The portfolio comprises a total of approximately 400,000 square metres of modern distribution space in top locations across Germany, including Munich, Hamburg and the Ruhr region. Besides the strong cash flows, the portfolio is characterised by a very high degree of diversification in its tenant structure.

ProLogis European Properties Fund II is the leading European logistics fund, owning 215 prime logistics properties in 12 European countries, with aggregate rentable space close to 5 million square metres and a total market value of approximately € 3 billion.

"Thanks to the very close client relationship and excellent cooperation between Prologis and Aareal Bank, we were able to successfully close this portfolio financing", said Christof Winkelmann, Managing Director – Special Property Finance at Aareal Bank.

"We are pleased to have concluded the portfolio financing with Aareal Bank AG, a reliable partner, as we continue to strategically access debt in all of our European markets", added Christian Nickels-Teske, Head of Treasury and Capital Markets at Prologis Europe. "We believe that the quality of our distribution facilities and the customers occupying them, make Prologis’ distribution centres attractive for the capital markets.” 

Aareal Bank

Aareal Bank AG is one of the leading international specialist property banks. The Aareal Bank share is included in Deutsche Börse's mid-cap MDAX index. Aareal Bank operates on three continents: leveraging its successful European business model, the bank has established similar platforms in North America and in the Asia-Pacific region. It provides property financing solutions in more than 20 countries.

Prologis
Prologis, Inc. is the leading owner, operator and developer of industrial real estate, focused on global and regional markets across the Americas, Europe and Asia. As of September 30, 2011, Prologis owned or had investments in, on a consolidated basis or through unconsolidated joint ventures, properties and development projects expected to total approximately 55.7 million square metres
(600 million square feet) in 22 countries. The company leases modern distribution facilities to more than 4,500 customers, including manufacturers, retailers, transportation companies, third-party logistics providers and other enterprises. Headquartered in San Francisco, California USA, Prologis is a member of the S&P 500 and is publicly traded on the New York Stock Exchange under the
ticker "PLD”.

The hotels are situated in Paris, Cannes and Nice and are renowned for their first-class locations, their historical buildings and their high-class service. The 5-star Hôtel du Louvre, a grand hotel in the heart of Paris, has a unique relationship with the city's culture and the arts: each one of its four facades looks out on a famous monument - the Louvre Museum, Opera Garnier, the state theatre Comédie Française and the place du Palais Royal. The 4-star Hôtel Concorde La Fayette is also located in Paris, not far from the Champs-Elysées, and its 33 floors offer a spectacular view of Paris and the Eiffel Tower. The 5-star Hôtel Martinez is located in Cannes in the south of France. It is famous for its eminent position on the famous seaside boulevard “La Croisette”. Lastly, the 5-star Hôtel Palais de la Méditerranée is one of the prime addresses in Nice, its trademark being its perfectly maintained white art deco façade from the 1930s. 

"With this hotel portfolio financing, Aareal Bank once again proved its expertise as
an international property financer with special knowledge in the area of hotel financings," said Christof Winkelmann, Managing Director Special Property Finance at Aareal Bank. "This deal is characterised in particular by the outstanding properties included in the portfolio and by the very good cooperation with our client Starwood Capital."

Of the 34 properties, 27 are in Germany and 7 in Poland. They are all fully-let and feature high quality standards. Additionally, they all benefit from strategic and diversified locations within the countries and are let to top-class tenants.

“The logistics sector is closely tied to the development of global trade flows, and hence strongly benefits from globalisation. Strategic logistics hubs remain attractive in the long-term”, explains Christof Winkelmann, Managing Director Special Property Finance at Aareal Bank. The Logistics Performance Index (LPI), published by the World Bank every 2 years assesses the attractiveness of more than 150 countries as logistics locations. The most recent LPI placed both Germany and Poland in the group of the most attractive countries. In fact, Germany is in first place. Winkelmann concluded: “We are thus very happy to be cooperating with a logistics specialist of such a global standing as Goodman Group, especially at these locations." 

“We are pleased to add a leading bank like Aareal Bank as an important banking partner for the Goodman platform. The agreed finance package underpins the quality of the European portfolio”, adds Danny Peeters, Goodman Group Continental Europe CEO.

Wiesbaden, 8 November 2011 – Aareal Bank Group maintained its positive business development throughout the third quarter of 2011, in a challenging market environment. Consolidated operating profit of € 47 million exceeded the figure posted for the same period of the previous year by some 42 per cent (Q3 2010: € 33 million) and was also higher than in the previous quarter (Q2 2011: € 44 million). At € 138 million, Aareal Bank Group's nine-month consolidated operating profit has already exceeded the full-year figure for 2010 (€ 134 million).

"During the third quarter, we were again able to exploit opportunities for high-margin new business, and to further strengthen our market position", said CEO Dr Wolf Schumacher." The moderate level of allowance for credit losses, which is expected to remain at the lower end of our projected range for the full year, affirms the prudent business policy which we have been pursuing over recent years. Looking back on the first nine months of the year, we are thus confident that we will be able to maintain our positive business performance."

Aareal Bank's capitalisation remains solid. The bank's comfortable Tier 1 ratio of 16.6 per cent (up from 15.8 per cent at the mid-year point) is also good by international standards. Aareal Bank was thus able to maintain the ratio at a high level, whilst having grown its new business volume as planned. The core Tier 1 ratio – defined as the Tier 1 ratio excluding hybrid capital and the remaining SoFFin silent participation – stood at 11.5 per cent. Furthermore, despite persistent uncertainty on the capital markets, Aareal Bank successfully carried out its funding activities as planned during the third quarter, fulfilling its full-year funding requirements ahead of schedule.

Aareal Bank is not exposed to Greek government bonds, and is thus not affected by the Greek debt reduction agreed upon at the special summit in Brussels at the end of October. "Thanks to its good business development during the year to date, Aareal Bank is in a position to take adequate measures, if required, to respond to any renewed escalation of the market situation within the framework of its active portfolio management – and thus to strictly contain the impact of the European sovereign debt crisis on the bank", Dr Schumacher explained.

Structured Property Financing: operating profit once again significantly exceeds the previous year's figure

Aareal Bank once again boosted operating profit in the Structured Property Financing segment year-on-year: at € 42 million for the third quarter of 2011, operating profit was up by 50 per cent from the previous year's figure of € 28 million, also exceeding the level posted in the previous quarter (Q2 2011: € 41 million) – despite the non-recurring burden from the partial repurchase of the remaining SoFFin-guaranteed notes maturing in March 2012. Allowance for credit losses was € 36 million in the third quarter, and was therefore consistent with the quarterly volatility expected by the bank.

Nine-month operating profit in the Structured Property Financing segment was up by more than 60 per cent to € 126 million. The increase was largely due to a marked increase in net interest income, and also to a lower allowance for credit losses. Aggregate allowance for credit losses after three quarters is € 78 million and is therefore at the lower end of the pro rata forecast range of € 110 to € 140 million for the full year.

During the course of 2011 to date the property sector has largely been stable, even improving slightly relative to the previous year, reflecting the still-robust performance of the economy as a whole. This statement also applies to the third quarter, even though the momentum of the recovery on the property markets has eased recently. However, in an economic environment that has slowed down slightly, the business framework for the commercial property markets was stable to slightly positive.

Aareal Bank remains well positioned in the current economic environment to take advantage of attractive opportunities for high-margin new business – whilst maintaining its risk-sensitive lending policy. New business totalled € 3.0 billion from July to September, thus exceeding the figures for both the previous quarter (€ 1.8 billion) and for Q3 2010 (€ 1.2 billion). During the first nine months of 2011, the volume of new business originated by Aareal Bank amounted to € 6.2 billion, which equates to growth of more than 50 per cent over the first three quarters of the previous year (€ 4.1 billion). The share of initial loan issues relative to the volume of new business increased significantly.

Consulting / Services: volume of deposits remaining on a high level

Operating profit in the Consulting / Services segment for the third quarter of 2011 amounted to € 5 million, matching the figure for the same period of the previous year.

Averaging € 4.8 billion, the volume of deposits from clients from the institutional housing industry remained at a high level during the third quarter of 2011. Aareal Bank's clients make strong use of the bank's combined offer of cash investment schemes, specialist services for automated mass electronic payments processing, and the optimisation of downstream processes (together with related advice). This enables the bank to maintain a strong position in the market, despite high competitive pressure.

The performance of the IT subsidiary Aareon AG was also on schedule during the third quarter. In particular, Aareon's enterprise resource planning software Wodis Sigma continued to develop positively; with 35 clients signing new contracts this year, a total of 356 clients have now opted for Wodis Sigma. Most of the existing Wodis Sigma clients previously used the Aareon ERP products Wodis and WohnData. To do justice to the strong market demand, Aareon invested further in expanding its advisory and support capacities.

