Difference between ordinary capital and preferred capital

IBV Fonds Deutschland 4 Opinion on the prospectus and the current situation


1 IBV Fonds Deutschland 4 Opinion on the prospectus and the current situation A. Fund structure A.1. Placement IBV Deutschland 4 was published with a prospectus from. The planned closure of the fund could not be carried out solely by placing it with investors, but was realized partly through a contribution from IBV and partly through equity-replacing loans from IBV. Both options were provided according to the closure guarantee. The payment of the majority of the capital shares (including the investors) was not made until the year. The equity-replacing loan from IBV is to be serviced at 298,000 euros per year (value for 2003), although the annual report does not mention the interest rate. A.2. Opportunities to participate There are two ways to join. Participation in the basic capital is planned with higher tax losses and a distribution of 6.0% initially, a participation in the preferred capital without significant tax losses, but with an initial distribution of 7.25%. The preferred capital () was placed in full, the compensation of the IBV through deposit and loan relates exclusively to the base capital. Here only a capital of was placed with investors, the IBV closed the financing gap through contributions from and through loans. The loan is to be repaid and interest is to be paid on an ongoing basis; however, there is no entitlement to a distribution of the loan. According to the prospectus, the liability of investors with preferred capital should be 10% of the compulsory contribution, while investors with base capital should be 100% of the compulsory contribution. Page 1/17 K&M Beratung und Management GmbH Knesebeckstr Berlin Tel (030) Fax (030) Registered office: Berlin District Court Berlin-Charlottenburg HRB Share capital: Euro Managing director: Kerstin Kondert / Betina Mainka Tax number: Dresdner Bank AG BLZ Kto

2 Page 2 of the letter dated July 15, 2005 A.3. Guarantees In addition to the closure guarantee, the fund was provided with two further guarantees: A.3.1. Guarantee of the distribution IBV is obliged to guarantee the distribution of 5% (basic capital) and 6.25% (preferred capital) for the period of the first ten years. If necessary, this should take the form of a loan. A.3.2. Share sale guarantee This guarantee is only valid for investors in the preferred capital, for the duration of the first ten years and only for 35% of the preferred capital. The obligation includes the redemption of 90% of the equity for the first five years and 95% of the equity for the years 6 to 10. A.4. Object of investment The fund company itself is not the owner of real estate, but rather participates in six real estate companies in the legal form of GmbH & Co. KG, which according to the prospectus are or should become owners / leaseholders of the following real estate: Object no. Object description Use 1 Dietzenbach administration building 2 Bottrop textile department store 3 Lörrach textile department store 4 Goslar textile department store 5 Hameln textile department store 6 Leopoldshöhe office and commercial building 7 Göttingen 8 Jena 9 Mönchengladbach 10 Koblenz 11 Görlitz hotel, administration and office building DIY store with garden center DIY store with garden center DIY store with garden center DIY store with garden center A.5. Participation in the property companies A.5.1. Allocation of the real estate to the property companies The allocation of the real estate to the property companies is as follows: 1. Okeanos GmbH & Co. Objekt Dietzenbach KG Property in Dietzenbach Page 2/17

3 Page 3 of the letter of July 15th Athena GmbH & Co. Object Henstedt-Ulzburg KG Objects in Bottrop and Lörrach 3. Thesaurus GmbH & Co. 33. Immobilien KG Objects in Goslar, Hameln and Leopoldshöhe 4. Thesaurus GmbH & Co. Third parties Immobilien KG object in Göttingen 5. Thesaurus GmbH & Co. 38. Immobilien KG objects in Jena and Mönchengladbach 6. Thesaurus GmbH & Co. 39. Immobilien KG objects in Koblenz and Görlitz A.5.2. Participation modalities of the fund company According to the prospectus, the fund company (in the meantime according to annual reports) should participate in the property companies as a managing limited partner with 94.9% of the share capital and participate in the same proportion in the results of the property companies. The prospectus presents all investment costs with regard to the real estate as well as the property-related income and expenses as if the results were achieved directly at the level of the fund company, i.e. as if the fund company were the direct owner of the property. Corresponding information is contained in the prospectus. However, it does not contain risk information that at the level of the property company, results may have arisen before the fund company joins - and in my opinion must be - with which the fund company may be burdened in terms of tax or liquidity. B. Open questions and contradictions B.1. Missing information and explanations in the prospectus and in the annual reports on the ownership structure. The fund is to participate in the pro-rata results of the property companies. The prospectus does not contain any information on the extent to which the results of the previous shareholders of the property companies are differentiated from the fund company. The prospectus audit report consequently contains the following note: "The calculations in the forecast earnings and liquidity calculation are based on a planned implementation of the intended investments with effect from December 31, 2001. The resulting effects and the associated risks on the forecast earnings and liquidity calculation ... is only indicated in the prospectus in a general form (in the prospectus on S). " Page 3/17

