
                                                         GmbH (AuM € 700mn)

                                               Acquisition of „Bremen“ and
                                               „Hamburg“ portfolio

                                      Acquisition of Grasmus B.V.
                                      (3,500 appartments)

                      Acquisition of GEBB building
                      (distressed seller)
                                                                                              Application for
                 Acquisition of Arcon Trust                                                   Prime Standard and
                 GmbH (3 Marriott Hotels)                                     10:1 Capital    SDAX Membership
Acquisition of                                                                Increase
Kueppersbusch
AG through                                               4:1 Capital          Application
SwissReal                                                Increase             for General
Estate                                                                        Standard
                                                         Application
                                                         for General
                                                         Standard

                      New management team and
                      renamed to Colonia Real Estate

       2003                        2004                             2005                      2006

                                                                                                            9
                 CRE‘s Share Price Performance

• Best performing real estate stock in
  Europe in 2005 with a 805% return
• Current market cap of EUR 720m
• 3.9m shares issued and outstanding
  (including management options, fully
  diluted number amounts to 4.4m)
• SDAX member as of March 20th 2006
• Envisaged 3:1 share split, raising the
  number of outstanding shares to
  15.6m (announced, AGM decision
  pending)




                                                 10
              Company overview: ownership structure

•   Fortman Cline Group (incl. Swiss   OWNERSHIP STRUCTURE
    Real Estate) intens to remain       Free Float
    major shareholder but intends to      55.00%

    decrease its stake further to
    increase the free float

•   Cerberus Group will be minority                                         Swiss Real Estate
    shareholder (1.7%) in CRE with a                                             38.43%

    2 year lock-up
                                                Peter May   Fortman Cline
                                                               Holding
•
                                                  5.76%
    Management owns 6% through                                  0.81%

    stock option plan with 2 year
    vesting



                                                                                                11
           Content

• Company Overview
• Portfolio and Strategy
   – Residential Real Estate
   – Commercial Real Estate
• Asset and Fund Management
• CRE‘s Financials
• Summary
• Appendix




                               12
                German RE: A Sleeping Giant
                                       TOTAL REAL ESTATE VALUES IN EU
                                            1,200


• Germany is Europe‘s biggest
                                                     Office Space (41 % )   Retail (43 % )         Storage (16 % )
                                                     1,052          1043

                                            1,000


  Real Estate Market, but prices are         800
                                                                              805



  under-performing European peers            600


• Estimated 3.4mn RE units with an           400                                             345


  approx. value of about EUR 138             200
                                                                                                             247
                                                                                                                     170


  bn. with public entities                     ---
                                                                                                                           63




• ca. 900,000 units are held by
                                                      GER           GBR       FRA            ITA             ESP     NED   BEL




  corporates with an approx. value
  of EUR 37bn.
 Massive potential for portfolio
  shifts and possible
  introduction of REITs will ease
  exit through stock listing

                                       Source: Deutsche Bank, LBS, Unternehmensangaben, HVB Global
                                       Market Research,                                                                          13
                 Growth and Value in Business Model
   CRE‘s goal is to build       Assets
    up a diversified high-
    yielding portfolio in German
    real estate
                                                     Trading
                                                     30 - 40%
   As an active portfolio
    manager, we also realize
    capital gains where we see
    limited value appreciation
    potential                                        Holding and
                                                     Optimization
   Trading aims to capture                          60 - 70%
    market opportunities as they
    occur
                                                 t
   A combined growth and
    value strategy


                                                          14
            CRE‘s investment strategy

Key objectives for CRE to enter investments:
 • Each single investment must be cash flow positive
 • Focus on opportunistic investments in residential assets
 • Focus on value added investments in non-residential assets
         • Acquiring good – mostly office - assets from distressed sellers
         • Focus on out-of-favour commercial real estate
 • Target investment size: EUR 10m - EUR 80m
         • Attractive bracket between private investors and large financial groups
 • Target IRR >15% based on estimated holding period of up to eight
   years
 • Proprietary quantitative screening process
         • Efficient and fast screening, avoiding investment mistakes through rigerous
           process




                                                                                     15
Residential RE – the CRE difference




                                      16
                 CRE‘s current portfolio allocation
                                                     AuM by region
• Total Investments have reached
  EUR 200m in assets (as of 03/30/06)                        East Germany
                                                                  4%
• Including Resolution (EUR 700m in total
 assets under management) CRE operates
 close to EUR 1bn in assets
• CRE is one of the fastest growing
  asset managers in Germany                           West Germany
                                                          96%



           AuM by asset class                       AuM by strategy
         Hotel                                                              Value Added
         19%                                                                    28%



Office
10%
                           Residential
                             71%            Opportunistic
                                               72%