Funding activities successfully executed

Aareal Bank Group continued to successfully carry out its funding activities as planned during the third quarter of 2011. It raised a total of € 0.9 billion in long-term funds on the capital market between July and September 2011. Mortgage Pfandbriefe accounted for just under € 0.6 billion of new issuance, and unsecured refinancing for € 0.3 billion. Despite the still-challenging situation on the capital and financial markets, Aareal Bank was thus able to execute all of its funding activities planned year-to-date and during the third quarter, and already achieved its funding targets for the year as a whole.

The bank raised a total of € 3.7 billion in long-term funds on the capital market through private and public transactions during the first nine months of the 2011 financial year, comprising € 2.2 billion in Mortgage Pfandbriefe, € 100 million in Public Sector Pfandbriefe, and € 1.4 billion in unsecured refinancing. The bank has therefore maintained its long-term funding inventory at a high level. The comfortable liquidity situation is also highlighted by the early partial redemption of the remaining SoFFin-guaranteed notes maturing in March 2012. 

Notes to Group financial performance

Net interest income for the third quarter of 2011 was € 133 million (Q3 2010: € 131 million). For the first nine months of the 2011 financial year, net interest income thus totalled € 401 million (9m 2010: € 370 million), an 8 per cent increase. Net interest income after allowance for credit losses amounted to € 323 million (9m 2010: € 273 million).

Net commission income for the third quarter was € 38 million (Q3 2010: € 24 million). The year-on-year increase was largely due to lower cost for SoFFin-guaranteed notes and to commission income generated by SG | automatisering bv, Aareon AG's Dutch subsidiary acquired in the fourth quarter of 2010. Nine-month net commission income of € 99 million was also up year-on-year (9m 2010: € 86 million). The net figure includes costs of € 18 million (9m 2010: € 20 million) incurred for bonds guaranteed by SoFFin.

Burdens in the result from non-trading assets were fully compensated by the positive net trading income/expenses figure, and by the positive net result from hedge accounting. Net trading income/expenses amounted to € 20 million for the third quarter (Q3 2010: € 2 million), totalling € 14 million for the first nine months of 2011 (9m 2010: € –5 million). Both the quarterly and the nine-month figure were primarily attributable to the measurement of derivatives used to hedge interest rate and currency risks, as well as from unrealised changes in value from the sale of hedging instruments on selected EU sovereign countries.

Results from non-trading assets amounted to € -22 million in the third quarter (Q3 2010: € -3 million); the figure for the first nine months of the year was € -18 million (9m 2010: € 11 million). These results were largely attributable to sales of fixed-income securities.

Consolidated administrative expenses totalled € 93 million for the third quarter (Q3 2010: € 88 million) and € 280 million for the first nine months of the year; the figure for the second quarter was € 96 million. This development highlights the Group’s continued strict cost discipline.

Net other operating income and expenses in the third quarter amounted to € 2 million (Q3 2010: € 1 million), and € -10 million for the first nine months of the year (9m 2010: € -7 million), reflecting in particular expenses incurred with one individual property.

Consolidated operating profit for the third quarter thus totalled € 47 million (Q3 2010: € 33 million). Taking into consideration € 13 million in income taxes and € 5 million in income attributable to non-controlling interests, consolidated net income after non-controlling interests for the quarter stood at € 29 million. After deduction of the net interest payable on the SoFFin silent participation, consolidated income stood at € 24 million (Q3 2010: € 10 million).

Consolidated operating profit for the first nine months of the current financial year thus totalled € 138 million (9m 2009: € 94 million). Taking into consideration taxes of € 39 million and non-controlling interest income of € 14 million, net income attributable to shareholders of Aareal Bank AG amounted to € 85 million. After deduction of the net interest payable on the SoFFin silent participation, consolidated net income stood at € 69 million (9m 2010: € 27 million).

Outlook: year-to-date results already exceed the full-year figures for 2010

The European sovereign debt crisis is likely to remain at the top of the agenda on the financial and capital markets during the remainder of the 2011 financial year. It is thus fair to expect that market volatility will remain high for the time being, and that the resulting risks in the financial system will persist.

Given the good year-to-date performance and its solid capital and liquidity base, Aareal Bank Group believes that it is in a good position to act accordingly on anticipated changes in the market environment. This applies both to the active management of the securities portfolio and to the internal organisation, which is subject to a continuous review regarding potential efficiency enhancements in all areas.

Aareal Bank continues to expect net interest income for the full 2011 financial year to exceed the previous year's level. New business for the year as a whole is expected within the upper half of the forecast range of between € 7 billion and
€ 8 billion. Regarding allowance for credit losses, the bank maintains its forecast range of between € 110 million and € 140 million for the year as a whole. Based on developments during the first nine months, however, allowance for credit losses is expected to be at the lower end of the range. As in previous years, the bank cannot rule out additional allowances for unexpected credit losses in 2011.

A marked year-on-year increase in net commission income for 2011 is expected, thanks predominantly to the relief arising from lower guarantee fees through the redemption of a large proportion of the SoFFin-guaranteed notes. Administrative expenses continue to be defined by the bank's unchanged cost discipline, and the figure for the current year is expected to be marginally higher than in the previous year, including the burden associated with the special bank levy (Bankenabgabe).

Looking ahead, economic risks and future developments on financial markets are difficult to assess for the coming months. Generally, Aareal Bank remains in a position to further exceed consolidated operating profit of the 2010 financial year during the current year – having matched the previous year's results after nine months already.

Moreover, Aareal Bank continues to believe that it is able to match its target return on equity before taxes of between 12 per cent and 13 per cent, in normalised markets.

"Aareal Bank Group continues to perform strongly in its operative business. Moreover, its medium-sized business structure also means that it has the necessary flexibility to hold its own, time and again, in a rapidly-changing market environment. After all, as a premium provider, our goal is to always offer our clients the best solutions in both our segments. In this way, we will secure the bank's successful development in the future", Schumacher summarised.

Note to editors: Aareal Bank's full interim report for the third quarter of 2011 is available for download from http://www.aareal-bank.com/financialreports.

This prime Paris office building was constructed in 2005 by the renowned developer HRO. It provides 31,160 sqm of lettable floorspace across 14 storeys and is fully let to major international tenants. The building has been awarded the certification “HQE” (Haute Qualité Environnementale), a green building certification valid in France. Défense Plaza is located west of Paris at the centre of "La Défense", the largest purpose-built business office district in Europe.

"The financing of the Défense Plaza is an outstanding example of Aareal Bank's long-standing and intensive commitment in France. We have been operating in France for almost 30 years now and have become an integral part of the market", says Dirk Große Wördemann, Member of the Management Board of Aareal Bank AG. "In addition, this club deal confirms our excellent and successful cooperation with Morgan Stanley."

Aareal Bank

Aareal Bank AG is one of the leading international specialist property banks. The Aareal Bank share is included in Deutsche Börse's mid-cap MDAX index. Aareal Bank operates on three continents: leveraging its successful European business model, the bank has established similar platforms in North America and in the Asia-Pacific region. It provides property financing solutions in more than 20 countries.

Morgan Stanley

Morgan Stanley is a leading global financial services firm providing a wide range of investment banking, securities, investment management and wealth management services. Morgan Stanley is a global leader in the origination, financing, securitisation and trading of both commercial mortgages and commercial mortgage backed securities (CMBS). As a direct lender, Morgan Stanley provides expedient and attractively priced fixed and floating rate financings on a broad range of stabilised commercial property types worldwide. For further information about Morgan Stanley, please visit www.morganstanley.com.

Wiesbaden, 9 August 2011 – Aareal Bank Group’s successful business development continued into the second quarter of the current year. At € 44 million, consolidated operating profit exceeded the previous year's figure by around 42% (Q2 2010: € 31 million), almost matching the extraordinary levels seen during the first quarter of 2011. Aareal Bank Group thus once again proved its operative strength, in a market environment that remains challenging.

"Our good performance during the second quarter once again demonstrated that a prudent business policy geared towards sustainable growth, which we pursued over recent years, is paying off. After the first six months, we remain well on track for achieving our goals for 2011 as a whole", said CEO Dr Wolf Schumacher, commenting on the results. "We thus remain in an excellent position to exploit the opportunities for attractive new business that are available in the current market environment", he added.

