March 12, 2008

Cologne, Germany: Colonia Real Estate Plans €100M Investment in Solar Projects

German real estate company, Colonia Real Estate AG is planning to install solar panels on the roofs of the company's residential properties over the next months in order to produce environmental friendly power. A master agreement has recently been completed between systaic AG and Colonia Real Estate AG to implement the project.

Systaic will provide and install solar panels worth €100 million to produce 20-25MWp power per year. This equates a total power supply of almost 6,000 households. Before the agreement was closed, the residential portfolio of the Colonia Real Estate was extensively assessed regarding the feasibility of the installations.

The first solar modules will be installed in May 2008. The entire installation is expected to be finalized by the end of 2008. Additionally, this will lead to a CO2 reduction of 14,000 tons per year.

Colonia Real Estate estimates that, in a first step, 50%-60% of the project quantity will be installed on their own properties. Currently, the 20,000 residential units in the portfolio of Colonia make the company the third largest exchange listed residential company in Germany.

The company is planning to install additional solar modules on properties supervised by Colonia´s asset management. CRE´s entire assets under management are currently EUR 3 bn. The combination of real estate and renewable engery will also be made available to third parties. Additional master agreement are in current negotiations.

Colonia Real Estate expects in a first step an investment volume on own objects of around EUR 60mn. The solar power systems produce annual guaranteed recurring cash flows from feeding power into the national power grid under the 'Erneuerbare Energie Gesetz' (EEG) in the amount of approximately EUR 6 to 8mn additionally to the current EUR 60mn rental income. The return on equity of this new business segment will be at around 50%.

It is anticipated that the investments will be financed with an equity ratio of about 10%. Financing offers are currently negotiated with several banks. Moreover, Colonia Real Estate secured a call option through their investment at the company systaic AG of 10%.

Stephan Rind, CEO of Colonia Real Estate AG, highlights the synergies with the real estate business next to the excellent yield potential. "By using our residential portfolio to generate new energies, we significantly increase the value of the portfolio. Moreover, we will increase the acceptance of the tenants as a means to show the importance of sustainable living."

With the cooperation of systaic AG, Colonia was able to win a partner whose proof of high quality standards is displayed through its entire certification process. The patented 'energy roof' was the winner in the last months of several innovation prices like the 'Innovation Award 2007' on the international construction fair BATIMAT in Paris or the '1st Innovationspreis' on the DEUBAU, the most important construction fair in Germany.

Further details about: Colonia and systaic AG