© Prof. Dr. Rolf Tilmes, CFP, H ON CFEP Page 1 Background on the Family Office Portfolio Forums on Issues and Innovations in Real Estate Prof. Dr. Rolf Tilmes October 27 th, 2006 Berlin

© Prof. Dr. Rolf Tilmes, CFP, H ON CFEP Page 2 Conceptually, the wealth management pyramid distinguishes three wealth segments with varying requirements for the FO Ultra HNWI Very High Net Worth Individuals High Net Worth Individuals Affluent Number of UHNWI Financial Wealth USD 962 bn. Number of HNWI Client View Individualism Supplier View Standardization

© Prof. Dr. Rolf Tilmes, CFP, H ON CFEP Page 3 The German U-HNWI segment grew by 81 % from 1997 to ,0% 1,0% 0,9% 0,8% 0,7% 0,6% 0,5% 0,4% 0,3% 0,2% 0,1% Share of U-HNWI in HNWI-population Number of U-HNWI in Germany Share of U-HNWI in HNWI-population in Germany Quelle: Capgemini 0,93% 0,92% 0,90% 0,77% 0,82% 0,86% 0,89% Number of U-HNWI U-HNWI financial wealth in Germany: USD 962 bn. Approx. 60 % to 75 % of total assets invested in real estate U-HNWI financial wealth in Germany: USD 962 bn. Approx. 60 % to 75 % of total assets invested in real estate ,94%

© Prof. Dr. Rolf Tilmes, CFP, H ON CFEP Page 4 Cash Real Estate Own Business Life Insurance Paintings/Art Antiques Gold Household Jewelry Vehicles 96,2 % 84,9 % 67,9 % 66,0 % 54,7 % 45,3 % 43,4 % 41,5 % 37,7 % n: 53 Financial Wealth Human Wealth Object Dimensions: Wealth Elements The understanding of Private Wealth Management is diverse and differs by object and subject categories Working capacity Healthyness/fitness Intelligence 86,0 % 83,7 % 74,4 % n: 43 Children Family Esteem Reputation Values Tradition 73,2 % 70,7 % 63,4 % 56,1 % 51,2 % n: 41 Social Wealth Which elements are part of the total wealth of a person or a family? Source: Research of Dr. Peter Schaubach: Family Office in Private Wealth Management; ebs FINANZAKADEMIE analysis

© Prof. Dr. Rolf Tilmes, CFP, H ON CFEP Page 5 Which main goals do you currently pursue with your management of… Wealth Preservation Harmony Wealth Accumulation Quality of life Wealth Transfer Personal Networks Quality of Life Esteem Wealth Preservation n: 54 31,5 % 33,3 % 35,2 % 38,9 % 51,9 % 64,8 % 68,5 % 70,4 % 79,6 % Asset Category FW SW FW HW FW SW FW SW HW Main Goal Increase of Financial Wealth Reduction of Work Increase of Human Wealth Increase of Social Wealth Increase of Human Wealth Increase of Financial Wealth Wealth Accumulation Wealth transfer Reduction of work n: 54 14,8 % 20,4 % 22,2 % 24,1 % 25,9 % 27,8 % 29,6 % HW SW FW HW FW SW HW FW Asset Category Main Goal FW = Financial Wealth HW = Human Wealth SW = Social Wealth The understanding of Private Wealth Management is diverse and differs by object and subject categories (cont.) Subject Dimension: Main Goals Partly Real Estate-driven

© Prof. Dr. Rolf Tilmes, CFP, H ON CFEP Page 6 The preferences for organizational designs of Family Offices are evident and driven by asset size Which form of organization do you prefer for Family Office? Unique Position of Client Aspect of Ownership Given Not Given External Single-User- Family Office External Multi-User- Family Office Private Single-User- Family Office Combined Multi-User- Family Office 4,8 %64,2 % 26,2 %4,8 % Forein- Property Private Property