Despite prevailing uncertainty on the financial and capital markets, Aareal Bank not only completed its scheduled funding activities, but also successfully executed a rights issue during the second quarter, raising gross issue proceeds of € 269.6 million. The net proceeds from the capital increase will support the future growth of the bank´s Structured Property Financing segment, consistent with its current credit risk strategy. At the same time, the bank used the capital increase to strengthen its regulatory capital base, and used € 75 million of the net proceeds for a further partial repayment of the silent participation provided by the German Financial Markets Stabilisation Fund (SoFFin).

Against the background of its good funding situation, during April 2011 Aareal Bank also carried out an early redemption of the SoFFin-guaranteed € 2 billion bond maturing in June 2013, which the bank had held on its own books, in agreement with SoFFin. Moreover, the bank was able to repurchase from investors just under € 0.8 billion worth of notes from the remaining € 2 billion SoFFin-guaranteed bond issue maturing in March 2012.

Structured Property Financing: operating profit once again exceeds the previous year's figure

Operating profit in the Structured Property Financing segment of € 41 million for the second quarter of 2011 exceeded the previous year's figure of € 25 million by 64 per cent, and almost matched the extraordinarily strong results achieved in the first quarter (€ 43 million). The year-on-year increase was largely due to an increase in net interest income – reflecting higher margins –  and lower allowance for credit losses, which amounted to € 24 million in the second quarter of 2011 (Q2 2010: € 33 million). Aggregate allowance for credit losses of € 42 million for the first half of the year was therefore lower than the pro-rata forecast range of € 110 million to € 140 million for the full year, but within the fluctuation range expected.

During the course of 2011 to date, the property sector continued to gradually improve, reflecting the predominantly positive performance of the economy as a whole. In this economic environment, the business framework for the commercial property markets was stable to slightly positive.

As expected, there were attractive opportunities for high-margin new business in this market situation – which the bank continued to exploit during the second quarter, maintaining its risk-sensitive lending policy. New business totalled € 1.8 billion from April to June, thus exceeding the figures for both the previous quarter (€ 1.4 billion) and for Q2 2010 (€ 1.6 billion). Aggregate new business originated during the first half of 2011 thus amounted to € 3.2 billion – up approximately 10% year-on-year. Newly acquired business more than doubled year-on-year, whilst the share of loan renewals declined significantly.

Consulting/Services: volume of deposits remaining on a high level

Aareal Bank made further progress towards its strategic objectives in the Institutional Housing Unit of its Consulting/Services segment during the second quarter: these objectives were to increase the volume of deposits by acquiring new clients, and to increase cross-selling of the broad product range in its existing client base. At an average € 4.7 billion, the volume of deposits was at a high level during the second quarter of 2011 – in fact, it has been rising continuously since the first quarter of 2010. Aareal Bank benefits from its strong market penetration, its extensive range of products and services, and from many years of experience as the lead bank to the German institutional housing industry. This enabled the bank to maintain a strong position in the market, despite strong competitive pressure on money market investment terms.

IT subsidiary Aareon AG has performed on schedule during the current financial year to date. In particular, Aareon's new Wodis Sigma product line continued to develop positively during the second quarter. A total of 347 clients have opted for Wodis Sigma since its introduction, with 216 already using the software in production. To adequately service the strong demand, Aareon has invested further in expanding its advisory and support capacities. With the rollout of the new Wodis Sigma Release 3.0 in the fourth quarter of 2011, Aareon will increasingly be offering its clients an alternative software rental option, alongside the existing licence model. Aareon can therefore pave the way for its clients to benefit from the advantages of cloud computing individually geared towards the institutional housing industry. Against this background, more users of the WohnData application - which will be phased out in 2012 - have opted to migrate to the Software as a Service option. When using the software under such a rental scheme, Aareon's SaaS clients pay regular usage fees over a long-term period, but do not need to purchase a software licence - thus saving the related one-off costs.

Operating profit in the Consulting/Services segment for the second quarter of 2011 amounted to € 3 million, after € 4 million in the previous quarter. The decline was attributable to a higher level of investment in the future business, as mentioned above, particularly in the Wodis Sigma product line. Due to consolidation effects (related to the acquisition of SG|automatisering bv), among others, the meaningfulness of a comparison with the same quarter of the previous year (Q2 2010: € 6 million) is limited.

Successful funding activities / capital base strengthened further

Aareal Bank Group continued to successfully carry out its funding activities during the second quarter of 2011. The bank continues to benefit from a good liquidity status, as evidenced in the early redemption of the majority of SoFFin-guaranteed bonds. Aareal Bank raised a total of € 1.7 billion in long-term funds on the capital markets during the period under review, with Mortgage Pfandbriefe accounting for € 0.8 billion and unsecured funding for € 0.9 billion. Key funding transactions included in particular, a three-year bearer bond and the placement of a five-year Mortgage Pfandbrief on the capital market. Both transactions were sized at € 500 million each.

The bank raised a total of € 2.8 billion in long-term funds on the capital market through private and public transactions during the first six months of the financial year, comprising € 1.6 billion in Mortgage Pfandbriefe and € 1.2 billion in unsecured funding.

Aareal Bank further strengthened its already solid capital base via the capital increase executed during the second quarter. Aareal Bank's Tier 1 ratio as at 30 June 2011 stood at 15.8 per cent, which is also good by international standards, compared to 12.9 per cent at the 2010 year-end. In this context, it is worth noting that the bank will only apply the portion of the proceeds from the capital increase earmarked for additional growth during the second half of the year for the purpose of originating additional new business. The bank's Core Tier 1 ratio (the Tier 1 ratio excluding hybrid capital and the SoFFin silent participation) was 11.0 per cent as at 30 June 2011.  

Notes to Group financial performance

Net interest income amounted to € 134 million in the second quarter (Q2 2010: € 122 million), which corresponds to a total figure for the first six months of the financial year of € 268 million (H1 2010: € 239 million). Net interest income after allowance for credit losses for the first half of the year totalled € 226 million (H1 2010: € 174 million).

Net commission income for the quarter under review was € 31 million (Q2 2010: € 32 million). Net commission income totalled € 61 million for the first half of the year (H1 2010: € 62 million). This figure includes costs of € 15 million (H1 2010: € 11 million) incurred for bonds guaranteed by SoFFin.

Net trading income/expenses for the second quarter totalled € 2 million (Q2 2010: € -13 million). The figure for the first six months amounted to € -6 million (H1 2010: € -7 million). Net trading income/expenses is primarily attributable to the measurement of derivatives used to hedge interest rate and currency risks, as well as from unrealised changes in value from sold hedging instruments on selected EU sovereign countries.

Aareal Bank's result from non-trading assets amounted to € 2 million for the second quarter (Q2 2010: € 14 million). The half-year figure amounted to € 4 million, compared to € 14 million in the same period of the previous year. The positive result was mainly attributable to sales of fixed-income securities.

Consolidated administrative expenses amounted to € 96 million in the second quarter (Q2 2010: € 92 million), and € 187 million in the first half-year – almost unchanged from the previous year (€ 183 million). This continues to reflect pursuance of the Group’s strict cost discipline.

Net other operating income and expenses in the second quarter amounted to € -10 million (Q2 2010: € -6 million). The figure for the first half of the year amounted to € -12 million (H1 2010: € -8 million).

On balance, consolidated operating profit for the second quarter amounted to € 44 million (Q2 2010: € 31 million). Taking into consideration income taxes of € 14 million and non-controlling interest income of € 4 million, consolidated net income after non-controlling interest income amounted to € 26 million. After deduction of the net interest payable on the SoFFin silent participation, consolidated income stood at € 21 million (Q2 2010: € 9 million).

Aareal Bank Group's consolidated operating profit thus amounted to € 91 million for the first six months of the financial year (H1 2010: € 61 million). Taking into consideration taxes of € 26 million and non-controlling interest income of € 9 million, net income attributable to shareholders of Aareal Bank AG amounted to € 56 million. After deduction of the net interest payable on the SoFFin silent participation, consolidated net income stood at € 45 million (H1 2010: € 17 million).  

Outlook: Forecasts for the full year 2011 affirmed

Despite the Brussels summit resolutions on 21 July 2011, the European sovereign debt crisis and the US debt issue are set to remain at the top of the agenda of financial and capital markets. It is thus fair to expect volatility on financial and capital markets to remain high for the time being. Overall, the risks in the financial system have increased.

Provided that the sovereign debt crisis will not deteriorate further, Aareal Bank Group continues to see good potential for maintaining its positive business development during the remainder of the year, in this challenging market environment. The bank is making good progress in achieving its targets for 2011, which were last raised in April.

