"We are delighted with the performance of our German investments which are producing strong cash returns. In addition, they offer ongoing asset management opportunities which will drive future returns."
                                                              Xavier Pullen, Deputy Chief Executive

Our German portfolio:

We acquired our first German assets in 2005 and have significantly expanded the portfolio since then. We added a further six properties in 2007. We now have 50 properties with a total floor space of 469,000 sq m. Our investment criteria have been:

• Established out-of-town retail locations.
• Large stand-alone hypermarkets and retail parks with sales area of more than 3,500 sq m (current average 9,380 sq m) with substantial land and car parking.
• Strong covenants.
• Shorter leases preferred leading to asset management opportunities.

Why Germany?

Our expansion into Germany has been management led and focused on a specific market segment. We identified the expertise of the Hahn Group and this led to the focus on big box edge-of-town retail, which has the following attractions:

• severe restrictions on further out-of-town development;
• good tenant covenants and long leases; and
• index linked rents.

We are also attracted by the high yields, secure income profile and low interest rates available in this market segment.

Our main tenants

Our German out-of-town retail investments differ markedly from our UK portfolio. We have concentrated on stand-alone retail units with the emphasis mainly on food stores and some DIY. We are seeing continued strong tenant demand in the out of town sector and we expect that this is unlikely to change.

Top five tenants by floorspace (2007)

Germany key statistics