Share price: caught by the financial crisis

Deutsche EuroShop shares began the year at €23.50 and by May 2008 recovered from the losses experienced in the fourth quarter of 2007. On 13 May, it posted an annual high of €28.40 on the basis of the Xetra closing price. From June to September, the share price levelled out at around the €24 mark following the dividend payment. In October, our shares were also affected by the sharp price falls on the global stock markets and the price moved down to €18.50 as of 20 November. A noticeable recovery phase then began in December. The share price ended the year with a slight plus at €24.30. This resulted in the market capitalisation of Deutsche EuroShop rising by around €27 million in 2008 from €808 million to €835 million.

Against the current

Taking into account the dividend paid of €1.05 per share, the performance of Deutsche EuroShop shares amounted to 7.9% year-on-year. The share price rose by 3.4%. Our shares exceeded the European benchmark, the EPRA index (-48.6%) by a substantial margin and in comparison with European peers , they came out at the top end of the field.

The Hamburg-Hanover stock exchange, the newspaper “Die Welt” and Hamburger Sparkasse bestowed Deutsche EuroShop with the Haspax Award for Top Performer 2008 in recognition of its positive share performance.

Open-ended property funds - our competitors for investor capital alongside other property management companies - achieved an average performance of 4.7% in the past year (2007: 5.7%) and, despite all market distortions, had cash inflows of around €0.6 billion (2007: €6.7 billion).

Higher attendance at annual general meeting

The Annual General meeting was held on 19 June 2008 in Hamburg. Approximately 400 shareholders were in attendance at the “Alte Dressurhalle” at the Hagenbeck Zoo in Hamburg, representing 56.1% of the capital (previous year: 46.4%) and approved all the items on the agenda.

Share price in the analysts’ spotlight

Our share is now regularly followed by 24 analysts (as at 31 March 2009, compared with 19 a year earlier) from well-known German and international financial institutions and their recommendations introduce us to new groups of investors. This puts Deutsche EuroShop among those property companies in Europe with the best coverage meaning that is does not need to shy away from comparison within the MDAX (average of 21 analysts). Particularly good news is that other banks intend to begin covering Deutsche EuroShop shares in 2009. Information on the recommendations is available at:

www.deutsche-euroshop.com/research

The majority of analysts give positive recommendations for Deutsche EuroShop shares (as at 31 March 2009)

Award-winning IR work

In July, Deutsche EuroShop received for the third consecutive time the Capital Investor Relations Prize for first place in the MDAX category for its investor relations activities. No other company in the competition has achieved this three times in a row. Each year, the financial magazine Capital awards this well-known prize for the best communication with the financial markets, judging companies on their target group focus, transparency, track record and extra financial reporting.

Deutsche EuroShop also won at BIRD 2008 (Beste Investor Relations Deutschlands - Germany’s Best Investor Relations) for the third time in a row. The investor magazine Börse Online awarded for the sixth time those companies whose capital market information is regarded as particularly open, honest and fair by private investors. We thus succeeded in 2008 not only in defending our top position in the MDAX, but equally in remaining ahead in the overall evaluation of 160 companies from the DAX, the MDAX, the SDAX and the TecDAX.

The 2007 annual report with its motto “The changing face of retail” won tenth place among over 3,000 entries in the LACP 2008 Vision Awards Annual Competition. The LACP is the League of American Communications Professionals. With 98 of a possible 100 points, the Deutsche EuroShop annual report was awarded platinum in the “Real Estate/REIT category”.

In addition, the international specialist magazine Institutional Investor awarded Deutsche EuroShop and its IR managers the Best European Investor Relations prize. We also received the "Deutscher Investor Relations Preis 2008" prize in the MDAX and IR Managers categories as awarded by DIRK (Deutscher Investor Relations Verband - German Investor Relations Association).

In the pan-European Extel Survey, we are happy to point out that the capital market team emerged among the top five in the industry in the relevant categories on a continual basis.

Further awards for our capital market communication can be found on our website at: www.deutsche-euroshop.com/ircommunication

Slight shifts in the shareholder structure

At around 7,800, the number of shareholders remained stable in 2008 (as of 31 March 2009, previous year: 7,750). Structural distribution has changed slightly – institutional investors now hold almost 56% of shares (previous year: 55%) and private investors hold around 25% (previous year: 26%). The Otto Family stake remained stable at around 19.5%. South Africa-based Attfund Ltd. reported holding a stake of almost 5.8%.

However, the share of foreign investors has fallen by 2 percentage points. There were slight changes to the country distribution, particularly to the share of French investors which has dropped by 2.3 percentage points to 4.7%.

Dividend continuity

The Executive and Supervisory Boards will propose payment of a dividend of €1.05 again per share for the 2008 financial year to the Annual General Meeting of 30 June 2009 in Hamburg. With our long-term strategy of a dividend policy based on continuity, and a comparatively high yield of 4.3% (based on the 2008 year-end closing price of €24.30), we hope to cement further the confidence of our existing shareholders and attract new investors. In future, we also intend to distribute a dividend of at least €1.05 per share.

Tax-free dividend

Dividends paid to shareholders domiciled in Germany are generally subject to income or corporation tax. Private investors are charged with the definitive withholding tax at a flat rate of 25% plus the solidarity surcharge as from 2009. Exceptions may be made under certain circumstances for dividend payments that are regarded as equity repayments for tax purposes (distributions from EK04 - equity class 04 - or, since 2001, from the tax-recognised contribution account). Deutsche EuroShop’s dividend fulfils this requirement. The dividend payment constitutes untaxable (i.e. tax-free) income for shareholders in accordance with section 20 (1) clause 1 sentence 3 of the Einkommensteuergesetz (German Income Tax Act). However since 2009 these distributions are taxable due to the new legal status, as capital gains from securities are subject to tax if they are bought after 31 December 2008. In this case the acquisition costs are reduced by the dividends and lead to higher capital gains at the time of the disposal.

Would you like further informations? Then please visit our website or call us:

Patrick Kiss and Nicolas Lissner
Tel.: +49 (0)40 - 41 35 79 20 / -22
Fax: +49 (0)40 - 41 35 79 29
E-Mail: ir@deutsche-euroshop.com

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