4 Page 4 of the letter dated July 15, 2005 In the above statements in the prospectus nothing is said about the construction about the holding companies. Only the risks resulting from the real estate itself are listed there! The property companies all existed before the fund was launched. The majority of the properties had already been acquired. The prospectus does not contain any information on the results that accrued up to the time of joining the fund company or on the question of whether or not the property companies owned other properties in addition to the properties mentioned in the prospectus, and whether the property companies carried out other business. Apparently, however, this was the case at least with one property company. The annual report of the fund company for the year 2003 contains the following on p. 14: "At the end of the year (that is the) the property company Athena Henstedt still had a bank liability of KEUR (share fund 6,144) from the interim financing of a property in Bamberg Purchase price receivable of TEUR (share fund 6,216). This bridging loan was replaced by the payment of the purchase price. " A property in Bamberg is not mentioned at all in the prospectus! The sale of a property usually triggers a number of tax consequences, 94.9% of which in this case also affect the fund company. Neither the prospectus nor the annual reports indicate how any changes in results that may result from such processes will affect the fund company. The fact that this fact is relevant is made clear by the prospectus audit report with a clear, bold note on p. 46: "It cannot be ruled out that at the time the fund company joins the property companies, negative capital accounts or other liabilities / claims apart from the property-related ones in the prospectus There are investment costs. A corresponding risk is only indicated in general in the prospectus. " I did not find the risk notice in "general form" mentioned in the prospectus audit report and which is supposed to relate to this matter in the prospectus. The prospectus audit report does not mention any page number in this regard. On the other hand, the risk to which the prospectus audit report refers is not a theoretical one, but rather the facts actually exist, as evidenced by the 2003 annual financial statements. There it says in the notes to the annual financial statements on p. 21: Page 4/17

5 Page 5 of the letter dated July 15, 2005 "Due to the loss carryforwards, the distributions and other withdrawals represent a return of contributions in accordance with 172 (4) HGB, which have led to a revival of the liability of the limited partners to the company's creditors." The limited partner's liability is relevant in the present case on two levels: firstly at the level of the fund company - investors as limited partners - and secondly at the level of property companies - fund company as limited partners. The annual report does not make any statements as to whether the capital account of the fund company as a limited partner of the property company is already negative even without distributions due to loss carryforwards from the property companies. Nothing at all has been said about the tax results of the property companies. According to the fund's forecast calculation, the limited partners should not have had a negative capital account for any type of capital (basic capital or preferred capital), and this should not arise in the future because only positive tax results should be generated and, even after distribution, there should always be excess liquidity is calculated. In addition, this is also stated in the prospectus on p. 63: "According to the forecast calculation, the tax capital account for shareholders participating in the basic capital will not be negative." According to the forecast calculation, the tax capital account of the shareholders participating in the preferred capital cannot be negative at all from the outset, because these shareholders should not be assigned any tax losses at all. The facts presented in the annual report do not match the forecast development. What does that mean in plain language: The fund company joins the property companies and increases its limited partnership capital in the property companies to such an extent that 94.9% of the investment costs for the real estate can be financed from it. The remaining 5.1% of the investment costs have to be borne by the other shareholders of the property companies. The limited partnership capital of the fund company to be invested in the property companies results partly from the equity of the subscribers and partly from external financing at the level of the fund company. According to the presentation in the prospectus, only those costs are incurred at the property company level that are necessary for the management of the property. Financing costs at the property company level are not planned according to the prospectus. Page 5/17