Accordingly, on the back of a moderately higher interest rate environment and expected revenues from additional new business, the Management Board expects net interest income for 2011 to be higher than in the previous year. The volume of new business generated in the Structured Property Financing segment is expected to increase to between € 7 billion and € 8 billion. The bank expects allowance for credit losses in a range of € 110 million to € 140 million during the 2011 financial year. As in the previous years, the bank cannot rule out additional allowances for unexpected credit losses that may be incurred during 2011. Net commission income for the financial year 2011 is expected to show a marked increase compared with the previous year. The net figure will benefit from relief due to lower guarantee fees, due to the partial redemption of SoFFin-guaranteed bonds. Aareal Bank continues to believe that during 2011 it will be able to once again markedly increase operating results over and above those for the 2010 financial year – results which were already good in the context of the challenging market environment.

Note to editors: Aareal Bank's full interim report for the second quarter of 2011 is available for download from http://www.aareal-bank.com/financialreports.

• Notes in the amount of 785 mn € repurchased
• Thomas Ortmanns: "We are highly satisfied with the result".

Wiesbaden, 11 July 2011 – Aareal Bank has successfully taken a further step towards returning the issue guarantees granted by the Financial Markets Stabilisation Fund (SoFFin). On July 1^st, 2011 the international property specialist had invited noteholders of the remaining 2 bn € SoFFin-guaranteed note to tender for cash all outstanding guaranteed notes with the maturity date 26 March 2012. By the invitation deadline today, Aareal Bank had been offered guaranteed notes in the volume of approx. 785 mn €. Aareal Bank has accepted all notes tendered for repurchase.

The repurchase price was set at 100.816 % by using the interpolated 8-month/9-month EURIBOR rate minus 55 basis points. Thomas Ortmanns, the Management Board member responsible forCapital Markets explained: "We have started the repurchase process considering the good refinancing situation of Aareal Bank. We are highly satisfied with the result."

Disclaimer:

This announcement shall not constitute a purchase offer or a public call to sell securities in the United States of America (including its territories and possessions), Australia, Japan, Canada or to persons in the United Kingdom, Belgium, France or any other jurisdiction where it is unlawful to distribute this document.

The distribution of the Invitation Memorandum may be subject to legal restrictions in certain countries and territories. Aareal Bank AG, the Dealer Manager and the Tender Agent hereby call upon all persons who come into possession of the  Invitation Memorandum to inform themselves of such restrictions and to adhere to them.

• Purchase price will be determined using a yield equivalent to the interpolated EURIBOR rate minus 55 basis points
• Management Board member Thomas Ortmanns: "The buyback process reflects the good refinancing situation of Aareal Bank."

Wiesbaden, 1 July  2011 – Aareal Bank has taken a further step in returning the guarantees granted by the German Financial Markets Stabilisation Fund (SoFFin). It is offering noteholders of its remaining EUR 2 billion SoFFin-guaranteed bond to repurchase any and all of such notes for cash. The note with a term of three years is due on 26 March 2012. Already in April 2011, Aareal Bank had made an early repayment of the second SoFFin-guaranteed EUR 2 billion bond due 5 June 2013 which was held on its own books. 

The buyback process for the SoFFin-guaranteed 2.625% notes 2009/2012 (ISIN: DE000AAR0041) has been launched as of today and is scheduled to end on 11 July 2011. There will be no limit on the repurchase volume. The purchase price will be set after the invitation deadline using the interpolated 8-month/9-month EURIBOR rate minus 55 basis points in accordance with market convention. The dealer manager for the transaction and tender agent is Deutsche Bank. The Invitation Memorandum inviting noteholders to submit tenders for purchase for cash may be obtained from the tender agent, Deutsche Bank AG, London Branch, Trust & Securities Services, Winchester House, 1 Great Winchester Street, London EC2N 2DB, United Kingdom, Telephone London: +44 207 547 5000, Frankfurt: +49 69 910 34907, Fax: +44 207 547 5001, E-Mail: xchange.offer@db.com.

Thomas Ortmanns, Aareal Bank Board member responsible for capital markets, said: "The buyback process starting today reflects our overall positive assessment of the market situation and the good refinancing situation of Aareal Bank."

Disclaimer:

This notice neither constitutes an offer to sell nor a solicitation to buy or subscribe for any securities in the United States of America (including its territories and possessions), Australia, Japan or Canada or to a person in the United Kingdom of Great Britain, Belgium, France or in any other jurisdiction, to which such an offer would be unlawful.

The distribution of the Invitation Memorandum may be subject to legal restrictions in certain countries and territories. Aareal Bank AG, the Dealer Manager and the Tender Agent request hereby all persons, who come into the possession of the Invitation Memorandum, to inform themselves about such restrictions and to comply with them.

Wiesbaden, 10 May 2011 – Aareal Bank Group started successfully into the 2011 financial year. At € 47 million, consolidated operating profit generated in the first quarter clearly exceeded the corresponding figure for the same period of the previous year (€ 30 million) as well as the already very strong figure for the fourth quarter of 2010 (€ 40 million). Thus, during the first three months of the current financial year, Aareal Bank generated the highest consolidated operating profit since the second quarter of 2008.

"Aareal Bank Group once again demonstrated its operative strength", commented Dr Wolf Schumacher, Chairman of the Management Board. "As one of the few remaining international property financing providers, Aareal Bank is in an excellent position to capitalise on the ongoing business improvement in the property sector, and to sustain its profitable growth trend."

Against this background, on 14 April 2011 the Management Board and Supervisory Board of Aareal Bank resolved to increase the capital in the form of a rights issue against cash contributions. The transaction, which has been successfully concluded, generated gross proceeds of € 269.6 million. The net proceeds from the capital increase are intended to be used for supporting the future growth of the Structured Property Financing segment, consistent with the bank's current credit risk strategy. The bank has also used the capital increase to further strengthen its regulatory capital base. Furthermore, some of the issuing proceeds have been used to make another partial repayment of € 75 million on the SoFFin silent participation, on 28 April 2011. In addition and also during April 2011, the Management Board carried out an early redemption of the SoFFin-guaranteed € 2 billion bond maturing on 5 June 2013, which the bank held on its own books, in agreement with SoFFin.

Structured Property Financing segment once again increases operating profit

At € 43 million, operating profit in the Structured Property Financing segment was not only up significantly year-on-year (Q1 2010: € 24 million), it was also above the very respectable level of the final quarter of 2010 (€ 31 million).

Net interest income in the first quarter was € 125 million, after € 106 million in the comparable period of the previous year. The year-on-year rise was attributable predominantly to higher average margins generated in the lending business.

At € 18 million, allowance for credit losses in the first quarter of 2011 was just over half of the figure for the previous year (€ 32 million). It was therefore lower than the pro-rata forecast range of € 110 million to € 140 million for the full year, but within the expected quarterly fluctuation range.

Aareal Bank's selective approach, oriented strictly upon quality, return and risk, together with the bank's medium-sized structure, once again proved to be a major competitive advantage. The bank was therefore in a position to react quickly to market developments, and to efficiently exploit opportunities that arose. New business increased slightly year-on-year, to € 1.4 billion (Q1 2010: € 1.3 billion). The share of newly acquired business increased significantly, a trend which is expected to continue during the coming months. Very positive new business origination in April 2011 provides early affirmation of Aareal Bank's optimistic assessment of the current market and competitive environment in commercial property financing. The bank's new business pipeline is very well stocked, suggesting that this development is likely to prevail going forward.

Consulting/Services: deposits generated by the institutional housing industry increased further

Operating profit in the Consulting / Services segment totalled € 4 million during the first quarter (Q1 2010: € 6 million). The prevailing low interest rate environment is unfavourable for the profitability of the deposit-taking business. Nonetheless, the volume of deposits generated from the institutional housing industry increased further, to average € 4.5 billion through the quarter. Our long-standing, intensive and trusting cooperation with companies operating in the German institutional housing industry paid off once again.

Aareon AG's business performed in line with expectations during the first quarter, which is traditionally the weakest phase of the year in its market. The company succeeded in winning an additional 13 new clients for its Wodis Sigma ERP system. A total of 334 clients have now decided in favour of the product to date. Aareon's international business has also developed favourably. The integration of the Dutch company SG|automatisering bv, Emmen, effective since 1 November 2010, continues to develop successfully.

Refinancing activities implemented on schedule – Tier 1 ratio strengthened further

Aareal Bank remains extremely solidly financed. In the first quarter of the current financial year, we successfully implemented all our planned refinancing activities in full – in a market environment that remained difficult, especially for unsecured issuance. Aareal Bank placed unsecured issues in the amount of € 0.3 billion, as well as Pfandbrief issues totalling € 0.8 billion.