                                                                                   17
Residential RE: Grasmus Portfolio
             „Grasmus“ - Residential RE
             Acquisition:        06 / 2005
             Locations:          Aurich, Delmenhorst,
                                 Emden, Ganderkesee,
                                 Leer, Sande,
                                 Wilhelmshaven and
                                 Wittmund
             Purchase price:     EUR 88mn
             Equipment:          3,488 units, 1,137 parking
                                 lots
             Year of construct.: 1968 – 1975
             Net rent:           EUR 11.5m p.a. /
                                 gross yld: 13,05%
             Vacancy rate:       6.5% (at purchase: 11%)

             10/05: Succesful Block Sale of 708 units to
             an international Investor Group


                                                         18
Residential Real Estate

             „Bremen“ - Residential RE
             Acquisition 03/06
             Location:           Brake and Nordenham
             Purchase Price:     EUR 6.7m
             Equipment:          356 units, 58 parking lots
             Net rent:           EUR 0.8m p.a. /
                                 gross yield: 11,94%


             „Hamburg“ - Residential RE
             Acquisition 03 and 04/06
             Location:           Elmshorn and Itzehoe
             Purchase Price:     EUR 38.2m
             Equipment:          1,577 units
             Net rent:           EUR 4.95m p.a. /
                                 gross yield: 12,95%



                                                          19
Office/Commercial RE (I)
            Office Real Estate
            Properties:         2 office buildings
            Acquisition:        01 / 2005
            Tenant:             G.E.B.B. GmbH
            Location:           Cologne
            Purchase price:     EUR 10.2m
            Equipment:          6,680 qm office space,
                                150 parking lots
            Year of construct.: 2001
            Net rent:           EUR 1.0m p.a. /
                                gross yield: 9,81%

            Duration of lease:   2012 (Indexed leases)
                                 G.E.B.B. is a 100%
                                 subsidiary of German
                                 Ministry of Defense



                                                         20
Office/Commercial RE: Hotel Portfolio
            Hotel Real Estate
            Properties:         3 Marriott Hotels (Courtyard)
            Acquisition:        10/2004
            Tenant:             HPI Germany
            Location:           Kassel, Braunschweig,
                                Eisenach
            Long term value:    EUR 27.2m
            Equipment:          439 rooms, 6 restaurants,
                                3 Bars, 2 Spa‘s, conference
                                facilities
            Year of construct.: 1993 - 1995
            Net rent:           EUR 2.0m p.a. /
                                gross yield: 9,2%
            Duration of lease: 2022, triple net
                                Indexed leases
                                Fully guaranted lease
                                payments


                                                         21
              Investment prospects for 2006
Residential portfolios

•   Acquiring at least E300m worth of residential portfolios in 2006 (including
    already pending portfolios in Hamburg and Bremen)

•   Allowing for a swift exit of parts of the portfolio, if opportunities occur and
    the minimum IRR target is achievable

Office/commercial portfolios

•   Acquiring at least E200m worth of assets, obeying the strict CRE 10-step
    investment criterias

•   Current cash levels and equity is sufficuient to finance, structure and
    improve these investments



                                                                                22
           Content

• Company Overview
• Portfolio and Strategy
   – Residential Real Estate
   – Commercial Real Estate
• Asset & Fund Management
• CRE‘s Financials
• Summary
• Appendix




                               23
                Asset & fund management capabilities

•   Foundation of CRE Fund Management in Q1 2006 (CFM)
     -   5 dedicated professionals in Frankfurt and Cologne offering closed-
         end fund or REIT solutions for retail and institutional investors

•   Acquisition of Resolution offering REAM to third parties
     -   24 dedicated professionals with offices in Cologne, Frankfurt,
         Stuttgart, Munich and Berlin cover all relevant markets
     -   Established 12 year track record and high-quality customer base
         (Blackstone etc.) with EUR 700m Assets under Management


•   Active management of principal portfolio
     -   optimization to enhance cash-flows and increase value (i.e. reducing
         vacancy, reducing outstanding rents, privatizations)




                                                                                24
                    Range of REAM Services




Acquisition Fees: 1 –       Asset Management     Incentive Fees: 10 –
2% of Transaction           Fees: 0,5 - 1% of    30% of profits above
Volume                      Transaction Volume   certain hurdle rates


                                                                        25
              Asset Management Prospects (I)
•   CRM, CFM and Resolution are the cornerstone to transform CRE into a
    fully integrated real estate investment company

•   Asset management is creating strong recurring revenue streams
    without the need of high investments – and increases value to owners / 3rd
    parties

•   CRE expects the volume of real estate assets acquired by foreign investors
    to be in need of professional local REAM to reach EUR 80bn by 2010
         • Rising institutional investors‘ interest requires nationwide operating
           real estate managers and fund managers

•   Crisis of open-end funds and potential iniation of G-REITs drives
    demand for alternative transparent products (closed-end funds, REITs)

•   CRE aims to achieve assets under management of EUR 2bn by 2008
         • Starting from initial E700m in 2006


                                                                               26
             Asset Management Prospects (II)
REAM
• Based on the initial business model, CRE expects until end of 2008
             • E5-7m in annual fees from Resolution‘s current REAM activities
             • E10 – 13m in acquisition fees for new Resolution activities


Fund management
• New closed end funds are expected to be launched as early as 2006
             • E2 – 3m in closing fees in 2006
             • About 1 – 2% in annual fund management fees
             • Business development partly depending on the launch of G-REITs


Research & Management
• New investors seeking investment targets would be advised on
  structuring and acquiring deals
             • Pure 3rd party approach, using vast internal experience


                                                                                27
           Content
• Company Overview
• Portfolio and Strategy
   – Residential Real Estate
   – Commercial Real Estate
• Asset and Fund Management
• CRE‘s Financials
• Summary
• Appendix




                               28
                   CRE‘s financial highlights 2005
                                   2005              2004
•   Total operating performance   € 39,9 Mio.       € 0,8 Mio.