6 Page 6 of the letter dated July 15, 2005 Therefore, in the property companies, the income always exceeds the expenditure as long as the property at least generates its management costs. Since only normal depreciation is used in the property companies (none of the properties was acquired when special depreciation was still available in accordance with the Development Area Act), which is far below the calculated rental income, should only be used at the property company level positive tax results arise, 94.9% of which are allocated to the fund company. The tax losses that are allocated to the investors of the basic capital in the investment phase arise from income-related expenses at the level of the fund company. The annual depreciation does not lead to an overall negative tax result. For the following years only positive tax results are calculated. This course - as shown in the prospectus - presupposes that in the property companies when the fund company joins the capital account of all shareholders, including the founding shareholders, is exactly at zero or agreements are made according to which capital accounts deviating from zero are exclusively for the other shareholders of the property company are allocated and are to be compensated by them. It also assumes that the property companies only contain the properties named in the prospectus and that no further business transactions arise from other contexts in which the fund company is involved. If these prerequisites are met, the fund company as a limited partner of the property companies can neither create a negative capital account, nor can the capital accounts become negative for the fund subscribers at the fund company level, so that if the prospectus continues, a resurgence of the limited partner's liability with the associated dangers should not occur. According to the statements in the 2003 Annual Report, however, these requirements are not met. Loss carryforwards result from the property companies, with which the fund company is also charged. The limited partner's liability has already been revived. At least one other property was in the portfolio of a property company for a long time. In this respect, there is in any case a deviation from the prospectus, the scope of which cannot be traced on the basis of the annual financial statements presented. What could that mean? The worst conceivable case would be that losses were incurred in the property companies, which led to loss carryforwards, 94.9% of which the fund company assumed when it joined the property companies. Then page 6/17

7 Page 7 of the letter dated July 15, 2005, these loss carryforwards are not to be offset by the old shareholders of the property company, but are added to the fund company. The tax results of the property companies assigned to the fund company would then be far below the liquid results shown in the prospectus, even if the rents were incurred at the planned amount. If the capital accounts of the fund company in the property companies have become negative as a result of these loss carryforwards, but at the same time the prospectus liquidity has been paid out to the fund company so that the distributions can be serviced and everything looks as if it was going according to the prospectus, then creditors of the property companies could make payments to the property company at any time Reclaim the fund company in order to replenish the negative capital accounts. In the future, this can lead to considerable liquidity losses for the fund company, possibly even to its illiquidity, i.e. insolvency, since the loans do not have to be serviced by the property companies but by the fund company. This is where risks are hidden that are potentially threatening the existence of the fund company. I am not claiming that the scenario outlined here is actually the case. In view of the statements in the annual report and in the annual financial statements, however, it is possible. Overall, the facts can only be checked by examining the annual financial statements of the property companies, the reconciliation invoices required for tax purposes and the business reports of the property companies, which I strongly recommend. If it turns out that the fund company is actually burdened with negative tax results or liabilities of the property companies and the risk presented here also exists in practice, the prospectus would have concealed a matter that was extremely relevant to the decision. B.2. Development of earnings of the fund company due to the investments The annual financial statements of the fund company do not allow any conclusions to be drawn about the fund company's liquidity development. The form in which the "income from participations" (, 84) or the "result from participations" (, 81) mentioned in the P&L and the income-surplus account have an effect on the fund company in terms of liquidity cannot be understood. On the contrary - the deviating figures make the assumption described under B.1 more likely. The income reported in the P&L must be increased arithmetically by the depreciation used at the property company level. Assuming that the proportionate depreciation attributable to the fund company in the prospectus- Page 7/17

