Capital Markets Day HOCHTIEF Real Estate Division

(1)

Capital Markets Day

HOCHTIEF Real Estate Division

October 27th 2008

Hamburg, Quartier 21, „Casino”

(2)

HOCHTIEF AG

Corporate Structure – Six Divisions

HOCHTIEF AG (Holding)

HOCHTIEF

Facility

Management

HOCHTIEF

Energy

Management

HOCHTIEF

Projekt-entwicklung

aurelis

HOCHTIEF

Property

Management

HOCHTIEF

Construction AG

Streif Baulogistik

HOCHTIEF

AirPort

HOCHTIEF

PPP Solutions

Leighton

Holdings

Turner

Flatiron

HOCHTIEF

do Brasil

HOCHTIEF

Services

HOCHTIEF

Real Estate

HOCHTIEF

Europe

HOCHTIEF

Concessions

HOCHTIEF

Asia Pacific

HOCHTIEF

Americas

(3)

HOCHTIEF Real

Estate

HOCHTIEF Real

Estate

HOCHTIEF

Concessions

HOCHTIEF

Concessions

HOCHTIEF Real Estate Division

(HTRE)

Evolution: From HOCHTIEF Development to HOCHTIEF Real Estate

HOCHTIEF

Real Estate

HOCHTIEF

Real Estate

HOCHTIEF

Development

HOCHTIEF

Development

2008

2007

PPP SOLUTIONS FACILITY

MANAGEMENT PROPERTY MANAGEMENT

HOCHTIEF Real Estate: Property developments and services for

institutional real estate investors.

(4)

HOCHTIEF Real Estate Division

(HTRE)

Business units

HOCHTIEF Projektentwicklung – trader developer

aurelis – brown field developer and asset manager

HOCHTIEF Property Management – service

provider to and representative of institutional real

estate owners

Common profile across the businesses:

Class A properties in top-locations

international investors

(5)

HOCHTIEF Real Estate Division

(HTRE)

Business units

At HOCHTIEF Real Estate 860 employees are in charge of:

EUR 2.9bn

Investments in Project

Development

EUR 2.9bn

Investments in Project

Development

24.5 million sqm

Land Bank

24.5 million sqm

Land Bank

EUR 23bn

Assets under

Management

EUR 23bn

Assets under

Management

PROPERTY

MANAGEMENT

(6)

HOCHTIEF Real Estate Division

(HTRE)

Organization

HT Projektentwicklung

(269 employees)

HT Property Management

(519 employees)

HTRE Management

Mr. Eichholz (CEO), Mr. Steinhauer (CFO)

Controlling Accounting Risk- and Personnel quality

management

Finance Legal Communication

Service departments of HTRE Service departments of HOCHTIEF AG

IT

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HTRE is an independent profit center with an efficient organization.

aurelis

(7)

October 27th 2008

Hamburg, Quartier 21, „Casino”

Rainer Eichholz, CEO HOCHTIEF Projektentwicklung

Capital Markets Day

(8)

HOCHTIEF Projektentwicklung

(HTP)

Organization and management

Offices in Europe

Prague Czech Republic Warsaw Poland Budapest Hungary Vienna Austria

Offices in Germany

Munich Frankfurt Hamburg Heidelberg _Stuttgart Berlin Cologne Dusseldorf Osnabrück Zurich Switzerland St. Petersburg Russia Bucharest Romania

Management

Rainer Eichholz (CEO) Robert Bambach (COO) Matthias Steinhauer (CFO)

(9)

Established

1991

Employees

269 Offices

16 Germany

9 Europe

7 Track Record since 1991

EUR 6.2bn cumulated investment volume

Total number of projects

161 Floor area

2.7 million sqm

Half of our customers are perpetual clients

Projects highlights

Rondo 1, Warsaw (office, completion 2005, 75,000 sqm gross floor space)

Radisson SAS Blue Heaven, Frankfurt (hotel, completion 2005, 4 Star-Hotel, 440 rooms)

Hotel de Rome - Rocco Forte Collection, Berlin (hotel, completion 2006, 5 Star plus)

Westend Duo, Frankfurt (office, completion 2006, 32,700 sqm gross floor space)

Office-Park Hadovka, Prague (office, completion 1999, 24,560 sqm lettable area)

HOCHTIEF Projektentwicklung

(HTP)

(10)

Rondo 1,

Warsaw

(Poland)

Gross floor area

95,000 m²

Height

194 m

Number of floors

40 Investor

MGPA

Tenants

Ernst & Young S.A.