During the first quarter of 2011, Aareal Bank continued the successful management of risk-weighted assets (RWA), and further strengthened its Tier 1 ratio. Calculated in accordance with the Advanced Internal Ratings-Based Approach (A-IRBA), Aareal Bank's Tier 1 ratio stood at 14.3 per cent as at 31 March 2011 (and thus prior to the successfully concluded capital increase). The Tier 1 ratio in accordance with the A-IRBA, excluding hybrid capital and the remaining silent participation by SoFFin, was 9.0 per cent.

One of the objectives of the capital increase conducted in April was to further strengthen the bank's capital base. As a result of the capital increase, the Tier 1 ratio in accordance with the A-IRBA – before appropriating funds for additional new business, and taking into account the further € 75 million partial repayment of the SoFFin silent participation – increased to 15.5 per cent on a pro-forma basis as at 31 March 2011. The Tier 1 ratio, excluding hybrid capital and the SoFFin silent participation, rose to 10.7 per cent on a pro-forma basis as at 31 March 2011.

Notes to Group financial performance

Net interest income of € 134 million (Q1 2010: € 117 million) was € 17 million (or 15%) higher than in the same period of the previous year. The year-on-year rise was attributable predominantly to higher average margins generated in the lending business. In contrast, the relatively low interest rate environment continued to burden the profitability of the deposit-taking business with the institutional housing industry.

Allowance for credit losses for the first quarter of 2011 amounted to € 18 million (Q1 2010: € 32 million). It was therefore lower than the pro-rata forecast range of € 110 million to € 140 million for the full year, but within the expected quarterly fluctuation range. Accordingly, net interest income after allowance for credit losses amounted to € 116 million (Q1 2010: € 85 million).

Unlike the same period of the previous year, net commission income of € 30 million (Q1 2010: € 30 million) reflects the running costs of € 5 million for the guarantee facility provided by SoFFin at the end of June 2010. Additionally, net commission income for the first quarter of 2011 includes € 3 million in revenue generated by SG|automatisering bv, a Dutch subsidiary acquired by Aareon during the fourth quarter of 2010. Adjusted for these effects, net commission income slightly exceeded last year’s level.

Net trading income/expenses of € -8 million (2010: € 6 million) was largely attributable to the valuation of derivatives used to hedge interest rate and currency risk, and to unrealised changes in value from sold hedging instruments on selected EU sovereign countries. Net income of € 2 million from investment securities was due to the sale of fixed-income securities (Q1 2010: € 0 million).

At € 91 million, administrative expenses were unchanged year-on-year.

Net other operating income and expenses amounted to € -2 million (Q1 2010: € -2 million).

Consolidated operating profit for the first three months of 2011 thus totalled € 47 million (Q1 2010: € 30 million). Taking into consideration taxes of € 12 million and non-controlling interest income of € 5 million, net income attributable to shareholders of Aareal Bank AG amounted to € 30 million. After deduction of net interest payable on the SoFFin silent participation, consolidated net income stood at € 24 million.

Outlook: Aareal Bank affirms raised forecasts for the full year 2011

Aareal Bank Group continues to see positive prospects for maintaining its good overall business performance for the 2011 financial year.

Taking the expected positive effects of the capital increase as well as the lower level of guarantee fees into account, Aareal Bank has raised its outlook for the financial year 2011 as a whole, as already announced on 14 April 2011: anticipating moderately higher interest rate levels, and considering the expected revenues generated from additional new business compared with the previous year, the Management Board expects net interest income to increase. Thanks to the fact that relief from lower guarantee fees will occur earlier than expected, net commission income will show a more pronounced increase than has been forecasted to date. All in all, Aareal Bank expects consolidated operating profit in 2011 to increase clearly over the previous year.

"We are confident of our ability to continue growing our business profitably in the years to come, and to further extend our market position. Aareal Bank remains on course, with its business model comprising two strong pillars. From today's perspective, we anticipate being able to generate a return on equity before taxes of between 12 per cent and 13 per cent, in a normal market environment", Schumacher stated.

Note to editors: Aareal Bank's full interim report for the first quarter of 2011 is available for download from http://www.aareal-bank.com/financialreports.

Aareal Bank

Aareal Bank AG is one of the leading international specialist property banks. The Aareal Bank share is included in Deutsche Börse's mid-cap MDAX index. Aareal Bank operates on three continents: leveraging its successful European business model, the bank has established similar platforms in North America and in the Asia-Pacific region. It provides property financing solutions in more than 25 countries.

Disclaimer:

This press release does not constitute an offer to sell nor an offer to buy any securities in the United States of America, Australia, Canada, Japan, or any other jurisdiction in which such offer is subject to legal restrictions. In the United States of America, the securities referred to in this press release may only be sold or offered for sale after registration in accordance with the provisions of the U.S. Securities Act of 1933 as amended (the "US Securities Act") or, without prior registration, if an exemption applies. Subject to certain exceptions, the securities referred to herein may not be offered or sold in Australia, Canada or Japan or to, or for the account or benefit of, any national, resident or citizen of Australia, Canada or Japan. The securities referred to in this press release will not be registered under the US Securities Act, nor under the legal rules applicable in Australia, Canada and Japan. There will be no public offering of these securities in the United States of America.

Wiesbaden, 2 May 2011 – Aareal Bank AG successfully completed its capital increase announced on 14 April 2011, raising gross issue proceeds of € 269.6 million. All 17,102,062 new common bearer shares offered were issued. Holders entitled to subscribe exercised 99.73 per cent of subscription rights during the subscription period, thus subscribing to 17,055,237 new common bearer shares at the issue price of € 15.75. The remaining new shares, which were not subscribed under the Offer, were sold by the syndicate banks via the stock exchange.

The Company's anchor shareholder, Aareal Holding Verwaltungsgesellschaft mbH ("Aareal Holding"), took part in the rights issue within the scope of a so-called 'opération blanche'. 4,991,355 new shares – corresponding to a value of
€ 102.3 million, or 78.4 per cent of the new shares Aareal Holding was entitled to subscribe to – were already successfully placed with institutional investors, in a pre-placement. Following the successful completion of the capital increase, Aareal Holding holds a 28.9 per cent stake in the issued share capital of Aareal Bank AG.

The new shares subscribed to under the Offer are expected to be delivered to shareholders on 3 May 2011. The new shares were already admitted to trading in the Regulated Market of the Frankfurt Stock Exchange (Prime Standard) on
19 April 2011.

Aareal Bank AG's issued share capital now amounts to € 179,571,663. Deutsche Bank and HSBC acted as syndicate banks in this transaction.

"We would like to thank our shareholders for their trust in Aareal Bank Group's long-term strategic direction. The successful completion of the capital increase marks a key step in the continued expansion of our market position. We will now increasingly exploit opportunities for high-margin new business which are available in the current market and competitive environment, and thus further boost our profitability", said Dr Wolf Schumacher, Chairman of the Management Board.

Aareal Bank

Aareal Bank AG is one of the leading international specialist property banks. The Aareal Bank share is included in Deutsche Börse's mid-cap MDAX index. Aareal Bank operates on three continents: leveraging its successful European business model, the bank has established similar platforms in North America and in the Asia-Pacific region. It provides property financing solutions in more than 20 countries.

Disclaimer:

This press release is an advertisement and not a prospectus. The securities referred to herein have already been sold.

This press release does not contain or constitute an offer of, or the solicitation of an offer to buy or subscribe for, securities to any person in Australia, Canada, Japan, or the United States of America (the “United States”) or in any jurisdiction to whom or in which such offer or solicitation is unlawful. The securities referred to herein may not be offered or sold in the United States absent registration under the U.S. Securities Act of 1933, as amended (the “Securities Act”) except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. Subject to certain exceptions, the securities referred to herein may not be offered or sold in Australia, Canada or Japan or to, or for the account or benefit of, any national, resident or citizen of Australia, Canada or Japan. The offer and sale of the securities referred to herein has not been and will not be registered under the Securities Act or under the applicable securities laws of Australia, Canada or Japan. There will be no public offer of the securities in the United States.

THE INFORMATION CONTAINED IN THIS DOCUMENT MUST NOT BE RELEASED, PUBLISHED OR DISTRIBUTED, WHETHER DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA OR JAPAN.

Within the framework of the capital increase resolved by Aareal Bank AG on 14 April 2011, today the syndicate of underwriting banks successfully completed the pre-placement of new shares worth € 102.3 million on behalf of Aareal Holding Verwaltungsgesellschaft mbH ("Aareal Holding"). The new shares were placed with institutional investors, at a price of € 20.50 per share, by way of a private placement in Germany and other countries outside the US.