8 Page 8 to the letter of July 15, 2005, the amount will increase from around 4 million to around 6.65 million (income before depreciation). Both the P&L values ​​and the E / U values ​​are, however, well below the prospectus net rent for 2003 in the amount of, but would have to be roughly the same if the prospectus followed, because the result to be determined at the property company level is only available the real estate and all other cash flows affecting income occur at the level of the fund company itself. In contrast, the liquidity calculation of the annual report on p. 10 shows a net rental income for the same year of. According to this presentation, the fund received this amount of income, which, however, exceeds the result or income from the property companies in several millions. I cannot explain the contradiction without looking into the financial statements of the property companies. B.3.Liquidity situation of the fund company The actual liquidity in the fund company itself cannot be found in the 2003 annual report or the annual financial statements. Due to the loan granted by IBV for closing, the total of the long-term liabilities of the fund company (see annual report p. 13) amounts to a total of T and thus exceeds the borrowed funds according to the prospectus, which was calculated as T for the end of 2003, by around 4 .25 million. The fund is thus more heavily indebted than planned. The liquidity actually available on fund accounts is not mentioned in the annual report. Only the "consolidated" liquidity of the fund company and the property company is listed on page 13. I cannot explain why the free liquidity of the property company in the amount in which it is allocated to the fund company and not attributable to the maintenance reserve was not transferred directly to the fund company and was also invested in securities. Since the interest income is far below the forecast anyway, this would be the most obvious approach in order to generate additional interest income for the fund company. Of the available liquidity of T (p. 14) according to the annual report, however, only securities with a market value of T have been purchased. Around 7 million according to the annual report of free liquidity therefore currently generate lower interest income than they could achieve. According to the information in the balance sheet, in addition to the T of securities, the company has account balances of T, i.e. total available liquidity of T (and not T). Account page 8/17

9 Page 9 of the letter dated July 15, 2005, no pension liabilities that might have to be offset are shown in the balance sheet. I recommend checking to what extent the fund company itself actually has free liquidity and, if necessary, requesting the liquidity it is entitled to in the property companies and investing it more profitably. B.4. Interest income The presentation of interest income in the annual report and in the annual financial statements is also contradictory. The 2003 annual report shows interest income of EUR 412 thousand for the year 2003 and explains the following about interest income: "Interest income is below plan because currently for fixed deposits instead of a forecast interest rate of 4.5% for current account balances and 5.5% for the liquidity reserve, only 2.5% can be achieved. " Nevertheless, the interest income mentioned here is only around 10% below the prospectus figure for 2003 and is therefore arithmetically too high despite the higher reserve. Contrary to this, the P&L shows under "Income from securities held as fixed assets", 19 and under "Other interest and similar income", 37, so a total of .56, the E / U shows under "Interest income" the amount of .79 out. I cannot understand what the interest income of 412,000 euros, which accrued to the fund company in 2003 according to the liquidity calculation, if, according to the income / surplus account, only 196,000 euros was received from interest in 2003, is also incomprehensible to me. This fact should also be checked. B.5. Incomprehensible deviations in area The usable areas of Hornbach properties are individually listed several times in the prospectus. In contradiction to the areas mentioned there, the Hornbach Group shows areas that clearly deviate downwards in its annual reports, specifically as follows: Location Jena Mönchengladbach Type of use DIY store with garden center DIY store with garden center usable area according to the area according to GB Hornbach 2001 Area according to GB Hornbach page 9/17