•   Total operating income        € 19,6 Mio.       € 0,8 Mio.

•   EBIT                          € 12,9 Mio.       € -0,5 Mio.

•   Group Income                  € 6,8 Mio.        € -0,6 Mio.

•   Earnings per Share            € 2,36 / € 1,97   € -0,27 /

•   Balance sheet total           € 141,5 Mio.      € 28,5 Mio.

•   Equity Ratio                  22,9 %            11,2 %


                                                                  29
                   Strong Outlook
Sales (EUR Mio.)                              Group Income (EUR Mio.)

                                             24
60
                                             20
45
                                             16

30                                           12
                                              8
15
                                              4

0                                             0
       2004            2005          2006e
                                              -4     2004         2005   2006e



Key Facts                                    2004              2005      2006e

Total oper. Performance (EUR Mio.)             0.8             39.9       56.8

EBIT (EUR Mio.)                               -0.5             12.9       33.0

Group Income (EUR Mio.)                       -0.6              6.8       25.0

EPS (EUR) (fully diluted)                    -0.27             1.97       5.45



                                                                                 30
           Content
• Company Overview
• Portfolio and Strategy
   – Residential Real Estate
   – Commercial Real Estate
• Asset and Fund Management
• CRE‘s Financials
• Summary
• Appendix




                               31
               A Unique Opportunity

•   A highly motivated management team with a broad and
    complimentary skillset and a 12 year track record

•   A nationwide office network with local access to all relevant regions

•   Together with Resolution operating more than EUR 900m in assets

•   A growth and value opportunity as one of the few integrated real
    estate investment firms in Germany at the beginning of the
    transition of Europe‘s largest Real Estate Market


         The fundament is set – join us building the house…




                                                                        32
                 Contact

Colonia Real Estate AG
Hohenstaufenring 48-54
50674 Cologne / Germany


Stephan Rind
CEO

phone:      + 49 221 71 60 71 0
fax:        + 49 221 71 60 71 99
mail:       info@cre.ag

Internet:   www.coloniarealestate.com




                                        33
                         Disclaimer

This document contains certain forward-looking statements and information relating to the Colonia Real Estate AG Group that are based on
beliefs of its management as well as assumptions made by and information currently available to Colonia Real Estate AG. When used in
this document, the words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan” and “project” and similar expressions, as they relate to
the Colonia Real Estate AG Group or its management, are intended to identify forward-looking statements. Such statements reflect the
current views of Colonia Real Estate AG with respect to future events and are subject to certain risks, uncertainties and assumptions. Many
factors could cause the actual results, performance or achievements of the Colonia Real Estate AG Group to be materially different from
any future results, performance or achievements that may be expressed or implied by such forward-looking statements, including, among
others, changes in general economic and business conditions, changes in currency exchange rates and interest rates, introduction of
competing products by other companies, lack of acceptance of new products or services by the Group´s targeted customers, changes in
business strategy and various other factors, both referenced and not referenced in this annual report. Should one or more of these risks or
uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in this
annual report as anticipated, believed, estimated, expected, intended, planned or projected. Colonia Real Estate AG does not intend, and
does not assume any obligation, to update these forward-looking statements.




                                                                                                                                            34
           Content

• Company Overview
• Portfolio and Strategy
   – Residential Real Estate
   – Commercial Real Estate
• Asset and Fund Management
• CRE‘s Financials
• Summary
• Appendix




                               35
              Shareholders` Equity and Liabilities
              2005                                           2004

                       Current
                                               Long-term
                       Liabilities
                                               Liabilities
                       (19,4 Mio.)                                  Current
                                               (24,2 Mio.)
Long-term              14%                                          Liabilities
                                               85%
Liabilities                                                         (1,0 Mio.)
(89,6 Mio.)                                                         4%
63%

                                                                        Shareholders`
                               Shareholders`                            Equity
                               Equity                                   (3,2 Mio.)
                               (32,4 Mio.)                              11%
                               23%




                                                                                  36
              Assets by Segment
              2005                        2004


                        Office                   Hotel
                        (13,3 Mio.)              (28,4 Mio.)
                        10%                      100%



Residential
(91,4 Mio.)
69%

                            Hotel
                            (28,6 Mio.)
                            21%




                                                               37
Increase in Households foreseen




                                  38
Where are the „good“ markets




                               39

				
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