The purpose of the pre-placement was to prepare a so-called 'opération blanche' to be executed by Aareal Holding. In this context, the syndicate of underwriting banks placed a part of the new shares that Aareal Holding is entitled to with institutional investors, thus enabling Aareal Holding to use the net proceeds obtained from this placement to subscribe to new shares itself, without investing additional funds.

Aareal Holding will continue to hold a 28.9% stake in Aareal Bank AG's issued share capital after the placement and capital increase have been completed.

Wiesbaden, 14 April 2011 – The Management Board of Aareal Bank AG, with the approval of the Supervisory Board, resolved today to increase the Company's share capital via a rights issue against cash contributions. Aareal Bank will issue 17,102,062 new ordinary bearer shares with a proportionate share in the nominal share capital of € 3.00 per share. As a result, the Company's share capital will increase from € 128,265,477 to € 179,571,663. The subscription price amounts to € 15.75. On this basis the gross proceeds are expected to amount to around € 269 million. The Offer is subject to approval of the securities prospectus by the German Federal Financial Supervisory Authority (BaFin), which is expected during the course of today.

The net proceeds from the capital increase are intended to support the future growth of Aareal Bank AG’s Structured Property Financing segment, consistent with its current credit risk strategy. At the same time, the proceeds are intended to strengthen Aareal Bank Group's regulatory capital base. In addition, Aareal Bank AG considers using approximately € 75 million of the proceeds to partially repay the silent participation of the German Financial Markets Stabilisation Fund (SoFFin), subject to approval by BaFin and a corresponding agreement with SoFFin.

"With the capital increase, we want to increasingly exploit opportunities for high-margin new business, which are available in the current market and competitive environment. Considering the significant potential available in our markets, we have raised our target for new business origination to between € 7 billion and € 8 billion for the current year", CEO Schumacher explained. "The capital increase is a key achievement in the continued expansion of our market position, and will further enhance profitability. Hence, from today's perspective, we anticipate an increase in the bank's return on equity before taxes, to between 12 and 13 per cent in normalised markets, thus exceeding our target to date", Schumacher summarised.

At the same time, the capital increase will further strengthen Aareal Bank's equity base. Aareal Bank's pro-forma Tier 1 ratio as at 31 December 2010, calculated in accordance with the Advanced Internal Ratings-Based Approach (Advanced IRB Approach or "A-IRBA") and including the effect of the capital increase (before appropriation of proceeds), will increase to 14.4 per cent; taking into account the partial repayment of the SoFFin silent participation, in the amount of approximately € 75 million, the pro-forma Tier 1 ratio will increase to 14.0 per cent. The pro-forma Tier 1 ratio in accordance with the A-IRBA, excluding hybrid capital and the remaining SoFFin silent participation, will increase to 9.6 per cent as at 31 December 2010.

Aareal Holding will remain an anchor shareholder following the capital increase

The capital increase will be carried out in the form of an indirect subscription offer to Aareal Bank's existing shareholders, whereby the subscription rights conveyed by 5 existing shares will give the right to subscribe to 2 new shares. The subscription period during which the Company's shareholders may exercise their subscription rights is expected to begin on 16 April 2011 and is expected to end on 29 April 2011. Deutsche Bank and HSBC have undertaken to subscribe to the new shares and to acquire them at the subscription price and to offer the shares to Aareal Bank's shareholders for subscription, pursuant to the terms and conditions of the subscription offer, which is expected to be published on 15 April 2011.

Aareal Holding Verwaltungsgesellschaft mbH ("Aareal Holding"), which currently holds a 37.23 per cent stake in the Company's issued share capital, will support the rights issue within the scope of a so-called 'opération blanche'. In this context, the syndicate of underwriting banks will offer a part of the new shares that Aareal Holding is entitled to as a private placement solely to qualified investors in Germany and Luxembourg, as well as in other countries outside the USA. This pre-placement will take the form of an accelerated bookbuilding procedure, which is expected to take place on or around 14 April 2011. Aareal Holding will use the net proceeds obtained from this placement to subscribe to new shares itself, without investing additional funds. Aareal Holding will continue holding more than 26 per cent of Aareal Bank AG's issued share capital after completion of the Offer.  

The subscription rights for the new shares (which will carry full dividend rights for the 2010 financial year) will be traded during the period from 18 April 2011 up to and including 27 April 2011 on the Regulated Market of the Frankfurt Stock Exchange, under ISIN DE000A1KRLB4 and German Securities ID WKN A1K RLB. No compensation will be awarded for any subscription rights remaining unexercised. The admission of the new shares to the Regulated Market segment (regulierter Markt) of the Frankfurt Stock Exchange, and to the Prime Standard sub-segment of the Frankfurt Stock Exchange, is expected to be granted on or around 19 April 2011. Commencement of trading is expected on or around
20 April 2011. It is intended that the new shares be included in the existing listing of the Company’s shares.

Following BaFin approval, the securities prospectus will be available for download on www.aareal-bank.com.

Results boosted further by the early redemption of guarantees

In addition to the capital increase, the Management Board intends early redemption of the SoFFin-guaranteed € 2 billion bond maturing on 5 June 2013, which the bank holds on its own books. This early redemption is intended to go ahead shortly, in agreement with SoFFin. The three-year bond was issued in June 2010 as a precautionary measure; however, in view of a gradually stabilising market environment, the issue was not subsequently placed on the market and hence was not used for funding purposes. The cancellation of this bond would result in a reduction of the guarantee fees payable by Aareal Bank to SoFFin of around € 19 million p.a. before taxes, and in a pro rata reduction for the years 2011 and 2013. Overall, this would have an accumulated positive effect of around € 41 million before taxes.

"Having already repaid a significant part of SoFFin's silent participation last year, returning government guarantees was thus the logical next step to take: it reflects our assessment of the market environment, as well as Aareal Bank's sound refinancing situation", Schumacher explained.

Forecasts raised for key financial indicators

Taking the expected positive effects of the capital increase as well as the partial redemption of guarantee fees into account, Aareal Bank has adjusted its outlook for the financial year 2011 as a whole, as follows: anticipating moderately higher interest rate levels, and considering the expected income generated on additional new business, the Management Board expects net interest income to increase compared to 2010. Due to the fact that relief from lower guarantee fees will occur earlier than expected, net commission income will show a more pronounced increase than previously forecast.

Given the positive factors influencing net interest income and net commission income, as outlined above, Aareal Bank expects consolidated net operating profit to increase clearly in 2011 compared to 2010.

Aareal Bank

Aareal Bank AG is one of the leading international specialist property banks. The Aareal Bank share is included in Deutsche Börse's mid-cap MDAX index. Aareal Bank operates on three continents: leveraging its successful European business model, the bank has established similar platforms in North America and in the Asia-Pacific region. It provides property financing solutions in more than 20 countries.

Disclaimer:

This press release does not contain or constitute an offer of, or the solicitation of an offer to buy or subscribe for, securities to any person in Australia, Canada, Japan, or the United States of America (the “United States”) or in any jurisdiction to whom or in which such offer or solicitation is unlawful. The securities referred to herein may not be offered or sold in the United States absent registration under the U.S. Securities Act of 1933, as amended (the “Securities Act”) except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. Subject to certain exceptions, the securities referred to herein may not be offered or sold in Australia, Canada or Japan or to, or for the account or benefit of, any national, resident or citizen of Australia, Canada or Japan. The offer and sale of the securities referred to herein has not been and will not be registered under the Securities Act or under the applicable securities laws of Australia, Canada or Japan. There will be no public offer of the securities in the United States.

This press release is an advertisement and not a prospectus. Investors should not purchase or subscribe for any shares referred to in this press release except on the basis of information in the prospectus to be issued by the company in connection with the offering of such shares. Copies of the prospectus will, following publication, be available free of charge from Aareal Bank AG at Paulinenstraße 15, 65189 Wiesbaden, Germany or on Aareal-Bank AG’s website (www.aareal-bank.com).

This press release as pdf-file

Aareal Bank AG resolves on capital increase

• Syndicate banks guarantee gross proceeds of around € 269 million
• Proceeds to be used for supporting future growth in the Structured Property Financing segment, and for strengthening the bank's equity base / Aareal Bank also considers repaying a further tranche of approximately € 75 million of the silent participation of the German Financial Markets Stabilisation Fund (SoFFin)
• Aareal Bank intends early redemption of the € 2 billion SoFFin-guaranteed bond maturing in June 2013, which has been held on the bank's own books

The Management Board of Aareal Bank AG, with the approval of the Supervisory Board, resolved today to increase the Company's share capital via a rights issue against cash contributions. Aareal Bank will issue 17,102,062 new ordinary bearer shares with a proportionate share in the nominal share capital of € 3.00 per share. As a result, the Company's share capital will increase from
€ 128,265,477 to € 179,571,663. The subscription price amounts to € 15.75. On this basis the gross proceeds are expected to amount to around € 269 million. The Offer is subject to approval of the securities prospectus by the German Federal Financial Supervisory Authority (BaFin), which is expected during the course of today.