10 Page 10 of the letter dated July 15, 2005 Koblenz Görlitz DIY store with garden center DIY store with garden center This difference should be clarified because initially, in view of the fixed rental contracts, deviations in terms of liquidity are not to be expected. If necessary, follow-up leasing (in 2016) will play a very significant role. The total difference in area amounts to m². If the rent difference resulting from this is set at the amount of the initially calculated rent per m², the reduced area would result in an annual decrease in income of .32 (share of the fund company), which amounts to around 7.3% of the initial rental income. However, taking into account the planned rent increases by the time the rental contracts expire, the deviation would become even greater. B.6. Purchase price and rent calculation for Hornbach properties and possible effects The properties in the property companies that are rented to the Hornbach Group were sold by Hornbach to the property companies. At the time of the sale and the loan approval by Bankgesellschaft Berlin, Wolfgang Rupf was simultaneously the board spokesman of the bank company, chairman of the supervisory board of BerlinHyp, chairman of the supervisory board of Hornbach AG and deputy chairman of the supervisory board of Hornbach Holding. Before moving to the bank company, Rupf was CEO of Hornbach AG. The purchase price of the fund properties was calculated on the basis of the rental agreements agreed with Hornbach, regardless of the construction costs of the properties and the acquisition costs of the land. With the purchase price of DM 87 million for the properties in Möchengladbach, Jena and Görlitz, Hornbach AG realized a book profit of DM 51 million (Hornbach Annual Report 2000/2001, p. 10). Assuming that Hornbach has made use of a depreciation of 3% pa ​​since the construction of this property in 1994, the depreciable manufacturing costs at Hornbach amounted to around DM Depreciation a profit of around 35% for Hornbach, after depreciation of around 44%. From my point of view, it is advisable to check the market standard of the rent charged when purchasing by the property company (if necessary, taking into account the area deviation mentioned under B.5.). If the rental price per m² agreed with Hornbach is significantly above the market standard for DIY stores, it is to be expected that once the rental agreements have expired, the rents in the prospectus can no longer be achieved by far. However, a possibly excessive rental amount may result in claims for damages by the fund company against the bank company or companies affiliated with it. In view of the much lower production costs, I also recommend checking the current building insurance, which is paid for by the property companies and charged to 94.9% of the fund company. Page 10/17

11 Page 11 of the letter dated July 15, 2005 These insurance premiums are usually calculated according to the production costs in order to be able to finance the new construction in the event of damage. However, if the values ​​on which the insurance is based deviate significantly from the purchase prices that were paid by the property company and partially financed by the bank company, the bank loan might not have been fully covered by the insured value. Any higher insurance sums required for the financing would, however, lead to a continuously excessive burden with increased insurance premiums, which in the event of a claim would not be compensated in full. B.7. IBV's ability to influence the fund company According to the 2003 annual report, the limited partnership capital of the fund company is made up as follows: Preferred capital Total base capital Votes Share general partner 20 0.01% IBV, 63% Hans Köning GmbH, 03% Christian Wuchold, 00% investor, 15% Investors, 17% total, 00% The regulations in 17 No. 2 of the articles of association, according to which the majorities required for a vote increase as soon as a large number of shares are combined in one hand, only apply as soon as 75% of all votes are united in one hand. The IBV currently has a share of the vote in which it is no longer possible to take votes on essential decision-making points against the will of the IBV, e.g. a change in the articles of association or an exchange of management. B.8. Liability contribution according to the commercial register According to the prospectus, the liability contribution of the shareholders with preferred capital should only amount to 10% of the mandatory contribution (7 of the articles of association). The total compulsory contribution of the fund amounts to. According to the 2003 annual report, the planned equity capital was financed by limited partner contributions in the total amount as well as a loan in the amount of. The following should therefore be entered in the commercial register: Page 11/17

12 Page 12 to the letter of July 15, 2005 registered preferred capital Entry of total preferred capital Basic capital General partner IBV Hans Köning GmbH Christian Wuchold Investor / if necessary Overall, however, this is not the case. Lt. From the commercial register extract, the full amount of the mandatory contribution is entered as follows: Limited partnership capital according to HR am Hans Köning GmbH IBV Investor Investor Investor Investor Investor Investor Investor Investor Investor Investor Investor Investor Investor Investor Investor Investor Investor Investor Investor Investor Investor Investor Investor Investor Investor Investor Investor Investor Investor Investor Investor Investor Investor Investor Investor Investor Investor Investor Investor Investor Investor Investor Investor Investor Investor Investor Investor Investor Investor Investor Investor Investor Investor Investor Investor Investor Investor Investor Investor Investors Investors page 12/17