Baker & McKenzie,

AT Kearney,

VW Bank u.a

Realization

2003 – 2005

(11)

Gross floor area 26,000 m²

No. of rooms

440 Investor

Keops

Investor-Partners A/S

Tenant

Radisson SAS

Hotels & Resorts

Realization

2003

–

2005

Blue Heaven,

Frankfurt

(Germany)

Hotel

(12)

OpernCarrée,

Berlin

(Germany)

Hotel, Office properties

Hotel de Rome, BureauPalais: Behren,

Markgrafen, Gendarmen

Gross floor area 34,200 m²

Operator

Sir Rocco Forte

Investor Hotel

Commerz

Grundbesitz

Investment

gesellschaft mbH

Investor Offices Luresa

(13)

WestendDuo,

Frankfurt

(Germany)

Office

Gross floor area 32,700 m²

Height

96 m

Investor

ING Real Estate

Tenants

Hengeler Mueller,

Henderson Global

Investors, Europe

Arab Bank,

Vapiano, Bank of

China

Realization

2004

–

2006

(14)

HOCHTIEF Projektentwicklung

(HTP)

Our business model (1/2)

Fee Developer

(service provider)

We are a classic „Trader Developer“

Value chain

Concept Realization Letting Sale

property-acquisition

Investor Developer

(buy – build/rent - hold)

Trader Developer

(15)

HOCHTIEF Projektentwicklung

(HTP)

Our business model (2/2)

„Trader Developer“:

Project development for institutional investors, no own real estate portfolio

Specializing in

commercial real estate

Focusing on lucrative office areas in

Germany

and

Central and Eastern Europe

Concentration on

downtown locations

Development of

„tailor made real estate“

: Early involvement of tenants and investors

„Temporary investor“

: early selling to investors

No speculative developments:

No commencement of construction without pre-letting

Use of

synergy potential

and integration of other group affiliates in all phases of project

development

(„best practice“

and

„knowledge transfer“

)

HTP is an independent

profit center

Sophisticated

“risk manager”

(16)

HOCHTIEF Projektentwicklung

(HTP)

Profitability

Our projects are highly profitable.

HTP is usually the

sole investor

of it’s projects

Our project portfolio is constantly

above our internal hurdle rate

of 14% IRR

The average

return on equity (ROE)

of our projects is > 25% p.a.

(Ø last 5 years)

(17)

HOCHTIEF Projektentwicklung

(HTP)

Investment volume (1/2)

Investment volume (EUR bn)

Investment volume

(EUR bn)

0,8 1,6 1,9 1,4 1,7 1,6 1,7 1,8 2,3 2,9 0,0 0,5 1,0 1,5 2,0 2,5 3,0 1999 2000 2001 2002 2003 2004 2005 2006 2007 H1 08

Current investment volume: EUR 2.9bn

189 55 155 30 149 43 160 46 168 38 269 226 175 208 190 employees projects 43 46 47 61 71

Investment volume

Includes all projects approved

by the investment committee of

HOCHTIEF AG

Includes all costs for property

purchase and all additional

costs until completion (design,

realization, finance, project

management)

(18)

HOCHTIEF Projektentwicklung

(HTP)

Investment volume (2/2)

0,4 1,1 2,9 0,0 1,4 0,0 0,5 1,0 1,5 2,0 2,5 3,0 T o ta l b e fo re l a n d p u rc h a s e a ft e r la n d p u rc h a s e b e fo re c o n s tr u c ti o n u n d e r c o n s tr u c ti o n a ft e r c o m p le ti o n

Investment volume (phases, EUR bn)

Investment volume

(phases, EUR bn)

Investment volume

(EUR bn)

Investment volume

(EUR bn)

1,7 0,7 1,8 0,4 2,3 1,1 2,9 1,4 0,0 0,5 1,0 1,5 2,0 2,5 3,0 2005 2006 2007 H1 08

Total investment volume Investment volume of projects under construction -85% 54% 5% 59%

Floor area rented

0 482 711 168 1.362 Floor area in `000 sqm Number of projects 71 11 31 29 0 Track Record: All completed projects sold

(19)

HOCHTIEF Projektentwicklung

(HTP)

Commercialization of projects under construction

Area rented to tenants in total

(‘000 sqm)

Area rented to tenants in total

(‘000 sqm)

20 98 175 55 103 0,0 50,0 100,0 150,0 200,0 250,0 2006 2007 H1 08

2nd half of the year 1st half of the year

Status of commercialization (H1 08)

Status of commercialization

(H1 08)

sold not sold

58%

Based on the investment volume of all projects in realization 58% are sold to investors.

