___ Marketing of the MainTor and Opera Offices ___ Project volume of around EUR 560 million
We are involved in project developments via co-investments, which reposition suitable properties on the market through major structural work. By posi- tioning properties in a higher quality segment of the market or increasing the lettable area, we can increase their value considerably. We can also exploit the cyclical movements in real estate markets to our advantage through proj- ect developments by preparing projects in periods when the market is weaker so that we are able to offer an attractive product when markets pick up. The
aim of our project developments is to sell properties at far better prices hav- ing increased their value. We minimise existing risks by making the execution of projects dependent on adequate levels of pre-letting.
We are currently involved in two major projects where planning is already far advanced and they are now the subject of intensive marketing campaigns.
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In late summer 2011, DIC will make some 4,000 sqm available as an exhibition space for parts of the exhibition marking the Museum of Modern Art’s 20th anniversary at the MainTor site. Parallel to the exhibition, preparations for the demolition of the building on the front section of the site will be started.
MainTor in Frankfurt
With an investment volume of approximately EUR 500 million, the DIC Group will construct an open and lively quarter on one of the most attractive devel- opment sites in Frankfurt’s city centre. The MainTor project development is designed as an extension to the Frankfurt banking quarter (“The Riverside Financial District”). It will allow historic routes from the city centre to the river Main again and provides for a central square. Three towers will be constructed – the 100 metre high "WinX" and two towers of 64 metres each – in the banking quarter. The devel- opment is completed by the revitalisation of an ex- isting building. While the towers will be used almost entirely as office space, smaller residential build- ings will supplement the variety of uses for the site. Extensive sustainability is- sues are being taken into account in the construction, which makes the Main-
Potential value added
– Space increased from 64,000 sqm to 108,000 sqm (+40%) – Development of an urban neighbourhood in an absolutely
unique position next to the Main
– Positioning as premium space in the banking quarter (Riverside Financial District)
Status
The legally binding zoning plan by the City of Frankfurt has been in place since the spring. Our entire preparatory plan- ning process has been concluded. Initial preparatory work for implementing the project on the existing structure will take place in 2011 following the departure of the current tenant. Pre-letting of the office towers on the site has begun. The point at which construction will start is flexible thanks to the optimised breakdown and will be based on the tenancy
The OpernPalais, a classic Schumacher building on the Opera Boulevard, is being respectfully redeveloped for modern use.
Opera Offices and OpernPalais/Hamburg
Our project development activities in Hamburg involve two properties of very different character, which are being constructed in the immediate vicinity of the Hamburg State Opera. With its façade curved around an atrium, the Opera Offices building offers exceptional, modern of- fice space in the best inner-city location. The OpernPalais is a sensitive redevelopment of a stylish, listed administrative building designed by the renowned architect Fritz Schumacher, which offers office space with traditional charm. The development will also be en- hanced by the large-scale optimisation and development of the entire quarter. The Opera Boulevard Business Improvement District, which DIC Asset AG assists with its activities, envisages traffic calming and wide pavements, among other things.
Potential value added
– Space increased to 12,800 sqm (+60%)
– Opening up of the ground floor for 1A retail space extending to the new Opera Boulevard
– Repositioning in the attractive Hamburg market
Status
Construction permits for both projects, which are worth some EUR 57 million, have been issued. The planning phase is com- plete and marketing has started for both properties. Both prop- erties are prepared for construction to start following successful pre-letting, meaning that no delays are expected.
DIC is promoting outstanding developments with ideas and marketing expertise.
Moving beyond the familiar to reinvent properties
The DIC Group develops properties in places where the combination of market and property potential offers extraordinary opportunities for adding value.
These include the delicate refurbishment of listed buildings, repositioning buildings or even complex new urban developments. In planning, construction and marketing, we rely on detailed market and competition analyses – and on our team’s many years of experience and unrivalled flair.
» Developing distinctive projects
to a precise schedule. «
SUSTAINABILITY
Our portfolio includes 288 properties with a total lettable area of 1.9 million sqm and real estate assets of EUR 3.1 billion in total. It is estimated that some 53,000 people work in our premises every day. The environment is affected by these business activities because, among other things, energy is consumed, carbon dioxide is released and waste is produced. As a real estate company which ranks among the major property owners in Germany, we have a posi- tion that obliges us to adopt a long-term focus in dealing with our assets, ten- ants, business partners, employees and residents.
Strategic sustainability issues
As a real estate company with a long-term investment horizon, we are geared to dealing with resources and the environment in a sustainable manner. As a result, we minimise risks, encourage existing business and open up new op- portunities for business. In our entrepreneurial decisions and processes, we therefore take account of ecological and social requirements and, wherever
possible, forego the opportunities for short-term gains in favour of funda- mental possibilities for optimisation. We are endeavouring gradually to inte- grate sustainability in our company’s concerns – both strategically and in or- ganisational terms – and to make it the aim of all our employees. This also means dealing with our employees, customers and business partners in a fair and responsible manner.
