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Investing in Real Estate

Opportunities

WestLB Real Estate Day

The Waldorf Astoria, New York

Tuesday, April 25th 2006

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Key Drivers

Drivers of German Real Estate MarketIndustry Level Company Level Property Level

• Population development• Age structure• Space consumption• Migration

• Capital gains taxation• Corporate purpose

• Changes in the new pension system• Unemployment benefit reform

• Relative undervalued• Potential for rent increase• Home ownership ratio

• Financing environment • Financing & affordability• Overall economic situation

• Construction costs• Limited land reserves

Source Colonia Real Estate AG, Morgan Stanley

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• Capital markets (G-REIT)

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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.

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Content

• Company Overview• Portfolio and Strategy

– Residential Real Estate– Commercial Real Estate

• Asset & Fund Management Capabilities • CRE‘s Financials• Summary• Appendix

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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

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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

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Company overview: structure

ResidentialReal Estate

• 100% CRE Wohnen GmbH

• 99.68% Grasmus Holding B.V.

Office/RetailReal Estate

• Mainly co-investments with Resolution clients

HotelReal Estate

• 94% CRE Hotel Immobilien GmbH

Services

Colonia Real Estate AG

CRM

• 100% CRE Research & Management GmbH

Investments

Resolution

• 56% Resolution GmbH

• Asset Management for 3rd Parties

CFM

• 56 % CRE Fonds

Management GmbH

Target: EUR 500 Mio. new Investments in 2006 (EUR 300 Mio. Residential; 200 Mio. Office- and Retail)

Target: EUR 2 bn assets under management until 2008 (currently EUR 700 Mio)

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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

Higher dealflow and top research capabilities leads to superior performance

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Company overview: milestones

Acquisition of Kueppersbusch AG through SwissReal Estate

2003 2004 2005 2006

Acquisition of GEBB building (distressed seller)

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

Acquisition of „Bremen“ and „Hamburg“ portfolio

Acquisition of Resolution GmbH (AuM € 700mn)

New management team and renamed to Colonia Real Estate

4:1 Capital Increase

Application for General Standard

Application for Prime Standard and SDAX Membership

Foundation of CFM together with senior management team from DB Real Estate

Acquisition of Arcon Trust GmbH (3 Marriott Hotels) 10:1 Capital

Increase

Application for General Standard

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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)

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Company overview: ownership structure

• Fortman Cline Group (incl. Swiss Real Estate) intens to remain major shareholder but intends to decrease its stake further to increase the free float

• Cerberus Group will be minority shareholder (1.7%) in CRE with a 2 year lock-up

• Management owns 6% through stock option plan with 2 year vesting

OWNERSHIP STRUCTURE

Free Float55.00%

Peter May5.76%

Swiss Real Estate 38.43%

Fortman Cline Holding0.81%

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Content

• Company Overview• Portfolio and Strategy

– Residential Real Estate– Commercial Real Estate

• Asset and Fund Management • CRE‘s Financials• Summary• Appendix

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German RE: A Sleeping Giant

• Germany is Europe‘s biggest Real Estate Market, but prices are under-performing European peers

• Estimated 3.4mn RE units with an approx. value of about EUR 138 bn. with public entities

• ca. 900,000 units are held by corporates with an approx. value of EUR 37bn.

Massive potential for portfolio shifts and possible introduction of REITs will ease exit through stock listing

TOTAL REAL ESTATE VALUES IN EU

Source: Deutsche Bank, LBS, Unternehmensangaben, HVB Global Market Research,

1,052 1043

805

345

247

170

63

---

200

400

600

800

1,000

1,200

GER GBR FRA ITA ESP NED BEL

Office Space (41 %) Retail (43 %) Storage (16 %)

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Growth and Value in Business Model

Assets

t

Trading

30 - 40%

Holding and Optimization

60 - 70%

CRE‘s goal is to build up a diversified high- yielding portfolio in German real estate

As an active portfolio manager, we also realize capital gains where we see limited value appreciation potential

Trading aims to capture market opportunities as theyoccur

A combined growth and value strategy

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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

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Residential RE – the CRE difference

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CRE‘s current portfolio allocation

Office10%

Hotel19%

Residential71%

East Germany4%

West Germany96%

AuM by asset class

AuM by region

Value Added 28%

Opportunistic 72%

AuM by strategy

• Total Investments have reached EUR 200m in assets (as of 03/30/06)

• 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

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Residential RE: Grasmus Portfolio

„Grasmus“ - Residential REAcquisition: 06 / 2005Locations: Aurich, Delmenhorst,

Emden, Ganderkesee,Leer, Sande,

Wilhelmshaven and Wittmund

Purchase price: EUR 88mnEquipment: 3,488 units, 1,137 parking

lotsYear of construct.: 1968 – 1975Net 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 toan international Investor Group

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Residential Real Estate

„Bremen“ - Residential REAcquisition 03/06Location: Brake and NordenhamPurchase Price: EUR 6.7m Equipment: 356 units, 58 parking lotsNet rent: EUR 0.8m p.a. /

gross yield: 11,94%

„Hamburg“ - Residential REAcquisition 03 and 04/06Location: Elmshorn and ItzehoePurchase Price: EUR 38.2m Equipment: 1,577 unitsNet rent: EUR 4.95m p.a. /

gross yield: 12,95%

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Office/Commercial RE (I)

Office Real EstateProperties: 2 office buildingsAcquisition: 01 / 2005Tenant: G.E.B.B. GmbHLocation: ColognePurchase price: EUR 10.2mEquipment: 6,680 qm office space,

150 parking lotsYear of construct.: 2001Net 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

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Office/Commercial RE: Hotel Portfolio

Hotel Real EstateProperties: 3 Marriott Hotels (Courtyard)Acquisition: 10/2004Tenant: HPI GermanyLocation: Kassel, Braunschweig,

EisenachLong term value: EUR 27.2mEquipment: 439 rooms, 6 restaurants,

3 Bars, 2 Spa‘s, conference facilities

Year of construct.: 1993 - 1995Net rent: EUR 2.0m p.a. /

gross yield: 9,2%Duration of lease: 2022, triple net

Indexed leasesFully guaranted lease payments

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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

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Content

• Company Overview• Portfolio and Strategy

– Residential Real Estate– Commercial Real Estate

• Asset & Fund Management • CRE‘s Financials• Summary• Appendix

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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)

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Range of REAM Services

Acquisition Fees: 1 – 2% of Transaction Volume

Asset Management Fees: 0,5 - 1% of Transaction Volume

Incentive Fees: 10 – 30% of profits above certain hurdle rates

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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

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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

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Content

• Company Overview• Portfolio and Strategy

– Residential Real Estate– Commercial Real Estate

• Asset and Fund Management• CRE‘s Financials• Summary• Appendix

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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 %

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Strong Outlook

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

Sales (EUR Mio.)

2004 2006e2005

60

45

30

15

0

Group Income (EUR Mio.)

2004 2006e2005

24

20

16

12

8

4

0

-4

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Content

• Company Overview• Portfolio and Strategy

– Residential Real Estate– Commercial Real Estate

• Asset and Fund Management • CRE‘s Financials• Summary• Appendix

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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…

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Colonia Real Estate AG

Hohenstaufenring 48-54

50674 Cologne / Germany

Stephan RindCEO

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

Internet: www.coloniarealestate.com

Contact

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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.

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Content

• Company Overview• Portfolio and Strategy

– Residential Real Estate– Commercial Real Estate

• Asset and Fund Management • CRE‘s Financials• Summary• Appendix

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Shareholders` Equity and Liabilities

Long-termLiabilities(89,6 Mio.)63%

CurrentLiabilities(19,4 Mio.)14%

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

Long-termLiabilities(24,2 Mio.)85%

CurrentLiabilities(1,0 Mio.)4%

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

2005 2004

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Assets by Segment

Residential(91,4 Mio.)69%

Office(13,3 Mio.)10%

Hotel(28,6 Mio.)21%

Hotel(28,4 Mio.)100%

2005 2004

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Increase in Households foreseen

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Where are the „good“ markets