85% of all lettable space of our projects in realization are rented to tenants (482,000 sqm). 42% rented not rented 85% 15%

Floor area rented

Projects sold

_{Projects sold}

72% 93% 2003 52% 57% 2002 47% 56% 2001 65% 72% 2000 69% 69% 1999 Projects sold Floor area rented 58% 56% 99% 85% 63% 85% 88% 55% 52% 55% 2004 2005 2006 2007 1H 08

(20)

HT Projektentwicklung 2008

HTP in Europe

HOCHTIEF Projektentwicklung

(HTP)

Market presence (1/2)

Markets

(of projects under construction EUR 1.4bn)

Markets

HTP successfully entered new

markets

60% 67% Office Other Retail Residential 72% 8% 11% 9% Germany abroad 67%

Segments

(21)

Growth potential: Population & office area ‘07

HTP enters high

growth markets

Why Eastern Europe?

High growth in Eastern Europe

Low market entry barriers

HTP has know-how and track record

Success story for HTP: We are

key-player in high growth markets

1,8 _1,7 1,9 13,2 2,8 1,1 0 2 4 6 8 10 12 14

Hamburg

Warsaw

Bucharest

Population in million Office area in million sqm

HOCHTIEF Projektentwicklung

(HTP)

Market presence (2/2)

Ø GDP growth 2003-2007 6.3 % (Romania) 5.1 % (Poland) 1.4 % (Germany)

(22)

HOCHTIEF Projektentwicklung

(HTP)

Sample projects

Trianon, Prague (Czech Republic)

Trianon, Prague

(Czech Republic)

Kav

_Kav

č

í Hory Office Parc, Prague

í Hory Office Parc, Prague (Czech Rep.)

(Czech Rep.)

Rental area 19.530 sqm Investor Union Investment Realization 2006 - 2008 Location Central Prague Location Prague Realization 2006 - 2008 Investor Europolis

Gross floor space

43.000 sqm

Prime Location in Prague

(23)

HOCHTIEF Projektentwicklung

(HTP)

Office market (1/3)

Key driver for office space demand

HTP understands long term trends to provide the right

products to clients at the right time.

Office space demand

GDP growth

Employment growth

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Investors expect rental income

Rents and stability of rental income

depends on office space demand

In

established markets

, the key driver

for demand are GDP- and employment

growth

In

emerging markets,

additionally the

growing share of the service sector in

the economy as well as the amount of

office space per employee adds

(24)

Flächenumsatz

der osteuropäischen Top 10 Standorte in T m²

0 500 1000 1500 2000 2500 3000 3500 4000 4500 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Flächenumsatz der Top 7 Standorte in T m²

0 500 1.000 1.500 2.000 2.500 3.000 3.500 4.000 4.500 2. Halbjahr 1.377 1.872 1.521 1.163 1.116 1.178 1.298 1.838 2.067 0 1. Halbjahr 1.377 1.872 1.521 1.163 1.116 1.178 1.298 1.227 1.517 1.699 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

HOCHTIEF Projektentwicklung

(HTP)

Office market (2/3)

Office take-up Easter Europe (Top 10 cities, ‘000 sqm)

Office take-up Easter Europe (Top 10 cities, ‘000 sqm) Office take-up Germany (Top 7 cities, ‘000 sqm)

Office take-up Germany (Top 7 cities, ‘000 sqm)

Office demand reaches high

point in 2008/2009

Cyclical high in 2008

Situation

Rental growth and vacancy reductions

Germany: cyclical high in 2008

Prime rent in Frankfurt: 37,50 EUR/sqm

Eastern Europe: structural growth

Prime rent in St. Petersburg 52 EUR/sqm

Change

Financial sector no longer demand driver

Germany: stagnation of GDP

CEE: slower GDP growth

Outlook

Germany: Decline in the tenant market

CEE: Stabilization in the tenant market

Structural growth n.a. Internet bubble Low point of German recession 2nd half 1st half 1st half 2008 1st half 2008

(25)

HOCHTIEF Projektentwicklung

(HTP)

Office market (3/3): Expected market development

HTP‘s markets: growth phase

HTP locations Office market cycle (1st half of 2008)

Office market cycle (1st half of 2008) Stabilization

(26)

AMB Generali

AT Kearney

Baker McKenzie

Deutsche Bank AG

Ernst & Young

EUROHYPO AG

PRICE WATERHOUSE COOPERS

BMW AG

Continental AG

Deutsche Telekom AG

Siemens AG

Unilever

ACCOR Group

Rocco Forte

SAS Radisson

HOCHTIEF Projektentwicklung

(HTP)