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Our strategic approach includes the fact that we
I are guided by environmental, security and social standards;
I include sustainability issues in checking and implementing business op- erations;
I maintain good relationships with customers and suppliers that have a long-term impact;
I communicate openly with relevant stakeholders.
Management and scrutiny through key indicators
We regularly examine whether our commercial activity is consistent with our understanding of sustainability and use various systems and indicators for this purpose. To this end, we make use of corporate figures, industry-wide benchmarks and examples of best practice.
In the area of environment and building efficiency, we are guided by compa- rable figures from industry studies (including the Oscar Study) and pursue our investments in measures to improve efficiency. In the area of employees, employment and social standards and our attraction as an employer are a pri- ority; we use feedback from staff and management appraisals here and as- sess the quality of applications for employment. Tenant satisfaction is the product, firstly, of discussions with tenants and secondly, of our letting re- sults. Finally, financial figures serve as indicators for economic and financial sustainability.
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Economic sustainability
We strive to make DIC Asset AG a company that operates economically, that will endure and through its services creates lasting values for the benefit of shareholders, employees and business partners and makes a positive contri- bution to the community.
Investment in permanent value creation
We concentrate on securing and increasing the value of our real estate port- folio. This is achieved through investments in the portfolio, which increase the useful life, the energy efficiency of the buildings, their fixtures and fittings and ultimately their attractiveness, but also through the use of means which optimise our property management services and contribute to achieving high levels of tenant satisfaction. In recent years, we have developed a network of offices across Germany and also pressed ahead strongly with ensuring that tenants constitute the focus of our property management by investing in per- sonnel structures.
Our tenants’ satisfaction
Our tenants' satisfaction is one of the elementary conditions for long-term success. Tenancy agreements are mostly agreed over a period of several years meaning that we can benefit from a good landlord-tenant relationship over a long period. This is why we started to offer personal, direct and local support to our tenants in 2006. We review our customer relationships regularly, through discussions with tenants among other things. The tenant-focused optimisation of our organisation, by ensuring that our staff specialise in com- panies of a certain size or within a certain industry for example, is also part of this strategy.
OPTIMISATION OF WASTE DISPOSAL
In 2010, we made significant improvements to the waste disposal at properties man- aged by one branch. Following an analysis of the quantities of and frequency with which waste was disposed of at the properties, we are able to save time and the num- ber of trips by optimising the logistics of the waste disposal process. This allows waste to be disposed of in the most efficient and environmentally friendly manner possible, initially at 16 properties. The system is to be gradually expanded to further properties. To our Shareholders The Share Management Report
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Long-term financing
Our aim of creating economically sustainable structures is also clearly evident in our long-term financing. By designing a resilient financing architecture, we create the basic condition for sound operations focused on long-term targets. This foundation allows us to pursue real estate strategies with a horizon of several years, which are not directly adversely affected by short-term changes in the market. We also create clear and fair structures for our business partners on which they can focus their activities. For example, non-recourse financing protects the investments of our capital partners from adverse effects caused by factors outside the property in which they have invested.
Consistent dividend policy
With our investment, the management and letting of our property portfolio, we strive for an attractive return on the capital invested. In the process, we would like our shareholders, who invest in the DIC Asset AG business model, to receive an appropriate share of our success. The payment of a regular div- idend also facilitates permanent access to the capital market.
WILHELMINENSTRASSE, DARMSTADT
Measures:
The existing windows were completely renovated throughout the building. By exchanging the windows for double and triple-insulated glazing, we were able to significantly improve insulation in accordance with ENEV 2010, the Energy Savings Ordinance for buildings.
Effect:
By installing modern windows, the building becomes more attractive to the user. We expect to save some 15% of total energy costs per year through the insulation. Investment and amortisation:
The benefits of the measure, which cost some EUR 1.2 million, are to be found in the improvement in the fittings, the enhancement in quality of use for our tenants and in the increase in the value of the property.
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Corporate and social sustainability
Employees: satisfaction and development opportunities
In our company, which numbers 110 employees in total and features a flat hierarchy and small teams, we consider that complex organisational and per- sonnel-related structures are not necessary in order to determine whether employment and social standards are complied with. However, DIC Asset AG’s flat hierarchical structure means that our managers can always be in a posi- tion to assess whether employees are treated fairly, whether they are pro- moted in line with their abilities and what development opportunities there are for them. Our wage policy can keep pace with the wages offered by our competitors. In filling vacancies, we are guided by the principles of equality but – because of our structures – the highest priority is attached to skills, per- sonal suitability and the ability to work in a team. We offer flexible working hours, particularly to support young mothers returning to work after mater- nity leave.
You can find more information in the “Our employees” section on page 65.