13 Page 13 of the letter of July 15, 2005 Investor Investor Investor Wuchold 500 total investors According to the commercial register, the liability of investors with preferred capital is therefore not entered in the amount of 10%, but in the amount of 100%. This violated the articles of association. However, the trust agreement and the declaration of membership do not again refer to the reduced liability amount of the preferred capital. Here it is necessary to clarify whose fault the excessive entry in the commercial register is based on. The consequence of the excessive registration is, however, that in the event of a crisis the investors, who are only supposed to be liable for 10% of their investment, are also liable for 100%! Even if the incorrect entry were corrected as of today, there would be a five-year extended liability period in full. According to HR excerpts from, the capital increases of the property companies have not yet been entered. The last entries in the commercial register were made on,,,, or. I cannot understand why the planned capital increase was not registered at this point in time. The possible legal consequences must be examined. B.9. Exaggeratedly optimistic calculation of interest income in the prospectus As already stated in the prospectus, interest income on current accounts and fixed-term deposits is calculated with 4.5% interest income per year, for securities with 5.5% p.a. This interest income was already set unrealistically high when the prospectus was issued. The monthly report of the Deutsche Bundesbank relevant for the time the prospectus was issued can be seen that at this point in time an average return of 1.92% pa, a maximum of 2.95%, was achievable on sight deposits from private customers, for monthly monies in the amount of 500,000 to 2 .5 million were achievable on average 3.03% pa, but a maximum of 3.40%. The prospectus does not contain any indication that the calculation approaches are significantly above the market level, so that not only possibly, but most likely, lower interest income is achieved, nor is there any indication that the securities reserve - calculated with a higher interest rate - is significantly smaller Forms part of the reserves, the majority of the liquidity is to be managed as a fixed-term deposit. The interest income listed under B.3 for 2003 roughly shows the ratio of the reserve actually invested in securities and fixed-term deposits. Since nothing is said on the subject in the annual report, I also recommend, as a precautionary measure, that the question of whether the fixed-term deposits and value are to be clarified

14 page 14 of the letter of July 15, 2005 paper reserves of the fund are freely available or possibly (as happened in other cases) pledged as additional security. B.10. Dietzenbach property On page 20 of the prospectus, the costs of the property in Dietzenbach that are incurred by the fund company are given. According to the prospectus, these costs include all construction costs of the building as well as all ancillary costs with the exception of notary and court fees and real estate transfer tax. There are no property purchase costs because the property was taken over under heritable building right and no price had to be paid for it. The price stated on p. 20 cannot be traced back to the individual details in the prospectus on pages 54/55. The values ​​given there are as follows: GÜ contract Bavaria, 37 expansion according to tenant request, 00 less building cost subsidy, 21 total, 16 94.9%, i.e. 51, would be accounted for by the fund. This amount is around 2.67 million below the total price shown on page 20. If the expansion costs, which according to the prospectus may be paid by the tenant, are not taken into account, the total amount due to the fund is .55, which is a difference to the amount shown on page 20 of around 4.47 million. The following is noted in the prospectus audit report: "We received a letter from the tenant dated May 10, 2000 about the estimate of the expected additional costs given in the prospectus (p. 55) due to the special requests of the tenant or the creation of 400 square meters of additional rental space Costs are not to be borne by the property company and insofar are not taken into account in the investment plan. A possibly higher rental income for the additional space would increase the fund's earnings. " Here the prospectus and annual report 2003 contradict the prospectus audit report - according to the annual report, these costs actually remain with the property company and 94.9% are charged to the fund company, even if a higher rent is paid for them. On the other hand, the prospectus review report mentions costs for the Dietzenbach property that are not mentioned in the prospectus itself: "In the investment plan, the fund company is economically burdened with interim financing costs for advance payments to be made in the 2001 calendar year