(27)

HOCHTIEF Projektentwicklung

(HTP)

Investment market (1/3)

Key driver for real estate demand

Real Estate demand

Liquidity of investors

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Investors seek returns

Real Estate provides stable returns

Real Estate demand depends on

performance of alternative asset classes

and the liquidity of investors

In

established markets

prevail safety

and stable cash flow oriented investors

with a lot of equity

In

emerging markets

higher returns go

together high value growth opportunities

Liquidity

(28)

HOCHTIEF Projektentwicklung

(HTP)

Investment market (2/3)

Net-Capital inflow (Source: BVI)

Capital inflow of public funds in Germany [mln EUR €]

-15.000

-10.000

-5.000

0

5.000

10.000

15.000

2001 2002 2003 2004 2005 2006 2007 1st half 2008

Open ended real estate funds Stock funds

Closed funds – declining importance

EUR 1.6bn equity to be placed in 2008

1

EUR 3bn potential investment volume

Transaction volume 2007 = EUR 9bn (approx. 15%)

2

Open funds – growing importance

EUR 4bn net equity inflow until 1st half of 2008

3

EUR 16bn potential investment volume in 2008

4

Transaction volume 2007 only EUR 3bn (approx. 4%)

5

Additional cash positions from sales in 2006/2007:

In Big Six cities alone EUR 12bn income from sales

6

Insurance companies & pension trusts

Committed to increase share of real estate assets

Additional investments of EUR 10bn until 2010

Transaction volume in 2007 only EUR 1bn (approx. 2%)

Example: Allianz intends to increase real estate

investment from EUR 5 to 15bn until 2013.

7

Comeback of equity strong investors

1_{Source: Scope} 2_{Source: AtisReal}

4_{Source: Immobilienzeitung / Deutsche Bank AG} 5_{Source: AtisReal}

(29)

HOCHTIEF Projektentwicklung

(HTP)

Investment market (3/3)

Transaction volume Eastern Europe (Top 10 cities, mln EUR)

0 2.000 4.000 6.000 8.000 10.000 12.000 14.000 16.000 18.000 2000 2001 2002 2003 2004 2005 2006 2007 2008 Transaktionsvolumen der Top 7 Standorte in Mio EUR

0 5.000 10.000 15.000 20.000 25.000 30.000 35.000 2. Halbjahr 2.588 3.282 3.203 3.712 2.597 2.601 4.852 15.213 17.480 0 1. Halbjahr 2.588 3.282 3.203 3.712 2.597 2.601 4.852 7.327 14.979 5.640 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Comeback of investors with

strong equity base

Situation

Out customers record continuous capital inflow

Equity

Our customers promise their investors returns

Pressure to invest

Change

In 2006 and 2007 new customers appeared on

the market, purchasing at high prices and high

leverages

Outlook

Out traditional customers return

State owned investment trusts aim to increase

their share of real estate assets through indirect

real estate investments

More liquidity for our customers

n.a.

Growing Demand Stable Demand

Transaction volume Germany (Top 7 cities, mln EUR)

2nd half 1st half

1st half 2008

(30)

AMB Generali

AXA Investment Managers

CA Immo

CGI

DEKA

Deutsche Bank Real Estate

Fonds Haus Hamburg

EuroHypo

Europolis

ING Real Estate

Keops InvestorPartner A.S.

SEB Immobilien Investment

Union Investment

HOCHTIEF Projektentwicklung

(HTP)

(31)

HOCHTIEF Projektentwicklung

(HTP)

Five elements of Real estate development

Property

Capital

Risk

-Management

(32)

HOCHTIEF Projektentwicklung

(HTP)

Volatile markets

GDP growth Germany in %

How do we manage

stable growth

in a

volatile environment?

A long

Experience,

sophisticated

Risk Management

and proper

Timing!

2,0 3,2 1,2 0,0 0,8 3,0 2,5 -0,2 1,2 -0,5 0,0 0,5 1,0 1,5 2,0 2,5 3,0 3,5 1999 2000 2001 2002 2003 2004 2005 2006 2007

(33)

HOCHTIEF Projektentwicklung

(HTP)

Risk management at strategic level

We anchored strategy and risk management in our

organization to avoid risks and capture chances early.

Long-term and foreseeing action

Risk diversification by broadening portfolio

-

by expansion into new countries

-

and expansion into established products

Quarterly market report for all European markets

Yearly forecasts and ranking of all markets

Structured business planning for market entries

Detailed watch on our clients and their behavior

Clear accountability

Clear regional structure

Business development department

Risk and quality management department

Revision department

Incentive structure based on project success

Individual targets defined with every employee

Four eyes principle for every contract signed

(34)

We live active risk management.