The net proceeds from the capital increase are intended to support the future growth of Aareal Bank AG’s Structured Property Financing segment, consistent with its current credit risk strategy. At the same time, the proceeds are intended to strengthen Aareal Bank Group's regulatory capital base. In addition, Aareal Bank AG considers using approximately € 75 million of the proceeds to partially repay the silent participation of the German Financial Markets Stabilisation Fund (SoFFin), subject to approval by BaFin and a corresponding agreement with SoFFin.

The capital increase will be carried out in the form of an indirect subscription offer to Aareal Bank's existing shareholders, whereby the subscription rights conveyed by 5 existing shares will give the right to subscribe to 2 new shares. The subscription period during which the Company's shareholders may exercise their subscription rights is expected to begin on 16 April 2011 and is expected to end on 29 April 2011. The underwriting banks have undertaken to subscribe to the new shares, and to acquire them at the subscription price and to offer the shares to Aareal Bank's shareholders for subscription, pursuant to the terms and conditions of the Subscription Offer, which is expected to be published on
15 April 2011.

Aareal Holding Verwaltungsgesellschaft mbH ("Aareal Holding"), which currently holds a 37.23 per cent stake in the Company's issued share capital, will support the rights issue within the scope of a so-called 'opération blanche'. In this context, the syndicate of underwriting banks will offer a part of the new shares that Aareal Holding is entitled to as a private placement solely to qualified investors in Germany and Luxembourg, as well as in other countries outside the USA. This pre-placement will take the form of an accelerated bookbuilding procedure, which is expected to take place on or around 14 April 2011. Aareal Holding will use the net proceeds obtained from this pre-placement to subscribe to new shares itself, without investing additional capital. Aareal Holding will continue holding more than 26 per cent of Aareal Bank AG's issued share capital after completion of the Offer.

The subscription rights for the new shares (which will carry full dividend rights for the 2010 financial year) will be traded during the period from 18 April 2011 up to and including 27 April 2011 on the Regulated Market of the Frankfurt Stock Exchange, under ISIN DE000A1KRLB4 and German Securities ID WKN A1K RLB. No compensation will be awarded for any subscription rights remaining unexercised. The admission of the new shares to the Regulated Market segment (regulierter Markt) of the Frankfurt Stock Exchange, and to the Prime Standard sub-segment of the Frankfurt Stock Exchange, is expected to be granted on or around 19 April 2011. Commencement of trading is expected on or around
20 April 2011. It is intended that the new shares be included in the existing listing of the Company’s shares.

Following BaFin approval, the securities prospectus will be available for download on www.aareal-bank.com.

In addition to the capital increase, the Management Board intends early redemption of the SoFFin-guaranteed € 2 billion bond maturing on 5 June 2013, which the bank holds on its own books. This early redemption is intended to go ahead shortly, in agreement with SoFFin. The three-year bond was issued in June 2010 as a precautionary measure; however, in view of a gradually stabilising market environment, the issue was not subsequently placed on the market and hence was not used for funding purposes. The cancellation of this bond would result in a reduction of the guarantee fees payable by Aareal Bank to SoFFin of around € 19 million p.a. before taxes, and in a pro rata reduction for the years 2011 and 2013. Overall, this would have an accumulated positive effect of around € 41 million before taxes.

Disclaimer:

This Ad-hoc disclosure does not contain or constitute an offer of, or the solicitation of an offer to buy or subscribe for, securities to any person in Australia, Canada, Japan, or the United States of America (the “United States”) or in any jurisdiction to whom or in which such offer or solicitation is unlawful. The securities referred to herein may not be offered or sold in the United States absent registration under the U.S. Securities Act of 1933, as amended (the “Securities Act”) except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. Subject to certain exceptions, the securities referred to herein may not be offered or sold in Australia, Canada or Japan or to, or for the account or benefit of, any national, resident or citizen of Australia, Canada or Japan. The offer and sale of the securities referred to herein has not been and will not be registered under the Securities Act or under the applicable securities laws of Australia, Canada or Japan. There will be no public offer of the securities in the United States.

This Ad-hoc disclosure is a document for information purposes and not a prospectus. Investors should not purchase or subscribe for any shares referred to in this Ad-hoc disclosure except on the basis of information in the prospectus to be issued by the company in connection with the offering of such shares. Copies of the prospectus will, following publication, be available free of charge from Aareal Bank AG at Paulinenstraße 15, 65189 Wiesbaden, Germany or on Aareal-Bank AG’s website (www.aareal-bank.com).

Wiesbaden, 31 March 2011 – Following its successful performance during the 2010 financial year, during which Aareal Bank achieved good results in a challenging environment, the bank sees itself in an excellent position for profitable growth, and for further boosting its market position during the coming months and years. "Leveraging our sustainable strategy, we are now determined to consistently exploit our competitive edge, to further expand our strong position on key markets", said Dr Wolf Schumacher, Chairman of the Management Board, presenting the bank's 2010 Annual Report.

Schumacher affirmed that Aareal Bank's outlook for the commercial property financing business remained generally positive: he observed that key markets had now concluded their bottom-building process – as predicted one year ago. According to Schumacher, demand for financings is picking up markedly in some segments, whilst the number of competitors has clearly diminished following the financial markets crisis.

"We are convinced that, as one of the few real estate finance providers left that maintains a broad international presence, we will be able to benefit from the ongoing normalisation of the markets we cover, to a greater extent than our competitors," Schumacher said, adding: "Our transaction pipeline is very well-stocked indeed – in the current market environment, a strongly-positioned institution such as Aareal Bank sees attractive opportunities for generating high-margin new business, with an adequate risk profile. We are determined to exploit these opportunities. In the interests of our shareholders, we will therefore retain all options to boost our lending business, in line with our strategy, beyond our current planning – which would permit us to increase new business during the current year above the previous year's levels", Schumacher emphasised.

Positive outlook for the 2011 financial year affirmed

Aareal Bank Group started into the current financial year as planned: notably, the positive development of new business continued during the first quarter, which is traditionally rather weak for both of its segments.

Aareal Bank affirms its outlook for the financial year 2011 as a whole, as published on 22 February 2011. Against the background of moderately higher interest rate levels, the Management Board expects net interest income to be stable or slightly higher compared with the previous year. Due to the gradual normalisation of property markets, and although there are still various uncertainties, Aareal Bank expects allowance for credit losses for the 2011 financial year to be within a range of € 110 million to € 140 million. (The previous year's projection was a range of € 117 million to € 165 million.) As in the previous year, additional allowance for unexpected credit losses that may be incurred during 2011 cannot be ruled out. Administrative expenses will continue to be defined by the unchanged cost discipline, and the figure for 2011 is expected to be marginally higher than the previous year, including the burden associated with the special bank levy.

Overall, Aareal Bank is confident, from today's perspective, that it will increase the good operating profit achieved during the 2010 financial year, in a challenging market environment. Despite the additional burdens facing banks as a result of the bank levy, Aareal Bank considers a return on equity before taxes of at least 12 per cent to be achievable in a normal market environment.

Significant increase in results for the 2010 financial year

Aareal Bank Group concluded the financial year under review with one of the best results in its corporate history – despite a difficult market environment. According to audited figures, consolidated operating profit amounted to € 134 million, up 54 per cent year-on-year (2009: € 87 million). Aareal Bank Group had in fact already achieved its original target – to beat the previous year's figure – by the end of the third quarter of 2010.

Looking at full-year results, Aareal Bank Group not only clearly outperformed its operating profit target, but also exceeded its projections for other key financial indicators. For instance, consolidated net interest income of € 509 million – up 11 per cent year-on-year – was markedly higher than the € 460-480 million range projected. At the same time, allowance for credit losses of € 105 million was below the € 117 to 165 million range budgeted for the 2010 financial year. At € 6.7 billion, new business originated in the Structured Property Financing segment significantly exceeded the target corridor of € 4 billion to € 5 billion; compared to 2009, new business was up by 74 per cent. At € 26 million, operating profit for the Consulting / Services segment was in line with projections, despite an unfavourable interest rate environment for the deposit-taking business.