Society: charitable and social involvement
Together with our properties, we are part of the social and daily lives of many people. We also assume social responsibility or become involved even if this does not contribute directly to financial success:
ISince 2009, as a local company, we have been supporting Frankfurt’s Goethe House. The museum was faced with reducing opening hours be- cause of budgetary issues. Through our support we are allowing the peo- ple of Frankfurt and visitors to the city access to the world-famous mu- seum seven days a week as usual. We also sponsor the Klingspor Museum in Offenbach.
PROPORTION OF FEMALE AND MALE EMPLOYEES
AGE PROPORTION OF EMPLOYEES AS AT 31.12.2010
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I We support initiatives that aim at reviving and enhancing habitats or eco- nomic areas – whether regionally or locally. This includes supporting the Frankfurt Rhine Main economic initiative or the initiative for the Indus- triehof Frankfurt quarter in its work, both through financial contributions and by providing personnel.
I In 2010, we started supporting the Cologne Butzweiler-Ossendorf initia- tive. This is working on financing the construction measures to extend a tram link. This would allow employees working for our tenants in prop- erty nearby to use the public transport system when it is completed.
IWe are also involved in associations and organisations in the sector with the aim of embedding sustainability-related issues, such as transparency, reporting and communication with investors in the real estate sector even more firmly. Among others, we are therefore a member of the German Property Federation (ZIA), the European Public Real Estate Association (EPRA) and the German Investor Relations Association (DIRK), Initiative Immobilien-Aktie, Initiative Corporate Governance der deutschen Immo- bilienwirtschaft.
BADENSCHE STRASSE, BERLIN
Measures:
Some 3,000 sqm were developed within the property and prepared for occupation by a new tenant. In the process, we installed an effective system for supplying fresh air and removing waste air at least three times an hour. The system also recovers heat.
Effect:
We use a system for air exchange, which – with the help of heat recovery – reduces the amount of total heating energy required by some 40-50%.
Investment and amortisation:
The additional investment for the purpose of recovering heat will pay for itself after
INVOLVEMENT IN ASSOCIATIONS AND INITIATIVES
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Ecological sustainability
Properties make a material contribution to the general consumption of en- ergy and greenhouse gas emissions. The efficient and environmentally friendly operation of our existing properties is therefore of great interest both for us and for our tenants. We are constantly in discussion with tenants re- garding the economical consumption of energy in our properties and show them ways to optimise their consumption. We combine processes and oper- ations, such as waste disposal and maintenance measures, in terms of their lo- gistics to ensure that an efficient and, at the same time, cost-saving service can be provided. Many of our properties are located in close proximity to public transport and can therefore be easily accessed by our employees.
In 2010, we decided – as a first step – in three of our six branches to use elec- tricity supplied completely from renewable sources of energy (green elec- tricity) in future for a majority of the properties managed. We are therefore making an ecologically sensible contribution, which is also in the interests of our tenants, and as a result are contributing to reducing CO2emissions. In
2011, we shall therefore gradually supply other properties managed by our six branches in Germany with “green” energy from a certified supplier of green electricity.
CARLO-MIERENDORFF-STRASSE, GIESSEN
Measures:
The system installed for heating and cooling was technologically outdated. By in- stalling an electric control unit, the temperature is now regulated more efficiently and used more effectively.
Effect:
The savings in the amount of gas energy required are approximately 65%. To our Shareholders The Share Management Report
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Measures within our portfolio
We are not the only ones, in our capacity as a property manager, to benefit from streamlined processes and optimal property management. Reasonable growth in ancillary leasing costs, the so-called “second rental”, contributes di- rectly to our tenants’ commercial success. We therefore strive to manage our properties efficiently, with additional benefits from the tenants' perspective, at all times. This is an important factor in generating customer loyalty and will increase the likelihood of tenants remaining with us.
Where possible, we invest in long-term technical and structural measures which have a sustained impact on the use of resources. In addition to poten- tially reducing and optimising energy consumption in the long-term and im- pacting positively on the environment, both ourselves and our tenants will benefit from a partial reduction in ancillary costs.
KURT-SCHUMACHER-ALLEE, HAMBURG
Measures:
In agreement with the energy supplier, we converted the heating supply from the former steam-based system to one based on hot water.
Effect:
This hot water used in this type of heating is less than the steam used for the old system, resulting in a reduction in the running energy costs. The energy consumed is therefore used more effectively, which helps to reduce CO2 emissions.
Investment and amortisation:
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Fundamental measures in the case of project developments
From the outset, we take account of sustainability issues when planning the redevelopment of buildings. We do this in such a way that the long-term im- pact is as environmentally sustainable as possible. The issue of sustainability is also becoming more and more of a priority on the part of users. Our em- ployees in the project development team continue to prepare for the techni- cal aspects of sustainability through training sessions and attending confer- ences.
Specialised technical planners are involved in the planning process at an early stage so as to recognise and transform potential. It is precisely by considering sustainability issues in the planning stages that we can make a positive impact on the energy efficiency of the building by implementing innovative ideas and using cutting-edge technologies. The requisite investments are repaid