Structured investment approval process

Double check of every project prior to investment

decision:

HTRE departments and HT departments check

projects prior to investment decisions

Investment Committee

1

_{HT examines every single}

project

Hurdle rate: no construction without pre-lease rate

or sale of project

Detailed reporting and controlling

Monthly reporting for every project’s costs, rental

and sales progress

Status-of-Projects-Meetings: Quarterly project

meetings with each regional head to discuss status

and strategy for all of his current and prospective

pipeline projects

Before

investment decision

After

investment decision

HOCHTIEF Projektentwicklung

(HTP)

(35)

HOCHTIEF Real Estate Development

Goal and strategy

Goal

Most profitable and innovative Real estate developer in Europe

Strategy

Expansion into high growth markets

Product development

Differentiation through technology

(36)

Short-term

Regionalization of international subsidiaries

Implement pilot project in Russia

Implement pilot project in Romania

Implement market entry in Scandinavia

Mid-term

Market entry in Turkey, Ukraine or Bulgaria

Long-term

Market entry in another West-European

core market

HOCHTIEF Projektentwicklung

(HTP)

Strategy: Expansion into high growth markets

Shortlist HRTE today

Planned Market Entry

Long List

In about 5 years we will generate 50% of our

business volume outside Germany.

(37)

Awards for sustainable high rise

HTP received two sustainability awards

Westend Duo in 2008

1

We designed this building 4 years before

Green Building became a hot topic

Another Green Building in the pipeline

Development of “Smart House” in Munich

Create lighthouse project with a multiplier

effect for “Green Buildings made by HTP”

HOCHTIEF Projektentwicklung

(HTP)

Strategy: Differentiation through technology

Westend Duo, Frankfurt (Germany)

Smart House, Munich (Germany)

(38)

• Aging population in Germany Nursing homes in Germany

• Poor public care in CEE Private Hospitals in Poland Health

Demand for healthy

inner city residential quarters Inner city brownfields Challenging quarter developments on large plots Quarters

HOCHTIEF Projektentwicklung

(HTP)

Strategy: Product development

• Raised attractivness of city centers

Inner City Shopping Centers • Growth in CEE increases commercial transportation Logistic projects in Germany and CEE

Logistic

Retail

We will broaden our range of products.

Inner city quarters are a new focus.

(39)

Actions

Intensify activities with HT Energy

Position HTP as preferred bidder in HTFM

and HTPM’s circle of customers

Enhance networking among HTP and

HTPM

Capitalize access to aurelis land bank

Use of know-how and experience of

HOCHTIEF Construction

HOCHTIEF Projektentwicklung

(HTP)

Strategy: Increase synergies among HOCHTIEF units

HOCHTIEF’s life cycle concept provides the profit

center HTP a competitive advantage.

Advantages

Profit from growing “energy

consciousness” on customer side

Identify development potential for HTP

in HTPMs managed objects and tenants

Access to aurelis properties for further

(40)

HOCHTIEF Projektentwicklung

(HTP)

(41)

HOCHTIEF Projektentwicklung

(HTP)

aurelis: Investment rational

aurelis is financial investment of HTP offering numerous opportunities

aurelis is an investment platform

with a land bank in West-Germany‘s growth regions

aurelis owns a “demanding” real estate portfolio

with high value potential

The portfolio’s value potential

is to be captured through development and refurbishments

HTP applies its know-how

in a wider context and enters the portfolio business

HTP increases its market presence

in Germany

Development of future oriented products like „vivid inner city districts“

High and stable rental income

ensures financing

(42)

HOCHTIEF Projektentwicklung

(HTP)

aurelis: In short

aurelis is a real estate company with “brownfield” properties. Most of the properties are

located in West German Cities.

Stable rental income ensure financing, attractive land bank ensure mid term upside-potential

Comfortable agreements with Deutsche Bahn AG in respect to rental contracts, property

borders and environmental issues

Our strategy focuses on the reduction of complexity and risk

Experienced management team deployed to aurelis and performance based incentivized

Already a positive contribution to HTRE’s earnings in 2007

Demanded IRR > 14% p.a.

aurelis is more than a land bank, it is a very promising opportunity

for HTP.

(43)

HOCHTIEF Projektentwicklung

(HTP)

Project development is a risky business with high returns

HOCHTIEF Projektentwicklung prevails as market leader due to its clear cut business

model and its sophisticated risk management

It is our goal to become the most profitable and most innovative Trader Developer in