This increase in consolidated net interest income for the full year 2010, to € 509 million (2009: € 460 million) was mainly attributable to higher average margins achieved in the lending business, reflecting new exposures originated and renewals agreed upon during 2009 and 2010. Margins from the deposit-taking business with the institutional housing industry declined, due to lower interest rate levels – which persisted for longer than anticipated.

At € 105 million (2009: € 150 million), allowance for credit losses reflected the high quality of Aareal Bank Group's credit portfolio.

Net commission income of € 123 million (2009: € 133 million) reflected – amongst other things – € 30 million (2009: € 17 million) in running costs for the guarantee facility extended by SoFFin. Adjusted for these costs, net commission income exceeded the previous year's figure.

Net trading income/expenses of € 8 million (2009: € 44 million) was largely attributable to the valuation of trading derivatives used to hedge interest rate and currency risk, and to realised and unrealised changes in value from sold hedging instruments on selected EU sovereign countries. The result from non-trading assets of € -12 million (2009: € -22 million) was mainly attributable to the sale of fixed-income securities.

A non-recurring expense of € 20 million was recognised for the realignment of an investment property during the financial year under review. This expense was reflected in the result from investment properties, which amounted to € -17 million during the 2010 financial year (2009: € 0 million).

Administrative expenses of € 366 million were virtually unchanged year-on-year (2009: € 361 million). This reflects the strict cost discipline pursued within the Group.

Taking into account net other operating income and expenses of € -9 million (2009: € -14 million), consolidated operating profit for the 2010 financial year totalled € 134 million, after € 87 million in 2009. Taking into consideration taxes of € 40 million and € 18 million in income attributable to non-controlling interests, net income attributable to shareholders of Aareal Bank AG amounted to € 76 million (2009: € 49 million). After deduction of the net € 30 million interest payable on the SoFFin silent participation, consolidated net income stood at € 46 million (2009: € 23 million).

Both of the business segments contributed to Aareal Bank Group’s good results for 2010, in the face of difficult market conditions.

Aareal Bank adhered to its conservative business policy – strictly focusing on quality – in its Structured Property Financing segment. Benefiting from economic recovery, and leveraging growing transaction volumes on the commercial property markets, Aareal Bank increasingly exploited available opportunities to originate attractive new business, which increased to € 6.7 billion during the 2010 financial year – up from € 3.8 billion the year before.

Net interest income posted by the segment for the financial year under review amounted to € 467 million (2009: € 410 million). This increase was mainly attributable to higher average margins generated on new exposures and renewals during 2009 and 2010.

At € 217 million, administrative expenses in the Structured Property Financing segments exceeded the previous year's figure of € 201 million. One of the factors contributing to this increase was higher provisions for share-based remuneration, due to the positive performance of Aareal Bank's share price during the financial year under review.

Overall, operating profit for the Structured Property Financing segment was € 108 million (2009: € 67 million). Taking into consideration tax expenses of € 32 million and € 16 million in non-controlling interest income, the segment result was € 60 million (2009: € 38 million). 

The Consulting/Services segment continued to show a stable performance during the 2010 financial year. While Aareon's business continued to develop on schedule, the prevailing low interest rate environment – which persisted for longer than anticipated – burdened profitability in the deposit-taking business.

Sales revenue amounted to € 199 million in the 2010 financial year (2009: € 209 million). The decline was largely due to the low interest rate environment, which impacted unfavourably on profitability of the deposit-taking business with the institutional housing industry. Nonetheless, the volume of deposits from the institutional housing industry increased slightly, despite predatory competition, averaging around € 4.1 billion during the 2010 financial year. Sales revenue included € 5 million of revenue generated by SG|automatisering bv, a Dutch subsidiary acquired by Aareon during the fourth quarter of 2010.

On balance, operating profit for the Consulting / Services segment was € 26 million (2009: € 20 million). After deduction of € 8 million in taxes and € 2 million in non-controlling interest income, the segment result stood at € 16 million (2008: € 11 million).

Successful issuance and solid capitalisation

During the 2010 financial year, Aareal Bank successfully implemented its planned funding activities, in a market environment that continued to be difficult, especially for unsecured issues. Overall, Aareal Bank placed € 1.5 billion in unsecured issues – a confirmation of  the trust that investors continue to place in Aareal Bank and its management. The bank also placed Pfandbrief issues totalling € 2.4 billion. Moreover, in June 2010 Aareal Bank exercised the option of drawing on the remaining € 2 billion available under the guarantee facility provided by the German Financial Markets Stabilisation Fund (SoFFin). This use of the guarantee facility was purely precautionary in nature; the bank continues to hold the guaranteed bond issued on its own books.

Aareal Bank has a solid capital base. The bank has applied the Advanced Internal Ratings-Based Approach (Advanced IRB Approach, "A-IRBA") to determine its capital requirements for credit risks, with retrospective effect from 31 December 2010, instead of the Credit Risk Standard Approach (CRSA) applied to date. Under the A-IRBA, Aareal Bank's Tier 1 ratio stood at 12.9 per cent as at 31 December 2010. Calculated according to the CRSA previously applicable, the bank's Tier 1 ratio would have amounted to 10.5 per cent on the same record date (30 September 2010: 10.4 per cent). The Tier 1 ratio according to the A-IRBA, excluding hybrid capital and the remaining SoFFin silent participation (of which Aareal Bank repaid an initial € 150 million tranche in July 2010), stood at 8.1 per cent as at the year-end. The capital ratios shown are based on the full reinvestment of profits generated during the 2010 financial year.

Wiesbaden, 25 February 2011- Aareal Bank AG and the Real Estate Management Institute (REMI) of the European Business School (EBS) have awarded the Aareal Award of Excellence in Real Estate Research for the fourth time. The annual research prize, advertised internationally, honours academic excellence in real estate economics. For 2011, a total of 50 submissions were received. Many more than half the applications came from outside Germany, especially from North America, the Netherlands and Israel. The award is worth €12,000. The award ceremony took place on the Schloss Reichartshausen campus of the European Business School, EBS, in Oestrich-Winkel at the 12th EBS Real Estate Congress.

Just under 30 experts, principally professors in the national and international REMI research network, assessed the work on this year's topics: "Corporate Responsibility in the Real Estate Industry“, "Real Estate Finance“ and "Regulatory Framework and Real Estate Markets." The winners in the three categories (.Dissertation, Research Paper, MSc-/BSc-/Diploma Thesis) received their prize money (6,000 €, 4,000 € and 2,000 €) and the award from the initiators: Professor Nico B. Rottke, REMI; Dr. Wolf Schumacher, Aareal Bank AG; Elke Rudolph, Immobilien Manager Verlag.

The price in the category Dissertation went to Xun Bian, Pennsylvania State University, USA, for his work "Bad Borrowers or Bad Loans? The Effect of Information Asymmetry on the Choice of Prepayment Penalty". The winner in the category Research Paper is Min Hwang, George Washington University, USA, for his work on the subject “Mortgage Contract Choice in Subprime Mortgage Markets". In the category of  MSc-/BSc-/Diploma Thesis the winner was Vanessa Kozik, University of Cambridge, UK, with her Masters on "An Evaluation of Forecast Bias in Analysts' Earnings Estimates of U.S. Real Estate Investment Trusts (REITs)".

Professor Nico B. Rottke, FRICS, head of REMI said: "Every year, we are in contact with over 1,700 professors as part of the award process and we ask them to submit the best work in three selected categories. Each year to date, the quality and quantity of the work has gone up. The award has become an international fixture. These days, colleagues in Germany and abroad already ask what the topics are going to be for the next year so that they can announce them in their institutes in good time. We have set up a facility that enlarges our knowledge and enables us to work towards advantageous change."

The REMI pursues an international, interdisciplinary and hands-on approach, thereby intending to promote further development and success in the property business. Aareal Bank and EBS-REMI have been cooperating already since 2004 and particularly on the REMI chair Aareal has endowed and on the Aareal Award competition. "The real estate sector is well-set for the future, as it has a mixture of academic and hands-on expertise of international standing. Because the future belongs to specialists who are both close to their customers and the market as well as to basic research and its practical insights", said Dr Wolf Schumacher in explicating the cooperation of both institutions.

Aareal Award 2012 and further information

Submissions for the "Aareal Award of Excellence in Real Estate Research 2011" can be submitted by 18 November 2011 on the topics: "Real Estate Finance", "Real Estate Economics" and "Residential Real Estate". The conditions of entry are at www.ebs-remi.de and www.aareal-award.com. The prize will be awarded on 24 February 2012.

(To editors: photos of the award ceremony are available on request)