Main Press Conference EXPO REAL 2009

1. Main Press Conference EXPO REAL 2009 Claus-Jürgen CohauszMember of the Management Board, Westdeutsche ImmobilienBank AG

2. Crisis in the financial markets: What happened? • Low interest rates in the US mortgage market and rising property prices led to many mortgages being granted to customers with much lower credit ratings • Loans transformed into tradable securities (globalisation: marketed worldwide) • Restrictive monetary policies of the Federal Reserve caused a rise in interest rates • Payment defaults, compulsory auctions • Property prices fell • Decreasing trust in the quality of securitised property loans • Summer 2007: Securities market collapses • High losses and refinancing difficulties on the part of banks that were involved in the US mortgage market (IKB, SachsenLB, Goldman Sachs, Northern Rock, Fannie Mae and Freddie Mac, HRE) • September 2008: Bankruptcy of the fourth largest bank in the US: Lehman Brothers • Loss of trust and lack of transparency between the banks: interbank trade comes to a halt • Banks have considerable difficulty in refinancing themselves, which then impacts on lending

3. Collapse of the main pillars in refinancing • The urgent need of companies and banks to obtain finance/refinance coincides with a shortage of liquidity on the capital markets • Interbank market impaired by the loss of trust • Liquidity available only at a high mark-up • Securities market stalls • Sales of mortgage bonds cease • Refinancing to deadlines is virtually impossible • Limited new business opportunities for the banks

4. Spread 3M-Euribor vs. 3M-EONIA Swap

5. CMBS emissions volumes Europe and USA Europe USA in € bn in USD bn 0 0

6. Transaction volumes in the main German cities drop significantly in € mill. n/a Quelle: Atisreal/BNP Paribas Real Estate

7. New business: Real-estate finance 1st half 2008 and 1st half 2009 In € bn -42% -82% +3% -41% -46% -57% +29% -21% First-half 2008 First-half 2009

8. Impact on investors • Higher refinancing costs lead to tougher credit conditions • Expansion of the usual test criteria of: • Property location • Current and possible alternative uses • Sustainability and stability of cash flow • Value development and potential for further enhancement to include • Special consideration of a balanced risk/yield structure • Special consideration of the actual cash flow • Stronger consideration of risks relating to the individual property • Investor required to put in a higher level of equity capital • More hedging of cash-flow risks necessary (equity capital reserves, liabilities) • Shorter credit periods (3-5 years) • Advantages for investors with high capital reserves and a long-term investment horizon • Opportunistic, leverage-oriented investors no longer active in the market

9. Sales of mortgage bonds in Q2 2009 much improved • At the end of 2008 sales had almost halted entirely (could only be presented at the ECB) • Significant rise in issues in Q2 2009 • July / August are generally weak months because of the summer break Mortage bond sales in € mill. Source: vdp

10. Mortgage-bond spreads continue to narrow, but still at a higher level • Spread of 10-year mortgage bonds to the 10-year swap (in bps) • Other covered bonds (Spain, UK, etc.) still had much wider spreads • Slight improvement in Q2, helped by the ECB´s buying programme. Sorce: Reuters

11. Outlook: Situation improving on the markets • Improvement in sentiment is reflected in the figures: order intake, production and export rise in Germany • Company reporting on Q2 leads to growing euphoria about the economy in the share markets; significant rise in share prices worldwide; its sustainability, however, is questionable • Positive outlook for the economy – stabilisation in the global economy, but coupled with expectations of rising inflation • Measures take effect: since Q2 2009 increasing stabilisation in the banking system and rising trust among the players in the capital markets – spreads narrowed, uncovered refinancing tools can be placed again