PROJECT DEVELOPMENT

VITERRA DEVELOPMENT	2003	2002	Change
	€ million	€ million	%
Sales	149.1	80.2	85.9
EBITDA	64.9	26.4	>100
Operating profit	3.5	–11.9	>100
Investments	4.3	4.4	–2.9
Number of employees*	140	92	52.2

* Excluding managing directors and trainees

Project development segment extended to include apartment development activities

This involved integrating the apartment development activities of Viterra Baupartner into Viterra Development. Operational responsibility for the former Viterra Baupartner branches in Hamburg, Frankfurt/Main, Munich and the subsidiary in Warsaw had already been transferred to the branches of Viterra Commercial Properties at those locations in September 2002. We then changed the name of Viterra Commercial Properties to Viterra Development with effect from January 1, 2003.

The successful incorporation of the apartment development activities in early 2003 culminated in a new business model for our project development segment: Viterra Development focuses on the development of office real estate and owner-occupied apartments in the German metropolitan areas as well as in Warsaw and Prague.

Rudná logistics park successfully sold

Viterra Development recognised the Rudná site's potential at a very early stage. After purchasing the land in 1996, we developed and successfully marketed the Rudná logistics park step by step as a central logistics hub in the Czech Republic.

The Rudná logistics park is an example of our business approach when developing commercial real estate. Our aim is to quickly identify sites with high potential as locations for commercial properties, to develop them successfully and sell them at a profit.

Leases signed for some 77,500 m² despite difficult market situation

The positive development in the letting of our commercial space is particularly pleasing given the tight market situation. One important factor is Viterra Development's concentration on a clearly user-oriented, value-enhancing concept for commercial real estate.

Sales rise sharply thanks to expansion of activities

Projects successfully launched or completed despite difficult market environment

In 2003, Viterra Development started or completed the following commercial real estate projects:

We are now developing the largest four-star superior congress hotel in the centre of Germany's capital, Berlin, on behalf of the operator MARITIM Hotelgesellschaft mbH and the investor SEB Immobilien-Investment GmbH. The building in the southern Tiergarten district is to be completed by the summer of 2005. The hotel designed by the Berlin architect, Jan Kleihues, will have 505 rooms and suites and cater for events and receptions for up to 5,500 guests. Construction work started on the 12,000 m² plot of land in June 2003.

A ten-storey, high-rise office building with approx. 4,000 m² of space for let was also completed in Berlin. The property situated in Lennéstraße, near Potsdamer Platz, was handed over to the investor, Bayerische Versorgungskammer, in early April 2003.

In mid-July 2003, work began on construction of the first phase of the office real estate project, H2 Office, in the inner port of Duisburg. In the two construction phases, about 25,000 m² of office space is to be completed on the roughly 14,000 m² plot of land. The building, designed by the internationally well-known Hamburg architects’ office, Bothe Richter Teherani, is reminiscent of the shape of a catamaran and so picks up on the maritime atmosphere of the port. The main tenant in the first construction phase, which will be finished in November 2004, is Wirtschaftsbetriebe Duisburg.

In the centre of the Frankfurt banking district known as Westend, we revitalised an office building originally erected in the 1970s. Work was completed in early October 2003. Some 90 % of the approx. 2,000 m² of office space has now been let.

Construction of owner-occupied apartments at attractive locations

By 2006, 185 owner-occupied apartments are to be erected in the Schwabing district of Munich for the "Parkstadt Schwabing" project. 74 units have already been completed and work started on another 33 in 2003. Construction of a further 78 apartments is to commence in 2004.

As part of the "Ackermannbogen" urban development project, which is also in the Schwabing district of Munich, we completed a residential complex with 37 luxury apartments on a 2,100 m² plot of land at the end of the year. All units had been sold prior to completion.

In September 2003, we started work on another 20 owner-occupied apartments in a second project on the same site. Most of these units have also already been sold.

At the end of August 2003, we started to market the 35 apartments which will be built in the first construction phase of the "taunSide" project in Frankfurt/Main. In the next few years, a total of 121 units are to be erected on a roughly two hectare piece of land on Homburger Landstraße overlooking the Taunus.

Under the "terrazza" project in Frankfurt-Sachsenhausen, we plan to build an eight-storey terraced house with 38 high-quality owner-occupied apartments. We started selling the apartments in October 2003.

In Ursynow, one of the most popular districts of Warsaw, we are currently constructing VitaParc, a residential complex with 227 apartments on a 11,820 m² plot of land. The first construction phase with 112 apartments was completed in January 2004. The second phase is scheduled for completion in August 2004. Nearly all the apartments have already been sold.

In Hamburg, we are also pursuing other apartment construction projects with a total of 115 housing units including the urban development project, HafenCity, as well as ones in the Bramfeld and Uhlenhorst districts.

In Munich, apart from the projects already described, we are also developing, constructing and selling a total of 204 owner-occupied apartments in the districts of Obermenzing, Oberföhring, Oberhaching and Olching. In five other projects, we are planning and developing a total of 464 owner-occupied apartments in desirable areas of Warsaw.

Portfolio restructuring continued

Outlook

For example, in the immediate vicinity of the Düsseldorf inner city, we want to develop an impressive, forward-looking concept, the 22-storey Sky Office. The building on Kennedydamm has a gross floor area of 37,400 m². The architecture features a highly efficient ground plan design and offers a great degree of flexibility in allocating floor space. Construction will begin as soon as enough office space has been prelet. Completion is scheduled for the end of 2006.

As the current situation on the commercial real estate market is not easy, in 2004 Viterra Development will adhere to its policy of only starting construction when enough space has been prelet. We will continue to avoid speculative projects. In the transition phase. this may mean that development projects will take some time before they are implemented. However, we are confident that demand will pick up again as more office space will be needed in the period up to 2006.

The market for owner-occupied apartments is also suffering from the weak economy. It is above all a lack of job security which is making owner-occupiers and capital investors reluctant to buy residential property. Only when the economy picks up will demand start to catch up, particularly in the fast-growing metropolitan areas of Munich, Frankfurt and Hamburg.

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