15 Page 15 to the letter of July 15, 2005, the general contractor agreement in the amount of EUR 72 is taken into account, the interest rate used for this is 4.5% pa ) to the planned completion of the property (according to the prospectus) on the total amount, i.e. for a total of five months, there are additional costs, which do not change the overall view significantly. The prospectus audit report does not explain the difference either However, the following: In the statements on all other properties, the prospectus audit report refers both to the information on the individual properties in the front part of the prospectus (p. 20 to 27) and to the differentiated information in the legal bases (p. 54 to 59) Only the information on p. 20 about the Dietzenbach property is checked for accuracy in the prospectus audit report pt not commented. The contractual agreements on the general contractor agreement of the property company, on the other costs in connection with the acquisition and construction of this property and on the participation of the fund company in these costs should be urgently reviewed. This is all the more true as the target / actual comparison of the investment phase in the 2003 annual report shows planned costs of T, which are compared with the actual costs of T (general contractor contract) and T (leasehold improvements), i.e. T in total. Where the specified target value for "unforeseen" in the amount of 356 T comes from cannot be traced on the basis of the prospectus, the prospectus audit report or the annual report. However, the list makes it clear that the tenant installation costs were actually not taken into account in the original investment plan. The above-mentioned unexplained cost difference of around 4.47 million remains unexplained. There is much to suggest that the investment plan in the prospectus already included costs in the millions for the property in Dietzenbach, the origin of which is not explained. It is particularly objectionable that IBV does not take a position at all in its target / actual comparison with regard to the amount of significant differences. I strongly recommend that the target / actual comparison, the contractual agreements in connection with the construction of the property in Dietzenbach and the calculation bases of the prospectus be checked by an independent specialist. This applies in particular against the background that the shortfall of the total expenditure in the prospectus results on balance from the equity brokerage commission saved, which can be traced back to the failure of the IBV in the placement

16 page 16 of the letter dated July 15, 2005. Without the commission savings, there would have been a cost overrun. B.11. Less significant prospectus errors For the sake of completeness, it should be noted that the information contained in the prospectus (p.31) the total usable area allocated to the fund company corresponds to the total usable area of ​​the properties, although the fund company only holds 94.9% of the property companies and all other values, in particular rents, are converted accordingly. This is probably a - in terms of content, negligible - carelessness in the prospectus. In addition, the development of the tax result in the forecast calculation cannot be compared with the development of the liquid result. The interest income stated in the liquidity calculation does not match the values ​​applied in the tax calculation, the different approach is not explained. The prospectus audit report indicates on p. 24 that the costs of the property in Göttingen stated in the prospectus deviate by approx. From the actual price. C. Concluding remark The IBV Fonds Deutschland 4 currently gives no cause for concern in view of the development noticeable for investors to date. However, it can be assumed that, due to the significantly lower interest rates compared to the prospectus approach, the interest income will be permanently below the prospectus values. Due to the significantly lower inflation rate, the rent increases will presumably also be realized much later than was forecast in the prospectus, so that here, too, an increasingly negative difference can be expected in future from the prospectus. The expected rental development of the Hornbach real estate needs to be checked. In my opinion, however, the actual results of the property companies and their effects on the fund company should be checked urgently in order to rule out previously unrecognized risks. In any case, the documents show that the fund company is charged with results from the property companies that were not mentioned in the prospectus. However, an overview of the actual conditions cannot be obtained. In order to make this comprehensible for every investor in the future, either the annual financial statements of the property companies should be checked by an independent expert on behalf of the fund company, consolidated annual financial statements should be drawn up or the financial statements of the property companies should be attached to the annual report of the fund company together with the relevant explanations. Page 16/17

17 Page 17 of the letter dated July 15, 2005 In addition, the facts in connection with the Dietzenbach property should be checked, as there may still be considerable claims to be made by the fund company. Even if, due to the lack of verifiable documents, there is currently no concrete overview of the risks that actually exist and are not mentioned in the prospectus, in my opinion the points mentioned here are sufficient to clarify the need for a detailed examination. If there are actually significant risks or financial circumstances that deviate negatively from the prospectus, then in 2005 any investor would still be able to file a claim for damages from prospectus liability in the narrower sense, as this claim would not yet be time barred. The facts should therefore be clarified as quickly as possible so that any necessary protective measures can be taken this year. Berlin, signed Kerstin Kondert page 17/17