© Prof. Dr. Rolf Tilmes, CFP, H ON CFEP Page 7 Minimum Financial Wealth Starting to Use a Family Office The use of Family Offices is deemed to be useful already below current wealth classes From which size of financial wealth do you reasonable consider starting to use a Family Office? Multi-User Family Office Single-User Family Office 7,1 % 33,3 % 19,0 % 4,8 % 9,5 % < 2,5 Mio. Euro > 2,5 Mio. till 5 Mio. Euro > 5 Mio. till 10 Mio. Euro > 10 Mio. till 15 Mio. Euro > 15 Mio. till 25 Mio. Euro > 25 Mio. till 50 Mio. Euro > 50 Mio. till 100 Mio. Euro >100 Mio. till 250 Mio. Euro >250 Mio. till 500 Mio. Euro > 500 Mio. Euro 16,7 % 4,8 % 2,4 % 0,0 % 2,3 % 14,0 % 4,7 % 30,2 % 18,6 % 7,0 % 14,0 % 7,0 % 2,3 % n: 42 n: 43 Average: 35,74 Mio Euro (without four extremes: 19,60 Mio. Euro) Average: 152,15 Mio Euro (without four extremes: 84,16 Mio Euro)

© Prof. Dr. Rolf Tilmes, CFP, H ON CFEP Page 8 Importance of Financial Wealth Service Categories Cash and asset management are the most important services – real estate management is not in line with total asset share Management of Daily Assets Cash and Asset Management Real Estate Management Corporate Venture Management Insurance/ Risk Management Art Management n: 51 n: 50 n: 42 3,06 3,19 2,73 3,99 Declining Importance 3,19 n: 52 2,08 4,08 n: 52 Naming encoded as 'very important' = 1 till 'very unimportant' = 5

© Prof. Dr. Rolf Tilmes, CFP, H ON CFEP Page 9 Trust to Family Office Trust in and competency assessments of bank-related Family Offices is across all major categories lower than for auditor/ tax-related ones Bank-related Family Office Auditor-/Tax-Advisor-related Family Office 10,4 % 58,3 % 25,0 % 6,3 % Daily Assets Cash-/Asset Management Real Estate Management Corporate Venture Management Life Insurance Management Art Management Management of (working) Capacity Management of Intelligence Management of Physis Managem. of Social Standing Legal- and Tax Advice Personal Office Management areas 12,5 % n: 48 4,2 % 2,1 % 4,2 % 12,5 % 22,9 % 27,1 % 35,4 % 0,0 % 20,8 % n: 48 2,1 % 0,0 % 58,3 % 2,1 % 14,6 %

© Prof. Dr. Rolf Tilmes, CFP, H ON CFEP Page 10 Private Real Estate Management merits a distinct approach in the FO context – and will be a major performance driver Private Wealth Management Management of Non-Real Estate- Portfolio Management of Real Estate- Portfolio Financial Economics Real Estate Economics isolatedintegrated isolated Private Real Estate Management Management of Single-Investments PREM Services in Family Office Single Object Optimization of locations, object analysis and assessment, financing, tax optimization, rental management, facilities management, … Real Estate Portfolio Assessment and optimization of real estate protfolios, hedging of currency risks, measurement of value creation / performance attribution of single object to portfolio, market assessment, … Total Portfolio Wealth planning and structuring, cash flow management, return optimization, estate planning, financial planning, controlling of overall strategy Souce: Tilmes/Schaubach, PREM

© Prof. Dr. Rolf Tilmes, CFP, H ON CFEP Page 11 Hypotheses for profitable growth in Family Office and Wealth Management business in Germany Positioning Define Family Office-strategy: pure play “Assets under Advisory” vs. “Assets under Management” Consider Wealth Management: Re-bundle traditional Private Banking Services with extended personal interaction Offering Focus product range: Purely being independent from own product selling will generate access to UHNWI – shift to third party product distribution as access is the limiting factor – not the product Extend product offering: Offer new, advice driven service (Estate Planning, Real Estate Management, Risk Management) and move from Financial Wealth to Human and Social Wealth Use teaming: Networking with external advisors is key to cover the entire wealth – which is more than just money Staffing Re-power/Re-tool staff: Invest in your own Human Capital and train core competencies in advice-driven business

© Prof. Dr. Rolf Tilmes, CFP, H ON CFEP Page 12 Contacts for further questions Prof. Dr. Rolf Tilmes, CFP, H ON CFEP Honorary Chair for Private Finance and Wealth Management at the European Business School International University Schloss Reichartshausen, Oestrich-Winkel Head of the Institute for Private Wealth Management, Frankfurt Academic Director of the ebs FINANZAKADEMIE, a Post-Graduate Training Company of the ebs, Oestrich-Winkel Tel.: