CA Immobilien Anlagen AG

Annual Report (ESEF) • Mar 23, 2022

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ARTICLE 124 OF THE AUSTRIAN STOCK EXCHANGE ACT 2 3 4 8 14 17 23 28 31 36 46 48 49 61 63 GROUP MANAGEMENT REPORT Group structure Economic environment Property markets Property assets Investment properties Investment properties under development Property evaluation Financing Results Outlook Supplementary report Risk report Information acc. Section 243A UGB (Austrian Commercial Code) ESG Report ESG Appendix CONSOLIDATED FINANCIAL STATEMENTS 106 109 110 112 113 115 A. CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED 31.12.2021 B. CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31.12.2021 C. CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31.12.2021 D. CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR 2021 E. CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31.12.2021 F. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT 31.12.2021 118 220 221 226 254 DECLARATION OF THE MANAGEMENT BOARD PURSUANT TO SECTION 124 (1) OF THE AUSTRIAN STOCK EXCHANGE ACT (CONSOLIDATED FINANCIAL STATEMENTS) AUDITOR’S REPORT (CONSOLIDATED FINANCIAL STATEMENTS) STATUTORY FINANCIAL STATEMENTS MANAGEMENT REPORT DECLARATION OF THE MANAGEMENT BOARD DUE TO SECTION 124 OF THE AUSTRIAN STOCK EXCHANGE ACT (STATUTORY FINANCIAL STATEMENTS AND MANAGEMENT REPORT) AUDITOR’S REPORT (STATUTORY FINANCIAL STATEMENTS AND MANAGEMENT REPORT) CONTACT/DISCLAIMER/IMPRINT 293 CONTENT 288 287 94 GROUP MANAGEMENT REPORT GROUP MANAGEMENT REPORT 3 CA Immo is a real estate company with its headquarters in V ienna and branch offices in Germany, Poland, Roma- nia, Serbia, the Czech Republic and Hungary. The parent company of the Group is CA Immobilien Anlagen Ak- tiengesellschaft, a listed company based in Vienna whose main activity is the strategic and operational manage- ment of subsidiary companies at home and abroad. The various branch offices act as largely decentralised profit centres. Following the liquidation of almost all Cypriot companies and the exit from Slovakia, further subsidiar- ies exist in the Netherlands. As at key date 31 December 2021, the Group comprised 165 companies (31.12.2020: 184) with 441 employees (437 on 31.12.2020). The core business of the CA Immo Group is the letting, management and development of high quality commer- cial real estate with a clear focus on office properties. The company, which has a high degree of in-house construc- tion expertise, covers the entire value chain in the field of commercial real estate. The objective is to build up a focused portfolio of high quality, high earning invest- ment properties within the core markets of Germany, Austria, Poland, Romania, the Czech Republic and Hun- gary. For Romania, the evaluation of all strategic options, including a potential sale of the entire portfolio, was started at the end of November 2021. Additional earnings contributions are generated by the preparation and utilisation of land reserves in the development business area. CA Immo either transfers completed projects to its portfolio or sells them to investors. The Group currently controls property assets of around €6.3 bn in Germany, Austria and Eastern Europe (€5.6 bn on 31.12.2020). Austria The company’s domestic properties are held in direct or indirect subsidiaries of CA Immobilien Anlagen AG. As at 31 December 2021, the parent company also directly held property assets of approximately €302 m (€323 m on 31.12.2020). As at 31 December 2021, the total Austrian portfolio comprised solely investment properties with a market value of €497 m (€530 m on 31.12.2020). COMPANIES BY REGION Number of companies 1) 31.12.2021 31.12.2020 Austria 18 19 - Of which joint ventures 3 3 Germany 2) 98 98 - Of which joint ventures 22 23 Central and Eastern Europe 3) 50 67 - Of which joint ventures 2 2 Group-wide 165 184 - Of which joint ventures 25 28 1) Joint ventures involving consolidated companies. 2) Includes one company in Switzerland. 3) Includes three holding companies in the Netherlands and one company in Cyprus established in connection with Eastern European investments. Germany The operational platform for all Group activities in Germany is CA Immo Deutschland GmbH, which has branches in Berlin, Frankfurt and Munich. Aside from investment properties, the company’s property assets mainly comprise properties under construction and undeveloped plots alongside a portfolio of properties intended for trading or sale. Investment properties are largely held in direct holdings and let and managed by DRG Deutsche Realitäten GmbH, a joint venture set up with the Austrian estate agent and property management firm ÖRAG. A number of development projects (in Munich and Mainz, for example) are being realised through joint ventures. Construction manage- ment is carried out by CA Immo subsidiary omniCon, which also performs these services for third parties. Eastern Europe (CEE) In the CEE region, the strategic focus is also on commer- cial class A buildings in the respective capitals. The CEE investment property portfolio is held by direct or indirect CA Immo subsidiaries. All Eastern European properties are managed by regional subsidiaries under the name CA Immo Real Estate Management. GROUP STRUCTURE GROUP MANAGEMENT REPORT GROUP MANAGEMENT REPORT 4 1) Sources: Eurostat, European Commission, Bloomberg, Financial Times, The Economist Furthermore, high inflation is expected to persist longer than projected in the October 2021 World Economic Out- look, with continued supply chain disruptions and high energy prices in 2022, further fuelled by the Russia- Ukraine crisis. According to an initial estimate of the annual growth rate for 2021, based on seasonally and calendar-adjusted quarterly data, GDP in the euro area and the EU increased by 5.2%. According to the current forecast, GDP in the EU shall increase by around 4.0% in 2022 and by around 2.8% in 2022. This means that the output of the Euro- pean economy at the end of this year would be roughly back at its pre-crisis level. CA IMMO CORE MARKETS IN 2021 2) Compared with the previous quarter, seasonally ad- justed GDP increased by 0.3% in the euro area and by 0.4% in the EU in Q4 2021. This is the result of a prelim- inary flash estimate published by Eurostat. In Q3 2021, GDP had increased by 2.3% in the euro area and by 2.2% in the EU. Compared to the corresponding quarter of the previous year, seasonally adjusted GDP in the fourth quarter of 2021 increased by 4.6% in the euro area and by 4.8% in the EU, after +3.9% in the euro area and +4.1% in the EU in the previous quarter. In December 2021, the seasonally adjusted unemploy- ment rate in the euro area was 7.0%, down from 7.1% in November 2021 and from 8.2% in December 2020, and the unemployment rate in the EU was 6.4% in December 2021, down from 6.5% in November 2021 and from 7.5% in December 2020. At the end of the third quarter of 2021, the government debt-to-GDP ratio was 97.7% in the euro area, compared to 98.3% at the end of the second quarter of 2021, while in the EU the ratio decreased from 90.9% to 90.1%. In both the euro area and the EU, the public debt-to-GDP ra- tio decreased at the end of the third quarter due to the re- covery in GDP, while debt continued to increase due to the financing needs of government responses to the Covid-19 pandemic measures used to mitigate the eco- nomic and social impact. Compared to the third quarter of 2020, the government debt-to-GDP ratio increased in 2) Sources: Eurostat, European Commission, Bloomberg, Financial Times, The Economist ECONOMIC ENVIRONMENT THE ECONOMIC TREND 1) Over the past decade intensifying geopolitical risk has been a constant feature of world politics, yet the world economy and financial markets have shrugged it off. Rus- sia’s invasion of Ukraine is likely to break this pattern, because it will result in the isolation of the world’s 11th- largest economy and one of its largest commodity pro- ducers. The immediate global implications will be higher inflation, lower growth and disruption to financial mar- kets as deeper sanctions take hold. The longer-term fall- out could be a further debilitation of the system of global- ised supply chains and integrated financial markets. The impact of the Russia-Ukraine crisis on the worlds’ econ- omy cannot be quantified properly yet and depends on further geopolitical development. Therefore it has not been taken into account in the latest economic forecasts. Following the outbreak of the Covid-19 pandemic with a severe recession in 2020 and the subsequent economic recovery in 2021, the International Monetary Fund (IMF) drew a more cautious but still positive outlook for the global economy in its World Economic Outlook update published in January 2022 (and therefore not taking into account latest geopolitical happenings). The global econ- omy was entering 2022 weaker than previously expected. Countries had reimposed mobility restrictions with the spread of the new Omicron Covid-19 variant. Rising en- ergy prices and supply disruptions have led to higher and broader-based inflation than anticipated, particularly in the United States and many emerging and developing economies. Global growth is expected to slow from 5.9% in 2021 to 4.4% in 2022 – half a percentage point lower for 2022 than anticipated in the October 2021 World Eco- nomic Outlook, mainly due to forecast cuts in the two largest economies (USA, China). Revised assumptions re- lated to the "Build Back Better" fiscal policy packages, as well as an earlier withdrawal of accommodative mone- tary policy and persistent supply constraints, led to a downward revision of 1.2 percentage points for the United States. In China, pandemic-related disruptions as- sociated with the Covid-19 zero-tolerance policy and pro- tracted financial tensions among real estate companies led to a downgrade of 0.8 percentage point. GROUP MANAGEMENT REPORT 5 both the euro area (from 96.6% to 97.7%) and the EU (from 89.2% to 90.1%). Annual inflation in the euro area in January 2022 is es- timated at 5.1%, up from 5.0% in December 2021, ac- cording to a flash estimate published by Eurostat, the sta- tistical office of the European Union. In terms of the main components of inflation in the euro area, energy is ex- pected to have the highest annual rate in January (28.6%, up from 25.9% in December). The economy in Austria grew by 4.5% in real GDP terms in 2021. The inflation rate was 3.8% and the unem- ployment rate was 4.9% in December 2021. Gross public debt as a percentage of GDP decreased to 84.1% in the third quarter of 2021. Positive economic momentum in Germany was re- flected in GDP growth of 2.9% in 2021. In a pan-Euro- pean comparison, Germany is below the average for the EU and the euro zone though. The unemployment rate in Germany decreased from 4.0% to 3.2% over the course of the year. The inflation rate for Germany in December 2021 was reported at 5.7%. Within the core Central and Eastern European markets, Hungary and Romania showed the strongest economic growth in 2021 at 7.1% and 5.9%, respectively. GDP in Poland and Czechia increased by 5.7% and 3.3%, respec- tively. The unemployment rate in the Central and Eastern Eu- ropean countries remains significantly lower than in the EU-27 and the euro area average. It is 2.1% in Czechia, 2.9% in Poland, 3.7% in Hungary and 5.4% in Romania. The inflation rate showed a significant increase in 2021 and was above the euro area average in all core Central and Eastern European countries. Poland reported an in- flation rate of 8.0% for December 2021, while the annual figure in Hungary was 7.4%. Annual inflation was regis- tered at 6.7% in Romania and 5.4% in Czechia. ECONOMIC DATA FOR CA IMMO CORE MARKETS Growth rate of real GDP 1) Annual inflation rates 2) Unemploy- ment rate 3) Public budget balance Gross public debt Growth rate of employment 2021 2020 in % in % as % of GDP 3Q 2021 as % of GDP 3Q 2021 as % of GDP 3Q 2021 EU – 27 5.3 -5.9 5.3 6.4 –3.7 90.1 0.9 Eurozone – 19 5.3 -6.4 5.0 7.0 –4.0 97.7 1.0 Austria 4.5 -6.7 3.8 4.9 –1.4 84.1 1.4 Germany 2.9 -4.6 5.7 3.2 –2.4 69.4 0.4 Poland 5.7 -2.5 8.0 2.9 –1.0 56.6 - 0.5 Czechia 3.3 -5.8 5.4 2.1 –6.0 40.5 0.2 Hungary 7.1 -4.7 7.4 3.7 –5.6 80.3 0.8 Romania 5.9 -3.7 6.7 5.4 –7.1 48.5 - 0.4 Source: Eurostat 1) Change on the previous year (%); 2) Change on the previous year as at December 2021; 3) As at December 2021 GROUP MANAGEMENT REPORT GROUP MANAGEMENT REPORT 6 THE MONEY MARKET AND INTEREST ENVIRONMENT 1) At its most recent meeting on March 10, 2022, the Gov- erning Council expressed its full support to the people of Ukraine. It said it will ensure smooth liquidity condi- tions and implement the sanctions decided by the Euro- pean Union and European governments. They will take whatever action is needed to fulfil the ECB’s mandate to pursue price stability and to safeguard financial stability. Based on its updated assessment and taking into account the uncertain environment, the Governing Council revised the purchase schedule for its Asset Purchase Programme (APP) for the coming months. Monthly net purchases un- der the APP will amount to €40 bn in April, €30 bn in May and €20 bn in June. The calibration of net purchases for the third quarter will be data-dependent and reflect its evolving assessment of the outlook. If the incoming data support the expectation that the medium-term inflation outlook will not weaken even after the end of its net asset purchases, the Governing Council will conclude net pur- chases under the APP in the third quarter. If the medium- term inflation outlook changes and if financing conditions become inconsistent with further progress towards the 2% target, the Governing Council stands ready to revise its schedule for net asset purchases in terms of size and/or duration. The Governing Council also intends to continue rein- vesting, in full, the principal payments from maturing se- curities purchased under the APP for an extended period of time past the date when it starts raising the key ECB in- terest rates and, in any case, for as long as necessary to maintain favourable liquidity conditions and an ample degree of monetary accommodation. Moreover, the Governing Council of the ECB decided to leave the interest rate for main refinancing operations and the interest rates for the marginal lending facility and the deposit facility unchanged at 0.00%, 0.25% and −0.50% respectively. Any adjustments to the key ECB interest rates will take place some time after the end of the Gov- erning Council’s net purchases under the APP and will be gradual. The path for the key ECB interest rates will con- tinue to be determined by the Governing Council’s for- ward guidance and by its strategic commitment to stabi- lise inflation at 2% over the medium term. Accordingly, the Governing Council expects the key ECB interest rates 1) Sources: European Central Bank, Eurostat, Bloomberg 2) Sources: European Commission, European Central Bank, Financial Times, The Economist to remain at their present levels until it sees inflation reaching 2% well ahead of the end of its projection hori- zon and durably for the rest of the projection horizon, and it judges that realised progress in underlying inflation is sufficiently advanced to be consistent with inflation stabi- lising at 2% over the medium term. In the first quarter of 2022, the Governing Council has been conducting net asset purchases under the Pandemic Emergency Purchase Programme (PEPP) at a lower pace than in the previous quarter. It will discontinue net asset purchases under the PEPP at the end of March 2022. The Governing Council intends to reinvest the principal pay- ments from maturing securities purchased under the PEPP until at least the end of 2024. In any case, the future roll- off of the PEPP portfolio will be managed to avoid inter- ference with the appropriate monetary policy stance. The Council said, that “the pandemic has shown that, under stressed conditions, flexibility in the design and conduct of asset purchases has helped to counter the impaired transmission of monetary policy and made the Governing Council’s efforts to achieve its goal more effective”. The Governing Council will continue to monitor bank funding conditions and ensure that the maturing of opera- tions under the third series of targeted longer-term refi- nancing operations (TLTRO III) does not hamper the smooth transmission of its monetary policy. It will also regularly assess how targeted lending operations are con- tributing to its monetary policy stance. As announced be- fore, it expects the special conditions applicable under TLTRO III to end in June this year. The 3-month Euribor continued to move in negative ter- ritory and fluctuated between -0.53% and -0.61% in the reporting period. Since December 2021, a clear upward trend in the Euribor has been noticeable. Following historic lows in bond yields on 10-year gov- ernment bonds issued by eurozone members at the end of 2020, a slight upward trend was recognizable in the course of 2021. Since the fourth quarter of 2022, this trend has intensified. After the 10-year German Bund turned positive in spring 2021 for the first time since 2019, there were recurring crossings above and below the zero per- cent mark. Since the end of last year, however, the yield has risen steadily to just under 0.5% in the meantime. GROUP MANAGEMENT REPORT 7 OUTLOOK 2) Even though the future impact of the Russia-Ukraine crisis on the worlds’ economy cannot be assessed properly at this point in time it already has substantially increased uncertainty and volatility on global markets, which has also been reflected in deteriorating financial market conditions. The Russian invasion has, beyond the human cost of the conflict, already driven commodity prices higher—and there could be profound and pro- tracted effects on macroeconomic prospects around the world such as energy supply disruptions or price shocks and sustained inflationary pressures. The risk of further escalations in the conflict as well as additional geopoliti- cal tensions will remain a key topic to watch in 2022. In its January 2022 World Economic Outlook, the Inter- national Monetary Fund projects economic growth of 4.4% in 2022 and 3.8% in 2023. Inflation is expected to remain high in the near future, averaging 3.9% in devel- oped economies and 5.9% in developing and emerging economies in 2022 before declining in 2023. The impact of the Russia-Ukraine crisis has not been taken into ac- count in these forecasts. Assuming that the pandemic reduces its impact, higher inflation could ease if supply chain disruptions subside, monetary policy tightens, and demand shifts from goods- intensive consumption to services. However, the Russia- Ukraine crisis has opposite effects due to the sharp rise in commodity costs and the renewed impairment of sup- ply chains. “The Russian invasion of Ukraine is a watershed for Eu- rope,” the ECB said in a statement after its governing council’s meeting in Frankfurt on March 10, adding that it would “take whatever action is needed to pursue price stability and to safeguard financial stability”. Market par- ticipants interpreted the move to speed up the ECB’s exit from buying more bonds as a signal that it could raise in- terest rates in the fourth quarter in an effort to contain soaring inflation — which would be the first such move for more than a decade. However, the ECB also gave itself more leeway to wait longer before raising interest rates after its bond-buying ends. Christine Lagarde said Rus- sia’s invasion of Ukraine had created “a major shock” for the eurozone economy, adding that the central bank was forecasting higher inflation and lower growth over the next three years. “Inflation could be considerably higher in the near term,” Lagarde said. “However, in all scenar- ios, inflation is expected to stabilise around our target by 2024.” The emergence of new Covid-19 variants could further prolong the pandemic and cause renewed economic dis- ruption. Global access to vaccines, tests and treatments is essential to reduce the risk of further dangerous Covid-19 variants. This will require increased stockpile produc- tion, as well as better supply systems in each country and more equitable international distribution. In addition, supply chain disruptions, energy price volatility, and lo- cal wage pressures mean that uncertainty about inflation and the stance of monetary policy is high. If leading economies raise policy rates, risks could emerge for fi- nancial stability and emerging and developing econo- mies' capital flows, currencies, and fiscal positions, espe- cially as debt has increased significantly over the past two years. GROUP MANAGEMENT REPORT GROUP MANAGEMENT REPORT 8 THE REAL ESTATE MARKET IN AUSTRIA 1) The investment market Due to the seasonal slowdown of the pandemic and gov- ernmental support for companies, a further slump in the investment market, as seen in the previous year, was inter- rupted; thus, an increase of around 25% (€4.3 bn) was re- ported in Austrian real estate in 2021 compared to the previous year. Around €2.8 bn (65%) of the investments were registered in Vienna. Office investments with a focus on core properties in premium locations in combination with residential properties accounted for the largest share of the total volume. Contrary to the general trend, retail also recorded an upswing, which can be attributed to two large deals and therefore does not appear to be a long-term trend. The Austrian investment market has been stable last year and was able to continue the trend of the previous year. The prime yield for office properties fell moderately and is currently at the historically low level of 3.20% (−15 bps compared to the previous year) for properties in Vien- na's Central Business District (CBD). The office property market Vienna's total office stock amounted to approximately 11.4 m sqm at the end of 2021 and was therefore almost unchanged from the previous year. The completion vol- ume of office space totaled around 65,000 sqm in 2021, around 32% less than in 2020. The low completion vol- ume continues to highlight the lack of new office proper- ties in Vienna. The letting performance was also somewhat below the previous year's level and, at around 166,200 sqm, rec- orded a decline of approximately 18.2%. The Covid-19 pandemic-related economic crisis has also had a negative impact on the office market in 2021. CBRE Research there- fore assumes a slightly rising letting performance in the next two years, also due to the still tense situation with re- gard to low new supply coming to the market. The vacancy rate fell by around 40 bps to approximately 4.2% over the course of 2021. CBRE Research expects the vacancy rate to settle at approximately 4.0% in 2022 and 2023 due to limited additional space, high level of pre-let- ting and a slight increase in demand. The monthly prime rent in Vienna rose by around 4% over last year to €26.0 1) Sources: CBRE; Data supplied by CBRE Research Austria Real Estate Mar- ket Outlook 2021 per sqm per month. Above all, top offices in attractive lo- cations remain in demand, whereas properties with lower building standards in weaker locations will probably have to expect less demand in the future. A steady increase in focus on the topic of ESG and certifications can also be observed on the market. OFFICE MARKET DEV ELOPMENT VIENNA 2021 2020 Chan g e in %/bps Take up in sqm 166,200 203,300 −18.2 Vacancy rate in % 4.2 4.6 −40 bps Prime rent in €/sqm net 26.00 25.00 4.0 Prime yield in % 3.20 3.35 −15 bps Sources: Data provided by CBRE Research Note: floor space take-up includes owner-occupied transactions THE REAL ESTATE MARKET IN GERMANY 2) The investment market In 2021, the German real estate market was unaffected by the Covid-19 pandemic developments, achieving a rec- ord result of €111.0 bn; this represents an increase of ap- proximately 40% compared to 2020 results. The record merger activity in the residential segment has had a major positive impact on this development. The commercial real estate sector contributed €62.1 bn (+5% y-o-y); there con- tinues to be a strong focus on office properties in prime lo- cations that can adapt to hybrid work thanks to their flexi- bility and location. With a turnover of around €30.0 bn, office properties accounted for 50% of the total commer- cial real estate investment volume. The share of the top 7-markets in Germany increased from around 53.0% in 2020 to 57.0% in 2021. Berlin, Co- logne, Munich and Stuttgart showed significantly higher volumes of transactions, whereas supply-related declines had to be recorded in Frankfurt, Düsseldorf and Hamburg. In 2021, a total of 125 major transactions above the €100 m mark were registered of which 79 transactions were in the office segment, 23 transactions related to lo- gistics properties and 13 were retail deals. In the top 7-lo- cations there was a clear trend towards individual transac- tions, as a result of which portfolio transactions in these 2) Sources: CBRE; Data supplied by CBRE Research, Germany Real Estate Market Outlook 2022, Berlin, Munich, Frankfurt Office MarketView Q4 2021; Oxford Economics PROPERTY MARKETS GROUP MANAGEMENT REPORT 9 markets fell by around 32% y-o-y. Furthermore, the ex- cess demand in all top 7-markets for prime properties is leading to a compression of prime yields. CBRE Research expects the German commercial real es- tate investment market to achieve a transaction volume of well above €55.0 bn in 2022, which would be only slightly below the record levels of 2021. The decisive fac- tor will be product availability, which already proved to be a challenge in some markets in the previous year. From an investor's perspective office properties remain in focus. Particularly in the current exceptional times, the trend is moving even more towards core and core-plus properties in established locations in the major office market centers. Defensive investment products with solid tenants have experienced an additional boost in demand, which, how- ever, could not be fully met on the supply side. CBRE Re- search therefore assumes that yields for these products will sharpen even further. The share of foreign investment declined from 46% in 2020 to 39% in 2021 in line with strong domestic de- mand. Nevertheless, the share of North American inves- tors increased significantly, by 34% y-o-y to €6.7 bn and approximately 11% of total investments. The Berlin investment market for commercial real estate recorded a record value of €11.8 bn and an increase of more than 50% compared to the previous year. Main con- tribution to this result has been a large number of transac- tions over €100 m in the last quarter of the year. The prime yield for office properties fell slightly to 2.50% due to the high demand for high quality office space (−15 bps y-o-y). In 2021, a transaction volume of around €2.5 bn has been registered on the commercial property market in Düsseldorf. This is around a third less than in 2020. Nev- ertheless, the Düsseldorf commercial real estate market showed a positive trend towards the end of the year. In the last quarter of 2021, €1.3 bn has been invested; more than in the three preceding quarters combined. Office properties represent the core of Düsseldorf’s commercial property market, accounting for approximately 73% of the total transaction volume. Prime yields fell by around 25 bps y-o-y to a record low of 2.75%. The commercial property market in Frankfurt registered investments of €5.5 bn. With a decline of approximately 23% y-o-y, the market recorded the weakest overall result since 2014; this is due to a lack of product, which does not allow demand to be matched. As in the previous year, office properties accounted for well over 80% of transac- tions. The prime yield for CBD offices fell by 20 bps to 2.70% in 2021. The commercial investment market in Munich recorded a 46% increase y-o-y with a volume of €7.2 bn, slightly less than in the record year 2019, due to a strong fourth quarter in which around €3.2 bn was transacted. Office properties accounted for approximately 83% of the total volume at around €6.0 bn. Due to unabated strong de- mand for real estate locations with stable values, the prime yield fell slightly by 5 bps to 2.50%. GROUP MANAGEMENT REPORT GROUP MANAGEMENT REPORT 10 The office property market 1) 2021 again has been characterized by further lockdowns and restrictions of public gatherings which had an impact on the economic situation. Various industries as well as inflation and GDP were negatively impacted by global supply chain disruptions. Furthermore, hybrid forms of work have been adapted in most industries due to re- strictions and expansion of digital infrastructure. Never- theless, in Germany in particular, there is a strong confi- dence in offices as a sustainable real estate investment while at the same time demand for office space started ris- ing again significantly in all markets. Lack of prime inner- city space generally resulted in an upward trend in rental price dynamics. Berlin registered a 23.7% y-o-y take-up increase in 2021 with office take-up of 817,000 sqm. The vacancy rate rose slightly over the course of the year to approximately 2.8% (2020: 2.4%). Lettings recorded a significant gain com- pared to the previous year, not least due to the unbroken confidence in the importance of the office for companies in Germany. Due to the comparably low vacancy rate in Berlin combined with the lack of premium space the prime rent rose by €2.5 per sqm to €41.00 per sqm per month. The weighted average monthly rent remains al- most unchanged from the previous year at €27.99 per sqm (€28.02 per sqm in 2020). Around 510,700 sqm of new space was completed in 2021, which is significantly less compared to the forecast at the beginning of the year. Ac- cording to CBRE Research, around 1.2 m sqm of space is now expected to be added to the market in 2022. The of- fice stock at the end of the year was around 20.2 m sqm. OFFICE MARKET DEVELOPMENT IN CA IMMO CORE MARKETS IN GERMANY 2021 2020 Chan g e in %/bps Berlin Take u p in s q m 817,000 660,500 23.70 Vacanc y rate in % 2.80 2.40 40 bp s Prime rent in €/s q m net 41.00 38.50 6.50 Prime y ield in % 2.50 2.65 − 15 b p s Frankfurt am Main Take u p in s q m 436,800 330,200 32.30 Vacanc y rate in % 8.60 7.00 160 b p s Prime rent in €/s q m net 45.50 44.00 3.40 Prime y ield in % 2.70 2.90 − 20 bp s Düsseldor f Take u p in s q m 301,500 293,500 2.70 Vacanc y rate in % 9.00 7.50 150 b p s Prime rent in €/s q m net 28.50 28.50 0.00 Prime y ield in % 2.75 3.00 − 25 bp s Munich Take u p in s q m 643,900 558,500 15.30 Vacanc y rate in % 4.50 3.80 70 bp s Prime rent in €/s q m net 41.50 39.50 5.10 Prime y ield in % 2.50 2.55 − 5 b p s Sources: Data provided by CBRE Research Note: floor space take-up includes owner-occupied transactions 1) Sources: CBRE: Data supplied by CBRE Research, Munich, Frankfurt, Ber- lin Office MarketView Q4 2021; Oxford Economics GROUP MANAGEMENT REPORT 11 Office take-up in Frankfurt amounted to 436,800 sqm in 2021 (+32.3% y-o-y). The fall of pandemic-related re- strictions in the second half of the year generally im- proved results in the last quarters of 2021. High quality of- fice space with high-class fit outs was the focus of leasing activities accounting for 62% of take-up. The vacancy rate amounted to 8.6% and thus increased by 160 bps y-o-y. The prime rent in Frankfurt also saw an increase to €45.50 per sqm per month (+3% y-o-y) due to a lack of premium space. The weighted average rent, on the other hand, fell by 7% to €21.57 per sqm under the pressure from rising vacancy. The completion volume of around 200,400 sqm was slightly above the level of the previous year (185,800 sqm). According to current forecasts, a total of around 587,000 sqm is in the completion pipeline by the end of 2024. The total stock was reported at around 11.5 m sqm at the end 2021. Düsseldorf confirmed a take-up of 301,500 sqm, showing little change from the 293,500 sqm in the previous year. Prime quality properties with a high standard of fit-out are sought after by tenants in Düsseldorf and account for 57% of total take-up. The vacancy rate increased by around 150 bps y-o-y to approximately 9.00%. Nevertheless, the monthly prime rent, unaffected by increased pressure from growing vacancies, remained unchanged at €28.50 per sqm. The weighted average monthly rent increased from around €15.20 per sqm per month to €16.30. Com- pletions of 96,300 sqm were on par with previous year's level (99,300 sqm). The office stock at the end of the year amounted to around 9.5 m sqm. Munich recorded a take-up of 643,900 sqm in 2021. This corresponds to an increase of 15.3% y-o-y. The office va- cancy rate increased to approximately 4.5% in Q4 2021 (+70 bps y-o-y) due to more vacant space in existing stock but also more unlet space from recent completions. Prime rents were unaffected by the pandemic and the growing vacancy rate. The achievable monthly prime rent rose y-o- y to €41.50 per sqm (+5% y-o-y). At around €23.95 per month the weighted average rent is 11.9% above the pre- vious year's level. Due to the continuing shortage of mod- ern and high quality space, tenants continue to be willing to pay corresponding prices for higher quality in central locations. 1) Sources: Data supplied by CBRE Research The completion volume of around 321,900 sqm in 2021 (new buildings and core refurbishments) fell by approxi- mately 5% y-o-y. Total office space stock amounted to around 22.0 m sqm at the end of the year. THE REAL ESTATE MARKET IN CENTRAL AND EASTERN EUROPE 1) The investment market In Central and Eastern Europe, the effects of the Covid- 19 pandemic and its economic consequences on the real estate markets are already slightly less visible than in 2020. The positive momentum of the last few years before the start of the pandemic could slowly be resumed. This is also evident in CA Immo's core cities Warsaw, Prague, Bu- dapest and Bucharest. The commercial property transac- tion volume of €9.1 bn registered in these cities has ex- ceeded the 2020 values by almost 60%. The office invest- ment volume in the cities mentioned rose by just over 26% y-o-y from €2.9 bn to €3.7 bn, Warsaw accounted for the largest volume (46%), followed by Budapest (26%), Prague (17%) and Bucharest (11%). In Warsaw, an investment volume of €5.6 bn was regis- tered in 2021 of which approximately 31% was in the of- fice sector. The prime office yield is approximately 4.50% (2020: 4.60%). Despite a continued decline in investment volume of 1.8 bn in 2021 (2020: €2.7 bn) in Prague, demand from na- tional and international investors for high quality, ESG compliant properties in good locations remained strong. The sharp decline can be explained by a persistent lack of corresponding products. As in the previous year, the prime yield was stable at 4.25%. In 2021, the investment volume in Budapest shows a positive trend and rose to €1.2 bn (2020: €1.0 bn), of which around 82% was accounted for by offices. Prime yields for top office properties fell by 50 bps y-o-y and stood at 5.25%. Bucharest registered an investment volume of around €490 m in 2021 (−11% y-o-y), of which around 81% was in the office sector. The prime yield is reported at 6.75%, 25 bps below the previous year's result. The office property market 2) All of CA Immo's Central and Eastern European core markets (Warsaw, Prague, Budapest and Bucharest) achieved a modest increase in take-up with the exception of Warsaw, where activity fell slightly. All markets saw 2) Sources: Data supplied by CBRE Research GROUP MANAGEMENT REPORT GROUP MANAGEMENT REPORT 1 2 further increases in vacancy rates, with the lowest in- crease in Budapest and the highest in Warsaw. Prime rents, on the other hand, remained largely constant with a minimal negative trend, with the exception of Prague, where a positive trend can be observed. At year-end 2021, the total office space in Warsaw was around 6.1 m sqm, following the completion of around 325,000 sqm during the year. Currently, 323,000 sqm space is under construction and new supply of around 230,000 sqm is expected during 2022. The office pipeline is heavily concentrated in the CBD of the Polish capital. At 356,600 sqm, office take-up in 2020 was only slightly below the previous year's level. The vacancy rate in- creased by 280 bps y-o-y to approximately 12.7% at year- end. The prime rent in central locations was around €25.50 per sqm per month (+€0.5 per sqm y-o-y). The weighted average rent in central locations improved slightly from the previous year to €19.5 per sqm. The office property market in Prague experienced an- other quiet year in 2021, characterized by a lack of new space. The office stock was expanded by around 57,000 sqm to around 3.8 m sqm by the end of 2021. Take- up reached around 217,300 sqm, approximately 21.5% above the previous year's volume, but still well below 2019 levels. The vacancy rate increased by 80 basis points to 7.8% at the end of the year. Due to the lack of new sup- ply prime rents in central locations were nevertheless ris- ing to €24.00 per sqm per month. The annual take-up in Budapest in 2021 was around 217,900 sqm, which is approximately 14.7% above the previous year's level. The total office space at the end of the year was around 4.0 m sqm. As expected, the comple- tion volume in 2021 was significantly below the 2020 level at 44,500 sqm. CBRE Research nevertheless expects a new record figure of up to 303,000 sqm for the coming year. The vacancy rate increased slightly by 10 bps to 9.2%. Due to the high number of expected completions in 2022 and 2023, a further increase in vacancy is expected. The prime rent decreased over the year and is now stated at €24.00 per sqm per month. By the end of 2021, about 162,800 sqm of office space was let in Bucharest, an increase of approximately 16.0% compared to the previous year. The office stock totaled 3.2 m sqm at the end of the year, following a completion volume of around 245,100 sqm. The vacancy rate in- creased by further 70 bps and stood at 13.1% at year-end. The prime rent in Bucharest remained stable at €18.75 per sqm per month. GROUP MANAGEMENT REPORT 1 3 OFFICE MARKET DEVELOPMENT IN THE CA IMMO CORE MARKETS IN CENTRAL AND EASTERN EUROPE 2021 2020 Chan g e in %/bps Warsaw Take up in sqm 356,600 383,000 −6.90 Vacancy rate in % 12.70 9.90 280 bps Peak rent in €/sqm net 25.50 25.00 2.00 Prime yield in % 4.50 4.60 −10 bps Prague Take up in sqm 217,300 178.800 21.50 Vacancy rate in % 7.80 7.00 80 bps Peak rent in €/sqm net 24.00 22.50 6.7 Prime yield in % 4.25 4.25 0 bps Budapest Take up in sqm 217,900 190,000 14.70 Vacancy rate in % 9.20 9.10 10 bps Peak rent in €/sqm net 24.00 25.00 −4.0 Prime yield in % 5.25 5.75 −50 bps Bucharest Take up in sqm 163,800 141,200 16.00 Vacancy rate in % 13.10 12.40 70 bps Peak rent in €/sqm net 18.75 18.75 0.00 Prime yield in % 6.75 7.00 −25 bps Sources: Data provided by CBRE Research. Note: floor space take-up includes owner-occupied transactions GROUP MANAGEMENT REPORT GROUP MANAGEMENT REPORT 1 4 Business areas The CA Immo Group divides its core activity into the business areas of investment properties and investment properties under development. In both of these business areas, CA Immo specialises in commercial real estate with a clear focus on office properties in capital cities in the centre of Europe. The objective is to expand the focused portfolio of high-quality and profitable investment prop- erties within the CA Immo core markets. Additional earn- ings will be generated through the preparation, develop- ment and utilisation of land reserves in the investment properties under development business segment. €6.3 bn property assets By the transfer of own project completions into the in- vestment portfolio as well as a positive revaluation result, the value of property assets has increased in 2021 by 12% up to €6.3 bn (2020: €5.6 bn). Of this figure, investment properties account for €5.0 bn (80% of the total portfolio), property assets under development represent €1.1 bn (17%) and short-term properties 1) €162 m (3%). With a proportion of 60% of total property assets, Germany is the biggest regional segment. PROPERTY ASSETS OF THE CA IMMO GROUP AS AT 31.12.2021 (PORTFOLIO VALUES) in € m Investment properties 2) Investment properties under development Short-term property assets 3) Property assets Property assets in % Austria 496.5 0.0 0.0 496.5 7.9 Germany 2,503.4 1,097.0 131.2 3,731.7 59.7 Czechia 471.5 0.1 0.0 471.7 7.5 Hungary 485.1 0.0 30.3 515.5 8.3 Poland 563.7 0.0 0.0 563.7 9.0 Romania 395.4 0.0 0.0 395.4 6.3 Serbia 79.9 0.0 0.0 79.9 1.3 Total 4,995.5 1,097.1 161.6 6,254.2 100.0 Share of total portfolio 79.9% 17.5% 2.6% 2) Includes properties used for own purposes; incl. the recently completed office buildings ZigZag (Mainz) and Mississippi House und Missouri Park (Pra- gue), which have been added to the portfolio and are still in the stabilisation phase 3) Short-term property assets include properties intended for trading or sale 1) Incl. properties intended for trading or sale PROPERTY ASSETS GROUP MANAGEMENT REPORT 15 CHANGES TO THE PORTFOLIO IN 2021 In the 2021 business year, CA Immo continued its strate- gic capital rotation programme and its portfolio focus on large-scale, modern office properties in core cities throughout the Group. The objective is to profitably dis- pose of properties which, according to the portfolio strat- egy, are not part of the core business, while at the same time improve the quality, management efficiency and sus- tainability of the CA Immo portfolio. CA Immo invests the sales proceeds in the continuation of its first-class German development development pipeline and in attrac- tive portfolio acquisitions. Project completions (for own stock) In 2021, CA Immo transferred three self-developed buildings with a total investment volume of approxi- mately €83.7 m to its investment portfolio. Assuming full occupancy, these will boost rental revenue by around €5 m annually over the years ahead. In the first quarter of 2021, CA Immo completed the of- fice building ZigZag in the north of the new Mainz city quarter. The office building has a lettable space of around 4,600 sqm. In the third quarter of 2021, CA Immo completed the construction of two premium office buildings Mississippi House and Missouri Park in the River City Prague cam- pus. The two buildings offer a total of 20,750 sqm of letta- ble area and are targeting highest sustainability standards (LEED platinum) as well as tenant health and wellbeing features (WELL Platinum and WELL Health&Safety certification. Mississippi House and Missouri Park make up the final component in the River City Prague urban district development project and have been part of the CA Immo portfolio since Q3 2021. PROPERTY ASSETS BRIDGE 2020 TO 2021 AND KEY FIGURES 2021 Austria Germany CEE Total Pro p ert y assets 31.12.2020 € m 530.0 3,015.6 2,050.6 5,596.2 Ca p ital ex p enditure 2) € m 0.5 237.4 34.1 272.0 Chan g e from revaluation/im p airment/de p reciation € m 14.0 523.3 23.2 560.5 Chan g es lease incentive € m 0.0 – 0.3 – 3.9 – 4.2 Dis p osals € m – 48.1 – 44.3 – 78.0 – 170.3 Other chan g es € m 0.0 0.0 0.1 0.1 Pro p ert y assets 31.12.2021 € m 496.5 3,731.7 2,026.1 6,254.2 Rental income (actual) 3) € m 26.8 84.0 118.3 229.1 Annualised rental income € m 25.9 82.2 119.2 227.2 Economic vacanc y rate for investment p ro p erties % 11.6 4.3 15.2 11.1 Gross y ield (investment p ro p erties) % 5.3 3.3 6.1 4.6 2) Excluding maintenance 3) Includes annual rental income from properties sold in 2021 (€2.7 m) GROUP MANAGEMENT REPORT GROUP MANAGEMENT REPORT 1 6 Acquisitions In December 2021, the signing for the purchase of an office property in Düsseldorf, Kasernenstrasse 67, took place. The transaction was closed at the beginning of February 2022 (see Supplementary Report). Sales CA Immo successfully completed the sale of older port- folio buildings and German land reserves in the fiscal year, thus withdrawing from two non-core markets (Slo- vakia and Kassel). Property assets 1) sold in 2021 generated total trading revenue of €162.9 m (2020: €229.8 m) and contributed €64.5 m to the result (compared to €55.3 m in 2020). In February 2021, CA Immo successfully completed the sale of the office buildings BBC 1 and 1 Plus (BBC 1) in Bratislava and withdrew from the non-core market of Slo- vakia. The sale of a hotel property in Lübeck was also completed in February. This was followed at the end of March by the sale of the "Hafeninsel I" and "Marina" construction sites in the Zollhafen Mainz in a joint venture with Mainzer Stadtwerke AG (Zollhafen Mainz GmbH Co. KG). In the 2nd quarter of 2021, the sale of a 17,600 sqm plot of land in the BelsenPark district of Düsseldorf, which was fixed in December 2020, was completed with gross sales proceeds of around €62 m. CA Immo withdrew from another regional non-core real estate market with the sale of an approx. 11,700 sqm commercial building in Kassel. In the course of the second half of the year, CA Immo sold a total of four portfolio buildings: the office build- ings Canada Square (approx. 5,000 sqm rental space, Bu- dapest), Wspolna 47-49 (approx. 7,700 sqm, Warsaw) and Wolfganggasse 58-60 (20,300 sqm, Vienna) as well as the Meininger Hotel Downtown Franz in Vienna. In December 2021, the signing also took place for the sale of a hotel property in Bodenseestraße and the Mein- inger Hotel Frankfurt as well as for the Seagull project in Mainz. The closing of the transactions is expected in the first quarter of 2022 Investments In 2021, CA Immo invested a total of €277.2 m (2020: €271.5 m) in its property portfolio (investments and maintenance). Of this figure, €32.9 m was earmarked for modernisation and optimisation measures and €244.3 m was devoted to the furtherance of development projects. 1) Incl. sale of properties held at equity (proportionately owned by CA Immo) GROUP MANAGEMENT REPORT 1 7 Contributing around 80% of total property assets, the investment property area is CA Immo’s main source of income. The principle objective of the company is the continual optimisation of its portfolio and the retention and acquisition of tenants with a view to securing stable and recurring rental revenue. Details on sustainability is- sues regarding the investment portfolio can be found in the ESG report. €5.0 bn investment portfolio As at key date 31 December 2021, the Group’s invest- ment portfolio incorporated a total rentable effective area of 1.3 m sqm with an approximate book value of €5.0 bn (2020: €4.7 bn). With a share of 50% of book value, the German segment accounts for the largest proportion of the investment portfolio. In 2021, CA Immo generated to- tal rental income of €229.1 m (€235.6 m in 2020); the CEE segment accounted for roughly 52% of total rental revenue. On the basis of annualised rental revenue, the asset portfolio produced a yield of 4.6% 2) (2020: 5.2% 3 ). In line with the strategic portfolio focus, the office share of the total portfolio has steadily increased over recent years and stands almost unchanged at the previous year’s level of 91%. The occupancy rate for the investment portfolio stands at 88.9% 2) on 31 December 2021 (31 December 2020: 94.8% 3) ). This decrease is due, among other things, to the transfer of a project completion that is not yet fully let to the Munich portfolio as well as higher vacancy rates in some CEE markets. INVESTMENT PROPERTIES: KEY FIGURES BY COUNTRY Book value investment properties Rentable area Occupancy rate Annualised rental income Yield in € m in sqm in % in € m in % Austria 491.5 190,720 88.4 25.9 5.3 Germany 2,482.4 400,185 95.7 81.2 3.3 Czechia 394.0 130,758 82.7 18.7 4.8 Hungary 485.1 194,392 77.2 27.3 5.6 Poland 532.2 164,114 88.4 33.3 6.3 Romania 395.1 164,557 92.1 29.6 7.5 Serbia 78.3 46,471 79.0 6.6 8.4 Subtotal 4,858.6 1,291,197 88.9 222.6 4.6 Other investment properties 4) 136.9 29,082 Total investment properties 4,995.5 1,320,279 4) Incl. properties used for own purposes; incl. the recently completed office buildings ZigZag (Mainz) and Mississippi House und Missouri Park (Prague), which have been added to the portfolio and are still in the stabilisation phase 1) This chapter shows, among other things, performance indicators for our investment properties such as occupancy rate and yield. Properties used for own purposes, “Right-of-use” assets and project completions still in the stabilization phase are not included in the calculation of these fig- ures. For this reason, these types of property are also excluded from the portfolio book values and the rentable area in the table "Investment prop- erties: key figures by country” and reported separately in the line “Other investment properties”. The portfolio properties Bodenseestrasse 229, Meininger Hotel Frankfurt and R70, which were sold in the 1st quarter of 2022, were reclassified to IFRS 5 in the 4th quarter of 2021 (short-term property assets) and are therefore not included in the key figures in this section. 2) Excl. properties used for own purposes; excl. the recently completed of- fice buildings ZigZag (Mainz) and Mississippi House und Missouri Park (Prague), which have been added to the portfolio and are still in the stabili- sation phase 3) Excl. properties used for own purposes; excl. the project completions NEO (Munich) and the quarter garage (Mainz), which have been trans- ferred to the investment portfolio in 2021 and are still in the stabilisation phase Office DISTRIBUTION OF BOOK VALUE INVESTMENT PROPERTIES BY MAIN USAGE (Basis: € 5.0 bn) Retail Hotel Other 91% 2% 5% 2% INVESTMENT PROPERTIES 1) GROUP MANAGEMENT REPORT GROUP MANAGEMENT REPORT 18 LIKE-FOR-LIKE COMPARISON OF PROPERTIES IN THE STABILISED PORTFOLIO AS AT 31.12.2020 The like-for-like analysis of the portfolio provides an overview of the organic year-on-year development of the key portfolio figures, adjusted for portfolio changes (property additions and disposals) to enable comparabil- ity. The increase in the balance sheet value over the course of 2021 resulted mainly from a positive revalua- tion result in Germany. Declines in rental income in all Central and Eastern European locations as well as Austria could not be compensated by the increase in rental in- come in Germany. Gross yields fell by 52 basis points, mainly due to increases in balance sheet values in Ger- many and lease expiries in Central and Eastern Europe. The occupancy rate decreased by 563 basis points over the period under review. The declines in Central and Eastern Europe, which are primarily responsible for the overall development, are mainly attributable to the depar- ture of major tenants in Hungary, Poland and Serbia. Book values Rental income P&L Gross yield in % 1) Occupancy rate in % 2) € m 2021 2020 2021 2020 2021 2020 2021 2020 Austria 491.5 493.6 24.9 25.5 5.3 5.3 88.4 92.1 Germany 2,333.8 2,053.3 76.6 71.4 3.3 3.6 98.1 98.7 Czechia 394.0 387.9 19.2 21.1 4.8 5.7 82.7 97.0 Hungary 485.1 479.5 26.1 30.5 5.6 6.5 77.2 89.9 Poland 444.3 447.3 26.9 27.9 6.1 6.4 87.7 94.1 Romania 395.1 390.1 28.0 29.3 7.5 8.1 92.1 94.9 Serbia 78.3 82.9 6.9 7.5 8.4 9.6 79.0 94.2 Total 4,622.1 4,334.6 208.6 213.1 4.6 5.1 89.5 95.1 1) Annualised contractual rent / book value 2) Economic occupancy (annualized contractual rent / contractual rent at full occupancy) Lettings performance 2021 Across the Group, CA Immo leased arou nd 240,000 sqm of rentable area in 2021 (2020: around 136,200 sqm), of which pre-lettings of development projects accounted for 23% (around 56,200 sqm). Excluding these pre-lettings, this equates to lettings performance of 14% for the Group’s total investment portfolio, which amounts to around 1.3 m sqm. New lettings and contract expansions by existing tenants accounted for 34%; contract exten- sions by existing tenants represent 66%. Office space ac- counted for around 83% of total lettings performance. 40% of lease contracts (in terms of letting volume) are concluded for terms of more than five years. As at 31 De- cember 2021, the WALT (Weighted Average Lease Term) was 3.8 years (2020: 4.0 years). CA Immo has a sector-di- versified tenant structure with a high proportion of com- panies from the service and technology sector. The 20 largest tenants account for around 35.8% of total rental income (on the basis of annualised rental revenue). LETTINGS PERFORMANCE BY REGION in sqm Pre-lease development projects New lease investment properties Lease extensions Total Germany 54,864 16,211 35,544 106,620 Austria 0 6,979 18,019 24,998 CEE 1,327 40,200 66,815 108,342 Total 56,191 63,391 120,378 239,960 GROUP MANAGEMENT REPORT 19 EXPIRY PROFILE OF LEASE AGREEMENTS BASED ON ANNUALISED RENTAL INCOME 1) 1) Lease term until the next possible end of the contract LARGEST TENANTS (TOP 20) Sector Region Share in % of total rent PWC Professional Services Germany 3.3% InterCityHotel GmbH Consumer Services & Leisure Germany 2.8% The European Border and Coast Guard Agency Public Sector / Regulatory Body CEE 2.7% Bundesanstalt für Immobilienaufgaben Public Sector / Regulatory Body Germany 2.2% Google Germany GmbH Technology Germany 2.2% KPMG AG Wirtschaftsprüfungsgesellschaft Professional Services Germany 2.0% Morgan Stanley Financial Services CEE 1.9% BRITISH AMERICAN TOBACCO Manufacturing Industrial & Energy CEE 1.9% Land Berlin Public Sector / Regulatory Body Germany 1.8% TOTAL Deutschland GmbH Manufacturing Industrial & Energy Germany 1.8% Robert Bosch AG Consumer Services & Leisure Austria 1.7% JetBrains Technology Germany 1.7% Verkehrsbüro Consumer Services & Leisure Austria 1.7% AstraZeneca Manufacturing Industrial & Energy CEE 1.6% Hypoport SE Financial Services Germany 1.5% salesforce.com Germany GmbH Technology Germany 1.2% S.C. ORANGE ROMANIA S.A. Technology CEE 1.0% VOBA Vermietungs- und Verpachtungs GmbH Financial Services Austria 1.0% Accenture Business Services CEE 1.0% S.C. THALES SYSTEMS ROMANIA S.R.L. Technology CEE 0.9% 1) Based on annualised rental revenue Business & Professional Services TENANTS BY INDUSTRY ON THE BASIS OF ANNUALISED RENTAL REVENUE Financial Services Technology Consumer Services & Leisure Public Sector/ Regulatory Body Manufacturing, Industrial & Energy 27% 11% 21% 17% 10% 14% GROUP MANAGEMENT REPORT GROUP MANAGEMENT REPORT 2 0 EPRA Yields The type and scope of yield disclosures often vary and the metrics used are not consistently defined. In order to provide comparable reporting in terms of yields across Europe, EPRA has defined two yield measures. The EPRA net initial yield is calculated as annualized rental income based on rents at the balance sheet date, less non-refundable property operating costs, divided by the market value of the property. The EPRA "topped up" yield is calculated using an adjustment in respect of the granting of rent-free periods (or other unexpired lease in- centives such as discounted lease periods and step-rents). EPRA YIELDS € K Austria Germany Czechia Hungary Poland Romania Serbia Total Investment p ro p erties 1) 522,247 2,475,948 399,910 489,950 448,743 399,467 79,474 4,815,739 Annualised cash rental income ( g ross) 25,044 76,307 19,090 27,288 27,934 29,708 6,812 212,183 Pro p ert y o p eratin g ex p enses -6,455 -5,975 -1,617 -3,952 -2,454 -4,959 -1,125 -26,538 Annualised cash rental income (net) 1) 18,589 70,332 17,472 23,336 25,480 24,749 5,687 185,645 EPRA Net Initial Yield 3.6% 2.8% 4.4% 4.8% 5.7% 6.2% 7.2% 3.9% Lease incentives -160 -985 -400 -1,043 -549 -1,742 126 -4,754 EPRA "to pp ed-u p " Net Initial Yield 3.5% 2.8% 4.3% 4.5% 5.6% 5.8% 7.3% 3.8% 1) Based on the like-for-like portfolio EPRA vacancy rate Vacancy rate reporting is not standardized across the real estate industry. In order to promote comparable and consistent reporting, the EPRA requirements specify a single, clearly defined vacancy rate disclosure. The EPRA vacancy rate is to be expressed as a percentage equal to the expected rental value of vacant space divided by the expected rental value of the entire portfolio. The EPRA vacancy rate is calculated only for completed properties (investment, trading and including share of joint ven- tures’ vacancy), but excluding properties under develop- ment. EPRA VACANCY RATE € m Vacancy ERV Full Reversion ERV EPRA Vacancy Rate Austria 3.4 30.4 11.1% Germany 3.7 116.9 3.1% Hungary 8.1 35.8 22.6% Poland 4.4 36.4 12.0% Czechia 3.9 22.8 17.1% Romania 2.5 32.3 7.8% Serbia 1.7 8.1 21.5% CEE 20.7 135.4 15.3% Total 27.7 282.7 9.8% GROUP MANAGEMENT REPORT 2 1 THE AUSTRIA SEGMENT The asset portfolio in Austria comprises a rentable effec- tive area of 193.2 k sqm with a market value of around €496.5 m (2020: €530.0 m) according to current valua- tions. In 2021, two Austrian portfolio buildings were sold (for details on the portfolio changes in 2021, please refer to the section ‘Property assets’). In 2021 this portfolio generated rental income of €26.8 m (2020: €29.7 m). equivalent to an average yield of 5.3% 1) (2020: 5.4% 1) ). In 2021 CA Immo invested around €1.8 m in its Aus- trian investment portfolio (investments and maintenance costs), compared to €5.6 m in 2020. Lettings performance In Austria, around 25,000 sqm of office space was newly let or extended in 2021. The economic occupancy rate in the asset portfolio was 88.4% 1) as at the key date (2020: 91.1% 1) ). The decrease in occupancy is in part due to the sale of the Meininger Hotel Vienna in 2020, which had an occupancy rate of 100%. INVESTMENT PROPERTIES AUSTRIA: KEY FIGURES 4) in € m 31.12.2021 31.12.2020 Change Book value 491.5 524.7 – 6.3 Annualised rental income 5) 25.9 28.3 – 8.7 Gross yield in % 5.3 5.4 – 10 bp Economic vacancy rate in % 11.6 8.9 270 bp 4) Excl. properties used for own purposes 5) Monthly contractual rent as at key date multiplied by 12 THE GERMANY SEGMENT The addition of a project completion (ZigZag office building, Mainz) to the portfolio, a portfolio acquisition (Pohlstrasse 20 office building, Berlin) and a positive re- valuation result further increased the value of the German real estate portfolio in 2021 and had a year-on-year boost- ing effect on all key portfolio figures (for details on pro- jects completed in 2020 refer to the ‘Property assets’ sec- tion; for details on the German revaluation result, please refer to the chapter 'Property valuation'). 1) Excludes properties used for own purposes 2) Excludes properties used for own purposes, excl. the recently completed office building ZigZag (Mainz), which has been added to the portfolio and is still in the stabilisation phase as at the key date As at the key date, CA Immo held investment properties in Germany with an approximate market value of €2,503.4 m (€2,228.5 m in 2020) and a rentable effective area of 406 k sqm (2020: 422 k sqm). By portfolio value. 50% of the total investment portfolio is in Germany. The German investment portfolio mainly comprises modern office buildings developed by CA Immo in central loca- tions of Berlin, Munich and Frankfurt. Rental income of €84.0 m was generated in 2021, com- pared to €78.3 m in 2020. The yield on the portfolio was 3.3% 2) as at 31 December 2021 (2020: 3.6% 3 ). CA Immo spent approximately €11.0 m on maintaining its German investment properties (investments and maintenance costs) in 2021 (2020: €24.7 m). Occupancy rate at 96% The occupancy rate for the asset portfolio in Germany stood at a very high level of 95.7% 2) on 31 December 2021 (98.8% 3) on 31 December 2020). In Germany approxi- mately 52,000 sqm of floor area was newly let or ex- tended during 2021. INVESTMENT PROPERTIES GERMANY: KEY FIGURES in € m 31.12.2021 6) 31.12.2020 7) Change Book value 2,482.4 2,129.3 16.6 Annualised rental income 8) 81.2 77.1 5.3 Gross yield in % 3.3 3.6 – 30 bp Economic vacancy rate in % 4.3 1.2 310 bp 6) Excludes properties used for own purposes, excl. the recently completed office building ZigZag (Mainz), which has been added to the portfolio and is still in the stabilisation phase as at the key date 7) Excl. properties used for own purposes; excl. the project completions NEO (Munich) and the quarter garage (Mainz), which have been trans- ferred to the investment portfolio in 2020 and are still in the stabilisation phase 8) Monthly contractual rent as at key date multiplied by 12 3) Excludes properties used for own purposes, excl. NEO (Munich) and the quarter garage (Mainz). which have been transferred to the investment portfolio in 2020 and are still in the stabilisation phase GROUP MANAGEMENT REPORT GROUP MANAGEMENT REPORT 2 2 THE CEE SEGMENT CA Immo has been investing in CEE since 1999. As at the key date, the company holds investment properties in five countries in the region. As at key date 31 December 2021, the value of the CEE investment properties was €1,995.6 m (€1,977.4 m on 31 December 2020), equivalent to a share (by portfolio value) of around 40% of the total investment portfolio in this region. CA Immo concentrates on high-quality, cen- trally located office properties in capital cities, which make up 100% of the overall CEE portfolio. The portfolio is maintained and let by the company´s local teams on site. 52% of rental revenue from CEE The company’s asset portfolio comprises 721 k sqm of rentable effective area (2020: 733 k sqm) which generated rental income of €118.3 m in 2021 (compared to €127.6 m in 2020) 1) . This represents 52% of CA Immo’s total rental revenue. The portfolio produced a gross yield of 6.1% 1) (2020: 6.8%). In 2021, CA Immo invested €20.1 m (2020: €30.3 m) in its CEE investment portfolio. Occupancy rate at 85% The eco nomic occupancy rate (measured on the basis of annualised rental income) was 84.8% 1) as at 31 December 2021 (2020: 93.4%). The decrease in occupancy is due in part to the sale of the Canada Square and Wspolna office buildings in 2020, both of which had occupancy rates above 96%, as well as a higher vacancy rate in Budapest. Total lettings performance for the CEE segment amounted to roughly 107,000 sqm of rentable office space in 2021; thereof 38% accounted for new lettings of investment properties (incl. lease expansions), 62% were lease exten- sions. INVESTMENT PROPERTIES IN CEE: KEY FIGURES 2) Book value investment properties Annualised rental income 3)⁾ Occupancy rate Yield in € m in € m in % in % Poland 532.2 33.3 88.4 6.3 Hungary 485.1 27.3 77.2 5.6 Romania 395.1 29.6 92.1 7.5 Czechia 394.0 18.7 82.7 4.8 Serbia 78.3 6.6 79.0 8.4 Total 1.884.7 115.6 84.8 6.1 2) Excl. the recently completed office buildings Mississippi House und Missouri Park (Prague), which have been transferred to the portfolio and are still in the stabilisation phase 3) Monthly contractual rent as at key date multiplied by 12 1) Excludes properties used for own purposes; excl. the recently completed office buildings Mississippi House und Missouri Park (Prague), which have been added to the portfolio and are still in the stabilisation phase Germany DISTRIBUTION OF BOOK VALUE INVESTMENT PROPERTIES BY COUNTRY (Basis: € 5.0 bn) Hungary Austria Poland Czechia Romania Other 50% 10% 10% 11% 9% 8% 2% GROUP MANAGEMENT REPORT 2 3 Project development as a driver of organic growth CA Immo enhances the quality and ensures the organic growth of its portfolio by developing properties and transferring them to its investment portfolio upon com- pletion. In this content CA Immo benefits from its exten- sive stock of land reserves in Germany (mostly in central locations of Munich, Frankfurt and Berlin) as well as an internal development platform that enables the company to exploit the full depth of the real estate value chain. From site development and the procurement of planning permission to construction management, letting and the transfer of completed properties to its own portfolio or sales to investors, CA Immo performs the full range of project development services. Details on sustainability aspects in the project develop- ment area can be found in the ESG report. Project completions in 2021 In 2021, CA Immo completed three buildings (the Zig- Zag office buildings in the north of the Zollhafen Mainz district and Mississippi House and Missouri Park in the River City Prague campus) for its own portfolio (for de- tails, please see the ‘Property assets’ section). The total investment volume of these completed development pro jects totalled approximately €83.7 m in 2021. Pre-letting on projects In 2021, CA Immo signed lease agreements for 59,400 sqm of usable space in development projects un- der construction. This includes, among other things, a 15-year lease for 34,850 sqm in the Berlin landmark Up- beat project development. 100% of development activity in Germany As at 31 December 2021, the development division rep- resented around 19% (equivalent to approximately €1,190.4 m) of CA Immo’s total property assets (2020: €826.3 m). 100% (by book value) of the development ac- tivity is in Germany. Investment properties under devel- opment in Germany with a total book value of €1,190.3 m are divided into landbanks (€260.4 m), projects in plan- ning (€164.0 m) and projects under construction (€765.8 m). INVESTMENT PROPERTIES UNDER DEVELOPMENT BY COUNTRY 1) Landbank Projects in planning Projects under construction Total investment properties under development in € m Book value Book value in % Book value Book value in % Book value Book value in % Book value Book value in % Austria 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Frankfurt 32.1 12.3 131.8 80.3 363.0 47.4 526.8 44.3 Berlin 121.2 46.5 10.8 6.6 402.8 52.6 534.8 44.9 Munich 107.2 41.1 21.4 13.1 0.0 0.0 128.6 10.8 Germany 260.4 99.9 164.0 100.0 765.8 100.0 1,190.3 100.0 Czechia 0.1 0.1 0.0 0.0 0.0 0.0 0.1 0.0 Hungary 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Poland 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Romania 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Serbia 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Eastern Europe 0.1 0.1 0.0 0.0 0.0 0.0 0.1 0.0 Total 260.6 100.0 164.0 100.0 765.8 100.0 1,190.4 100.0 1) Incl. projects under construction and plots held for trading or sale (short-term property assets) INVESTMENT PROPERTIES UNDER DEVELOPMENT GROUP MANAGEMENT REPORT GROUP MANAGEMENT REPORT 24 in € m Total Investment 2) Outstanding construction costs Planned rentable effective area in sqm Gross yield on cost in % City Usage Utilisation in % 3) Scheduled completion Projects for own stock Upbeat 323.4 276.8 34,911 5.1 Berlin Office 100 Q1 2026 ONE 431.0 113.9 68,575 5.2 Frankfurt Office 60 Q2 2022 Hochhaus am Europaplatz 140.5 46.2 22,948 6.2 Berlin Office 100 Q1 2024 Grasblau 68.5 27.7 13,350 8.1 Berlin Office 47 Q4 2022 Total 963.5 464.6 139,784 5.5 79 1) Excl. Joint Ventures (residential construction). All projects included in the table are 100% owned by CA Immo 2) Incl. plot (total investment cost excl. plot €870.9 m) 3) Utilisation: pre-letting rate THE AUSTRIA SEGMENT During business year 2021, CA Immo had no activities in the field of investment properties under development in Austria. THE G ERMANY SEGMENT CA Immo’s development activity in Germany focuses mainly on large scale, mixed-use urban projects in Berlin, Munich and Frankfurt. As at 31 December 2021, CA Immo held rentable effective area under construction amounting to approximately 140 k sqm in Germany with a total investment volume (including plots) of around €963.5 m (2020: €637.1 m). In addition to the current project volume, CA Immo holds German land reserves with a value of €260.4 m (incl. properties held for trading or sale). These existing land reserves will form the basis of further value-creating development activity by CA Immo over the years ahead. PROJECTS UNDER CONSTRUCTION 1) 2 1 DEVELOPMENT OF URBAN DISTRICT EUROPACITY IN BERLIN JOHN F. KENNEDY HAUS office / 18,000 sqm / 2015 / rented 1 INTERCITY HOTEL BERLIN hotel / 20,600 sqm / 2013 / rented 2 MONNET 4 office / 8,100 sqm / 2015 / rented 3 TOUR TOTAL office / 14,200 sqm / 2012 / rented 4 OFFICE BUILDING HEIDESTRASSE 58 office / 12,800 sqm / 2018 / rented 5 HAMBURGER BAHNHOF museum 6 INVESTMENT PROPERTIES L BÜROGEBÄUDE AM KUNSTCAMPUS office / 7,900 sqm / 2019 / rented 7 MY.B office / 14,800 sqm / 2020 / rented 8 GROUP MANAGEMENT REPORT 4 3 5 6 8 7 (usage / usable area in sqm / completion / status) PROJECTS UNDER CONSTRUCTION LAND RESERVE L 10 L 9 HIGH-RISE BUILDING ON EUROPAPLATZ office / 22,900 sqm / 2024 / under construction 9 GROUP MANAGEMENT REPORT UPBEAT office / 34,900 sqm / 2026 / under construction 10 GROUP MANAGEMENT REPORT 2 7 Main focus of current development activity in Ger- many Berlin The Europacity district is taking shape around Berlin’s main railway station, drawing together office, residential, hotel and cultural uses across some 60 hectares. Reputa- ble companies such as KPMG, DKB and IntercityHotel have already signed up as tenants, the location has devel- oped into an attractive environment for work, leisure, culture and living. As at the key date, CA Immo had two office projects under development in this urban district: In September 2021, construction began on the Upbeat office building, which was fully leased to Deutsche Kreditbank (DKB) even before construction began. Also in September 2021, the topping-out ceremony was held for the 84-meter office tower Hochhaus am Eu- ropaplatz. The landmark building was already 100% pre- let to KPMG before construction began. Outside Europacity, CA Immo already started construc- tion of the Grasblau office building in the immediate vi- cinity of Potsdamer Platz in the first half of 2020. The shell of the Grasblau office building was completed in April 2021. Munich In the north of Munich, CA Immo is currently preparing to build an innovative business campus under the name "Viertel Four" on the site of the former Freimann repair plant. The four office buildings planned by renowned ar- chitects such as 3XN and Eller + Eller will have a total of around 50,000 sqm of rental space. Frankfurt In the Frankfurt Europaviertel, centrally located be- tween the banking district and the exhibition grounds, CA Immo is developing the 190-metre office and hotel high-rise structure ONE. The building is already 60% leased ahead of its planned completion in 2022. In 2021, leases were signed with Crédit Agricole Corporate and In- vestment Bank and the consulting firm Baker Tilly, among others. The realization competition concluded in August 2021 created the basis for the further development of the so- called "Millennium Areal". The aim is to develop a mixed-use building ensemble with two high-rise build- ings and a perimeter block development with a total gross floor area of approx. 185,000 sqm. The approxi- mately 8,700 sqm competition site is centrally located, not far from Frankfurt's main train station on the western edge of Frankfurt's banking district. The ensemble con- cept envisages a high, urban mix of uses for the site, com- prising apartments, office space, a hotel and a daycare center, as well as complementary gastronomy, retail, ser- vice and leisure areas. The international realization competition for the CA Immo "Millennium Areal" in Frankfurt has been decided: Ferdinand Heide wins with icono- graphic design Mainz In partnership with Stadtwerke Mainz, CA Immo has been developing Zollhafen Mainz, a new urban district on the banks of the Rhine spanning some 22 hectares, since 2015. In the northern area of the Zollhafen, CA Immo is developing two buildings with a focus on residential use under the names Flösserhof and Kauf- mannshof together with UBM Development Deutschland GmbH. In addition, around 3,000 sqm of office space is being created in the Kaufmannshof. Construction of the Kaufmannshof started in July 2020, and construction of the Flösserhof was scheduled to begin in mid-2021. THE CEE SEGMENT The CEE segment accounts for property assets under de- velopment with an approximate book value of €0.1 m as at 31 December 2021. In the sought-after Karlin district, CA Immo 2021 com- pleted two high-quality office buildings, Mississippi House and Missouri Park, and transferred them to its own portfolio. For more information, please refer to the chapter "Investment properties". GROUP MANAGEMENT REPORT GROUP MANAGEMENT REPORT 2 8 Property valuation constitutes the fundamental basis on which a real estate company is appraised, and is thus the most important factor in determining net asset value. In addition to property-specific criteria, there are many eco- nomic and political factors that can affect the develop- ment of property values. In the office property sector, which represents the core business of the CA Immo Group, the general economic conditions – especially where economic growth and the employment rate are concerned – directly influence the real estate cycle. Other key variables having a major influence on the demand sit- uation on real estate investment markets include interest levels and geopolitical events. Given their economic im- plications and varying impact on the capital and real es- tate markets of different sectors, unforeseeable and excep- tional situations (such as the outbreak of the Covid-19 pandemic) can also have a direct impact on property val- uations. External valuation reports to international standards The value of real estate is generally determined by inde- pendent expert appraisers outside the company using rec- ognised valuation methods. External valuations are car- ried out in line with standards defined by the Royal Insti- tution of Chartered Surveyors (RICS). RICS defines fair value as the estimated value at which an asset or liability can be sold to a willing buyer by a willing seller on the valuation date in the framework of a transaction in the usual course of business after a reasonable marketing pe- riod, whereby the buyer and seller each act knowledgea- bly, prudently and without compulsion. The valuation method applied by the expert appraiser in a particular case is mainly determined by the stage of development and usage type of a property. Rented commercial properties (which makes up the bulk of the CA Immo Group’s portfolio) is generally val- ued according to the investment method; fair values are based on capitalised rental revenue or the discounted cash flows expected in future. In addition to current con- tractual rents and lease expiry profiles, the qualified as- sessment of the expert appraiser determines and takes ac- count of other parameters such as, in particular, the at- tainable market rent and the equivalent yield for a prop- erty. The residual value procedure is applied to sites in the development and construction phase. In this case, fair values are determined following completion, taking ac- count of outstanding expenses and incorporating an ap- propriate developer profit in line with construction pro- gress. Other possible risks are considered, amongst other things, related to future attainable rents, initial yields and financing rates. Interest rates are influenced in particular by general market behaviour as well as locations and us- age types. The closer a project comes to the point of com- pletion, the larger the proportion of parameters derived from actual and contractually stipulated figures. Sites are valued according to the investment method, shortly be- fore and after completion. In the case of land reserves where no active develop- ment is planned for the near future, the comparable value method (or the residual value method) is applied, de- pending on the property and the status of development. For almost 100% of the total property assets, external valuations were carried out on the key date 31.12.2021 or values were based on binding purchase agreements. Other property assets were valued internally. In 2021, all exter- nal valuations commissioned by CA Immo were carried out by CB Richard Ellis. Market environment in 2021 Following a pandemic-related decline in 2020, 2021 saw a recovery in real estate investment worldwide, with Eu- rope exceeding 2019 levels. Office investment volumes in CA Immo's core markets increased by 13% year-on-year to reach €23.8 bn, which is particularly encouraging in light of ongoing operational complications, supply chain disruptions and increasing pricing pressure in the con- struction sector. For the full year 2021, CA Immo Group recorded a sig- nificantly positive revaluation result of €540.1 m (2020: €183.5 m). Of this amount, 41% was attributable to active development projects and land reserves and 59% to in- vestment properties. The German segment contributed the largest share of the valuation gain, with Berlin gener- ating a contribution of 62%, Munich 28% and Frankfurt 8% of the German valuation uplift. The result reflects the continued attractive market envi- ronment for prime ("Class A") properties in Germany, and particularly in Munich and Berlin, despite the Covid-19 pandemic. In addition, the company's profitable property development activities were a key driver of the valuation PROPERTY VALUATION GROUP MANAGEMENT REPORT 2 9 GERMANY High rent stability and comparatively low vacancy rates in Germany's key office markets supported investor de- mand, resulting in an 11% year-on-year increase in in- vestment activity. Munich and Berlin were the top desti- nations for office investors in Germany in 2021. Both markets benefited from their high liquidity, solid occu- pancy rates and increased supply of new prime product, recording annual investment volume growth of 91% and 28%, respectively. As a result of increased market activ- ity, prime yields in all of CA Immo's main German mar- kets fell by 5 to 25 basis points during the year. As in previous years, the robust market development of the German office property market led to a positive per- formance in the Group's Germany segment. This is mainly attributable to rising market values of office prop- erties in Berlin and Munich and the successful imple- mentation of development projects. The valuation result in Germany totaled €524.2 m as of December 31, 2021 (December 31, 2020: €270.0 m). The largest contributions to the revaluation gain in terms of amount were made by revaluations in the investment portfolio, primarily in Munich and Berlin, such as Skygarden, Kontorhaus, MY.O (Munich) and Spreebogen, John F. Kennedy Haus, Königliche Direktion (Berlin), as well as the properties under development in the German capital (Hochhaus am Europaplatz, Grasblau and Upbeat) and Frankfurt (ONE). Year-on-year the gross yield de- clined from 3.6% to 3.3% (fully consolidated properties). uplift, both in terms of progress on ongoing projects un- der construction − most notably the CA Immo projects Up beat and Hochhaus am Europaplatz in Berlin and ONE in Frankfurt – and in terms of the development of land re- serves. CA Immo's hotel properties in Germany recorded an in- crease in value of €23.1 m in 2021, following a decline in value of €24.7 m in the previous year. Including one hotel property in Austria, CA Immo's hotel properties recorded an overall increase in value of €22.5 m (2020: €−35.6 m). AUSTRIA While the total investment volume in commercial real estate in Vienna rose by 24% in 2021, office investments fell to around €660 m (33% less than in the previous year). The 15 basis point decline in prime office yield over the year to 3.20% illustrates that the decline in mar- ket activity was due to low availability of prime proper- ties. Positive net absorption and a supply of new proper- ties below the long-term average contributed to the steady decline in vacancy rates and growth in prime rents last year. The revaluation result in Austria totaled €−2.0 m as of the reporting date (2020: €−12.5 m). The average gross yield of the portfolio properties fell year-on-year from 5.4% to 5.3% (fully consolidated properties). VALUATION RESULT FOR AUSTRIA 1) Book value in € m Revaluation/ Impairment Gross yield in % 31.12.2021 in € m 31.12.2020 31.12.2021 Investment properties²⁾ 491.5 -2.0 5.4 5.3 Investment properties under development 0 0 Assets held for sale 0 0 Total 491.5 -2.0 1) Based on fully consolidated properties 2) Excludes properties used for own purposes GROUP MANAGEMENT REPORT GROUP MANAGEMENT REPORT 3 0 VALUATION RESULT FOR GERMANY 1) Book value in € m Revaluation/ Impairment Gross yield in % 31.12.2021 31.12.2020 31.12.2021 Investment properties²⁾ 2,497.2 279.7 3.6 3.3 Investment properties under development 1,097.0 221.4 Properties held for trading 131.2 23.1 Total 3,725.5 524.2 1) Based on fully consolidated properties 2) Excludes properties used for own purposes CENTRAL AND EASTERN EUROPE The CEE region enjoyed a renewed increase in interest in office investments in 2021, which rose by 26% com- pared to 2020. Investor interest was particularly strong in Warsaw and Budapest, where volumes increased by 35% and 57%, respectively. Vacancy rates in Warsaw and Bucharest remained at the upper end of the pre-pandemic five-year range. In Prague and Budapest, vacancy rates also remained at elevated levels. However, all CEE markets recorded positive net absorption in 2021, and vacancy rates largely stabilized in the CBDs and city center locations in the second half of 2021. Prime yields declined little or marginally in Prague (4.25%, no change) and Warsaw (4.50%, −10 basis points), while they declined somewhat more significantly in Bucharest and Budapest, by 25 and 50 basis points, re- spectively, to 6.75% and 5.25% over the year. Revaluation gains in the Central and Eastern Europe seg- ment amounted to €17.9 m as of the reporting date (2020: €−74.0 m). The largest single contribution to this was made by the successful completion of the Mississippi House and Missouri Park development project in Prague. The gross yield of the CA Immo portfolio fell year-on-year from 6.8% to 6.1% (fully consolidated properties), which in addition to the positive valuation result is also attribut- able to the slightly lower occupancy rate in the CEE core markets in the meantime. VALUATION RESULT FOR CENTRAL AND EASTERN EUROPE 1) Book value in € m Revaluation/ Impairment Gross yield in % 31.12.2021 31.12.2020 31.12.2021 Investment properties 1,995.6 19.7 6.8 6.1 Investment properties under development 0.1 0.0 Properties held for trading 30.3 -1.8 Total 2,026.1 17.9 1) Based on fully consolidated properties GROUP MANAGEMENT REPORT 3 1 As a real estate company, CA Immo operates in a capi- tal-intensive sector where success is heavily dependent on access to loan capital. Ensuring the most effective pos- sible structuring and optimisation of the capital structure is highly important; alongside successful management of the real estate portfolio, this is one of the key factors in the overall result of CA Immo. Balance sheet profile remains strong As at 31.12.2021, the total financial liabilities of the CA Immo Group stood at €2.6 bn, below the previous year’s value of €2.8 bn. After deduction of the Group’s cash and cash equivalents, net debt amounted to €1.9 bn at year end (against €1.9 bn in 2020). In addition to the full conversion of the convertible bond with a vol- ume of €200 m, the redemption of a corporate bond (€107 m) maturing in July 2021 was one of the factors re- sponsible for this reduction. The company has thus maintained an extremely robust balance sheet with a healthy equity ratio of 46.3% (2020: 45.9%), which in conservative debt figures equates to gearing (net) of 59.1% (2020: 60.4%) or a loan-to-value (LTV, net) of 31.1% (2020: 33.8%). Financing costs, a key element in recurring earnings, stood at €–47.7 m (2020: €–42.3 m). In addition to the financing facilities that have already been secured and are therefore reflected on the balance sheet, the CA Immo Group also has financing lines that have not yet been utilized, which serve to finance devel- opment projects under construction in Germany and will be successively valued by the banks as construction pro- gresses. This financing facility amounted to €217 m at the reporting date, taking into account joint ventures in the amount of the interest held. In addition, the company has a financing line (revolving credit facility) of €300 m at holding level, which was concluded in the fourth quarter of 2021 and whose mar- gin is linked, among other things, to the company's sus- tainability performance. Following the placement of a Green Bond in 2020, CA Immo thereby signed its second sustainability-related financing instrument with a term of 3 years plus two one-year extension options. This facility can be used for general corporate purposes (including ac- quisitions) and was provided by a syndicate of five banks led by Crédit Agricole CIB. Investment grade rating In December 2015, following a comprehensive credit analysis, the international rating agency Moody's Inves- tors Service assigned CA Immobilien Anlagen AG an in- vestment grade - long-term issuer rating of Baa2 with a stable outlook. CA Immo's investment grade rating makes it possible to increase the flexibility and therefore further optimize the financing structure by improving access to the institutional debt capital market. This broadens the range of financing options available to the Group. Key in- dicators for obtaining and maintaining this investment grade rating are a strong balance sheet with low gearing, recurring earnings power and the associated solid inter- est cover, and a sufficiently large proportion of unsecured real estate. As a result of the offer announcement by SOF-11 Klimt CAI S.à.r.l, Moody's had already placed CA Immo's in- vestment grade rating (Baa2 with stable outlook) under review at the beginning of 2021 with an outlook for a possible downgrade. On November 16, 2021, Moody's downgraded CA Immo's long-term issuer rating and sen- ior unsecured rating to Baa3 with a negative outlook. FINANCING GROUP MANAGEMENT REPORT GROUP MANAGEMENT REPORT 3 2 Maturity profil e The chart above shows the maturity profile of CA Immo Group's financial liabilities as of December 31, 2021 (as- suming that extension options are exercised). The maturi- ties shown for 2022, secured mortgage loans in Germany and an unsecured corporate bond issued in 2015 with an annual coupon of 2.75%, amount to around €253 m as of the reporting date. Of this amount, around €142 m relates to the corporate bond maturing in February 2022, which was repaid from freely available cash. In 2021, the construction financing for the completed NEO office project (Munich), which was transferred to the investment portfolio, was transferred to long-term fi- nancing with a total volume of around €38 m. Newly concluded bank financing includes the Flößerhof project in Mainz (around €39 m). Furthermore, as stated above, a sustainability-linked revolving credit facility in the amount of €300 m was secured at the holding level of CA Immobilien Anlagen AG. In 2022, secured financing activities will focus on the German portfolio, with upcoming extensions of the bank loans Tour Total and John F. Kennedy - Haus in Berlin, as well as the transfer of the construction financing of the ONE project in Frankfurt (€250 m) to long-term financing as part of the completion and reclassification to the in- vestment portfolio. Falling financing costs Over recent years, continual optimisation of the financ- ing structure and advantageous market conditions have facilitated significant reductions in financing costs. As the table shows, average financing costs for the CA Immo Group on the basis of fully consolidated financial liabili- ties stood at 1.49% as at key date 31.12.2021 (2020: 1.50%). The figure includes derivatives used for interest rate hedging in the form of interest rate swaps. If the lat- ter are excluded, the average interest rate is somewhat lower at 1.24%. INTEREST RATE DEVELOPMENT GROUP MANAGEMENT REPORT 3 3 FINANCING COSTS 1) in € m Outstanding nominal value Nominal value swaps Average cost of debt excl. derivatives Average cost of debt incl. derivatives Average debt maturity Average swap maturity Investment properties Austria 184.1 106.6 1.8 2.4 7.9 8.5 Germany 670.1 350.7 1.0 1.4 5.5 7.4 Czechia 62.0 62.0 1.4 1.9 4.7 4.7 Hungary 0.0 0.0 0.0 0.0 0.0 0.0 Poland 86.4 71.0 1.4 1.7 4.7 4.9 Romania 0.0 0.0 0.0 0.0 0.0 0.0 Serbia 0.0 0.0 0.0 0.0 0.0 0.0 Total 1,002.7 590.3 1.2 1.6 5.9 7.0 Development projects 51.3 0.0 1.5 1.5 7.0 0.0 Short-term property assets 0.0 0.0 0.0 0.0 0.0 0.0 Financing on parent company level 1,741.5 0.0 1.4 1.4 4.2 0.0 Total 2,795.4 590.3 1.3 1.5 4.9 7.0 1) The data includes only fully consolidated financing BASIC PARAMETERS OF THE FINANCING STRATEGY Financing Strategy The financing strategy of the CA Immo Group is based on a balanced mix of secured and unsecured financing instruments with the aim of minimising financing costs and the risk of interest rate changes while maximising av- erage terms and flexibility. Maintaining and improving the investment grade rating and financial policy in the medium term on the basis of a solid balance sheet structure with a strong equity base and sustainable profitability is a key strategic component, which is also reflected in the objective of a long-term de- fensive and robust financial profile. As regards financial indicators, long-term objectives fluctuate between 45-50% for the Group’s equity ratio and 35-40% for the loan-to-value ratio (net financial lia- bilities to property assets). The interest rate hedging ratio as at the key date was approximately 90%; this should be kept at a high level to cushion the risk of interest rate rises. Financing structure With a share of around 56% of the total financing vol- ume, the majority is currently accounted for by unse- cured financing in the form of corporate bonds placed on the capital market. The remaining financing volume com- prises mortgage loans secured by real estate, which are taken out in those (subsidiary) companies in which the respective real estate is held. Unsecured financing The share of unsecured financing at the level of the Group parent company has gradually increased since the investment grade rating was obtained in 2015 and, as of the reporting date, comprised six corporate bonds placed on the capital market with a total volume of around €1.4 bn. In January 2020, CA Immo tapped the Eurobond market for the first time and successfully issued a €500 m fixed- rate unsubordinated unsecured benchmark bond with a maturity of seven years and an annual coupon of 0.875%. This transaction represented an important milestone in the implementation of the company's growth strategy, further accelerated the optimization of the capital struc- ture and created access to the most liquid international debt market, thus further improving CA Immo's market position. GROUP MANAGEMENT REPORT GROUP MANAGEMENT REPORT 3 4 In October 2020, CA Immo was able to take advantage of the extraordinarily favorable market conditions once again with the successful issuance of a fixed-interest un- secured €350 m Green Bond. The issuance had a maturity of five years and was priced with an annual coupon of 1.0%. The transaction generated strong demand from more than 150 investors and was more than 5 times over- subscribed. The net proceeds have been dedicated to the full or par- tial financing and refinancing of sustainable buildings in line with the Sustainability Bond Framework. This framework was provided by Sustainalytics, a leading global provider of ESG and corporate governance re- search and ratings to investors). This covers the financing and refinancing of commercial properties that either have sustainability certificates (including LEED or DGNB Gold Standard) or whose primary energy demand is at least 25% below nationally defined standards such as the En- ergy Saving Ordinance (EnEV) in Germany or PENB in the Czech Republic. Two examples of the use of funds include the Grasblau sustainable development project currently under con- struction in Berlin and the recently completed Missis- sippi House and Missouri Park office project in Prague. The Green Bond Report on the use of funds published in November 2021 documents an investment volume of around €222 m, which was used for qualifying projects within the first year since issuance. The carrying amount of unencumbered real estate, a key criterion for the Group's investment grade rating, amounted to around €2.7 bn as of December 31, 2021 and was thus higher than in the previous period (December 31, 2020: €2.6 bn). This corresponds to a ratio of around 43% of total real estate assets. 1 The outstanding volume of corporate bonds due in 2021/2022/2023 in- cludes the repurchase carried out in 1Q 2020. Bonds As at key date 31.12.2021, CA Immo had the following outstanding bonds registered for official trading on the Vienna Stock Exchange: ISIN Type Out- standing vo- lume 1) Tenor Cou- pon AT0000A1CB33 Corporate bond 142 m € 2015-2022 2.750% AT0000A1JVU3 Corporate bond 117 m € 2016-2023 2.750% AT0000A1TBC2 Corporate bond 175 m € 2017-2024 1.875% AT0000A22H40 Corporate bond 150 m € 2018-2026 1.875% XS2099128055 Corporate bond 500 m € 2020-2027 0.875% XS2248827771 Green bond 350 m € 2020-2025 1.000% Both, the corporate bond due in July 2021 (€107 m) and the corporate bond due in February 2021 (€142 m) were repaid upon maturity. The bonds are unsecured fi- nancings of the Group parent company, which rank pari passu with each other and with all other unsecured fi- nancings of CA Immobilien Anlagen AG. With the excep- tion of the corporate bond 2015-2022, the terms and con- ditions of the bonds include a loan-to-value (LTV) cove- nant. The two bonds issued in 2020 also contain two fur- ther covenants relating to the secured financing volume and the interest rate coverage of the Group. Convertible bond Due to the change-of-control clause of the convertible bond issued in October 2017 and due in 2025, which was triggered by the Starwood offer, 100% of the convertible bond was converted into equity. The conversion rights were serviced by conditional capital and partly by issu- ing new shares. Overall, the total number of voting rights increased by 7,688,090 from 98,808,336 to a total of 106,496,426 voting rights. As a consequence, the share capital increased by €55.9 m from €718.3 m to €774.2 m and is divided into four registered shares and 106,496,422 ordinary bearer shares, each with a pro-rata share of the share capital of €7.27. GROUP MANAGEMENT REPORT 3 5 Secured financing CA Immo has business relations with a large number of financing partners. With around 13% of total outstanding financial liabilities, the main financing bank in terms of the credit volume is the UniCredit Group. As the chart shows, DG Hyp, Deutsche Postbank, Deutsche Hypo and Helaba also accounted for larger shares as at the key date. Long-term interest rate hedging Since interest expenses makes up a significant expense item on the income statement for most real estate compa- nies (alongside administrative overheads), interest rate rises can have a major impact on earnings – especially since rental revenue is usually based on long-term agree- ments, which means increases in financing costs cannot be directly counterbalanced by higher revenue. For this reason, the CA Immo Group’s financing strategy involves hedging a substantial proportion of interest expenditure against fluctuation over the long term. Interest swaps are currently used as interest hedging tools. The ratio of fixed-interest bonds, which has been rising over recent quarters, also makes up a major part of the interest rate hedging ratio. Of the derivatives deployed, interest swap agreements account for a nominal value of €756.0 m (€815.8 m on 31.12.2020) and interest rate floors account for €42.1 m (€23.9 m on 31.12.2020). The weighted average term re- maining on derivatives used for interest rate hedging was around 6.7 years on the key date, compared to a weighted remaining term of 4.3 years on financial liabilities. In terms of the balance sheet, a distinction is drawn be- tween those contracts directly attributable to a loan (thus meeting the criteria for hedge accounting as cash flow hedges) and those for which these preconditions are not met (fair value derivatives). For cash flow hedges, the change in the fair value on the relevant key date is recog- nised directly in equity; for fair value derivatives, by con- trast, the change is recognised as expenditure in the in- come statement under ‘Result from derivatives’. As at key date 31.12.2021, contracts with a nominal value of €473.1 m in total and a fair value of € –18.9 m were classi- fied as fair value derivatives (31.12.2020: €633.7 m and € –80.9 m, respectively). As at 31.12.2021, the company held contracts classified as cash flow hedges with a nomi- nal amount of €225.0 m and an attributable fair value of €4.0 m. Variable rate debt FINANCIAL DEBT AS OF 31.12.2021 (Basis: €2.6 bn) Variable, but hedged through derivatives Fixed rate debt 10.4% 22.5% 67.1% Bonds FINANCING SPLIT BY BANKS (Basis: €2.6 bn) Other Unicredit DG Hyp Deutsche Hypo Helaba 56% 10% 13% 7% 5% 3% Deutsche Postbank AG 6% GROUP MANAGEMENT REPORT GROUP MANAGEMENT REPORT 3 6 KEY FIGURES FROM THE INCOME STATEMENT Sustained earnings Rental income for CA Immo declined by –2.8% to €229.1 m. By region, around 52% of total rental income was generated by the Central and Eastern European port- folio, followed by Germany with around 37% and Austria with around 12%. The recent completions of MY.O and NEO (both in Mu- nich) and MY.B (Berlin) made a positive rental contribu- tion of €4.4 m in total. The acquisitions of investment properties in 2020 (Am Karlsbad 11 and Pohlstrasse in Berlin as well as Postepu 14 in Warsaw) generated an in- crease in rental income of €8.3 m in total. On the other hand, there were losses on leases in con- nection with non-strategic property disposals (including exits from the Zagreb, Bratislava and Graz markets) and a higher vacancy rate in Central- and Eastern European core markets, which could not be fully compensated for by the positive effects mentioned above. Incentive arrangements from various lease agreements (in particular rent-free periods) are amortised on a straight line basis for the total term of the lease contract. Rental income therefore shows the effective economic rent and not the actual cash-relevant rent during the pe- riod. Of the rental income for business year 2021, straight line amortisation of this kind accounted for €–4.2 m (2020: €4.2 m). In year-on-year comparison, property expenses directly attributable to the asset portfolio, including own operat- ing expenses were up at € –29.6 m (2020: € –25.9 m). This expenditure item consists of vacancy costs and operating expenses that cannot be passed on (€ –7.7 m), agency fees (€ –3.0 m), maintenance (€ –5.2 m), allowances for bad debt (€ –1.3 m) and other directly attributable expenses (€ –13.6 m). A positive ef- fect of €3.7 m (release of provisions for property-related taxes) was recorded in connection with proceedings con- cerning the payment of building taxes decided in favour of the CA Immo Group in the previous year. The net rental income generated by the rental activities after deduction of direct management costs declined by –4.9% from €209.7 m to €199.5 m. The Covid -19 pan- demic had a negative impact of €–3.1 m on net rental in- come as of the reporting date. This mainly relates to re- serves for bad debts and to a lower degree rent reduc- tions, which are, however, counterbalanced by opposi ng effects from incentive agreements (rent-free periods). All agreed rent adj ustments, such as the granting of rent-free periods, are to be distributed o n a straight line basis over the respective t erm of the underlying lease ag reement. The operating margin on letting activities (net rental in- come in relation to rental income), an indicator of the ef- ficiency of the rental business, decreased from 89.0% in the previous year to 87.1% . Other expenditure directly attributable to project devel- opment stood at €–1.9 m at year end (2020: € –2.2 m). Office RENTAL INCOME BY MAIN USAGE (Basis: €229.1 m) Other Hotel 91% 4% 5% Germany RENTAL INCOME BY COUNTRY (Basis: €229.1 m) Poland Hungary Austria Romania Czechia Serbien 37% 15% 12% 12% 12% 9% 3% RESULTS GROUP MANAGEMENT REPORT 3 7 CHANGE IN RENTAL INCOME FROM 2020 TO 2021 1) € m Austria Germany CEE Total 2020 29.7 78.3 127.6 235.6 Change: Resulting from change in vacancy rate, indexation or rental price –0.6 –0.2 –9.6 –10.3 Resulting from new acquisitions 0.0 3.0 5.5 8.5 Resulting from completed projects 0.0 4.9 0.7 5.6 Resulting from sale of properties –2.3 –2.0 –6.0 –10.3 Total change in rental income –2.9 5.7 –9.3 –6.5 2021 26.8 84.0 118.3 229.1 1) Included are non-performance components of operating costs according to IFRS 16 amounting to €10.7 m. INDIRECT EXPENSES € m 2021 2020 Personnel expenses –49.8 –45.9 Legal, auditing and consulting fees –14.0 –9.1 Third party acquired development services –1.9 –1.9 Office rent –0.7 –0.8 Travel expenses and transportation costs –0.3 –0.4 Other expenses internal management –2.9 –2.7 Other indirect expenses 1) –5.8 –29.0 Subtotal –75.4 –89.7 Own work capitalised in investment property 16.2 15.2 Change in properties held for trading 1.0 1.4 Indirect expenses –58.2 –73.2 1) The figure includes provisioned court fees associated with the action for damages brought by CA Immobilien Anlagen AG in the second quarter of 2020 against the Republic of Austria and the state of Carinthia in connection with the privatisation of the federal housing companies (BUWOG) completed in 2004. GROUP MANAGEMENT REPORT GROUP MANAGEMENT REPORT 3 8 Property sales result Trading revenue of €8.2 m was generated in 2021 in connection with the scheduled sale of properties held in current assets and construction services (2020: €43.3 m). This income was offset by book value deductions and other directly attributable expenditure of € –1.6 m. The trading portfolio thus contributed a total of €6.7 m to the result (2020: €7.9 m). The largest contribution to earnings in terms of value was generated by the sale of the NEO Living residential project developed by CA Immo in Mu- nich. Profit from the sale of investment properties of €52.7 m was above the previous year’s value of €43.9 m. The sale of a non-strategic land plot in Düsseldorf in the second quarter generated the largest part of this result in terms of value, followed by an investment property in Vienna sold in the fourth quarter. Income from services Gross revenue from services dropped by –0.4% to €8.1 m (2020: €8.2 m). This item mainly includes devel- opment revenues for third parties by the Group subsidi- ary omniCon. Indirect expenses In 2021 indirect expenditures fell substantially by –20.4% from € –73.2 m in the previous year to €–58.2 m. The figure of th e previous year includes court fees associ- ated with the action for damages brought by CA Immo- bilien Anlagen AG in the second quarter of 2 020 against the Rep ublic of Austria and the state of Carinthia in con- nection with the privatisation of the federal housing com- panies (BUWOG) complete d in 2004. As shown in th e table above, the item "Own work capi- talized" remained essentially unchanged at €16.2 m (2020: €15.2 m). This item may be regarded as an offset- ting position to the indirect expenditures which counter- balance the portion of internal project development ex- penditure, provided it is directly attributable to individ- ual development projects and thus qualifies for capitali- sation. Indirect expenses also contains expenditure counterbal- ancing the aforementioned gross revenue from services. Other operating income Other operating income amounted to a total of €3.2 m compared to the 2020 reference value of €1.2 m. Earnings before interest, taxes, depreciation and amortisation (EBITDA) Earnings before interest, taxes, depreciation and amorti- zation (EBITDA) amounted to €210.1 m, up 7.4% on the previous year's figure of €195.6 m. The contribution of the individual regional segments to the overall result was as follows: With an EBITDA of €102.4 m, the Germany segment generated the largest share of around 49%. The largest EBITDA contribution from the Central and Eastern European core markets is attributable to Poland, with generated EBITDA of €31.5 m (15%), followed by Hun- gary with €27.3 m (13%) and Romania with €20.7 m (10%). The Austrian segment generated an EBITDA of €7.2 m (3%). Adjusted for the BUWOG provision for court fees in 2020 and other one-off effects, EBITDA remained stable year-on-year at €217.8 m. Revaluation result The total revaluation gain of €602.4 m in 2021 was counterbalanced by a revaluation loss of €–61.2 m. The cumulative revaluation result based on independent ex- ternal appraisals of €541.1 m was therefore extraordinar- ily positive and was significantly above the previous year’s value (2020: €183.5 m). The result reflects the attractive market environment for first-class properties ("Class A") in Germany, particularly in Munich and Berlin, despite the Covid-19 pandemic. In addition, CA Immo’s profitable property development ac- tivities were a key driver of the valuation increase, both in terms of the construction progress of current projects under construction - in particular the CA Immo projects Upbeat and Hochhaus am Europaplatz in Berlin and ONE in Frankfurt - and in terms of the development of land re- serves. Broken down by region, the revaluation result in Ger- many totalled €525.2 m. In addition to the active devel- opment projects mentioned above, the largest contribu- tions in terms of value were made by the investment portfolio in Munich and in particular properties such as Skygarden, Kontorhaus and MY.O as well as Berlin with the properties Spreebogen, John F. Kennedy - Haus and Königliche Direktion. Central- and Eastern Europe recorded positive value ad- justments of €17.9 m, among other things due to the suc- GROUP MANAGEMENT REPORT 3 9 cessful completion of the Mississippi House and Mis- souri Park development project in Prague. In contrast, Austria recorded a valuation loss of €–2.0 m. Result from joint ventures Current results of joint ventures consolidated at equity are reported under ‘Result from joint ventures’ in the consolidated income statement. In 2021 this contribution totalled €3.6 m (2020: €1.9 m). Earnings before interest and taxes (EBIT) Earnings before interest and taxes (EBIT) totalled €749.6 m and doubled compared to the corresponding figure for the previous year of €375.4 m (+99.6%), in par- ticular due to the significantly higher revaluation result. In regional terms, the Germany segment accounted for the lion's share of Group EBIT at €627.4 m. Central- and Eastern Europe Austria generated EBIT of €117.9 m, and Austria €4.3 m. Financial result The financial result for 2021 was €–74.4 m, compared to €–27.2 m last year. In detail, the elements of the finan- cial result developed as follows: The Group's financing costs totalled €–47.6 m (2020: €–42.3 m). This item includes a positive effect in connec- tion with proceedings concerning the payment of build- ing taxes amounting to €5.2 m (release of provisions for interest on arrears) decided in favour of the CA Immo Group. In addition to interest paid as shown in the income statement, financing costs of €5.8 m (2020: €4.9 m) with a weighted average interest rate of 1.37% (2020: 1.30%) were capitalised in business year 2020 in connection with the construction of real estate. The result from derivatives came to €–25.9 m (2020: €21.4 m). The result for 2021 includes a derivative valua- tion in the amount of €–46.2 m for the convertible bond issued in October 2017 (2020: €32.2 m). This instrument consists of a debt component and, due to the cash repay- ment option of CA Immo, an embedded derivative that must be separated. The embedded derivative of the con- vertible bond is reported at fair value. In contrast, the interest rate development over 2021 re- sulted in a positive valuation effect of the company's in- terest rate derivatives in the amount of €20.3 m (2020: € –10.8 m). At € –0.8 m, the result from financial investments was improved compared to the figure for the reference period (2020: €–3.6 m). Other items of the financial result (other financial result and exchange rate differences) totalled €–0.1 m (2020: €–2.7 m). The figure for the first quarter of 2020 includes a one-off effect relating to the repurchase of outstanding corporate bonds in the amount of € –5.1 m. Earnings before taxes (EBT) Earnings before taxes (EBT) of €675.2 m (2020: €348.3 m) showed a significant year-on-year increase of 93.9% based on the earnings developments described above. Taxes on income Taxes on earnings amounted to €–195.4 m in 2021 (2020: €–94.3 m) of which the majority is accounted for by deferred taxes. Consolidated net income At €479.8 m, consolidated net income for the period was 88.9% above the previous year's figure of €253.9 m, which translates into the highest result in the company’s history. Earnings per share (basic) amounted to €4.89 (2020: €2.73 per share). Cash flow Cash flow from operating activities takes account of changes in current assets linked to the sale of properties intended for trading and totalled €150.9 m (2020: €185.1 m). Cash flow from investment activities, which comprises the net balance between investments and real estate sales, stood at €–10.3 m in 2021 compared to the previ- ous year’s value of €–334.7 m. Cash flow from financing activities was €–445.1 m (2020: €650.1 m). GROUP MANAGEMENT REPORT GROUP MANAGEMENT REPORT 4 0 CASH FLOW-STATEMENT – SHORT VERSION € m 2021 2020 Change in % Cash and cash equivalents - beginning of the business year 935.5 439.4 >100 Cash flow from - b usiness activities 150.9 185.1 – 18 - Investment activities – 10.3 – 334.7 – 97 - financin g activities – 445.1 650.1 n.m. Changes in cash and cash equivalents –304.6 500.5 n.m. Other chan g es 2.2 – 5.0 n.m. Changes in cash and cash equivalents - the end of the business year 633.1 934.9 –32 1) Includes exchange rate movements from foreign currency, reclassification to a disposal group and expected credit losses on cash and cash equiva- lents Funds from Operations (FFO) An FFO I of €128.3 m was generated in 2021, –4.1% be- low the previous year's value of €133.8 m. FFO I per share stood at €1.31 at the key date, a similar decline of –9.1% in year -on-year compar ison (2020: €1.44 per share). The F Y 2021 guidance of > €128 m wa s therefore achieve d. FFO I, a key indicator of the Group' s recurring earnings power , is reported before taxes and adjusted for the sales result and other n on-recurring effects. Adjusted non-recurring effects totalled €13.7 m (2020: €22.9 m). These primarily related to administrative ex- penses in the amount of €7.7 m and financing expenses of €6.2 m. Adjusted non-recurring effects of the previous year primarily comprised administrative expenses (€26.7 m, including expenses in connection with the ac- tion for damages brought by CA Immo in the second quarter in connection with the privatisation of the federal housing societies and associated legal costs of around €26.1 m) and operating expenses of €–3.7 m. The latter mainly include a positive effect from the reversal of pro- visions for property-related taxes. FFO II, including trading, other non-recurring results and after taxes, is an indicator for the Group’s overall profitability and totalled €143.1 m, compared to €141.1 m in the previous year (up 1.4%). FFO II per share amounted to €1.46 (2020: €1.52 per share). FUNDS FROM OPERATIONS (FFO) € m 2021 2020 Net rental income (NRI) 199.5 209.7 Income from services 8.1 8.2 Other o p eratin g income/ex p enses excl. services 3.2 1.2 Other o p eratin g income/ex p enses 11.4 9.4 Indirect ex p enses – 58.2 – 73.2 Result from j oint ventures 9.9 3.9 Finance costs – 47.6 – 42.3 Result from financial investments 1) – 0.5 3.5 Non-recurrin g ad j ustments 2) 13.9 22.9 FFO I (excl. tradin g and p re taxes) 128.3 133.8 Result from tradin g and construction works 6.7 7.9 Result from the sale of investment p ro p erties 52.7 43.9 Result from dis p osal of j oint ventures 0.0 0.1 At-e q uit y result p ro p ert y sales 5.2 3.4 Pro p ert y sales result 64.5 55.3 Result from dis p osal of assets at fair value 0.8 – 1.2 Other financial results 0.0 – 5.1 Other ad j ustments 3) – 18.9 – 26.4 Current income tax – 31.7 – 15.5 FFO II (incl. tradin g and after taxes) 143.1 141.1 1) Excluding value adjustments for cash and restricted cash 2) Adjustment for property sales and other non-recurring results 3) Includes other non-recurring results adjusted in FFO I GROUP MANAGEMENT REPORT 4 1 BALANCE SHEET ANALYSIS Assets As at the balance sheet date, long-term assets amounted to €6,249.5 m (87.8% of total assets). The growth of in- vestment property assets on the balance sheet to €4,984.3 m (31 December 2020: €4,723.1 m) reflects the strong portfolio growth both organically from the compa- ny's own development project pipeline and externally by selective acquisitions of investment properties in the core markets. The balance sheet item ‘Property assets under develop- ment’ increased by 38.7% to €1,097.1 m compared to 31 December 2020. Total property assets (investment proper- ties, properties used for own purposes, property assets under development and property assets held as current assets) amounted to €6,254.2 m on the key date, hence up on the level for the end of 2020 (€5,596.2 m). The net assets of joint ventures are shown in the bal- ance sheet item ‘Investments in joint ventures’, which stood at €55.8 m on the key date (31 December 2020: €57.6 m). Cash and cash equivalents stood at €633.1 m on the bal- ance sheet date, below the level for 31 December 2020 (€934.9 m). This use of cash included the redemption of a corporate bond maturing in 2021 (€107 m) and the pay- ment of a special dividend of approximately €252 m in December 2021. Liabilities Equity The balance sheet equity grew in 2021 by 5.2% from €3,128.3 m at the end of last year to €3,291.0 m. Apart from the net profit for the period of €479.8 m, this figure also reflects the payment of the regular dividend and spe- cial dividend (in total €604.2 m). Since the start of the year, the Group’s total assets in- creased by around 4.3% to €7,114.4 m (31.12.2020: €6,820.3m). Despite the increase in assets, the equity ra- tio of 46.3% on the key date remained within the strate- gic target range (31 December 2020: 45.9%). Interest-bearing liabilities On the reporting date, interest-bearing liabilities amounted to €2,583.9 m, –8.6%% below the previous year’s value of €2,827.5 m. The reduction is related, among other things, to the above-mentioned redemption of a corporate bond upon maturity. Net debt (interest- bearing liabilities less cash and cash equivalents) in- creased from €1,890.5 m in the previous year to €1,946.2 m. Gearing (ratio of net debt to shareholders’ eq- uity) was 59.1% at year-end (31 December 2020: 60.4%). The loan-to-value ratio (financial liabilities less cash and cash equivalents to property assets) stood at 31.1% on the key date, compared to 33.8% in the previous year. 100% of interest-bearing financial liabilities are in eu- ros. CA Immo has a comprehensive interest rate hedging strategy to hedge against interest rate risk; for more de- tails, see the section on ‘Financing’. KEY BALANCE SHEET AND FINANCING FIGURES € m 31.12.2021 31.12.2020 Shareholders' equity 3,291.0 3,128.3 Long-term interest-bearing liabilities 2,186.5 2,622.2 Short-term interest-bearing liabilities 397.4 205.3 Cash and cash equivalents –633.1 –934.9 Restricted cash –4.6 –2.1 Net debt 1,946.2 1,890.5 Equity ratio 46.3 45.9 Gearing (net) 59.1 60.4 Gearing (gross) 78.5 90.4 Loan-to-value (net) 31.1 33.8 Loan-to-value (gross) 41.3 50.5 GROUP MANAGEMENT REPORT GROUP MANAGEMENT REPORT 42 CONSOLIDATED STATEMENT OF FINANCIAL POSITION: SHORT VERSION 2021 2020 Change € m in % € m in % in % Property assets 6,092.6 86 5,527.1 81 10 Investments in joint ventures 55.8 1 57.6 1 –3 Intangible assets 3.4 0 3.0 0 14 Financial and other assets 95.0 1 68.3 1 39 Deferred tax assets 2.7 0 4.4 0 –39 Long-term assets 6,249.5 88 5,660.4 83 10 Assets held for sale and relating to disposal groups 76.2 1 37.1 1 >100 Properties held for trading 87.2 1 35.2 1 >100 Receivables and other assets 68.4 1 152.8 2 –55 Securities 0.0 0 0.0 0 n.m. Cash and cash equivalents 633.1 9 934.9 14 –32 Short-term assets 864.9 12 1,159.9 17 –25 Total assets 7,114.4 100 6,820.3 100 4 Shareholders' equity 3,291.0 46 3,128.3 46 5 Shareholders' equity as a % of total assets 46.3 45.9 Long-term interest-bearing liabilities 2,186.5 31 2,622.2 38 –17 Short-term interest-bearing liabilities 397.4 6 205.3 3 94 Other liabilities 541.2 8 328.2 5 65 Deferred tax assets 698.3 10 536.3 8 30 Total liabilities and shareholders' equity 7,114.4 100 6,820.3 100 4 EPRA NET ASSET VALUE (NAV) In order to ensure comparability with other listed prop- erty companies, CA Immo reports individual key figures in accordance with the standards of EPRA (European Public Real Estate Association), the leading interest group for listed property companies. These key figures may differ from the values determined in accordance with IFRS rules. CA Immo follows EPRA's 'Best Practice Recommendations' (www.epra.com). EPRA KEY FIGURES 31.12.2021 31.12.2020 EPRA NRV € m 4,450.5 4,346.7 EPRA NRV per share € 44.19 43.58 EPRA NTA € m 4,033.9 3,999.3 EPRA NTA per share € 40.05 40.09 EPRA NDV € m 3,393.8 3,423.4 EPRA NDV per share € 33.70 34.32 GROUP MANAGEMENT REPORT 43 With the publication of the EPRA Best Practices Recom- mendations Guidelines October 2019, the net asset value reporting was revised with the aim of better reflecting re- cent market and company developments. As a conse- quence, EPRA NAV and EPRA NNNAV were replaced by three new Net Asset Valuation metrics: EPRA Net Rein- statement Value, EPRA Net Tangible Assets and EPRA Net Disposal Value. CA Immo intends to report only these new key figures as of Q1 2021, which are defined by EPRA as follows 1) : EPRA Net Reinstatement Value The objective of the EPRA Net Reinstatement Value measure is to highlight the value of net assets on a long- term basis. Assets and liabilities that are not expected to crystallise in normal circumstances such as the fair value movements on financial derivatives and deferred taxes on property valuation surpluses are therefore excluded. Since the aim of the metric is to also reflect what would be needed to recreate the company through the invest- ment markets based on its current capital and financing structure, related costs such as real estate transfer taxes should be included. EPRA Net Tangible Assets The underlying assumption behind the EPRA Net Tan- gible Assets calculation assumes entities buy and sell as- sets, thereby crystallising certain levels of deferred tax li- ability. EPRA Net Disposal Value Shareholders are interested in understanding the full extent of liabilities and resulting shareholder value if company assets are sold and/or if liabilities are not held until maturity. For this purpose, the EPRA Net Disposal 1) Source: EPRA – Best Practices Recommendations Guidelines (October 2019) Value provides the reader with a scenario where deferred tax, financial instruments, and certain other adjustments are calculated as to the full extent of their liability, in- cluding tax exposure not reflected in the Balance Sheet, net of any resulting tax. This measure should not be viewed as a “liquidation NAV” because, in many cases, fair values do not represent liquidation values. Net Asset Value (IFRS) stood at €3,290.9 m on 31 De- cember 2021 (€32.68 per share) against €3,128.3 m at the end of 2020 (€33.63 per share); this represents a decline of 2.2% on a diluted basis (2.8% per share). Aside from the annual result of €479.6 m, this change also reflects other changes in equity, such as the conversion of the converti- ble bond (€282.2 m) and the distribution of dividends (€–604.2 m). The latter includes the regular dividend (€100.6 m) as well as special dividends (€503.2 m, see chapter "Capital markets"). EPRA Net Tangible Assets (NTA) stood at €4,033.9 m as at the reporting date, 0.9% above the value at year-end 2020 (€3,999.3 m). This corresponds to an EPRA NTA per share of €40.05, which is at a similar level to the EPRA NTA as at 31 December 2020 of €40.09 per share. The number of shares in circulation on the reporting date was 100,716,389 (31 December 2020: 99,747,036, di- luted). The values per share in the table below are pre- sented on a diluted basis and thus reflect the dilution ef- fect in connection with the convertible bond issued by the Group (€200 m), which was fully converted during the period under review (see chapter "Capital markets"). GROUP MANAGEMENT REPORT GROUP MANAGEMENT REPORT 4 4 NET ASSET VALUE (NRV, NTA AND NDV AS DEFINED BY EPRA) € m 31.12.2021 31.12.2020 EPRA NRV EPRA NTA EPRA NDV EPRA NRV EPRA NTA EPRA NDV IFRS Equity attributable to shareholders 3,290.9 3,290.9 3,290.9 3,128.2 3,128.2 3,128.2 i) Hybrid instruments (Convertible) 0.0 0.0 0.0 235.3 235.3 235.3 Diluted NAV 3,290.9 3,290.9 3,290.9 3,363.5 3,363.5 3,363.5 ii.a) Revaluation of IP (if IAS 40 cost option is used) 11.9 11.9 10.0 9.7 9.7 8.2 ii.b) Revaluation of IPUC (if IAS 40 cost option is used) 0.0 0.0 0.0 0.0 0.0 0.0 ii.c) Revaluation of other non-current investments 0.0 0.0 0.0 0.0 0.0 0.0 iii) Revaluation of tenant leases held as finance leases 0.0 0.0 0.0 0.0 0.0 0.0 iv) Revaluation of trading properties 149.4 124.5 110.5 151.0 138.8 110.9 Diluted NAV at Fair Value 3,452.2 3,427.3 3,411.4 3,524.2 3,512.0 3,482.5 v) Deferred taxes in relation to fair value gains of IP 694.9 598.6 531.2 451.9 vi) Fair value of financial instruments 12.9 9.2 40.5 37.4 vii) Goodwill as a result of deferred tax –1.2 –1.2 –1.2 –2.0 –2.0 –2.0 viii.a) Goodwill as per the IFRS balance sheet 0.0 0.0 0.0 0.0 viii.b) Intangibles as per the IFRS balance sheet 0.0 0.0 ix) Fair value of fixed interest rate debt –16.4 –57.2 x) Revaluation of intangibles to fair value 0.0 0.0 xi) Purchasers' costs 291.7 0.0 252.8 0.0 NAV 4,450.5 4,033.9 3,393.8 4,346.7 3,999.3 3,423.4 Fully diluted number of shares 100,716,389 100,716,389 100,716,389 99,747,036 99,747,036 99,747,036 NAV per share in € 44.19 40.05 33.70 43.58 40.09 34.32 FINANCIAL PERFORMANCE INDICATORS The strategic focus of business activity at CA Immo is the long-term increase in the value of the company. This is supported by key financial performance indicators which are important tools to identify the factors that con- tribute to the sustained increase in enterprise value and quantifying those factors for the purposes of value man- agement. The primary financial performance indicator is the net income generated on the Company’s average equity (re- turn on equity or RoE). The aim is to generate a figure higher than the calculated cost of capital, thus generating shareholder value. At 14.9% in 2021 (2020: 8.3%), this figure was significantly above the target value. The in- crease compared to the previous year was mainly driven by the significantly higher property revaluation result. With the successful strategy implementation of recent years and strong positioning of the CA Immo Group, the ground was prepared for generating a return on equity over the long term, and one that exceeds the cost of eq- uity (see the "Strategy" section). The other quantitative factors used to measure and manage our shareholders' long-term return include the change in NAV per share, operating cash flow per share, and Funds from Operations (FFO I and FFO II) per share (please refer to the table above and “Balance Sheet” and “Key Figures per Share” in the flap of the annual report). Since the key financial indicators ultimately demon- strate the operational success of the property business, they are preceded by a series of other non-financial per- formance indicators which are key to measuring and managing the operational business. The non-financial performance indicators relating to environmental, em- ployee and social issues as well as human rights and the fight against corruption and bribery are presented and ex- plained in detail in the ESG report and appendix. GROUP MANAGEMENT REPORT 4 5 NON-FINANCIAL PERFORMANCE INDICATORS As the financial indicators ultimately represent the suc- cess achieved in the operating real estate business, they are preceded by a number of other performance indica- tors, including non-financial indicators, that are essential for measuring and managing the operating business per- formance: – Occupancy rate is an indicator for the quality and man- agement success of the portfolio. The econo mic letting rate of CA Imm oblien Anlagen AG in the portfolio re- mained at around 89% (around 95% as at 31 Decem ber 2020) 1) . – Va cancy rate shows the ratio of unlet space to the total area of the prop erty portfolio and therefore plays an im- portant role in terms of the return to be generat ed. The higher the vacancy rate, the lower the rental income. The property portfolio of CA I mmoblien Anlagen AG had a vacancy rate of around 11% as at 31 De cember 2021 (31 De cember 2020: around 5% ). – WAULT - Weighted Average (Unexpired) Lease Term is a key indicator in the commercial real estate sector . It provides infor mation on the average remainin g lease term of the property portfolio and amo unts to 3. 9 years at CA Immoblien Anlagen AG as at 31 Decem ber 2021 (31 Decemb e r 2020: 4.0 years). – Location quality and infrastr ucture are decisi ve for the marketability of the properties . The majority of the 1 2021: Excl. owner-occupied properties and excl. the Mississippi House, Missouri Park (Prague) and ZigZag (Mainz) office buildings completed in 2021 and transferred to the portfolio, which are still in the stabilisation Group's office stock is located in CBD or central busi- ness locations in central European capitals. – Sustainability certification: the development of sustain- able buildings for its own portfolio to increase the qual- ity of its buildin g stock has been an important part of CA Immo' s sustainability strategy for many years. In or- der to provide transparent, internationally comparable and objective proof of buildin g quality across the entire portfolio, CA Immo also has strategic core existing buildings certified. – Local pres ence and market knowledge: a dece ntralised organisational structure with our own branches in the core markets ensures efficient manageme n t and tenant loyalty. – R eduction of the CO 2 emission intensity of the invest- ment portfolio as an indication of a targeted active im- provement in the energy performance of the bu ildings, thereby increas ing the attractiveness of the inve stment portfolio. CA Immo focuses in particular on measures such as increas ing the energy efficiency of buildings, renovatio n measures and mode rnization, the gradual switch to renewable energy s ources, and the incorpora- tion of its own project completions, which were real- ized under sustainable aspe cts, into the own portfolio. The non-financial performance indicators relating to en- vironmental, e mployee and social issues as well as hu- man rights and the fight against corruption and bribery are presented and explained in detail in the ESG report. phase; 2020: excl. owner-occupied properties and excl. the NEO (Mu- nich) and Quartiersgarage (Mainz) project completions, which were still in the stabilisation phase as at 31 December 2020. GROUP MANAGEMENT REPORT GROUP MANAGEMENT REPORT 46 ANTICIPATED DEVELOPMENTS AND THE MAIN OPPORTUNITIES AND THREATS Russia's invasion of Ukraine has shaken the global econ- omy. The immediate global impact will be higher infla- tion, lower growth and dislocations in financial markets. The crisis has significantly increased uncertainty and vol- atility in global equity and financial markets. Major eq- uity indices have performed negatively since the onset of the crisis and debt capital markets have been completely closed for a period of time or are currently very limited in access. The risk of a further escalation of the conflict and additional geopolitical tensions must continue to be mon- itored. The CA Immo Group has no properties in Russia or Ukraine in its portfolio and monitors developments on the stock and financial markets. In addition, we counter exchange rate risk by generally pegging rents to the euro and converting liquid funds in foreign currencies into eu- ros on an ongoing basis. This means that the CA Immo Group is not exposed to any significant currency risk. The war in Ukraine and the resulting sanctions and countermeasures may have an impact on the CA Immo Group's balance sheet. The global consequences of the war could have an impact on the valuation of receivables and the calculation of expected credit losses. Further- more, increased caution is required in property valua- tions due to the uncertainty. We are constantly evaluating current developments and possible effects on the com- pany. Despite the uncertainty and possible direct and in- direct effects, the CA Immo Group assumes that the Rus- sia-Ukraine war will not affect the company's long-term ability to conduct business successfully. The emergence of new Covid-19 variants could further prolong the pandemic and cause renewed economic dis- ruption. Global access to vaccines, tests and treatments is essential to reduce the risk of further dangerous Covid-19 variants. This will require increased stockpile produc- tion, as well as better supply systems in each country and more equitable international distribution. In addition, supply chain disruptions, energy price volatility, and lo- cal wage pressures mean that uncertainty about inflation and the stance of monetary policy is high. If leading econ- omies raise policy rates, risks could emerge for financial stability and emerging and developing economies' capital flows, currencies, and fiscal positions, especially as debt has increased significantly over the past two years. Portfolio strategy In addition to the increased focus of the portfolio on Class A offic e buildings in the core markets of Berlin, Mu- nich, V ienna, Prague and Warsaw, our focus remains on sustainability and intensive tenant retention. The goal with our buildings is to offer the best product, the best support and the greatest possible flexibility for our ten- ants. The special synergy of being an experienced developer of green buildings and manager of an international Class A office portfolio in attractive metropolitan areas makes us the ideal partner for blue-chip companies. We want to use and further develop these strengths to expand our good market position in the long term. The profitable sale of non-strategic properties as part of the strategic capital rotation programme should also lead to a strong EBITDA-effective sales result and a corre- sponding inflow of liquidity. The reinvestment of the sales proceeds in acquisitions of strategic investment properties or in the company's development pipeline are aimed at optimizing the quality of the portfolio in terms of location, physical and sustainable building quality, and management efficiency. As part of this portfolio optimisation programme, we de- cided, together with the Supervisory Board of CA Immo, to start evaluating all strategic options for Romania, including a potential sale of the entire portfolio. Development In 2021, we were able to add three more of our own pro- ject completions to our portfolio as planned with the completion of office projects in Prague and Mainz. CA Immo’s largest development project ONE in Frankfurt with a total investment volume of around €430 m is due for completion in the second quarter of 2022. In addition, the Grasblau office project in Berlin (total investment vol- ume of around €70 m) is expected to complete towards the end of the business year. The development of extensive land reserves in central locations in the German cities of Munich, Frankfurt and Berlin represents significant long-term organic growth po- tential for CA Immo, which is to be realized successively once the necessary conditions and requirements have been met. OUTLOOK GROUP MANAGEMENT REPORT 4 7 Key business factors Key factors that may influence the business develop- ment planned for 2022 include: – Economic developments in the regions in which CA Immo is active and the effects of these on demand for rental premises and rental prices (core indicators in- clude GDP growth, employment and inflation). – The development of general interest rate levels. – The financing environment as regards the availability and cost of long-term financing with outside capital (both secured financing from banks on property level and unsecured capital market financing on group level), and accordingly the development of the market for real estate investment, price trends and their impact on the valuation of the CA Immo portfolio. – The speed at which planned development projects are realised will also depend on the market factors outlined above and the availability of necessary debt and equity. – CA Immo is relying on companies returning to their physical offices as the pandemic recedes. In this con- text, it remains to be seen how the crisis-induced expan- sion of digital work processes and the establishment of work-from-home will affect demand for office property in the medium term. – Political, fiscal, legal and economic risks, transparency and the development level on our real estate markets. Dividend At the beginning of November 2021, the majority share- holder SOF-11 Klimt CAI S.à r.l. requested that an extraor- dinary general meeting be convened to resolve on special dividends totaling €5.00 per dividend-bearing share to be paid to all shareholders in two tranches. The Extraordi- nary General Meeting was held virtually on November 30, 2021 and resolved to adopt the proposed resolutions. After a thorough evaluation, we have decided to propose to the Annual General Meeting to be held on 5 May 2022 to deviate from the previous dividend policy and to carry forward the entire balance sheet profit for the 2021 financial year. The background to this decision is the fact that, as outlined above, dividends totalling €3.50 per share have already been distributed in the 2021 financial year from the net profit reported as at 31 December 2020, and a further dividend of €2.50 per share was distributed to shareholders in the current financial year on March 15, 2022. Especially in view of the current geopolitical envi- ronment and the increased uncertainty and volatility in the markets, no additional dividend payment is planned for the 2021 financial year. Earnings target 2022 The profitable sale of non-strategic properties as part of the strategic capital rotation programme should continue to lead to a strong EBITDA-effective sales result and a cor- responding inflow of liquidity. We plan to specify the an- nual financial target for the 2022 financial year in the course of the year. GROUP MANAGEMENT REPORT GROUP MANAGEMENT REPORT 48 The following activities are reported for the opening months of business year 2022: Acquisitions In February 2022, CA Immo acquired a 10,400 sqm of- fice building (Kasernenstraße 67) in a prime downtown Düsseldorf location. The office building was recently ex- tensively modernized and leased on a long-term basis as headquarters to a leading fin-tech company in Germany. The office building "Kasernenstraße 67" is located in a prime central loca- tion in Düsseldorf's Central Business District (CBD). Sales In January, CA Immo successfully signed and closed the sale of the Hungarian office building R70. In February 2022, the sale of two German hotel build- ings was successfully completed with the sale of the Meininger Hotel Frankfurt (4,750 sqm gross floor area) and a hotel on Bodenseestraße in the Aubing district of Munich. Dividend At the beginning of November 2021, the majority share- holder SOF-11 Klimt CAI S.à r.l. requested that an ex- traordinary general meeting be convened to resolve on special dividends totaling €5.00 per dividend-bearing share to be paid to all shareholders in two tranches. The Extraordinary General Meeting was held virtually on November 30, 2021 and resolved to a dopt the proposed resolutions. After a thorough evaluation, we have decided to pro- pose to the Annual General Meeting to be held on 5 May 2022 to deviate from the previous dividend policy and to carry forward the entire balance sheet profit for the 2021 financial year. The background to this decision is the fact that, as outlined above, dividends totalling €3.50 per share have already been distributed in the 2021 financial year from the net profit reported as at 31 December 2020, and a further dividend of €2.50 per share was distributed to shareholders in the current financial year on March 15, 2022. Especially in view of the current geopolitical envi- ronment and the increased uncertainty and volatility in the markets, no additional dividend payment is planned for the 2021 financial year. RESEARCH AND DEVELOPMENT Technological and social change continues to transform the office environment and the knowledge-based econ- omy. To (re-)develop office properties today in such a way that they can be efficiently and profitably managed in future, CA Immo monitors changes to working pro- cesses and corporate requirements in terms of premises; at the same time, it trials new technical solutions along with space and building concepts on selected develop- ment projects. Currently, the focus is on new require- ments with regard to energy efficiency, environmental protection and protective measures with regard to viral infections (pandemic protection). In the course of theoretical and practical research activ- ity, CA Immo maintains partnerships with other compa- nies and research institutions. For example, CA Immo is a partner to the Office 21 joint research project of the Fraunhofer IAO Institute (www.office21.de) and the Inno- vation platform RE!N (Real Estate Innovation Network) with the objective of pilot testing own innovation ap- proaches at an early stage. CA Immo also actively partici- pates in relevant platforms for the real estate sector (for details on our memberships, please see the ESG report). SUPPLEMENTARY REPORT GROUP MANAGEMENT REPORT 4 9 RISK REPORT GROUP MANAGEMENT REPORT GROUP MANAGEMENT REPORT 5 0 RISK MANAGEMENT AT CA IMMO To ensure the success of CA Immo as a business in the long term and enable the company to meet its strategic objectives, effective management of new and existing risks is essential. A commensurate measure of risk must be accepted if we are to utilise market opportunities and exploit the potential for success they hold. For this rea- son, risk management and the internal monitoring sys- tem (IMS) deliver an important contribution to the Group’s corporate governance (defined as the principle of responsible management). CA Immo's risk management system is based on the fol- lowing elements: – Risk culture: CA Immo's reput ation is central to our identity and business success. Therefore, com p liance with established principles of corporate govern ance and value management (Code of Ethics, Code of Conduc t) is a matter of course. For CA Immo, risk culture i m plies raising of risk awareness an d consciously addr essing risks in day-to-day busi ness – both for managers and in- dividual employees. – Risk strategy: The risk strategy describes how risks aris- ing from CA Immo’s business strategy or busine ss model are managed. It sets out the framework for the nature, extent and a ppropriateness of ri sks, thus reflecting the company’s own definition of a “sensible” approach to risks and d escribing these risks in terms of their impact on th e economic situation of the company an d the gui delines for managing risks that are to be derive d from this. Strat egic alignment and tolerance of risk With the approval of the Corporate Development com- mittee established in 2019 and the Supervisory Board, the Management Board defines the strategic direction of the CA Immo Group as well as the nature and extent of risks the Group is prepared to accept in pursuit of its strategic objectives. The Risk Management department supports the Management Board in assessing the risk en- vironment and developing potential strategies to raise long-term stakeholder value. An internal risk committee comprising representatives from all business areas and the CFO has also been set up; this convenes quarterly or, if necessary, in special sessions (for example, on the topic of the Covid-19 pandemic). The purpose of the committee is to provide additional assurance in regularly assessing the Group's risk situation across departmental boundaries and introducing measures as necessary. The aim of this is to ensure the company adopts the best pos- sible direction from the alternatives available. Identification of risks and assessment At CA Immo, the opportunity/risk situation is assessed on a quarterly basis within the framework of reports that are prepared, among other things, on the basis of the re- sults of the risk committee. Risk is assessed in relation to specific properties and projects as well as (sub)portfo- lios. The company incorporates early warning indicators such as rent forecasts, vacancy analyses, continuous monitoring of lease agreement periods and the possibil- ity of terminations; construction costs are also tracked throughout project implementation. Scenarios are envis- aged regarding the value trend for the real estate portfo- lio, exit strategies and liquidity planning; these supple- ment risk reporting and promote reliable planning. CA Immo observes the precautionary principle by apply- ing the full investment horizon to long-term planning and investment decisions. The company now also evalu- ates specific risks once a year, focusing on content, effect and likelihood of occurrence. An annual update is also carried out with regard to the estimated impact on the re- sult, assets or liquidity of CA Immo (‘extent of damage’) and the probability of occurrence within a period of one year. Measures and controls already implemented are taken into account to determine the net risk. The Man- agement Board uses this data as the basis for determining the severity and type of risks that it regards as acceptable in pursuing its strategic objectives. Strategies adopted by the Management Board are incorporated into the Group’s three-year planning; this assists the Group in communi- cating its willingness to take risks and its expectations, both internally and externally. The risk policy of CA Immo is defined by a range of guidelines, observance of which is continually moni- tored and documented by controlling processes. Risk management is obligatory at all levels of the company. The Management Board is involved in all risk-relevant decisions and bears overall responsibility for such deci- sions. At all levels, decisions are subject to the dual veri- fication principle. Internal Auditing, an independent di- vision, reviews operational and business processes, ap- pointing experts from outside as necessary; it acts inde- pendently in reporting and evaluating audit results. GROUP MANAGEMENT REPORT 51 Evaluating the functionality of risk management The proper functioning of the risk management system is evaluated annually by the Group auditor in line with the requirements of C Rule no. 83 of the Austrian Corpo- rate Governance Code. The results are reported to the Management Board a nd the audit committee. KEY FEATURES OF THE INTERNAL MONITORING SYSTEM (IMS) CA Immo’s internal monitoring system covers all princi- ples, procedures and measures designed to ensure the ef- fectiveness, cost-effectiveness and accuracy of accounting as well as compliance with relevant legal regulations and company guidelines. The IMS is integrated into individ- ual business processes, taking account of management processes. The objectives of the IMS are to preclude and expose errors in accounting and financial reporting, thus ensuring amendments to be introduced in good time. Transparent documentation makes it possible to depict accounting, financial reporting and auditing processes. All operational areas are incorporated into the financial reporting process. Competent local management teams are responsible for implementing and monitoring the IMS; the managing directors of subsidiaries are required to perform their own checks in order to assess and docu- ment compliance with monitoring measures. The effec- tiveness of the IMS is assessed on a random basis by the Group Auditing department while the cost-effectiveness of business processes is continually evaluated. The results of these assessments are reported to the responsible executive boards, the full CA Immo Management Board and (at least once a year) the audit c ommittee. IMPACT OF THE COVID-19 PANDEMIC As in the previous fiscal year, 2021 overall was domi- nated by the effects of the global Covid-19 pandemic. Many countries again imposed general lockdowns and travel restrictions. As a result, market activity in many sectors continued to be severely impacted. The real estate sector is also experiencing the conse- quences of the pandemic already, with some real estate markets reporting significantly lower levels of transaction activity and liquidity. Hotels still have to close due to low occupa ncy rates and retailers are increasingly requesting rent deferrals or rent reductions in the fa ce of significant sa les losses. Some construction sites cannot be operated as planned. CA Immo is experiencing the first effects on con- struction sites, but even after two years of the pandemic, there have been no significant time or financial shortfalls to date. However, the short- and long-term economic im- pact of the Covid-19 pandemic on real estate markets re- mains highly uncertain. The longer the crisis lasts, the more complex and severe the effects will be. Develop- ments remain to be seen. Volatility and uncertainty on stock markets, corporate profit warnings and negative economic forecasts related to the Covid-19 pandemic underline its potential threat to the European and global economies. The real effects can- not be conclusively assessed given the fast-moving situa- tion, and are subject to constant evaluation. Temporary restrictions on the course of operations (also caused by exit restrictions, curfews, border closings, school/busi- ness shutdowns and other constraints) may affect the CA Immo Group, tenants, customers and suppliers as well as authorities. The consequences in terms of finance, general business and real estate in particular cannot be fully gauged (e.g. rent payments not received in accord- ance with the contract, delays in construction activities, effects on real estate markets, development of covenants for financings, consequences for planned real estate trans- actions). However, CA Immo relies on a wide range of possible measures to minimise the impact on the Group. INVESTMENT PROPERTY RISKS Risks linked to the market environment and composition of the portfolio (portfolio risk) The economic success of CA Immo depends, among other things, on the development of real estate markets of relevance to the Group. Key factors influencing the eco- nomic trend include the overall global economy, the trend in rental prices, the inflation rate, levels of national debt and interest rates. In the office properties segment, factors such as economic growth, industrial activity, the unemployment rate and consumer confidence play a ma- jor role alongside other factors critical to the economic trend. These circumstances – all of which are beyond the company’s control – may have a negative impact on the broad economic picture in Europe and thus adversely af- fect economically powerful countries like Germany and Austria; they may also impair the finance and real estate sector generally. Any downturn in the economic situation has the potential to reduce demand for real estate, which in turn can adversely affect occupancy rates, property val- ues and even the liquidity of real estate. Economic insta- bility and limited access to loan capital and equity-based financing can lead to business partners opting out. Where GROUP MANAGEMENT REPORT GROUP MANAGEMENT REPORT 52 the liquidity of the real estate inve stment market is insuf- ficient, there is a risk that sales of individual properties with a view to strategic adjustment of the real estate port- folio may prove impossible or only possible under unac- ceptable conditions. Property values depend not only on the development of rental rates, but also on real estate starting yields. Given the general market environment, there is still a risk that starting yields for commercial real estate will be adjusted upwards. The historically high price of property invest- ment is combining with low real estate yields to create risks to the value of properties in the CA Immo portfolio. Due to sustained pressure from investors, there is also the risk that properties are only available to purchase at in- flated prices. The possibility of an increase in general in- terest rates that forces property yields up and subse- quently property values down cannot be ruled out. In view of the uncertain future impact of the Covid-19 pandemic and the related current and future measures on the property markets, plus the fact that it is difficult to distinguish between short-term effects and longer-term structural market changes, CA Immo regularly reviews its property valuations. Following a near-complete external valuation of the Group's portfolio in the fourth quarter of 2021, values for the property assets as at the reporting date of 31 December 2021 were updated or adjusted on the basis of binding purchase agreements or external val- uations. Taking into account the current exceptional cir- cumstances and low levels of transactions, property valu- ations must continue to be handled with greater caution than is normally necessary, especially in the core markets of Austria and Eastern Europe. For further information on changes in fair values, please refer to the chapter ‘Prop- erty Valuation’. CA Immo counters market risk by spreading its portfo- lio across various countries. CA Immo counters country- specific risk by concentrating on strategic core regions through local subsidiaries with their own on-site staff, and through appropriate regional allocation within those core markets. The focus here is on markets that exhibit the long-term structural trends of increasing urbanisation, positive demographic change, and structural supply shortages as well as high investment liquidity. Market knowledge, continual evaluation of strategy, monitoring of the portfolio and purposeful portfolio management in the context of strategic decision-making (e.g. defining exit strategies, medium-term planning of sales) enable the company to respond quickly to economic and political events. CA Immo negates transfer risk by repatriating liq- uid assets from investment markets with a low credit standing. Active portfolio management aims to prevent concentration risk and maintain a balanced portfolio structure. CA Immo is currently active in Germany, Aus- tria and selected CEE markets. Germany is currently the largest single market of CA Immo, accounting for a share of 60% of the total portfolio. The regional portfolio target distribution envisages a medium-term target for the Ger- man share of 60-65%. CA Immo is part of the EPRA De- veloped Europe Index, which supports the capital market positioning and the overall rating. To this end, an aggre- gate EBITDA contribution of Germany, Austria and Po- land of more than 50% is targeted. In terms of asset clas- ses, CA Immo concentrates on modern, high-quality of- fice properties, with a focus on prime inner-city loca- tions. The development business segment also realises property developments and construction projects with other usage types (e.g. residential, hotel), which are gen- erally sold after successful development or completion. For single investments, CA Immo currently defines con- centration risk as a limit value of 5% of the total portfo- lio. The only properties in this category as at the balance sheet date were the Skygarden office building in Munich and the ONE project development in Frankfurt. The port- folio as a whole is highly diversified: the top ten Group assets represent less than one-third of the total portfolio. The concentration risk in respect of single tenants is also manageable. As at 31 December 2021, the top ten tenants were generating some 22% of rental revenue. With an ap- proximate share of 3% of total rental income, Pricewater- houseCoopers followed by Intercity Hotel GmbH are cur- rently the biggest individual tenants in the portfolio. In general, single tenants should not account for more than 5% of total annual rental income over an extended pe- riod, although tenants with excellent credit ratings (AAA/AA) may be an exception. For single-tenant build- ings, such scenarios should be avoided unless the tenant's credit rating is considered excellent (AAA/AA). A single- tenant scenario is defined as a case where more than 75% of the annual rental income (single property level) is at- tributable to a single tenant. Generally, rental income from single-tenant buildings should not exceed 20% of total annual rental income. In addition, the average lease term for single-tenant properties should exceed ten years. GROUP MANAGEMENT REPORT 5 3 Other concentration risks arising from factors such as the existence of several properties with a market value of more than €100 m in the same city, the sector mix of ten- ants, the identity of contractual partners, suppliers or lenders, etc., which cannot be effectively measured or limited in quantitative terms, are subject to regular re- view. Political and economic trends in the countries in which CA Immo is active also have a significant impact on occu- pancy rates and rent losses. The earning power and mar- ket value of a property is adversely affected where the Group is unable to extend a rental agreement due to ex- pire under favourable conditions or find (and retain for the long term) suitably solvent tenants. The creditworthi- ness of a tenant, especially during an economic down- turn, may diminish over the short or medium term, which can affect rental revenue in turn. In critical situations, the Group can cut rents to maintain an acceptable occupancy rate. All of CA Immo's core cities have already seen a decline in demand for office space and/or an increase in vacancy rates due to the challenging conditions and economic im- pact of the pandemic. After both transaction and letting activities have declined significantly, extended marketing and vacancy periods for unlet units are also likely in the future. As demand for office space is primarily dependent on macroeconomic developments, it remains to be seen how the in some cases decline in office space take-up in 2021 will develop in fiscal year 2022. It also remains un- clear how the expansion of digital working processes linked to the crisis and the rise of the home office will af- fect demand for office space in the medium term. The pos- sibility of the office market being more strongly influenced in future by the trends towards flexible office space leases and co-working cannot be ruled out. Across its tenant base (office, hotel, retail), CA Immo is confronted with different requests for rent reduction. The legal framework varies from country to country. In the event of Covid-19-related official shut-downs or re- strictions of operations, Austrian law provides for a spe- cial statutory right to reduce rent, whereas in other coun- tries, in the absence of specific statutory provisions, there is generally an obligation to pay rent; a right to reduce rent can only be established by way of exception and in individual cases via general legal provisions (such as the lapse of the contractual basis). However, deviating con- tractual provisions can also justify a tenant's right to re- duce rents. The extent to which the measures taken to contain the Covid-19 pandemic will lead to insolvencies of individual tenants and thus to an increase in vacancy rates cannot yet be estimated and will largely depend on the duration of the crisis. In particular the hotel, restau- rant and non-systematically relevant retail sectors are suf- fering disproportionately from the prevailing situation. Depending on the asset class, further rent waivers, rent reductions and rent deferrals are likely. CA Immo responds to this risk by analysing the property portfolio, tenant structure and cash flow, among other things, and performs various scenarios to assess the risks. Case-by-case assessment is generally necessary. Through careful monitoring and proactive measures (such as de- manding securities and screening the creditworthiness and reputation of tenants), the Group’s rent default risk has remained at the low level, despite the negative impact of the pandemic on individual tenants. Subject to the un- predictable economic impact of the pandemic, a decline in rental income cannot be excluded. All outstanding re- ceivables are evaluated quarterly and adjusted according to the level of risk. The risk of lost rent is taken into ac- count to a sufficient degree in the estimation of property values. Many of the Group’s lease agreements contain sta- ble value clauses, often taking account of consumer price indices for particular countries. The level of revenue from such rental contracts and new lettings depends heavily on the inflation trend (sustainable value risk). Competition for reputable tenants is intense on the let- tings market; rent levels are under pressure in many mar- kets. To remain attractive to tenants, CA Immo could be forced to accept lower rental rates. Moreover, incorrect as- sessments of the attractiveness of locations or potential usages can make lettings more difficult or significantly impair desired lease conditions. To a lesser extent, the Group’s portfolio also includes special asset classes such as shopping malls and hotels whose operation involves its own risks. Poor running of a centre, inadequate corporate management of tenants, de- clining footfall and increasing competition can force rental rates down and lead to the loss of key tenants, which in turn leads to rent losses and problems with new lettings. Although CA Immo does not operate any hotels itself, the Group’s earnings situation also depends on the quality of external hotel management and the develop- ment of hotel markets. Among other things, there are pan- GROUP MANAGEMENT REPORT GROUP MANAGEMENT REPORT 5 4 demic measures ordered by the authorities, such as lock- downs, which have a particularly severe impact on hotel operators and the retail sector. RISKS ASSOCIATED WITH THE PROJECT DEVELOPMENT FIELD Costs are generally sustained at the early stages of real estate development projects; revenue is not generated un- til the latter phases of a project. Many development pro- jects may be associated with cost overruns and delays in completion that are frequently beyond the control of CA Immo. This can adversely affect the economic viabil- ity of individual projects and lead to contractual penal- ties and compensation claims. If no suitable tenants are found, this can lead to vacancy after completion. CA Immo takes steps such as cost monitoring, variance analyses and long-term liquidity planning to manage these risks to a large extent. With few exceptions, projects are only started subject to appropriate pre-letting that can cover future debt service through rental income. Excep- tions are only made in special project and/or market situ- ations (e.g. extreme regional shortage of leasable space with foreseeable rising rents and low letting risk during the project phase) and require explicit reviews when ob- taining project approval. Saturation of the construction industry presents risk to CA Immo as regards the (on time) availability of construc- tion services and the level of building costs and quality. This is now noticeable not only in Germany – the core market for the company's development projects – but in all CA Immo's core regions. Despite making provision for rising costs within project reserves, the fact that further rises in construction costs could present a risk to budget compliance and the overall success of a project cannot be ruled out. Another risk is that current property yields might change, thereby reducing target developer profits, even though projects have been calculated defensively. For this reason, CA Immo is increasingly reliant on appro- priate market and cost analyses in the development area as well. Given the current market conditions – with rising construction costs, supply and timing problems, fluctuat- ing financing rates, uncertain marketing periods and a lack of comparative values – it is inevitable that a higher uncertainty factor will apply to project developments. Land values could therefore fluctuate much more than would be the case under normal circumstances. Projects currently in progress are generally on time and within ap- proved budgets; they are continually monitored as re- gards cost risk. CA Immo creates sustainable value through a compre- hensive value chain, from leasing and management to the construction, planning and development of investment properties with highly developed in-house expertise. This reduces functional (performance) risks while maximizing opportunities along the value chain (developer profit). Although, land reserves and land development projects present specific risks (e.g. permit risk) owing to the high capital commitment and absence of steady cash inflows, they also offer considerable potential for value increases through the securing or enhancement of building rights. Risks are regularly reduced via the sale of non-strategic land reserves. The acquisition of building rights on re- maining land will be accelerated through the company's own capacity. Overall, CA Immo is aiming for a balanced portfolio; on the basis of balance sheet values, this means around 85% profitable investment properties and 15% development projects under construction, including land bank reserves. Since CA Immo undertakes a number of development projects as joint ventures, the company depends on the solvency and performance capability of partners to some extent (partner risks); moreover, the Group is exposed to credit risk in respect of its counterparties. Depending on the agreement in question, CA Immo could also bear joint liability for costs, taxes and other third-party claims with its co-investors and, where a co-investor opts out, be forced to accept liability for their credit risk or their share of costs, taxes or other liabilities. GROUP MANAGEMENT REPORT 5 5 FINANCIAL RISKS Capital market, liquidity, investment and refinancing risk (Re)financing on the financial and capital markets is one of the most important considerations for a real estate company. In particular, CA Immo relies on debt capital to refinance existing loans and to finance development pro- jects and acquisitions. In effect, therefore, the company is dependent on the readiness of banks and capital markets to provide additional debt capital and extend existing fi- nancing agreements under acceptable terms. Market con- ditions for real estate financing are constantly changing. The attractiveness of financing options depends on a range of factors, not all of which can be influenced by the Group (market interest rates, required collateral and so on). This can significantly impair the ability of the Group to raise the completion level of its development portfolio, invest in suitable acquisition projects or meet its obliga- tions in connection with financing agreements. Although the CA Immo Group has a sufficient level of liquidity as things stand, we must take account of re- strictions at individual subsidiary level; access to cash and cash equivalents is limited owing to obligations to ongoing projects and a liquidity requirement to stabilise loans exists in certain instances. There is also a risk that planned sales will be prevented, delayed or transacted at prices lower than expected. Other risks arise from un- foreseen additional funding obligations in relation to project financing and breaches of covenant in the prop- erty financing area or corporate bonds issued by CA Immo. Where these requirements are violated or de- fault occurs, the relevant contractual partners are enti- tled to accelerate financing and demand immediate re- payment. This could force the Group to sell properties or arrange refinancing under unfavourable terms. CA Immo has fluctuating stocks of cash and cash equiv- alents which the company invests according to its partic- ular operational and strategic needs and objectives. In or- der to maintain the investment grade - long-term issuer rating from Moody's (currently Baa3 with negative out- look) at an acceptable level, adequate equity capitalisa- tion is also required. CA Immo counters risk of this kind by continually monitoring covenant agreements and effectively plan- ning and securing liquidity. The financial consequences of strategic aims are also taken into account. To control liquidity peaks, the Group has secured a revolving facil- ity at parent company level (e.g. 3-year RCF of €300 m). This also ensures the Group can meet unexpected cash flow requirements. In line with the investment horizon for real estate, loans are invariably agreed on a long-term basis. In principle, appropriate financing (e.g. loan or bond) must be guaranteed before binding contracts are concluded in connection with real estate acquisitions. As an alternative and supplement to established means of (equity) capital procurement, the company has also en- tered into equity partnerships (joint ventures) at project level in the past. Despite careful planning, it is not possible to eliminate liquidity risk, particularly where capital requests linked to joint venture partners are not viable. CA Immo Deutschland has a high capital commitment, which is typical of development projects. Financing has been se- cured for all projects under construction; additional fi- nancing is required for new project launches. Interest rate risk Although the current economic environment remains characterised by low interest rates and relatively high val- uations of real estate portfolios, the possibility of an inter- est rate rise negatively affecting the real estate market – and thus property valuations and the divestment plans of CA Immo – cannot be discounted. Raising equity or debt capital could become considerably more difficult, making expansion plans almost or completely impossible. Market-related fluctuations in interest rates affect both the level of financing costs and the fair value of interest hedging transactions concluded. For financing purposes, CA Immo uses banks at home and abroad and issues cor- porate bonds, thereby opting for a mix of long-term fixed-rate and floating-rate loans. To hedge against im- pending interest rate changes and associated fluctua- tions in financing costs, greater use is made of derivative financial instruments (interest rate caps, swaps and floors) in the case of floating-rate loans. However, hedg- ing transactions of this kind may prove to be inefficient or unsuitable for achieving targets; they may also result in losses that affect earnings. Moreover, the valuation of derivatives can impact negatively on profits and share- holders’ equity. The extent to which the Group utilises derivative instruments is guided by assumptions and market expectations in respect of the future interest level, and especially the 3-month Euribor rate. Should these assumptions prove incorrect, the result can be a GROUP MANAGEMENT REPORT GROUP MANAGEMENT REPORT 5 6 significant rise in interest expenditure. Continual moni- toring of the interest rate risk is therefore essential. No risks constituting a serious and permanent threat to the company exist at the present time. Moreover, CA Immo is increasingly obtaining finance from the capital market. Fixed-interest loans (in the form of corporate bonds, for example) and loans hedged through derivatives currently account for 96% of the total financing volume. Continual optimisation of the financing structure in recent years has served to improve the maturity profile and raise the quota of hedged financial liabilities while reducing aver- age borrowing costs. The pool of unencumbered assets was also raised. The financing profile has thus become more robust. Tax risks For all companies, current income and capital gains is subject to income tax in the respective country. Im- portant discretionary decisions must be taken regarding the level of tax provisions that need to be formed. The extent to which active deferred taxes are recognised must also be determined. Subject to compliance with certain requirements, reve- nue from the sale of participating interests may be fully or partially exempted from income tax. Even where a com- pany intends to meet the requirements, passive deferred taxes are fully applied to property assets according to IAS 12. Key assumptions must also be made regarding the ex- tent to which deductible temporary differences and loss carry forwards are set off against future taxable profits, and thus the extent to which active deferred taxes can be recognised. Uncertainty arises regarding the amount and timing of future income and the interpretation of complex tax regulations. Where there is uncertainty over the appli- cation of income tax to business transactions, an assess- ment will be required as to whether or not the responsible tax authority is likely to accept the interpretation of the tax treatment of such transactions. In case of doubt, the CA Immo Group enters the tax obligation as the most likely amount on the basis of that assessment. Such doubt and complexity can mean that future tax payments turn out to be significantly higher or lower than the obliga- tions currently assessed as probable and recognised in the balance sheet. The CA Immo Group holds a large part of its real estate portfolio in Germany, where many complex tax regula- tions must be observed. In particular, these include (i) provisions on the transfer of hidden reserves to other as- sets, (ii) legal regulations on real estate transfer tax or the possible accrual of real estate transfer tax in connection with direct or indirect changes of control in German part- nerships and corporations, (iii) the fiscal recognition of outsourcing operating equipment or (iv) the deduction of input taxes on construction costs in the case of develop- ment projects. The CA Immo Group makes every effort to ensure full compliance with all tax regulations. Nonethe- less, there are circumstances (some of which are outside the CA Immo Group’s control) such as changes to the shareholding structure, changes in legislation or changes in interpretation on the part of tax authorities and courts which could lead to the aforementioned taxation cases being treated differently, which in turn would influence the assessment of tax in the consolidated financial state- ments. Moreover, in connection with past restructuring measures in Eastern Europe, there are uncertainties re- garding the possible retroactive application of any subse- quent tax changes. However, CA Immo considers the probability of an actual charge to be low. With regard to the tax deductibility of internal service charges within the Group, CA Immo always attempts to charge an arm's length price for internal services and to adequately record this in order to comply with all legal requirements (transfer pricing documentation). However, it is possible that the tax authorities may take a different view and come to a different conclusion, which could have tax consequences with regard to the deductibility of internal cost transfers undertaken in the past and thus trigger subsequent tax payments. Currency risks The possible reintroduction of national currencies by individual Eurozone members would also have serious consequences for the European economies and financial markets. Finally, the exit of individual nations from Euro- pean Monetary Union could lead to a complete collapse of the monetary system. Since CA Immo is active on a number of markets out- side the eurozone, the company is subject to various cur- rency risks. Where rents are payable in currencies other than the euro on these markets and cannot be fully ad- justed to current exchange rates in time, incoming pay- ments may be reduced by means of exchange rate changes. Where expenses and investments are not trans- acted in euros, exchange rate fluctuations can impair the GROUP MANAGEMENT REPORT 5 7 payment capacity of Group companies and adversely af- fect the Group’s profits and earnings situation. CA Immo generally counters such risk in that foreign currency inflows are secured by pegging rents to the euro; no significant and direct currency risk exists at present. The pegging of rents affects the creditworthiness of ten- ants and thus produces an indirect currency risk that can result in payment bottlenecks and loss of rent. Since in- coming payments are mainly received in local currency, however, free liquidity (rental revenue less operating costs) is converted into euros upon receipt. This process is continually overseen by the responsible country managers. There is no currency risk on the liabilities side. Currency risks linked to construction projects are hedged according to need on a case-by-case basis, taking account of the cur- rency underlying the order and lease agreement, likely ex- change rate development and the calculation rate. Transaction risk and risks from sales transactions The German real estate transaction market was unim- pressed by the pandemic and developments in the sur- rounding countries in 2021 and achieved a record result in terms of investment volume. Due to a seasonal slow- down in the pandemic and government aid for compa- nies, there was no further slump in the Austrian real es- tate market as seen in the previous year. In Central and Eastern Europe, too, the impact of the pandemic and its economic consequences on the real estate markets in 2021 were already less noticeable than in the previous year. The positive momentum of the last few years before the start of the pandemic was slowly resumed. This is also evident in CA Immo's core cities of Warsaw, Prague, Budapest and Bucharest. However, in the current situa- tion, it cannot be excluded that the real estate transaction market will decline again and that transactions will be suspended or even canceled due to problems in pricing and financing. Sales transactions can produce risks linked to contractual agreements and assurances. These might relate to guaran- teed income from rental payments and can subsequently reduce purchase sums agreed or received. Sufficient fi- nancial provision has been made to counter recognised risks to revenue from transacted sales, and liquidity risk is considered in liquidity planning. Contractual obliga- tions in the form of follow-on costs (e.g. residual con- struction work) form part of relevant project cost esti- mates. OTHER RISKS Operational and organisational risks Weaknesses in the CA Immo Group’s structural and process organisation can lead to unexpected losses or additional expenditure. This risk can arise from short- comings in EDP and other information systems as well as human error and inadequate internal inspection pro- cedures. Flawed program sequences as well as auto- mated EDP and information systems pose a high opera- tional risk where their type and scope fail to take ac- count of business volumes or prove vulnerable to cyber- crime (IT and cyber risks). Human risk factors include an insufficient understanding of corporate strategy, inad- equate internal risk monitoring (and especially business process controls) and excessive decision-making author- ity at individual level, which can lead to unconsidered actions or a proliferation of decision-making bodies that hinder flexible responses to changes in the market. Some real estate management tasks and other administrative duties are outsourced to external third parties. In the process of transferring administrative tasks, it is possible that knowledge of managed properties and administra- tive processes can be lost, and that CA Immo could prove incapable of identifying and contractually committing suitable service providers within the necessary timeframe. Nonetheless, the expertise possessed by a company and its workforce constitutes a significant competitive factor and a unique point of distinction over competitors. When key members of staff leave, therefore, the company is exposed to the risk of loss of expertise, which gener- ally requires a significant commitment of corporate re- sources (money, time, recruitment of new employees) to redress the balance (HR risk). CA Immo takes various measures to counter these risk factors. In the case of corporate mergers, structured pro- cesses of organisational integration are observed. Process organisation (i.e. system/process integration) is firmly es- tablished; activities to ensure the long-term implementa- tion of operational processes are ongoing. The Group structure is regularly scrutinised and examined to ensure predefined structures take account of the size of the com- pany. CA Immo counters risks linked to personal exper- tise (which can arise with the resignation of key knowledge holders) through regular transfers of knowledge (via training courses) and by documenting know-how (in manuals, etc.); far-sighted staff planning also plays a part. GROUP MANAGEMENT REPORT GROUP MANAGEMENT REPORT 5 8 Legal risks In the course of normal business activity, the compa- nies of the Group can become involved in legal disputes, both as plaintiffs and as defendants. Such cases are heard in various jurisdictions. The law applicable in each case, the varying degrees of efficiency of the compe- tent courts and the complexity of the matters in dispute may in some cases result in a considerable length of pro- ceedings or other delays. CA Immo is confident that it has made sufficient financial provisions for legal dis- putes. At present, no lawsuits or arbitration proceedings that could threaten the company’s survival are imminent or pending. In the spring of 2020, CA Immo filed a claim for dam- ages against the Republic of Austria and the state of Carinthia for unlawful and culpably biased influence on the best bidder procedure in the context of privatisation of Federal Residential Property companies in 2004 (‘BUWOG’) and for the unlawful failure to win the best bidder procedure. The first instance (though not yet fi- nal) criminal verdicts of January 2022 against the defend- ants, ex-Federal Minister of Finance Grasser et al., which are relevant for these civil proceedings, essentially con- firmed that illegal and biased actions were taken to the detriment of CA Immo in connection with the BUWOG privatization proceedings. An assessment of the impact of the criminal proceedings on the pending civil pro- ceedings for damages will only be possible once all ap- peal proceedings have been concluded with a final crim- inal verdict. In 2020, a provision of approximately €25 m has been recognised for court fees in connection with the damages proceedings; the payment of the court fees was made following a ruling of the Federal Administrative Court in 2021. CA Immo has filed an appeal against this ruling with the Constitutional Court. It is not possible to predict changes to legal regulations, case law and administrative practice, or the impact of these on business results and operations; such changes may in particular adversely affect real estate values or the cost structure of the CA Immo Group. CA Immo pro- actively manages such legal risks by taking numerous measures. These include the regular assessment of his- torical and existing legal risks, continual monitoring of legislative changes and changes in case law, the incorpo- ration of lessons learned into business processes and continuous informative and training measures. ESG RISKS Current developments on the capital market (e.g. sus- tainable finance) and new legal requirements are creating pressure for companies to report more prominently than before on ESG risks resulting from their business activi- ties. Environmental, social and governance aspects have also become increasingly important across the real estate sector. Buildings are seen as one of the key factors for cli- mate protection due to their high energy consumption, which is why attention is currently still primarily focused on environmental issues, however, the social and govern- ance factors are also becoming increasingly relevant. Environmental risks Energy use in buildings for lighting, heating or cooling leads to direct or indirect CO 2 emissions. Building materi- als contain carbon that is produced during their extrac- tion, manufacture, transportation and processing. Since carbon is contained in almost every phase of the con- struction and operation of buildings, companies should start implementing appropriate real estate decarbonisa- tion programmes in time to contribute to the ambitious goal of climate neutrality in Europe by 2050. As a responsible player in the European real estate sector, CA Immo fully supports the United Nations' climate goals and the associated transition to a low-car- bon, sustainable economy. In order to meet the associated requirements in the best possible way and to secure long- term competitiveness, CA Immo has anchored corre- sponding measures, processes and goals in its strategic approach (including sustainability certification, sustaina- bility reporting, ESG reporting and green financing). For CA Immo, improving energy efficiency in existing buildings is a key factor in achieving climate neutrality. Since carbon efficiency results depend significantly on decisions made in the planning phase, we pay attention to future environmental impacts at a very early stage in our project developments. Where possible, we focus on increasing the proportion of bio-based materials, paying attention to the CO 2 footprint of conventional materials and on-site energy generation (solar panels, heat pumps, heat grids, etc.). Our procurement process also ensures that the high green standards are met in accordance with the certification levels set for the building in question. We require our construction service providers to comply with the sustainability standards according to DGNB Gold or LEED Gold (e.g. material declaration, worker protection). GROUP MANAGEMENT REPORT 59 Detailed information on this – in particular on climate risks and opportunitie s including risk assessment – can be found in the ESG Report. Other environmental and climate risks Environmental and safety regulations include active and latent obligations to remediate contaminated sites. Com- plying with these provisions can entail considerable in- vestment expenses and other costs. These obligations may apply to real estate currently or formerly owned by CA Immo, or currently or formerly managed or developed by the company. In particular, the provisions cover con- tamination with undiscovered harmful materials or nox- ious substances, munitions and other environmental risks such as soil pollution, etc. Several regulations impose sanctions on the discharge of emissions into air, soil and water: this can render CA Immo liable to third parties, significantly impact the sale and letting of affected prop- erties and adversely affect the generation of rental reve- nue from such properties. Natural disasters and extreme weather conditions can also cause considerable damage to real estate. In principle, insurable risks are insured to the usual extent (e.g. all-risk insurance for development projects). Unless sufficient insurance is in place to cover such damage, this can have an adverse impact. To mini- mise the risk, CA Immo incorporates these considerations into its due diligence audit prior to every purchase; ap- propriate guarantees are required from sellers. Wherever possible, the CA Immo Group makes use of environmen- tally sustainable materials and energy-saving technolo- gies. CA Immo observes the ecological precautionary principle by ensuring all (re)development projects qualify for certification. Social risks In the social sector, our strategic focus is on the fol- lowing topics in particular: Compliance with hu- man rights, health & safety, employment & working con- ditions, and social aspects of sustainable urban develop- ment. In the case of construction services, for example, CA Immo requires and monitors its contractors for com- pliance with statutory regulations on occupational health and safety, workplace and working time regulations, and collective bargaining agreements. Information on the key social risks faced by CA Immo and the wide-ranging protective measures implemented by CA Immo in the course of the Covid-19 pandemic to ensure a safe working environment for CA Immo employ- ees, tenants and workers on CA Immo construction sites c an be found in the ESG report. Governance risks Best practice in corporate governance represents an opportunity for CA Immo to increase its value in the long term. Conversely, failure to comply with govern- ance and compliance standards entails high risks, rang- ing from penalties and fines to loss of reputation. These include not only compliance with legal requirements, governance standards and (internal) guidelines, but also a transparent approach to conflicts of interest, granting of appropriate remuneration, promotion of open commu- nication with all stakeholders, and adherence to our ethi- cal principles and corporate values. CA Immo clearly op- poses any form of unequal treatment, human rights viola- tions, organized crime (e.g. fraud, extortion, bribery and corruption), money laundering or terrorism financing. In contrast, we want to promote integrity and diversity at all levels. The risk of corruption is addressed, for example, by the code of conduct (‘zero tolerance’) and the related gifts and donations policy. Employees are required to report any suspicions internally. Employees and external third parties can also report suspected misconduct anony- mously via the electronic whistleblower system set up by CA Immo (Whistleblower System (caimmo.com)). The Supervisory Board is informed at least once a year about measures taken to combat corruption. Corruption-related matters are audited on the basis of the audit plan ap- proved by the audit committee or on the basis of special audit assignments issued by the Management Board, au- dit committee or full Supervisory Board. All operating Group companies are reviewed for corruption risks on a regular basis. Already as part of the tender process, we require our contractors and suppliers (vendors) to accept and com- ply with our Code of Ethics and Code of Conduct as well as the governance, social and environmental standards we have defined. CA Immo screens its business partners – including construction companies in particular – as part of the tender process not only in terms of their pro- fessional qualifications and economic situation, bu t also with regard to social aspects. As part of a third-party compliance check, questionnaires and the use of com- pany and risk databases for undesirable media, sanc- tions, watchlists, etc. are also used to check complian ce with governance, social and environmental standards and taken into account in tendering processes. In the GROUP MANAGEMENT REPORT GROUP MANAGEMENT REPORT 6 0 governance field, we pay particular attention to compli- ance with the law, our internal requirements for contrac- tual partners, for example, with regard to business eth- ics, ensuring compliance, and measures to combat cor- ruption, money laundering, and terrorism financing. Details of our key standards and related control mecha- nisms are available at Our values (caimmo.com). GROUP MANAGEMENT REPORT 6 1 SHARE CAPITAL & SHAREHOLDER STRUCTURE Due to the change-of-control clause of the convertible bond triggered by the Starwood offer, almost all convert- ible bond holders have exercised their conversion rights. Since the end of April, the conversion rights have been serviced by conditional capital and partly by issuing new shares. Overall, the total number of voting rights in- creased by 7,688,090 from 98,808,336 to a total of 106,496,426 voting rights. As of the end of April 2021, the share capital increased by a total of €55,892,414.30 from €718,336,602.72 and amounted to €774,229,017.02 at the balance sheet date, divided into four registered shares and 106,496,422 bearer shares, each with a pro- portionate amount of the capital stock of €7.27. The bearer shares trade on the prime market segment of the Vienna Stock Exchange (ISIN: AT0000641352). With a shareholding of around 58% as at 31 December 2021 (61,654,765 bearer shares and four registered shares), SOF-11 Klimt CAI S.à r.l., Luxembourg, a com- pany managed by Starwood Capital Group, is the largest shareholder of CA Immo. Starwood is a global financial investor focusing on real estate investments. The remain- ing shares of CA Immo are held in free float by both insti- tutional and private investors who, with the exception of Petrus Advisers Ltd. (4.57% as of 18 March 2022), each hold a stake below the 4% threshold required by law to be reported. For more information on the organisation of the shares and the rights of shareholders, please refer to the Corporate Governance Report (Corporate Governance (caimmo.com)). CAPITAL DISCLOSURES At the 31st Annual General Meeting of 9 May 2018, the Management Board was authorized, with the consent of the Supervisory Board, to increase the capital stock by up to €359,168,301.36 (approx. 50% of the current capital stock) by issuance of up to 49,404,168 new ordinary bearer shares in return for contributions in cash or in kind (also in several tranches and by exclusion of share- holders’ subscription rights if required). In addition to the conditional capital available for this purpose, author- ised capital of €9,098,448.62 was used to service the con- version rights exercised by holders of convertible bonds, resulting in unused authorised capital of €350,069,852.74 as of 31 December 2021, which can be drawn down until 18 September 2023 at the latest. In the same Annual General Meeting the Management Board was authorized, with the consent of the Supervi- sory Board, until 8 May 2023 to issue convertible bonds up to a total nominal amount of €750 m with conversion and/or subscription rights in respect of up to 19,761,667 ordinary bearer shares of the company representing a pro-rata amount of the share capital of the company of up to €143,667,319.09 (‘contingent capital 2018’), also in several tranches and to determine all other terms of the convertible bonds as well as in respect of the issuance and the conversion procedure. Under this authorisation, convertible bonds may only be issued, if the total number of new shares for which conversion and/or subscription rights are granted by such convertible bonds shall not ex- ceed 20% of the share capital at the time this authorisa- tion is resolved upon. The shareholders’ subscription rights were excluded (article 174 para 4 in connection with article 153 Austrian Stock Corporation Act (AktG)). At the 34th Annual General Meeting held on 6 May 2021, the Management Board was authorised in accord- ance with article 65 para 1 no 8 and para 1a and para 1b Austrian Stock Corporation Act (AktG) for a period of 30 months from the date of the adopted resolution (until 5 November 2023), with the consent of the Supervisory Board, to repurchase treasury shares in the company, whereas the company’s stock of treasury shares must not exceed 10% of its share capital. The consideration shall not be lower than 30% and shall not exceed 10% of the average unweighted market price at the close of the mar- ket on the ten trading days preceding the repurchase. The Management Board is further authorised to determine the respective other terms and conditions of the repurchase, whereby the treasury shares may be acquired at the dis- cretion of the Management Board via the stock exchange, by way of a public offer, or by any other lawful and ap- propriate way, in particular off market, and/or from indi- vidual shareholders and under exclusion of the share- holders’ pro rata rights (reverse subscription right). The authorisation may be exercised in full or in part or in multiple partial amounts and in pursuit of one or more purposes by the company, subsidiaries (article 189a no 8 Commercial Code (UGB)) or by third parties for their ac- count. The authorisation may be repeatedly exercised. In addition, the Management Board was authorised, with the consent of the Supervisory Board, to transfer the ac- quired treasury shares by all legally permissible means and to determine the terms and conditions of the transfer of shares or to cancel the treasury shares without an addi- tional resolution by the General Meeting. INFORMATION ACC. SECTION 243A UGB (AUSTRIAN COMMERCIAL CODE) GROUP MANAGEMENT REPORT GROUP MANAGEMENT REPORT 6 2 No use has been made of the share buyback programme in the year under review. As at 31 December 2021, CA Immobilien Anlagen AG held 5,780,037 treasury shares in total; given the total number of 106,496,426 vot- ing shares issued, this corresponds to approximately 5% of the voting shares. INFORMATION ON THE MANAGEMENT AND SUPERVISORY BOARDS According to the articles of association, the Manage- ment Board of CA Immo comprises one, two or three per- sons. The age limit for Management Board members is defined as 65 in the Articles of Association. The final term of office for Management Board members concludes at the end of the Annual General Meeting that follows the 65th birthday of a Board member. The Supervisory Board comprises no less than three and no more than twelve members. At any time, Supervisory Board members ap- pointed through registered shares may be asked to step down by the person entitled to nominate and replaced by another. The provisions of the Articles of Association re- garding terms of office and elections to appoint replace- ments do not apply to them. The other Supervisory Board members are elected by the Annual General Meeting. The age limit for Supervisory Board members is defined as 70 in the Articles of Association. Supervisory Board mem- bers must step down from the Board at the end of the An- nual General Meeting that follows their 70th birthday. The Shareholder’s Meeting resolves on the dismissal of members of the Supervisory Board on the basis of a ma- jority of at least 75% of the capital stock represented (ar- ticle 21 of the Articles of Association of CA Immo). CHANGE-OF-CONTROL CLAUSES The new Management Board contracts concluded in fiscal year 2021 do not contain any commitments assuring pay- ments in the event of premature termination of Manage- ment Board duties following a change of control (“change of control” provisions). GROUP MANAGEMENT REPORT 63 CA Immo is an investor, developer and long-term man- ager of high-quality office buil dings. Our strategic busi- ness model is geared towards sustainable value creation, taking into account ecological, economic, social and legal dimensions. This goes hand in hand with our claim to meet the diverse interests and needs of CA Immo´s stake- holders in a responsible balance, thereby safeguarding competitiveness in the long term. With this in mind, we evaluate and manage the requirements of our stakehold- ers as well as the impact of our business activities on our ecological and social environment. This report shows our strategic positioning, goals and action plan on the topic of sustainability and provides an overview of correspond- ing activities in 2021. Reporting standards and guidelines CA Immo is not obliged to prepare a consolidated non- financial report in accordance with section 267a of the Austrian Commercial Code (Nachhaltigkeits- und Diver- sitätsverbesserungsgesetz, or NaDiVeG). As a public inter- est entity, we nevertheless voluntarily prepare a corre- sponding report. In order to prepare our sustainability topics as clearly as possible and in an internationally comparable manner, we base our reporting on two common international standards: the EPRA Sustainability Best Practice Recom- mendations 3rd Edition (sBPRs) and the recommenda- tions of the Task Force on Climate Related Financial Dis- closures (TCFD). An overview of all sustainability topics integrated into the annual report in accordance with these standards can be found in the appendix, including the definition of the report boundaries. The EPRA sBPR Guidelines provide – based on the standards of the Global Reporting Initiative (GRI) – a con- sistent method for the comparable presentation of the sustainability performance of real estate companies and cover the categories environment, social and governance (ESG). The TCFD recommendations stand for consistent disclosure of climate-related financial risks. In addition, we show and explain the United Nations Sustainable Development Goals (SDGs) considered within the framework of our sustainability strategy. 1) www.voenix.at With the EU Ta xonomy Regulation, the 2021 financial year brought a new material standard for sustainability reporting. The topics and approaches of this regulation were already taken into account in the preparation of our ESG materiality analysis in 2020. In addition, we devote a separate chapter in this report to the EU taxonomy, its significance for CA Immo including an initial assessment of the relevant economic activities and the financial ra- tios covered by the EU taxonomy. Reporting boundaries and coverage A detailed definition of the reporting boundaries and -methodology can be found in the ESG Appendix. Reporting: Status and Outlook We aim to optimise t he transparency and comparability of our sustainability performance through reporting that i s as relevant and meaningful as possible. In 2021, our sustainability report, which is integrated into the annual report, received an "EPRA sBPR Gold" award for exem- plary ESG reporting for the second year in a row. We also partici pate annually in established ESG ratings. In the 2021 business year, CA Immo actively reviewed and com-mented on various ratings, includi ng Sustainalytics and the MSCI ESG Rating. In addition, CA Immo was ranked for another consecutive year as the only real estate com-pany i n the VÖNIX sustainability index of the Vienna Stock Exchange 1) . CA IMMO ESG RATINGS PERFORMANCE Rating Agency Score 2020 Score 2021 MSCI ESG Rating A AA Sustainalytics ESG Risk Rating 17.1 (low) 14.6 (low) ISS Corporate Rating C- C- EPRA sBPR Gold Award Gold Award ESG REPORT GROUP MANAGEMENT REPORT GROUP MANAGEMENT REPORT 64 are also conducted. External media coverage and ana- lysts' assessments of the company are regularly moni- tored. Our guidelines regarding political influence (lob- bying) can be found in our Code of Ethics & Conduct at www.caimmo.com/esg-policies. For CA Immo, an open, early exchange and partnership- based cooperation with local authorities, residents and other stakeholders in the context of development projects is a key success factor in creating sustainable and vibrant neighbourhood development. For this reason, an active dialogue is conducted with the relevant groups at an early stage of any project. This can take the form of neighbourhood or public events, posting or providing in- formation in public places, information to the local press, or face-to-face dialogue with selected target groups, among others. Every CA Immo neighbourhood develop- ment begins with an architectural competition for urban and landscape planning, which is advertised transpar- ently and awarded internationally. Representatives of all interest groups associated with the quarter development are involved in this process. The most recent example of early neighbourhood communication and stakeholder en- gagement are the citizens' events and the architectural competition in the course of the development of the Mu- nich Eggartensiedlung (eggarten-siedlung.de). The goal for the coming reporting periods is to further expand our reporting in line with international standards (f.e. the EU Taxonomy and the Corporate Sustainability Reporting Directive CSRD), best practice examples and the requirements of our stakeholders, and to take ad- vantage of opportunities that present themselves in the form of more favourable financing conditions, among other things. Both the quantity and the quality of the in- formation submitted to the rating agencies will continue to be increased. The canon of ESG ratings relevant to CA Immo is continually reviewed and supplemented as necessary. Stakeholder dialogue and political engagement Comprehensive and continuous dialogue with our di- verse target groups is an important prerequisite for the long-term success of CA Immo. The concerns of our stakeholders shape our self-image and guide our strategic decisions – and thus also flow into the selection and weighting of our strategic sustainability topics. Details on the materiality analysis and stakeholder assessment of our sustainability topics can be found on page 65. Our stakeholder relationships run on several levels. CA Immo employees are in constant direct dialogue and maintain personal contact with investors, tenants, busi- ness partners, local authorities, the media, other employ- ees and job applicants. Standardised employee surveys CA IMMO SUSTAINABILITY APPROACH GROUP MANAGEMENT REPORT 65 Organisational anchoring and management of sustainability issues and risks The entire Management Board is responsible for the group-wide, holistic implementation of the sustainability strategy in the corporate strategy and its compliance. CA Immo's ESG commitment comprises goals, corre- sponding measures and strategies for achieving these goals, comprehensive reporting and a commitment to compliance with various established standards in the ar- eas of the environment, social affairs and governance. The climate and general sustainability risks relevant to CA Immo are re-evaluated annually as part of the Group- wide risk catalogue, and appropriate risk-reducing measures are derived (risk profiles). A summary of the risk catalogue is presented to the Executive Board and Supervisory Board once a year. Risk prevention measures are implemented by the responsible departments as re- quired. Responsibility for the management of these risks lies with the entire Executive Board; the individual Exec- utive Board members are responsible for ensuring the op- erational effectiveness of the internal control systems and risk mitigation in their areas of responsibility. This pro- active approach is designed to ensure that any risks are minimised through early countermeasures and that the company can react to changing conditions in good time. The cross-departmental CA Immo Sustainability Task Force, headed by the Head of Sustainability, coordinates the ongoing implementation of the sustainability strategy and drives the development of new initiatives. The framework conditions, targets, measures and related pro- gress in the context of ESG are presented to the Manage- ment Board at regular Management Board meetings and other management meetings at least once a quarter. In ad- dition, the supervisory board is informed about ESG is- sues at least once a year as part of ongoing reporting. Information on the anchoring of ESG in the remunera- tion model of the Executive Board can be found in the Corporate Governance Report or at caimmo.com/remu- neration. 1) Impact of the environment, society and the economy on the business model, strategy and financial position of CA Immo Strategic sustainability initiative and awareness raising In 2019, CA Immo launched a Group-wide project to de- fine and manage its strategic sustainability activities un- der the motto "Tomorrow Proof by CA Immo". Parallel to the expansion of external reporting, the inter- nal communication of sustainability topics and activities was also intensified in 2021 – among other things through the formation of further working groups on indi- vidual topics (e.g. on climate scenarios and risks, EU tax- onomy) and virtual employee trainings. Relevance and priorities of CA Immo sustainability reporting To ensure that sustainability reporting and strategy fol- lows the right priorities, CA Immo carried out an analysis for the first time in the 2020 business year to determine the key sustainability issues. A corresponding list of top- ics was drawn up on the basis of the reporting of relevant competitors, regulations and sustainability standards as well as an internal analysis of the impact of CA Immo's business activities on the environment, society and the economy. The materiality analysis of this range of topics was sub- sequently carried out taking into account three dimen- sions: business relevance ("outside-in ") 1) , the significance of the impact of our business activities ("inside-out") 2) and a stakeholder assessment. Nearly the entire senior man- agement level of CA Immo was actively involved in this analysis process. In the course of the stakeholder survey, all CA Immo employees were invited to prioritise the in- dividual topics from their own point of view; the partici- pation rate was around 50%. A corresponding topic as- sessment from the perspective of the other CA Immo stakeholder groups (including tenants, investors, banks) was carried out by their internal CA Immo contacts. 2) Impact of CA Immo on the environment, society and the economy GROUP MANAGEMENT REPORT GROUP MANAGEMENT REPORT 6 6 The results of this three-dimensional materiality analy- sis are presented below in the form of a matrix. The six focus topics derived from this (strongest impact on the environment, society and economy, while at the same time having a high stakeholder relevance) define the framework within which CA Immo can make a relevant contribution to a sustainable economy – and the associ- ated key risks and opportunities. They subsequently de- termine the focus of ongoing sustainability reporting, strategic objectives and operational measures. The report- ing on the focus topics is marked by the corresponding symbols. The sustainability topics included in addition to the focus topics in the matrix below are also covered in our reporting, sometimes in less detail. Due to the current dynamic developments in ESG issues – both the regul atory environment and stakehol der needs – we will reass ess this materiality matrix at least every two years in the future. CA IMMO SUSTAINABILITY: MATERIALITY MATRIX AND FOCUS AREAS The diagram shows an overview of the relevant CA Immo sustainability topics according to their impact intensity on the environment, society and the econ- omy (horizontal axis) and stakeholder relevance (vertical axis). The relevance to the company's success is reflected in the size of the circular areas. The coloured area indicates the CA Immo focus areas (equally high impact and stakeholder relevance). Social, environ mental and economic impacts, risks and opportunities arising from CA Immo business activities A key step in identifying and weighting the sustainabil- ity issues relevant to CA Immo was to evaluate the im- pact of our business activity on the environment, society and the economy across the entire value chain. This in- cluded the following direct (own activities) and indirect (supply chain) material impacts, risks and opportunities. Environment: – Management of energy efficiency and CO 2 emissions, waste generatio n, resource consumption, an d circular econom y princi ples over the entire building life cycle – Eco-friendly pr ocurement and supply chain – Brownfield vs. greenfield de velopment (protection of biodiversity) – Sustainable product definition for city quarter develop- ments and new construction proj ects. GROUP MANAGEMENT REPORT 67 Society and economy: – Social standards in urban district and project develop- ment (product definition, e.g. social infrastructure, af- fordable housing), response to social change – Health and safety for tenants, contractors and own em- ployees in our buildings and on construction sites, deal- ing with pandemic risks – Working conditions and income effects of own and ex- ternal employees (contractors), employee rights, staff development and retention – Independent and responsible corporate governance, compliance with social and environmental require- ments, observance of human rights, avoidance of cor- ruption and bribery, reputational risk. UN Sustainable Development Goals (SDGs) As a relevant player in the European real estate sector, CA Immo supports the Sustainable Development Goals (SDGs) 1) of the United Nations (see graphic). Our posi- tioning and activities are in line with the SDGs; the most important fields of action are listed in the table on page 68 and explained in overview form. Memberships CA Immo is actively involved in the relevant platforms of the real estate industry and supports industry-relevant research and development through memberships and co- operations. For example, CA Immo has for many years been an active member of organisations which – promote sustainable urban and project development, e.g. the German Sustainable Building Council (DGNB) or the Urban Land Institute (ULI) – publicly represent and standardise relevant topics and concerns of the real estate industry, e.g. the European Public Real Estate Association (EPRA), the Zentraler Im- mobilien Ausschuss (ZIA) or the Initiative Corporate Governance (ICG). In addition, as a member of the ESG Circle of Real Estate (ECORE) 2) CA Immo participated in the development of a European scoring standard which is intended to make sustainability in real estate portfo- lios transparent, measurable and comparable. The aim of this commitment is to strengthen long-term competitiveness at both operational and corporate level through innovation, best practice and cross-company co- operation (see also the section on research and develop- ment). A complete list of all CA Immo memberships can be found on our Group website at ww.caimmo.com/mem- bership. 1) https://www.sdgwatch.at/en/about-sdgs/ 2) www.ecore-scoring.com GROUP MANAGEMENT REPORT GROUP MANAGEMENT REPORT 68 FOCUS AREAS OF CA IMMO IN THE CONTEXT OF INTERNATIONAL SUSTAINABILITY INITIATIVES Focus Area Description Main topics of the EU Taxonomy Regulation UN Sustainable Development Goals (SDGs) Climate & Energy We want to contribute to limiting global warming to 1.5° Celsius. Therefore, we have set ourselves the goal of reducing the energy consumption and CO 2 footprint in the construction and operation of our buildings and increasing the resilience of our portfolio to climate risks. By raising awareness among our tenants, employ- ees and suppliers, we aim to promote climate and envi- ronmentally friendly behaviour within our sphere of in- fluence. – Climate Change Mitigation – Climate Change Adaptation Sustainable Procure- ment & Supply Chain We develop office properties for the long-term portfo- lio exclusively according to high sustainability stand- ards. We ensure compliance with the associated re- quirements for sustainable procurement in the supply chain through a wide range of environmental and social requirements for contractors and suppliers. – Pollution prevention and control – Supply chain responsibility Resource Conservation & Circular Economy We take initiatives that lead to reduced resource con- sumption, the reuse and recycling of materials and waste in the construction, operation and refurbishment of buildings. – Transition to a circular Economy – Sustainable use and protec- tion of water and marine re- sources Sustainable Urban Dis- trict Development We specialise in the environmentally friendly revitali- sation of old inner-city sites (brownfield development). In doing so, we pay attention to the protection of biodi- versity and create mixed-use urban neighbourhoods with sustainable infrastructure and a high quality of life that are attractive, inclusive and accessible. – Protection and restoration of biodiversity and ecosys- tems Business Ethics, Cor- porate Governance & Compliance Responsible corporate governance and compliance with socially, environmentally and economically rele- vant requirements form the basis of our business activi- ties. We are committed to strengthening workers´ rights, preventing human rights abuses and acting in accordance with the principles of non-discrimination, equal opportunities and zero tolerance of corruption and bribery throughout our sphere of influence. – Human Rights – Workers´ rights – Fight against corruption Health & Safety We create safe, healthy and attractive working environ- ments for tenants, employees and service providers – both in our buildings and on the construction sites. We support our employees and pay attention to their needs, health and individuality. GROUP MANAGEMENT REPORT 69 CA Immo Sustainability Agenda: Targets, principles and measures Our sustainable business agenda summarises all current key corporate objectives, principles and actions in the context of our focus areas. With this programme, CA Immo wants to actively contribute to achieving the climate and environmenta l targets defined by the Euro- pean Union (climate neutrality by 2050) and the general transition to a sustainable economy. Supplementary ta- bles and information according to EPRA, TCFD and NaDiVeG standards can be found in the ESG Appendix. CA IMMO AGENDA FOR SUSTAINABLE BUSINESS OPERATIONS Focus areas Targets & Principles Measures Climate & Energy – Reduction of the average Scope 1+2 CO 2 emission intensity of the in- vestment portfolio by 50% by 2030 (base year 2019). – All new construction projects com- pleted from 2030 onwards are cli- mate neutral in operation (net zero carbon) – Climate neutrality by 2050 – Conversion of electricity contracts to 100% electricity from renewable energy sources in the investment portfolio by 2023 (landlord-obtained) – Purchase of climate-neutral district heating acc. to local availability – Green lease programme to reduce CO 2 emissions (Scope 3) in the in- vestment portfolio (tenant participation) – Establishment of a digital energy monitoring and management system for the Group-wide portfolio by 2025 – Renovation programme to systematically reduce the energy consump- tion and carbon footprint of the investment portfolio – Continuous reduction of the energy demand of development projects – Expansion of renewable energy sources in and on development projects (e.g. photovoltaics, solar thermal energy, geothermal energy) – Reduction of embodied carbon emissions in development projects – Compensation of unavoidable emissions through offsetting measures (e.g. CO 2 reduction certificates) Sustainable Procure- ment & Supply Chain – Social and environmental require- ments in CA Immo Procurement Di- rective – Obligation of all construction service providers to comply with compre- hensive sustainability standards (e.g. material declaration, worker pro- tection) Resource Conservation & Circular Economy – Increase the share of recycled/recy- clable waste – Reduction of water consumption – Implementation of a professional waste management an d water con- sumption monitoring in building operations – Green lease programme for resource-saving, sustainable building use (tenant participation) Sustainable Urban Dis- trict Development – Focus on brownfield developments (revitalisation of old sites) – Continuation of the strategic focus on revitalisation of old sites – Implementation of all new office developments for the own long-term portfolio according to at least DGNB Gold or LEED Gold certification standard – Definition of a Group-wide standard for sustainable project develop- ment based on tenant needs and the EU Taxonomy Regulation Business Ethics, Cor- porate Governance & Compliance – Compliance with ESG regulations – Voluntary best practice commitment – Aiming for UN Global Compact membership – OECD Guidelines as a guideline for corporate action Health & Safety – Avoiding accidents in buildings and on construction sites – Maintaining the long-term perfor- mance of own and external employ- ees (tenants, contractors) – Consideration of a wide range of measures for the health and comfort of future users already in the course of building planning and develop- ment (DGNB, LEED, WELL certification standards) – Standardised safety concepts in buildings an on construction sites – Comprehensive Covid-19 protection measur es – Occupational health care, flexible working time models GROUP MANAGEMENT REPORT GROUP MANAGEMENT REPORT 70 ENVIRO NMENT CA Immo wants to make a contribution to limiting global warming to 1.5° Celsius and protecting the envi- ronment. Therefore, we have set ourselves the goal of re- ducing the CO 2 footprint of our business activities and evaluating and intensifying the measures we have taken so far to protect the environment. 1. CLIMATE RISKS AND OPPORTUNITIES Climate change and its consequences for our environ- ment are a global threat, the manifold effects of which are already being felt in many countries today. The future so- cietal, climate policy and technological developments as- sociated with climate change are subject to a high degree of uncertainty, as is the speed at which this process of change will take place. Much will depend on how sensi- tive the climate system is to changes in greenhouse gas emissions, how much higher levels of warming will actu- ally affect our environment and how quickly individual countries and societies respond to these developments. CO 2 emissions and global warming scenarios Global warming of 2°Celsius will be exceeded in the course of the 21st century if there are no profound reduc- tions in CO 2 and other greenhouse gas emissions in the coming decades. 1) The graph on the top right shows sce- nario analyses for the development of global CO 2 emis- sions and the resulting global warming until 2100. 1 IPCC: Climate Change 2021, Sixth Assessment Report, www.ipcc.ch Scenario analysis for global climate warming The role of the real estate sector in the fight against climate change Over the whole life cycle – from construction, use, ren- ovation to demolition – building s in the EU are responsi- ble for 40% of energy consumption and 36% of energy- related greenhouse gas emissions (CO 2 ). Around 75% of buildings in Europe are considered inefficient and less than 1% of the national building stock is renovated annu- ally on average 2) . Stricter energy standards for buildings, higher energy refurbishment rates and technological change (e.g. more intensive use of renewable energy sources such as heat pump technologies), but also the en- ergy transition (provision of sufficient energy from re- newable sources for climate-neutral building operation) are key components to achieve the EU climate targets. CA Immo climate risks and opportunities The analysis of specific climate risks for our business is extremely complex and involves a number of unknown variables. Information on the management of climate risks relevant to CA Immo and the corresponding organi- sational processes and responsibilities can be found on page 65 and in the Risk Management chapter. 2) https://ec.europa.eu/info/news/focus-energy-efficiency-buildings-2020- feb-17_en GROUP MANAGEMENT REPORT 7 1 Climate change represents a risk that unfolds on two levels. In assessing the specific climate risks for CA Immo, we have used these levels for classification purposes: – Physical risks: Direct, physical damage to prop erty, plant and equipment due to the changing climate, trig- gered by extreme weather events (acute risks) or contin- uous climate change such as ri sing sea levels or higher temperatures (chronic risks). In order to be able to concretely assess the correspond- ing risk exposure of our portfolio, we evaluated natural hazards (flood, hailstorm, lightning strike, tornado, storm) for all investment properties with a value of >€10 m in 2021. 1 ) The implementation of a detailed, for- ward-looking risk and vulnerability assessment according to different RCP scenarios (Representative Concentration Pathways) for the identified climate risks in accordance with the guidelines of the EU taxonomy is planned for the 2022 business year. Global warming: RCP scenario calculation Source: Researchgate.net 2 PHYSICAL RISKS Type of risk Risk assessment Potential financial impacts Action and strategic precaution Natural disasters and extreme weather events Risk group: Acute Probability: High Time horizon 3) : Short CA Immo risk exposure 4) : Low 5) – Physical damage and deterioration of buildings (possibly enhanced by high portfolio concentration within a city) – Delivery delays and material shortages (interrupted supply chains) – Interruption of production or operations – Ongoing control, maintenance and servicing of the build- ings – Forward-looking project development and high building quality of the CA Immo portfolio – Scenario analysis in accordance with the guidelines of the EU taxonomy will be carried out in 2022, deriving adaptation measures to increase the climate resilience of the portfolio – Comprehensive insurance cover for existing buildings and projects (construction sites) Gradual changes in temperature and precipitation, rising sea level Risk group: Chronic Probability: High Time horizon 3) : Long CA Immo risk exposure: To be evaluated in 2022 by means of scenario analysis – Changes in raw materi al and input prices – Higher energy consumption and operatin g costs for buildings (e.g. due to increase in cooling demand) – Higher maintenance and construction costs to make buildings climate resilient – Increase of insurance premiums or no in- surance coverage possible – Risk prevention, e.g. through flood protection concepts in buildings in river locations and improved drainage systems – Implementation of efficient cooling and sun protection systems – Scenario analysis in accordance with the guidelines of the EU taxonomy will be carried out in 2022, deriving adaptation measures to increase the climate resilience of the portfolio 1) Natural Hazards Analyse mit SwissRE CATNET ® Risk Analysis Tool 2) www.researchgate.net/figure/Global-temperature-increase-used-in-IPCC- AR5-presented-by-the-RCPs-The-values-in_fig1_316307741 3) Period in which these climate risks are likely to occur: Short: 0-1 year, Medium: 1-3 years, Long: more than 3 years 4) Low: €0-10 m; Medium: €10-50 m, High: >€50 m. Period under consider- ation: 1 year 5) Taking into account the existing risk mitigating measures, the currently existing residual risk is classified as low GROUP MANAGEMENT REPORT GROUP MANAGEMENT REPORT 7 2 Transition risks: Economic risks triggered by the transi- tion to a low-carbon economy. This risk group includes regulatory risks (as a result of new or stricter legal regula- tions) and risks due to changes in the market, demand and technologies (market and competition risks) or loss of reputation (reputation risk). TRANSITION RISKS Type of risk Risk assessment Potential financial impacts Action and strategic precaution Regulatory risks Stricter targets and legislation on decarbonisation, energy efficiency and adaptation to climate change Probability: High Time horizon 1) : Medium – Higher construction costs due to increas- ing requirements for energy efficiency of buildings and CO 2 -neutral construction process – Higher investments in energy retrofit- ting/refurbishment of the building stoc k – Compliance costs ( penalties, levies) – Increased taxes and/or loss of subsidies – Close monitoring of the current and future legal situ- ation in our markets – Investments in energy retrofitting/refurbishment of the building stock – Forward-looking project development and high building quality of the CA Immo portfolio – Targeted energy and sustainability management – Buildings developed by CA Immo exceed current en- ergy efficiency and environmental protection re- quirements (stay ahead of regulation) Market risks Pressure from the capital market to reduce CO 2 emissions (Sustainable finance) Probability: High Time horizon 1) : Short – Declining share price (loss of reputation) – Higher financing costs, reduced availabil- ity of debt capital – Clear, measurable climate strategy and targets – Transparent sustainability reporting and communica- tion – Strategic capital rotation programme to increase the sustainability of the portfolio Change in market demand toward energy-efficient buildings (changing tenant needs) Probability: High Time horizon 1) : Medium – Decreasing real estate values – Poorer marketability – Lower rent levels, lower rental income (stranding risk) – High building quality with a high proportion of sus- tainability certifications increases the long-term competitiveness of the portfolio – Buildings developed by CA Immo exceed current en- ergy efficiency and environmental protection re- quirements (premium segment, best-in-class) – Strategic capital rotation programme to increase the sustainability of the portfolio Reputational risks Attractiveness as an employer, stakeholder trust Probability: High Time horizon 1) : Short – Competitive disadvantages due to high employee turnover – Disadvantages in the fight for the best brains – Responsible business model with clear commitment to sustainability and climate protectio n – T ransparent sustainability reporting and communica- tion, stakeholder engagement 1) Time horizon: Short: 0-1 year, Medium: 1-3 years, Long: more than 3 years GROUP MANAGEMENT REPORT 73 CLIMATE OPPORTUNITIES Opportunities Potential financial impacts Action and strategic precaution Resource efficiency: More efficient buildings – Lower operating costs through efficiency gains, reduced water and energy consumption – Higher value or value stability of the portfolio Energy source: Use of renewable or low-emission energies – Low dependency on future fossil fuel price increases through efficiency improvements, use of renewable energy and low-emission technologies for property operation – Possibility of using political incentives for a low-emission economy (subsidies) – High building quality with a high proportion of sustaina-bility certifications increases the long-term competitive-ness of the portfolio – CA Immo Agenda for sustainable business operations (targets and measures, see page 69) – CA Immo Agenda for sustainable business operations (targets and measures, see page 69) Products and services: Green buildings – Reputation gain and competitive advantage through trans- parent and future-oriented environmental reporting and communication and due to higher demand for prod- ucts/services with low emissions ("green buildings") – Competitive advantage through rapid adaptations of the building stock (modern technologies and innovation to op- timize energy efficiency and reduce emissions) – CA Immo has a high-quality portfolio with a high propor- tion of sustainability certifications (DGNB, LEED, BREEAM) – Buildings developed by CA Immo exceed current re- quirements for energy efficiency and environmental pro- tection (DGNB Gold or LEED Gold certification standard, strong in-house expertise and track record regarding Green Building development) – Use of knowledge and synergies from project develop- ment to reduce CO 2 emissions and resource consum p tion in existing buildings – Transparent sustainability reporting and communication Markets: New business areas, target groups and financing opportunities – Increased revenue, com p etitive advanta g e throu g h access to new and emerging markets – Green Finance: Lower financing costs, better availability of debt capital – Responsible business model with clear, early commit- ment to sustainability and climate protection brings ex- tensive competitive advantages in customer and investor relations – In 2021, CA Immo underpinned its ESG commitment by signing a €300 m sustainability-linked financing (RCF). This green financing strategy is to be ex p anded further in the future Climate resilience – Increased market valuation due to resilience planning (e.g. infrastructure, location, building condition) – Lower maintenance costs and costs for refurbishment due to high building climate resilience – Clear strategic commitment to high-quality core products in resilient, inner-city metropolitan lo cations – Scenario analysis in accordance with the guidelines of the EU taxonomy will be carried out in 2022, deriving adaptation measures to increase the climate resilience of the portfolio GROUP MANAGEMENT REPORT GROUP MANAGEMENT REPORT 74 2. GROUP LEVEL Climate & Energy: Climate-friendly mobility CA Immo´s commitment to climate and environ- mental protection applies at both operational and Group level. We can make a contribution here by reduc- ing our air travel and the CO 2 emissions of the company cars we provide to employees. With this in mind, we are increasingly offering employees the opportunity to use electric or hybrid vehicles as company cars. At the end of 2021, the hybrid share of company cars across the Group was 12% (2020: 7%), while electric cars accounted for 5% (2020: 2%). These shares are to be successively fur- ther expanded. In addition, we support the mobility transition by in- stalling electric vehicle charging stations (EV charging stations) in our own buildings. In total, 154 EV charging stations were available in our buildings as of 31 Decem- ber 2021. In the 2022 financial year, we plan to carry out a Group-wide, property-related inventory analysis, which will form the basis for a bundled conversion to EV charg- ing stations. Our travel policy stipulates that employees use rail in- stead of air travel wherever possible. Through further ac- tivities such as the promotion of the BahnCard or job tickets for local public transport, we want to encourage our employees to switch from car to public transport. Climate & Energy: Reduction of the carbon footprint of CA Immo offices through green electricity purchasing As part of the conversion of CA Immo building op- 1) By book value, excl. short-term properties (properties intended for trad- ing or sale) 3. INVESTMENT PROPERTIES We aim to offer our tenants high-quality buildings in prime locations. Part of this comprehensive quality standard is to maintain sustainable and energy-efficient buildings in the portfolio and to operate them in a way that conserves resources as much as possible. To ensure that all properties retain their value, marketability and comprehensive sustainability over the long term, CA Immo focuses on quality and sustainability manage- ment throughout the entire life cycle of the buildings. In the course of this, a wide range of measures are imple- mented to optimise the energy balance of our buildings and minimise the CO 2 footprint and resource consump- tion (ecological building operation). As at the end of 2021, the CA Immo portfolio comprised 66 investment properties, of which 56 were multi-tenant office buildings, one shopping centre and 9 single-tenant buildings (including 3 hotels). Around 91% of the build- ing stock 1) was office property. 42 buildings are heated with district heating, the remaining 24 with gas. Climate & Energy: Standardised Energy Management CA Immo continuously collects and analyses the energy consumption from heat and electricity as well as the resulting CO 2 emissions of the portfolio (see table on page 75 and the EPRA table in the ESG Appen- dix). This data flows into the group-wide energy monitor- ing, on the basis of which decisions on energetic optimi- sation measures are made. In order to enable even more detailed and timely energy monitoring in the future, including weak point analyses, a Group-wide, digitally supported energy management system is being implemented. The basis for this is the conversion to smart meters (digital meters) as well as an evaluation for upgrading or retrofitting the building man- agement systems (BMS) in the international building stock. Digital energy data management will ensure con- tinuous and effective monitoring of current consumption data. The majority of the German and around half of the Aus- trian CA Immo buildings were converted to digital elec- tricity meters in 2021, with the CEE countries to follow by 2025 and the installation of digital gas meters also to be completed. The expansion of building digitalisation erations to green electrici ty in 2021, the supply of energy from renewable sources to the CA Immo offices used by the company itself has also been secured until 2025. (see page 75). This green energy purchasing ena- bles us to significantly reduce the carbon footprint of our owner-occupied office space. A list of the energy con-sumption, including the resulting CO 2 emissions, as well as the water consumption and waste produced in CA Im-mo's own-used office space, can be found in the ESG ap-pendix. GROUP MANAGEMENT REPORT 75 (intelligent BMS control of technical building infrastruc- ture such as lighting, air-conditioning and heating sys- tems) is intended to further optimise energy efficiency in operations. Energy management program: Processes, control, responsibilities The facility management contracts of CA Immo proper- ties include extensive standard services for energy man- agement (Service Level Agreements). From 2022, these will include the preparation of half-yearly reports on the energy efficiency of each individual building, which will be used to derive measures to improve the energy effi- ciency of the buildings – both for rental and common ar- eas (optimisation proposals for tenants and owners). The control and monitoring of these processes is the responsi- bility of CA Immo's technical asset management. Invest- ments in the energy modernisation of buildings (Green CAPEX) are proposed by Asset Management as part of the maintenance expenditure in the course of the annual budgeting process and approved by the Management Board. Energy consumption and CO 2 footprint In 2020, the average CO 2 emission intensity (annual CO 2 emissions per sqm) of the CA Immo portfolio (Scope 1+2, excluding tenant energy purchase) was reduced by around 11% compared to the previous year. This reduc- tion is based on a year-on-year decrease in all energy con- sumption values yoy (–14% electricity consumption like- for-like; –10% gas consumption like-for-like; –4% energy con- sumption from district heating like-for-like). Total aver- age energy intensity (energy consumption per sqm, ex- cluding tenant energy purchase) fell by 13% year-on-year. The main drivers of this development are above all: – The ongoing transfer of own project completions into the own portfolio – Targeted sale of older buildings (strategic capital rota- tion programme) – Reduced office use from 2020 (Covid 19 pandemic) – Energy management and renovation measures – Purchase of green electricity The sha re of electricity from renewable energy sources was 1% of total consumption in 2020. This share will in- crease significantly in the course of the continuous switch to green electricity from 2021 onwards (see para- graph on green electricity purchasing on page 67). As the consumption data for 2021 was not yet available in full at the time of reporting, the energy consumption and the CO 2 emission data based on it shown in the table below for 2021 are preliminary estimates based on 2020 consumption data (for extrapolation methodology, see ESG Appendix). ENERGY CONSUMPTION DATA AND CO 2 -FOOTPRINT OF THE CA IMMO INVESTMENT PORTFOLIO 1) EPRA Code Coverage Unit of measure 2019 2020 % change 2021e 2) Building energy intensity (excl. tenant energy supply) Energy-Int General electricity, heating, cooling kWh/sqm 138 119 –13 136 Building CO 2 emissions intensity (Scope 1+2) GHG-Int General electricity, heating, cooling kgCO 2 e/sqm 36.5 32.6 –11 25.3 Gross Internal Area (GIA) 3) Whole building sqm 1,357,552 1,422,963 5 1,420,512 Number of Properties 4) Whole building number 53 55 54 1) Information on reporting boundaries and analysis methodology of the consumption values can be found in the ESG Appendix. The consumption data shown (and the resulting emissions) include the electricity purchased by CA Immo for common areas (general electricity) and energy for heating and cooling throughout the building. Electricity purchased directly by tenants or centrally by CA Immo for tenants' areas (recorded via submetering) is excluded, as consumption values for tenant electricity are not available for all buildings. A detailed table of energy consumption and emission values of the CA Immo portfolio in accordance with EPRA Best Practice Recommendations can be found in the ESG Appendix from page 128 onwards. 2) The energy consumption and emission data for 2021 are preliminary estimates, as the consumption data for 2021 was not yet fully available at the time of reporting. Information on the extrapolation mode can also be found in the ESG Appendix. 3) In the 2021 financial year, the area used to calculate the energy and CO 2 intensities was changed from Gross Leasable Area (GLA) to Gross Internal Area (GIA). The values for 2019 and 2020 were adjusted accordingly. 4) Multi-tenant buildings. Single-tenant buildings are not included in this analysis, as the separation into general and tenant electricity is not available for these buildings. GROUP MANAGEMENT REPORT GROUP MANAGEMENT REPORT 7 6 Energetic and climate-friendly modernisation of investment properties CA Immo invests continuously in optimising the energy efficiency of its portfolio. The following measures are part of this energy modernisation programme: – Replacing old pumps with energy-saving high-effi- ciency pumps – Successive replacement of conventional lightin g with LED technology with modern sensors – Installation of heat recovery in ventilation systems – Modernis ation and system improvements, e.g. of heat- ing and cooling media – Modern e nergy management systems to identify optimi- sation potential in the building at an early stage. In 2021, among other things, detailed energy assess- ments were carried out for buildings with increased en- ergy consumption (compared to the portfolio average) in order to derive and successively implement targeted measures for further efficiency improvements. Climate & Energy: Reduction of carbon emissions through conversion of building operations to green energy The national bundling and Group-wide conversion of electricity procurement to renewable energy sources (wind, water and solar energy) was initiated in 2020 and completed in summer 2021. The country-specific con- tracts cover the period 2020 to 2025 and include the pur- chase of green electricity for all common areas and ser- vices provided by the landlord (general electricity incl. cooling, lighting, lifts) in our multi-tenant buildings as well as the electricity supply in our own-used CA Immo office areas. As all tenant electricity in the CEE countries (Hungary, Romania, Poland and Czechia) is purchased centrally by CA Immo, the contracts in these countries also include all tenant electricity. The supply of the Austrian and Polish buildings as well as part of the German building stock has been converted to green electricity since 1 January 2021. In the remaining countries, the conversion of operations to green electric- ity will take place after the current energy contracts ex- pire and is expected to be completed by the end of 2023. In order to also reduce CO 2 emissions from the heating of the building stock, the district heating contracts are also to be successively switched to green or CO 2 -neutral energy sources (e.g. from waste heat, combustion of bio- mass or reduction certificates), depending on local avail- ability. In 2021, corresponding contracts have already been concluded for our buildings in some German cities (Cologne, Düsseldorf, Mainz), and the share of green or CO 2 -neutral district heating is to be further expanded in the future. Tenant participation: Green Lease Agreements Holistic environmentally and climate-friendly building operation requires the participation of our tenants. For example, the conclusion of electricity contracts for rental space – and thus the decision on whether to purchase "green" or "grey" electricity – is the responsibility of our tenants in Austria and Germany, since for legal reasons only in the CEE countries of Hungary, Romania, Poland and the Czech Republic can all tenant electricity be pur- chased centrally by CA Immo in addition to general elec- tricity. By means of Green Lease Agreements (customer eco-ef- ficiency programme), we offer our tenants the oppor- tunity to participate in our environmental and climate protection initiative in a spirit of partnership and to send a strong signal for sustainability. Corresponding contract components were finalised in 2021 and the first green lease agreements were concluded (primarily in Ger- many). In the coming years, new and existing contractual relationships are to be successively converted to green leases. Green Lease Agreements include, among others: – Purchase of green electricity at optimised conditions (CA Immo tenant electricity pool) to reduce CO 2 emis- sions in operations (Sco pe 3) – D ata and information exchange with the tenant (con- sumption, occupancy, use) and analysis of cons umption data (energy m onitoring) – Reduction of waste, ecological cleaning – Incentives for climate-friendly mobility of employees GROUP MANAGEMENT REPORT 77 Resource conservation & circular economy in building operations As CA Immo centrally organises both water purchasing and waste disposal for all Multi-tenant office buildings, water consumption and waste data is available for the majority of investment buildings (2020: 59 of 67 buildings). For 2020, the data base could be significantly expanded from 52 (2019) to 59 buildings. At the time of reporting, there was insufficient data for a meaningful estimate of the 2021 consumption values. In 2020, water consumption intensity (average annual water consumption per sqm) decreased by around 37% year-on-year. This strong decrease is mainly due to the lower office use in view of the Covid 19 pandemic. Water consumption is to be further optimised through the in- stallation of digital water consumption meters (smart me- ters) and corresponding consumption monitoring. The waste recycling rate (incl. reuse) was 21% in 2020 and thus 3 percentage points above previous year´s value. In terms of efficient operating cost and sustainability management, our aim is to optimise existing disposal concepts, to further increase the waste recycling rate and to close the last data gaps. A framework agreement for professional waste management of the German buildings was concluded in 2021 and is in force as of 1.1.2022. In addition, the continuous conversion to green lease con- tracts should contribute to better waste separation by the building users (tenant participation). WATER CONSUMPTION AND WASTE RECYCLING QUANTITIES OF THE CA IMMO INVESTMENT PORTFOLIO 1) EPRA Code Unit of measure 2019 2020 % change Building water consumption intensity Water-Int m³/sqm 0.44 0.28 –37 Waste recycling Waste-Int Weight of waste by disposal route (%) 18 21 3 5) Gross Internal Area (GIA) sqm 1,326,622 1,494,178 13 Number of properties (coverage) Number of properties 52 59 1) Information on reporting boundaries and analysis methodology of the consumption values can be found in the ESG Appendix. All key figures refer to the entire building. 2) Proportion of total annual waste disposed of through reuse or recycling. 3) In the 2021 financial year, the area used to calculate the water intensity was changed from Gross Leasable Area (GLA) to Gross Internal Area (GIA). The values for 2019 and 2020 were adjusted accordingly. 4) Number of buildings whose data is included in the corresponding key figure. Since all asset classes have been included in the analysis since 2020, the number of buildings has increased from 52 to 59 from 2019 to 2020. 5) Percentage points Sustainability certification as objective proof of portfolio quality Sustainable in-house project development for its own stock to enhance the quality of the investment portfolio has been an important component of CA Immo's sustaina- bility strategy for many years. In order to provide trans- parent, internationally comparable and objective proof of building quality across the entire portfolio, CA Immo also has strategic core investment properties certified. In 2021, the certification process was completed for two office buildings (project completions) in Berlin, one of- fice building in Warsaw was recertified. On the other hand, two certified buildings in CEE have been sold. As at 31 December 2021, 44 office properties and 2 hotel properties are certified according to DGNB, LEED or BREEAM standards (2020: 43 and 2, respectively). A fur- ther five investment buildings (four German project com- pletions and one investment building in Warsaw) were in the certification process. By book value, around 72% of the total CA Immo portfolio (all asset classes; 2020: 69%) and 75% of the total office portfolio (2020: 72%) were certified. By rentable area, certified stock comprised some 71% of the total portfolio (2020: 67%) and 78% of the office portfolio (2020: 75%). The book value of the certified property assets (all asset classes) was approximately €3,596 m as at 31 December 2021 (31 December 2020: €3,265 m); including the build- ings in the certification process as at reporting date, the value was €3,965 m (31.12.2020: €3,714 m). GROUP MANAGEMENT REPORT GROUP MANAGEMENT REPORT 7 8 CERTIFIED PROPERTY ASSETS BY REGION 1) in € m Total portfolio Certified portfolio Share of certified portfolio Germany 2,503 1,559 62% Austria 497 122 25% CEE 1,996 1,915 96% Total 4,996 3,596 72% 1) By book value. Basis: Properties 100% owned by CA Immo (fully consoli- dated). CERTIFIED PROPERTY ASSETS BY BOOK VALUE 1) 1) www.dgnb-system.de/de/gebaeude/neubau/kriterien/ 4. PROJECT AND URBAN DISTRICT DEVELOPMENT Sustainable urban district development CA Immo contributes to shaping the appearance of major cities such as Berlin, Frankfurt, Munich and Prague through property and district development. CA Immo specialists cover the entire value chain: From land preparation and participation in the master plan and the procurement of building rights (zoning), to the reali- sation of the surrounding infrastructure to the construc- tion and operation of new buildings. This results in mixed-use inner-city neighbourhoods with short dis- tances and a high quality of life. Buildings developed by CA Immo are characterised by high technical and archi- tectural quality, flexible use of space and low energy con- sumption. Sustainability certification for new developments Since 2011, CA Immo has been developing all office properties for the own long-term stock in accordance with high sustainability standards (at least DGNB 1) Gold or LEED 2) Gold certification), taking into account the many years of experience gained from ongoing building operations. At the beginning of every project develop- ment there is a site-specific and user-oriented product definition, which, among other things, defines the stand- ard and the level of the sustainability certification. The corresponding minimum standards for ecological, socio- cultural and functional, technical, location and process quality are derived from this. OVERVIEW SUSTAINABILITY STANDARDS OF PROJECTS UNDER CONSTRUCTION City Project System Category Berlin Hochhaus am Europaplatz DGNB Gold Berlin Grasblau DGNB Gold Berlin Upbeat DGNB Gold Frankfurt ONE DGNB Platin In the course of the certification process, an external au- ditor accredited according to the respective standard (DGNB, LEED) accompanies the entire planning and con- struction process and ensures the implementation of the agreed sustainability criteria. The sustainability goals of the project are recorded in a pre-certificate based on the 2) www.usgbc.org/leed/why-leed DGNB Gold CERTIFICATES OF THE CA IMMO INVESTMENT PORTFOLIO 1) (Basis: € 3.6 bn book value) LEED Gold DGNB Platinum LEED Platinum BREEAM Very Good BREEAM Excellent 24% 21% 15% 7% 19% 8% BREEAM Interim 6% 1) Properties with main use type office + hotel 100% owned by CA Immo (fully consolidated) GROUP MANAGEMENT REPORT 7 9 building design. Their implementation is checked by the certifier after completion of the building and is con- firmed with the issuance of the final certificate. Climate & Energy: Energy efficiency and CO 2 emissions in project development For many years, our aim has been to develop particu- larly sustainable and energy-efficient buildings for our own portfolio and thereby successively increase the qual- ity of the building stock. While the focus in portfolio management is primarily on sustainability in building operation, the entire life cycle of the building is taken into account in project development (cradle to grave). In order to determine and optimise the impact of a building on its environment (including CO 2 emissions) in all phases of its life cycle, CA Immo carries out a compre- hensive life cycle assessment (LCA) as early as the build- ing planning stage. These analyses distinguish between two types of emissions: Embodied carbon emissions – Emissions resulting from the production of building materials and their transport (phase A1-A3) – Emissions from the construction process (phase A4-A5) – Emissions from maintenance, repairs/refurbishment during the life cycle (B1-B5) – Emissions from demolition and disposal (C1-4) – Emission credits from reuse and recycling (D) Operational carbon emissions – Emissions from energy consumption in building opera- tion (heating, hot water, lighting, air conditioning, ven- tilation; phase B6) – Emissions from water consumption (phase B7) For all new construction projects certified according to DGNB or LEED (15 buildings in the period 2011-2021), corresponding LCAs were carried out. Based on a first analysis of 13 LCAs of our German construction projects of the past years carried out in 2021 according to DGNB methodology, an average total CO 2 footprint per building of approx. 2,000 kg CO 2 /m² is shown. Of this, around 500 kg CO 2 /m² is accounted for by embed carbon emis- sions and 1,500 kg CO 2 /m² by operational carbon emis- sions. Operational CO 2 emissions therefore account for around 70 to 85% of the total CO 2 emissions during the 1) www.dgnb.de/de/aktuell/pressemitteilungen/2021/studie-co2-emissio- nen-bauwerke 2) The primary energy demand of a building is calculated from the final en- ergy demand (heating, lighting, cooling; excl. tenant electricity such as IT or kitchens in the rental areas), the energy sources used in the building (e.g. electricity, district heating or gas) and their defined primary energy factors. The purchase of green electricity is not taken into account here. life cycle of a building and are thus the greatest lever for reducing the CO 2 footprint. This data is in line with a re- cent analysis by the German Sustainable Building Coun- cil (DGNB). 1) Operational CO 2 emissions Over the past 10 years (2011-2021) CA Immo has been able to reduce the average primary energy demand 2) of the projects 3) realised from over 150 kWh/m²/a to below 100 kWh/m²/a. The main reasons for these improvements were, on the one hand, the increase in energy efficiency and, on the other hand, the progressive decarbonisation of district heating and electricity (energy transition, de- carbonisation of the grids). At the same time, the primary energy demand of the new buildings was on average about 30% below the respective legal requirements 4) . In the coming years, operational CO 2 emissions of new buildings can be further reduced by the following measures, among others: – Reduction of energy demand through optimis ation of the building envelope and tec hnology and through – Increased digitalisation of building control technology – Even more inte nsive use of renewable energy sources in and on the building (e.g. photovoltaics, geothermal en- ergy). In parallel to these measures, continued progr ess in de- carbonising the grids (electricity and district heating) should further reduce emissions from building energy consumption in the coming years. Embodied CO 2 emissions In the 2021 business year, CA Immo analysed all Life Cycle Assessments (LCA) carried out in the course of new construction projects in Germany over the past 10 years. The knowledge gained from this will now be used to systematically optimise the CO 2 emissions caused by the construction and renovation of our buildings. In the future, the life cycle assessment (LCA) will become the central instrument in the planning process to holistically consider energy consumption and CO 2 emissions. In the coming years, CO 2 emissions from new buildings will be reduced through the following measures, among others: 3 Basis: 15 in-house office completions. Excl. projects currently under con- struction 4) Legal requirements for energy efficiency at the time of submission of the building application GROUP MANAGEMENT REPORT GROUP MANAGEMENT REPORT 80 – Early implementation of an LCA for each new construc- tion project, corresponding monitoring throughout the entire development process. – Further optimisation of building structure and -struc- ture – Use of wood or alternative building materials with low CO 2 intensity – Greater consi deration of the principles of circular econ- omy to optimise raw material consumption and emis- sion load (cradle to grave / crad le to cradle) In order to increase the transparency of the emissions bound in our new construction projects in the future, a detailed reporting of these key figures is being developed. Sustainable Procurement & Supply Chain CA Immo's procurement process ensures that the high ecological requirements are met in accordance with the certification standard provided for the projected building in each case (see paragraph on sustainability certification on page 77). All contractors (suppliers) are obliged to comply with the defined sustainability stand- ards throughout the entire supply chain in the course of the award process. Details on these standards and the as- sociated control mechanisms can be found in the Corpo- rate Governance chapter and in the CA Immo Award Policy at caimmo.com/esg-policies. Resource Conservation & Circular Economy In the course of its development projects CA Immo takes into account a wide range of circular econ- omy factors and measures to conserve resources (design for circularity). Criteria such as responsible resource ex- traction, ease of deconstruction or the use of recycled ma- terials are applied in many CA Immo project develop- ments, insofar as this can be mapped in the context of the overall project. The greatest possible flexibility and re- versibility of use for a wide range of user requirements in terms of future office landscapes, conversion and repur- posing are key requirements for every new new building, which are taken into account right from the planning phase. For example, the shell of the building is designed to be as flexible as possible by making the supporting structure, floor heights, floor depths and ceiling loads as neutral as possible in terms of use, and by taking into ac- count occupancy reserves in the supply shafts. The aim is to enable a variety of flexible uses in the life cycle of the building and to avoid extensive conversion work in the course of the building's life cycle, including prema- ture demolition. Disposal logistics and recycling management for opti- mised waste separation are installed at all CA Immo con- struction sites. This includes daily waste collection, sep- aration and disposal by external disposal logisticians. The CA Immo subsidiary omniCon is responsible for waste disposal logistics on construction sites in Germany as part of its construction management. At all other loca- tions, this is the responsibility of the Development and Engineering department. Sustainable urban district development: Brownfield development Since taking over the German district developer Vivico Real Estate GmbH in 2008, CA Immo has been developing large inner-city sites that were previ- ously derelict or used for industrial purposes into mod- ern urban districts (brownfield development). As part of the revitalisation of these old (brownfield) sites, some of which have been used for industrial and commercial pur- poses for over 100 years and by Deutsche Bahn, special- ists from CA Immo's construction subsidiary omniCon are implementing a wide range of measures to prepare and develop the land. This special brownfield develop- ment expertise of CA Immo covers the following environ- mental aspects of site preparation, among others: – Technical site assessment: inventory of buildings, un- derground "old buildings", coring, deconstruction – Explosive ordnance risks and (construction-accompany- ing) explosive ordnance clearance measurem ent – Evaluation of contaminated site risks (soil, water, soil air); soil and groundwater remediation – Evaluation of waste and disposal services – Measures for the protection of biodiversity: nature con- servation surveys of flora and fauna – Species protection: relocation measures for protected animal species such as lizards, green toads and bats Creation of biot opes, green compensation area s – Infrastructural development: construction of future pub- lic roads, paths, squares, playgrounds and parks. GROUP MANAGEMENT REPORT 81 SOCIAL ENGAGEMENT CA Immo also takes measures in the social sphere to set positive impulses and responsible standards within its sphere of influence. Our strategy focuses in particular on health & safety, employment & working conditions and the social aspects of a sustainable supply chain and ur- ban district development. Other topics from our material- ity analysis are also explained. 1. TENANTS AND SERVICE PROVIDERS Health & Safety Safe and health-promoting working conditions for occupiers and external service providers, both in ongoing building operations and in the course of con- struction projects, are a basic prerequisite for our corpo- rate success. CA Immo stands for strict compliance with all legal requirements in the area of health and safety. Our aim is to prevent accidents in or around our build- ings, in our own offices and on construction sites. In ad- dition, our activities focus on maintaining the long-term well-being of all occupiers. Product and service safety program (Product Health and Safety) In all project developments carried out throughout the Group, health and safety considerations are integrated both in the planning and construction phase and with re- gard to subsequent tenants/occupiers of the buildings. The safety and health protection coordinator (SiGeKo), who is already involved in the planning phase, coordi- nates all those involved in the construction work. This coordinator carries out regular safety inspections and in- tervenes immediately when hazardous conditions are identified. In addition, each contractor is required to ap- point its own safety officer. The risk of the individual ac- tivities is assessed by the SiGeKo and appropriate pre- cautions are defined and compliance is monitored on site. All safety measures are incorporated as an overall safety and health protection plan in the respective con- struction site regulations of the project, compliance with which is mandatory for all project participants. Monitoring and overall responsibility for safety at CA Immo's German construction sites lies with CA Immo subsidiary omniCon as part of its construction manage- ment activities. At all other sites outside Germany, this is the responsibility of the CA Immo Development and En- gineering department. In addition, CA Immo strives not only to comply with, but also to exceed all legal requirements relating to po- tential negative impacts on stakeholders (such as con- struction noise or increased particulate pollution) in all its project developments. Health and safety assessments are also carried out in all buildings throughout the Group during building opera- tions. All legal requirements, e.g. concerning electrical installations, elevator systems and fire protection measures, are complied with. The safety and functional- ity of technical building systems are regularly checked by means of expert inspections, maintenance and functional tests in order to prevent malfunctions and equipment failures. If deficiencies are identified, their rectification is initiated immediately. External facility managers are re- sponsible for functional safety and compliance with fire safety regulations in the individual buildings and report to CA Immo Asse t Management at least once a year. The Asset Management department bears overall responsibil- ity for the safety of the CA Immo investment portfolio. In Germany, all CA Immo portfolio buildings are in- spected at least once a year for safety and health impacts (100%); in all other CA Immo core markets, the fre- quency of these inspections is based at least on national legal requirements. In total, 62 of a total of 66 CA Immo portfolio buildings were inspected for product safety and health impacts in 2021, which corresponds to around 95% of the total portfolio (by area, excl. properties held for sale). During business year 2021, no regulatory violations or penalties were reported in relation to the health and safety impact of our buildings. All CA Immo buildings are barrier-free for walking impaired people. Further key figures on product safety can be found in the ESG Appendix. GROUP MANAGEMENT REPORT GROUP MANAGEMENT REPORT 8 2 Tenant Comfort & Wellbeing Workplace quality has a significant impact on the health, motivation and productivity of office occupants. That is why CA Immo considers the safety and health im- pacts of buildings as early as the planning, design and development phase of construction projects. A wide range of measures to promote the health and comfort of future tenants are implemented in the course of our pro- ject developments, such as a pleasant indoor climate, ideal acoustic, thermal and visual conditions, and the creation of spaces for social interaction, often with greened outdoor areas. In this respect, CA Immo relies on additional certification standards for selected buildings. The WELL building standard specifies measures to pro- mote health and well-being in buildings in the categories of air, water, light, movement, thermal comfort, nutrition, noise, materials, spirit and community (wellcerti- fied.com). Currently, one CA Immo office building in Pra- gue holds a gold WELL Core and Shell certification. As of the reporting date, the Mississippi House and Missouri Park office buildings in Prague and two German office projects under construction are scheduled for WELL cer- tification. Covid-19 In 2021, compliance with all additional safety precau- tions prescribed in the context of the Covid-19 pandemic was continuously monitored and ensured in our build- ings and on the construction sites. In order to ensure the safety of tenants and employees as best as possible and to be able to act quickly if neces- sary, CA Immo set up an international Health & Safety Taskforce at an early stage. Since the beginning of March 2020, this taskforce has been coordinating weekly on cur- rent developments and implementing appropriate recom- mendations for hygiene measures at regional level in the common areas of our buildings and in the own-used of- fice spaces. A corresponding action plan was continu- ously revised in the course of 2021 and adapted to the current local infection situatioun and the guidelines of the national health authorities in the cities in which CA Immo is represented with investment buildings and own branch offices. Measures and internal rules of con- duct for several scenarios and escalation levels were in- cluded to ensure a safe environment for all building users at all times. Based on this, the following protective 1) Safe Hospitality, Offices, Retail and Exhibitions (SHORE) Certification Program, www.safeassetgroup.com measures, among others, were implemented in the com- mon areas of CA Immo buildings: – Increased cleaning frequenc y (several times a day) and disinfection – Provision of dis infectant at the building recept ion desk, including instructions o n hand disinfectio n – Posting of dista nce rules for elevator use and recom- mendation for use of stairwells – Mand atory use of mouth-nose protection in al l common areas – Cha nge of filter type and/or regular replacem ent of air conditioning filters – Increasing air c irculation (e.g. by extending the operat- ing hours of ventilation units) and deactivating recircu- lation mode, as well as intensifying air humidification in the buildings to reduce the viral load in the indoor air (as far as cor responding technical requirem ents are available) – Permanent operation of exhaust air systems i n toilets – Partial closure of showers in the common are a s. All operational personnel were continuously informed about the Co vid-19 prevention measures. This also in- cluded the behavior of employees in the event of a con- firmed or possible presence of a person infected with Covid-19. For the successful implementation of all security and prevention measures against the spread of the Covid-19 virus, CA Immo received the SHORE certification from SAFE Asset Group 1) and the DEKRA Trusted Facility cer- tificate 2) for its Romanian portfolio in 2021, which con- firms, among other things, that CA Immo's buildings are safe facilities that comply with the recommendations of the World Health Organization (WHO) and local authori- ties. Tenant Relations & Retention CA Immo has had local teams on the ground in its core cities for many years, taking care of active tenant support and retention as well as the efficient management and maintenance of our buildings. Our experts are well ac- quainted with the respective market conditions, the na- ture and possibilities of our regional portfolio buildings, and the individual needs of our tenants. Ongoing interac- tion with our tenants, combined with our strong regional and international portfolio presence, enables us to offer tailored solutions for a wide range of tenant needs. High 2) https://www.dekra.de/de/dekra-standard-trusted-facility/ GROUP MANAGEMENT REPORT 83 building quality, good inner-city locations, a reliable track record in project development for our own portfolio (built to suit) and our continuity as a long-term portfolio holder offer our tenants stability and security. Occupier Satisfaction Surveys At the end of 2021, CA Immo conducted a survey on tenant satisfaction. In an initial survey phase, the 50 most important tenants were invited to telephone or personal interviews. In total, around 70% of the companies con- tacted took part in the survey. The following main topics were examined: – Satisfaction with the support and the rental property – Space requirements and utilization – Need for services such as e-charging stations, digitiza- tion in the building – Requirements in terms of ESG/sustainability. Once analyzed, the results of the survey are used for tar- geted optimization of our buildings and services with the aim of increasing tenant loyalty and satisfaction. The sur- vey is scheduled to be repeated regularly, at least every three years. Sustainable procurement & Supply Chain CA Immo screens business partne rs – including construction companies in particular – for their professional qualifications and economic situation as part of the award process, but also requires confirmation of compliance with social standards. In the case of con- struction services, CA Immo obliges its contractors and supply chain partners for compliance with statutory reg- ula tions on occupational health and safety, workplace and working time regulations and collective agreements. In addition to the economic evaluation of bids, compli- ance with social and environmental standards is re- quested from potential contractors and taken into ac- c ount in award processes. Details on these standards and the associated control mechanisms can be found in the Corporate Governance chapter and in the CA Immo Procurement policy at caimmo.com/esg-policies. 1) Of which around 11% part-time employees (PTE); incl. 31 employees on unpaid leave; excl. Freelancer 2) Of which around 11% are PTE; including 26 employees on unpaid leave 2. EMPLOYEES Our employees are our most valuable resource; their ex- pertise and commitment are crucial to our success. CA Immo values a corporate culture that is characterised by pride, trust and self-determined work. As an em- ployer, we want to create the best possible conditions for our employees to develop their potential, strengths and competencies to the full. We offer safe and attractive working environments, a wide range of international de- velopment opportunities and careful, forward-looking personnel development with the aim of offering our em- ployees what our office properties stand for: “a place where people love to work". Employment & Working Conditions The number of staff employed by CA Immo across the Group as of December 31, 2021 was 441 1) (31.12.2020: 437) 2) . Germany is CA Immo's most employee-intensive core market, accountin g for around 52% of the work- force, followed by CEE (23%) and Austria (21%). The re- maining 4% is accounted for by employees of the con- struction subsidiary omniCon branch in Basel 3) . Of the to- tal of 247 employees in Germa ny, 108 (2020: 119) were employed by omniCon as of the reporting date (of which 19 were emplo yed by the omniCon branch in Basel). As an employer, CA Immo has been locally anchored in its markets for many years and employs almost exclusively local staff in its international branches. As of December 31, 2021, people from 22 nations worked for CA Immo. In principle, CA Immo employs staff on full-time, per- manent contracts. In 2021, of a total of 441 employees, 430 are employed on permanent contracts and 11 on fixed-term contracts. The proportion of fixed-term em- ployees by employment contract is 2%. In its CSR Policy, CA Immo is clearly committed to the freedom of association of its employees. This policy also defines CA Immo's position on issues such as employee relations, human rights and working conditions. The CSR Policy is available at caimmo.com/esg-policies. In coop- eration with the Austrian works council, a large number of employee-related regulations – among other things to support the work-life balance – were defined within the framework of company agreements. 3) omniCon is a subsidiary of CA Immo that specializes in construction management and is active in Germany and Switzerland. GROUP MANAGEMENT REPORT GROUP MANAGEMENT REPORT 8 4 CA Immo last conducted a Group-wide analysis of em- ployee satisfaction in cooperation with Great Place to Work (GPTW) in 2020. Compared to the last GPTW sur- vey conducted in 2016, the satisfaction rate stood nearly unchanged at 86% (2016: 85%). The survey is standard- ised and assesses satisfaction dimensions such as pride, fairness, respect, camaraderie and credibility. The em- ployees who took part in the survey (76% of total em- ployees) were particularly positive about factors such as teamwork, working environment, portfolio, reputation, focus on sustainability and stability. CA Immo plans to conduct employee satisfaction surveys at least every three years. PERSONNEL DISTRIBUTION WITHIN THE CA IMMO GROUP 1) Headcount Number of employees Share of women Joining / Leaving New hires 2) Turnover 3) 31.12.2020 31.12.2021 change 2021 Ø 31.12.2021 2021 2021 in % 2021 in % in % in % Austria 80 92 15 86 62 21/10 24 12 Germany/Switzerland 4) 252 247 -2 250 39 15/20 6 8 CEE 105 102 -3 106 72 10/13 9 12 Total 437 441 1 442 51 46/43 10 10 1) Headcounts. Thereof around 11% part-time staff, incl 31 employees on unpaid leave; excl.20 employees of joint venture companies; Calculations according to the GRI guidelines (GRI 401 -1) 2) New hires: Joiners 2021 / average number of employees in 2021 (Headcount) 3) Turnover: Leavers 2021 / average number of employees in 2021 (Headcount) 4) At the end of 2021 19 local employees were employed at the Basel branch of CA Immo's wholly owned construction subsidiary omniCon. Co-determi nation of employees and internal communication Regular internal communication and a trusting and con- structive exchange between the Supervisory Board, man- agement and employees are important to us. Relevant in- formation is passed on to all employees in a comprehen- sive and timely manner via various channels, including physical or virtual CEO info meetings, info mails, man- agement meetings and team jour fixes. The Works Coun- cil, which is based at the Vienna headquarters, cooper- ates closely with the HR department. Corresponding co- ordination meetings are held every 14 days. The Manage- ment Board and the Works Council meet on a quarterly basis to discuss company developments and relevant em- ployee issues. Four employee representatives from the Austrian Works Council sit on the Supervisory Board of CA Immo. Their activities enable co-determination on the Supervisory Board, including the right to have a say in far-reaching corporate decisions. Employee participation and social benefits CA Immo offers employees a range of voluntary social benefits, independent of the working time model: Meal vouchers or food subsidy, Bahn-card 25 or 50, job tickets, further training support, kindergarten allowance, group health insurance, group accident insurance, job-related allowances and company pension scheme (pension fund). In addition to the fixed salary, all employees can participate in the company's success in the form of a vari- able profit-sharing bonus. This is linked to the achieve- ment of budgeted annual targets and a positive Group re- sult. Talent Management & Human Resources Development As part of its strategic training and development pro- gram (CA Immo Academy), CA Immo provides its em- ployees with a wide range of regular internal and exter- nal training and development opportunities. In 2021, training courses were held in the specialist areas of asset and portfolio management as well as data analysis and forecasting (Real Estate Analyst Training). Due to the pan- demic, a large part of the training was held virtually. 85 GROUP MANAGEMENT REPORT CA Immo also supports the professional development of its employees with training days, flexible working hours and financial assistance for the completion of (dual) stud- ies. Further information on the subject of training and further education can also be found at www.caimmo.com/en/careers/. Every CA Immo employee holds an appraisal interview with his or her manager at least once a year to assess per- formance, define goals and develop his or her personal career. Individual training plans and goals can be defined in line with both the individual development potential of employees and the company's need for expertise and qualifications. In 2021, 98% of employees had an annual appraisal, with the remaining 2% being accounted for by employees who joined in the fourth quarter of 2021. In order to promote a culture of continuous feedback, every employee appraisal has been digitally recorded in a cen- tral HR tool since 2021. This means that targets can be viewed at any time and an interim status on target achievement can be determined. A new feature of the an- nual appraisal is an analysis of employee potential in or- der to provide optimum support for employees' talents and training needs. AVERAGE ABSENCES FROM WORK BY REGIONS in days Vacation Illness Qualification in hours in days Austria 1) Women 18.8 4.8 11.5 1.4 Men 22.6 3.2 12.5 1.6 Germ any 2) Women 29.5 8.1 5.3 0.7 Men 28.8 5.5 5.0 0.6 CEE 3) Women 20.5 1.1 4.7 0.6 Men 20.2 0.5 6.9 0.9 1) Excludes one long-term sick leave case (LTSL). Including these LTSL, the average of sick leaves of women in Austria would be 5.5 days. 2) Excludes two long-term sick leave cases (LTSL). Including these LTSL, the average of sick leaves of women in Germany would be 8.9 days and of men 6.1 days 3) Excludes one long-term sick leave case (LTSL). Including these LTSL, the average of sick leaves of men in CEE would be 2.0 days. Health and safety at work Two occupational accidents were recorded in the 2021 reporting year. The resulting absences did not exceed one month in each case. No other significant work-related injuries, illnesses or days lost by CA Immo employees were reported in 2021. External safety specialists carry out regular rounds and checks in all own-used CA Immo offices. The frequency of these inspections is based on national legal require- ments and ranges from four times to once a year. The main topics include workplace evaluation, fire protec- tion, indoor climate factors and alone work/alone work- place. An internal safety officer at each subsidiary also ensures pleasant and safe working environments. No identifiable technical safety deficiencies and resulting acute hazards or risks to employees were identified at any CA Immo office in 2021. Safety and health plans are drawn up at all CA Immo construction sites; the company's own employees re- ceived regular safety briefings at the sites (see also the section Tenants & Service Providers, Health & Safety). In order to protect the physical and mental health of employees in the long term, CA Immo offers the follow- ing measures and incentives as part of its occupational health care programme: – Ongoing physical and virtua l (digital) informations on health-promoting work (place) design. – Regular vol unt ary first aid courses – Lectures by medical professionals on health promotion and stress prev ention/manage ment – Annual voluntary free tick and flu vaccinations Since 2021, CA Immo has been offering employees eye examinations and other medical screenings relevant to the specific area of responsibility of each employee group, in addition to the legally required occupational safety measures (such as workplace and home-office in- structions). The implementation of a Group-wide "Digital Wellness Week" with master classes on topics such as stress management, digital balance and food as medicine rounded off the offering. GROUP MANAGEMENT REPORT GROUP MANAGEMENT REPORT 86 In addition to many restric tions, the pandemic also brought psychological stress. CA Immo has therefore made external psychological support available to em- ployees throughout the Group (Employee Assistance Pro- gram) in the form of telephone or personal counseling. This service is available to both CA Immo employees and their relatives living in the same household. Our coopera- tion partner in Austria, Hilfswerk, for example, offers a variety of online presentations on time management and stress, conflicts or changes in the work environment in its KEEP BALANCE program. Partnership problems, questions about separation, divorce or raising children, and family conflicts can also be discussed with the coun- seling experts. Covid-19 In addition to the security measures in the common ar- eas of our buildings as listed in the "Tenants & Service Providers" section, the following Covid-19 protection measures are also implemented in the own-used CA Immo offices: – Free Covid 19 test kits for staff and visitors at all sites – Provision of mouth-nose protection at the reception – Mandatory use of mouth-nose protection in al l general building an d of fice areas (except at own workplace) – Reducing courier deliveries, including private packages, to a minimum. A special catalogue of measures to create a safe working environment for CA Immo employees in all office prem- ises used by the company itself has been continuously adapted and communicated internally. For example, due to the Covid-19 pandemic, an extended work-from-home regulation has been in force for all CA Immo employees since March 13, 2020, with voluntary office presence, a maximum of 50% office occupancy and mandatory mask- ing in all shared office areas. Until the editorial deadline of this report, business trips and presence meetings were only be held in exceptional cases. CA Immo did not take advantage of any short-time work or other government subsidies related to the pandemic during 2021. Thanks to early investment in modern IT equipment (e.g. laptops for all employees) and conver- sion to digital processes, all employees were able to con- tinue working largely undisturbed in their home offices or office workplaces while complying with Group-wide security precautions. 1) https://www.myability.org/ Further information on health and safety for employees can be found in our CSR Policy at caimmo.com/esg-poli- cies. Diversity und inclusion CA Immo operates in numerous countries of different languages and cultures and recognises social diversity and the rights of every individual. Therefore, we always strive to promote diversity within the company and give employees the space to realise their full potential in or- der to achieve exceptional results for customers and soci- ety. We strive to create workplaces free from discrimina- tion based on gender, sexual orientation, marital status, regional/social origin, race, skin colour, religion, world view, age, ethnical affiliation, handicap of any kind or any other reason. CA Immo does not tolerate disrespect- ful or inappropriate behavior, unfair treatment or unfair retaliation of any form. CA Immo respects the rights, interests and needs of its employees and pays attention to their individuality in or- der to establish a corresponding equality of rights and op- portunities. With this in mind, CA Immo commits to fair and respectful treatment of our employees in its corpo- rate social responsibility (CSR) policy. At the same time, CA Immo commits its employees to respectful and fair behavior towards each other and towards third parties (applicants, service providers, contractual partners etc.). The respective managers are responsible for observing and implementing diversity and equality in the day-to- day work of each department. Responsibility for diversity initiatives at CA Immo lies with the Group Head of Hu- man Resources. The basis for promoting diversity and equality is based on the Group-wide policies (CSR Policy, Code of Ethics and Code of Conduct) and the commit- ment to diversity management that we entered into by signing the Diversity Charter. CA Immo is a cooperation partner of myAbility Social Enterprise GmbH. myAbility is a social enterprise con- sultancy that aims to create equal opportunities and make society barrier-free from within the economy. 1) For the Frankfurt site, CA Immo has launched the collabora- tion as a pilot project to give students with disabilities in- sights into different departments and to promote a cul- ture of inclusion among CA Immo employees. This pro- ject is to be continued in Vienna in 2022. 8 7 GROUP MANAGEMENT REPORT In 2021, CA Immo offered Bullying Awareness Training for all managers for the first time, covering the topics of sexual harassment, bullying and bossing. The aim of this training was to increase managers' awareness of these is- sues, identify them at an early stage and intervene or take countermeasures. No incidents of discrimination were re- ported in 2021. Gender diversity CA Immo ensures equality and balance in the composi- tion of its employee structure, across the workforce as a whole and at all managerial and executive levels. Aside from professional qualifications, the recruitment process adheres to a policy of non-discrimination between women and men. Since 2020, CA Immo supports the ini- tiative Women in Leadership (F!F) 1) , which actively pro- motes the change towards more diversity and a contem- porary leadership culture in the real estate industry. In the application and selection process, CA Immo pays attention to a balanced ratio between men and women. A fair, non-discriminatory and equal opportunity applica- tion and selection process is particularly important to us. CA Immo undergoes annual benchmarking as part of the Best Recruiters Awards 2) . In this benchmarking, an exter- nal agency critically examines the quality of the recruit- ing process, the career website and, among other things, the company's focus on social responsibility and diver- sity. CA Immo recently received the Best Recruiters seal in gold and silver for its performance. CA Immo also aims to increase the proportion of female managers through a variety of measures and incentives. For example, women are specifically targeted in internal succession planning and when filling management posi- tions; preference is given to female applicants with equivalent qualification profiles in the recruiting process. Even part-time employment does not stand in the way of a management position. This model has already been used by some executives. In addition, attention is paid to gender balance in graduate and talent management pro- grams. In order to ensure that succession planning and the promotion of young executives are appropriately di- verse, 50% women and 50% men are regularly nomi- nated for the international talent program (FIRE) and care is taken to ensure that the participants have as wide a range of tasks and country coverage as possible. Training and consultation on the topic of diversity are a regular part of the employee training program. From 2022, the topic of diversity development will be included in the 1) https://www.frauen-in-fuehrung.info/ agenda of one of the Supervisory Board meetings at least once a year. As at the key date, the proportion of women working for the Group stood at approximately 51% (51% in 2020). The proportion of women was highest in the CEE subsid- iaries (73%), followed by Austria (62%) and Germany (39%). The proportion of female managers fell slightly year-on-year from 32% (31.12.2020) to 30% (31.12.2021). Since January 1, 2022, the CA Immo three-member Man- agement Board has also included one woman. Four women are represented on the Supervisory Board; the proportion of women is therefore 36% overall, or 43% among the shareholder representatives and 25% among the employee representatives when viewed separately. CA Immo makes it possible to reconcile professional and family life by offering flexible working hours, part- time options, working from home, paternity leave and ‘fa- thers’ month’. Employees on a leave of absence remain linked to the internal information network and are in- vited to participate in annual team meetings and com- pany events. Gender Pay Gap We evaluate and compare the salaries of men and women in comparable functions on an annual basis. If a pay gap exists, it is analyzed at the individual level and discussed with the respective manager before each salary review, so that the gender pay gap can be gradually closed as part of the annual salary review. In a year-on- year comparison, the gender pay gap (total compensa- tion) at management level has decreased from –2.1% (De- cember 31, 2020) to –0.3% and at employee level from 8.2% (December 31, 2020) to 6.4%. 2) https://bestrecruiters.eu/ GROUP MANAGEMENT REPORT GROUP MANAGEMENT REPORT 88 PERSONNEL DISTRIBUTION BY AGE AND CATEGORIES (TOTAL: 441 EMPLOYEES) 1) in % Employees (377) 2) ≤ 28 years 29-48 years ≥ 49 years Female 5% 40% 11% Male 4% 25% 16% Total 9% 64% 27% Managers (61) 3) ≤ 28 years 29-48 years ≥ 49 years Female 0% 25% 5% Male 0% 38% 33% Total 0% 62% 38% Management Board (3) ≤ 28 years 29-48 years ≥ 49 years Female 0% 0% 0% Male 0% 33% 67% Total 0% 33% 67% Total employees (441) 34 281 126 1) Excl. 20 employees (as at 31.12.2021) of joint venture companies. The percentages relate to the number of employees in the respective category. Calculations according to the GRI guidelines (GRI 405-1). 2) Of which 1% with disabilities 3) Managers were defined as follows: Group manager, Man- aging Director, Head of department, head of division, team leader. GENDER DIVERSITY 1) in % Men Women Gender pay gap 2) Base remun eratio n Total compens ation Supervisory Board (total) 64 36 0 0 Supervisory Board (capital representatives) 57 43 0 0 Supervisory Board (employee representatives) 75 25 0 0 Mana g ement Board 100 0 0 0 Executives 70 30 – 1.0 – 0.3 Em p lo y ees 45 55 5.6 6.4 Total 49% 51% 1) Compensation of the Supervisory Board is independent of gender. 2) Information regarding the alculation methodology can be found in the ESG appendix Outlook 2022 Further improvements in employee satisfaction, staff development geared to rapidly changing general condi- tions and clear positioning of the CA Immo employer brand to support international recruiting are key objec- tives for the coming years. 3. SUSTAINABLE URBAN DISTRICT DEVELOPMENT As an international investor, owner of inner-city office buildings and urban district developer, CA Immo also has an impact on the social environment in its core cities. Our goal is to create urban districts in which people will enjoy living tomorrow just as much as they do today. Our districts are characterized by good public transport links and the combination of working and living with social and cultural facilities. The provi- sion of green spaces and public spaces makes these places inclusive and accessible to all city residents. Creation of social infrastructure By specializing in the revitalization of brownfield sites, CA Immo opens up for all city dwellers places that were previously inaccessible or only accessible to a few people – mostly due to former industrial use. 24 CA Immo port- folio buildings, or around 30% of the total portfolio (by area), are located in neighborhoods that have been appro- priately developed, upgraded and opened up to the pub- lic by CA Immo. In the course of its neighbourhood de- velopments, CA Immo creates a wide range of social ser- vices and infrastructure in cooperation with the respec- tive municipali ties, including: – Parks, playgrounds, sports facilities and ecological com- pensation areas, – schools, daycare centers, local amenities, – public roads and (bicycle) paths. This results in a sustainable inner-city use of space with a high quality of stay at the same time. The 60,000 sqm landscape park created by CA Immo in the Baumkirchen Mitte residential quarter was awarded the Bavarian Landscape Architecture Prize in 2021. The area, where locomotives and freight cars were shunted for almost 70 years, is now a special habitat for rare ani- mal species. In its statement, the jury particularly empha- sized the holistic, sustainable approach to the landscape park as well as the sensitive development concept and 8 9 GROUP MANAGEMENT REPORT the clarification of the special "responsibility of land- scape architecture for the social, ecological and sustaina- ble quality of open spaces and their urban integration 1) . 2021, the Baumkirchen Mitte urban neighborhood development won the Bavarian Landscape Architecture Award 2020 in the "Living Environment" category. In total, CA Im mo invested around €450,000 in the so- cial infrastructure of its German urban districts in 2021, including planning costs for a daycare centre in Baumkir- chen Mitte and contribution payments for the construc- tion of the ESV Munich East club sports hall. Plans for 2022 include the construction of a playground in Eu- ropacity Berlin and a green space with generous sports and play areas in the Baumkirchen Mitte neighborhood. 1) https://www.bdla.de/de/bayerischer-landschaftsarchitektur- preis/2020/gewinner Procurement of building rights for residential development In the course of its urban district development projects, CA Immo has procured building rights for more than one million sqm of gross floor space of residential construc- tion in Frankfurt, Munich, Regensburg, Mainz, Berlin and Vienna over the past two decades. This corresponds to more than 12,000 residential units. Around 3,300 resi- dential units were developed by CA Immo itself, in many cases with joint venture partners. Further extensive land reserves for urban residential quarters in Munich are cur- rently in various stages of land preparation and zoning. In 2021, the building application for the last plot in the Baumkirchen Mitte quarter was submitted. It provides for the construction of a building with 54 subsidised and 11 privately financed flats as well as around 500 sqm of re- tail space in a timber hybrid construction. The project also includes an approx. 850 m² childcare centre in tim- ber construction, which will be transferred to the City of Munich as part-ownership after completion. 4. COMMUNITY ENGAGEMENT Cultural and social sponsoring Cultural and social sponsoring In the course of develop- ing inner-city districts and converting former industrial sites, CA Immo has for many years made space and buildings available free of charge or at low cost for in- terim cultural use. One example of this is the Rieck Halls, which are used as exhibition space, and the Hamburger Bahnhof property at Berlin's main train station. CA Immo also promotes selected charitable institutions, hospitals and schools in their core cities. In 2021, for ex- ample, we supported the victims of the flood disaster in Germany through donations to the German Red Cross and the "Deutschland hilft" campaign. Further funds went to the Child Nutrition Foundation in Budapest and to sup- port the construction of a hospital in Bucharest. In total, CA Immo donated around €96,000 to social and medical institutions in 2021. Corporate Volunteering CA Immo promotes its employees' commitment to the common good. In accordance with a new policy drawn up in 2020, all CA Immo employees have the opportunity to devote up to two working days per year to their active activities for the common good. GROUP MANAGEMENT REPORT GROUP MANAGEMENT REPORT 90 5. CYBERSECURITY CA Immo considers strong cybersecurity to be essential for the smooth functioning of its business. Network, pro- gram, information and operational security form the core of this. The Organization and IT department is responsi- ble for IT security throughout the Group. CA Immo's IT security concept addresses key topics such as security management, security objectives, protection requirements and risk analysis in order to constantly increase CA Im- mo's cyber resilience. Standardized processes and measures are used to identify potential threats and cyber risks at an early stage and to determine the need for pro- tection (low to very high protection requirement) for each IT system. Measures for monitoring and responding to data protection breaches and cyber attacks are in place and are continuously reviewed to ensure they are up to date. Audit plans provide for audits of data privacy and IT security at regular intervals. This applies both to IT technical issues and to organizational issues such as compliance with the provisions of the General Data Pro- tection Regulation (GDPR). Internal and external security audits have been carried out for several years. The last external audit was completed in December 2021 by an external auditing firm. The information and new findings compiled as part of these audits are documented in our Cybersecurity Policy. All CA Immo employees receive regular training (at least once a year) on the topic of cybersecurity. IT guide- lines are handed out to all employees at the beginning of their employment, and CA Immo employees can also find further links on IT security on the Group-wide intranet. The IT guidelines include information and rules on data backup, data exchange and transfer, data protection, use of e-mail and the Internet, mobile devices, home offices and remote access. BUSINESS ETHICS, CORPORATE GOVERNANCE & COMPLIANCE CA Immo wants to make an active contribution to a sustainable economy with integrity within its sphere of influence. This commitment requires the in- volve ment of many, both our own employees and exter- nal partners. Through targeted information and clear standards and guidelines, we aim to raise awareness among our employees and contractors of the issues we consider relevant and to encourage or oblige them to sup- port our principles and initiatives. All information on corporate governance, compliance, anti-corruption and human rights can be found in the Corporate Governance Report. Relevant polic ies are avail-able on our Group website at caimmo.com/esg -policies, including: – Code of Ethics & Code of Cond uct – Gifts and Donations Policy – CSR Policy – Procurement Policy 9 1 DISCLOSURES UNDER ARTICLE 8 OF THE EU REGULATION ESTABLISHING A FRAMEWORK FOR SUSTAINABLE INVESTMENT (EU TAXONOMY) Regulation (EU) 2020/852 ("EU Taxonomy Regulation") entered into force on July 12, 2020. It aims to define sus- tainable economic activities and represents an important piece of EU legislation to promote transparency and to enable and expand investment in these activities, thus implementing the European Green Deal. The scope of the economic activities listed within the EU taxonomy is not comprehensive, but is limited to sec- tors with significant environmental footprints and thus particular potential to contribute positively to the transi- tion to a sustainable economy. The construction and real estate industry as an energy-intensive and thus emission- intensive sector is one of the addressees of the EU taxon- omy. According to the EU taxonomy, an economic activity is considered environmentally sustainable if it makes a sig- nificant contribution to at least one of the environmental goals, does not have a significant negative impact on any of the other environmental goals ("do no significant harm, DNSH") and is carried out in compliance with certain minimum protection criteria (“minimum safeguards”), especially with regard to responsible business conduct and human and labour rights. Whether a significant con- tribution is made to an environmental goal or there is no significant harm to the environmental goals must be re- ported from 2022 onwards on the basis of the technical screening criteria specified in detail by the EU Commis- sion. Compliance with the minimum protection criteria must also be reported as part of the determination of the share of sustainable economic activities from the 2022 fi- nancial year onwards. At present, the technical criteria for a significant contri- bution are only available for the first two environmental goals of climate protection and adaptation to climate change. Publication of the final criteria for the remaining four environmental goals (water protection, circular economy, pollution prevention and biodiversity) is ex- pected in the course of 2022. According to Art. 10 of the “Delegated act on the new reporting obligations under Art. 8 of the Taxonomy Regu- lation”, simplification provisions apply for the reporting year 2021, according to which only the share of economic activities covered by the taxonomy must be reported. A reporting obligation on the share of sustainable economic activities (in the sense of the application of predefined technical assessment criteria) only exists from the report- ing year 2022 onwards. As the scope of application of the EU taxonomy is linked to that of non-financial reporting in accordance with Article 19a and Article 29a of Directive 2013/34/EU and therefore extends to large public interest entities with more than 500 employees, CA Immo is not covered by the reporting requirements of the EU taxonomy at the reporting date. In order to be transparent with regard to its sustainable economic activities, CA Immo discloses the relevant information voluntarily. In the following, the economic activities applicable to CA Immo are presented with the financial performance indicators to be reported in accordance with Art. 8 of the EU Taxonomy Regulation (revenue, capital expenditure & operating expenses). This presentation includes the shares of the economic activities covered by the taxon- omy in revenues, capital expenditure (CapEX) and oper- ating expenditure (OpEX). Gross revenues CA Immo is an investor, manager and developer spe- cializing in large, modern office properties in the metro- politan cities of Germany, Austria and CEE. The com- pany covers the entire value chain in the commercial property sector and has a high level of in-house construc- tion expertise. Founded in 1987, CA Immo is listed on the ATX of the Vienna Stock Exchange and holds real es- tate assets of around €6,3 bn in Germany, Austria and CEE. GROUP MANA GEMENT REPORT GROUP MANAGEMENT REPORT GROUP MANAGEMENT REPORT 9 2 The gross revenues of CA Immo consist mainly of rental income (including operating cost income) from proper- ties in the portfolio amounting to €280.2 m. In addition, revenue of €143.5 m was generated from the sale of long- term property assets (asset and share deals). Revenues from real estate trading and construction services are also recognised and are in negative territory in 2021 (revenue correction previous year). Income from the sale of proper- ties held for trading and services amount to €17.3 m, but these revenues originate from economic activities not covered by the EU taxonomy. Within the list of economic activities covered by the taxonomy, CA Immo has identified two activities for the gross revenues of the business year 2021: – Acquisition and ownershi p of buildings: Acquisition of real estate and exercise of own e rship of this real estate (note: e.g. by re nting). Th e economic activities in this category can be classified under NACE code L.68 ac- cording to the statistical classification of economic ac- tivities established by Regulation (EC) No. 1893/2006. – Construction of new buildings: The economic activities in this category can be classified under NACE code F .41.2 according to the statistical classification of eco- nomic activities established by Regulation (EC) No 1893/2006. The shar es of eligible and ineligible gross revenues (turnover) according to the taxonomy for the fiscal year 2021 are as follows: in € K NACE Code Total turnover 2021 Share of total turnover in % A. Taxonomy-eligible economic activities 7.7 Acquisition and ownership of buildings L.68 423,660 7.1 Construction of new buildings F.41.2 –926 Total Taxonomy-eligible economic activities 422,734 96% B. Not Taxonomy-eligible economic activities Total not Taxonomy-eligible economic activities 17,296 4% Total turnover (A+B) 440,030 100% Capital expenditures (CapEx) Capital expenditures as defined by the EU taxonomy are additions to long-term assets or rights of use. CA Immo reports capital expenditure primarily in the form of addi- tions to the investment portfolio (purchases of existing properties, project development for its own portfolio). Furthermore, investments are made in the form of reno- vations and refurbishments of the building stock owned by CA Immo. Both types of additions are to be allocated as CapEx to the economic activity "Acquisition and own- ership of buildings". Investments in company cars are also covered by the taxonomy under the economic activity 'Transport by pas- senger car'. Investments in owner-occupied property and software as well as in office furniture and equipment totalling around €2.3 m are not covered by the EU taxonomy. Overall, the shares of eligible and ineligible capital ex- penditures according to the taxonomy for the fiscal year 2021 are as follows: 9 3 GROUP MANAGEMENT REPORT In € K NACE Code Absolute CapEx 2021 Share of total CapEx in % A. Taxonomy-eligible economic activities 7.7 Acquisition and ownership of buildings L.68 212,056 98.8% 6.5 Transport by passenger car H.49.39 361 0.2% Total Taxonomy-eligible economic activities 212,417 98.9% B. Not Taxonomy-eligible economic activities Total not Taxonomy-eligible economic activities 2,280 1.1% Total CapEx (A+B) 214,697 100% Operating ex penses (OpEx) Operating expenses as defined by the EU taxonomy are, in addition to research and development expenses for the reduction of greenhouse gas emissions, all maintenance and repair expenses as well as other directly attributable costs that are relevant for the ongoing maintenance and preservation of the functionality of property, plant and equipment. In relation to CA Immo's business model, OpEx is only considered in the form of non-capitalised costs for maintenance and repair expenses on existing properties. The operating expenses covered by the EU taxonomy are therefore to be allocated in their entirety to the eco- nomic activity "Acquisition of and ownership of build- ings" and break down as follows: In € K NACE Code Absolute OpEx 2021 Share of total OpEx in % A. Taxonomy-eligible economic activities 7.7 Acquisition and ownership of buildings L.68 –5,236 100% Total Taxonomy-eligible economic activities –5,236 100% B. Not Taxonomy-eligible economic activities Total not Taxonomy-eligible economic activities 0 0% Total OpEx (A+B) –5,236 100% GROUP MANAGEMENT REPORT GROUP MANAGEMENT REPORT 9 4 MATERIAL NON-FINANCIAL PERFORMANCE INDICATORS UNDER SECTION 267 PARA. 2 UGB (NADIVEG) CA Immo Focus areas EPRA-Indicators Environmental issues Climate & Energy, Resource Conservation & Circular Economy, Sustainable procurement & Supply chain, Sustainable urban district development Elec-Abs, Elec-LFL, DH&C-Abs, DH&C-LFL, Fuels-Abs, Fuels-LFL, Energy-Int, GHG-Dir-Abs, GHG-Indir- Abs2, GHG-Indir-Abs3, GHG-Int, Water-Abs, Water-LFL, Water-Int, Waste-Abs, Waste-LFL, Cert-Tot Employee issues Health & Safet y , Sustainable p rocurement & Su pp l y chain Diversity-Emp, Diversity-Pay, Emp- Dev, Emp-Turnover, H&S-Emp, Emp-Training, H&S-Asset, H&S-Comp, Comty-Eng Social issues Health and safety, Sustainable procurement / supply chain Respect for human rights Business Ethics, Corporate Governance & Compliance Gov-Board Gov-Select Gov-CoI Combating corruption and bribery Business Ethics, Corporate Governance & Compliance REPORTING ACCORDING TO THE TASK FORCE ON CLIMATE-RELATED FINANCIAL DISCLOSURES (TCFD) Subject areas Topics Chapter Governance The Board's monitoring of climate-related risks and opportunities Corporate Governance Report, Risk Re p ort, ESG Re p ort Management´s role in assessing and managing climate-related risks and o pp ortunities Corporate Governance Report, Risk Re p ort , ESG Re p ort Strategy Short-, mid- and long-term climate-related risks and opportunities the or g anisation has identified ESG Report Impact from risks and opportunities on the organisation´s o p erations , strate gy and financial p lannin g ESG Report Preparation of the organisation's strategy in consideration of various climate-related scenarios Strategy, ESG Report Risk Management The organisation's process for identifying climate-related risks Risk Report, ESG Report The organisations' processes for managing climate-related risks Risk Report, ESG Report Integration of the above processes in the organisations general risk mana g ement Risk Report, ESG Report Indicators and goals The organisations indicators for evaluating climate-related risks and opportunities ESG Appendix, ESG Report Carbon emissions of Scope 1, 2 and 3 under the Greenhouse Gas Protocol and associated risks ESG Appendix, ESG Report Goals for mana g in g climate-related risks and o pp ortunities ESG Re p ort ESG APPENDIX 95 GROUP MANAGEMENT REPORT EPRA SUSTAINABILITY PERFORMANCE MEASURES We report on our environmental, social and governance engagement in accordance with the EPRA Sustainability Best Practice Recommendations 3rd Edition (sBPR). We address the EPRA sBPR across three sections: – Overarching recommendations (see this and next page) – Sustaina bility performance indicators (see page 128- 136) – Narrative on performance (see ESG Report page 94-124 and Corporate Governance Report on page 22-32 6. OVERARCHING RECOMMENDATIONS ACC. TO EPRA Organisational boundaries For our data boundary, we take an operational control approach. All key figures stated in the course of ESG re- porting refer to CA Immobilien Anlagen AG and all fully consolidated subsidiaries in the respective reporting pe- riod or reporting date (unless otherwise stated). The re- porting on the consumption data of our investment port- folio (page 128-134) includes exclusively investment properties that were in operation and fully-owned by CA Immo throughout the year under review. Properties that were acquired, sold or completed in the reporting period (financial year) and thus were not part of our in- vestment portfolio for the entire period were not in- cluded. Reporting period The reporting on the consumption data of our invest- ment portfolio (page 128-134) refers to the calendar year that ended on 31 December 2020, as the consumption data of our buildings for the year 2021 was not com- pletely available by the editorial deadline of the report. The rest of the sustainability reporting refers to the re- porting date 31 December 2021, unless otherwise stated. Coverage We seek to report on all properties within the organisa- tional boundaries defined above, excluding: – Properties classified as land reserves, e.g. temp orary buildings, buildings with interim use – multi-storey car parks. 1) As at 31 December 2021, by book value, excl. short-term properties Office properties form the core segment of CA Immo; as at the reporting date, office properties accounted for 91% of the total portfolio 1) , the rest was accounted for by ho- tels (5%) and other types of use (4%). In 2020, the CA Immo portfolio recorded in the EPRA consumption data on pages 128-131 in accordance with the scope described above included 67 investment build- ings, of which 54 were multi-tenant office buildings, one shopping centre and 12 single-tenant buildings (includ- ing six hotels). 40 buildings were heated with district heating, the remaining 27 with gas. Compared to 2019, the scope of the analysed portfolio was significantly ex- panded in 2020 and, in addition to the office asset class, all asset classes (hotel, retail, other) were included in the consumption data analysis. In total, around 90% of the entire CA Immo investment portfolio (by gross lettable area, as at 31 December 2020) was included in the con- sumption data analysis in the 2020 business year (2019: 76%), including utility consumption for seven CA Immo owner-occupied offices located in CA Immo buildings. The consumption figures for the three offices used by CA Immo itself that are not located in CA Immo build- ings are shown separately in the table on page 132. In order to be able to provide a comprehensive data col- lection for the total energy consumption of our buildings, we seek to obtain tenant consumption data (tenant elec- tricity purchased directly by the tenant) from both all sin- gle-tenant buildings and multi-tenant buildings. For the 2020 financial year, two office buildings fully let to a sin- gle tenant (single-tenant buildings) had to be excluded from the consumption data analysis due to lack of data availability. Extrapolation methodology for 2021 consumption data Consumption data for the 2021 business year was not available in full by the editorial deadline for this report. In order to nevertheless be able to give an indication of the corresponding consumption, we have extrapolated selective consumption values (energy and CO 2 intensity of the investment portfolio) on the basis of the 2020 con- sumption values, taking into account climate (weather) and vacancy factors, and presented them in the ESG re- port on page 106. The EPRA tables in the ESG Appendix show the full 2019 and 2020 consumption data only. GROUP MANAGEMENT REPORT GROUP MANAGEMENT REPORT 9 6 Scope of reporting In reporting on the consumption data of our investment portfolio, we follow the scope definition of the Green- house Gas Protocol: – Scope 1: Direct emissions from the combustion of en- ergy sources procured dire ctly by CA Immo (natural gas) – Scope 2: Indirect emissions arising from the generation of energy proc ured by CA Immo outside CA Immo prop- erties (electricity and district h eating) – Scope 3: Indirect emissions generated within the CA Immo value chain. As at the reporting date , CA Immo only reports Scope 3.13 emissions from leased buildi ngs (downstream leased assets). These are emissions that arise in the cou rse of energy consump- tion by tenants who purchase th eir energy quantities (electricity, gas and district heating) via submet ering from CA Immo (tenant electricity, obtained from the landlord a nd submetered to tenants) or via direct con- tracts with their suppliers. The co nversion of energy consumption to greenhouse gas emissions has been carried out both location-based and market-based since the 2020 financial year. For the location-based conversion, country-specific average con- version factors from DEFRA (for district heating and gas) and the International Energy Agency IEA (for electricity) are used. For the market-based conversion, the factors of the respective energy suppliers (for district heating and electricity) from the corresponding energy contracts are applied. Estimation of landlord-obtained utility consumption Total reported energy and water consumption is based on invoices and meter readings where applicable. For a single-tenant building, estimates for water and energy data were made based on the requirements of the EPRA Sustainability Best Practices Recommendations 3rd Edi- tion. In some cases, we converted waste data reported in volumetric units. Density conversion factors provided by the UK Environment Agency were used for this purpose. Boundaries – Reporting on landlord and tenant consumption Where possible, the total consumption quantities (en- ergy and water) of the properties were recorded. The total energy quantities include energy purchased by the land- lord to supply the technical building equipment and common areas, energy purchased by the tenant, and en- ergy purchased by the landlord, which is passed on di- rectly to the tenants and recorded and invoiced as part of submetering. All three components are reported sepa- rately. Water consumption is based on the entire building and therefore also includes tenant consumption. Waste data covers tenant and landlord waste as CA Immo is re- sponsible for waste contracts. Analysis – Normalisation In the 2021 financial year, the area used to calculate en- ergy intensity (Energy-Int), CO 2 intensity (GHG-Int) and water intensity (Water-Int) was changed from rentable floor space (GLA) to gross internal area (GIA in sqm; incl. garage parking spaces, basement and storage area located in the building). The values for 2019 and 2020 have been adjusted accordingly. Only those buildings for which complete data are available are included in the calcula- tion of the intensity ratios. For our own offices we report intensity performance indicators using the floor area we occupy in these buildings. Analysis – Segment analysis Segment analysis has been conducted both on a geo- graphical and asset-class basis. The investment portfolio 2020 included properties in Germany, Austria and CEE (Czechia, Hungary, Poland, Romania, Serbia and Slo- vakia). Analysis – Like-for-like analysis Like-for-like analysis includes all properties that were in continuous operation and part of the CA Immo portfo- lio in the last two full reporting years (operational con- trol). To ensure meaningful comparability, the individual performance indicators only include properties for which consumption data is available from both years. Key employee figures Employee figures are reported on the basis of headcounts (HC) of all fully consolidated companies (including em- ployees on unpaid leave and part-time employees, ex- cluding students and interns). If a key figure was calcu- lated with a different basis, this is explained in more de- tail in a footnote. 9 7 GROUP MANAGEMENT REPORT ENERGY CONSUMPTION AND CO 2 FOOTPRINT OF THE CA IMMO INVESTMENT PORTFOLIO 2019/2020 Total p ortfolio Indicator EPRA Code Boundaries Unit of measure 2019 2020 Change Electricit y consum p tion Elec-Abs Total ener gy consum p tion from electricit y kWh 160,705,089 145,388,794 -9.5% General electricit y , landlord obtained 1) 81,142,311 69,737,161 -14.1% Landlord obtained, submetered to tenant area 60,214,306 51,443,829 -14.6% Tenant obtained, tenant area 19,348,472 24,207,803 25.1% % from renewable sources 0% 1% - Electricit y consum p tion LFL Elec-LFL Total ener gy consum p tion from electricit y 154,268,358 133,983,230 -13.1% General electricit y , landlord obtained 1) 77,599,441 67,073,158 -13.6% Landlord obtained, submetered to tenant area 58,535,460 50,085,100 -14.4% Tenant obtained, tenant area 18,133,457 16,824,972 -7.2% Energy consumption from district heating 2) DH&C-Abs Total ener gy consum p tion from district heatin g 46,049,995 60,629,345 31.7% Whole buildin g , landlord obtained , 43,613,937 48,452,961 11.1% Whole buildin g , tenant obtained 2,436,058 12,176,384 399.8% % from renewable sources 0% 0% 0% Energy consumption from district heating LFL 2) DH&C-LFL Total ener gy consum p tion from district heatin g 46,049,995 44,331,022 -3.7% Whole buildin g , landlord obtained 43,613,937 41,686,070 -4.4% Whole buildin g , tenant obtained 2,436,058 2,644,952 8.6% Energy consumption from fuel Fuels-Abs Total ener gy consum p tion from fuel 63,022,091 54,584,527 -13.4% Whole buildin g , landlord obtained 63,022,091 51,527,244 -18.2% Whole buildin g , tenant obtained - 3,057,283 N/A % from renewable sources 0% 0% 0% Energy consumption from fuel LFL Fuels-LFL Total ener gy consum p tion from fuel 56,921,641 51,527,244 -9.5% Whole buildin g , landlord obtained 56,921,641 51,527,244 -9.5% Whole buildin g , tenant obtained - - N/A Buildin g ener gy intensit y Ener gy -Int Whole buildin g kWh/sqm 187 173 -7.1% Buildin g ener gy intensit y landlord-obtained Whole buildin g , excl. tenant ener gy su pp l y 138 119 -13.3% Buildin g ener gy intensit y LFL Whole buildin g 196 174 -11.3% Buildin g ener gy intensit y landlord-obtained LFL Whole buildin g , excl. tenant ener gy su pp l y 136 122 -10.3% Direct GHG emission ( total ) Sco p e 1 GHG-Dir-Abs Whole Buildin g k g CO 2 e 11,586,611 9,474,314 -18.2% Indirect GHG emission ( total ) Sco p e 2 GHG-Indir- Whole Buildin g , excl. tenant ener gy su pp l y kgCO 2 e (location based) 37,638,468 35,132,823 -6.7% Indirect GHG emission ( total ) Sco p e 3.13 GHG-Indir- tenant ener gy su pp l y 29,995,433 30,897,734 3) 3.0% Indirect GHG emission ( total ) Sco p e 2 GHG-Indir- Whole Buildin g , excl. tenant ener gy su pp l y kgCO 2 e (market based) 38,209,110 36,858,939 -3.5% Indirect GHG emission ( total ) Sco p e 3.13 GHG-Indir- tenant ener gy su pp l y 30,149,850 30,676,305 3) 1.7% Buildin g GHG emissions intensit y ( Sco p e 1+2 ) GHG-Int Whole Buildin g , excl. tenant ener gy su pp l y kgCO 2 e/sqm (location based) 34.64 31.35 -9.5% Buildin g GHG emissions intensit y ( Sco p e 1+2+3.13 ) Whole Buildin g 54.27 51.66 -4.8% Buildin g GHG emissions intensit y ( Sco p e 1+2 ) LFL Whole Buildin g , excl. tenant ener gy su pp l y 36.13 32.39 -10.3% Buildin g GHG emissions intensit y ( Sco p e 1+2+3.13 ) LFL Whole Buildin g 59.50 52.96 -11.0% Buildin g GHG emissions intensit y ( Sco p e 1+2 ) Whole Buildin g , excl. tenant ener gy su pp l y kgCO 2 e/sqm (market based) 36.54 32.56 6) -10.9% Buildin g GHG emissions intensit y ( Sco p e 1+2+3.13 ) Whole Buildin g 59.96 53.25 6) -11.2% Buildin g GHG emissions intensit y ( Sco p e 1+2 ) LFL Whole Buildin g , excl. tenant ener gy su pp l y 36.53 33.87 6) -7.3% Buildin g GHG emissions intensit y ( Sco p e 1+2+3.13 ) LFL Whole Buildin g 60.22 55.02 6) -8.6% Type and number of assets certified Cert-Tot 5) Whole Building % of p ortfolio certified 86 78 -9.41 1) Includes electricity purchased from CA Immo for common areas and cooling throughout the building. 2) No purchase of district cooling in CA Immo's investment portfolio 3) GHG-Indir-Abs excludes emissions from consumption that is exclusively attributable to rental space (Scope 3.13 emissions) 4) The reported emissions are assigned to Scope 3, but these values do not represent the full Scope 3 emissions according to the GHG Protocol. Only Scope 3 category 13 "Downstream leased assets" is mapped. 5) By book value. Includes all asset classes. Please see page 134 for a detailed list of certified properties by type; 6) The 2020 market-based data differ slightly from the data published in July 2021 because some of the energy suppliers' market-based emission factors were not available at that time. In these cases, as recommended in the GHG Protocol Corporate Standard, average site-based emission factors were used to fill gaps. LFL: like-for-like For information on CO 2 conversion factors and scope definition, see ESG Appendix on page 126-127. GROUP MANAGEMENT REPORT GROUP MANAGEMENT REPORT 9 8 Germany Austria CEE Germany Austria CEE Office Hotel Others 7) 2019 2020 2020 21,546,998 11,867,453 127,290,638 28,181,726 13,641,938 103,565,130 138,637,846 3,038,558 3,712,389 5,270,429 8,795,550 67,076,332 6,881,413 9,375,718 53,480,030 68,478,695 - 1,258,466 - - 60,214,306 - 1,358,729 50,085,100 51,300,241 143,588 - 16,276,569 3,071,903 - 21,300,312 2,907,491 - 18,858,910 2,894,970 2,453,923 0% 0% 0% 8% 0% 0% 2% 0% 0% 21,546,998 9,580,838 123,140,522 20,917,712 9,500,388 103,565,130 133,983,230 - - 5,270,429 7,723,950 64,605,062 5,475,876 8,117,252 53,480,030 67,073,158 - - - - 58,535,460 - - 50,085,100 50,085,100 - - 16,276,569 1,856,888 - 15,441,835 1,383,136 - 16,824,972 - - 10,279,360 7,274,604 28,496,031 19,670,628 11,106,247 29,852,470 53,137,106 4,248,327 3,243,912 8,853,922 6,263,984 28,496,031 11,119,960 7,480,531 29,852,470 47,582,049 - 870,912 1,425,438 1,010,620 - 8,550,668 3,625,716 - 5,555,057 4,248,327 2,373,000 0% 0% 0% 0% 0% 0% 0% 0% 0% 10,279,360 7,274,604 28,496,031 9,862,436 7,521,008 26,947,578 44,331,022 - - 8,853,922 6,263,984 28,496,031 8,128,873 6,609,619 26,947,578 41,686,070 - - 1,425,438 1,010,620 - 1,733,563 911,389 - 2,644,952 - - 4,708,384 4,326,723 53,986,984 7,638,177 4,303,905 42,642,445 51,527,244 3,057,283 - 4,708,384 4,326,723 53,986,984 4,580,894 4,303,905 42,642,445 51,527,244 - - - - - 3,057,283 - - - 3,057,283 - 0% 0% 0% 0% 0% 0% 0% 0% 0% 4,708,384 4,326,723 47,886,534 4,580,894 4,303,905 42,642,445 51,527,244 - - 4,708,384 4,326,723 47,886,534 4,580,894 4,303,905 42,642,445 51,527,244 - - - - - - - - - - - 165.54 91.24 211.44 166.61 120.59 182.45 172.94 153.88 280.08 102.81 100.50 150.74 97.27 93.71 130.55 121.03 N/A 55.57 168.21 122.01 209.91 162.96 119.01 182.45 174.20 N/A N/A 102.81 100.50 149.25 99.28 101.50 130.55 122.18 N/A N/A 865,636 795,468 9,925,507 842,289 791,359 7,840,666 9,474,314 - - 3,410,850 2,370,276 31,857,342 4,337,545 2,642,255 28,153,023 34,801,150 - 331,673 5,970,549 620,591 23,404,293 9,523,003 1,240,597 20,134,133 27,431,904 2,193,918 1,271,912 1,992,818 1,334,696 34,881,596 2,401,793 1,617,661 32,839,486 36,644,471 - 214,469 5,970,549 775,009 23,404,293 9,189,851 747,462 20,738,991 27,614,517 1,789,876 1,271,912 23.35 15.13 42.11 22.31 15.21 37.30 31.98 N/A 8.66 47.30 18.97 65.70 44.70 19.02 58.16 52.33 32.78 73.80 23.35 16.53 42.26 22.76 16.54 37.30 32.39 N/A N/A 47.30 18.97 66.21 45.70 18.46 58.16 52.96 N/A N/A 15.60 11.36 45.16 13.97 10.67 42.16 33.31 N/A 5.60 41.05 13.53 68.75 37.91 11.07 63.65 54.32 26.66 73.80 15.60 11.36 45.39 12.92 11.70 42.16 33.87 N/A N/A 41.05 13.53 69.34 36.16 12.43 63.65 55.02 N/A N/A 84 34 95 69 24 100 80 64 0 7) These include a shopping center (Galleria, Vienna) and a museum (Hamburger Bahnhof, Berlin). 9 9 GROUP MANAGEMENT REPORT WASTE GENERATION AND WATER CONSUMPTION IN THE CA IMMO INVESTMENT PORTFOLIO 2019/2020 Total p ortfolio Indicator EPRA Code Boundaries Unit of measure 2019 2020 Change Total waste Whole Buildin g Tonnes 13,653 4,814 -64.7% Weight of waste by disposal route (total) Waste-Abs Landfill with or without ener gy recover y Tonnes 8,395 2,830 -66.3% Incineration with or without ener gy recover y 2,640 751 -71.5% Reuse 79 0 -99.9% Rec y clin g 2,286 1,015 -55.6% Materials Recover y Facilit y 232 4 -98.3% Com p ost 7 33 366.9% Other 12 181 1,353.0% Total q uantit y recover y 5,257 1,984 -62.3% Weight of waste by disposal route (%) Waste-Abs Landfill with or without ener gy recover y % disposal route 61% 59% -4.4% Incineration with or without ener gy recover y 19% 16% -19.3% Reuse 1% 0% -99.8% Rec y clin g 17% 21% 25.9% Materials Recover y Facilit y 2% 0% -95.3% Com p ost 0% 1% 1,224.0% Other 0% 4% 4,020.6% Total q uantit y recover y 39% 41% 7.0% Total waste LFL Whole Buildin g Tonnes 13,619 4,509 -66.9% Weight of waste by disposal route (total) LFL Waste-LFL Landfill with or without ener gy recover y Tonnes 8,395 2,676 -68.1% Incineration with or without ener gy recover y 2,640 638 -75.8% Reuse 79 0 -99.9% Rec y clin g 2,260 993 -56.1% Materials Recover y Facilit y 225 4 -98.3% Com p ost 7 24 235.3% Other 12 174 1,297.9% Total q uantit y recover y 5,224 1,832 -64.9% Weight of waste by disposal route (%) LFL Waste-LFL Landfill with or without ener gy recover y % disposal route 62% 59% -3.7% Incineration with or without ener gy recover y 19% 14% -27.0% Reuse 1% 0% -99.8% Rec y clin g 17% 22% 32.7% Materials Recover y Facilit y 2% 0% -94.8% Com p ost 0% 1% 912.9% Other 0% 4% 4,122.8% Total q uantit y recover y 38% 41% 6.0% Waste intensit y Whole buildin g kg/ sqm 6.32 1.89 -70.1% Waste intensit y LFL Whole buildin g 6.46 2.05 -68.3% Total water consum p tion Water-Abs Whole buildin g 1) m 3 585,313 417,488 –28.7% Water consum p tion LFL Water-LFL Whole buildin g 1) 571,453 361,088 –36.8% Buildin g water consum p tion intensit y Water-Int Whole Buildin g m³/s q m 0.44 0.28 –36.7% Buildin g water consum p tion intensit y LFL Water-Int Whole Buildin g 0.41 0.26 –37.0% 1) Municipal supply. LFL: like-for-like GROUP MANAGEMENT REPORT GROUP MANAGEMENT REPORT 1 00 Germany Austria CEE Germany Austria CEE Office Hotel Others 2) 2019 2020 2020 866 2,291 10,496 901 1,048 2,865 4,604 46 165 0 2,166 6,229 0 849 1,981 2,676 0 154 442 25 2,173 597 6 148 714 37 - 68 - 12 - - 0 0 - - 286 97 1,903 274 31 711 1,002 7 5 54 2 176 - 0 4 4 - - 4 - 3 29 1 4 33 - - 12 - 0 1 161 18 174 1 5 866 125 4,267 901 199 884 1,927 46 11 0% 95% 59% 0% 81% 69% 58% 0% 93% 51% 1% 21% 66% 1% 5% 16% 81% 0% 8% 0% 0% 0% 0% 0% 0% 0% 0% 33% 4% 18% 30% 3% 25% 22% 16% 3% 6% 0% 2% 0% 0% 0% 0% 0% 0% 0% 0% 0% 3% 0% 0% 1% 0% 0% 1% 0% 0% 0% 15% 1% 4% 3% 3% 100% 5% 41% 100% 19% 31% 42% 100% 7% 866 2,291 10,463 764 883 2,862 4,509 - - 0 2,166 6,229 - 695 1,981 2,676 - - 442 25 2,173 484 6 148 638 - - 68 - 12 - - 0 0 - - 286 97 1,877 260 25 708 993 - - 54 2 169 - 0 4 4 - - 4 - 3 19 1 4 24 - - 12 - 0 - 156 18 174 - - 866 125 4,234 764 188 881 1,832 - - 0% 95% 60% 0% 79% 69% 59% N/A N/A 51% 1% 21% 63% 1% 5% 14% N/A N/A 8% 0% 0% 0% 0% 0% 0% N/A N/A 33% 4% 18% 34% 3% 25% 22% N/A N/A 6% 0% 2% 0% 0% 0% 0% N/A N/A 0% 0% 0% 3% 0% 0% 1% N/A N/A 1% 0% 0% 0% 18% 1% 4% N/A N/A 100% 5% 40% 100% 21% 31% 41% N/A N/A 0.00 10.35 6.67 0.00 3.36 2.12 1.90 0.00 4.02 0.00 10.35 6.87 0.00 3.24 2.18 2.05 N/A N/A 56,113 52,352 476,848 73,083 70,520 273,885 365,783 36,568 15,136 56,113 52,352 462,988 36,804 50,399 273,885 361,088 - - 0.26 0.25 0.48 0.22 0.25 0.29 0.25 0.55 0.27 0.26 0.25 0.48 0.17 0.24 0.29 0.26 N/A N/A 2) Incl. a shopping center (Galleria, Vienna) and a museum (Hamburger Bahnhof, Berlin). 1 01 GROUP MANAGEMENT REPORT ENERGY, WATER CONSUMPTION AND CO 2 FOOTPRINT OF OWN-USED OFFICES 2019/2020 Indicator EPRA Code Unit of measure 2019 2020 % change Total electricit y consum p tion Elec-Abs kWh 140,019 131,335 -6.2 Thereof % from renewable sources % 0% 44% Like-fo r -like electricit y consum p tion Elec-LFL kWh 140,019 131,335 -6.2 Total ener gy consum p tion from district heatin g and DH&C-Abs kWh 231,730 169,080 -27.04 Thereof % from renewable sources % 0% 0% Like-fo r -like consum p tion from district heatin g and DH&C-LFL kWh 231,730 169,080 -27.0 Total ener gy consum p tion from fuel 2) Fuels-Abs kWh 0 0 0 Buildin g ener gy intensit y Ener gy -Int kWh/ s q m 83 67 -19.2 Direct GHG emission ( total ) Sco p e 1 2) GHG-Dir-Abs k g CO 2 e 0 0 0 Indirect GHG emission ( total ) Sco p e 2 GHG-Indir-Abs k g CO 2 e ( location based ) 90 75 -16.3 Indirect GHG emission ( total ) Sco p e 2 GHG-Indir-Abs k g CO 2 e ( market based ) 78 65 N/A Buildin g GHG emissions intensit y GHG-Int k g CO2e/s q m ( location based ) 20.07 16.80 -16.3 Buildin g GHG emissions intensit y GHG-Int k g CO2e/s q m ( market based ) 17.33 14.53 N/A Total water consum p tion 3) Water-Abs m 3 850 596 -29.8 Like-fo r -like water consum p tion 3) Water-LFL m 3 850 596 -29.8 Buildin g water consum p tion intensit y 3) Water-Int l/ s q m 189.48 133.02 -29.8 T yp e and number of assets certified Cert-Tot T yp e and number 2 ( DGNB ) Gold ) 2 ( DGNB ) Gold ) 0 1) For the indicator energy consumption from district heating and cooling, the percentage from renewable sources is 0. 2) There is no fuel consumption in any own used office 3) Data relates to municipal supply. LFL: like-for-like. The table contains data on three own-used offices not located in CA Immo. Consumption data for the remaining seven own-used offices is included in the tables on page 128-131. WASTE GENERATION IN OWN-USED OFFICES 2019/2020 Indicator EPRA code Boundaries Unit of measure 2019 2020 Change 2) Like-for-like 2019 2020 Change Weight of waste by disposal route (absolute) Waste-Abs 1) Total Waste Tonnes 31.38 31.38 0% 31.38 31.38 0% Landfill with or without energy recovery 0.00 0.00 0% - - - Incineration with or without energy recovery 6.41 6.41 0% 6.41 6.41 0% Reuse - - - - - - Rec y clin g 24.74 24.74 0% 24.74 24.74 0% Materials Recover y Facilit y - - - - - Com p ost - - - - - Other 0.23 0.23 0% 0.23 0.23 0% Total q uantit y recover y 31.38 31.38 0% 31.38 31.38 0% Weight of waste by disposal route (%) Waste-Abs 1) Landfill with or without ener gy recover y % disposal route 0% 0% - - - - Incineration with or without energy recovery 20% 20% 20% 20% Reuse - - - - Rec y clin g 79% 79% 79% 79% Materials Recover y Facilit y - - - - Com p ost - - - - Other 1% 1% 1% 1% Total q uantit y recover y 100% 100% 100% 100% 1) Waste data by weight was not available for Klaus-Mann-Platz 1 (CA Immo branch office in Munich); 2) Waste disposal in the rented office space is handled by the landlord. Due to the lack of access to specific waste disposal data, the waste volume for the building as a whole can only be determined on the basis of the number of waste containers and the frequency with which they are emptied, of which the proportionate waste volume can be determined by CA Immo on the basis of the share of our rental space in the total rental space of the building. Since the same input data (number of containers, frequency of emptying, proportion of rental space) was available in both years under review, the result is unchanged waste volumes. GROUP MANAGEMENT REPORT GROUP MANAGEMENT REPORT 10 2 COVERAGE OF THE CA IMMO INVESTMENT PORTFOLIO 2019/2020 1) 1) This table shows the lettable area, number of buildings and percentage coverage of the total building stock (according to the definition of the scope of the report on page 95-96) on which the respective consumption data in the table on page 97-100 are based) 2) Gross internal area of the buildings surveyed 3) Number of applicable properties. Compared to 2019, the scope of the analysed 2020 portfolio was expanded to include alle asset classes (hotel, retail, others) in addition to the office asset class. The total number of investment buildings (67 buildings) also includes two single-tenant buildings for which we have no consumption data. 4) Coverage of the total area 5) Landlord obtained 6) Total building, excluding tenant energy supply 2019 2020 Indicator EPRA Code Area 2) Number 3) Coverage 4) Area 2) Number 3) Coverage 4) Total electricity consumption Total ener gy consum p tion from electricit y Elec-Abs 1,421,104 sqm 56 out of 56 100% 1,607,728 sqm 65 out of 67 99% Landlord obtained, General electricit y 5) 1,357,552 sqm 53 out of 53 100% 1,422,963 sqm 55 out of 55 100% Landlord obtained, tenant area (submetered) 992,139 s q m 35 out of 36 94% 1,026,788 s q m 35 out of 35 100% Tenant obtained, tenant area 247,688 s q m 14 out of 20 67% 369,453 s q m 20 out of 32 62% Electricit y consum p tion LFL Total ener gy consum p tion from electricit y Elec-LFL 1,393,953 sqm 55 out of 55 100% 1,399,217 sqm 55 out of 55 100% Landlord obtained, General electricit y 5) 1,330,401 sqm 52 out of 52 100% 1,335,665 sqm 52 out of 52 100% Landlord obtained, tenant area (submetered) 964,988 s q m 34 out of 34 100% 964,988 s q m 34 out of 34 100% Tenant obtained, tenant area 247,688 s q m 14 out of 14 100% 252,953 s q m 14 out of 14 100% Consumption from district heating and cooling Whole building 5) DH&C-Abs 723,418 sqm 29 out of 29 100% 939,967 sqm 38 out of 40 99% Landlord obtained, whole b uildin g 659,866 sqm 26 out of 26 100% 779,133 sqm 30 out of 30 100% Tenant obtained, whole buildin g 63,552 sqm 3 out of 3 100% 160,834 sqm 8 out of 10 95% Consum p tion from district heatin g and coolin g LFL DH&C-LFL Whole buildin g 5) 723,418 sqm 29 out of 29 100% 728,681 sqm 29 out of 29 100% Landlord obtained, whole b uildin g 659,866 sqm 26 out of 26 100% 665,130 sqm 26 out of 26 100% Tenant obtained, whole buildin g 63,552 sqm 3 out of 3 100% 63,552 sqm 3 out of 3 100% Ener gy consum p tion from fossil fuels Fuels-Abs Whole buildin g 697,686 sqm 27 out of 27 100% 663,048 sqm 26 out of 27 98% Landlord obtained, whole b uildin g 697,686 sqm 27 out of 27 100% 643,830 sqm 25 out of 25 100% Tenant obtained, whole buildin g 0 sqm 0 out of 0 N/A 19,218 sqm 1 out of 2 63% Ener gy consum p tion from fossil fuels LFL Fuels-LFL Landlord obtained, whole b uildin g 643,830 sqm 25 out of 25 100% 643,830 sqm 25 out of 25 100% Tenant obtained, whole buildin g 0 sqm 0 out of 0 N/A 0 sqm 0 out of 0 N/A Buildin g ener gy intensit y Energy-Int 1,421,104 sqm 56 out of 56 100% 1,396,241 sqm 55 out of 67 86% Buildin g ener gy intensit y landlord-obtained 6) 1,357,552 sqm 53 out of 53 100% 1,422,963 sqm 55 out of 67 88% Direct GHG emission (total) Sco p e 1 GHG-Di r -Abs 697,686 sqm 27 out of 27 100% 643,830 sqm 25 out of 25 100% Indirect GHG emission (total) Sco p e 2 GHG-Indi r -Abs 1,357,552 sqm 53 out of 53 100% 1,422,963 sqm 55 out of 55 100% Indirect GHG emission (total) Sco p e 3 GHG-Indi r -Abs 1,301,628 sqm 50 out of 56 92% 1,400,955 sqm 56 out of 67 86% Buildin g GHG emissions intensit y (Sco p e 1+2) GHG-Int 5) 1,357,552 sqm 53 out of 53 100% 1,422,963 sqm 55 out of 55 100% Buildin g GHG emissions intensit y (Sco p e 1+2+3.13) 1,301,628 sqm 50 out of 56 92% 1,396,241 sqm 55 out of 67 86% Water consum p tion Wate r -Abs 1,326,622 sqm 52 out of 56 93% 1,494,178 sqm 59 out of 67 92% Water consum p tion LFL Wate r -LFL 1,393,953 sqm 55 out of 55 100% 1,399,217 sqm 55 out of 55 100% Buildin g water consum p tion intensit y Wate r -Int 1,326,622 sqm 52 out of 56 93% 1,494,178 sqm 59 out of 67 92% Wei g ht of waste b y dis p osal route (absolute and %) Waste-Abs 1,326,622 sqm 52 out of 56 93% 1,494,178 sqm 59 out of 67 92% Wei g ht of waste b y dis p osal route (abs. and %) LFL Waste-LFL 1,299,471 sqm 51 out of 51 100% 1,304,735 sqm 51 out of 51 100,00% Waste intensit y 1.326.622 sqm 52 out of 56 93% 1.494.178 sqm 59 out of 67 92% Waste Intensit y LFL 1.299.471 sqm 51 out of 51 100% 1.304.735 sqm 51 out of 51 100% T yp e and number of assets certified Cert-Tot 7) 1,143,886 sqm 44 out of 56 80% 1,217,589 sqm 48 out of 67 75% 1 03 GROUP MANAGEMENT REPORT COVERAGE OF THE CA IMMO OWN-USED OFFICES 2019/2020 2019 2020 Indicator EPRA Code Office space Coverage Office space Coverage Total electricity consumption Elec-Abs 4,484 sqm 3 out of 3 4,484 sqm 3 out of 3 Like-for-like electricity consumption Elec-LFL 4,484 sqm 3 out of 3 4,484 sqm 3 out of 3 Total energy consumption from district heating and cooling DH&C-Abs 4,484 sqm 3 out of 3 4,484 sqm 3 out of 3 LFL consumption from district heating and cooling DH&C-LFL 4,484 sqm 3 out of 3 4,484 sqm 3 out of 3 Total energy consumption from fossil fuels 1) Fuels-Abs 0 0 0 0 Building energy intensity Energy-Int 4,484 sqm 3 out of 3 4,484 sqm 3 out of 3 Direct GHG emission (total) Scope 1 GHG-Dir-Abs 0 0 0 0 Indirect GHG emission (total) Scope 2 GHG-Indir-Abs 4,484 sqm 3 out of 3 4,484 sqm 3 out of 3 Building GHG emissions intensity GHG-Int 4,484 sqm 3 out of 3 4,484 sqm 3 out of 3 Total water consumption Water-Abs 4,484 sqm 3 out of 3 4,484 sqm 3 out of 3 Like-for-like water consumption Water-LFL 4,484 sqm 3 out of 3 4,484 sqm 3 out of 3 Building water consumption intensity Water-Int 4,484 sqm 3 out of 3 4,484 sqm 3 out of 3 Weight of waste by disposal route (absolute and %) Waste-Abs 3,583 sqm 2 out of 3 3,583 sqm 2 out of 3 Like-for-like Weight of waste by disposal route (absolute and %) Waste-LFL 3,583 sqm 2 out of 2 3,583 sqm 2 out of 2 Type and number of assets certified Cert-Tot 3,583 sqm 2 von 3 3,583 sqm 2 von 3 1) There is no energy consumption from fossil fuels in any of the own-used offices CERTIFICATION OF THE CA IMMO INVESTMENT PORTFOLIO – EPRA CERT-TOT 1) Buildin g Certification 2018 1) 2019 1) 2020 2) 2021 2) BREEAM - Excellent Covera g e in s q m 112 , 451 150 , 333 80 , 990 115 , 578 Number of buildin g s 4 5 2 3 BREEAM - Ver y g ood Covera g e in s q m 129 , 943 171 , 317 265 , 128 280 , 176 Number of buildin g s 8 10 14 14 BREEAM - Interim Covera g e in s q m 0 0 78 , 029 43 , 462 Number of buildin g s 0 0 3 2 Leed - Platinum Covera g e in s q m 145 , 589 144 , 728 144 , 723 103 , 466 Number of buildin g s 5 5 5 3 Leed - Gold Covera g e in s q m 262 , 536 255 , 733 160 , 884 185 , 846 Number of buildin g s 13 13 8 9 DGNB - Platinum Covera g e in s q m 48 , 335 85 , 418 106 , 365 106 , 383 Number of buildin g s 3 5 6 6 DGNB - Gold Covera g e in s q m 104 , 680 81 , 413 99 , 951 117 , 552 Number of buildin g s 7 6 7 9 Total covera g e in s q m 803 , 534 888 , 942 936 , 070 952 , 463 Total number of buildin g s 40 44 45 46 1) Basis: office properties, Gross leasable area (GLA) in sqm 2) Basis: all asset classes, GLA GROUP MANAGEMENT REPORT GROUP MANAGEMENT REPORT 10 4 SOCIAL UND GOVERNANCE PERFORMANCE MEASURES ACCORDING TO EPRA Social EPRA Code Chapter Unit of measure / Definition Coverage 31.12.2021 Gender diversity Diversity-Emp Corporate Governance Report ESG Report % of employees Supervisory Board 1) 64% Male 36% Female Executive Board 100% Male 0% Female Managers 2) Employees 70% Male 30% Female 45% Male 55% Female Gender pay Diversity-Pay 3) Ratio in % Supervisory Board Avera g e Median 0 0 Executive Board 4) 0 0 Managers 2) Employees -0.3 6.4 -1.6 6.0 2020 Performance a pp raisals Em p -Dev ESG Report ESG Appendix % of total workforce All employees 98 New hires Emp-Turnover Total number 46 Rate in % 5) 10 Turnover Total number ( Exits ) 43 Rate in % 6) 9.7 In j ur y rate 7) H&S-Emp Rate in % 0% Lost da y rate 8) Rate in % 0% Absentee rate 9) Rate in % 2% Fatalities 10) Number 0 Training and development Emp-Training Average hours of training per employee Men: 6.4 Women: 6.5 Health and safety assessments H&S-Asset ESG Report Percentage of buildings (by rentable area) inspected for health and safety issues (e,g, fire safety, water quality) % of total investment portfolio 11) (by sqm) 95% (DE: 100%, AT: 93%, CEE: 93%) Health and safety compliance H&S-Comp All legal requirements are complied with, and any deficiencies identified are rectified immediately in all properties (100%) Number of defects detected 0 Community engagement Comty-Eng Share of properties (by rentable area) located in urban districts developed by CA Immo % of total investment portfolio (by sqm) 31% (DE: 60%, AT: 43%, CEE: 12%) Governance Composition of the highest governance body Gov-Board Corporate Governance Report Total number of Management Board Members Management Board 3 Total number of Su p ervisory Board members (shareholder representatives independent of the Company or the Board of Management) Supervisory Board 7 4 Total number of Su p ervisory Board members (capital representatives independent of the main shareholder) Average tenure (years) of Supervisory Board 12) Supervisory Board 4 Supervisory Board Members 13) with competencies relating to environmental and social topics Supervisory Board 11 Nominating and selecting the highest governance body Gov-Select Description Supervisory Board and Management Board Process for managing conflicts of interest Gov-CoI Description 1) Total Supervisory Board, incl, 7 shareholder and 4 employee representatives 2) Managers include Group managers, Managing Directors of the regional offices, heads of departments, divisional heads, team leaders 3) Difference in average total compensation (base salary and bonus) per employee category (function, level, country) of women and men in % 4) The Management Board is 100% male 5) New hire rate: new hires 2020 / average employees 2020 (headcount) 6) Staff turnover: staff leaving in 2020 / average employees in 2020 (headcount) 7) Injury rate: number of injuries & occupational accidents / total hours worked by all employees 8) Lost day rate: Number of absence days due to injuries due to accidents at work / total working time of all employees in hours 9) Absentee rate: total number of absence days (illness) / total working time of all employees in days 10) Fatalities: Number of deaths due to occupational disease or accident 11) As at 31.12.2021; excl. buildings acquired, completed or intended for sale in the course of the financial year 2021. 12) General average appointment period 13) Independent / non-executive Supervisory Board Members 1 05 GROUP MANAGEMENT REPORT INFORMATION ON CA IMMO EMPLOYEES TYPES OF EMPLOYMENT AND WORK MODELS 1) Performance measures Gender Unit of measure 31.12.2020 31.12.2021 Em p lo y ment Total em p lo y ment Female HC 223 227 Male HC 214 214 Total HC 437 441 New hires Female HC 27 22 Male HC 41 , 25 Total HC 68 46 Leavin g s Female HC 13 19 Male HC 26 24 Total HC 39 43 Fluctuation Female HC 6% 8% Male HC 12% 11% Total HC 9% 10% Em p lo y ment contracts 2) Full-time HC 364 363 Part-time HC 47 47 Un p aid leave HC 26 31 Total HC 437 441 Tem p orar y em p lo y ees HC 0 0 All-in HC 400 419 Health Occu p ational diseases Number/ y ear 0 0 Occu p ational accidents Number/ y ear 2 2 Education & trainin g Number of em p lo y ees trained HC 414 437 Percenta g e of trained em p lo y ees % 100 100 Trainin g time in hours Hours/ y ear 4 , 892 2 , 862 Social dialo g ue Number of collective a g reements Number 0 0 Bar g ainin g a g reements Number 8 6 Number of meetin g s of the works council with the mana g ement board Number/ y ear 4 4 1) Excl, joint ventures; HC: Headcount, Calculations according to the GRI guidelines (GRI 401-1, 402) CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 10 7 109 110 112 113 115 118 118 118 118 118 119 119 120 120 122 123 125 CHAPTER 2: PROFIT AND LOSS 127 127 132 134 135 135 136 137 138 138 139 139 139 140 140 140 141 141 2.1. Operating segments 2.2 Rental income 2.3. Result from operating costs and other expenses directly related to properties rented 2.4. Other expenses directly related to properties under development 2.5. Result from trading and construction works 2.6. Result from sale of investment properties 2.7. Income from services rendered 2.8. Indirect expenses 2.9. Other operating income 2.10. Depreciation and impairment losses/reversal 2.11. Joint ventures result 2.12. Finance expenses 2.13. Result from derivatives 2.14. Result from financial investments 2.15. Other financial results 2.16. Financial result 2.17. Other comprehensive income 2.18. Earnings per share 142 CHAPTER 3: LONG-TERM ASSETS 143 143 157 158 161 3.1. Long-term property assets 3.2. Own used properties 3.3. Office furniture and equipment and intangible assets 3.4. Investments in joint ventures 3.5. Other assets 163 CONTENT A. CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED 31.12.2021 B. CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31.12.2021 C. CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31.12.2021 D. CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31.12.2021 E. CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 2021 F. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT 31.12.2021 CHAPTER 1: INFORMATION ABOUT THE COMPANY AND GENERAL NOTES a) Information concerning the Company b) Accounting principles c) Presentation and structuring of the group notes d) Scope of consolidation e) Acquisitions and establishments of companies/company stakes f) Disposals of companies/company stakes g) Consolidation methods h) Foreign currency translation i) Covid- 19 pandemic – impact on CA Immo Group j) Climate-related matters CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 108 166 167 168 4.1. Assets and liabilities held for sale 4.2. Properties held for trading 4.3. Receivables and other assets 4.4. Cash and cash equivalents 171 CHAPTER 5: EQUITY AND FINANCING 172 5.1. Shareholders‘ equity 172 5.2. Interest bearing liabilities 173 5.3. Other liabilities 175 5.4. Liabilities in disposal groups 176 CHAPTER 6: PROVISIONS 177 6.1. Provisions 177 CHAPTER 7: TAXES 182 182 188 188 7.1. Income taxes 7.2. Current income tax receivables 7.3. Income tax liabilities 7.4. Tax risks 189 CHAPTER 8: FINANCIAL INSTRUMENTS AND RISK MANAGEMENT 190 8.1. Financial instruments 190 8.2. Derivative financial instruments and hedging transactions 192 8.3. Risks from financial instruments 196 CHAPTER 9: OTHER DISCLOSURES 201 9.1. Information for cash flow statement 201 9.2. Other obligations and contingent liabilities 205 9.3. Leases 205 9.4. Transactions with related parties 208 9.5. Employees 211 9.6. Costs for the auditors 211 9.7. Events after balance sheet date 211 9.8. New and amended standards and interpretations 212 212 a) Changes in presentation, which have a material effect on the consolidated financial statements b) First-time application of new and revised standards and interpretations not materially influencing 212 212 the consolidated financial statements c) New or revised standards and interpretations not yet in force 9.9. List of group companies 213 220 221 CHAPTER 4: CURRENT ASSETS 166 DECLARATION OF THE MANAGEMENT BOARD PURSUANT TO SECTION 124 (1) OF THE AUSTRIAN STOCK EXCHANGE ACT AUDITOR’S REPORT CONSOLIDATED FINANCIAL STATEMENTS 1 09 € K Note 2021 2020 Rental income 2.2. 229,111 235,609 Operating costs charged to tenants 2.3. 51,053 53,260 Operating expenses 2.3. –57,600 –57,738 Other expenses directly related to properties rented 2.3. –23,102 –21,466 Net rental income 199,462 209,665 Other expenses directly related to properties under development 2.4. –1,854 –2,154 Income from trading and construction works 8,233 43,335 Book value of properties sold incl. ancillary and construction costs –1,558 –35,387 Result from trading and construction works 2.5. 6,675 7,949 Result from the sale of investment properties 2.6. 52,660 43,930 Income from services rendered 2.7. 8,137 8,166 Indirect expenses 2.8. –58,222 –73,176 Other operating income 2.9. 3,235 1,204 EBITDA 210,093 195,584 Depreciation and impairment of long-term assets –4,939 –4,662 Changes in value of properties held for trading –354 –871 Depreciation and impairment/reversal 2.10. –5,293 –5,533 Revaluation gain 602,360 352,110 Revaluation loss –61,213 –168,611 Result from revaluation 541,147 183,499 Result from joint ventures 2.11. 3,618 1,898 Result of operations (EBIT) 749,565 375,448 Finance costs 2.12. –47,619 –42,311 Other financial results 2.15. 0 –5,067 Foreign currency gains/losses 2.16. –69 2,385 Result from derivatives 2.13. –25,945 21,429 Result from financial investments 2.14. –756 –3,589 Financial result 2.16. –74,389 –27,154 Net result before taxes (EBT) 675,176 348,295 Current income tax –30,939 –15,242 Deferred taxes –164,436 –79,099 Income tax expense 7.1. –195,375 –94,341 Consolidated net income 479,801 253,953 thereof attributable to non-controlling interests 26 5 thereof attributable to the owners of the parent 479,774 253,948 Earnings per share in € (basic) 2.18. €4.89 €2.73 Earnings per share in € (diluted) 2.18. €4.89 €2.34 A. CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED 31.12.2021 CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 1 10 € K Note 2021 2020 Consolidated net income 479,801 253,953 Other comprehensive income Cash flow hedges - changes in fair value 6,664 –620 Foreign currency gains/losses 42 –111 Income tax related to other comprehensive income –2,127 198 Other comprehensive income for the period (realised through profit or loss) 2.17. 4,578 –533 Revaluation IAS 19 592 –80 Income tax related to other comprehensive income –196 28 Other comprehensive income for the period (not realised through profit or loss) 2.17. 396 –52 Other comprehensive income for the period 2.17. 4,974 –585 Comprehensive income for the period 484,775 253,368 thereof attributable to non-controlling interests 26 5 thereof attributable to the owners of the parent 484,748 253,363 B. CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31.12.2021 CONSOLIDATED FINANCIAL STATEMENTS 1 11 CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 1 12 € K Note 31.12.2021 31.12.2020 ASSETS Investment properties 3.1. 4,984,297 4,723,068 Investment properties under development 3.1. 1,097,147 791,136 Own used properties 3.2. 11,174 12,896 Office furniture and equipment 3.3. 6,431 7,531 Intangible assets 3.3. 3,419 2,998 Investments in joint ventures 3.4. 55,800 57,629 Other assets 3.5. 88,571 60,728 Deferred tax assets 7.1. 2,681 4,382 Long-term assets 6,249,520 5,660,368 Long-term assets as a % of total assets 87.8% 83.0% Assets held for sale and relating to disposal groups 4.1. 76,197 37,092 Properties held for trading 4.2. 87,166 35,200 Receivables and other assets 4.3. 55,727 136,375 Current income tax receivables 7.2. 12,718 16,391 Cash and cash equivalents 4.4. 633,117 934,863 Short-term assets 864,925 1,159,921 Total assets 7,114,445 6,820,289 LIABILITIES AND SHAREHOLDERS' EQUITY Share capital 774,229 718,337 Capital reserves 1,017,662 791,372 Other reserves 993 –3,981 Retained earnings 1,498,038 1,622,491 Attributable to the owners of the parent 3,290,922 3,128,218 Non-controlling interests 116 89 Shareholders' equity 5.1. 3,291,038 3,128,308 Shareholders' equity as a % of total assets 46.3% 45.9% Provisions 6.1. 50,323 34,249 Interest-bearing liabilities 5.2. 2,186,534 2,622 ,161 Other liabilities 5.3. 50,314 113,503 Deferred tax liabilities 7.1. 698,310 536,317 Long-term liabilities 2,985,482 3,306,228 Current income tax liabilities 7.3. 19,278 14,464 Provisions 6.1. 113,333 117,409 Interest-bearing liabilities 5.2. 397,409 205,301 Other liabilities 5.3. 305,547 46,932 Liabilities relating to disposal groups 4.1. 2,357 1,647 Short-term liabilities 837,925 385,753 Total liabilities and shareholders' equity 7,114,445 6,820,289 C. CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31.12.2021 CONSOLIDATED FINANCIAL STATEMENTS 1 13 € K 2021 2020 Operating activities Net result before taxes 675,176 348,295 Revaluation result incl. change in accrual and deferral of rental income –536,988 –187,422 Depreciation and impairment/reversal 5,293 5,533 Result from the sale of long-term properties and office furniture and other equipment –52,645 –43,893 Finance costs, other financial results and result from financial investments 48,375 50,968 Foreign currency gains/losses 69 –2,385 Result from derivatives 25,945 –21,429 Result from joint ventures –3,618 –1,898 Payment/ non-cash expenses court fees damages claim –25,475 25,475 Taxes paid excl. taxes for the sale of long-term properties and investments –11,632 –9,016 Interest paid (excluding interest for financing activities) –1,030 –11,521 Interest received (excluding interest from investing activities) 423 7,200 Cash flow from operations 123,894 159,906 Properties held for trading –2,083 26,417 Receivables and other assets 22,419 9,419 Provisions 2,750 –8,980 Other liabilities 3,878 –1,698 Cash flow from change in net working capital 26,964 25,158 Cash flow from operating activities 150,858 185,064 Investing activities Acquisition of and investment in long-term properties incl. prepayments –236,298 –321,283 Acquisition of companies 369 –133,874 Cash and cash equivalents acquired companies 0 1,705 Acquisition of office equipment and intangible assets –1,911 –2,085 Payment/ Cash inflow disposal of financial assets –98 0 Disposal of investment properties and other assets 161,007 –1,831 Disposal of investment property companies 78,688 133,996 Cash and cash equivalents investment property companies disposed –3,946 –4,817 Disposal of at equity consolidated entities 0 580 Loans made to joint ventures –3,000 –2,545 Loan repayments made by joint ventures and others 771 0 Taxes paid relating to the sale of long-term properties and investments –10,842 –5,347 Dividend distribution/capital repayment from at equity consolidated entities and other investments 13,511 7,369 Interest paid for capital expenditure in investment properties –5,325 –4,792 Negative interest paid –3,648 –1,802 Interest received from financial investments 394 64 Cash flow from investing activities –10,327 –334,663 D. CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31.12.2021 CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 1 14 € K 2021 2020 Financing activities Cash inflow from loans received 123,844 111,056 Costs paid/ Cash inflow from the issuance of bonds –20 836,747 Repayment of convertible bonds –100 0 Repayment of bonds / Cash outflow from the repurchase of bonds –107,450 –103,380 Dividend payments to shareholders –352,436 –93,028 Payments to shareholders of non-controlling interests –3 0 Repayment of loans incl. interest rate derivatives –70,535 –65,626 Other interest paid –38,400 –35,669 Cash flow from financing activities –445,101 650,101 Net change in cash and cash equivalents –304,569 500,502 Fund of cash and cash equivalents 1.1. 935,482 439,391 Changes in the value of foreign currency 791 –1,325 Changes due to classification from/of disposal group 1,444 –3,086 Fund of cash and cash equivalents 31.12. 633,148 935,482 Expected credit losses cash and cash equivalents –31 –619 Cash and cash equivalents 31.12. (balance sheet) 633,117 934,863 The interest paid in 2021 (excluding negative interest) totalled €–44,755 K (2020: €–51,982 K). The income taxes paid in 2021 added up to €–22,474 K (2020: €–14,363 K). The total lease payments in 2021 amount to €–4,580 K (2020: €–5,016 K). Additional information for the cashflow statement is provided in note 9.1. CONSOLIDATED FINANCIAL STATEMENTS 1 15 € K Note Share capital Capital reserves - Others Capital reserves - Treasury share reserve As at 1.1.2020 718,337 887,147 –95,775 Cash flow hedges - changes in fair value 2.17. 0 0 0 Foreign currency gains/losses 2.17. 0 0 0 Revaluation IAS 19 2.17. 0 0 0 Consolidated net income 0 0 0 Comprehensive income for 2020 0 0 0 Dividend payments to shareholders 5.1. 0 0 0 As at 31.12.2020 5.1. 718,337 887,147 –95,775 As at 1.1.2021 718,337 887,147 –95,775 Cash flow hedges - changes in fair value 2.17. 0 0 0 Foreign currency gains/losses 2.17. 0 0 0 Revaluation IAS 19 2.17. 0 0 0 Consolidated net income 0 0 0 Comprehensive income for 2021 0 0 0 Conversion of bonds 5.1. 55,892 226,290 0 Dividend payments to shareholders 5.1. 0 0 0 As at 31.12.2021 5.1. 774,229 1,113,437 –95,775 E. CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 2021 CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 1 16 Retained earnings Valuation result (hedging - reserve) Other reserves Attributable to shareholders of the parent company Non-controlling interests Shareholders' equity (total) 1,461,571 0 –3,396 2,967,884 84 2,967,968 0 –422 0 –422 0 –422 0 0 –111 –111 0 –111 0 0 –52 –52 0 –52 253,948 0 0 253,948 5 253,953 253,948 –422 –163 253,363 5 253,368 –93,028 0 0 –93,028 0 –93,028 1,622,491 –422 –3,559 3,128,218 89 3,128,308 1,622,491 –422 –3,559 3,128,218 89 3,128,308 0 4,537 0 4,537 0 4,537 0 0 42 42 0 42 0 0 396 396 0 396 479,774 0 0 479,774 26 479,801 479,774 4,537 437 484,748 26 484,775 0 0 0 282,183 0 282,183 –604,227 0 0 –604,227 0 –604,227 1,498,038 4,115 –3,122 3,290,922 116 3,291,038 CONSOLIDATED FINANCIAL STATEMENTS 1 17 CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 1 18 CHAPTER 1: INFORMATION ABOUT THE COMPANY AND GENERAL NOTES a) Information concerning the Company CA Immobilien Anlagen Aktiengesellschaft and its subsidiaries constitute an international real estate group (the “CA Immo Group”). The parent company is CA Immobilien Anlagen Aktiengesellschaft ("CA Immo AG"), which has its head office at 1030 Vienna, Mechelgasse 1, Austria. CA Immo Group owns, develops and manages especially office properties in Austria and Germany as well as in Eastern Europe. CA Immo AG is listed on the prime market segment of the Vienna Stock Exchange and is included in the ATX (Austrian Traded Index of leading companies). b) Accounting principles The consolidated financial statements of CA Immo AG were prepared in acc ordance with the International Financial Reporting Standards (IFRS) as adopted by the European Union and thereby fulfil the additional requirements of § 245a par. 1 of the Austrian Commercial Code (UGB). The consolidated financial statements are based on the acquisition cost method, with the exception of investment properties (including standing investments and properties under develop- ment), properties held for sale, other investments, derivative financial instruments and provisions for cash-settled share-based payment plans, which are measured at fair value. The net item from pension obligations is presented as a provision, comprising the present value of the obligations less the fair value of the plan asset. The consolidated financial statements are presented in thousands of Euros ("€ K"), rounded according to the commer- cial rounding method. The use of automatic data processing equipment may lead to rounding differences in the addi- tion of rounded amounts and percentage rates. c) Presentation and structuring of the group no tes The preparation and presentation of the financial statements require management to make relevant decisions regard- ing the choice of the accounting methods as well as the sequence and the relevance of the disclosures, taking into ac- count the requirements of the users of the financial statements. CA Immo Group presents all items of the consolidated income statement and the consolidated statement of financial position together with information about main decisions, assumptions and estimations as well as the accounting policies for these items. This structure offers the users of the financial statements a clear overview of the information about the group figures and relating explanations and disclo- sures. The following symbols indicate the different contents of the chapters: Main decisions, assumptions and estimations Accounting policies The financial statements contain financial information prepared by taking into account materiality considerations. The materiality of the CA Immo Group is determined by quantitative and qualitative aspects. The quantitative aspects are evaluated by means of ratios to balance sheet total, performance indicators and/or main items of cash flow. The dis- closures in the notes of the CA Immo Group are assessed at each end of the financial period, weighing the efficient preparation of the financial statements and the transparent presentation of the relevant information. F. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT 31.12.2021 CONSOLIDATED FINANCIAL STATEMENTS 1 19 d) Scope of consolidation The consolidated financial statements comprise the ultimate parent company CA Immo AG and the companies listed in Note 9.9. Changes in scope Full consolidation Joint ventures at equity As at 1.1.2021 156 28 New establishment of companies 4 0 Disposal of companies due to liquidation or restructuring –16 –2 Sales of entities –4 –1 As at 31.12.2021 140 25 thereof foreign companies 125 22 Investments in unconsolidated structured entities As at 31.12.2021, as in the previous year, there are no investments in unconsolidated structured entities. Effective date of initial or deconsolidation The consolidation of a subsidiary begins on the day on which the group gains control over the subsidiary. It ends when the group loses control over the subsidiary. Assets, liabilities, income and expenses of a subsidiary are recog- nized in the financial statements as of the date on which the group gains control of the subsidiary until the date the control ceases. CA Immo Group determines the date of the initial consolidation or deconsolidation taking into account efficiency and materiality considerations. Consolidation The control concept of IFRS 10 leads to the existence of joint ventures within CA Immo Group, which, due to contractual arrangements, despite a shareholding percentage higher than 50% are included in the consolidated finan- cial statements using the at-equity method in line with IFRS 11. e) Acquisitions and establishments of companies/company stakes CA Immo Group did not acquire any entities in 2021. CA Immo Group determines at the time of acquisition of companies (legal entities) whether the acquisition repre- sents a business or a group of assets and liabilities. The following indicators are used for the assessment of busi- ness units: – the acquired entity comprises a number of properties – the acquired entity conducts substantive processes, apart from owning and letting properties – the entity employs personnel carrying out substantive processes In order to determine whether a transaction represents an acquisition of assets and liabilities or a business combina- tion according to IFRS 3, CA Immo Group does not make use of the practical expedient (concentration test). Newly established companies For the foundation of companies, equity amounting to €100 K was paid. CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 1 20 f) Disposals of companies/company stakes CA Immo Group disposed of the following interests in entities in the business year 2021: Company name/domicile Interest held in % Consolidation method before change in participation Sales price € K Deconsolidation date BA Business Center s.r.o. 100 Full consolidation 5,782 25.2.2021 CA Immo Elf GmbH 100 Full consolidation 2,384 31.3.2021 Canada Square Kft. 100 Full consolidation 11,246 31.8.2021 CA Immo Wspólna Sp.z.o.o. 100 Full consolidation 13,017 17.11.2021 Total affiliated entities 32,429 The outstanding sales prices in relation to sales made in 2021 amounted to €344 K as at 31.12.2021. The fully consolidated entities comprised the following net assets as of the date of the sale: € K Total Properties (including Right-of-use Asset) 81,076 Other assets 241 Cash and cash equivalents 3,946 Deferred taxes –1,636 Provisions –61 Other liabilities –2,376 Financial liabilities –3,799 Net change before payables to affiliated companies 77,389 Payables to affiliated companies –46,384 Net change 31,005 g) Cons olidation methods All companies under the control of the parent company are fully consolidated in the consolidated financial state- ments. A company is initially consolidated as of the time control is gained by the parent. Companies are decon- solidated when control ceases. All intra-group transactions between companies included in the scope of full consolida- tion, the related revenues and expenses, receivables and payables, as well as unrealised intra-group profits, are fully eliminated. Profit and loss amounts resulting from “upstream” and “downstream” transactions with joint ventures or associated companies are eliminated in accordance with the share of CA Immo Group in these companies (except for real estate properties measured at fair value). If the company (legal entity) acquired is not a business, the acquisition is not a business combination according to IFRS 3. Correspondingly, the acquisition is only an acquisition of assets and liabilities, which are recognised with their proportional acquisition cost. The acquisition costs are allocated to the acquired assets (especially investment proper- ties) and liabilities as well as the non-controlling interests, based on their relative fair value at the date of acquisition of the subsidiary. If a business is acquired, the acquisition is classified as a business combination according to IFRS 3. In order to qual- ify as a business there must be at least one input factor (such as workforce, intellectual property or rights) and one sub- stantive process (transformation of the input factors) that contributes significantly to the ability to generate output. The subsidiary is consolidated for the first time using the acquisition method, by recognising its identifiable assets and lia- bilities at fair value as well as a goodwill and non-controlling interests, if applicable. The goodwill represents any CONSOLIDATED FINANCIAL STATEMENTS 1 21 amount by which the fair value of the transferred amount (usually the purchase price for the acquired business) and (if applicable) for the non-controlling interest, exceeds the fair value of the identifiable assets and liabilities, including any deferred taxes. Non-controlling interests are initially recognized proportionally at fair value of the identifiable net assets of the entity acquired and subsequently measured according to the changes in shareholders' equity attributable to the non-contro- lling interests. Total comprehensive income is attributed to the non-controlling interests even if this results in a nega- tive balance of non-controlling interests. According to the classification of interest as shareholders’ equity or liabilities, the non-controlling interests are recognized within shareholders’ equity respectively as other liabilities. Acquisitions or sales of shares in a subsidiary that do not result in an establishment or loss of control are accounted for as equity transactions. The book values of the controlling and non-controlling interests are adjusted to reflect the changes in the respective interests in the subsidiary. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to the shareholders of the parent company. In case of a partial sale of shares in a subsidiary, previously fully consolidated, all assets and liabilities of the former subsidiary are excluded from the consolidated balance sheet, at the moment control is lost. As a result, the remaining shares are recognised as joint ventures, associated entities or financial instrument according to IFRS 9, with applicable fair value at the transition consolidation date through profit or loss. If an acquisition of shares in an entity, previously accounted for as joint venture, associate or financial instrument according to IFRS 9, leads to control over that entity, then its assets and liabilities are recognized in the consolidated statement of financial position following the transitional consolidation and previously held investment is derecognized at their fair value through profit or loss. Joint ventures CA Immo Group enters into joint ventures with one or more partner companies in the course of establishing invest- ment property or project development partnerships, whereby joint management of these ventures is established by con- tract. Interests in jointly managed companies are accounted for according to the equity method in the consolidated fi- nancial statements of CA Immo Group (AEJV – at equity joint ventures). Associated companies An associated company is an entity under significant influence of the Group that is neither a subsidiary nor an inter- est in a joint venture. The results of associated companies will be included in the financial statements using the equity method of accounting (AEA – at equity associates). Equity method According to the equity method, investments in joint ventures and associates are initially recognised at the date of acquisition in the consolidated statement of financial position at cost, including directly attributable ancillary costs. The subsequent measurement is affected by any increase/decrease of this value, based on the group’s share in profit or loss and the other comprehensive income (adjusted by interim gains and losses resulting from transactions with the group), dividends, contributions and other changes in the equity of the associated company, as well as by impairment. Once the book value of the interest in an associated company has decreased to zero and possible long-term loans to the associated companies are impaired to zero as well, additional losses are recognised as a liability only to the extent that CA Immo Group has a legal or effective obligation to make further payments to the associated company. CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 1 22 h) Foreign currency translation Transactions in foreign currencies The individual group companies record foreign currency transactions at the exchange rate prevailing at the date of the relevant transaction. Monetary assets and liabilities in foreign currency existing at the reporting date are translated into the particular functional currency at the exchange rate prevailing at that date. Any resulting foreign cur- rency gains or losses are recognised in the income statement of the relevant business year. The currency translation of assets and liabilities is based on the following exchange rates: Bid Sale Bid Sale 31.12.2021 31.12.2021 31.12.2020 31.12.2020 Switzerland CHF 1.0257 1.0385 1.0767 1.0895 USA USD 1.1296 1.1396 1.2251 1.2351 The monetary assets and liabilities in foreign currency are converted at the exchange rate of the reporting date. The resulting foreign currency gains and losses are recorded in the respective financial year. Translation of companies’ individual financial statements denominated in foreign currencies The group reporting currency is the Euro (EUR). Since the Euro is generally also the functional currency of those com- panies included in the consolidated financial statements that are domiciled outside the European Monetary Union in Eastern Europe, the financial statements prepared in a foreign currency are translated in accordance with the temporal method. Under this method, investment properties (including properties under development) as well as monetary as- sets and liabilities are translated at closing rates, whereas own used properties as well as other non-monetary assets are translated at historical exchange rates. Items in the income statement are translated at the average exchange rates of the relevant reporting period. Gains or losses resulting from the currency translation are recognised in the income state- ment. The functional currency of management companies in Eastern Europe is the respective local currency in each case. The amounts in the statements of financial position are translated at the exchange rate at the reporting date. Only share- holders' equity is translated at historical rates. Items of the income statement are translated at the average exchange rates of the relevant reporting period. Gains and losses arising from the application of the closing rate method are recog- nised in other comprehensive income. Individual financial statements were translated on the basis of the following rates of exchange: Closing rate Average exchange rate Closing rate Average exchange rate 31.12.2021 2021 31.12.2020 2020 Croatia HRK not applicable not applicable 7.5369 7.5350 Poland PLN 4.5994 4.5775 4.6148 4.4742 Romania RON 4.9481 4.9244 4.8694 4.8428 Serbia RSD 117.5821 117.5729 117.5802 117.5730 Czechia CZK 24.8600 25.6483 26.2450 26.4963 Hungary HUF 369.0000 358.7858 365.1300 354.1642 CONSOLIDATED FINANCIAL STATEMENTS 1 23 Determination of the functional currency In determining the functional currency CA Immo Group differentiates basically between property entities and management entities. Functional currency: property entities In the real estate transaction market in the countries where CA Immo Group owns investment properties, the proper- ties and property entities are usually purchased and sold in Euro due to the active international investors in those mar- kets. In addition, CA Immo Group almost entirely concludes lease contracts in Euro, or, in case these contracts are not concluded in Euro, they are almost entirely indexed to the Euro exchange rate. Hence, the Euro has the most influence on the sales price of goods (real estate sales) and services (rental services) offered by CA Immo. This fact is also stated in external valuation reports, as values are stated in EUR. Moreover, CA Immo finances its property in Euro. The price of the most essential cost factor of a real estate company is therefore also determined in Euro. In consideration of the above mentioned factors, the Euro is determined as the functional currency of CA Immo Group’s property companies, which are included in the consolidated financial statements and located out- side the territory of the European Monetary Union. Functional currency: management entities The invoicing of services (management services provided to the property companies by management companies) in Eastern Europe is carried out in the respective local currency. The prices are set in the respective local currency, which therefore have the most significant influence on the sales prices of the provided services. Furthermore, these companies also employ staff which is paid in the respective local currency. The prices for the key cost factors are therefore deter- mined based on the respective local currency. Cash flow is generated mostly independently from the parent company. In consideration of the above mentioned factors, the respective local currency is the functional currency of CA Immo’s management companies, which are included in the consolidated financial statements and located outside the territory of the European Monetary Union. i) Covid- 19 pandemic – impact on CA Immo Group The year 2021 c ontinued to be dominated by the effects of the global Covid- 19 pandemic. The outbreak of the Covid- 19 pandemic in 2020 has affected the global financial and real estate markets. Many countries again imposed general lock- downs and travel restrictions. As a result, market activity in many sectors continued to be severely impacted. The real estate sector is also experiencing the consequences of the pandemic. Some real estate markets are still repor- ting significantly lower levels of transaction activity and liquidity. Hotels still have to close due to low occupancy rates. Retailers are increasingly requesting rent deferrals or rent reductions as a consequence of significant sales losses. Some construction sites cannot be operated as planned. The short- and long-term economic impact of the Covid- 19 pandemic on real estate markets remains highly uncertain. The longer the crisis lasts, the more complex and severe the effects will be. Given the significant decline in transaction and letting activities, extended marketing and vacancy periods for unlet units are also likely in the future. As demand for office space is primarily dependent on macroeconomic developments, CA Immo Group monitors how rental income from office spaces is developing. Main decisions, assumptions and estimations Considering the uncertain future impact of the Covid- 19 pandemic and the related current and future measures on the property markets, as well as the fact that it is difficult to distinguish between short-term effects and long-term structural market changes, CA Immo Group regularly reviews its property valuations. Investment properties are measured accor- CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 1 24 ding to the fair value model. As at 31.12.2021, an almost complete external valuation of the CA Immo Group portfolio was made. The changes in market values are primarily due to property-specific circumstances, such as signed lease contracts, project progress, capitalization of performed planning and construction services, changed project plans and general cost increases. The Covid- 19 pandemic did not lead to any change in the useful lives or impairments of non-financial assets in the CA Immo Group. The risk of tenant default is generally influenced by pandemic-related payment difficulties or restrictions in various economic sectors (especially in the hotel and retail sector). Due to the Covid- 19 pandemic and the related economic difficulties, the amount of overdue rental receivables could increase in upcoming quarters. As Covid-related support payments from governments are ceasing, this could also lead to an increase in insolvency rates. These effects cannot be finally assessed due to the dynamic development, but are subject to ongoing evaluations. Given the current market conditions – with rising construction costs, supply and timing problems, fluctuating financ- ing rates, uncertain marketing periods and lack of comparative values – it is inevitable that a higher uncertainty factor will apply to project developments. Land values could therefore fluctuate much more than would be the case under nor- mal circumstances. Projects currently in progress are generally on time and within approved budgets and are continously assessed regarding cost risk and pre-letting. It also remains unclear how the expansion of digital working processes linked to the crisis and the rise of the home office will affect demand for office space in the medium term. The possibility of the office market being more strongly influenced in future by the trends towards flexible office space leases and co-working cannot be ruled out. Going Concern The consolidated financial statements were prepared on the assumption that the CA Immo Group will be able to con- tinue the business operations as a going concern. The Covid- 19 pandemic had no significant impact on the financial position, financial performance and cash flows of CA Immo Group as at 31.12.2021. However, due to the consequences of the Covid- 19 pandemic, which are hard to predict, and exisiting or future legal measures, it cannot be ruled out that the pandemic could have negative effects on individual countries/ real estate properties or tenant groups (in particular offices, hotels, retail). Thus the consequences of different Covid-variants and effects of the Covid- 19 pandemic on the future financial position of CA Immo Group cannot be conclusively assessed and are continuously evaluated. CA Immo Group has a sufficient level of liquidity at this point in time. Financial Covenants Bank financings and bonds in CA Immo Group are subject to so-called financial covenants. Basically these are ratios such as LTV (Loan-to-Value-Ratios) and ISCR (Interest-Service-Coverage-Ratio). Given the ongoing negative economic development, it cannot be ruled out that there will be a breach of contractual conditions (financial covenants, such as DSCR, LTV, LTC) in the future. As at 31.12.2021 no financial covenants of the CA Immo Group were breached. The effects of the Covid- 19 pandemic on possible future breaches of financial covenants of the CA Immo Group are continuously evaluated. This may relate to properties in all main types of use. Net rental income Across its tenant base (office, hotel, retail), CA Immo Group is confronted with different requests for rent waivers, rent decreases and deferral of rental payments. The legal framework varies from country to country. In particular the hotel, restaurant and non-systematically relevant retail sectors are disproportionately affected from the prevailing situation. CONSOLIDATED FINANCIAL STATEMENTS 1 25 Rent waivers and rent decreases due to the Covid- 19 pandemic impacted net rental income with €–3,636 K (2020: €–7,960 K). Positive counter-effects from linearization of lease incentive agreements (rent frees) over the remaining lease term amount to €559 K (2020: €1,166 K). Liquidity risk CA Immo responds to this risk by analysing the property portfolio, tenant structure and cash flows, among other things, and performs various scenarios to assess the risks. Case-by-case assessment is generally necessary. Through careful monitoring and proactive measures (such as demanding securities and screening the creditworthiness and reputation of tenants), the Group’s rent default risk has remained at a low level, despite the negative impact of the pan- demic on individual tenants. Subject to the unpredictable economic impact of the pandemic, a decline in rental income cannot be excluded. All outstanding receivables are quarterly evaluated and adjusted according to the level of risk. The risk of rent default has risen further compared to the beginning of the year, mainly due to the pandemic-related payment difficulties in the hotel sector (especially in Austria). CA Immo Group calculates the expected credit loss based on the aging and expected insolvency rates per country. In the fourth quarter of 2021, CA Immo AG secured at the reporting date unused revolving credit facility of €300 M in order to have an additional liquidity reserve. Government grants CA Immo did not make use of any state aid (neither short-time work, grants nor deferrals). j) Climate-related matters Environmental, social and governance (ESG) aspects have also become increasingly important across the real estate sector. Buildings are seen as one of the key factors for climate protection. CA Immo Group fully supports the United Nations' climate goals and the associated transition to a low-carbon, sustainable economy. CA Immo Group has an- chored corresponding measures, processes and goals in its strategic approach. Risk identification The analysis of specific climate risks is extremely complex for our business and involves a number of unknown variables. In 2021, CA Immo Group reviewed its general risk catalogue with regard to climate risks and reassessed the climate risks and general sustainability risks relevant to CA Immo Group. In order to be able to better assess the corresponding risk exposure of the portfolio, direct, physical risks triggered by extreme weather events were evaluated for all existing CA Immo buildings with a value of >€10 M in 2021. Additionally economic risks triggered by the transition to a low-carbon economy were analyzed and assessed. The evaluation regarding risk assessment and risk exposure is related to assumptions and estimates. The risk catalogue will be reviewed and reassessed on a yearly basis. The implementation of a detailed, forward-looking risk and vulnerability assessment for the identified climate risks in accordance with the guidelines of the EU taxonomy is planned for the business year 2022. Impact on the business model The climate risks identified by CA Immo Group can have an impact on investment properties, caused by e.g. physical damage, damage to properties due to extreme weather or decreasing property values given changing market demand towards energy-efficient buildings. Changes in tenant’s demand can lead to poorer marketability of investment proper- ties and lower rent levels. Development projects can also be impacted by, for example, higher construction costs due to increasing energy efficiency requirements and higher investments for energy refurbishments of the existing building. Furthermore, the pressure from the capital market to reduce CO 2 -emissions can have an impact on financing costs and the availability of capital. Environmental and safety regulations include active and latent obligations to clean-up contaminated sites. Complying with these provisions can entail considerable investment expenses and other costs. These obligations may apply to real estate currently or formerly owned by CA Immo Group, or currently or formerly managed or developed by the CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 1 26 company. In particular, the provisions cover contamination with undiscovered harmful materials or noxious sub- stances, munitions and other environmental risks such as soil pollution, etc. Several regulations impose sanctions on the discharge of emissions into air, soil and water: this can make CA Immo Group liable towards third parties, significantly impact the sale and letting of affected properties and adversely affect the generation of rental revenue from such properties. In principle, insurable risks are covered to the usual extent. In the short term, taking into account the existing risk-mitigating measures, CA Immo Group assumes that the identified climate risks will not have any significant impact on the financial position, financial performance and cash flows of CA Immo Group. All identified climate risks are actively managed by CA Immo Group in order to counter me- dium- and long-term negative effects. Management of climate-related risks If the assessment of the climate risks indicates the need for additional measures, these will be implemented in CA Immo Group. CA Immo Group follows a proactive approach to ensure that any risks are minimized by taking countermeasures at an early stage and that CA Immo Group can timely react to any changes. For CA Immo Group the reduction of energy consumption and CO 2 -footprints in the construction and operation of buildings is a key factor in achieving climate neutrality. In order to achieve these goals and to promote climate and en- vironmentally friendly behavior, appropriate measures, processes and goals have been defined. Corresponding progress is reported in the course of the annual ESG reporting. CONSOLIDATED FINANCIAL STATEMENTS 1 27 CHAPTER 2: PROFIT AND LOSS 2.1. Operating segments 3) € K Austria Germany 2021 Income p roducin g Develop- ment Total Income p roducin g Develop- ment Total Rental income 26,780 11 26,791 73,791 12,378 86,169 Rental income with other operating segments 620 0 620 622 14 636 Operating costs charged to tenants 6,596 0 6,596 11,930 1,420 13,350 Operating expenses –7,776 0 –7,776 –13,321 –2,077 –15,398 Other expenses directly related to properties rented –5,676 0 –5,676 –4,234 –1,219 –5,453 Net rental income 20,543 11 20,554 68,788 10,516 79,304 Other expenses directly related to properties under development 0 –6 –6 0 –1,951 –1,951 Result from trading and construction works 0 44 44 0 25,598 25,598 Result from the sale of investment properties 16,364 0 16,364 442 30,825 31,268 Income from services rendered 0 0 0 1,597 8,292 9,889 Indirect expenses –1,031 –80 –1,111 –8,314 –13,871 –22,186 Other operating income 101 0 101 631 249 880 EBITDA 35,976 –31 35,945 63,143 59,658 122,801 Depreciation and impairment/reversal –369 0 –369 –672 –3,425 –4,096 Result from revaluation –1,974 0 –1,974 290,381 234,865 525,245 Result from joint ventures 0 0 0 0 0 0 Result of operations (EBIT) 33,633 –31 33,601 352,852 291,098 643,950 Timing of revenue recognition Income from trading 0 135 135 0 39,745 39,745 Income from sale of investment properties 48,685 0 48,685 2,384 62,419 64,803 Total income IFRS 15 - transferred at a point in time 48,685 135 48,820 2,384 102,164 104,548 Operating costs charged to tenants 6,596 0 6,596 11,930 1,420 13,350 Income from trading and construction works 0 0 0 0 2,511 2,511 Income from services rendered 0 0 0 1,597 8,292 9,889 Total income IFRS 15 - transferred over time 6,596 0 6,596 13,527 12,224 25,750 Total income IFRS 15 55,281 135 55,415 15,911 114,388 130,299 31.12.2021 Property assets 1) 496,450 154 496,605 2,295,213 1,604,413 3,899,626 Other assets 22,406 480 22,885 168,494 476,027 644,521 Deferred tax assets 0 0 0 1,149 2,327 3,476 Segment assets 518,856 634 519,490 2,464,856 2,082,766 4,547,623 Interest-bearing liabilities 181,288 0 181,288 762,008 521,801 1,283,810 Other liabilities 11,839 3 11,842 27,199 227,612 254,811 Deferred tax liabilities incl. current income tax liabilities 40,911 0 40,911 440,654 196,314 636,968 Liabilities 234,038 3 234,041 1,229,861 945,727 2,175,588 Shareholders' equity 284,818 631 285,449 1,234,995 1,137,039 2,372,034 Capital expenditures 2) 509 0 509 2,037 257,344 259,381 1) Property assets include rental investment properties, investment properties under development, own used properties, properties held for trading and properties available for sale. 2) Capital expenditures include all acquisitions of properties (long-term and short-term) including additions from initial consolidation, office furniture and other equipment and intangible assets; thereof €53,059 K (31.12.2020: €7,490 K) in properties held for trading. 3) The segment reporting does not show a right of use asset and a corresponding lease liability resulting from an intercompany lease as per IFRS 16 between the entities of CA Immo Group. These intercompany contracts are recognized as regular income/expense in the segment reporting as before and eliminated in column “Consolidation”. CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 1 28 Eastern Europe core regions Eastern Europe other regions Total segments Transition Total Income producing Development Total Income producing Holding Consolidation 110,110 745 110,854 7,434 231,249 0 –2,138 229,111 0 0 0 0 1,256 0 –1,256 0 29,173 134 29,306 1,724 50,975 0 78 51,053 –32,460 –328 –32,788 –2,048 –58,011 0 411 –57,600 –11,436 –304 –11,740 –777 –23,647 0 545 –23,102 95,386 246 95,633 6,333 201,823 0 –2,361 199,462 0 –142 –142 0 –2,099 0 246 –1,854 0 0 0 0 25,641 0 –18,966 6,675 4,430 0 4,430 –477 51,585 0 1,075 52,660 550 0 550 0 10,439 7,788 –10,090 8,137 –13,907 –464 –14,372 –754 –38,423 –30,922 11,123 –58,222 2,428 1 2,428 14 3,423 45 –234 3,235 88,887 –359 88,528 5,116 252,390 –23,089 –19,208 210,093 –452 0 –452 –7 –4,925 –536 168 –5,293 4,671 18,181 22,852 –4,976 541,147 0 0 541,147 0 0 0 0 0 0 3,618 3,618 93,106 17,822 110,928 133 788,612 –23,625 –15,422 749,565 0 0 0 0 39,880 0 –30,720 9,159 23,944 0 23,944 5,742 143,174 0 322 143,496 23,944 0 23,944 5,742 183,054 0 –30,398 152,656 29,173 134 29,306 1,724 50,975 0 78 51,053 0 0 0 0 2,511 0 –3,437 -926 550 0 550 0 10,439 7,788 –10,090 8,137 29,723 134 29,856 1,724 63,926 7,788 –13,450 58,264 53,666 134 53,800 7,466 246,980 7,788 –43,848 210,919 1,868,565 77,650 1,946,215 79,861 6,422,307 0 –168,106 6,254,201 215,553 18,602 234,155 7,081 908,642 1,085,557 –1,136,637 857,563 652 0 652 0 4,128 30,809 –32,256 2,681 2,084,771 96,252 2,181,022 86,942 7,335,077 1,116,366 –1,336,998 7,114,445 690,135 41,398 731,533 38,389 2,235,020 1,460,513 –1,111,590 2,583,943 96,702 8,290 104,992 1,720 373,365 269,185 –120,674 521,876 67,618 3,028 70,645 2,596 751,121 632 –34,165 717,588 854,455 52,716 907,171 42,706 3,359,506 1,730,330 –1,266,430 3,823,407 1,230,315 43,536 1,273,851 44,236 3,975,570 –613,963 –70,569 3,291,038 13,211 19,952 33,163 786 293,839 1,053 –21,741 273,151 CONSOLIDATED FINANCIAL STATEMENTS 1 29 € K Austria Germany 2020 Income p roducin g Develop- ment Total Income p roducin g Develop- ment Total Rental income 29,658 9 29,666 64,414 15,509 79,923 Rental income with other operating segments 612 0 612 599 9 608 Operating costs charged to tenants 6,625 0 6,625 10,269 1,488 11,758 Operating expenses –8,009 0 –8,009 –11,049 –2,637 –13,686 Other expenses directly related to properties rented –7,186 0 –7,186 –6,109 –947 –7,056 Net rental income 21,700 9 21,709 58,124 13,422 71,546 Other expenses directly related to properties under development 0 –3 –3 0 –2,405 –2,405 Result from trading and construction works 0 11 11 0 18,324 18,324 Result from the sale of investment properties 17,051 0 17,051 0 26,083 26,083 Income from services rendered 0 0 0 1,746 8,848 10,594 Indirect expenses –1,057 –85 –1,142 –7,594 –13,944 –21,538 Other operating income 25 3 28 447 150 596 EBITDA 37,720 –67 37,653 52,722 50,478 103,200 Depreciation and impairment/reversal –534 0 –534 –253 –4,638 –4,890 Result from revaluation –12,519 0 –12,519 132,039 137,976 270,015 Result from joint ventures 0 0 0 0 0 0 Result of operations (EBIT) 24,666 –67 24,600 184,509 183,815 368,324 Timing of revenue recognition Income from trading 0 25 25 0 18,682 18,682 Income from sale of investment properties 57,265 0 57,265 0 90,181 90,181 Total income IFRS 15 - transferred at a point in time 57,265 25 57,290 0 108,863 108,863 Operating costs charged to tenants 6,625 0 6,625 10,269 1,488 11,758 Income from trading and construction works 0 0 0 0 43,524 43,524 Income from services rendered 0 0 0 1,746 8,848 10,594 Total income IFRS 15 - transferred over time 6,625 0 6,625 12,015 53,860 65,875 Total income IFRS 15 63,890 25 63,914 12,015 162,723 174,738 31.12.2020 Property assets 1) 530,031 239 530,270 1,841,149 1,327,497 3,168,647 Other assets 67,876 523 68,398 149,257 437,021 586,278 Deferred tax assets 0 0 0 1,808 2,641 4,449 Segment assets 597,907 761 598,669 1,992,214 1,767,160 3,759,374 Interest-bearing liabilities 205,584 0 205,584 704,357 433,585 1,137,942 Other liabilities 29,353 106 29,459 37,819 182,930 220,748 Deferred tax liabilities incl. current income tax liabilities 40,585 2 40,587 336,969 146,754 483,723 Liabilities 275,523 107 275,630 1,079,145 763,269 1,842,413 Shareholders' equity 322,385 654 323,039 913,069 1,003,891 1,916,960 Capital expenditures 2) 3,301 0 3,301 128,639 227,970 356,610 CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 1 30 Eastern Europe core re g ions Eastern Europe other re g ions Total segments Transition Total Income p roducin g Development Total Income p roducin g Holding Consolidation 114,839 0 114,839 12,793 237,221 0 –1,612 235,609 0 0 0 0 1,220 0 –1,220 0 31,183 0 31,183 3,774 53,339 0 –78 53,260 –32,056 0 –32,056 –4,055 –57,807 0 69 –57,738 –6,167 0 –6,167 –1,043 –21,453 0 –14 –21,466 107,798 0 107,798 11,468 212,521 0 –2,855 209,665 0 –158 –158 0 –2,566 0 412 –2,154 0 0 0 0 18,335 0 –10,386 7,949 250 0 250 –383 43,001 0 928 43,930 279 0 279 0 10,873 9,072 –11,778 8,166 –13,288 –274 –13,561 –1,344 –37,586 –48,089 12,499 –73,176 175 0 175 478 1,277 64 –138 1,204 95,215 –431 94,783 10,220 245,855 –38,953 –11,318 195,584 –423 0 –423 –9 –5,857 –480 805 –5,533 –61,483 3,216 –58,267 –15,729 183,499 0 0 183,499 0 0 0 0 0 0 1,898 1,898 33,308 2,784 36,093 –5,519 423,498 –39,434 –8,616 375,448 0 0 0 0 18,707 0 –18,523 183 17 0 17 32,682 180,145 0 –89 180,056 17 0 17 32,682 198,852 0 –18,612 180,240 31,183 0 31,183 3,774 53,339 0 –78 53,260 0 0 0 0 43,524 0 –372 43,152 279 0 279 0 10,873 9,072 –11,778 8,166 31,461 0 31,461 3,774 107,735 9,072 –12,228 104,579 31,479 0 31,479 36,455 306,587 9,072 –30,840 284,819 1,892,911 39,250 1,932,161 118,398 5,749,476 0 –153,282 5,596,194 202,556 14,586 217,143 8,568 880,387 1,476,137 –1,136,811 1,219,713 1,344 0 1,344 0 5,794 33,627 –35,039 4,382 2,096,812 53,836 2,150,648 126,966 6,635,657 1,509,765 –1,325,133 6,820,289 739,576 16,500 756,076 71,092 2,170,695 1,797,369 –1,140,602 2,827,462 51,848 8,516 60,364 2,652 313,223 79,141 –78,626 313,739 60,308 390 60,698 3,178 588,186 1,431 –38,836 550,780 851,733 25,406 877,139 76,922 3,072,104 1,877,941 –1,258,064 3,691,981 1,245,080 28,430 1,273,510 50,044 3,563,553 –368,177 –67,069 3,128,308 107,845 20,959 128,805 2,590 491,305 454 –13,876 477,883 CONSOLIDATED FINANCIAL STATEMENTS 1 31 Segment information The operating segments generate gross revenues and other income from rental activities, the sale of properties held for trading, the sale of properties as well as from development services. Gross revenues and other income are allocated to the country and segment the properties or services are located/provided in. Business relationships within an operating segment are consolidated within the segment. Business relationships with other operating segments are disclosed separately and reconciliations to the consolidated income statement and consolidated statement of financial position are presented in the “Transition Consolidation” column. The accounting principles of the reportable segments correspond to those described under “Summarized presentation of accounting methods”. In line with IFRS 16, segment reporting does not include any rights of use/lease liabilities from rental and lease agreements existing between companies of the CA Immo Group. As in the past, such intercom- pany contracts are recognized as income/expense in the segment reporting and eliminated in the column “Transition Consolidation”. Transactions between operating segments are allocated as follows: - Management fees for services performed (e.g. property management, financial negotiation, purchase and sale of prop- erties, accounting, controlling, provision of personnel) are charged on the basis of actual fees and allocated to the in- dividual segments on the basis of the invoiced services. They are recognised in the column “Holding” as income from services rendered. - Management companies are assigned to the segments according to their main activities. Management fees charged by these companies are allocated based on the invoiced services to the individual operating segment of the respective region and are recognised in the segment, which the management company has been assigned to, as income from ser- vices rendered. - Eastern Europe core region segment consists of Hungary, Poland, Romania and Czechia. - Eastern Europe other region segment consists of Serbia, Croatia (sold in 2020) and Slovakia (sold in 2021). The segments were identified on the basis of the information regularly used by the company’s principal decision makers when deciding on the allocation of resources and assessing profitability. The principal decision-making body of CA Immo Group is the Management Board. It controls the individual properties (basic reporting segments) that are aggregated into reportable business segments by regions (based on the geographic region), and within the regions by income producing property and property under development based on the stage of development of the properties. The aggregation of the regions mainly takes place based on evaluation of the market dynamics and the risk profiles which mainly impact economic characteristics. According to the assessment of CA Immo Group, the properties in the portfo- lio need to be separated into investment properties and investment properties under development, based on the crite- ria “nature of products and services” and “nature of production processes” according to IFRS 8. The properties are allocated to the reporting segments according to location/region, their category and the main activities of the management/holding companies. Items that cannot be directly attributed to a property or segment management structure are disclosed in the column “holding”. The presentation corresponds to CA Immo Group’s inter- nal reporting system. The following segments have been identified: - Income producing properties: Investment properties rented including the related rights of use, own used properties including rights of use for own used properties and investment properties pursuant to IFRS 5 - Development: Properties under development and land banks, completed development properties (investment proper- ties) until the second annual reporting date after completion (depending on the tenancy rate or beginning of the sales process), development services for third parties, properties under development pursuant to IFRS 5, and properties held for trading - Holding: general management and financing activities of CA Immo Group. CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 1 32 Joint ventures are included with 100% of the assets and liabilities as well as revenues and expenses of the entities in the segment, irrespective of the method of consolidation into the financial statements. Adjustments in accordance with the consolidation method in CA Immo Group are shown in the column “Transition Consolidation”. A significant percentage of total rental income of CA Immo Group is generated in the segment Eastern Europe core regions. A material proportion of the investment properties of CA Immo Group is located in these countries: 2021 2020 Segment Eastern Europe core regions before consolidation € K Share in % € K Share in % Rental income Poland 34,332 31.0% 30,638 26.7% Romania 27,966 25.2% 29,342 25.6% Czechia 19,972 18.0% 21,064 18.3% Hungary 28,585 25.8% 33,795 29.4% Total rental income 110,854 100.0% 114,839 100.0% Book value of investment properties IAS 40 Poland 563,679 29.0% 590,185 30.5% Romania 395,434 20.3% 390,598 20.2% Czechia 471,650 24.2% 427,150 22.1% Hungary 515,452 26.5% 524,229 27.1% Total book value investment property according to IAS 40 1,946,215 100.0% 1,932,161 100.0% 2.2 Rental inco me € K 2021 2020 Basic rental income 221,500 218,935 Conditional rental income 60 474 Income from non-service components of service charges 10,729 10,675 Change in accrued rental income related to lease incentive agreements –4,187 4,172 Settlement from cancellation of rent agreements 1,008 1,354 Rental income 229,111 235,609 CONSOLIDATED FINANCIAL STATEMENTS 1 33 CA Immo Group generates rental income from the following types of property: 2021 Austria Germany Eastern Europe core regions Eastern Europe other regions Total € K Share in % € K Share in % € K Share in % € K Share in % € K Share in % Office 18,101 67.6% 71,576 85.2% 110,849 100.0% 7,434 100.0% 207,961 90.8% Hotel 4,594 17.2% 7,080 8.4% 0 0.0% 0 0.0% 11,674 5.1% Retail 4,079 15.2% 9 0.0% 0 0.0% 0 0.0% 4,088 1.8% Others 6 0.0% 5,378 6.4% 4 0.0% 0 0.0% 5,388 2.4% Rental income 26,780 100% 84,042 100% 110,854 100% 7,434 100% 229,111 100% 2020 Austria Germany Eastern Europe core regions Eastern Europe other regions Total € K Share in % € K Share in % € K Share in % € K Share in % € K Share in % Office 17,519 59.1% 63,903 81.6% 114,835 100.0% 12,793 100.0% 209,050 88.7% Hotel 5,589 18.8% 8,325 10.6% 0 0.0% 0 0.0% 13,914 5.9% Retail 4,140 14.0% 36 0.0% 0 0.0% 0 0.0% 4,175 1.8% Others 2,410 8.1% 6,056 7.7% 4 0.0% 0 0.0% 8,470 3.6% Rental income 29,658 100% 78,320 100% 114,839 100% 12,793 100% 235,609 100% CA Immo Group generates rental income from a multitude of tenants. No single tenant generates more than 10% of the total rental income of CA Immo Group. Rental revenues according to IFRS 16 are recognised on a straight-line basis over the lease term. Lease incentive agreements, such as rent-free periods, reduced rents for a certain period or one-off payments, which can be freely used in the course of their businesses, are included in rental income. Therefore, the lease incentives are allocated on a straight-line basis over the entire expected, respectively remaining contractual lease term accordingly. In the case of leases with constant rent adjustment over the term (graduated rents), such adjustments are likewise recognised on a straight-line basis over the lease term. The lease term over which rental income is allocated on a straight-line basis comprises the non-terminable period as well as any further periods for which the tenant can exercise an option, with or without making additional payments, provided that the exercise of the option is estimated as being probable at the in- ception of the lease. Rental revenues comprise also components of the service charges reconciliation for which CA Immo Group does not provide the tenant with a separate service however the tenant must reimburse them (for example property taxes, build- ing insurance, usufruct expenses), these being presented under ”Income from non-service components of service charges”. Conditional rental income, which is based on revenues generated in the business premises, are recognised in profit or loss in the period in which they are assessed. Rental income is measured at the fair value of the consideration received or outstanding, less any directly related re- ductions. CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 1 34 Payments received from tenants for the early termination of a lease and payments for damages of rented premises are recognised as rental income in the period in which they are incurred. 2.3. Result from operating costs and other expenses directly related to properties rented € K 2021 2020 Operating costs charged to tenants 51,053 53,260 Operating expenses –57,600 –57,738 Own operating costs –6,547 –4,478 Maintenance costs –5,183 –4,925 Agency fees –3,037 –1,212 Bad debt losses and reserves for bad debts –1,259 –6,120 Other directly related expenses –13,623 –9,210 Other expenses directly related to properties rented –23,102 –21,466 Total –29,649 –25,944 According to IFRS 16, the item “Other directly related expenses“ contains expenses from non-service components. These relate mainly to property taxes and building insurance expenses and amount to €11,007 K in 2021 (2020: €6,705 K). In Eastern Europe, a lawsuit linked to the payment of building taxes was decided in favour of CA Immo Group. In 2020 this brought a positive effect in the amount of €3,698 K in “Other directly related expenses” given the reversal of the respective tax provision. Rent waivers and rent decreases due to Covid- 19 pandemic impacted net rental income with €–3,636 K (2020: €–7,960 K). Positive counter-effects from linearization of lease incentive agreements (rent frees) over the remaining lease term amount to €559 K (2020: €1,166 K). All agreed rent changes as well as granting of rent free periods are split over the duration of the respective lease agreement linearly. Operating costs incurred by CA Immo Group for properties rented, which trigger a separate performance obliga- tion (non-lease components) to tenants, are presented in the consolidated income statement in “operating costs charged to tenants”. Based on an analysis of primary performance responsibility, inventory risk as well as pricing com- petence, CA Immo Group has to be considered as principal for service charges as it has the primary responsibility for providing the service and is the direct counterpart in case of performance disruptions. The item “operating costs charged to tenants” contains only non-lease components that are within the scope of IFRS 15. CONSOLIDATED FINANCIAL STATEMENTS 1 35 2.4. Other expenses directly related to properties under development € K 2021 2020 Operating expenses related to investment properties under development –655 –733 Property advertising costs –189 –103 Project development and project execution –875 –1,155 Operating expenses related to investment properties under development long- term assets –1,719 –1,990 Operating expenses related to investment properties under development –109 –108 Project development and project execution –25 –56 Operating expenses related to investment properties under development short- term assets –134 –164 Other expenses directly related to properties under development –1,854 –2,154 2.5. Result from trading and construction works € K 2021 2020 Trading property - transferred at a point in time 9,159 183 Trading property and contruction work - transferred over time –926 43,152 Income from the sale of properties and construction works 8,233 43,335 Book value of properties sold incl. ancillary costs –1,297 207 Construction costs –261 –35,594 Book value of properties sold incl. ancillary and construction costs –1,558 –35,387 Result from trading and construction works 6,675 7,949 The item “income from trading and constructi on works” includes income from the sale of properties intended for trading, which is depending on contract stipulations realized at a point or over time, as well as income from con- struction works (construction of a building on the land of a customer, whereby CA Immo Group as a builder carries out a construction contract with or without a general contractor), which are transferred over time. CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 1 36 2.6. Result from sale of investment properties € K Austria Germany Eastern Europe core regions Eastern Europe other regions 2021 Austria Germany Eastern Europe core regions Eastern Europe other regions 2020 Sales prices for interests in property companies 0 2,667 24,266 5,742 32,675 0 89,598 17 32,593 122,208 Book value of net assets sold excl. goodwill 0 –1,485 –23,967 –5,553 –31,005 0 –63,150 0 –30,315 –93,465 Revaluation result for the year 0 0 5,333 0 5,333 0 205 0 –1,980 –1,775 Change in subsequent costs and ancillary costs 0 1,481 –653 –323 505 0 –1,244 12 –326 –1,557 Results from the sale of investment property (share deals) 0 2,664 4,979 –135 7,507 0 25,409 29 –28 25,410 Income from the sale of investment properties 48,685 62,136 0 0 110,821 57,265 583 0 0 57,848 Book value of properties sold –47,727 –36,900 0 0 –84,628 –53,860 0 2 0 –53,858 Goodwill of sold properties 0 –9 0 0 –9 –2,090 0 0 0 –2,090 Revaluation result for the year 16,324 0 0 0 16,324 20,020 0 0 0 20,020 Change in subsequent costs and ancillary costs –784 3,428 0 0 2,644 –3,712 91 220 0 –3,401 Results from the sale of investment property (asset deals) 16,498 28,654 0 0 45,153 17,624 674 222 0 18,519 Result from the sale of investment properties 16,498 31,318 4,979 –135 52,660 17,624 26,083 251 –28 43,930 R evenues from the sale of investment properties Income from the sale of properties is recognised when: - CA Immo Group does not retain any rights of disposal or effective cotrol in respect of the object sold (control), - the amount of the revenues and the expenses incurred or to be incurred in connection with the sale can be reliably determined, an d - it is sufficiently probable that the economic benefit from the sale will flow to CA Immo Group. Non-current earnings received in advance are measured at par value and subsequently with a reasonable market inter- est rate reflecting maturity and risk. The accrued interest is recognised in the consolidated income statement in the fi- nancial result. Result from the sale of investment properties In accordance with IAS 40, investment properties are measured at each reporting date and changes in fair values are recognised in profit or loss, as result from revaluation (revaluation gain/loss). When property assets are sold, the CONSOLIDATED FINANCIAL STATEMENTS 1 37 valuation result realised during the current business year is reclassified to the result from the sale of investment proper- ties together with other expenses in relation to the disposal. The book value of goodwill that has been allocated to a property sold is recognised as part of the disposal within the result from the sale of investment properties. 2.7. Income from services rendered € K 2021 2020 Revenues from service contracts 7,611 7,927 Management revenues and other fees 526 239 Income from services rendered 8,137 8,166 Revenue recognition accor ding to IFRS 15 Revenues are to be recognized in according with IFRS 15, when a performance obligation is fulfilled by transfer- ring an agreed good or service to the customer. An asset is deemed to be transferred when the customer gains control of that asset. Control over a good or a service is transferred at a specific point in time if the obligation is not satisfied over a period of time. If one of the following criteria is met, the performance obligation is fulfilled over a period of time: a) the customer simultaneously receives and consumes all of the benefits provided by the entity as the entity per- forms; b) the entity’s performance creates or enhances an asset th at the customer controls as the asset is created; or c) the entity’s performance does not create an asset with an alternative use to the entity and the entity has an enforce- able claim of payment for performance completed to date If a performance obligation is met over a period of time, according to IFRS 15, the contract related transaction price as well as contract performance and acquisition costs must be recognized as revenues or expenses, in accordance with the performace progress as at balance sheet date. The cost-to-cost method is used in the CA Immo Group for the ongoing monitoring of construction projects and is a reliable method for determining the progress of the service performance. Thereby, to determine the performance progress, the ratio of the contract respectively construction costs incurred up to balance sheet date to the estimated total contract costs, respectively construction costs (cost-to-cost method) is applied. Revenues from services rendered A rendered service is a service for a customer, which can be satisfied in time-based units (for example time based advice for building conversion, planning services or project assistance). Income from service contracts is recognized to the extent of the services rendered up to the reporting date (accounting by time unit). Revenues from construction contracts CA Immo Group also offers services in the form of construction supervision for customers, which are handled as construction contracts. The income from construction contracts (e.g. project management, construction supervision and acceptance of, for example building construction, interior works or development of land) is recorded in accordance with the provision of services. CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 1 38 2.8. Indirect expenses € K 2021 2020 Personnel expenses –49,799 –45,899 Legal, auditing and consulting fees –14,048 –9,068 Third party acquired development services –1,933 –1,866 Office rent –658 –820 Travel expenses and transportation costs –277 –358 Other expenses internal management –2,912 –2,707 Other indirect expenses –5,769 –29,004 Subtotal –75,396 –89,722 Own work capitalised in investment property 16,201 15,151 Change in properties held for trading 973 1,394 Indirect expenses –58,222 –73,176 In 2020 CA Immo Group filed an action for damages against the Republic of Austria and the state of Carinthia in the amount of approx. €1.9 bn in connection with the privatization of the state residential construction company (BUWOG) in 2004. In this respect, in 2020 other indirect expenses include court fees of €25,475 K. Personnel expenses include contributions to staff welfare funds in the amount of €174 K (2020: €119 K) and to pen- sion and relief funds in the amount of €394 K (2020: €422 K). CA Immo Group capitalizes indirect expenses (mainly personnel expenses) to the extent that they can be attributed to the construction cost of properties under development and properties held for trading. The assign- ment is based on the activities of the departments for the developments. These internally-produced capitalised ex- penses and capitalised changes in work-in-progress respectively are reported as an adjustment of the indirect expenses. As long as these services are rendered to joint ventures of CA Immo Group, no decrease of the indirect expenses, but “income from services rendered” is recognised. 2.9. Other operating income € K 2021 2020 Discharge of lapsed liabilities 102 21 Other income 3,133 1,182 Other operating income 3,235 1,204 Other income includes in 2021 revenues in accordance with a neighbourhood agreement in Poland, amounting to approx. €2,000 K. CONSOLIDATED FINANCIAL STATEMENTS 1 39 2.10. Depreciation and impairment losses/reversal € K 2021 2020 Regular depreciation –2,244 –2,043 Depreciation right of use assets –1,933 –2,209 Impairment loss on goodwill –762 –410 Impairment loss on properties held for trading –372 –988 Reversal of impairment loss previously recognised on properties held for trading 19 118 Depreciation and impairment/reversal –5,293 –5,533 Explanations with regard to the measurement of depreciation and impairments/reversal of impairments can be found in chapters “3.2. Own used properties”, “3.3. Office furniture and equipment and intangible assets” and “4.2. Properties held for trading”. 2.11. Joint ventures result € K 2021 2020 At equity consolidation of investments in joint ventures 3,618 1,809 Result from sale of joint ventures 0 90 Result from joint ventures 3,618 1,898 2.12. Finance e xpenses € K 2021 2020 Interest expense bonds –25,531 –22,317 Interest expense banks –18,788 –20,109 Other interest and finance costs –6,162 1,378 Interest expense convertible bond –1,569 –4,914 Interest expenses lease liabilities –1,335 –1,267 Capitalised interest 5,765 4,918 Finance costs –47,619 –42,311 In Eastern Europe, a lawsuit linked to the payment of building taxes was decided in favour of CA Immo Group. In 2020, this led to a positive effect in the amount of €5,190 K in “other interest and finance costs” due to the reversal of provision for late interest payments. Finance costs comprise interest payable for external financing, interest recognised by the effective interest-rate method (if not required to be capitalised according to IAS 23), interest for lease liabilities determined according to the effective interest-rate method (if not required to be capitalized according to IAS 23), interest for committed exter- nal funds not yet received, current interest on derivative transactions, the interest costs arising from the calculation of retirement benefits, the net result attributable to non-controlling interests in limited partnerships and expenses similar to interest. Interest is deferred over time by the effective interest-rate method. The net result of non-controlling interests in lim- ited partnerships contains the pro rata net income of non-controlling partners of limited partnerships in Germany, CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 1 40 whose capital contribution, updated with the profit share, is recognised as debt in the statement of financial position under “other liabilities”. 2.13. Result from derivatives € K 2021 2020 Valuation interest rate derivative transactions 20,299 –10,780 Ineffectiveness of interest rate swaps –23 0 Valuation derivative convertible bond –46,221 32,208 Result from derivatives –25,945 21,429 The item "valuation interest rate derivative transactions" includes the following items: € K 2021 2020 Valuation of interest rate swaps without cash flow hedge relationship 20,914 –11,314 Valuation interest rate floors –615 535 Valuation interest rate derivative transactions 20,299 –10,780 2.14. Result from financial inv estments € K 2021 2020 Negative interests on deposits –3,638 –1,934 Revaluation of other investments –1,682 –5,595 Interest income on bank deposits 175 28 Change in expected credit losses for cash and restricted cash 651 –355 Result from disposal of other investments 757 –1,171 Interest income from loans to joint ventures 866 1,546 Revenues from dividends 1,028 1,142 Other interest income 1,088 2,750 Result from financial investments –756 –3,589 The negative valuation of other investments results from the decrease in fair value. 2.15. Other financial results CA Immo Group repurchased outstanding corporate bonds in 2020 with a total nominal value of €98.5 M. This led in 2020 to a one-time negative effect of €–5,067 K. CONSOLIDATED FINANCIAL STATEMENTS 1 41 2.16. Financial result € K Category 1) 2021 2020 Interest expense Interest AC –47,619 –42,311 Other financial results Realisation 0 –5,067 Foreign currency gains/losses Valuation –264 3,622 Realisation 195 –1,237 Interest rate swaps Valuation FVtPL 20,914 –11,314 Ineffectiveness FVOCI –23 0 Interest rate floors Valuation FVtPL –615 535 Derivative convertible bond Valuation FVtPL –46,221 32,208 Interest income Interest AC 2,129 4,325 Negative interests on deposits Interest AC –3,638 –1,934 Financial investments Dividends AC 1,028 1,142 Financial investments Valuation FVtPL –1,682 –5,595 Result from disposal of other investments Realisation AC 757 –1,171 Change expected credit losses for cash and restricted cash Valuation AC 651 –355 Net result of financial instruments –74,389 –27,154 Financial result –74,389 –27,154 1) AC – amortised cost, FVtPL – fair value through profit or loss, FVOCI – fair value through other comprehensive income 2.17. Other comprehensive income 2021 € K Valuation result (Hedging) Currency translation reserve Reserve according to IAS 19 Total Other comprehensive income before taxes 6,664 42 592 7,298 Income tax related to other comprehensive income –2,127 0 –196 –2,324 Other comprehensive income for the period 4,537 42 396 4,974 thereof: attributable to the owners of the parent 4,537 42 396 4,974 2020 € K Valuation result (Hedging) Currency translation reserve Reserve according to IAS 19 Total Other comprehensive income before taxes –620 –111 –80 –812 Income tax related to other comprehensive income 198 0 28 226 Other comprehensive income for the period –422 –111 –52 –585 thereof: attributable to the owners of the parent –422 –111 –52 –585 Reserves according to IAS 19 include actuarial gains and losses from post-employment defined benefit plans as well as actuarial gains and losses from the plan assets. CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 1 42 2.18. Earnings per share A convertible bond was issued in October 2017. This bond had until the termination in September 2021 an effect on the earnings per share. 2021 2020 Weighted average number of shares outstanding pcs. 98,162,253 93,028,299 Consolidated net income € K 479,774 253,948 Basic earnings per share € 4.89 2.73 2021 2020 Weighted average number of shares outstanding pcs. 98,162,253 93,028,299 Dilution effect: Convertible bond pcs. 0 6,659,902 Weighted average number of shares pcs. 98,162,253 99,688,201 Consolidated net income attributable to the owners of the parent € K 479,774 253,948 Dilution effect: Convertible bond effective interest/valuation derivative convertible bond € K 0 –27,294 Less taxes € K 0 6,823 Consolidated net income attributable to the owners of the parent adjusted by dilution effect € K 479,774 233,478 Diluted earnings per share € 4.89 2.34 CONSOLIDATED FINANCIAL STATEMENTS 1 43 CHAPTER 3: LONG-TERM ASSETS 3.1. Long-term property assets Investment Property (IAS 40) – Movements and classification € K Income producing investment properties Investment properties under development Total Book values As at 1.1.2020 4,292,893 817,107 5,110,000 purchase of real estate and real estate companies 219,825 0 219,825 Current investment/construction 45,926 203,289 249,215 Disposals –249,064 0 –249,064 Reclassification to assets held for sale –33,894 0 –33,894 Reclassification from IAS 40 to IAS 2 0 –1,030 –1,030 Reclassification from advance payments to IAS 40 4,020 0 4,020 Transfers 335,664 –335,664 0 Revaluation 94,166 107,577 201,744 Change in lease incentives 13,531 –143 13,388 As at 31.12.2020 4,723,068 791,136 5,514,204 Current investment/construction 20,980 191,077 212,056 Disposals –96,476 –36,900 –133,376 Reclassification to assets held for sale –68,359 –6,058 –74,417 Transfers 81,688 –81,688 0 Revaluation 323,363 239,441 562,804 Change in lease incentives 35 139 174 As at 31.12.2021 4,984,297 1,097,147 6,081,444 In 2021, the current capital expenditures (construction costs) for investment properties under development mainly relate to the projects Frankfurt ONE (€98,957 K), Berlin Europaplatz 04 (€35,591 K), Grasblau (€17,832 K), Upbeat (€13,755 K) in Germany as well as the two projects Mississippi and Missouri (€15,635 K) in the Czech Republic. The capital expenditures in income producing investment properties relate to various office buildings in Germany and the CEE-region. The reclassifications from investment properties under development to income producing investment properties relate to the project ZigZag Zollhafen Mainz (€13,238 K) as well as the two projects Mississippi and Missouri (€68,450 K). In 2021, the disposals from income producing investment properties relate to two properties in Austria (€–47,560 K), a property in Hungary (€–17,443 K) and a property in Poland (€–24,509 K). The disposal from investment properties un- der development relates to the German property Belsenpark (€–36,900 K). Previous year disposals relate to the sale of the CUBE office building in Germany and the Zagrebtower office building in Croatia. The fair value of the properties assigned as collateral for external financings totals €3,564,910 K (31.12.2020: €3,036,646 K). In 2021, borrowing costs relating to the construction of properties totaling €5,765 K (2020: €4,918 K) were capitalised at a weighted average interest rate of 1.37% (2020: 1.30%). In 2021, government grants amounted to €0 K (2020: €103 K). The following table provides an overview of the book values as at the respective reporting dates: CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 1 44 € K Income producing investment properties Investment properties under development Total As at 1.1.2020 Fair value of properties 4,276,811 816,964 5,093,775 Lease incentive agreements 16,082 143 16,225 Fair value/book value 4,292,893 817,107 5,110,000 As at 31.12.2020 Fair value of properties 4,693,569 791,136 5,484,705 Lease incentive agreements 29,498 0 29,498 Fair value/book value 4,723,068 791,136 5,514,204 As at 31.12.2021 Fair value of properties 4,955,075 1,097,008 6,052,083 Lease incentive agreements 29,222 139 29,361 Fair value/book value 4,984,297 1,097,147 6,081,444 Classification of real estate assets with mixed utilisation Some properties are of mixed use – they are used both to generate rental income and appreciation in value as well as partially for administrative purposes. If these respective portions can be sold individually, CA Immo Group recog- nises them separately. If the portions cannot be separated, the entire property is only classified as an investment prop- erty if the own used part occupies less than 5.0% of the total useful area. Classification of real estate assets with change in use Changes in classification for real estate assets (standing investments, investments under development, own used, held for trading) are to be considered when a change in the use is made. Transfers in or out from investment property are made, for example when: – beginning or ending of owner occupied property or beginning of the development of an own used property (transfer in or from own used properties), – beginning of the actual development with the purpose of sale (transfer from investment property to properties held for trading). Classification of investment pr operties The item “investment properties” consists of investment properties and properties under development that are held neither for own use nor for sale in the ordinary course of business, but to generate rental income and to appreciate in value. Usufruct rights for developed land and the rental of parking spaces for subletting lead to the recognition of right of use assets, which are assigned to the item “investment properties”. Properties under development are reclassified to investment properties upon completion of the main construction works and rental income is gained. Valuation of investment properties Investment properties are measured according to the fair value model. Changes in the current book value before revaluation (fair value of previous year plus subsequent/additional acquisition or construction cost less subsequent acquisition cost reductions as well as the impact from the deferral of lease incentives) are recognised in the income statement under “result from revaluation”. Investment grants are accounted for as deduction of construction costs. CONSOLIDATED FINANCIAL STATEMENTS 1 45 Borrowing costs arising during property construction are allocated to the construction costs if they have been used for a qualifying asset (direct and generally borrowed funds). A qualifying asset is an asset that takes a substantial period of time (in principle more than 12 months) to be ready for its intended use or for sale. In cases in which debt is not di- rectly attributable to an individual qualifying asset, the proportional amount of the total finance costs is allocated to the qualifying asset. The capitalisation rate for the generally borrowed funds is calculated as a weighted average of the borrowing cost for all loans, however with the exception of debt specifically raised for the qualifying asset. All other borrowing costs are recognised in profit or loss in the period in which they are incurred. Valuation of right of use assets The carrying amount of the right of use asset in form of usufruct rights for the developed land as well as for rented parking spaces intended for sublease corresponds to the lease liability. These rights of use fulfill the definition of investment property and are therefore to be measured at fair value subsequently. The scheduled depreciation for these rights of use assets is not applicable and is replaced by the revaluation recognized in the profit or loss instead. The valuation reports prepared by the appraisers reflect the fair value of the respective property as a whole, as it is ex- pected to be attainable on the market. The fair value prepared by the appraiser represents the expected realizable amount of the property. As the lease liability is separately accounted for, the presentation of the investment property without the right of use asset would lead to an incorrect result. For this reason the fair value according the appraisal has to be increased by the lease liability as at balance sheet date. Fair value measurement IFRS 13 defines the fair value as the price that would be received following the sale of an asset or paid to transfer a liability in an orderly transaction between market participants, at the measurement date. The price could be directly observable or estimated using valuation techniques. Corresponding to the inputs used to determine of the fair values, the measurement hierarchy distinguishes between the following levels: - Level 1: quoted prices in active markets for identical assets or liabilities - Level 2: inputs that are observable for the measurement of assets or liabilities, either directly or indirectly - Level 3: inputs are unobserv able for the measurement of assets or liabilities. Investment Pr operty (IAS 40) - Valuation Assessment of fair value More than 99.9% (31.12.2020: 99.9%) of the properties in Austria, about 99% (31.12.2020: 98.1%) of the proper- ties in Germany, and 99% (31.12.2020: 100%) of the properties in Eastern Europe, according to segment reporting, were subject to an external valuation as of the reporting date 31.12.2021. The values of other properties were determined based on binding purchase agreements or internally based on the previous year’s valuations. CA Immo Group generally commissions external valuation reports every six months. CA Immo Group provides on property level all material and valuation related information and documents to the appraisers. Before finalization of the valuation reports internal con- trols (e.g. input testing) and plausibility checks are applied. Afterwards the experts finalize the valuation reports. The external valuations are made in accordance with the standards defined by the Royal Institution of Chartered Sur- veyors (RICS). The RICS defines the market value as the estimated amount for which an asset or liability could be ex- changed on the valuation date between a willing buyer and a willing seller in an arm’s length transaction, after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion. The selection of the independent, external real estate experts for CA Immo Group is based, on the one hand on profes- sional qualification, which is measured by national and international standards, such as HypZert, RICS or public ap- pointments and swearing-ins and on the other hand by giving consideration to local market presence and penetration. The valuation method applied by the expert for each property particularly depends on the property’s stage of develop- ment and its type of use. CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 1 46 Rented commercial properties, which constitute the largest portion of CA Immo Group’s portfolio, are mainly valued by the investment method. The fair value represents the present value of the future expected rental income. These are calculated based on two time units: firstly “term”, with mainly contractual secured rents over the average expected re- maining lease term and secondly “reversion”, for which the experts include further parameters, in particular the market rent achievable for the object. Both periods are capitalized with an adequate interest rate (term yield/ reversionary yield). For properties under development and construction, the residual method is applied. Under this method, the market value is based on the estimated market value upon completion, less expected outstanding expenses and after applying a reasonable developer profit in the range of 5% to 20% of the market value upon completion (31.12.2020: 6% to 25%). Developer profit for properties under development, which are nearly completed, ranges at the bottom of the margin according to their reduced risk. Risks of investment properties (after completion) considered are, the estimated future rents and initial yields in the range from 2.6% to 4.5% (31.12.2020: 2.8% to 5.2%) and financing interest rates in the range from 2.0% (31.12.2020: 2.0% to 4.0%). The rates vary in particular depending on the general market climate, lo- cation and type of use. The closer a project is to completion, the greater the portion of parameters that are based on ac- tual or contractually fixed amounts. After completion or immediately before completion, the properties are valued by applying the investment method (see above), adjusted for outstanding work. The following table shows the essential input factors for the valuation of investment property (the fair value of the classes Office Austria and Office Germany also includes the fair value of own used properties) and property under de- velopment (the properties are assigned to each class based on their main use). The tables show for the properties in each classification the minimum and maximum values for rent and yield, as well as the area-weighted average values for rent, vacancy and yield and the average remaining lease terms calculated in years. CONSOLIDATED FINANCIAL STATEMENTS 1 47 Classification investment properties incl. own used properties Fair value 31.12.2021 Fair value 31.12.2020 Inputs Range 2021 Range 2020 Valuation technique investment method € K € K Office Austria 352,100 367,000 Actual-rent €/m² p. m. min/max/average weighted 8.48 / 28.97 / 12.02 7.22 / 26.99 / 11.32 Market-rent €/m² p. m. min/max 7.10 / 24.49 6.54 / 24.33 average remaining lease term in years 3.41 4.19 average vacancy % 11.98 11.96 Yield Term min/max/weighted average % 3.15 / 5.00 / 4.15 3.35 / 6.25 / 4.48 Yield Reversion min/max/weighted average % 3.00 / 5.40 / 4.37 3.20 / 6.75 / 4.72 Office Germany 2,278,299 1,989,342 Actual-rent €/m² p. m. min/max/average weighted 10.83 / 26.55 / 18.78 10.62 / 27.15 / 18.11 Market-rent €/m² p. m. min/max 11.99 / 30.05 11.99 / 29.06 average remaining lease term in years 9.05 8.96 average vacancy % 3.85 2.92 Yield Term min/max/weighted average % 0.00 / 4.30 / 2.93 0.00 / 4.10 / 3.14 Yield Reversion min/max/weighted average % 3.05 / 4.30 / 3.58 3.45 / 4.60 / 3.82 Office Eastern Europe 1,995,587 1,977,415 Actual-rent €/m² p. m. min/max/average weighted 11.60 / 21.41 / 14.85 8.82 / 21.36 / 14.62 Market-rent €/m² p. m. min/max 11.65 / 18.74 6.77 / 18.75 average remaining lease term in years 3.36 3.12 average vacancy % 14.14 6.49 Yield Term min/max/weighted average % 4.60 / 8.50 / 6.62 4.60 / 10.00 / 6.87 Yield Reversion min/max/weighted average % 4.50 / 8.75 / 6.59 4.70 / 12.00 / 6.83 Office total 4,625,986 4,333,758 Retail Austria 87,500 90,100 Actual-rent €/m² p. m. min/max/average weighted 12.83 / 12.83 / 12.83 13.38 / 13.38 / 13.38 Market-rent €/m² p. m. min/max 12.86 / 12.86 12.92 / 12.92 average remaining lease term in years 2.63 3.13 average vacancy % 12.26 13.12 Yield Term min/max/weighted average % 4.65 / 4.65 / 4.65 4.65 / 4.65 / 4.65 Yield Reversion min/max/weighted average % 4.60 / 4.60 / 4.60 4.60 / 4.60 / 4.60 Retail total 87,500 90,100 * The book value of “Office Germany” classification includes right of use assets in amount of €389 K (31.12.2020: €572 K), respectively book value of “Office Eastern Europe” classification includes €33,407 K (31.12.2020: €37,245 K) right of use assets. CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 1 48 Classification investment properties incl. own used properties Fair value 31.12.2021 Fair value 31.12.2020 Inputs Range 2021 Range 2020 Valuation technique investment method € K € K Hotel Austria 47,400 60,900 Actual-rent €/m² p. m. min/max/average weighted 10.18 / 10.18 / 10.18 10.04 / 11.05 / 10.18 Market-rent €/m² p. m. min/max 10.00 / 10.00 10.00 / 12.00 average remaining lease term in years 5.16 6.93 average vacancy % 0.00 0.00 Yield Term min/max/weighted average % 5.75 / 5.75 / 5.75 5.25 / 5.75 / 5.67 Yield Reversion min/max/weighted average % 6.00 / 6.00 / 6.00 5.50 / 6.00 / 5.92 Hotel Germany 160,300 169,700 Actual-rent €/m² p. m. min/max/average weighted 15.24 / 15.72 / 15.51 15.41 / 16.97 / 15.71 Market-rent €/m² p. m. min/max 14.24 / 15.13 14.39 / 16.00 average remaining lease term in years 14.10 14.49 average vacancy % 0.59 1.05 Yield Term min/max/weighted average % 3.75 / 4.10 / 3.91 3.80 / 4.75 / 4.06 Yield Reversion min/max/weighted average % 4.25 / 4.45 / 4.34 4.30 / 5.15 / 4.48 Hotel total 207,700 230,600 Other Austria 16,800 17,900 Actual-rent €/m² p. m. min/max/average weighted 1.41 / 1.41 / 1.41 1.35 / 1.35 / 1.35 Market-rent €/m² p. m. min/max 0.98 / 0.98 0.98 / 0.98 average remaining lease term in years 1.00 1.02 average vacancy % 0.00 0.00 Yield Term min/max/weighted average % 6.20 / 6.20 / 6.20 6.25 / 6.25 / 6.25 Yield Reversion min/max/weighted average % 6.20 / 6.20 / 6.20 6.15 / 6.15 / 6.15 Other Germany 64,460 67,110 Actual-rent €/m² p. m. min/max/average weighted 4.51 / 4, 51 / 4.51 3.51 / 7.11 / 4.48 Market-rent €/m² p. m. min/max 5.48 / 5.48 3.44 / 7.11 average remaining lease term in years 0.90 4.60 average vacancy % 2.34 0.76 Yield Term min/max/weighted average % 3.65 / 4.55 / 4.27 2.35 / 6.50 / 4.40 Yield Reversion min/max/weighted average % 4.65 / 5.05 / 4.90 4.65 / 6.00 / 5.19 Other total 81,260 85,010 CONSOLIDATED FINANCIAL STATEMENTS 1 49 Classification investment properties under development Fair value 31.12.2021 Fair value 31.12.2020 Inputs Range 2021 Range 2020 Valuation technique residual value € K € K Office Germany 909,510 509,900 Expected-rent €/m² p. m. min/max 18.50 / 37.05 18.50 / 33.50 Construction cost €/m² min/max 1,801 / 3,494 1,801 / 3,673 Related cost in % of Constr. Cost min/max 22.55 / 33.50 19.36 / 32.28 Office Eastern Europe 0 39,100 Expected-rent €/m² p. m. min/max 0.00 15.50 / 15.50 Construction cost €/m² min/max 0.00 1,290 / 1,410 Related cost in % of Constr. Cost min/max 0.00 10.00 / 10.00 Development total 909,510 549,000 * The book value of “Office Germany” classification includes right of use assets in amount of €60 K (31.12.2020: €0 K). Land banks which are not currently under development or which are not expected to be developed in the near future are valued through comparable transactions method. Classification investment properties under development Fair value 31.12.2021 Fair value 31.12.2020 Inputs Range 2021 Range 2020 Compar ative or residual method € K € K Landbank Germany 187,487 241,986 Valuation approach / m² plot area 2.31 – 22,096.18 2.25 – 22,503.08 Landbank Eastern Europe 150 150 Valuation approach / m² plot area 29.87 - 29.87 29.87 – 29.87 Landbank total 187,637 242,136 Interaction bet ween the input factors The essential input factors that determine the fair values for investment property are the actual rents and market rents as well as the interest rates (yields). Increasing rents (e.g. a short supply and increased demand) would cause ceteris paribus increasing fair values. Vice versa, the fair value ceteris paribus decreases when the rents are decreasing. Increasing yields (e.g. the market expects increasing interest rates due to increasing risks – excessive supply, etc.) would cause ceteris paribus decreasing fair values. Conversely, the fair value ceteris paribus would increase if the yield decreases (e.g. higher demand for this type of investment property). Both input factors act reinforcing – as well in a positive or negative way – when they appear jointly. This means that a strengthened demand for rental space as well as a simultaneously strengthened demand for such investment property would cause an even greater increase of the fair value. Vice versa, a decrease in the demand for rental space as well as a decreased market demand for investment property would cause an even heavier decrease of the fair value. For properties under development, construction costs are another essential input factor. The market value of proper- ties is mainly determined by the expected rental income and the yield. It is in this area of conflict that new develop- ment projects are planned and calculated. Given that the calculated construction costs, which are a major influencing CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 1 50 factor in development, could change during the development phase because of both market related factors (e.g. shortage of resources on the markets or oversupply) and planning-related factors (e.g. necessary additional changes, unforeseea- ble problems, subsequent savings, etc.), they have a significant influence on profitability. These additional opportuni- ties/risks are given appropriate consideration in a developer’s profit (risk/profit). The fair value for rented properties, properties under development as well as land banks corresponds to level 3 of the fair value hierarchy according to IFRS 13. Measurement hierarchy according to IFRS 13 31.12.2021 31.12.2020 € K Level 3 Level 3 Investment properties 4,984,297 4,723,068 investment properties under development 1,097,147 791,136 Investment property 6,081,444 5,514,204 Reclassification s between levels did not occur in 2021 and 2020. Hierarchy classification The following tables show the development of separate classes that are assigned according to IFRS 13 to level 3 of the fair value hierarchy: Office Office Office Retail € K Austria Germany Eastern Europe Austria As at 1.1.2020 356,800 1,467,559 2,009,574 94,000 Additions 2,211 23,150 28,868 1,089 Disposals 0 –152,958 –42,562 0 purchase of real estate and real estate companies 0 127,495 92,330 0 Valuation 7,268 190,186 –79,192 –5,044 Reclassification IFRS 5 0 0 –33,894 0 Reclassification between classes 0 333,214 0 0 Change in lease incentives 721 697 2,292 55 As at 31.12.2020 = 1.1.2021 367,000 1,989,342 1,977,415 90,100 Additions 273 8,409 18,459 229 Disposals –34,941 –1,380 –44,112 0 Valuation 19,909 268,906 9,512 –2,824 Reclassification IFRS 5 0 0 –30,339 0 Reclassification between classes 0 13,238 68,450 0 Change in lease incentives –141 –216 –3,798 –5 As at 31.12.2021 352,100 2,278,299 1,995,587 87,500 * The fair value of the classes “Office Austria” and “Office Germany” also includes the fair value of the own used properties. CONSOLIDATED FINANCIAL STATEMENTS 1 51 Hotel Hotel Others Others € K Austria Germany Austria Germany As at 1.1.2020 74,600 193,100 51,440 60,520 Additions 0 90 0 285 Disposals 0 0 –53,860 0 Valuation –13,544 –23,840 20,320 –274 Reclassification between classes 0 0 0 6,470 Change in lease incentives –156 349 0 109 As at 31.12.2020 = 1.1.2021 60,900 169,700 17,900 67,110 Additions 0 0 0 99 Disposals –13,098 –11 0 –5,230 Valuation –535 12,933 –1,100 18,312 Reclassification IFRS 5 0 –22,201 0 –15,819 Change in lease incentives 133 –121 0 –11 As at 31.12.2021 47,400 160,300 16,800 64,460 Development Development Land banks Land banks € K Germany Eastern Europe Germany Eastern Europe As at 1.1.2020 516,680 14,930 285,352 145 Additions 171,077 20,959 11,267 0 Valuation 57,270 3,211 47,077 5 Reclassification IAS 2 0 0 –1,030 0 Reclassification between classes –234,984 0 –100,680 0 Change in lease incentives –143 0 0 0 As at 31.12.2020 = 1.1.2021 509,900 39,100 241,986 150 Additions 173,345 15,635 2,218 18 Disposals 0 0 –36,900 0 Valuation 202,261 13,715 23,483 –18 Reclassification IFRS 5 –6,058 0 0 0 Reclassification between classes 30,062 –68,450 –43,300 0 As at 31.12.2021 909,510 0 187,487 150 Sensitivity of the property val uation All valuations represent an estimate of the price that could be obtained in a transaction taking place at the valua- tion date. Valuations are based on assumptions, such as the existence of an active market in the region concerned. Un- foreseen macroeconomic or political crises could have a significant influence on the market. Such events can trigger panic buying or selling, or a general reluctance to conclude business transactions. If a valuation date falls within a pe- riod immediately following an event of this kind, the data underlying the valuation may be questionable, incomplete or inconsistent, which inevitably affects the reliability of the estimate. The outbreak of the Covid- 19 pandemic in 2020 has impacted many aspects of daily life and the gobal economy. Many countries have imposed general lockdowns and travel restrictions. Consequently, since then, market activity in many sectors continued to be severely impacted. Although the current economic impact of the pandemic is decreasing, the long-term impact on real estate markets cannot be assessed yet. Some real estate markets and sectors are still show- ing significantly lower levels of transaction activity and liquidity. CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 1 52 Since the consequences of current and future measures cannot be foreseen at this point in time, the effects of Covid- 19 on the real estate markets and the group’s property values are regularely reviewed. For properties that currently have a high vacancy rate or short-term leases in non-prime locations the influence of the appraiser’s assumptions on the property value is higher than for properties in prime locations with cash flows that are secured by long-term contracts. The property values established by external appraisers depend on several parameters, some of which influence each other in a complex way. For the purposes of a sensitivity analysis for sub-portfolios in respect of changes in value caused by the change in one parameter, individual input factors vary (while other factors stay unchanged) in order to present possible changes. The below tables illustrate the sensitivity of the fair values to a change in expected rental income (for the purposes of this model, defined as market rent) and in the yields (term yield – capitalization interest rate for the average expected remaining term of the current rental contracts and reversionary yield – capitalization interest rate for expected rental income after expiration of the current rental contracts) for all investment properties, other than properties held for sale. 2021 Office Austria Change in Yield (in % of initial yield) –10% –5% 0% 5% Change in market rent of 10% –10% 0.49% 5.86% 11.24% 16.61% 21.98% –5% –4.79% 0.26% 5.32% 10.38% 15.44% 0% –9.55% –4.78% 0.00% 4.78% 9.55% +5% –13.86% –9.34% –4.82% –0.30% 4.22% +10% –17.77% –13.48% –9.20% –4.91% –0.62% 2020 Office Austria Change in Yield (in % of initial yield) –10% –5% 0% 5% Change in market rent of 10% –10% 0.83% 5.99% 11.14% 16.30% 21.46% –5% –4.41% 0.43% 5.28% 10.12% 14.97% 0% –9.13% –4.57% 0.00% 4.57% 9.13% +5% –13.41% –9.09% –4.78% –0.46% 3.85% +10% –17.30% –13.21% –9.12% –5.03% –0.95% 2021 Office Germany Change in Yield (in % of initial yield) –10% –5% 0% 5% Change in market rent of 10% –10% 2.30% 6.95% 11.59% 16.24% 20.89% –5% –3.20% 1.15% 5.49% 9.83% 14.17% 0% –8.14% –4.07% 0.00% 4.07% 8.14% +5% –12.61% –8.78% –4.96% –1.14% 2.68% +10% –16.66% –13.07% –9.47% –5.87% –2.27% CONSOLIDATED FINANCIAL STATEMENTS 1 53 2020 Office Germany Change in Yield (in % of initial yield) –10% –5% 0% 5% Change in market rent of 10% –10% 2.46% 7.07% 11.67% 16.28% 20.88% –5% –3.07% 1.23% 5.53% 9.82% 14.12% 0% –8.05% –4.02% 0.00% 4.02% 8.05% +5% –12.54% –8.77% –4.99% –1.22% 2.56% +10% –16.63% –13.08% –9.53% –5.98% –2.43% 2021 Office Eastern Europe Change in Yield (in % of initial yield) –10% –5% 0% 5% Change in market rent of 10% –10% 1.87% 6.92% 11.96% 17.00% 22.05% –5% –3.81% 0.93% 5.66% 10.40% 15.13% 0% –8.92% –4.46% 0.00% 4.46% 8.92% +5% –13.54% –9.33% –5.13% –0.92% 3.29% +10% –17.75% –13.77% –9.78% –5.80% –1.82% 2020 Office Eastern Europe Change in Yield (in % of initial yield) –10% –5% 0% 5% Change in market rent of 10% –10% 1.87% 6.80% 11.72% 16.64% 21.57% –5% –3.69% 0.93% 5.55% 10.17% 14.79% 0% –8.70% –4.35% 0.00% 4.35% 8.70% +5% –13.23% –9.13% –5.02% –0.92% 3.19% +10% –17.35% –13.47% –9.59% –5.71% –1.83% 2021 Retail Austria Change in Yield (in % of initial yield) –10% –5% 0% 5% Change in market rent of 10% –10% 0.41% 5.98% 11.56% 17.13% 22.70% –5% –5.03% 0.22% 5.47% 10.73% 15.98% 0% –9.92% –4.96% 0.00% 4.96% 9.92% +5% –14.35% –9.65% –4.95% –0.25% 4.45% +10% –18.38% –13.92% –9.45% –4.99% –0.53% CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 1 54 2020 Retail Austria Change in Yield (in % of initial yield) –10% –5% 0% 5% Change in market rent of 10% –10% 0.60% 5.97% 11.35% 16.72% 22.09% –5% –4.74% 0.32% 5.37% 10.43% 15.49% 0% –9.55% –4.77% 0.00% 4.77% 9.55% +5% –13.90% –9.38% –4.86% –0.35% 4.17% +10% –17.85% –13.57% –9.28% –5.00% –0.72% 2021 Hotel Austria Change in Yield (in % of initial yield) –10% –5% 0% 5% Change in market rent of 10% –10% 2.55% 7.52% 12.50% 17.48% 22.46% –5% –3.37% 1.28% 5.92% 10.57% 15.21% 0% –8.69% –4.35% 0.00% 4.35% 8.69% +5% –13.51% –9.43% –5.36% –1.28% 2.79% +10% –17.89% –14.06% –10.23% –6.40% –2.56% 2020 Hotel Austria Change in Yield (in % of initial yield) –10% –5% 0% 5% Change in market rent of 10% –10% 3.21% 7.54% 11.86% 16.18% 20.51% –5% –2.41% 1.60% 5.62% 9.63% 13.65% 0% –7.48% –3.74% 0.00% 3.74% 7.48% +5% –12.06% –8.57% –5.08% –1.59% 1.90% +10% –16.23% –12.96% –9.70% –6.43% –3.17% 2021 Hotel Germany Change in Yield (in % of initial yield) –10% –5% 0% 5% Change in market rent of 10% –10% 4.35% 7.64% 10.94% 14.23% 17.53% –5% –0.88% 2.15% 5.18% 8.21% 11.25% 0% –5.59% –2.80% 0.00% 2.80% 5.59% +5% –9.86% –7.28% –4.69% –2.10% 0.48% +10% –13.75% –11.35% –8.95% –6.56% –4.16% CONSOLIDATED FINANCIAL STATEMENTS 1 55 2020 Hotel Germany Change in Yield (in % of initial yield) –10% –5% 0% 5% Change in market rent of 10% –10% 4.74% 8.07% 11.39% 14.71% 18.04% –5% –0.71% 2.34% 5.40% 8.45% 11.50% 0% –5.63% –2.81% 0.00% 2.81% 5.63% +5% –10.08% –7.48% –4.88% –2.28% 0.32% +10% –14.13% –11.73% –9.32% –6.91% –4.51% 2021 Other Austria Change in Yield (in % of initial yield) –10% –5% 0% 5% Change in market rent of 10% –10% 0.55% 6.33% 12.12% 17.90% 23.69% –5% –5.18% 0.28% 5.74% 11.20% 16.66% 0% –10.33% –5.16% 0.00% 5.16% 10.33% +5% –14.99% –10.09% –5.19% –0.30% 4.60% +10% –19.22% –14.57% –9.91% –5.26% –0.61% 2020 Other Austria Change in Yield (in % of initial yield) –10% –5% 0% 5% Change in market rent of 10% –10% 0.45% 5.96% 11.47% 16.98% 22.49% –5% –4.97% 0.23% 5.43% 10.64% 15.84% 0% –9.84% –4.92% 0.00% 4.92% 9.84% +5% –14.25% –9.59% –4.92% –0.25% 4.42% +10% –18.27% –13.83% –9.39% –4.95% –0.51% 2021 Other Germany Change in Yield (in % of initial yield) –10% –5% 0% 5% Change in market rent of 10% –10% –0.21% 5.56% 11.34% 17.11% 22.89% –5% –5.55% –0.09% 5.37% 10.83% 16.29% 0% –10.36% –5.18% 0.00% 5.18% 10.36% +5% –14.70% –9.78% –4.86% 0.06% 4.99% +10% –18.65% –13.96% –9.27% –4.58% 0.11% CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 1 56 2020 Other Germany Change in Yield (in % of initial yield) –10% –5% 0% 5% Change in market rent of 10% –10% 1.16% 6.45% 11.74% 17.03% 22.32% –5% –4.38% 0.59% 5.56% 10.53% 15.50% 0% –9.37% –4.68% 0.00% 4.68% 9.37% +5% –13.88% –9.45% –5.03% –0.60% 3.82% +10% –17.97% –13.78% –9.60% –5.41% –1.22% For the development projects, which are valued by residual value method, the table below illustrates the sensitivity of the fair value to an increase or decrease in the projected outstanding development and construction costs. Development projects actively being developed were used as basis. 2021 Still outstanding capital expenditures in € m –10% –5% Initial value +5% +10% Still outstanding capital expenditures 1,506.0 1,589.7 1,673.3 1,757.0 1,840.7 Fair value 1,076.8 993.1 909.5 825.8 742.1 Changes to initial value 18.4% 9.2% 0.0% –9.2% –18.4% 2020 Still outstanding capital expenditures in € m –10% –5% Initial value +5% +10% Still outstanding capital expenditures 1,229.6 1,297.9 1,366.2 1,434.5 1,502.8 Fair value 685.6 617.3 549.0 480.7 412.4 Changes to initial value 24.9% 12.4% 0.0% –12.4% –24.9% The sensitivity analysis of the projects under development are based on an average percentage of completion of approximately 27% (2020: 29%) as at balance sheet date, related to total construction costs. The sensitivity only relates to the outstanding costs of the building constructions works. The outstanding capital expenditures will reduce with the increase of the percentage of completion. Based on the residual value method this leads to an increase of the fair value of the projects under development. An increase or decrease of the still outstanding capital expenditures leads to an in- versely development of the fair value of the projects under development, within the residual value method. CONSOLIDATED FINANCIAL STATEMENTS 1 57 3.2. Own used properties € K Own used properties Right of use assets of own used properties Total Book values As at 1.1.2020 7,165 7,865 15,030 Additions 0 40 40 Disposals –47 –23 –70 Depreciation and amortisation –410 –1,694 –2,103 As at 31.12.2020 6,709 6,188 12,896 Additions 7 262 269 Disposals –14 0 –14 Depreciation and amortisation –410 –1,568 –1,978 As at 31.12.2021 6,292 4,882 11,174 The following table provides an overview of the book values as at the respective reporting dates: € K Own used properties Right of use assets of own used properties Total As at 1.1.2020 Acquisition costs 10,489 9,648 20,137 Accumulated depreciation –3,324 –1,783 –5,107 Net book value 7,165 7,865 15,030 As at 31.12.2020 Acquisition costs 10,443 9,625 20,068 Accumulated depreciation –3,734 –3,437 –7,171 Net book value 6,709 6,188 12,896 As at 31.12.2021 Acquisition costs 10,300 9,231 19,531 Accumulated depreciation –4,009 –4,349 –8,358 Net book value 6,292 4,882 11,174 Impairment losses If an indication exists that a long term non-financial asset (own used properties) might be impaired, CA Immo Group performs an impairment test. CA Immo calculates the recoverable amount for the asset or smallest identifiable group of assets that generate cash inflows from continued use that are largely independent from the cash inflows from other assets (cash-generating unit). The recoverable amount is the higher of the fair value less the cost to sell (net realisable value) and the value in use of the corresponding asset (or group of assets). The value in use is the present value of the expected future cash flows that are likely to be generated by the continued use of an asset (or group of assets) and its retirement at the end of its useful life. If this recoverable amount of an own used property is lower than its carrying value, the asset is written off to the lower value. These write-offs are reported in the consolidated income statement under “depreciation and impair- ment/reversal”. CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 1 58 If at a later date the impairment ceases to exist, the impairment loss is reversed to profit or loss up to the carrying amount of the amortised original acquisition or production cost. Classification of properties Properties used for administration purposes are presented under the line “own used properties” if these proper- ties can be sold separately or their own use amounts to more than 5.0% of the total usable area. The rights of use for the rent of space used for administration purposes are also included in this balance sheet item. Measurement Own used properties are measured in accordance with the cost method, i.e. acquisition or production cost or fair value at the date of reclassification less regular depreciation and impairment losses. The valuation of rights of use for properties rented for administration purposes is carried out according to the cost method, i.e. at the present value of the lease payments (lease liability) and reduced by the scheduled depreciation and impairments. Investment grants are accounted for as deduction of production costs. The estimated useful life of own used properties, applying the principle that each part of an item with a significant cost shall be depreciated separately, is 70 to 75 years for the structural work, 15 to 70 years for the facade, 20 years for the building equipment and appliances, 15 to 20 years for the roof, and 10 to 20 years for the tenant’s finishing works. The scheduled depreciation for the right of use assets of own used properties is carried out on a straight-line basis over the expected rental period. This is determined individually based on the underlying contracts. 3.3. Office furniture and equipment and intangible assets € K Office furniture and equipment Right of use assets of office furniture and equipment Total office furniture and equipment Goodwill Software Total intangible assets Book values As at 1.1.2020 6,978 790 7,768 4,481 687 5,169 Currency translation adjustments –31 –2 –33 0 0 0 Current additions 1,269 490 1,759 0 685 685 Disposals –81 –77 –158 –2,090 –12 –2,102 Depreciation and amortisation –1,290 –515 –1,806 0 –343 –343 Impairment 0 0 0 –410 0 –410 As at 31.12.2020 6,844 687 7,531 1,981 1,017 2,998 Currency translation adjustments –1 –1 –1 0 0 0 Current additions 309 336 645 0 1,727 1,727 Disposals –33 –43 –76 –9 –3 –12 Depreciation and amortisation –1,299 –367 –1,666 0 –534 –534 Impairment 0 0 0 –762 0 –762 As at 31.12.2021 5,820 612 6,431 1,211 2,208 3,419 CONSOLIDATED FINANCIAL STATEMENTS 1 59 The following table shows the composition of the book values at each of the reporting dates: € K Office furniture and equipment Right of use assets of office furniture and equipment Total office furniture and equipment Goodwill Software Total intangible assets As at 1.1.2020 Acquisition costs 13,212 1,231 14,443 14,244 4,698 18,941 Accumulated impairment/amortisation –6,234 –441 –6,675 –9,762 –4,010 –13,773 Book values 6,978 790 7,768 4,481 687 5,169 As at 31.12.2020 Acquisition costs 14,264 1,317 15,581 5,124 5,366 10,490 Accumulated impairment/amortisation –7,420 –630 –8,051 –3,143 –4,349 –7,492 Book values 6,844 687 7,531 1,981 1,017 2,998 As at 31.12.2021 Acquisition costs 14,522 1,138 15,660 5,106 7,062 12,168 Accumulated impairment/amortisation –8,702 –526 –9,228 –3,894 –4,855 –8,749 Book values 5,820 612 6,431 1,211 2,208 3,419 Goodwill impairment Goo dwill is tested for impairment at each balance sheet date, with individual properties representing the cash generating units. Due to the specific nature of the recognised goodwill, the recoverable amount for the cash generating unit cannot be determined without taking into account the expected tax charge. Hence, the book value of the cash gen- erating unit includes, in addition to the allocated goodwill, the directly attributable deferred taxes of the single proper- ties. The recoverable amount is determined on the basis of value in use. This amount is derived from the fair value of a property which is mainly determined on the basis of external valuation reports. The present value of the income tax payments is determined considering after-tax yield (which represents the yield of the property after tax effects of the relevant country) on the expected income tax payments. The impairment test assumes, based on experience, an average retention period for properties held by CA Immo Group as at 31.12.2021 of 1 year for investment properties. Due to the assumption of the retention period de- creasing each year and thus of a reduced discounting period each year, further impairment losses of the goodwill corre- sponding to the reduction in the present value benefit are expected in future periods. The following sensitivity analysis shows the impact in goodwill impairment of changes in significant parameters for the impairment test. CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 1 60 2021 Goodwill impairment in € K Change in yield (in % of initial yield) +5% +5% +10% +10% Change in market rent –5% –10% –5% –10% Impact on the profit and loss statement –30.2 –45.4 –43.1 –57.6 2020 Goodwill impairment in € K Change in yield (in % of initial yield) +5% +5% +10% +10% Change in market rent –5% –10% –5% –10% Impact on the profit and loss statement –58.9 –91.0 –91.2 –122.7 Intangible assets The goodwill represents the amount by which the fair value of the amount transferred (usually the purchase price for the acquired business) and (if applicable) for the non-controlling interest, exceeds the fair value of the identifiable assets and liabilities, including any deferred taxes. It mainly represents the benefit resulting from the fact that the de- ferred tax liabilities acquired will become due only in a future period. Goodwill is not amortised, but is tested for im- pairment at each period end. A possible impairment is directly connected to the reduction of the fair value of the property or to taxation changes in the country of the cash generating unit. Parameters determined by the appraisers within the scope of the external property valuation are largely used for the impairment test. Other intangible assets mainly comprise software and are recognised at acquisition cost less straight-line amortisation and impairment losses. Software is amortised over a useful life of 2 to 5 years. CA Immo Group makes use of the option under IFRS 16 and does not recognise any rights of use for software. Given the lack of control over the software, cloud software solutions are not capitalized as an asset and consequently, the costs are expensed over the contractual period. Office furniture and equipment Office furniture and equipment are measured in accordance with the cost method, i.e. acquisition or production cost less regular depreciation and impairment losses. The initial valuation of rights of use for office furniture and equipments carried out according to the cost method, i.e. at the present value of the lease payments (lease liability), and subsequently reduced by scheduled depreciation and impairments. Office furniture and equipment are depreciated on a straight-line basis over their estimated useful life, which ranges from 2 to 15 years. The scheduled depreciation of the rights of use for office furniture, equipment and other assets is carried out on a straight-line basis over the expected rental period. This is determined individually based on the under- lying contracts. CONSOLIDATED FINANCIAL STATEMENTS 1 61 3.4. Investments in joint ventures € K 31.12.2021 31.12.2020 Eggarten 41,285 41,395 Mainz 13,621 13,866 Others 894 2,367 Investments in joint ventures 55,800 57,629 CA Immo Group is engaged in the following material joint ventures: Name Project Partner Ownership share of CA Immo Group (Prior Year) Registered office Region/ Country Investment Type of investment Aggregation Number entities (Prior Year) Eggarten Büschl Group represented by Park Immobilien Projekt Eggarten Holding GmbH & Co. KG 50% (50%) Munich Germany Development Sum of entities 2 (2) Mainz Mainzer Stadtwerke AG 50.1% (50.1%) Mainz Germany Development Sum of entities 2 (3) The joint venture “Eggarten” plans the development and sale of properties in Munich. The joint venture Mainz plans the development and sale of land plots in the customs harbour in Mainz. None of the joint ventures are listed and all have 31.12. as the key date. In all cases, except the Mainz joint ventures (profit share between 50% and 30%), the profit share is in accordance with the ownership share. The financial state- ments of the joint ventures are prepared in compliance with the accounting policy of CA Immo Group and included in the consolidated financial statements in accordance with the equity method. Joint ventures are set up by CA Immo Group for strategic reasons and structured as independent investment compa- nies. They consist of common agreements, groups of independent investment companies (sum), or separate investment companies (subsidiaries). The structure depends on the strategic background e.g. development of properties, financing or investment volume. As at 31.12.2021, just like in previous year, there are no unrecognized losses from joint ventures. There are no unrec- ognized contractual obligations for the CA Immo Group concerning the acquisition or disposal of shares in joint ven- tures or for assets that are not accounted for. The presented information of joint ventures does not include any consolidation within the CA Immo Group. CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 1 62 The following table shows material interests in joint ventures: € K 2021 2020 Eggarten Mainz Eggarten Mainz Rental income 47 2,150 48 1,689 Depreciation and impairment/reversal –5 –75 –5 –152 Finance costs –141 –123 –124 –1,218 Income tax expense 128 –2,778 0 –389 Consolidated net income –319 20,970 –372 10,278 Total comprehensive income 0 0 0 0 Comprehensive income for the period –319 20,970 –372 10,278 Long-term assets 172 1,262 49 2,540 Other short-term assets 93,418 107,934 91,991 99,014 Cash and cash equivalents 185 792 115 851 Total assets 93,776 109,989 92,154 102,404 Other long-term liabilities 0 41,084 0 41,610 Interest-bearing liabilities 10,287 147 9,151 31 Long-term liabilities 10,287 41,231 9,151 41,640 Other short-term liabilities 888 24,607 181 23,986 Interest-bearing liabilities 5 13 5 13 Short-term liabilities 893 24,620 186 23,999 Shareholders' equity 82,595 44,138 82,817 36,766 Proportional equity as at 1.1. 41,395 18,386 41,581 17,477 Proportional profit of the period in accordance with shares held –159 10,479 –186 5,133 Dividends received 0 –6,743 0 –4,224 Proportional equity as at 31.12. 41,236 22,122 41,395 18,386 Intercompany profit elimination, other consolidation effects and adjustment for profit share 49 –8,501 0 –4,520 Book value investments into joint ventures 31.12 41,285 13,621 41,395 13,866 CONSOLIDATED FINANCIAL STATEMENTS 1 63 The following table summarizes non-material interests in joint ventures: € K 2021 2020 Proportional equity as at 1.1. –650 8,578 Proportional profit of the period –2,720 –1,050 Capital increases 105 208 Capital decrease –18 –5,064 Dividends received –899 –3,299 Proportional equity as at 31.12. –4,182 –628 Intercompany profit elimination and other consolidation effects 1,651 –60 Transition consolidation 0 –22 Allowance of loans and receivables 3,425 3,076 Book value investments into joint ventures 31.12 894 2,367 3.5. Other assets € K 31.12.2021 31.12.2020 Other financial assets 50,194 45,470 Long-term receivables and other assets 38,377 15,258 88,571 60,728 € K Acquisition costs incl. recognized interest as at 31.12.2021 Changes in value accumulated until 31.12.2021 Book values as at 31.12.2021 Changes in value recognized in profit or loss 2021 Loans to joint ventures 15,107 –3,425 11,682 –349 Loans and receivables 15,107 –3,425 11,682 –349 Other investments 30,540 1,853 32,393 –1,682 Other investments 30,540 1,853 32,393 –1,682 Interest rate swaps 0 5,052 5,052 5,052 Interest rate floors 726 341 1,067 –615 Derivative financial instruments 726 5,393 6,119 4,437 Total other financial assets 46,373 3,821 50,194 2,406 CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 1 64 € K Acquisition costs incl. recognized interests as at 31.12.2020 Changes in value accumulated until 31.12.2020 Book values as at 31.12.2020 Changes in value recognized in profit or loss 2020 Loans to joint ventures 12,002 –3,076 8,926 –772 Loans and receivables 12,002 8,926 –772 Other investments 31,326 34,861 –5,595 Other investments 31,326 –3,076 3,535 3,535 34,861 –5,595 Interest rate floors 726 956 1,682 535 Derivative financial instruments 726 956 1,682 535 Total other financial assets 44,054 1,415 45,470 –5,832 Other investments mainly include non-controlling interests in Germany. € K Other investments As at 1.1.2020 41,406 Valuation P/L –5,595 Distributions/capital reduction –950 As at 31.12.2020 = 1.1.2021 34,861 Valuation P/L –1,682 Distributions/capital reduction –469 Disposals –317 As at 31.12.2021 32,393 The fair value of other investments corresponds to level 3 of the fair value hierarchy according to IFRS 13. Measurement hierarchy according to IFRS 13 31.12.2021 31.12.2020 € K Level 2 Level 3 Total Level 2 Level 3 Total Derivative financial instruments FVtPL 6,119 0 6,119 1,682 0 1,682 Other investments FVtPL 0 32,393 32,393 0 34,861 34,861 Financial instruments by category (assets) 6,119 32,393 38,513 1,682 34,861 36,544 Reclassifications between levels did not occur in 2021 and 2020. Long-term receivables and other assets € K 31.12.2021 31.12.2020 Cash and cash equivalents with drawing restrictions 34,274 11,708 Other receivables from joint ventures 1,351 1,137 Receivables from property and share sales 64 61 Other receivables and assets 2,687 2,353 Long-term receivables and other assets 38,377 15,258 CONSOLIDATED FINANCIAL STATEMENTS 1 65 Loans Loans granted to joint ventures are assigned to the category “amortised cost” (AC). They are measured at fair value upon recognition, and subsequently at amortised cost, applying the effective interest-rate method and taking into account any impairment, according to IFRS 9. CA Immo Group generally evaluates loans granted to joint ventures to- gether with the equity held in these entities because the loans are considered as part of the net investment. If the equity of the entities reported under the equity method becomes negative, the loans considered as part of the net investment are impaired to the level of the loss not yet recognized. Other investments Non-controlling interests are assigned to the category “fair value through profit or loss” (FVtPL). The valuation of the investment is made at fair value upon recognition. Subsequent changes in value are presented in profit or loss as “result from financial investments”. If a listed price on an active market is not available, the fair value of investments which own investment properties will be updated based on internal valuations, mostly based on external professional opinions for the properties. Long-term receivables Trade receivables, other receivables and other financial assets are primary financial instruments that are not listed on active markets and not intended for sale. They are assigned to the measurement category “amortised cost” (AC). They are initially measured at fair value, and thereafter at amortised cost, applying the effective interest-rate method and less expected credit losses. Receivables from the sale of properties having a maturity of more than one year are recognised at their present values and presented as non-current receivables as of the respective reporting date. Cash subject to drawing restrictions of more than 12 months Restricted cash with a longer lock-up period (over 12 months) is presented as financial assets. The expected credit losses for cash and cash equivalents are determined based on the default probability of each financial institution. CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 1 66 CHAPTER 4: CURRENT ASSETS 4.1. Assets and liabilities held for sale As at 31.12.2021 a disposal group including an office building in Hungary with a fair value of €30,339 K (31.12.2020: €0 K) was classified as held for sale. Furthermore three properties in Germany with a fair value of €44,078 K (31.12.2020: €0 K) were classified as held for sale. For these assets and liabilities, the disposal was agreed by the appro- priate level of management of CA Immo Group and contracts of sale were concluded or assigned by the time the consolidated financial statements as at 31.12.2021 were prepared. Assets held for sale € K 31.12.2021 31.12.2020 Germany - Investment properties 38,020 0 Germany - Properties under development 6,058 0 Eastern Europe core regions - Investment properties 30,339 0 Eastern Europe other regions - Investment properties 0 33,894 Properties held for sale 74,417 33,894 Eastern Europe core regions - Investment properties 1,780 0 Other assets held for sale 1,780 0 Assets held for sale and relating to disposal groups 76,197 33,894 The result from revaluation includes an amount of €0 K (2020: €0 K) related to investment properties after their reclas- sification as properties held for sale. Assets and liabilities held for sale € K 31.12.2021 31.12.2020 Assets held for sale 30,339 33,894 Receivables and other assets 137 111 Cash and cash equivalents 1,643 3,086 Assets in disposal groups held for sale 32,119 37,092 Provisions 160 43 Interest-bearing liabilities 0 1,604 Other liabilities 767 0 Deferred tax liabilities 1,430 0 Liabilities relating to disposal groups 2,357 1,647 Net-assets/liabilities included in disposal groups 29,762 35,445 Investment properties held for sale in the amount of €15,819 K (31.12.2020: €0 K) are encumbered with mortgages. CONSOLIDATED FINANCIAL STATEMENTS 1 67 € K IFRS 5 properties As at 1.1.2020 0 Reclassification IFRS 5 33,894 As at 31.12.2020 = 1.1.2021 33,894 Disposals –33,894 Reclassification IFRS 5 74,417 As at 31.12.2021 74,417 The fair value of assets held for sale corresponds to level 3 of the fair value hierarchy according to IFRS 13. Classification as “held for sale” Non-current assets and disposal groups are classified as “held for sale” if the relevant book value is expected to be realised from disposal and not from continued use. In this case, the relevant non-current assets and disposal groups are available for immediate sale in their current condition and a disposal is highly probable. Furthermore, the sale must be expected to be completed within one year of the classification as held for sale. Disposal groups consist of assets and liabilities that will be sold together in a single transaction. Non-current assets and disposal groups that are classified as held for sale are generally recognised at the lower of book value and fair value less costs to sell. Investment properties, measured according to the fair value model, interest bearing liabilities measured at amortised cost, as well as deferred taxes valued according to IAS 12 and financial assets according to IFRS 9 are exempt from this rule. 4.2. Properties held for trading 31.12.2021 31.12.2020 € K Acquisition / production costs Accumulated impairment Book values Acquisition / production costs Accumulated impairment Book values At acquisition/production costs 82,956 0 82,956 33,042 0 33,042 At net realisable value 9,694 –5,484 4,210 7,288 –5,130 2,158 Total properties held for trading 92,650 –5,484 87,166 40,330 –5,130 35,200 The increase in acquisition/production costs in 2021 is mainly due to capitalization of urban development obliga- tions. The fair value of the properties held for trading, which are recognised at acquisition/production costs, amounts to €169,788 K (31.12.2020: €113,724 K) and corresponds to level 3 of the fair value hierarchy. Properties held for trading amounting to €15,824 K (31.12.2020: €31,441 K) with a fair value of €37,371 K (31.12.2020: €104,856 K) are expected to be realised within a period of more than 12 months. This applies to 9 properties (31.12.2020: 13 properties) in Germany which comprise mainly land banks in Munich. CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 1 68 Classification as “held for trading” Properties are recognised as held for trading if the relevant property is intended for sale in the ordinary course of business or its specific development has started with the intention of a subsequent sale in the ordinary course of busi- ness (or a corresponding forward-sale agreement was concluded). Measurement Properties held for trading are measured at the lower of acquisition or production cost and net realisable value as of the relevant reporting date. 4.3. Receivables and other assets € K Book values as at 31.12.2021 Book values as at 31.12.2020 Rental and trade debtors 16,736 19,220 Receivables from trading property and construction work (transferred over time) 280 18,618 Receivables from property and share sales/acquisitions 4,446 60,164 Receivables from joint ventures 5,931 6,060 Cash and cash equivalents with drawing restrictions 5,918 10,306 Other accounts receivable 8,772 6,962 Receivables and other financial assets 42,084 121,330 Other receivables from fiscal authorities 9,519 11,786 Other non financial receivables 4,124 3,259 Other non financial assets 13,643 15,045 Receivables and other assets 55,727 136,375 The carrying amount of receivables and other assets are based on nominal value and allowance, as follows: € K Nominal value Expected credit losses Book value Nominal value Expected credit losses Book value 31.12.2021 31.12.2021 31.12.2021 31.12.2020 31.12.2020 31.12.2020 Receivables and other financial assets 51,211 –9,127 42,084 130,292 –8,962 121,330 Other non financial assets 13,643 0 13,643 15,045 0 15,045 Receivables and other assets 64,853 –9,127 55,727 145,337 –8,962 136,375 CONSOLIDATED FINANCIAL STATEMENTS 1 69 Movements in allowances for receivables and other assets are presented below: € K 2021 2020 As at 1.1. –8,962 –4,852 Additions (value adjustment expenses) –3,451 –6,177 Usage 652 399 Reversal 2,662 1,556 Reclassification IFRS 5 0 37 Currency translation adjustments –28 74 As at 31.12. –9,127 –8,962 The following table shows the risk profile of receivables and other assets based on their maturity: Maturities receivables and other financial assets 2021 2020 € K Not due 34,101 108,965 Overdue <31 days 2,512 4,358 Overdue 31- 90 days 454 1,924 Overdue >90 days 5,017 6,083 Overdue total 7,983 12,365 Total 42,084 121,330 Changes in contract assets and contract liabilities result from: 31.12.2021 31.12.2020 € K Receivables Contract assets Contract liabilities Receivables Contract assets Contract liabilities As at 1.1. 18,618 0 0 17,342 0 0 Increase as a result of changes in the measure of progress 0 0 0 0 42,860 0 Reclassification from contract assets to trade receivables 0 0 0 42,860 –42,860 0 Prepayments received –17,845 0 0 –42,106 0 0 Subsequent changes / Purchase price reduction –748 Interest income present value receivables 255 0 0 523 0 0 As at 31.12. 280 0 0 18,618 0 0 As at 31.12.2021 expected future income from the sale of properties and construction works (realization over time due to transfer over time) amounts to €0 K (31.12.2020: €0 K). CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 1 70 Receivables and other financial assets Trade receivables, other receivables and other financial assets are primary financial instruments that are not listed on active markets and not intended for sale. They are assigned to the measurement category “amortised cost” (AC). They are initially measured at fair value, and thereafter at amortised cost, applying the effective interest-rate method less expected credit losses. An expected loss on receivables is calculated based on the maturity, the past due period and the individual payment performance of the relevant debtor, taking into account any security received. The simplified allowance model of IFRS 9 for leasing receivables is applied, so that the expected credit losses for the whole remaining duration of the in- strument are presented. Uncollectible receivables are derecognised. Subsequent payments in respect of receivables for which impairment losses have been incurred, are recognised as income in the consolidated income statement. CA Immo Group limits the credit risk mostly by means of deposits, bank guarantees and related securities. The following risk categories exist: Risk category Description Expected credit loss 1 (low risk) Low default risk; timely payments of the counterparty 12 month-expected credit loss 2 (increased risk or simplified approach) Overdue receivables and all leasing receivables due to application of simplified approach. Liftetime expected credit loss 3 (high risk due to delay of payment) Diminished credit standing due to enduring non- payment, bankruptcy or insolvency proceedings Liftetime expected credit loss 4 (derecognition) No expected payments. Full write-off. With the final default the receivable is derecognized. CA Immo Group sets the expected credit losses based on aging and expected insolvency rates per country (for cate- gory 2 and category 3). For category 1 (low risk) the credit loss for the expected remaining maturity (maximum 12 months) is determined based on CDS (credit default swaps) default rates, for example, or expected credit losses. Cash subject to drawing restrictions of up to 12 months Cash in banks subject to drawing restrictions of more than 3 but less than 12 months is presented as “receivables and other assets”. Other non-financial instruments Other non-financial assets mainly consist of prepayments, accrued services in progress, receivables from fiscal authorities, prepaid expenses and contract assets (in accordance with IFRS 15). They are measured at cost less any im- pairment losses, respectively in case of contract assets less any expected credit losses. When revenues for construction projects (for example for owner occupied aparments) are recognized by measuring progress, according to IFRS 15, contract assets, respectively contract liabilities, are presented. The recognized contract assets are netted with prepayments received and presented as “trade and other receivables” and in case of a contract liability as “other liabilities”. CONSOLIDATED FINANCIAL STATEMENTS 1 71 4.4. Cash and cash equivalents € K 31.12.2021 31.12.2020 Cash in banks 633,130 922,346 Restricted cash 0 13,116 Cash on hand 18 20 Fund of cash and cash equivalents 633,148 935,482 Expected credit losses in cash and cash equivalents –31 –619 Cash and cash equivalents (balance sheet) 633,117 934,863 Cash and cash equivale nts include cash, deposits in banks, as well as fixed-term deposits with an original term of up to three months. This item also includes cash in banks subject to drawing restrictions for a period of less than 3 months, which is used for securing outstanding loans (principal and interest) as well as current investments in deve- lopment projects. The expected credit losses for cash and cash equivalents are determined based on the default probability of each fi- nancial institution. For the computation of the expected credit losses, CA Immo Group takes into consideration the ex- pected period it takes to transfer cash and cash equivalents to other financial institutions. CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 1 72 CHAPTER 5: EQUITY AND FINANCING 5.1. Shareholders‘ equity The share capital equals the fully paid in nominal capital of CA Immobilien Anlagen Aktiengesellschaft of €774,229,017.02 (31.12.2020: €718,336,602.72). It is divided into 106,496,422 (31.12.2020: 98,808,332) bearer shares and 4 registered shares with a proportionate amount of the share capital of €7.27 each. The registered shares are held by SOF- 11 Klimt CAI S.à r.l., Luxembourg, an entity managed by Starwood Capital Group, each granting the right to nominate one member of the Supervisory Board. The Supervisory Board currently consists of five shareholder repre- sentatives elected by the General Meeting, two shareholder representatives appointed by means of registered shares, and four employee representatives. Due to the change-of-control clause of the convertible bond triggered by the offer of SOF- 11 Klimt CAI S.à r.l., nearly all convertible bond holders exercised their conversion rights. As of 30.4.2021, respectively 13.9.2021, the conversion rights were serviced by contingent capital and partly by issuing new shares. Overall, the share capital increased by €55,892,414.30 from €718,336,602.72 to €774,229,017.02 in the reporting year and is divided into 106,496,422 ordinary bearer shares and four registered shares. The remaining outstanding convertible bonds with a nominal value of €100 K were repaid in cash. As at 31.12.2021, CA Immobilien Anlagen AG held 5,780,037 treasury shares in total (31.12.2020: 5,780,037 treasury shares). Given the total number of voting shares issued of 106,496,426 (31.12.2020: 98,808,336), this is equivalent to around 5.4% (31.12.2020: 5.8%) of the voting shares. The appropriated capital reserve as reported in the individual financial statements of CA Immobilien Anlagen Aktiengesellschaft totals €998,959 K (31.12.2020: €854,842 K). Profits can only be distributed up to the amount of the net profit of the parent company disclosed in the individual financial statements in accordance with the Austrian Com- mercial Code (UGB), subject to the existence of any legal dividend payment constraints. In May 2021, a dividend amount of €1.00 (2020: €1.00) for each share entitled to dividend, totalling €100,645 K (2020: €93,028 K), was distrib- uted to the shareholders in accordance with the resolution of the 34 th Annual General Meeting. In its letter dated 3.11.2021, the majority shareholder SOF- 11 Klimt CAI S.à r.l., Luxembourg, requested to convene an extraordinary shareholders' meeting to resolve on special dividends totaling €5.00 per dividend-bearing share. In accordance with the resolution of the Extraordinary General Meeting on 30.11.2021, the special dividends will be distributed in two tranches of €2.50 per dividend-bearing share. The first tranche was paid out on 15.12.2021; the second tranche was paid on 15.3.2022. The total net profit of CA Immobilien Anlagen Aktiengesellschaft as at 31.12.2021 amounting to €440,139 K (31.12.2020: €897,605 K), is subject to dividend payment constraints in the amount of the deferred tax assets of €665 K (31.12.2020: no dividend payment constraints). The Management Board of CA Immo AG proposes to distribute no divi- dend to shareholders from the retained earnings as at 31.12.2021, amounting to €440,139 K. The retained earnings of €440,139 K are to be carried forward. The profit appropriation proposal reflects the current assessment of the Manage- ment and Supervisory Boards. Besides the current geopolitical environment and the increased uncertainty and volatil- ity of the markets, the background for this decision is the fact that after the first tranche of €2.50 per share was paid out on 15.12.2021, also the second tranche of €2.50 special dividend per share was paid on 15.3.2022, which was decided in the Extraordinary General Meeting on 30.11.2021. As at 31.12.2021, there exists unused authority capital in the amount of €350,069,852.74, which can be utilized until 18.9.2023 at the latest, as well as contingent capital in the amount of €143,667,319.09 earmarked for servicing converti- ble bonds that will be issued in the future based on the authorization of the Annual General Meeting as of 9.5.2018 (contingent capital 2018). CONSOLIDATED FINANCIAL STATEMENTS 1 73 5.2. Interest bearing liabilities 31.12.2021 31.12.2020 € K Short-term Long-term Total Short-term Long-term Total Convertible bond 0 0 0 362 193,846 194,207 Corporate bonds 158,144 1,278,841 1,436,985 123,983 1,418,027 1,542,011 Bonds 158,144 1,278,841 1,436,985 124,345 1,611,873 1,736,218 Loans 235,946 871,227 1,107,173 77,309 968,660 1,045,969 Lease liabilities 3,320 36,466 39,786 3,647 41,627 45,275 Other interest-bearing liabilities 239,265 907,693 1,146,959 80,956 1,010,288 1,091,244 397,409 2,186,534 2,583,943 205,301 2,622,161 2,827,462 The convertible bond was converted into shares in 2021 in the nominal amount of €199,900 K. The remaining nomi- nal of €100 K was paid back in cash. The Euro is the contract currency of 100% of the loans and bonds (31.12.2020: 100% in EUR). Bonds 31.12.2021 Nominal value in € K Book value excl. interests € K Deferred interest in € K Nominal interest rate Effective interest rate Issue Repayment Bond 2015- 2022 142,411 142,397 3,412 2.75% 2.83% 17.2.2015 17.2.2022 Bond 2016- 2023 116,621 116,506 2,794 2.75% 2.84% 17.2.2016 17.2.2023 Bond 2017- 2024 175,000 174,490 2,814 1.88% 2.02% 22.2.2017 22.2.2024 Bond 2018- 2026 150,000 147,882 2,148 1.88% 2.24% 26.9.2018 26.3.2026 Bond 2020- 2027 500,000 494,280 3,955 0.88% 1.11% 5.2.2020 5.2.2027 Bond 2020- 2025 350,000 345,682 623 1.00% 1.34% 27.10.2020 27.10.2025 Total 1,434,032 1,421,238 15,747 31.12.2020 Nominal value in € K Book value excl. interests € K Deferred interest in € K Nominal interest rate Effective interest rate Issue Repayment Convertible bond 200,000 193,846 362 0.75% 2.57% 4.10.2017 4.4.2025 Bond 2015- 2022 142,411 142,290 3,381 2.75% 2.83% 17.2.2015 17.2.2022 Bond 2016- 2023 116,621 116,399 2,780 2.75% 2.84% 17.2.2016 17.2.2023 Bond 2016- 2021 107,450 107,360 941 1.88% 2.03% 12.7.2016 12.7.2021 Bond 2017- 2024 175,000 174,244 2,791 1.88% 2.02% 22.2.2017 22.2.2024 Bond 2018- 2026 150,000 147,365 2,152 1.88% 2.24% 26.9.2018 26.3.2026 Bond 2020- 2027 500,000 493,166 3,957 0.88% 1.11% 5.2.2020 5.2.2027 Bond 2020- 2025 350,000 344,562 623 1.00% 1.34% 27.10.2020 27.10.2025 Total 1,741,482 1,719,233 16,985 CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 1 74 The corporate bonds are subject to so-called financial covenants. These are mainly key indicators such as gearing (Loan-to-Value ratios) and interest coverage. The utilization of funds from the 2020- 2025 bond (Green Bond) is tied to the allocation rules defined in the Green Bond Framework. As at 31.12.2021 no bonds were in breach of covenants (31.12.2020: no breaches). Other interest-bearing liabilities As at 31.12.2021 and 31.12.2020, the terms of other interest-bearing liabilities are as follows: 31.12.2021 Type of financing and currency Effective interest rate as at 31.12.2021 in % Interest variable/fixed/hedged Maturity Nominal value in € K Book value in € K Fair value of liability in € K Loans 0.70%- 1.58% variable 6/2022 - 3/2032 262,583 260,129 260,129 Loans 0.90%- 1.73% hedged 6/2024 - 12/2032 565,425 561,926 561,926 Loans 0.70%- 3.95% fixed 12/2022 - 6/2030 285,300 285,117 286,787 Loans (total) 1,113,308 1,107,173 1,108,842 Lease liabilities (IAS 40) 0.14%- 6.94% fixed 3/2022- 8/2104 84,562 33,858 Lease liabilities (other) 0.06%- 3.87% fixed 1/2022- 12/2025 6,123 5,928 1,203,993 1,146,959 1,108,842 31.12.2020 Type of financing and currency Effective interest rate as at 31.12.2020 in % Interest variable/fixed/hedged Maturity Nominal value in € K Book value in € K Fair value of liability in € K Loans 0.70%- 1.85% variable 3/2021 - 3/2032 182,718 180,196 180,196 Loans 0.90%- 2.64% hedged 12/2021 - 12/2032 580,363 575,487 575,487 Loans 0.70%- 3.95% fixed 12/2022 - 6/2030 290,840 290,286 299,288 Loans (total) 1,053,921 1,045,969 1,054,971 Lease liabilities (IAS 40) 0.81%- 6.94% fixed 3/2021- 8/2104 96,510 37,911 Lease liabilities (other) 0.41%- 3.87% fixed 1/2021- 12/2025 7,665 7,364 1,158,096 1,091,244 1,054,971 For loans with variable interest rate, interest rate derivatives with a nominal value of €9,635 K (31.12.2020: €9,978 K) have been set up in order to reduce the effect of changes in the interest rate. The bank financing of CA Immo Group is subject to financial covenants. These are generally for investment properties LTV (loan to value, i.e. ratio between loan amount and the fair value of the property), ISCR (interest service coverage ratio, i.e. the ratio between rental revenues and interest expenses) and DSCR (debt service coverage ratio, i.e. the ratio between rental revenues and debt service of one period) and ratios for investment properties under development LTC (loan to cost, i.e. ratio between debt amount and total project costs) and ISCR (interest service coverage ratio, i.e. the ratio between future rental revenues planned and interest expenses). Other interest-bearing liabilities, for which the relevant financial covenants were not met as at 31.12.2021, are pre- sented in short-term interest-bearing liabilities regardless of their maturity, because breaches of the financial covenants CONSOLIDATED FINANCIAL STATEMENTS 1 75 generally entitle the lender to early termination of the loan agreement. This applies irrespective of the state of negotia- tions with the banks regarding a continuation or amendment of the loan agreements. As at 31.12.2021 no loans were in breach of covenants (31.12.2020: no breaches). Interest-bearing liabilities are assigned to the category "amortised cost" (AC) and recognised upon disbursement at the amount actually received less transaction costs and for the lease liabilities at the present value of the future lease payments. Any difference between the amount received and the repayment amount, respectively between the pre- sent value and the nominal value of the lease liabilities is allocated over the term of the financing, according to the ef- fective interest-rate method, and is recognised as financing costs or, if the conditions set forth in IAS 23 are met, capi- talized as borrowing costs of construction works. A convertible bond requires in principle a split of the financial instrument between an equity component and a debt component. The equity component was replaced due to the cash settlement option of CA Immo AG, with an embedded derivative subject to separation. Embedded derivatives are generally separately recognized, if their economic character- istics and risks are not closely related to those of the host contract, if they independently fulfill the definition of deriva- tives and if the entire instrument is not measured at fair value through profit or loss. Initial recognition of the debt com- ponent is at fair value of a similar liability that does not include an option to convert into equity instruments. Directly attributable transaction costs are allocated to the debt component. Liabilities from convertible bonds are assigned to the category "amortised cost” (AC) and are measured using the effective interest-rate method. When a change or amendment in the contractual terms of a liability is recognized as a redemption (i.e. the obligations specified in the contract are cancelled or the 10% threshold of the present value test is not met), then all incurred ex- penses and fees are deemed to be part of the gain or loss from the redemption. Changes or amendments in terms of loan agreements that do not result in a redemption, lead to an adjustment of the carrying value of the liability. The change in the fair value, as a result of changed or amended terms, is presented in the profit or loss statement and amortized as effective interest over the remaining duration. 5.3. Other liabilities € K 31.12.2021 31.12.2020 Short-term Long-term Total Short-term Long-term Total Fair value derivative transactions 0 20,960 20,960 235 84,975 85,210 Trade payables 19,815 5,494 25,309 17,722 6,501 24,224 Liabilities to joint ventures 123 0 123 1,445 0 1,445 Rent deposits 5,883 10,495 16,379 4,812 11,863 16,675 Open purchase prices 564 340 904 941 347 1,288 Settlement of operating costs 2,401 0 2,401 2,294 0 2,294 Other 257,904 10,598 268,501 8,027 9,108 17,134 Financial liabilities 286,690 26,927 313,617 35,241 27,819 63,060 Operating taxes 4,672 0 4,672 4,089 0 4,089 Prepayments received 9,331 300 9,631 3,540 283 3,823 Prepaid rent and other non financial liabilities 4,854 2,127 6,982 3,827 425 4,252 Non-financial liabilities 18,857 2,427 21,284 11,456 708 12,164 Total other liabilities 305,547 50,314 355,861 46,932 113,503 160,434 CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 1 76 At the Extraordinary General Meeting on 30.11.2021 it was decided to distribute the special dividend in two tranches. The first tranche was paid out on 15.12.2021; the second tranche is due on 15.03.2022 and is reported under other lia- bilities as of 31.12.2021. Financial liabilities Financial liabilities, such as trade payables, are assigned to the category “amortised cost” (AC) and measured upon recognition at fair value and subsequently at amortised cost. For other short-term financial liabilities, the fair value generally corresponds to the estimated sum of all future pay- ments. Other long-term financial liabilities are measured at fair value at initial recognition and are discounted with a timely and risk adequate market rate. Non-financial liabilities Non-financial liabilities refer to liabilities to fiscal authorities and social insurance insitutions, rent prepayments received, advance payments, advance dividends received, as well as contract liabilities (according to IFRS 15). They are recognized at the date of inception at the amount corresponding to the expected outflow of resources and the cost of inception (cashed-in amount). Subsequent changes in value (including interest) are recognised in profit or loss. Where revenues transferred over time occur in a construction project (for example for owner occupied apartments) by means of measure of progress, according to IFRS 15, contract assets, respectivly contract liabilities, should be recog- nized. This item is reported as a net amount offset against the corresponding prepayments received under “trade and other receivables” in case of a contract asset or under “other non-financial liabilities” in case of a contract liability. 5.4. Liabilities in disposal groups We refer to the presentation and explanations in Chapter 4.1. „Assets held for sale and relating to disposal groups“. CONSOLIDATED FINANCIAL STATEMENTS 1 77 CHAPTER 6: PROVISIONS 6.1. Provisions € K Staff Construction services Subsequent costs o f sold properties Others Total As at 1.1.2021 17,694 42,619 43,911 47,434 151,658 Usage –10,266 –39,581 –9,507 –34,584 –93,938 Reversal –926 –2,030 –2,847 –3,259 –9,062 Addition 13,980 82,897 3,243 14,828 114,949 Disposal from deconsolidation 0 0 0 –61 –61 Transfer to IFRS 5 0 –57 0 –151 –208 Accumulated interest 34 0 1 0 35 Currency translation adjustments 12 249 0 22 284 As at 31.12.2021 20,529 84,098 34,802 24,229 163,657 thereof short-term 13,054 65,951 10,099 24,228 113,333 thereof long-term 7,474 18,146 24,703 0 50,323 Other provisions mainly consist of provisions for services (audit services, tax and legal advice), property taxes, real estate transfer taxes, service expenses for properties, warranty risks and interest connected to tax audits. Provisions are recognised if CA Immo Group has a legal or constructive obligation towards a third party as a re- sult of a past event and the obligation is likely to lead to an outflow of funds. Especially for provisions for con- struction works and expenses related to sold investment properties it is necessary that estimations (eg. of a construction project, qualitative appraisals of service providers, price related risks or for the concrete fulfillment or scope of an obli- gation) are taken into consideration. Such provisions are recognised in the amount representing the best possible esti- mate at the time the consolidated financial statements are prepared. If the present value of the provision determined on the basis of prevailing market interest rates differs substantially from the nominal value, the present value of the obliga- tion is recognised. Provision for employees The provision for employees primarily comprises bonuses of €15,267 K (31.12.2020: €11,819 K), net of the pensions provisions less plan asset in amount of €2,584 K (31.12.2020: €3,166 K), the present value of the long-term severance obligation of €396 K (31.12.2020: €505 K) and unused holiday entitlements of €1,616 K (31.12.2020: €1,446 K). The provision for bonuses comprises a long-term provision for the LTI (long-term incentive) program amounting to €1,428 K (31.12.2020: €600 K) as well as a short-term provision of €364 K (31.12.2020: €195 K). CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 1 78 The following table presents the changes in the present value of the severance payment obligation: € K 2021 2020 Present value of severance obligations as at 1.1 505 336 Usage –202 0 Current service costs 67 178 Interest cost 2 –1 Revaluation 23 –8 Present value of severance obligations as at 31.12 396 505 The empirical adjustments of the present value of the obligation in respect of changes in projected employee turnover, early retirement or mortality rates are negligible. Net plan assets from pension obligations CA Immo Group has a reinsurance for defined benefit obligations in Germany, which fulfills the criteria for disclosure as plan assets. As the capital value of these defined benefit obligations exceeds the plan assets at the closing date, the net position is presented under the provisions. € K 31.12.2021 31.12.2020 Present value of obligation –9,514 –10,166 Fair value of plan asset 6,930 7,001 Net position recorded in consolidated statement of financial position –2,584 –3,166 Financial adjustments of present value of the obligation 477 –120 Experience adjustments of present value of the obligation –33 –36 The development of the defined benefit obligation and of the plan asset is shown in the following table: € K 2021 2020 Present value of obligation as at 1.1. –10,166 –10,124 Current Payment 258 196 Interest cost –49 –82 Revaluation 444 –156 Present value of obligation 31.12 –9,514 –10,166 Plan asset as at 1.1. 7,001 7,083 Expected income from plan asset 34 57 Revaluation 171 67 Current Payment –275 –207 Plan asset as at 31.12 6,930 7,001 CONSOLIDATED FINANCIAL STATEMENTS 1 79 The following income/expense was recognized in the income statement: € K 2021 2020 Interest cost –49 –82 Expected income from plan asset 34 57 Pensions costs –15 –25 The following result before taxes was recognized in the other comprehensive income: € K 2021 2020 Revaluation of pension obligation 444 –156 Revaluation of plan assets 171 67 IAS 19 reserve 615 –89 Sensitivity analysis regarding the financial mathematical assumptions is shown in the following table: 2021 € K –0.25% +0.25% change interest rate of 0.25 percentage points –394 371 change pension trend of 0.25 percentage points 326 –342 2020 € K – 0.25% + 0.25% change interest rate of 0.25 percentage points –422 417 change pension trend of 0.25 percentage points 362 –380 Payment obligations to employees V ariable remuneration Long term incentive (LTI) program In order to promote a high level of identification with the company’s objectives, all employees are entitled to variable remuneration in addition to their fixed salary, thus enabling them to participate in the company’s success. In line with the compensation system of the Management Board, the prerequisite for this is the attainment of the budgeted quantita- tive and qualitative annual targets as well as a positive consolidated result. Furthermore, selected executives have the opportunity to participate in a share price-based compensation program. In contrast to the model for the Management Board (phantom shares), participation in the LTI programs started before the 2020 financial year was voluntary. The revolving program had a term (retention period) of three years per tranche and required a personal investment (maxi- mum of 35% of the fixed annual salary). The personal investment was valued at the average share price of the first quarter of the year the tranche started. The number of underlying shares is determined on the basis of this valuation. At CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 1 80 the end of the respective three-year performance period, target achievement was defined by means of a target/actual comparison. Performance was measured by the following key figures: NAV growth, TSR (total shareholder return) and FFO (funds from operations) growth. The weighting for NAV and FFO growth was 30% each, and for TSR 40%. Pay- ments were made in cash. The LTI program was subject to a comprehensive revision (adjustment to market standards) in 2019; the new program provides for changes with regard to the group of participants, the conditions of participation, and the performance indi- cators and was applied for the first time in fiscal year 2020. The new LTI program is revolving and does not provide for any personal investment. The plan grants performance-related remuneration in the form of virtual shares in CA Immo. The final number of virtual shares is determined on the basis of performance criteria linked to the medium-term strat- egy and share performance. The target amount of the LTI is divided by the volume-weighted average CA Immo share price (= closing price on the Vienna Stock Exchange) over the 3-month period prior to 31.12. of the respective bonus year. This method is used to calculate the preliminary number of virtual shares. Based on the performance criteria measured at the end of the four-year performance period, the final number of virtual shares is determined. The LTI is generally determined as of 31.12. of the last year of the four-year performance period. Equal-weighted performance cri- teria for the LTI are Funds From Operations ("FFO") I and Relative Total Shareholder Return ("TSR") against the EPRA Nareit Developed Europe ex UK Index. Each tranche starts with a target value based on the executive's respective func- tion, which would be received at the end of the term of the respective tranche if 100% of the targets were achieved. The amount allocated to a performance criterion is determined by comparing agreed targets with values actually achieved and expressed as a percentage. Allocation between the performance thresholds is linear. The final number of virtual shares is capped at 200% of the preliminary number of virtual shares. For the payout, the final number of virtual shares is multiplied by the volume-weighted average price of the last three months of the performance period. The resulting amount is paid out in cash, subject to a cap of 250% of the LTI target amount. The bonus payment for the Management Board is linked to long-term operational and quality-based targets and also takes account of non-financial performance criteria. It is limited to 200% of the annual salary. Of the variable remuner- ation, half is linked to the attainment of short-term targets defined annually by the remuneration committee (annual bonus). The other half is based on outperformance of the following indicators defined annually by the remuneration committee: return on equity (ROE), funds from operations (FFO) and NAV growth. The level of the bonus actually paid depends on the degree of target attainment: the values agreed and actually achieved at the end of each business year are determined by the Remuneration Committee. Half of performance-related remuneration takes the form of immediate payments (short term incentive); the remaining 50% is converted into phantom shares on the basis of the average rate for the last quarter of the business year relevant to target attainment. The payment of phantom shares is made in cash in three equal parts after 12 months, 24 months (mid term incentive) and 36 months (long term incentive) at the average rate for the last quarter of the year preceding the payment year. For this kind of share-based remuneration, which is settled in cash, the liability incurred is recognised over the vest- ing period as a provision in the amount of the attributable fair value. Until the debt is settled, the attributable fair value is determined afresh on every closing date and settlement date. All changes are recognised in the income statement in the relevant business year. Defined benefit plans upon termination of employment Obligations arising from defined benefit pension plans exist for four persons in the CA Immo Germany Group. The commitments relate to one pension benefit for an already retired managing director, as well as three ongoing pen- sion benefits. In accordance with IAS 19.63, reinsurance contracts in respect of defined benefit pension obligations are presented as a net debt (asset). Each year, external actuarial calculations are obtained for the defined benefit pension obligations. The defined benefit obligation or liability is calculated according to IAS 19 using the projected unit credit method and based on the follow- ing parameters: CONSOLIDATED FINANCIAL STATEMENTS 1 81 31.12.2021 31.12.2020 Interest rate 0.72% 0.49% Salary increases expected in the future 2.00% 2.00% Accumulation period 25 years 25 years Expected income from plan asset 0.72% 0.49% The actual return on plan assets for 2021 is 0.49% (2020: 0.81%). Service cost and interest expense related to the obligation as well as the interest income related to the plan assets are recognised in the year in which they arise. Actuarial gains and losses less deferred taxes related to the obligation and the plan assets are recognised in other comprehensive income. CA Immo Group has a legal obligation to make a one-time severance payment to staff employed in Austria before 1.1.2003 in the event of dismissal or retirement. The amount of this payment depends on the number of years of service and the relevant salary at the time the settlement is payable. It varies between two and twelve monthly salary pay- ments. In CA Immo Group, contract stipulated severance exists for several employees. According to IAS 19, a provision is recognised for this defined benefit obligation. The interest rate used for the computation of this provision amounts to -0.04% (2020: - 0.34%). Defined contribution plans CA Immo Group has the legal obligation to pay 1.53% of the monthly salary of all staff joining companies in Aus- tria after 31.12.2002 into a staff pension fund. No further obligations exist. The payments are considered as staff ex- penses and included in indirect expenses. Based on agreements with a pension fund in Austria and a benevolent fund for small and medium-sized enterprises in Germany, a defined contribution pension commitment exists for employees in Austria and Germany after a certain number of years of service (Austria: 1 year irrespective of age; Germany: immediately upon reaching the age of 27). The contribution is calculated as a percentage of the relevant monthly gross salary, namely 2.5% in Austria and 2.0% in Germany. The contributions paid vest after a certain period (Austria: 3 years; Germany: 3 years) and are paid out as monthly pension upon retirement. CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 1 82 CHAPTER 7: TAXES 7.1. Income taxes € K 2021 2020 Current income tax (current year) –31,333 –12,258 Current income tax (previous years) 394 –2,984 Current income tax –30,939 –15,242 Change in deferred taxes –164,436 –79,099 Income tax expense –195,375 –94,341 Effective tax rate (total) 28.9% 27.1% Current income tax (current year) mainly arises in Germany in the amount of €–25,966 K (2020: €–8,582 K). The change of current income tax (previous years) mainly results from Germany and refers to tax audit findings. During the review of the tax calculation the allocation of deferred taxes was adjusted. The adjustments for the finan- cial year 2020 are explained at the end of Chapter 7.1. The reasons for the difference between expected income tax expense and effective income tax expense are outlined in the following table: € K 2021 2020 restated Net result before taxes 675,176 348,295 Expected tax expenses (tax rate Austria 25.0%/prior year 25.0%) –168,794 –87,074 Tax-effective impairment and reversal of impairment losses of investments in affiliated entities 19 293 Non-usable tax losses carried forward –139 –3,792 Permanent differences in connection with convertible bond –12,092 7,276 Non tax-deductible expense and permanent differences –4,249 –3,022 Differing tax rates abroad –16,114 –17,610 Capitalisation of prior years non-capitalised tax losses 57 2,810 Tax-exempt income 543 874 Adjustment of prior periods 1,398 –7,784 Utilization of prior years non-capitalised tax losses 1,819 316 Tax-exempt sales 943 6,478 Trade tax effects 378 309 Amortisation/Reversal of amortisation of deferred tax assets –955 435 At equity consolidation of investments in joint ventures –9 550 Exchange rate differences not affecting tax 1,456 –6,059 Change in tax rate 48 11,586 Others 316 73 Effective tax expense –195,375 –94,341 CONSOLIDATED FINANCIAL STATEMENTS 1 83 The amortization of deferred tax assets mainly results from the loss of interest carried forward due to a tax reform in Poland. The impact of change in tax rate in 2020 results from transfer of registered office of real estate companies in Germany. CA Immo Group assumes that the tax reform enacted in 2022 in Austria will lead to a reduction of deferred tax liabiliites in the amount of approximately €0.6 M. Changes in deferred taxes are as follows: € K 2021 2020 Deferred taxes as at 1.1. (net) –531,935 –471,200 Change from IFRS 5 transfer 1,430 0 Changes from sale of companies 1,632 15,971 Changes from first consolidation 0 2,173 Changes due to exchange rate fluctuations 3 –5 Changes recognised in equity –2,324 226 Changes recognised in profit or loss –164,436 –79,099 Deferred taxes as at 31.12. (net) –695,629 –531,935 CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 1 84 As at 31.12. deferred tax assets and liabilities are split as follows: € K 31.12.2020 restated 31.12.2021 Type Deferred tax asset Deferred tax liabilities Net amount Consolidated Income Statement Other income Addition/ Disposal/ IFRS 5/ exchange rate fluctuations Net amount Deferred tax asset Deferred tax liabilities Book value differences IFRS/tax of investment properties 1,248 –604,938 –603,690 –154,830 0 14,378 –744,142 2,149 –746,290 Difference in depreciation of own used properties and related right-of-use assets 603 –1,972 –1,368 438 0 0 –930 627 –1,557 Difference in acquisition costs for assets held for trading 462 –433 29 24 0 0 52 485 –433 Difference in useful life for equipment and related right-of- use assets 245 –200 45 –35 0 0 10 183 –174 Investments in joint ventures 1,042 –1 1,041 –97 0 0 944 944 0 Loans, other investments 0 –4,757 –4,757 1,872 0 0 –2,885 0 –2,885 Assets held for sale 0 0 0 0 0 –11,569 –11,569 0 –11,569 Revaluation of receivables and other assets 871 –18 853 –234 0 –2 616 670 –54 Revaluation of derivatives assets 0 –508 –508 –1,980 0 0 –2,488 0 –2,488 Revaluation of cash and cash equivalents 0 –128 –128 49 0 5 –73 0 –73 Revaluation of derivatives liabilities 8,569 0 8,569 –2,608 –2,127 0 3,833 3,833 0 Liabilities (incl. lease liabilities) 14,515 –1,827 12,688 216 0 –1,121 11,783 12,817 –1,034 Bonds 0 –33 –33 14 0 0 –19 0 –19 Provisions 5,163 –6 5,157 –424 –196 –1 4,535 4,574 –39 Tax losses 50,167 0 50,167 –6,839 0 –55 43,272 43,272 0 Deferred tax assets/liabilities before offset and reclassification IFRS 5 82,885 –614,819 –531,935 –164,436 –2,324 1,635 –697,060 69,554 –766,614 Computation of taxes –78,503 78,503 0 0 –66,873 66,873 Deferred tax assets/liabilities before reclassification IFRS 5 4,382 –536,317 –531,935 –164,436 –2,324 1,635 –697,060 2,681 –699,741 Reclassification IFRS 5 0 0 0 0 0 1,430 1,430 0 1,430 Deferred tax assets/liabilities net 4,382 –536,317 –531,935 –164,436 –2,324 3,065 –695,629 2,681 –698,310 The recorded tax losses include deferred tax assets related to impairment losses on investments in subsidiaries in Austria amounting to €0 K (31.12.2020: €0 K), which have to be deferred over the next years for income tax purposes. CONSOLIDATED FINANCIAL STATEMENTS 1 85 Not recognized deferred taxes Not recognized deferred taxes mainly relate to tax loss carryforwards in CA Immo Group, interest losses in CEE and business tax losses in CA Immo Group Germany. Tax loss carryforwards and impairment losses on investments in sub- sidiaries for which deferred taxes were not recognised expire as follows: € K 2021 2020 restated In the following year 5,424 1,305 Between 1 - 5 years 11,060 14,705 More than 5 years 5,261 1,202 Without limitation in time 128,027 141,998 Total unrecorded tax losses carried forward 149,772 159,209 thereupon non-capitalised deferred tax assets 33,222 34,031 The total taxable temporary differences related to investments in Austrian affiliated companies and joint ventures for which no deferred taxes were recognised pursuant to IAS 12.39 amount to €279,063 K (31.12.2020: €261,033 K). Tax loss carryforwards and impairment losses on investments in subsidiaries of the Austrian companies that were not recognised amount to €103,422 K (31.12.2020 restated: €100,282 K). Thereof the unrecognized deferred tax asset related to impair- ment losses on investments which have to be deferred over the next years for income tax purposes amounts to €915 K (31.12.2020: €1,343 K). The total taxable temporary differences related to investments in foreign affiliated companies and joint ventures for which no deferred taxes were recognised pursuant to IAS 12.39 amount to €146,985 K (31.12.2020: €110,466 K). Tax loss carry forwards not recognised of foreign entities amount to €46,349 K (31.12.2020: €58,927 K). All companies are subject to local income tax on current results and capital gains in their respective country. Sig- nificant estimates are required in respect of the amount of income tax provisions to be recognised. Moreover, it needs to be determined to which extent deferred tax assets should be recognised in the Group consolidated financial statements. Income from the disposal of investments in real estate companies can be taxable or wholly or partially exempt from income tax. The scope of the exemption depends on compliance with certain requirements and on the rules of the applicable double taxation agreement. Even if the group intends to meet these conditions, the full amount of deferred taxes, under consideration of the initial recognition exemption, according to IAS 12 is recognized for investment properties. The income tax expense reported for the business year contains the income tax on the taxable income (current and for other periods) of the individual subsidiaries calculated at the tax rate applicable in the relevant country (“current tax”), and the change in deferred taxes recognised in profit or loss (“deferred tax”), as well as the tax effect arising from amounts recognised in equity not giving rise to temporary differences and recognised in equity (e.g. the tax related to ancillary expenses for capital increases). Changes in deferred taxes resulting from foreign currency transla- tion are included in deferred income tax expense. In line with IAS 12, the calculation of deferred taxes is based on all temporary differences between the tax base of assets or liabilities and their book values in the consolidated statement of financial position. Deferred tax assets on tax losses carried forward are recognised taking into account the fact whether they can be carried forward indefinitely or only up to a certain time as well as the extent of their expected use in the future. The amount of the deferred tax asset recognised is determined based on projections for the next 3 to 5 years which show the expected use of the tax losses carried forward in the near future and on the existence of sufficient taxable temporary differences, mainly resulting from investment property. CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 1 86 A group and tax compensation agreement was concluded in Austria for the formation of a tax group as defined by Section 9 of the Austrian Personal Income Tax and Corporate Income Tax Act (KStG) for almost all companies of CA Immo Group. The head of the group is CA Immobilien Anlagen Aktiengesellschaft, Vienna. For certain entities within the CA Immo Germany Group a tax group has been established in accordance with German income tax legislation. The head of the tax group is CA Immo Deutschland GmbH, Frankfurt. Based on profit and loss transfer agreements the members of the tax group are required to transfer their entire profit to the head of the group (be- ing the annual surplus before the profit transfer, less any loss carried forward from the previous year and after recogni- tion or release of reserves). The head of the group has an obligation to balance any annual deficit arising in a group en- tity during the term of the agreement to the extent that such deficits exceed the amounts which can be released from other reserves that have been allocated out of profits earned during the term of the agreement. Change in presentation During the review of the tax calculation the allocation of deferred taxes in connection with the convertible bond was evaluated and the allocation was changed from adjustment from prior periods and capitalisation of prior years non-capitalised tax losses to permanent differences in connection with convertible bond. The change in presentation enables the improved presentation of recognized deferred taxes in connection with the convertible bond. The change in presentation relates to the tax reconciliation, the deferred taxes and the unrecorded tax losses carried forward. There have been no changes in the balance sheet and profit and loss statement of CA Immo Group. The follo- wing positions have been restated: CONSOLIDATED FINANCIAL STATEMENTS 1 87 € K 2020 Adjustment 2020 as reported restated Net result before taxes 348,295 0 348,295 0 Expected tax expenses (tax rate Austria 25.0%/prior year 25.0%) –87,074 0 –87,074 Tax-effective impairment and reversal of impairment losses of investments in affiliated entities 293 0 293 Non-usable tax losses carried forward –3,792 0 –3,792 Permanent differences in connection with convertible bond 0 7,276 7,276 Non tax-deductible expense and permanent differences –3,022 0 –3,022 Differing tax rates abroad –17,610 0 –17,610 Capitalisation of prior years non-capitalised tax losses 3,901 –1,091 2,810 Tax-exempt income 874 0 874 Adjustment of prior periods –1,599 –6,185 –7,784 Utilization of prior years non-capitalised tax losses 316 0 316 Tax-exempt sales 6,478 0 6,478 Trade tax effects 309 0 309 Amortisation/Reversal of amortisation of deferred tax assets 435 0 435 At equity consolidation of investments in joint ventures 550 0 550 Exchange rate differences not affecting tax –6,059 0 –6,059 Change in tax rate 11,586 0 11,586 Others 73 0 73 Effective tax expense –94,341 0 –94,341 CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 1 88 € K 31.12.2020 Adjustment 31.12.2020 as reported restated Type Net amount Net amount Net amount Book value differences IFRS/tax of investment properties –603,690 0 –603,690 Difference in depreciation of own used properties and related right-of-use assets –1,368 0 –1,368 Difference in acquisition costs for assets held for trading 29 0 29 Difference in useful life for equipment and related right-of- use assets 45 0 45 Investments in joint ventures 1,041 0 1,041 Loans, other investments –4,757 0 –4,757 Revaluation of receivables and other assets 853 0 853 Revaluation of derivatives assets –508 0 –508 Revaluation of cash and cash equivalents –128 0 –128 Revaluation of derivatives liabilities 18,831 –10,262 8,569 Liabilities (incl. lease liabilities) 12,688 0 12,688 Bonds –1,257 1,224 –33 Provisions 5,157 0 5,157 Tax losses 41,129 9,038 50,167 Deferred tax assets/liabilities before offset –531,935 0 –531,935 Computation of taxes 0 0 0 Deferred tax assets/liabilities net –531,935 0 –531,935 € K 2020 Adjustment 2020 as reported restated In the following year 1,305 0 1,305 Between 1 - 5 years 14,705 0 14,705 More than 5 years 1,202 0 1,202 Without limitation in time 178,149 –36,151 141,998 Total unrecorded tax losses carried forward 195,361 –36,151 159,209 thereupon non-capitalised deferred tax assets 43,069 –9,038 34,031 7.2. Current in come tax receivables This item amounting to €11,795 K (31.12.2020: €13,497 K) relates to the CA Immo Germany Group and comprises cor- porate income tax and trade tax from the fiscal years 2013 and 2020 not yet assessed by the tax authorities as well as results of finalized tax audits. 7.3. Income tax liabilities This includes an amount of €16,809 K (31.12.2020: €13,177 K) relating to CA Immo Germany Group and comprises corporate income tax and trade tax for the years 2016 and 2021 which have not been finally assessed by tax authorities as well as results of finalized tax audits. CONSOLIDATED FINANCIAL STATEMENTS 1 89 7.4. Tax risks For the purpose of recognising tax provisions, estimates have to be made. Uncertainties exist concerning the interpre- tation of complex tax regulations as well as calculation methods to determine the amount and timing of taxable income. Due to these uncertainties and the complexity estimates may vary from the real tax expense also in a material amount. This may include amended interpretations of tax authorities for previous periods. CA Immo Group recognises appropri- ate provisions for known and probable charges arising from ongoing tax audits. Uncertainty in the tax treatment of transactions require an assessment of whether the relevant tax authority is likely to accept the interpretation of the tax treatment of the transaction or not. Based on this assessment, the CA Immo Group recognizes tax liabilities at the amount considered most probable in the event of uncertainty. These uncertainties and compexities may result in future tax payments being significantly higher or lower than the obligations currently assessed as probable and recognized in the balance sheet. There are uncertainties regarding the possible retrospective application of subsequent tax changes with regard to com- pleted restructuring measures in Eastern Europe that have been agreed with the tax authorities. CA Immo Group esti- mates the probability of the actual burden due to the subsequent change in the tax consequences of restructuring measures carried out in the past as low. Material assumptions also need to be assessed if temporary differences and losses carried forward can be offset against taxable profits in the future and if therefore deferred tax assets can be capitalised. Uncertainties exist concerning the amount and effective date of future taxable income. CA Immo Group holds a significant part of its real estate portfolio in Germany, being subject to numerous complex tax regulations. In particular, CA Immo Group has to constantly deal with (i) roll-over schemes in order to transfer undisclosed, hidden reserves to other investments, (ii) legal provisions relevant to the real estate transfer tax/possible incurrence of real estate transfer tax in the event of direct or indirect shareholder changes in German partnerships and corporations, (iii) the tax recognition of outsourcing of operating facilities, as well as (iv) the deduction of input VAT on construction costs, as an ongoing issue in the development phase of projects. CA Immo Group takes all necessary steps in order to comply with the relevant tax rules. However, because of circumstances that are out of CA Immo Groups control, such as changes in ownership structure, tax laws as well as alterations of interpretation by the tax administration and courts, the aforementioned tax issues might be treated differently and, therefore, could have an impact on the tax position in the consolidated financial statements. Uncertainties exist in connection with the tax deductibility of service invoicings within the Group. CA Immo Group always aims to charge a price at arm’s length for internal services and to prepare adequate documentation. In addition, external service providers are appointed for the preparation of transfer pricing documenatation to comply with all le- gal requirements, but the tax authorities can have a different view and subsequently reach different conclusions. This can lead to tax consequences for the deductibility of internal service invoicings, which could trigger subsequent tax payments for previous periods. Currently existing uncertainties are continually evaluated and may lead to adjustments of estimates. CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 1 90 CHAPTER 8: FINANCIAL INSTRUMENTS AND RISK MANAGEMENT 8.1. Financial instruments Financial assets by categories Category Classification IFRS 9 1) No financial instruments Book value Fair value € K FVTPL FVOCI AC 31.12.2021 31.12.2021 Cash and cash equivalents with drawing restrictions 0 0 34,274 0 34,274 34,306 Derivative financial instruments 2,095 4,025 0 0 6,119 6,119 Primary instruments 0 0 15,597 188 15,785 Other investments 32,393 0 0 0 32,393 32,393 Financial assets 34,488 4,025 49,871 188 88,571 Cash and cash equivalents with drawing restrictions 0 0 5,918 0 5,918 5,924 Other receivables and assets 0 0 36,165 13,643 49,808 Receivables and other assets 0 0 42,084 13,643 55,727 Cash and cash equivalents 0 0 633,117 0 633,117 34,488 4,025 725,072 13,830 777,415 1) FVTPL – fair value through profit or loss, FVOCI – fair value through other comprehensive income, AC – amortised cost Category Classification IFRS 9 1) No financial instruments Book value Fair value € K FVTPL AC 31.12.2020 31.12.2020 Cash and cash equivalents with drawing restrictions 0 11,708 0 11,708 11,762 Derivative financial instruments 1,682 0 0 1,682 1,682 Primary financial instruments 0 12,477 0 12,477 Other investments 34,861 0 0 34,861 34,861 Financial assets 36,544 24,184 0 60,728 Cash and cash equivalents with drawing restrictions 0 10,306 0 10,306 10,351 Other receivables and assets 0 111,024 15,045 126,069 Receivables and other assets 0 121,330 15,045 136,375 Cash and cash equivalents 0 934,863 0 934,863 36,544 1,080,378 15,045 1,131,967 The fair value of the receivables and other assets in the category of “Amortised Cost” (AC) essentially equals the book value due to daily and/or short-term maturities. The primary financial instruments mainly consist of loans granted to joint ventures, which are considered and valued as part of the net investment in the entities (this corresponds to level 3 of the fair value hierarchy), as well as long term receivables from trading and construction works. Valuation of invest- ments of FVTPL category corresponds to level 3 of the fair value hierarchy. Financial assets are partially pledged as securities for financial liabilities. CONSOLIDATED FINANCIAL STATEMENTS 1 91 Financial liabilities by categories Category Classification IFRS 9 1) No financial instruments Book value Fair value € K FVTPL AC 31.12.2021 31.12.2021 Bonds 0 1,436,985 0 1,436,985 1,451,697 Loans 0 1,107,173 0 1,107,173 1,108,842 Lease liabilities (IFRS 16) 0 39,786 0 39,786 Interest-bearing liabilities 0 2,583,943 0 2,583,943 Derivative financial instruments 20,960 0 0 20,960 20,960 Other primary liabilities 0 313,617 21,284 334,902 Other liabilities 20,960 313,617 21,284 355,861 20,960 2,897,561 21,284 2,939,805 1) FVTPL – fair value through profit or loss, FVOCI – fair value through other comprehensive income, AC – amortised cost Category Classification IFRS 9 1) No financial instruments Book value Fair value € K FVTPL FVOCI AC 31.12.2020 31.12.2020 Convertible bond 0 0 194,207 0 194,207 191,695 Bonds 0 0 1,542,011 0 1,542,011 1,590,203 Loans 0 0 1,045,969 0 1,045,969 1,054,971 Lease liabilities (IFRS 16) 0 0 45,275 0 45,275 0 Interest-bearing liabilities 0 0 2,827,462 0 2,827,462 Derivative financial instruments 82,596 2,614 0 0 85,210 85,210 Other primary liabilities 0 0 63,060 12,164 75,224 Other liabilities 82,596 2,614 63,060 12,164 160,434 82,596 2,614 2,890,522 12,164 2,987,896 The fair value recognized of the other primary liabilities basically equals the book value, based on the daily and short term due date. CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 1 92 8.2. Derivative financial instruments and hedging transactions 31.12.2021 31.12.2020 € K Nominal value Fair value Book value Nominal value Fair value Book value Interest rate swaps - assets 335,555 5,052 5,052 0 0 0 Interest rate swaps - liabilities 464,505 –20,960 –20,960 815,759 –44,161 –44,161 Total interest rate swaps 800,060 –15,908 –15,908 815,759 –44,161 –44,161 Interest rate floors 42,075 1,067 1,067 42,975 1,682 1,682 Derivative convertible bond 0 0 0 0 –41,049 –41,049 Total derivatives 842,135 –14,840 –14,840 858,734 –83,528 –83,528 - thereof hedging (cash flow hedges) 225,000 4,025 4,025 225,000 –2,614 –2,614 thereof stand alone (fair value derivatives) - assets 152,630 2,095 2,095 42,975 1,682 1,682 thereof stand alone (fair value derivatives) - liabilities 464,505 –20,960 –20,960 590,759 –82,596 –82,596 As at 31.12.2020 the derivative of the convertible bond resulted from the cash settlement option of the convertible bond of CA Immo AG and it was reported at fair value until the conversion date. As at the balance sheet date 50.8% (31.12.2020: 55.1%) of the nominal value of all loans have been turned into fixed interest rates (or into ranges of interest rates with a cap) by means of interest rate swaps. 31.12.2021 31.12.2020 € K Nominal value Fair value Book value Nominal value Fair value Book value Cash flow hedges 225,000 4,025 4,025 225,000 –2,614 –2,614 Fair value derivatives (stand alone) - liabilities 110,555 1,027 1,027 0 0 0 Fair value derivatives (stand alone) - assets 464,505 –20,960 –20,960 590,759 –41,547 –41,547 Interest rate swaps 800,060 –15,908 –15,908 815,759 –44,161 –44,161 Interest rate floors 42,075 1,067 1,067 42,975 1,682 1,682 Total interest rate derivatives 842,135 –14,840 –14,840 858,734 –42,479 –42,479 CONSOLIDATED FINANCIAL STATEMENTS 1 93 Interest rate derivatives Nominal value Start End Fixed interest rate as at Reference interest rate Fair value in € K in € K 31.12.2021 31.12.2021 EUR - CFH 225,000 3/2022 1/2029 –0.16% 3M-Euribor 4,025 EUR - stand alone - assets 110,555 5/2020- 1/2021 12/2029- 3/2030 0.04%- 0.10% 3M-Euribor 1,027 EUR - stand alone - liabilities 464,505 5/2017- 12/2019 6/2024- 12/2032 0.33%- 1.19% 3M-Euribor –20,960 Total interest swaps = variable in fixed 800,060 –15,908 Interest rate floors 42,075 5/2018 5/2028 0.00% 3M-Euribor 1,067 Total interest rate derivatives 842,135 –14,840 Interest rate derivatives Nominal value Start End Fixed interest rate as at Reference interest rate Fair value in € K in € K 31.12.2020 31.12.2020 EUR - CFH 225,000 3/2022 1/2029 –0.16% 3M-Euribor –2,614 EUR - stand alone - liabilities 590,759 12/2016- 5/2020 12/2021- 12/2032 –0.14%- 1.19% 3M-Euribor –41,547 Total interest swaps = variable in fixed 815,759 –44,161 Interest rate floors 42,975 5/2018 5/2028 0.00% 3M-Euribor 1,682 Total interest rate derivatives 858,734 –42,479 In July 2020 the CA Immo Group concluded forward interest rate swaps with a nominal value of €225,000 K over the term March 2022 - January 2029. Gains and losses in other comprehensive income € K 2021 2020 As at 1.1. –422 0 Change in valuation of cash flow hedges 6,641 –620 Change of ineffectiveness cash flow hedges 23 0 Income tax cash flow hedges –2,127 198 As at 31.12. 4,115 –422 thereof: attributable to the owners of the parent 4,115 –422 CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 1 94 The fair value hierarchy Measurement hierarchy according to IFRS 13 31.12.2021 € K Level 1 Level 2 Level 3 Total Derivative financial instruments FVtPL 0 –20,960 0 –20,960 Financial instruments by category (liabilities) 0 –20,960 0 –20,960 Measurement hierarchy according to IFRS 13 31.12.2020 € K Level 1 Level 2 Level 3 Total Derivative financial instruments FVtPL 0 –82,596 0 –82,596 Financial liabilities CFH 0 –2,614 0 –2,614 Financial instruments by category (liabilities) 0 –85,210 0 –85,210 There were no reclassifications between the levels in 2021 and 2020. Valuation of interest rate derivatives The interest rate derivatives are recognised at fair value. The fair values are calculated by discounting the future cash flows from variable payments on the basis of generally recognized financial-mathematical models. The interest rates for discounting the future cash flows are estimated by reference to an observable market yield curve. The calcula- tion is based on inter-bank middle rates. The fair value of the derivatives corresponds therefore to level 2 of the meas- urement hierarchy according to IFRS 13. A correction of the measurement of the interest rate derivatives due to CVA (Credit Value Adjustment) and DVA (Debt Value Adjustment) is only conducted when the adjustment reaches a significant extent. CA Immo Group also enters into bank financing for investments properties whereby a minimal interest limit is con- tractually agreed. In this case it needs to be investigated whether an embedded derivative subject to separation is pre- sent. An embedded minimal limit on interest rates of a debt instrument is closely linked to the host contract if, at the date of entering the contract, the minimal interest limit is equal or below the prevailing market rate. CA Immo Group examines the existence of an embedded derivative for the necessity of separation from the host contract by comparing the agreed interest plus the valuation of the minimal interest rate limit with the market interest rate (reference interest plus margin). If the market interest rate (reference interest plus margin) exceeds the contractually agreed interest in each future period, there is no obligation to separate the embedded derivative. To date, CA Immo Group has not identi- fied in any loan agreement an embedded derivatives subject to separation. Valuation of the derivative convertible bond Due to the cash settlement option of CA Immo AG, the convertible bond had an embedded derivative subject to separation. The fair value of the separate embedded derivative was determined based on a generally accepted financial mathematics model (Black-Scholes) and parameters observable on the market. Thus the fair value of the derivative of the convertible bond corresponded to level 2 of the measurement hierarchy according to IFRS 13. Derivative financial instruments CA Immo Group uses derivative financial instruments, such as interest rate swaps, floors and forward exchange transactions, in order to hedge against interest and currency risks. These derivative financial instruments are recog- nised at fair value at the time the contract is concluded and remeasured at fair value in the following periods. Deriva- tive financial instruments are recognised as financial assets if their value is positive and as financial liabilities if their fair value is negative. CONSOLIDATED FINANCIAL STATEMENTS 1 95 Derivative financial instruments are presented as non-current financial assets or liabilities if their remaining term ex- ceeds twelve months and realisation within twelve months is not expected. All other derivative financial instruments, whose remaining term is below twelve months, are presented as current assets or liabilities. The method applied by CA Immo Group when recognizing gains and losses from the subsequent measurement of de- rivative financial instruments depends on whether the criteria for cash flow hedge accounting (hedging of future cash flows) are met or not. The interest rate swaps were designated as hedging instruments in a cash flow hedge relationship in accordance with IFRS 9. The hedged risk results from the difference between the expected future variable interest payments based on the 3M-Euribor and the future fixed interest rates for construction financing. In the case of derivative financial instruments for which the criteria for cash flow hedge accounting are met and the cash flows are hedged, the part of the profit or loss from the hedging instrument that is determined as an effective hedge is recognized in other comprehensive income. Any remaining profit or loss from the hedging instrument repre- sents an ineffectiveness of the hedge and is recognized in profit or loss. The ineffectiveness of this hedging transaction is measured using the dollar offset method. Expenses and income which are not recognized in the other comprehensive income, are recognized in the profit or loss as ineffectiveness un- der the item “result from derivatives”. The hedging relationship between the hedging instrument and the underlying transaction as well as its effectiveness is evaluated and documented when the hedging transaction is concluded and then on an ongoing basis. According to IFRS 9, a financial instrument is to be measured at fair value at initial recognition. However, if the fair value deviates from the transaction price when initially recognized and it is also not observable in an active market, the difference is to be accrued in line with IFRS 9 and may only be recognized as gain or loss to the extent that it results from a change in a factor (including the time factor) that the market participants would consider when pricing the asset or liability. For this reason, CA Immo has created a deferred item for the difference between the transaction price of the interest rate swaps and their fair value at the initial recognition, which will be released to profit or loss over the term using the effective interest method. Pursuant to IFRS 9, derivatives not qualifying for hedge accounting are assigned to the category “fair value through profit or loss” (FVtPL). Changes in the fair value are therefore recognized entirely in profit or loss in the item “result from derivatives”. The fair values of interest rate swaps and floors are calculated by discounting the future cash flows from variable pay- ments on the basis of generally accepted financial models. The interest rates for the discount of the future cash flows are estimated on basis of an interest rate curve, which is observable on the market. Inter-bank middle rates are used for the calculation. A convertible bond requires in principle a split out of the financial instrument between an equity component and a debt component. The convertible bond consisted due to the cash settlement option of CA Immo AG of an embedded derivative subject to separation. Embedded derivatives are basically to be accounted separately from the host contract if their economic characteristics and risks are not closely related to these of the host contract, if they independently fulfill the definition of a derivative and the entire instrument is not valued at fair value through profit or loss. The embedded derivative is classified as "fair value through profit or loss” (FVtPL) and is measured at fair value through profit or loss at each balance sheet date. The changes in fair value are fully presented in profit or loss as “result from derivatives”. CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 1 96 8.3. Risks from financial instruments Interest rate risk Risks arising from changes in interest rates basically result from long-term loans and interest rate derivatives and re- late to the amount of future interest payments (for variable interest instruments) and to the fair value of the financial instrument (for fixed rate instruments). A mix of long-term fixed-rate and floating-rate loans is used to reduce the inter- est rate risk. In case of floating-rate loans, derivative financial instruments (interest rate floors and interest rate swaps) are also used to hedge the cash flow risk of interest rate changes arising from hedged items. In addition to the general interest rate risk (interest level) there are also risks arising from a possible change in the credit rating, which would lead to an increase or a decrease of the interest margin in the course of a follow-up financing. The following sensitivity analysis outlines the impact of variable interest rates on interest expense. It shows the effect on the result of the financial year 2021 of a change in interest rate by 50 and 100 basis points on the interest expenses. The analysis assumes that all other variables, particularly foreign exchange rates, remain constant. Due to the very low interest rate levels the analysis only shows the effect of increasing interest rates. € K recognised in Profit/Loss Statement recognised in other comprehensive income at 50 bps at 100 bps at 50 bps at 100 bps Increase Increase Increase Increase 31.12.2021 Interest-bearing liabilities with variable interest rate, without hedging –1,265 –2,529 0 0 Interest-bearing liabilities with variable interest rate, hedged (Swap) 17,169 33,691 0 0 Other derivative financial instruments with/without CFH relationship –540 –810 7,256 14,176 15,364 30,351 7,256 14,176 31.12.2020 restated Interest-bearing liabilities with variable interest rate, without hedging –864 –1,727 0 0 Interest-bearing liabilities with variable interest rate, hedged (Swap) 19,570 38,385 0 0 Other derivative financial instruments with/without CFH relationship –948 –1,399 7,525 14,690 17,758 35,258 7,525 14,690 Risks of the embedded derivative of the convertible bond Due to the exercise of the conversion right of the convertible bond in 2021, there is no longer any risk from the embedded derivative as of 31.12.2021. Currency risk Currency risks result from rental revenues and receivables denominated in CZK, HUF, PLN, RON, CHF and RSD. This foreign currency rental income is secured by linking the rental payments to EUR, so that no major risk remains. Credit risk The book values disclosed for all financial assets, guarantees and other commitments assumed, represent the maxi- mum default risk as no major set-off agreements exist. CONSOLIDATED FINANCIAL STATEMENTS 1 97 Tenants provided deposits amounting to €16,980 K (31.12.2020: €16,675 K) as well as bank guarantees of €58,062 K (31.12.2020: €62,563 K) and group guarantees in the amount of €44,216 K (31.12.2020: €44,017 K). The credit risk for liquid funds with banks is monitored according to internal guidelines. Liquidity risk Liquidity risk is the risk that CA Immo Group will not be able to meet its financial obligations as they fall due. CA Immo Group’s approach to managing liquidity is to ensure that it will always have sufficient liquidity to meet lia- bilities when due, whilst avoiding unnecessary potential losses and risks. Loans are usually agreed on a long-term basis in accordance with the long-term nature of real estate. The CA Immo Group manages liquidity risk in several different ways: firstly, by means of distinct liquidity planning and securing to avoid possible liquidity shortages. Secondly, CA Immo Group secured an at the reporting date unused revolving credit facility of €300 M in the fourth quarter of 2021. External capital is raised by CA Immo Group from a wide variety of domestic and foreign banks. The contractually agreed (undiscounted) interest payments and repayments for primary financial liabilities and derivative financial in- struments are presented in the table below. 31.12.2021 € K Book value 2021 Contractually agreed cash flows Cash flow 2022 Cash flow 2023- 2026 Cash flow 2027 ff Bonds 1,436,985 –1,508,518 –163,503 –840,641 –504,375 Loans 1,107,173 –1,174,653 –247,256 –417,077 –510,319 Lease liabilities 39,786 –90,685 –3,321 –9,895 –77,469 Trade payables 25,309 –25,309 –19,815 –5,494 –1 Non-controlling interests held by limited partners 5,691 –5,691 0 0 –5,691 Liabilities to joint ventures 123 –123 –123 0 0 Other liabilities 282,494 –282,494 –266,752 –13,738 –2,004 Primary financial liabilities 2,897,561 –3,087,473 –700,770 –1,286,844 –1,099,859 Interest rate derivatives not connected with hedges 20,960 –20,982 –6,439 –12,227 –2,315 Derivative financial liabilities 20,960 –20,982 –6,439 –12,227 –2,315 2,918,520 –3,108,454 –707,209 –1,299,071 –1,102,174 The convertible bond required a separation of the financial instrument into a debt component and a separate embe- dded derivative. The derivative of the convertible bond had no cash flows. CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 1 98 31.12.2020 € K Book value 2020 Contractually agreed cash flows Cash flow 2021 Cash flow 2022- 2025 Cash flow 2026 ff Convertible bond 194,207 –206,479 –1,521 –204,958 0 Bonds 1,542,011 –1,639,075 –130,557 –846,956 –661,563 Loans 1,045,969 –1,108,649 –91,165 –447,680 –569,804 Lease liabilities 45,275 –104,175 –3,652 –11,719 –88,803 Trade payables 24,224 –24,224 –17,722 –6,498 –4 Non-controlling interests held by limited partners 4,597 –4,597 0 0 –4,597 Liabilities to joint ventures 1,445 –1,445 –1,445 0 0 Other liabilities 32,794 –32,794 –16,073 –14,824 –1,897 Primary financial liabilities 2,890,522 –3,121,439 –262,136 –1,532,635 –1,326,667 Interest rate derivatives in connection with cash flow hedges 2,614 –2,575 0 –2,455 –120 Interest rate derivatives not connected with hedges 41,547 –40,945 –7,230 –24,943 –8,772 Derivative convertible bond 41,049 0 0 0 0 Derivative financial liabilities 85,210 –43,520 –7,230 –27,398 –8,892 2,975,732 –3,164,959 –269,366 –1,560,034 –1,335,559 For variable interest bearing liablities and derivatives the cashflows are determined based on assumed values for the underlying forward rates as at the respective balance sheet date. Capital management The objective of CA Immo Group's capital management is to ensure that the Group achieves its goals and strategies, while optimising the costs of capital in a sustainable way and in the interests of shareholders and other stakeholders. In particular, it focuses on achieving a return on equity that exceeds the cost of capital. Furthermore, the external invest- ment grade rating should be supported by adequate capitalisation and by raising equity for the growth targets in the upcoming fiscal years. The key parameters in determining the capital structure of the CA Immo Group are: 1. the general ratio of equity to debt and 2. within outside capital, the optimal ratio between the debt secured with real estate, which is recorded at the level of individ ual property companies, and the unsecured debt at the level of the parent company. Regarding the first parameter, the CA Immo Group aims to maintain an equity ratio of 45% - 50%. As at 31.12.2021 the ratio was 46.3% (31.12.2020: 45.9%). The proportion between the secured and the unsecured debt should generally be balanced. As at 31.12.2021 the higher share of 56% (31.12.2020: 61%) is attributable to unsecured corporate bonds. The remaining share of 44% (31.12.2020: 39%) is attributable to secured property loans, which are usually taken directly by the company in which the property is held. CONSOLIDATED FINANCIAL STATEMENTS 1 99 Net debt and the gearing ratio are other key figures relevant to the presentation of the capital structure of CA Immo Group: € K 31.12.2021 31.12.2020 Interest-bearing liabilities Long-term interest-bearing liabilities 2,186,534 2,622,161 Short-term interest-bearing liabilities 397,409 205,301 Interest-bearing assets Cash and cash equivalents –633,117 –934,863 Cash at banks with drawing restrictions –4,628 –2,073 Net debt 1,946,198 1,890,526 Shareholders' equity 3,291,038 3,128,308 Gearing ratio (Net debt/equity) 59.1% 60.4% In calculating the gearing, for simplicity the book value of the cash and cash equivalents has been taken into account. The cash at banks with drawing restrictions is included in the calculation of net debt, if it is used to secure the repay- ments of interest bearing liabilities. CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 2 00 CONSOLIDATED FINANCIAL STATEMENTS 2 01 CHAPTER 9: OTHER DISCLOSURES 9.1. Information for cash flow statement Liabilities € K Note Other interest- b earin g liabilities Leasing liabilities Convertible b ond Bonds As at 1.1.2021 1,045,969 45,275 194,207 1,542,011 Changes in cash flow from financing activities Cash inflow from loans received 5.2. 123,844 0 0 0 Costs paid/ Cash inflow from the issuance of bonds 5.2. 0 0 0 –20 Repayment of convertible bonds 5.2. 0 0 –100 0 Repayment of bonds / Cash outflow from the repurchase of bonds 5.2. 0 0 –107,450 Dividend payments to shareholders 5.1. 0 0 0 0 Payments to shareholders of non-controlling interests 5.1. 0 0 0 0 Repayment of loans incl. interest rate derivatives 5.2. –64,346 –2,938 0 0 Other interest paid 5.2. –10,578 –1,335 –751 –18,922 Total change in cash flow from financing activities 48,921 –4,272 –851 –126,392 Total change from the sale of subsidiaries or other business operations 1.f. 0 –3,799 0 0 Effects of changes in exchange rates 5.2. 0 57 0 0 Change in fair value 8.1. 0 0 0 0 Conversion of bonds 5.1. –194,913 Total Other changes related to liabilities 12,283 2,525 1,557 21,366 Total Other changes related to equity 0 0 0 0 As at 31.12.2021 1,107,173 39,786 0 1,436,985 Other changes related to liabilities mainly result from interest expenses, in accordance with Group profit and loss. CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 2 02 Liabilities Derivatives Shareholders' equity Other effects in cash flow from financing activities Derivatives assets Derivatives liabilities Total 0 –1,682 85,210 3,128,308 6,039,297 0 0 0 0 123,844 0 0 0 0 –20 0 0 0 0 –100 0 0 0 0 –107,450 0 0 0 –352,436 –352,436 –3 0 0 0 –3 –2,556 0 –696 0 –70,535 0 0 –6,815 0 –38,400 –2,559 0 –7,511 –352,436 –445,101 0 0 0 0 –3,799 0 0 0 0 57 0 –4,437 23,718 0 19,281 –87,270 282,183 0 2,559 0 6,812 0 47,102 0 0 0 232,984 232,984 0 –6,119 20,960 3,291,038 5,889,822 CONSOLIDATED FINANCIAL STATEMENTS 2 03 Liabilities € K Note Other interest- b earin g liabilities Leasing liabilities Convertible b ond Bonds As at 1.1.2020 1,067,239 40,480 190,807 798,817 Changes in cash flow from financing activities Cash inflow from loans received 5.2. 111,056 0 0 0 Cash inflow from the issuance of bonds 5.2. 0 0 0 836,747 Repayment of bonds 0 0 –103,380 Dividend payments to shareholders 5.1. 0 0 0 0 Repayment of loans incl. interest rate derivatives 5.2. –61,596 –3,403 0 0 Other interest paid 5.2. –13,602 –1,267 –1,514 –13,051 Total change in cash flow from financing activities 35,859 –4,670 –1,514 720,316 Total change from the purchase of subsidiaries or other business operations 1.e. 0 9,809 0 0 Total change from the sale of subsidiaries or other business operations 1.f. –70,200 0 0 0 Effects of changes in exchange rates 5.2. 105 –2,114 0 0 Change in fair value 8.1. 0 0 0 0 Total Other changes related to liabilities 12,967 1,770 4,914 22,878 Total Other changes related to equity 0 0 0 0 As at 31.12.2020 1,045,969 45,275 194,207 1,542,011 CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 2 04 Liabilities Derivatives Shareholders' e q uit y Other effects in cash flow from financin g activities Derivatives assets Derivatives liabilities Total 0 –1,148 103,960 2,967,968 5,168,123 0 0 0 0 111,056 0 0 0 0 836,747 0 0 0 0 –103,380 0 0 0 –93,028 –93,028 –159 0 –468 0 –65,626 0 0 –6,235 0 –35,668 –159 0 –6,703 –93,028 650,101 0 0 0 0 9,809 0 0 0 0 –70,200 0 0 –261 0 –2,269 0 –535 –20,274 0 –20,809 159 0 8,488 0 51,175 0 0 0 253,368 253,368 0 –1,682 85,210 3,128,308 6,039,298 CONSOLIDATED FINANCIAL STATEMENTS 2 05 9.2. Other obligations and contingent liabilities Guarantees and other commitments As at 31.12.2021, CA Immo Germany Group is subject to guarantees and other commitments resulting from purchase agreements for decontamination costs and war damage costs amounting to €106 K (31.12.2020: €106 K). Furthermore, comfort letters and securities have been issued for one joint venture in Germany amounting to €2,000 K (31.12.2020: €2,000 K). As a security for the liabilities of two (31.12.2020: two) joint ventures loan guarantees, letters of comfort and declarations were issued totalling €10,500 K (31.12.2020: €6,500 K) in Germany. Furthermore, as security for warranty risks in Germany a guarantee was issued in an amount of €20,128 K (31.12.2020: €17,605 K). In connection with disposals, marketable guarantees exist between CA Immo Group and the buyer for coverage of possible warranty- and liability claims, which have been recognized in the statement of financial position accordingly. The actual claims may exceed the expected level. Furthermore, comfort letters and securities have been issued for one (31.12.2020: two) joint venture in Austria amounting to €4,700 K (31.12.2020: €11,443 K). As at 31.12.2021, no comfort letter has been issued for joint ventures (31.12.2020: one joint venture) in Eastern Europe (31.12.2020: €15,699 K). In connection with a development project in Eastern Europe a main contractor has filed an arbitration action at the Vienna International Arbitral Center on 15.2.2019. The claim contains alleged claims for the payment of additional costs, compensation for work performed and interest in the amount of over €22.0 M. CA Immo Group assumes that the general contractor will mostly not suceed. We have considered this in the statement of financial position accordingly. In 2020 CA Immo Group filed an action for damages of approx. €1.9 bn against the Republic of Austria and the state of Carinthia in connection with the privatization of the state residential construction company (BUWOG) in 2004. After a dismissing judgement by the Federal Administrative Court from 22.10.2021 with regard to the asserted exemption from court fees, CA Immo Group had to pay around €25 M court fees in 2021 for this action. On 2.12.2021 CA Immo Group filed with the Constitutional Court a constitutional complaint against this judgement in accordance with Art. 144 B-VG. Mortgages, pledges of rental receivables, bank accounts and share pledges as well as similar guarantees are used as market collateral for bank liabilities. Other financial obligations In addition, there are other financial obligations of order commitments related to building site liabilities for work carried out in the course of developing real estate in Austria in the amount of €0 K (31.12.2020: €132 K), in Germany in the amount of €102,356 K (31.12.2020: €159,140 K) and in Eastern Europe in the amount of €3,891 K (31.12.2020: €24,008 K). In addition as at 31.12.2021 CA Immo Group is subject to other financial commitments resulting from con- struction costs from urban development contracts which can be capitalised in the future in an amount of €11,083 K (31.12.2020: €13,124 K). If the amount of an obligation cannot be estimated reliably, the outflow of funds from the obligation is not likely, or the occurrence of the obligation depends on future events, it represents a contingent liability. In such cases, a provision is not recognised and an explanation of material facts is disclosed in the notes. 9.3. Leases CA Immo Group as lessor All lease contracts concluded by CA Immo Group, under which CA Immo Group is the lessor, are recorded as opera- ting leases in accordance with IFRS. These generally have the following essential contractual terms: – linkage to EUR – guaranteed value by linkage to international indices – medium- to long-term maturities and/or termination waivers. CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 2 06 Future minimum rental income from as at 31.12. existing term lease contracts or contracts with termination waivers as at the reporting date are as follows: € K 2021 2020 In the following year 201,833 216,435 in the second year 172,673 182,747 in the third year 137,209 153,327 in the fourth year 101,234 119,837 in the fifth year 77,380 86,252 after more than five years 169,890 224,330 Total 860,220 982,928 All remaining rental agreements may be terminated at short notice and are not included in the table above. The minimum rental income includes net rent amounts to be collected until the contractually agreed expiration of the contract or the earliest possible termination option by the lessee (tenant). According to IFRS 16, the allocation of a leased asset to the lessor or lessee is based on the criterion of accounta- bility of all significant risks and rewards associated with ownership of the leased asset. The characteristics of the CA Immo Group as lessor of investment properties corresponds to an operating lease because the economic ownership remains with CA Immo Group for the rented properties and thus the significant risks and rewards are not transferred. CA Immo Group classifies leases as operating lease when the underlying contract does not represent a finance lease. A finance lease exists when: – at the end of the lease term the ownership of the asset will be transferred to the lessee; – the lessee has the option to purchase the asset at a price which is expected to be sufficiently lower than the fair value at the date the option becomes exercisable so that at the inception of the lease it is reasonably certain that the option will be exercised; – the lease term is for the major part of the economic life of the asset, even if title is not transferred; – at the inception of the lease, the present value of the minimum lease payments amounts to at least substantially all of the fair value of the leased asset; and – the leased assets are of a specialized nature such that only the lessee can use them without major modifications being made. CA Immo Group as lessee The lease contracts concluded by CA Immo Group acting as lessee primarily relate to rented properties in Munich (until 2022) and in Frankfurt (until 2025), rented parking space, software, leases of cars, the rental of furniture and office equipment as well as usufruct of land. No purchase options have been agreed. The CA Immo Group presents the rights of use in the same balance sheet item in which the underlying assets would be shown if they were owned by the CA Immo Group. The lease liabilities are also included in the balance sheet item “Interest-bearing liabilities”. The users of the financial statements can find the detailed disclosures according to IFRS 16 in the relevant chapter of the notes to which the individual disclosure belongs: the rights of use which are measured according to IAS 40 are comprised in chapter “3.1. Long-term property assets”. The rights of use which are recognized according to the cost model can be found in the chapter “3.2. Own used properties” or “3.3. Office furniture and equipment and intangible assets” (e.g. cars). Lease liabilities are explained in greater detail in chapters “5.2. Inter- est bearing liabilities”, respectively “8.1. Financial instruments” and “8.3. Risks from financial instruments”. The effects of leases on the profit or loss are contained in the following chapters: the depreciation of rights of use in chapter CONSOLIDATED FINANCIAL STATEMENTS 2 07 “2.10. Depreciation and impairment losses/reversal” and interest expenses related to lease liabilities in “2.12. Finance expenses”. The expense for short-term leases amounts to €34 K (2020: €40 K) and the expense for leases related to assets of low value amounts to €45 K (2020: €45 K). The total cash outflows for leases amount to €4,580 K (2020: €5,016 K). Extensions and termination options are taken into account when measuring lease liabilities, if using an option is highly probable. However, this measurement is discretionary, therefore the estimates can be changed in the fu- ture. In a first step the term of the underlying contract is used and only in case indicators are available (e.g. information from valuation reports, particularly favourable contract terms, changed operating requirements) a termination or an extension option will be considered in the cash outflows when measuring the lease liability. CA Immo Group determines whether an arrangement contains a lease based on the economic substance of the arrangement and evaluates whether the fulfilment of the arrangement is dependent on the use of a specific asset or assets and whether the arrangement conveyed a right to use the asset. This is the case only when the contract entitles CA Immo Group to control the use of a clearly identified asset in exchange for consideration for a certain period of time. In doing so, it is relevant that throughout the period of use, CA Immo Group can obtain substantially all the eco- nomic benefits from the identified asset and it has the right to direct the use of such an asset. However, an asset is only considered identified when the supplier does not have a substantive substitution right. If, based on the agreement, the supplier is actually able to exchange the asset for another during the period of use and if the exchange results in eco- nomic benefits, there is no identified asset and no recognition of a right of use takes place. When accounting for leases, assets in the form of right of use are capitalized and lease liabilities are recognized. CA Immo Group applies practical expedients and does not recognize any rights of use/lease liabilities for short-term leases (less than 1 year) as well as leases with underlying assets of low value (< €5,000) and software. Retrospective adjustment of lease payments, for example based on index adjustments are considerered as variable leasing payments and recognized as profit or loss in the current period. An adjustment of a right of use asset/lease lia- bility is only made on the base of future cash outflows. Pandemic-related rent concessions from lessors are not pre- sented as a lease modification. The CA Immo Group applies the practical expedient and records all rent concessions in the income statement. CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 2 08 9.4. Transactions with related parties The following companies and parties are deemed related parties to the CA Immo Group: – joint ventures, in which CA Immo Group holds an interest – the corporate bodies of CA Immobilien Anlagen Aktiengesell schaft – Starwood Capital Group (”Starwood“) (from 27.9.2018) Transactions with joint ventures Joint ventures € K 31.12.2021 31.12.2020 Investments in joint ventures 55,800 57,629 Loans 11,682 8,926 Receivables 7,283 7,197 Liabilities 7,876 3,747 Provisions 6,577 7,128 2021 2020 Joint ventures result 3,618 1,809 Result from sale of joint ventures 0 90 Result from joint ventures 3,618 1,898 Other income 375 268 Other expenses –1,290 –1,228 Interest income 605 1,020 Outstanding loans to joint ventures and the majority of the receivables from joint ventures as at the reporting date serve to finance the properties. The cumulative impairment loss on loans to joint ventures amounts to €3,425 K (31.12.2020: €3,076 K). All loans have interest rates in line with those prevailing on the market. The remaining receiva- bles are predominantly the result of services performed in Germany. No guarantees or other forms of security exist in connection with these receivables and liabilities. No additional impairments or other adjustments to the book values were recognised in profit or loss. Starwood Capital Group (Starwood) Since 27.9.2018, SOF- 11 Klimt CAI S.à r.l. is the company's largest single shareholder. As of 31.12.2021, SOF- 11 Klimt CAI S.à.r.l. held 61,654,765 bearer shares and four registered shares of CA Immo AG, this corresponds to 57.89% of the company's share capital. SOF- 11 Klimt CAI S.à.r.l. is a company controlled by Starwood Capital Group ("Starwood"). Starwood is a private investment company with a global focus on real estate, energy, infrastructure, oil and natural gas. CONSOLIDATED FINANCIAL STATEMENTS 2 09 Corporate bodies of CA Immobilien Anlagen Aktiengesellschaft, Vienna Management Board Silvia Schmitten-Walgenbach (from 1.1.2022) Dr. Andreas Schillhofer (from 1.6.2019) Keegan Viscius (from 1.11.2018) Andreas Quint (until 31.12.2021) Total salary payments (excluding salary-based deductions) to Management Board members a mounted to €3,464 K (€2,763 K in 2020). The salary-based deductions totaled €198 K (2020: €172 K). Total fixed salary components amounted to €1,581 K (€1,588 K in 2020) and were made up of the basic salary of €1,410 K (2020: €1,410 K), other benefits (in par- ticular remuneration in kind for cars, expense allowances and travel expenses) of €48 K (2020: €55 K) and contributions to pension funds of €123 K (2020: €123 K). Variable compensation components amounted to €1,269 K (2020: €1,175 K). Special payments amounted to €307 K (2020: €0 K). As at the balance sheet date 31.12.2021, severance payment provisions for Management Board members totaled €311 K (31.12.2020: €412 K). There were no payment obligations to former members of the Management Board (i.e. not in office in the reporting year). As a consequence of the termination of the activity for one Management Board member, as at 31.12.2021 provisions for bonuses (at 100% target achievement level) in amount of €2,157 K as well as a payable from contract termination in amount of €307 K are booked. No loans or advances were granted to members of the Management Board. As at 31.12.2021, based on assumption of 100% target achievement, provisions amounting to €5,329 K (31.12.2020: €3,460 K) had been made up for the Management Board under the variable remuneration system. CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 2 10 Supervisory Board Elected by the General Meeting: Torsten Hollstein, Chairman Jeffrey G. Dishner, Deputy Chair Dr. Monika Wildner, Deputy Chair Univ.-Prof. MMag. Dr. Klaus Hirschler Michael Stanton Dr. Florian Koschat (until 6.5.2021) Delegated by registered share: Sarah Broughton Laura Rubin Delegated by works council: Georg Edinger, BA, REAM (IREBS) Nicole Kubista Sebastian Obermair Walter Sonnleitner As at the balance sheet date, the Supervisory Bo ard comprised five capital representatives elected by the Annual General Meeting, two capital representatives appointed by means of registered shares and four employee representatives. In business year 2021 (for 2020), total remuneration of €328 K (2020: €309 K) was paid out (including attendance fees of €113 K; €84 K in 2020). Moreover, expenditure of €202 K was reported in connection with the Supervisory Board in business year 2021 (2020: €78 K). Of this, cash outlays for travel expenses accounted for approximately €13 K (2020: €9 K) and other expenditure (including training costs and license costs) accounted for €33 K (2020: €52 K). Legal and other consultancy services accounted for €156 K (2020: €17 K). No other fees (particularly for consultancy or brokerage activities) and no loans or advances were paid to Supervisory Board members. Total Supervisory Board remuneration of €299 K for business year 2021 will be proposed to the Annual General Meeting on the basis of the same criteria (fixed annual payment of €30 K per Supervisory Board member plus attend- ance fee of €1 K per meeting), taking account of the waiver of remuneration for Supervisory Board members appointed on the basis of registered shares or related to the Starwood Group respectively. The remuneration was taken into account in the consolidated financial statements as at 31.12.2021. All business transactions conducted between the company and members of the Supervisory Board which oblige such members to perform services for the CA Immo Group outside of their Supervisory Board activities in return for remu- neration of a not inconsiderable value must conform to industry standards and be approved by the Supervisory Board. The same applies to contracts with companies in which a Supervisory Board member has a significant economic interest. Sarah Broughton, Laura Rubin and Jeffrey G. Dishner perform comprehensive management functions within Starwood Capital Group. In the business year 2021, Starwood Capital Group (via its vehicle SOF- 11 Klimt CAI S.à r.l.) increased its stake in CA Immo from around 28.25% of the share capital to around 57.89% as part of an anticipated mandatory offer pursuant to Sections 22 et seq. of the Austrian Takeover Act as well as further acquisitions on and off the stock exchange. CONSOLIDATED FINANCIAL STATEMENTS 21 1 9.5. Employees In 2021, CA Immo Group had an average of 397 white-collar workers (2020: 386) of whom on average 72 (2020: 70) were employed in Austria, 235 (2020: 230) in Germany and 90 (2020: 86) in subsidiaries in Eastern Europe. 9.6. Costs for the auditors The expenses presented in the table below refer to fees from Ernst & Young Wirtschaftsprüfungsgesellschaft.m.b.H.. € K 2021 2020 Auditing costs 420 387 Other assurance services 133 311 Other consultancy services 0 0 Total 553 698 In the consolidated income sta tement, the audit expenses, including review amount to €1,376 K (2020: €1,359 K). Out of this, the amount for Ernst & Young entities amounts to €1,235 K (2020: €1,235 K). 9.7. Events after balance sheet date In January 2022, CA Immo Group acquired one real estate property in Dusseldorf, Germany, via share deal, and closed the sale of R70 Invest Budapest Kft. in Hungary. In the first quarter 2022, the sale of two hotel properties in Munich and Frankfurt as well as the sale of land banks in the joint venture Mainz, Germany, took place. CA Immo AG has drawn in the first quarter 2022 the revolving credit facility in the amount of €300 M. On 18.03.2022, CA Immobilien Anlagen AG was served with an action for annulment directed against the resolutions on the distribution of an additional basic dividend and a super dividend adopted by the Extraordinary General Meeting on 30.11.2021. Ukraine Russia’s invasion of Ukraine has distressed the world economy. The immediate global implications are higher infla- tion and lower economic growth. The crisis has substantially increased uncertainty and volatility to global financial markets. Major equity indices have deteriorated since the outbreak of the crisis and debt capital markets have been completely closed for a certain time or are only very limited accessible. The risk of further escalations in the conflict as well as additional geopolitical tensions will remain a key topic. The CA Immo Group does not have any properties in Russia or Ukraine in its portfolio. The CA Immo Group continu- ously monitors the development of the stock and financial markets. There is no significant currency risk for the CA Immo Group as rents are generally linked to the EUR and the amount of liquid funds in foreign currencies is regu- larly monitored. The war in Ukraine and the resulting sanctions and countermeasures may have an impact on the CA Immo Group's financial statements. The global impact of war could impact the valuation of real estate properties and the determina- tion of expected credit losses. Furthermore, there could be effects on project developments, eg. due to delays in the supply chains, fluctuating financing rates and rising construction costs. The increased uncertainty could also lead to extended marketing periods. The effects cannot be finally assessed due to the dynamic development, but are subject to ongoing evaluations. Despite the uncertainty and possible direct and indirect effects, the CA Immo Group assumes that the Russia-Ukraine war will not affect the company's ability to continue as a going concern. CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 2 12 9.8. New and amended standards and interpretations a) Changes in presentation, which have a material effect on the consolidated financial statements The presentation and accounting policies remain unchanged compared to previous year. Change in presentation During the review of the tax calculation the allocation of deferred taxes in connection with the convertible bond was evaluated and the allocation was changed from adjustment from prior periods and capitalisation of prior years non- capitalised tax losses to permanent differences in connection with convertible bond. The change in presentation ena- bles the improved presentation of recognized deferred taxes in connection with the convertible bond. The change in presentation relates to the tax reconciliation, the deferred taxes and the unrecorded tax losses carried forward (refer to chapter 7 Taxes). There have been no changes in the balance sheet and profit and loss statement of CA Immo Group. b) First-time application of new and revised standards and interpretations not materially influencing the consolidated financial statements The following standards and interpretations, already adopted by the EU, were applicable for the first time in the busi- ness year 2021: Standard / Interpretation Content Entry into force 1) Amendments to IFRS 16 Covid- 19-Related Rent Concessions 1.6.2020 Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 Interest Rate Benchmark Reform - Phase 2 1.1.2021 IFRS 4 Extension of the Temporary Exemption from Applying IFRS 9 (Amendments to IFRS 4) 1.1.2021 1) The standards and interpretations are to be applied to business years commencing on or after the effective date. c) New or revised standards and interpretations not yet in force Standard / Interpretation Content Entry into force1) Amendments to IFRS 16 Covid- 19-Related Rent Concessions beyond 30 June 2021 1.4.2021 1) Amendments to IFRS 3 Reference to the Conceptual Framework 1.1.2022 1) Amendments to IAS 37 Cost of Fulfilling a Contract 1.1.2022 1) Amendments to IAS 16 Proceeds before Intended Use 1.1.2022 1) Annual Improvements (2018- 2020) Miscellaneous 1.1.2022 1) IFRS 17 Insurance Contracts 1.1.2023² ) Amendments to IAS 1 Classification of liabilities as current or non-current 1.1.2023² ) Amendments to IAS 1 Disclosure of Accounting Policies 1.1.2023² ) Amendments to IAS 8 Definition of Accounting Estimates 1.1.2023² ) Amendments to IAS 12 Deferred tax related to assets and liabilities arising from a single transaction 1.1.2023² ) 1) The standards and interpretations are to be applied to business years commencing on or after the effective date. 2) Not yet adopted by the EU as of the reporting date. The effective date envisaged by an EU Regulation may differ from the date indicated by the IASB. The above listed revisions and interpretations are not being early adopted by CA Immo Group. CA Immo Group does not expect any material impact from the first-time application of IFRS 17 (Insurance contracts). The first time adoption of the remaining new regulations is not expected to have a material impact. CONSOLIDATED FINANCIAL STATEMENTS 2 13 9.9. List of group companies The following companies are included in the consolidated financial statements in addition to CA Immobilien Anlagen Aktiengesellschaft: 1) FC full consolidation, AEJV at equity consolidation joint ventures Company Registered office Nominal capital Currency Interest in % Consolidation method 1) Foundation / First time consolidation in 2021 CA Immo Holding B.V. Amsterdam 32,000,000 EUR 100 FC Europolis BV Amsterdam 400,000 EUR 100 FC CA Immo d.o.o. Belgrade 32,822,662 RSD 100 FC CA Immo Sava City d.o.o. Belgrade 4,273,618,689 RSD 100 FC TM Immo d.o.o. Belgrade 1,307,737,295 RSD 100 FC CA Immo Sechzehn GmbH & Co. KG Berlin 25,000 EUR 100 FC CA Immo Spreebogen Betriebs GmbH Berlin 25,000 EUR 100 FC CA Immo Zehn GmbH Berlin 25,000 EUR 100 FC CA Immo Zwölf Verwaltungs GmbH Berlin 25,000 EUR 100 FC CA Holding Szolgáltató Kft Budapest 13,000,000 HUF 100 FC CAImmo Real Estate Management Hungary Kft Budapest 54,510,000 HUF 100 FC COM PARK Ingatlanberuházási Kft Budapest 3,040,000 HUF 100 FC Duna Business Hotel Ingatlanfejleszt Kft. Budapest 452,844,530 HUF 100 FC Duna Irodaház Kft. Budapest 277,003,015 HUF 100 FC Duna Termál Hotel Ingatlanfejlesztö Kft. Budapest 390,906,655 HUF 100 FC EUROPOLIS CityGate Ingatlanberuházás Kft Budapest 13,010,000 HUF 100 FC EUROPOLIS IPW Ingatlanberuházási Kft Budapest 54,380,000 HUF 100 FC Europolis Park Airport Kft. i.L. Budapest 19,900,000 HUF 100 FC Kapas Center Kft Budapest 772,560,000 HUF 100 FC Kilb Kft Budapest 30,000,000 HUF 100 FC Millennium Irodaház Kft. Budapest 997,244,944 HUF 100 FC R70 Invest Budapest Kft Budapest 5,270,000 HUF 100 FC Vaci 76 Budapest 3,100,000 HUF 100 FC CA Immo Campus 6.1. S.R.L. Bucharest 114,000 RON 100 FC CAI REAL ESTATE M. ROMANIA SRL Bucharest 989,570 RON 100 FC EUROPOLIS ORHIDEEA B.C. SRL Bucharest 247,394,530 RON 100 FC EUROPOLIS SEMA PARK SRL Bucharest 233,430,000 RON 100 FC INTERMED CONSULTING & MANAGEMENT SRL Bucharest 31,500,330 RON 100 FC Opera Center One S.R.L. Bucharest 27,326,150 RON 100 FC Opera Center Two S.R.L. Bucharest 7,310,400 RON 100 FC S.C. BBP Leasing S.R.L. Bucharest 14,637,711 RON 100 FC VICTORIA INTERNATIONAL PROPERTY SRL Bucharest 216 RON 100 FC Blitz F07 -neunhundert-sechzig-neun GmbH Frankfurt 25,000 EUR 100 FC Blitz F07-neunhundert-sechzig-acht GmbH Frankfurt 25,000 EUR 100 FC CA Immo Deutschland GmbH Frankfurt 5,000,000 EUR 99.7 FC CA Immo GB Eins Verwaltungs GmbH Frankfurt 25,000 EUR 100 FC CA Immo Invest GmbH Frankfurt 50,000 EUR 100 FC CM Komplementär F07- 888 GmbH & Co. KG Frankfurt 25,000 EUR 100 FC CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 2 14 Company Registered office Nominal capital Currency Interest in % Consoli- dation method 1) Foundation / First time consolidation in 2021 DRG Deutsche Realitäten GmbH Frankfurt 500,000 EUR 49 AEJV CAINE B.V. Hoofdorp 101,000.000 EUR 100 FC ALBERIQUE LIMITED i.L. Limassol 1,325 EUR 100 FC 4P - Immo. Praha s.r.o. Prague 200,000 CZK 100 FC CAI Real Estate Managment Czech Rep.s.r.o. Prague 1,000,000 CZK 100 FC RCP Alfa, s.r.o. Prague 1,000,000 CZK 100 FC RCP Amazon, s.r.o. Prague 1,000,000 CZK 100 FC RCP Beta, s.r.o. Prague 73,804,000 CZK 100 FC RCP Delta, s.r.o. Prague 1,000,000 CZK 100 FC RCP Gama, s.r.o. Prague 96,931,000 CZK 100 FC RCP ISC, s.r.o. Prague 1,000,000 CZK 100 FC RCP Zeta, s. r. o. Prague 200,000 CZK 100 FC Visionary Prague, s.r.o. Prague 200,000 CZK 100 FC CA Immo Bitwy Warszawskiej Sp.z o.o. Warsaw 47,956,320 PLN 100 FC CA IMMO New City Sp.z.o.o. Warsaw 116,000 PLN 100 FC CA IMMO P14 Sp.z.o.o. Warsaw 10,000 PLN 100 FC CA Immo Saski Crescent Sp.z o.o. Warsaw 140,921,250 PLN 100 FC CA Immo Saski Point Sp.z o.o. Warsaw 55,093,000 PLN 100 FC CA IMMO WARSAW SPIRE B Sp. z o.o. Warsaw 5,050,000 PLN 100 FC CA Immo Warsaw Spire C Sp. z o.o. Warsaw 2,050,000 PLN 100 FC CA Immo Warsaw Towers Sp.z o.o. Warsaw 155,490,900 PLN 100 FC CA Immo Sienna Center Sp.z o.o. Warsaw 116,912,640 PLN 100 FC CAI REAL ESTATE M. POLAND Sp.z.o.o. Warsaw 565,000 PLN 100 FC BIL-S Superädifikatsverwaltungs GmbH Vienna 70,000 EUR 100 FC CA Immo BIP Liegenschaftsverwaltung GmbH Vienna 3,738,127 EUR 100 FC CA Immo Galleria Liegenschaftsverwaltung GmbH Vienna 35,000 EUR 100 FC CA Immo Germany Holding GmbH Vienna 35,000 EUR 100 FC CA Immo International Holding GmbH Vienna 35,000 EUR 100 FC CA Immo Konzernfinanzierungs GmbH Vienna 100,000 EUR 100 FC CA Immo LP GmbH Vienna 146,000 EUR 100 FC CA Immo Rennweg 16 GmbH Vienna 35,000 EUR 100 FC CA Immobilien Anlagen Beteiligungs GmbH & Co Finanzierungs KG Vienna 7,000 EUR 100 FC CA Immo-RI-Residential Prop Holding GmbH Vienna 35,000 EUR 100 FC EBL Nord 2 Immobilien Eins GmbH & Co KG Vienna 10,000 EUR 50 AEJV EBL Nord 2 Immobilien GmbH Vienna 35,000 EUR 50 AEJV EBL Nord 2 Immobilien Zwei GmbH & Co KG Vienna 10,000 EUR 50 AEJV Erdberger Lände 26 GmbH in Liqu. Vienna 35,000 EUR 100 FC EUROPOLIS CE Alpha Holding GmbH Vienna 36,336 EUR 100 FC EUROPOLIS CE Rho Holding GmbH Vienna 35,000 EUR 100 FC EUROPOLIS GmbH Vienna 5,000,000 EUR 100 FC 1) FC full consolidation, AEJV at equity consolidation joint ventures CONSOLIDATED FINANCIAL STATEMENTS 2 15 As at 31.12.2021, CA Immo Group held 99.7% of shares in CA Immo Deutschand GmbH, Frankfurt am Main (or simply Frankfurt). The following subsidiaries, shares in joint ventures and associated companies of CA Immo Deutschland GmbH, Frankfurt, are therefor also included in the consolidated financial statements: Company Registered office Nominal capital Currency Interest in % Consoli- dation method 1) ) Foundation/ First time consolidation in 2021 2) CA Immo Berlin Am Karlsbad 11 Betriebs GmbH Berlin 25,000 EUR 100 FC CA Immo Berlin Am Karlsbad 11 GmbH & Co. KG Berlin 5,000 EUR 100 FC CA Immo Berlin Am Karlsbad 11 Verwaltungs GmbH Berlin 25,000 EUR 100 FC CA Immo Berlin Europaplatz 01 GmbH & Co. KG Berlin 5,000 EUR 100 FC CA Immo Berlin Europaplatz 01 M4 Betriebs GmbH Berlin 25,000 EUR 100 FC F CA Immo Berlin Europaplatz 01 TT Betriebs GmbH Berlin 25,000 EUR 100 FC CA Immo Berlin Europaplatz 03 GmbH & Co. KG Berlin 5,000 EUR 100 FC CA Immo Berlin Europaplatz 04 GmbH & Co. KG Berlin 5,000 EUR 100 FC CA Immo Berlin Europaplatz Verwaltungs GmbH Berlin 25,000 EUR 100 FC CA Immo Berlin Hallesches Ufer GmbH Berlin 25,000 EUR 100 FC CA Immo Berlin Lehrter Stadtquartier 4 Betriebs GmbH Berlin 5,000 EUR 100 FC CA Immo Berlin Lehrter Stadtquartier 4 GmbH & Co. KG Berlin 5,000 EUR 100 FC CA Immo Berlin Lehrter Stadtquartier 7 Betriebs GmbH Berlin 25,000 EUR 100 FC F CA Immo Berlin Lehrter Stadtquartier 7 GmbH & Co. KG Berlin 25,000 EUR 100 FC CA Immo Berlin Lehrter Stadtquartier 8 GmbH & Co. KG Berlin 5,000 EUR 100 FC CA Immo Berlin Lehrter Stadtquartier 8 Verwaltungs GmbH Berlin 25,000 EUR 100 FC CA Immo Berlin Mitte 01 GmbH & Co. KG Berlin 5,000 EUR 100 FC CA Immo Berlin Mitte 01 Verwaltungs GmbH Berlin 25,000 EUR 100 FC CA Immo Berlin Mitte 02 GmbH & Co. KG Berlin 5,000 EUR 100 FC CA Immo Berlin Pohlstraße 20 GmbH Berlin 25,000 EUR 100 FC CA Immo Berlin Pohlstraße Betriebs GmbH Berlin 25,000 EUR 100 FC CA Immo Berlin Pohlstraße GmbH Berlin 25,000 EUR 100 FC CA Immo Berlin Schöneberger Ufer Beteiligungs GmbH Berlin 25,000 EUR 100 FC CA Immo Berlin Schöneberger Ufer BT 1 Betriebs GmbH Berlin 25,000 EUR 100 FC CA Immo Berlin Schöneberger Ufer BT 2 Betriebs GmbH Berlin 25,000 EUR 100 FC CA Immo Berlin Schöneberger Ufer GmbH & Co. KG Berlin 25,000 EUR 100 FC CA Immo Berlin Upbeat GmbH & Co. KG Berlin 5,000 EUR 100 FC CA Immo Berlin Upbeat Verwaltungs GmbH Berlin 25,000 EUR 100 FC CA Immo Berlin Verwaltungs GmbH Berlin 25,000 EUR 100 FC Stadthafenquartier Europacity Berlin GmbH & Co. KG Berlin 5,000 EUR 50 AEJV Stadthafenquartier Europacity Berlin Verwaltungs GmbH Berlin 25,000 EUR 50 AEJV Boulevard Süd 4 GmbH & Co. KG i.L. Frankfurt 200,000 EUR 100 FC Boulevard Süd 4 Verwaltung-GmbH i.L. Frankfurt 25,000 EUR 100 FC CA Immo Düsseldorf BelsenPark MK 2,1 Betriebs GmbH Frankfurt 25,000 EUR 100 FC F 1) FC full consolidation, AEJV at equity consolidation joint ventures 2) F foundation CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 2 16 Company Registered office Nominal capital Currency Interest in % Consoli- dation method 1) Foundation / First time consolidation in 2021 2) CA Immo Düsseldorf BelsenPark MK 2,1 Projekt GmbH & Co. KG Frankfurt 5,000 EUR 100 FC CA Immo Düsseldorf BelsenPark MK 3 Projekt GmbH & Co. KG Frankfurt 5,000 EUR 100 FC CA Immo Düsseldorf BelsenPark Verwaltungs GmbH Frankfurt 25,000 EUR 100 FC CA Immo Frankfurt Alpha GmbH Frankfurt 25,100 EUR 100 FC CA Immo Frankfurt Beta GmbH Frankfurt 25,000 EUR 100 FC CA Immo Frankfurt Gamma GmbH Frankfurt 25,000 EUR 100 FC CA Immo Frankfurt Karlsruher Straße GmbH & Co. KG Frankfurt 5,000 EUR 100 FC CA Immo Frankfurt Nord 4 Betriebs GmbH Frankfurt 25,000 EUR 100 FC F CA Immo Frankfurt Nord 4 GmbH & Co. KG Frankfurt 5,000 EUR 100 FC CA Immo Frankfurt ONE GmbH Frankfurt 25,000 EUR 100 FC CA Immo Frankfurt Verwaltungs GmbH Frankfurt 25,000 EUR 100 FC omniCon Gesellschaft für innovatives Bauen mbH Frankfurt 100,000 EUR 100 FC Baumkirchen MI GmbH & Co. KG Grünwald 5,000 EUR 100 FC Baumkirchen MI Verwaltungs GmbH Grünwald 25,000 EUR 100 FC Baumkirchen MK GmbH & Co. KG Grünwald 10,000 EUR 100 FC Baumkirchen MK Verwaltungs GmbH Grünwald 25,000 EUR 100 FC Baumkirchen WA 1 GmbH & Co. KG Grünwald 10,000 EUR 50 AEJV Baumkirchen WA 1 Verwaltungs GmbH Grünwald 25,000 EUR 50 AEJV Baumkirchen WA 2 GmbH & Co. KG Grünwald 10,000 EUR 50 AEJV Baumkirchen WA 2 Verwaltungs GmbH Grünwald 25,000 EUR 50 AEJV Baumkirchen WA 3 GmbH & Co. KG Grünwald 10,000 EUR 50 AEJV Baumkirchen WA 3 Verwaltungs GmbH Grünwald 25,000 EUR 50 AEJV CA Immo Bayern Betriebs GmbH Grünwald 25,000 EUR 100 FC CA Immo München Ambigon Nymphenburg GmbH & Co. KG Grünwald 5,000 EUR 100 FC CA Immo München Nymphenburg GmbH & Co. KG Grünwald 5,000 EUR 100 FC CA Immo München Verwaltungs GmbH Grünwald 25,000 EUR 100 FC CA Immo Projektentwicklung Bayern Verwaltungs GmbH Grünwald 25,565 EUR 100 FC CA Immo Projektentwicklung Bayern GmbH &Co.KG Grünwald 255,646 EUR 100 FC CAMG Zollhafen HI IV V GmbH & Co. KG Grünwald 105,000 EUR AEJV CAMG Zollhafen HI IV V Verwaltungs GmbH Grünwald 25,000 EUR AEJV CPW Immobilien GmbH & Co. KG i.L. Grünwald 5,000 EUR 33.32 3) AEJV CPW Immobilien Verwaltungs GmbH Grünwald 25,000 EUR 33.34 3) AEJV Eggarten Projektentwicklung GmbH&Co.KG Grünwald 16,000 EUR 50 AEJV Eggarten Projektentwicklung Verwaltung GmbH Grünwald 25,000 EUR 50 AEJV Kontorhaus Arnulfpark Betriebs GmbH Grünwald 25,000 EUR 100 FC 1) FC full consolidation, AEJV at equity consolidation joint ventures 2) F foundation 3) Common control CONSOLIDATED FINANCIAL STATEMENTS 217 Company Registered office Nominal capital Currency Interest in % Consoli- dation method 1) Foundation/ First time consolidation in 2021 Kontorhaus Arnulfpark GmbH & Co. KG Grünwald 100,000 EUR 99.93 FC Kontorhaus Arnufpark Verwaltungs GmbH Grünwald 25,000 EUR 100 FC SKYGARDEN Arnulfpark GmbH & Co. KG Grünwald 100,000 EUR 100 FC SKYGARDEN Arnulfpark Verwaltungs GmbH Grünwald 25,000 EUR 100 FC Congress Centrum Skyline Plaza Beteiligung GmbH Hamburg 25,000 EUR 50 AEJV Congress Centrum Skyline Plaza GmbH & Co. KG Hamburg 25,000 EUR 50 AEJV Congress Centrum Skyline Plaza Verwaltung GmbH Hamburg 25,000 EUR 50 AEJV CA Immo Mainz Hafenspitze GmbH Mainz 25,000 EUR 100 FC CA Immo Mainz Quartiersgarage GmbH Mainz 25,000 EUR 100 FC CA Immo Mainz Rheinallee III GmbH & Co. KG Mainz 5,000 EUR 100 FC CA Immo Mainz Rheinwiese II GmbH & Co. KG Mainz 5,000 EUR 100 FC CA Immo Mainz Verwaltungs GmbH Mainz 25,000 EUR 100 FC Mainzer Hafen GmbH Mainz 25,000 EUR 50 AEJV Zollhafen Mainz GmbH & Co. KG Mainz 1,200,000 EUR 50.1 2) AEJV SEG Kontorhaus Arnulfpark Beteiligungsgesellschaft mbH Munich 25,000 EUR 99 FC Skyline Plaza Generalübernehmer GmbH & Co. KG Oststeinbek 25,000 EUR 50 AEJV Skyline Plaza Generalübernehmer Verwaltung GmbH Oststeinbek 25,000 EUR 50 AEJV 1) FC full consolidation, AEJV at equity consolidation joint ventures 2) Common control Vienna, 23.3.2022 The Management Board Silvia Schmitten-Walgenbach (Chief Executive Officer) Dr. Andreas Schillhofer (Chief Financial Officer) Keegan Viscius (Chief Investment Officer) CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 2 18 CONSOLIDATED FINANCIAL STATEMENTS 2 19 DECLARATION OF THE MANAGEMENT BOARD DECLARATION OF THE MANAGEMENT BOARD 220 The management board confirms to the best of their knowledge that the consolidated financial statements of CA Im- mobilien Anlagen Aktiengesellschaft, which were prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU, give a true and fair view of the consolidated financial position of CA Immo Group and its consolidated financial performance and of its consolidated cash flows and that the group management report gives a true and fair view of the business development, the financial performance, and financial position of the Group, together with a description of the principal risks and uncertainties the CA Immo Group faces. Vienna, 23.3.2022 The Ma nagement Board DECLARATION OF THE MANAGEMENT BOARD PURSUANT TO SECTION 124 (1) OF THE AUSTRIAN STOCK EXCHANGE ACT Silvia Schmitten-Walgenbach (Chief Executive Officer) Dr. Andreas Schillhofer (Chief Financial Officer) Keegan Viscius (Chief Investment Officer) 22 1 Report on the Consolidated Financial Statements Audit Opinion We have audited the consolidated financial statements of CA Immobilien Anlagen Aktienge sellschaft, Vienna, and of its subsidiaries (the Group) comprising the consolidated statement of financial position as of December 31, 2021, the consolidated statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the fiscal year then ended and the notes to the con- solidated financial statements. Based on our audit the accompanying consolidated financial statements were prepared in accordance with the legal regulations and present fairly, in all material respects, the assets and the financial position of the Group as of December 31, 2021 and its financial performance for the year then ended in accordance with the International Financial Report- ings Standards (IFRS) as adopted by EU, and the additional requirements under Section 245a Austrian Company Code UGB. Basis for Opinion We conducted our audit in accordance with the regulation (EU) no. 537/2014 (in the following "EU regulation") and in accordance with Austrian Standards on Auditing. Those standards require that we comply with International Stand- ards on Auditing (ISA). Our responsibilities under those regulations and standards are further described in the "Audi- tor’s Re-sponsibilities for the Audit of the Consolidated Financial Statements" section of our report. We are independ- ent of the Group in accordance with the Austrian General Accepted Accounting Principles and professional require- ments and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained until the date of this auditor’s report is sufficient and appropriate to provide a ba- sis for our opinion by this date. Key Audit Matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the fiscal year. These matters were addressed in the context of our audit of the con- solidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opin- ion on these matters. The following is the key audit matter that we identified: Tite l Valuation of Investment Property Risk CA Immobilien Anlagen Aktiengesellschaft reports investme nt properties in the amount of TEUR 4,984,297 and investment properties under development in the amount of TEUR 1,097,147 in its consolidated financial statements as of December 31, 2021. The consolidated financial statements as of December 31, 2021 also include a result from revaluation amount- ing to TEUR 541,147. AUDITOR’S REPORT AUDITOR’S REPORT ) AUDITOR’S REPORT AUDITORS REPORT 2 22 Investment properties are measured at fair value based on valuation reports from external, independent valuation experts. The valuation of investment properties is subject to material assumptions and estimates. The material risk for every individual property exists when determining assumptions and estimates such as the discount/capitalization rate and rental income and for investment properties under development the construction and development costs to completion and the developer’s profit. A minor change in these assumptions and estimates can have a mate- rial impact on the valuation of investment properties. The respective disclosures relating to accounting policies and significant judgements, assumptions and estimates are shown in Section “3.1 Long-term property assets” in the con- solidated financial statements. Consideration in the audit To address this risk, we have critically assessed the assumptions and estimates made by management and the external valuation experts and performed, among others, the following audit procedures with involvement of our internal property valuation experts: – Assessment of concept and design of the underlying property valuation process – Assessment of design and effectiveness of relevant key controls in the underlying process based on a sample – Assessment of the competence, capability and objectivity of the external valuation experts engaged by management – Assessment of the applied methods and the mathematical accuracy of selected valuation reports as well as assessment of the plausibility of the underlying assumptions (eg. Rental income, discount/capitalization rate, usable space, vacancy rate) by means of comparison with market data if available – Check of certain input-data as included in the valuation reports with data in the accounting system or underlying agreements – Inquiry of project-management for selected properties under development regarding rea- sons for deviations between plan and actual costs and current estimation of cost to comple- tion; check of actual costs for those projects through review of project-documentation and vouching on a sample basis as well as evaluation of the derived percentage of completion – Assessment of the adequacy and completeness of the disclosures made in the financial statements by the management Other Information Management is responsible for the other information. The other information comprises the information included in the annual report and the annual financial report, but does not include the consolidated financial statements, the Group’s management report and the auditor’s report thereon. We received the consolidated Corporate Governance Report until the date of this audit opinion; the rest of the annual report is estimated to be provided to us after the date of the auditor's report. Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the consolidated financial statements, our responsibility is to read the other infor- mation and, in doing so, to consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. AUDITOR’S REPORT 2 23 Responsibilities of Management and of the Audit Committee for the Consoli dated Financial Statements Management is responsible for the preparation of the consolidated financial statements in accordance with IFRS as adopted by the EU, and the additional requirements under Section 245a Austrian Company Code UGB for them to pre- sent a true and fair view of the assets, the financial position and the financial performance of the Group and for such internal controls as management determines are necessary to enable the preparation of consolidated financial state- ments that are free from material misstatement, whether due to fraud or error. In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so. The Audit Committee is responsible for overseeing the Group’s financial reporting process. Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the EU regulation and in accordance with Austrian Standards on Auditing, which require the application of ISA, always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. As part of an audit in accordance with the EU regulation and in accordance with Austrian Standards on Auditing, which require the application of ISA, we exercise professional judgment and maintain professional scepticism through- out the audit. We also: – identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, mis- representations, or the override of internal control. – obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropri- ate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control. – evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. – conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the au- dit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern. – evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclo- sures, and whether the consolidated financial statements represent the underlying transactions and events in a man- ner that achieves fair presentation. AUDITOR’S REPORT AUDITORS REPORT 2 24 – obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion. We communicate with the Audit Committee regarding, among other matters, the planned scope and timing of the au- dit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide the Audit Committee with a statement that we have complied with relevant ethical requirements re- garding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with the Audit Committee, we determine those matters that were of most signifi- cance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the ad- verse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such commu- nication. Report on Other Legal and Regulatory Requirements Comments on the Management Report for the Group Pursuant to Austrian Generally Accepted Accounting Principles, the management report for the Group is to be au- dited as to whether it is consistent with the consolidated financial statements and as to whether the management report for the Group was prepared in accordance with the applicable legal regulations. Management is responsible for the preparation of the management report for the Group in accordance with Austrian Generally Accepted Accounting Principles. We conducted our audit in accordance with Austrian Standards on Auditing for the audit of the management report for the Group Opinion In our opinion, the management report for the Group was prepared in accordance with the valid legal requirements, comprising the details in accordance with Section 243a Austrian Company Code UGB, and is consistent with the con- solidated financial statements. Statement Based on the findings during the audit of the consolidated financial statements and due to the thus obtained under- standing concerning the Group and its circumstances no material misstatements in the management report for the Group came to our attention. Additional information in accordance with article 10 EU regulation We were elected as auditor by the ordinary general meeting at May 6, 2021. We were appointed by the Supervisory Board on September 14, 2021. We are auditors since the financial year 2017. We confirm that the audit opinion in the Section "Report on the consolidated financial statements" is consistent with the additional report to the audit committee referred to in article 11 of the EU regulation. We declare that no prohibited non-audit services (article 5 par. 1 of the EU regulation) were provided by us and that we remained independent of the audited company in conducting the audit. AUDITOR’S REPORT 2 25 Responsible Austrian Certified Public Accountant The engagement partner is Alexander Wlasto, Certified Public Accountant]. Vienna, March 23, 2022 Ernst & Young Wirtschaftsprüfungsgesellschaft m.b.H. ___ ) This report is a translation of the original report in German, which is solely valid. Publication or sharing with third parties of the consolidated financial statements together with our auditor's opinion is only allowed if the consolidated financial statements and the management report for the Group are iden- tical with the German audited version. This audit opinion is only applicable to the German and complete consolidated financial statements with the man- agement report for the Group. Section 281 paragraph 2 UGB (Austrian Company Code) applies to alternated versions. Mag. Alexander Wlasto eh Mag. (FH) Isabelle Vollmer eh Certified Public Accountant Certified Public Accountant FINANCIAL STATEMENTS AND MANAGEMENT REPORT CA IMMOBILIEN ANLAGEN AKTIENGESELLSCHAFT, VIENNA 2 27 CA IMMOBILIEN ANLAGEN AKTIENGESELLSCHAFT, VIENNA ANNEX 1 22 8 FINANCIAL STATEMENTS AND MANAGEMENT REPORT ANNEX 1 Financial Statements as at 31.12.2021 226 Balance Sheet as at 31.12.2021 229 Income Statement for the year ended 31.12.2021 231 Notes on the Financial Statements for the year ended 31.12.2021 232 Asset Analysis for the business year 2021 251 Information about Group companies 253 ANNE X 2 Management Report 254 Declaration of the Management Board due to section 124 of th e austrian stock exchange act (Börsegesetz) 287 Auditor’s Report 288 CONTENT CA IMMOBILIEN ANLAGEN AKTIENGESELLSCHAFT, VIENNA ANNEX 1 22 9 Assets 31.12.2021 31.12.2020 € €1,000 A. Fixed assets I. Intan g ible fixed assets Software 1,210,728.25 542 1,210,728.25 542 II. Tan g ible fixed assets 1. Land and buildin g s 219,074,284.65 246,783 of which land value: €34,870,999.81; 31.12.2020: €43,563 K 2. Other assets, office furniture and e q ui p ment 962,159.02 1,294 220,036,443.67 248,077 III. Financial assets 1. Investments in affiliated com p anies 3,219,268,414.49 2,938,724 2. Loans to affiliated com p anies 292,666,035.74 538,240 3. Investments in associated com p anies 272,146.21 273 3,512,206,596.44 3,477,237 3,733,453,768.36 3,725,856 B. Current assets I. Receivables 1. Trade receivables 730,509.57 461 2. Receivables from affiliated com p anies 52,558,324.66 27,840 3. Receivables from associated com p anies 0.00 12 4. Other receivables 19,384.86 1,735 53,308,219.09 30,048 II. Cash and cash e q uivalents 286,215,922.83 694,418 339,524,141.92 724,466 C. Deferred char g es 7,845,148.47 9,929 D. Deferred tax asset 664,549.51 0 4,081,487,608.26 4,460,251 BALANCE SHEET AS AT 31.12.2021 CA IMMOBILIEN ANLAGEN AKTIENGESELLSCHAFT, VIENNA ANNEX 1 2 30 Liabilities and shareholders’ equity 31.12.2021 31.12.2020 € €1,000 A. Shareholders' e q uit y I. Share ca p ital Share ca p ital drawn 774,229,017.02 718,337 Treasur y shares – 42,020,868.99 – 42,021 732,208,148.03 676,316 II. Tied ca p ital reserves 998,958,619.09 854,841 III. Tied reserves for treasur y shares 42,020,868.99 42,021 IV. Net p rofit 440,138,865.80 897,605 of which p rofit carried forward: €293,377,808.81; 31.12.2020: €814,502 K 2,213,326,501.91 2,470,783 B. Grants from p ublic funds 377,300.76 390 C. Provisions 1. Provision for severance p a y ment 395,533.00 505 2. Tax p rovisions 464,000.00 114 3. Provision for deferred taxes 0.00 161 4. Other p rovisions 17,781,520.61 42,659 18,641,053.61 43,439 D. Liabilities 1. Bonds 1,434,031,500.00 1,741,481 of which convertible: €0.00; 31.12.2020: €200,000 K thereof with a residual term of u p to one y ear: €142,410,500.00; 31.12.2020: €107,450 K thereof with a residual term of more than one y ear: €1,291,621,000.00; 31.12.2020: €1,634,031 K 2. Liabilities to banks 100,833,286.70 111,134 thereof with a residual term of u p to one y ear: €1,224,750.00; 31.12.2020: €1,847 K thereof with a residual term of more than one y ear: €99,608,536.70; 31.12.2020: €109,287 K 3. Trade p a y ables 818,459.57 946 thereof with a residual term of u p to one y ear: €757,912.96 ; 31.12.2019: €608 K thereof with a residual term of more than one y ear: €60,546.61; 31.12.2020: €338 K 4. Pa y ables to affiliated com p anies 38,222,158.49 67,136 thereof with a residual term of u p to one y ear: €38,222,158.49; 31.12.2020: €67,136 K 5. Other liabilities 269,469,528.24 18,969 of which from taxes: €329,466.59 €; 31.12.2020: €452 K of which social securit y related: €163,010.72; 31.12.2020: €151 K thereof with a residual term of u p to one y ear: €269,469,528.24; 31.12.2020: €18,969 K 1,843,374,933.00 1,939,666 thereof with a residual term of u p to one y ear: €452,084,849.69; 31.12.2020: €196,010 K thereof with a residual term of more than one y ear: €1,391,290,083.31; 31.12.2020: €1,743,656 K E. Deferred income 5,767,818.98 5,973 4,081,487,608.26 4,460,251 CA IMMOBILIEN ANLAGEN AKTIENGESELLSCHAFT, VIENNA ANNEX 1 2 31 2021 2020 € € € 1,0 00 € 1,0 00 1. Gross revenues 30,739,268.50 30,228 2. Other operating income a) Income from the disposal and reversal of impairment losses of fixed assets except of financial assets 14,683,348.65 5,137 b) Income from the reversal of provisions 193,980.31 304 c) Other income 644,135.17 15,521,464.13 440 5,881 3. Staff expense a) Salaries – 13,502,990.73 – 12,902 b) Social expenses – 2,609,997.72 – 16,112,988.45 – 2,486 – 15,388 thereof expenses in connection with pensions: €253,573.27; 2020: €275 K thereof expenses for severance payments and payments into staff welfare funds: €364,490.52; 2020: €324 K thereof payments relating to statutory social security contributions as well as payments dependent on remuneration and compulsory contributions: €1,768,674.04; 2020: €1,743 K 4. Depreciation on intangible fixed assets and tangible fixed assets – 8,140,093.55 – 11,532 of which unscheduled depreciation in accordance with § 204 para. 2 Commercial Code: €0.00; 2020: €3,688 K 5. Other operating expenses a) Taxes – 860,545.08 – 26,297 b) Other expenses – 19,390,305.83 – 20,250,850.91 – 21,622 – 47,919 6. Subtotal from lines 1 to 5 (operating result) 1,756,799.72 – 38,730 7. Income from investments 179,485,702.94 123,378 of which from affiliated companies: €179,336,988.16; 2020: €122,303 K 8. Income from loans from financial assets 14,108,603.56 19,796 of which from affiliated companies: €14,108,603.56; 2020: €19,796 K 9. Other interest and similar income 3,315,421.20 431 of which from affiliated companies: €11,875.00; 2020: €409 K 10. Income from the disposal and revaluation of financial assets 11,366,142.30 3,619 11. Expenses for financial assets, thereof – 34,495,898.51 – 3,502 a) Impairment: €34,494,602,50; 2020: €3,239 K b) Expenses from affiliated companies: €34,489,692.22; 2020: €3,239 K 12. Interest and similar expenses – 31,460,104.14 – 34,634 of which relating to affiliated companies: €73,794.44; 2020: €766 K 13. Subtotal from lines 7 to 12 (financial result) 142,319,867.35 109,088 14. Result before taxes 144,076,667.07 70,358 15. Taxes on income 2,684,389.92 12,745 thereof income deferred taxes: €826,052.24; 2020: €191 K 16. Net profit for the year 146,761,056.99 83,103 17. Profit carried forward from the previous year 293,377,808.81 814,502 18. Net profit 440,138,865.80 897,605 INCOME STATEMENT FOR THE YEAR ENDED 31.12.2021 CA IMMOBILIEN ANLAGEN AKTIENGESELLSCHAFT, VIENNA ANNEX 1 2 32 ACCOUNTING AND VALUATION PRINCIPLES AND GENERAL INFORMATION CA Immobilien Anlagen Aktiengesellschaft (“CA Immo AG”) is classified as public interest entity according to section 189a Aus- trian Commercial Code (UGB) and as a large company according to section 221 Austrian Commercial Code (UGB). The annual financial statements were prepared in accordance with Austrian Generally Accepted Accounting Principles in the current version and with the principles of proper accounting and general standards, to present a true and fair view of assets, finan- cial situation and profit and loss. Furthermore, going concern principle, prudence and completeness as well as individual valua- tion of assets and liabilities were taken into account in the preparation of the financial statements. For profit and loss, classification by nature was used. Covid-19 pandemic - impact on CA Immo AG: The year 2021 continued to be dominated by the effects of global Covid-19 pandemic. The outbreak of the Covid-19 pandemic in 2020 has affected global financial and real estate markets. Many countries again imposed general lockdowns and travel restrictions. As a result, market activity in many sectors continued to be severely impacted. The real estate sector is also experiencing the consequences of the pandemic. Some real estate markets are still reporting signifi- cantly lower levels of transaction activity and liquidity. Hotels still have to close due to low occupancy rates. Retailers are increas- ingly requesting rent deferrals or rent reductions as a consequence of significant sales losses. The short- and long-term economic impact of the Covid-19 pandemic on real estate markets remains highly uncertain. The longer the crisis lasts, the more complex and severe the effects will be. CA Immo AG did not make use of state aid (neither short-time work, grants nor deferrals). Given the significant decline in transaction and letting activities, extended marketing and vacancy periods for unlet units are also likely in the future. As demand for office space is primarily dependent on macroeconomic developments, CA Immo AG monitors how rental income from office spaces is developing. In order to ensure the safety of tenants and employees and to be able to react quickly if required, CA Immo AG has appointed a Health and Safety Taskforce, which starting March 2020, reacts on the develop- ments and establishes hygienic measures to be taken at regional level in the respective office spaces. An action plan was set up in 2021 and was updated whenever necessary, based on the actual infection numbers. These also included measures and internal rules of conduct for multiple scenarios and escalation levels to ensure a safe environment for all building users at all times. Due to the Covid-19 pandemic a Home-Office rule is in place for all employees. Offices of C A Immo AG are open with voluntary office attendance with mandatory mask wearing in all office spaces. Business trips and meetings will be restricted until further notice. Going Concern The Covid-19 pandemic had no significant impact on the financial position, financial performance and cash flows of CA Immo AG as at 31.12.2021. However, due to existing or future legal measures, it cannot be ruled out that the pandemic could have negative effects on real estate properties or tenant groups or subsidiaries. Thus, the effects of the Covid-19 pandemic on the future financial position of CA Immo AG cannot be conclusively assessed and are continuously evaluated. Financial Covenants Bank financings and bonds in CA Immo AG and its subsidiaries are subject to so-called financial convenants. These usually refer to LTV (Loan to Value) and ISCR (Interest Service Coverage Ratio). Given the ongoing negative economic development, it cannot be ruled out that there will be a breach of contractual conditions (financial convenants, such as ISCR and LTV) in the future. As at NOTES ON THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31.12.2021 CA IMMOBILIEN ANLAGEN AKTIENGESELLSCHAFT, VIENNA ANNEX 1 2 33 31.12.2021 no financial convenants of the CA Immo AG and its subsidiaries were breached. The effects of the Covid-19 pandemic on possible future breaches of financial convenants of the CA Immo AG are continuously evaluated. The Covid-19 pandemic has no impact on the accounting policies applied. 1. Fixed assets Intangible and tangible fixed assets Intangible and tangible assets are stated at acquisition or production cost reduced by scheduled depreciation, if depreciable, and unscheduled depreciation, where required. Years from to Software 3 4 Fit-outs 5 10 Buildings 33 50 Other assets, office furniture and equipment 2 20 Scheduled depreciation is performed on a linear basis, with t he depreciation period corresponding to useful life expectancy. Additions in the first half of the business year are subject to full annual depreciation, while additions in the second half are sub- ject to half of the annual depreciation. Unscheduled depreciation is only carried out where it is anticipated that permanent value impairments will occur. Reversal of impairments recognised in prior periods are recorded if the fair value is higher than the book value at the balance sheet date, but below amortised costs. Financial assets Shares in affiliated companies and investments are stated at acquisition costs less unscheduled depreciation. Loans to affiliated companies are stated at acquisition costs less repayments made and unscheduled depreciation. Unscheduled depreciation is only recorded if permanent impairment losses are expected to occur. A reversal of impairment losses recognised in prior periods is recorded if the fair value is considerably higher than the book value at the balance sheet date. The valuation is done by a simplified subsidiary valuation model based on the fair value of the respective property for IFRS pur- poses adjusted for other assets or liabilities of the subsidiary. 2. Current assets Receivables are stated at nominal value. Identifiable default risks are considered by carrying out individual value adjustments. Income from investments is recognised on the basis of shareholders’ resolutions. Reversal of short-term assets impairments or the release of allowances are made when the underlying reasons for such decreases are no longer valid. The basis for determining the fair values of interest receivables is the market value of the properties of the respective subsidiaries (based on market value appraisals used for the IFRS consolidated financial statements purposes). 3. Deferred charges and deferred income Prepayments are recorded under deferred charges. Additionally the disagio of the bond is capitalised under this item and re- leased over the redemption period, according to the effective interest rate method. CA IMMOBILIEN ANLAGEN AKTIENGESELLSCHAFT, VIENNA ANNEX 1 2 34 Rent prepayments and investment allowances from tenants are shown under deferred income and will be released over the mini- mum lease term. 4. Deferred taxes Provisions for deferred taxes are made using the 25% rate of corporate income tax, according to Art 198 par 9 and 10 in Austrian Commercial Code, using the liability method, i.e. on the temporary differences arising between tax basis of assets and liabilities and their accounting values and without discounting. Deferred taxes with a tax rate of 3% were also applied to deferred taxes of tax members, which themselves account for only 22% of group tax (instead of 25% corporate income tax). CA Immo AG records tax losses amounting to the maximum of netted deferred tax assets and deferred tax liabilities, taking into account the 75% thresh- old. A surplus of tax losses carried forward is not recognized. CA Immo AG estimates that the tax reform passed in Austria in 2022 will result a reduction in deferred tax assets of approximately €148 K. 5. Grants from public funds The grants relate entirely to buildings and are released over the remaining useful life of the building. 6. Provisions Provisions for severance payments amount to 569 % (31.12.2020: 700%) of the imputed statutory notional severance payment obligations at the balance sheet date. The calculation is performed using the PUC method, which is recognised in international accounting, based on an interest rate of -0.04% (31.12.2020: -0.34%) and future salary increases (including inflation rate) of 3% (31.12.2020: 3%). For the computation of severance payments provisions, AVÖ 2018-P was used as actuarial basis. The period for build-up is until retirement, i.e. for a maximum of 25 years. Interest as well as effects from the change in interest rate were rec- orded in “personnel expenses”. Tax and other provisions are made on a prudent basis, in accordance with anticipated requirements. They take into account all identifiable risks and not yet finally assessed liabilities. 7. Liabilities Liabilities are stated at the amount to be paid. 8. Tax group In business year 2005 a group and tax compensation agreement was concluded for the formation of a tax group within the mean- ing of section 9 of the Austrian Corporation Tax Act (KStG) effective from business year 2005. In the subsequent years this was expanded to include additional group members. The group is headed by CA Immo AG. In business year 2021 the tax group com- prised 12 Austrian group companies (2020: 15), in addition to the group head entity. The allocation method used by the CA Immo tax group is the distribution method where tax profits of a group member are offset against pre-group tax losses carried forward and the remaining profit of the group member taxed at a rate of 22%, respectively up to a tax rate of 25% if the tax group has a profit. Losses carried forward of a group member are retained. In case of termination of the tax group or the withdrawal of a tax group member, CA Immo AG, as group head entity, is obliged to pay a final compensation payment for unused tax losses that have been allocated to the head of the group. These compensation payments are based on the fair value of all (notional) prospective tax reductions, which the group member would have potentially realized, if it had not joined the tax group. Upon withdrawal of a tax group member or termination of the tax group, the final compensation payment will be determined through the professional opinion of a mutually appointed chartered accountant. As at 31.12.2021 the possible obliga- tions against group companies resulting from a possible termination of the group, were estimated at €22,372 K (31.12.2020: €23,028 K). In 2021 one member of the tax group left before liquidation, whereby no payment was required for the final settlement. CA IMMOBILIEN ANLAGEN AKTIENGESELLSCHAFT, VIENNA ANNEX 1 2 35 Tax expenses in the profit and loss are reduced by the tax compensation of tax group members. 9. Note on currency translation Foreign exchange receivables are valued at the purchase price or the lower exchange rate as at the balance sheet date. Foreign exchange liabilities are valued at the purchase price or the higher exchange rate as at the balance sheet date. EXPLANATORY NOTES ON THE BALANCE SHEET AND INCOME STATEMENT 10. Explanatory notes on the balance sheet a) Fixed assets The breakdown and development of fixed assets can be seen in the assets an alysis in Appendix 1. T angible assets Additions to property and buildings mainly relate to investments in Erdberger Lände. In 2021 one investment property was sold. The acquisition/production costs of the buildings include capitalized interest in the amount of €133 K, which will be depreciated over a period of 40 years following the put into function in 2018. As at the balance sheet date, the tangible assets comprise 7 prop- erties (31.12.2020: 8 properties). In 2021 there was no unscheduled depreciation on tangible assets (2020: €3,688 K) and no reversals of impairment losses (2020: €5,137 K) were recorded. Financial assets The notes on affiliated companies can be found in Appendix 2. Impairment losses on financial assets in the amount of €34,495 K (2020: €3,239 K) and reversals of impairment losses in the amount of €1,675 K (2020: €3,397 K) were recognized in 2021. Book value of investments in affiliated companies amounts to €3,219,268 K (31.12.2020: €2,938,724 K). Current additions are mainly the result of various shareholders’ contributions in the amount of €236,565 K and of intragroup acquisition of 7 companies in Poland €249,213 K. The disposals mainly relate the sale of a real estate company in Hungary and capital repayments amounting to €182,262 K, of which €49,567 K were not yet cashed in and consequently these are reported as receivables. CA IMMOBILIEN ANLAGEN AKTIENGESELLSCHAFT, VIENNA ANNEX 1 2 36 Loans to affiliated companies are made up as follows: €1,000 31.12.2021 31.12.2020 4P - Immo. Praha s.r.o., Prague 36,589 39,589 RCP Amazon, s.r.o., Prague 31,388 33,488 Vaci 76 Kft, Budapest 27,526 28,976 INTERMED CONSULTING & MANAGEMENT S.R.L., Bucharest 23,200 28,200 EUROPOLIS City Gate Ingatlanberuházási Kft, Budapest 22,700 22,700 EUROPOLIS ORHIDEEA B.C. S.R.L., Bucharest 22,424 54,424 CA Immo Invest GmbH, Frankfurt 21,300 22,000 Duna Irodaház Kft., Budapest 19,439 20,239 CA Immo Holding B.V., Amsterdam 8,604 130,758 Europolis Holding B.V., Amsterdam 0 31,690 BA Business Center s.r.o., Bratislava 0 25,000 Other up to €17 m 79,496 101,176 292,666 538,240 Loans to affiliated companies to the value of €41,708 K (31.12.2020: €25,000 K) have a remaining term of up to one year. b) Current assets All receivables – as in the previous year – have a due date of less than one year. There is no exchangeable securitization issued in connection with receivables. Trade receivables amounting to €731 K (31.12.2020: €461 K) include outstanding rent and reinvoiced operating costs. Receivables from affiliated companies are made up as follows: €1,000 31.12.2021 31.12.2020 Trade receivable (current reinvoicings to affiliated companies) 218 988 Receivables from capital repayment 49,567 0 Receivables from tax compensation 2,378 12,716 Receivables from interest 395 11,636 Receivables from loans 0 2,500 52,558 27,840 Other receivables amountin g to €19 K (31.12.2020: €1,735 K) mainly include reinvoiced expenses (31.12.2020: receivables from acquisition of shares, due to a subsequent purchase price adjustment). c) Deferred charge s €1,000 31.12.2021 31.12.2020 Disagio bonds 7,376 9,338 Other 469 591 7,845 9,929 CA IMMOBILIEN ANLAGEN AKTIENGESELLSCHAFT, VIENNA ANNEX 1 2 37 d) Deferred tax assets/ Provisions for deferred taxes Deferred taxes comprise the offsetting of deferred tax assets and deferred tax liabilities and are based on the differences between tax and corporate value approaches for the following (+ deferred tax assets / - deferred tax liabilities): €1,000 31.12.2021 31.12.2020 Land and buildings – 8,935 – 12,426 Partnership 240 – 4,352 Ancillary bond expenses 5,343 7,882 Bank loans ancillary expenses 1,237 471 Provisions for severance payments 43 49 Deferred income 4,730 5,391 Base for tax rate 25 % 2,658 – 2,985 Out of which resulted deferred tax assets / provision deferred taxes 665 – 746 less: offsetting with tax losses carried forward 0 585 As at 31.12. 665 – 161 Movements in deferred taxes are presented below: €1,000 2021 2020 As at 1.1. provision for deferred taxes – 161 – 352 Changes in deferred taxes affecting profit and loss 826 191 As at 31.12. deferred tax assets / provision for deferred taxes 665 – 161 e) Share holders' equity Share capital is equivalent to the fully paid in nominal capital of €774,229,017.02 (31.12.2020: €718,336.602.72). It is divide d into 106,496,42 2 (31.12.2020: 98,808,332) bearer shares and four registered shares of no par value. Out of nominal capital 5,780,037 treasury shares (31.12.20209: 5,780,037), each amounting to €7.27, thus totaling €42,020,868.99 (31.12.2020: €42,020,868.99), were deducted from shareholders’ equity. The registered shares are held by SOF-11 Klimt CAI S.à r.l., Luxem- burg, an entity managed by Starwood Capital Group, each granting the right to nominate one member of the Supervisory Board. The Supervisory Board currently consists of five members elected by the Annual General Meeting as well as two members elected by the registered shares and four delegated by the works council. Due to the change-of-control clause of the convertible bond triggered by the offer of SOF-11 Klimt CAI S.à r.l., nearly all converti- ble bond holders exercised their conversion rights. As of 30.4.2021, respectively 13.9.2021, the conversion rights were serviced by contingent capital and partly by issuing new shares. Overall, the share capital increased by €55,892,414.30 from €718,336,602.72 to €774,229,017.02 in the reporting year and is divided into 106,496,422 ordinary bearer shares and four registered shares. The remaining outstanding convertible bonds with a nominal value of €100 K were repaid in cash. As at 31.12.2021, CA Immobilien Anlagen AG held 5,780,037 treasury shares in total (31.12.2020: 5,780,037 treasury shares). Given the total number of voting shares issued 106,496,426 (31.12.2020: 98,808,336), this is equivalent to around 5.4% (31.12.2020: 5.8%) of the voting shares. In May 2021, a dividend amount of €1.00 (2020: €1.00) for each share entitled to dividend, totalling €100,645 K (2020: €93,028 K), was distributed to the shareholders in accordance with the resolution of the 34 th Annual General Meeting. In its letter CA IMMOBILIEN ANLAGEN AKTIENGESELLSCHAFT, VIENNA ANNEX 1 2 38 dated 3.11.2021, the majority shareholder SOF-11 Klimt CAI S.à r.l., Luxembourg, requested to convene an extraordinary share- holders ' meeting to resolve on special dividends totaling €5.00 per dividend-bearing share. In accordance with the resolution of the Extraordinary General Meeting on 30.11.2021, the special dividends will be distributed in two tranches of €2.50 per dividend- bearing share. The first tranche was paid out on 15.12.2021; the second tranche was paid on 15.3.2022. The total net profit as at 31.12.2021 amounting to €440,139 K (31.12.2020: €897,605 K) is subject to a distribution restriction in the amount of the deferred tax asset of €665 K. As at 31.12.2021, there exists unused authority capital in the amount of €350,069,852.74, which can be utilized until 18.9.2023 at the latest, as well as contingent capital in the amount of €143,667,319.09 earmarked for servicing convertible bonds that will be issued in the future based on the authorization of the Annual General Meeting as of 9.5.2018 (contingent capital 2018). The declared revenues reserves are tied and the book value corresponds to the nominal value of the treasury shares deducted from the share capital. €1,000 31.12.2021 31.12.2020 Other additional expenses for treasury shares – 53,663 – 53,663 Nominal treasury shares in share capital 42,021 42,021 Reserves for other acquisition costs for treasury shares 53,663 53,663 Tied revenue reserves for treasury shares 42,021 42,021 The requ irement of the legal reserve up to 10% of the share capital is fulfilled. The revenue reserves have not changed compared to the previous year. f) Grants from public funds The grants are expensed over the remaining useful life of the respective asset. These were granted in previous years for the con- struction of buildings and a photovoltaic system. g) Provisions Provisions for severance payment amount to €396 K (31.12.2020: €505 K) and include severance payment entitlements of com- pany employees and Management Board members. Tax provisions in the amount of €464 K (31.12.2020: €114 K) mainly relate to provisions for corporate tax. CA IMMOBILIEN ANLAGEN AKTIENGESELLSCHAFT, VIENNA ANNEX 1 239 Other provisions are made up as follows: €1,000 31.12.2021 31.12.2020 Premiums 8,774 6,730 Derivative transactions 3,547 6,657 Borrowing costs 1,354 420 Legal, auditing and consultancy fees 1,262 460 Staff (vacation and overtime) 1,059 926 Construction services 723 1,001 Court fees 0 25,475 Other 1,063 991 17,782 42,659 In the previous year, the provision for court fees included the provision for a claim for damages filed in the 2020 financial year against the Republic of Austria and the state of Carinthia in the amount of approximately €1.9 billion in connection with the pri- vatisation of the Bundeswohnbaugesellschaften in 2004. Following a dismissive ruling by the Federal Administrative Court on 22 October 2021 with regard to the claimed exemption from court fee, CA Immo AG had to pay the court fees in 2021. On 2.12.2021 CA Immo AG filed an appeal against this ruling at the Constitutional Court pursuant to Art. 144 B-VG. Long Term Incentive (LTI) Programm: In order to promote a high level of identification with the company’s objectives, all employees are entitled to variable remunera- tion in addition to their fixed salary, thus enabling them to participate in the company’s success. In line with the compensation system of the Management Board, the prerequisite for this is the attainment of the budgeted quantitative and qualitative annual targets as well as a positive consolidated result. Furthermore, selected executives have the opportunity to participate in a share price-based compensation program. In contrast to the model for the Management Board (phantom shares), participation in the LTI programs started before the 2020 financial year was voluntary. The revolving programme had a term (retention period) of three years per tranche and required a personal investment (maximum of 35% of the fixed annual salary). The personal investment was valued at the average share price of the first quarter of the year the tranche started. The number of underlying shares is determined on the basis of this valuation. At the end of the respective three-year performance period, target achievement was defined by means of a target/actual comparison. Performance was measured by the following key figures: NAV growth, TSR (total shareholder return) and FFO (funds from operations) growth. The weighting for NAV and FFO growth was 30% each, and for TSR 40%. Pay- ments were made in cash. The LTI program was subject to a comprehensive revision (adjustment to market standards) in 2019; the new program provides for changes with regard to the group of participants, the conditions of participation, and the performance indicators and was ap- plied for the first time in fiscal year 2020. The new LTI program is revolving and does not provide for any personal investment. The plan grants performance-related remuneration in the form of virtual shares in CA Immo. The final number of virtual shares is determined on the basis of performance criteria linked to the medium-term strategy and share performance. The target amount of the LTI is divided by the volume-weighted average CA Immo share price (= closing price on the Vienna Stock Exchange) over the 3-month period prior to 31.12. of the respective bonus year. This method is used to calculate the preliminary number of virtual shares. Based on the performance criteria measured at the end of the four-year performance period, the final number of virtual shares is deter mined. The LTI is generally determined as of 31.12. of the last year of the four-year performance period. Equal- weighted performance criteria for the LTI are Funds From Operations ("FFO") I and Relative Total Shareholder Return ("TSR") against the EPRA Nareit Developed Europe ex UK Index. Each tranche starts with a target value based on the executive's respec- tive function, which would be received at the end of the term of the respective tranche if 100% of the targets were achieved. T he amount allocat ed to a performance criterion is determined by comparing agreed targets with values actually achieved and ex- pressed as a percentage. Allocation between the performance thresholds is linear. The final number of virtual shares is capped at 200% of the pr eliminary number of virtual shares. For the payout, the final number of virtual shares is multiplied by the volume- CA IMMOBILIEN ANLAGEN AKTIENGESELLSCHAFT, VIENNA ANNEX 1 2 40 weighted average price of the last three months of the performance period. The resulting amount is paid out in cash, subject to a cap of 250% of the LTI target amount. The bonus payment for the Management Board is linked to long-term operational and quality-based targets and also takes ac- count of non-financial performance criteria. It is limited to 200% of the annual salary. Of the variable remuneration, half is linked to the attainment of short-term targets defined annually by the remuneration committee (annual bonus). The other half is based on outperformance of the following indicators defined annually by the remuneration committee: return on equity (ROE), funds from operations (FFO) and NAV growth. The level of the bonus actually paid depends on the degree of target attainment: the values agreed and actually achieved at the end of each business year are determined by the Remuneration Committee. Half of perfor- mance-related remuneration takes the form of immediate payments (short term incentive); the remaining 50% is converted into phantom shares on the basis of the average rate for the last quarter of the business year relevant to target attainment. The payment of phantom shares is made in cash in three equal parts after 12 months, 24 months (mid term incentive) and 36 months (long term incentive) at the average rate for the last quarter of the year preceding the payment year. For this kind of share-based remuneration, which is settled in cash, the liability incurred is recognised over the vesting period as a provision in the amount of the attributable fair value. Until the debt is settled, the attributable fair value is determined afresh on every closing date and settlement date. All changes are recognised in the income statement in the relevant business year. h) Liabilities 31.12.2021 Maturity Maturity Maturity Total €1,000 up to 1 year 1 - 5 years more than 5 years Bonds 142,411 791,621 500,000 1,434,032 Liabilities to banks 1,225 43,807 55,801 100,833 Trade payables 757 61 0 818 Payables to affiliated companies 38,222 0 0 38,222 Other liabilities 269,470 0 0 269,470 Total 452,085 835,489 555,801 1,843,375 31.12.2020 Maturity Maturity Maturity Total €1,000 up to 1 year 1 - 5 years more than 5 years Bonds 107,450 984,031 650,000 1,741,481 Liabilities to banks 1,847 51,117 58,170 111,134 Trade payables 608 338 0 946 Payables to affiliated companies 67,136 0 0 67,136 Other liabilities 18,969 0 0 18,969 Total 196,010 1,035,486 708,170 1,939,666 CA IMMOBILIEN ANLAGEN AKTIENGESELLSCHAFT, VIENNA ANNEX 1 2 41 In bonds, the maturities are accounted for based on the repayment date. The bonds item for 31.12.2021 comprises the following liabilities: Nominal value Nominal interest rate Issue Repayment €1,000 Bond 2015-2022 142,411 2.75% 17.02.2015 17.02.2022 Bond 2016-2023 116,621 2.75% 17.02.2016 17.02.2023 Bonds 2017-2024 175,000 1.88% 22.02.2017 22.02.2024 Bonds 2020-2025 350,000 1.00% 27.10.2020 27.10.2025 Bonds 2018-2026 150,000 1.88% 26.09.2018 26.03.2026 Bonds 2020-2027 500,000 0.88% 05.02.2020 05.02.2027 1,434,032 For the conv ertible bond existing as of 31.12.2020 in the amount of €200,000 K, based on an offer by SOF-11 Klimt CAI S.á r.l., the option to convert into shares was exercised in 2021 and a nominal amount of €100 K was paid in cash. Liabilities to banks comprise investment loans amounting to €100,803 K (31.12.2020: €111,134 K), which are mainly secured by filed claims to entry in the land register and by pledge of bank credits as well as rental receivables and claims from derivative transactions. Trade payables item essentially comprises liabilities for consulting, software changes and liability guarantees as well as general administrative costs. The liabilities shown under payables to affiliated companies relate to capital contributions to an affiliated company not yet paid but already granted, amounting to €38,000 K (31.12.2020: €24,535 K) and trade payables amounting to €222 K (31.12.2020: €201 K). Other liabilities are mainly made up of the second installment of the special dividend decided on 30.11.2021 in the amount of €251,791 K and accrued interest for bonds amounting to €15,747 K (31.12.2020: €16,985 K). i) Deferred income €1,000 31.12.2021 31.12.2020 Investment grants from tenants 4,730 5,391 Rent prepayments received 1,037 582 5,768 5,973 CA IMMOBILIEN ANLAGEN AKTIENGESELLSCHAFT, VIENNA ANNEX 1 2 42 j) Contingent liabilities Maximum amount as at Outstanding on reporting date Outstanding on reporting date 31.12.2021 31.12.2021 31.12.2020 1,000 €1,000 €1,000 Guarantees and letters of comfort in connection with sales made by affiliated companies 132,734 € 115,546 60,746 Guarantees for loans granted to affiliated companies 15,345 € 15,345 15,531 Guarantees in connection with sales made by other group companies 19,699 € 19,699 26,442 Guarantees for loans granted to other group companies 700 € 700 700 168,478 151,290 103,419 The shar es of in the following companies are secured by a pledge in favour of the financing banks of the subsidiaries: - CA Immo AG in Visionary Prague, s.r.o., Pragu e - CA Immo Saski Point Sp. Z o.o., Wa rsaw - CA Immo Bitwy W arszawskiej Sp. Z o.o., Wars aw - CA Immo Sien na Center sp. Z o.o., Wa rsaw - C A Immo Warsaw Towers sp. Z o. o., Warsaw Out of reported bank balances, an amount of €2,000 K is pledged in favour of the financing banks of the subsidiaries. In connection with the disposals, marketable guarantees for coverage of possible warranty and liability claims exist and - where necessary - financial provisions were made. k) Liabilities from the utilisation of tangible assets The lease-related liability from the utilisation of tangible assets not reported in the balance sheet is €825 K (31.12.2020: €803 K) for the subsequ ent business year and €3,892 K (31.12.2020: €3,817 K) for the subsequent five business years. Out of this, €740 K (31.12.2020: €722 K) is attributable to affiliated companies for the subsequent business year and €3,693 K (31.12.2020: €3,609 K) for the subsequent five business years. The above mentioned amounts refer to the Rennweg office/ Mechelgasse 1. The rental agreement was concluded for an unlimited period, whereas a waiver of termination right until 31.12.2026 was agreed. l) Details of derivative financial instruments - swaps €1,000 Nominal value Fixed interest rate as at Interest reference rate Fair value thereof considered as provisions Start End 31.12.2021 31.12.2021 31.12.2021 31.12.2021 06/2017 06/2027 10,668 0.79% 3M-EURIBOR – 440 – 440 06/2017 06/2027 26,821 0.76% 3M-EURIBOR – 1,041 – 1,041 08/2017 12/2029 28,796 1.12% 3M-EURIBOR – 2,066 – 2,066 66,285 – 3,547 – 3,547 CA IMMOBILIEN ANLAGEN AKTIENGESELLSCHAFT, VIENNA ANNEX 1 2 43 €1,000 Nominal value Fixed interest rate as at Interest reference rate Fair value thereof considered as provisions Start End 31.12.2020 31.12.2020 31.12.2020 31.12.2020 12/2016 12/2024 9,135 0.44% 3M-EURIBOR – 308 – 308 06/2017 06/2027 10,908 0.79% 3M-EURIBOR – 832 – 832 06/2017 06/2027 27,776 0.76% 3M-EURIBOR – 1,992 – 1,992 08/2017 12/2029 28,796 1.12% 3M-EURIBOR – 3,524 – 3,524 76,615 – 6,657 – 6,657 The fair value corresponds to the value CA Immo AG would receive upon termination of the contract at the balance sheet date. The value woul d be received from the financial institution, with which the contract was signed. The quoted value is a cash value. Future cash flows from variable payments as well as discount rates will be calculated based on generally accepted financial mod- els. For the valuation, inter-bank middle rates are used. Specific bid/ ask rates as well as other termination expenses are not in- cluded in the valuation. 11. Explanatory notes on the income statement Gross revenues By type €1,000 2021 2020 Rental income from real estate 16,877 15,430 Operating costs passed on to tenants 5,335 4,912 Income from management services 7,825 9,139 Other revenues 702 747 30,739 30,228 In 2021 reductions in rental in come in Austria due to Covid-19 amounted to €139 K (2020: €232 K). By region €1,000 2021 2020 Austria 24,091 23,266 Germany 186 961 Eastern Europe 6,462 6,001 30,739 30,228 Other operating income The income from the disposal of fixed assets fully relates to the sale of a property at the end of 2021 (2020: fully related to income from the reversal of impairment losses of fixed assets). The revenues from the release of provisions mainly refers to provisions for legal fees, Annual General Meeting related expenses and other consulting expenses (2020: additional expenses related to a bond issuance and Supervisory Board remuneration). CA IMMOBILIEN ANLAGEN AKTIENGESELLSCHAFT, VIENNA ANNEX 1 2 44 Other operating income of €644 K (2020: €440 K) results from expenses reinvoicings, insurance revenues and the release of the deferrals for government grants. Staff expense This item, totalling €16,113 K (2020: €15,388 K), includes expenses for the 72 staff members (2020: 70) employed by the com- pany on average. The expenses for retirement benefits are as follows: €1,000 2021 2020 Pension fund contributions for Management Board members and senior executives 180 183 Pension fund contributions for other employees 74 92 254 275 Expenses for severance pa yments dependent on remuneration and compulsory contributions are made up as follows: €1,000 2021 2020 Change in provision for severance payments to Management Board members and senior executives – 102 174 Change in provision for severance payments to other employees – 8 – 6 Severance payments to Management Board members 307 0 Pension fund contributions for Management Board members and senior executives 92 92 Pension fund contributions for other employees 75 64 364 324 Depreciation €1,000 2021 2020 Depreciation of intangible fixed assets 309 200 Scheduled depreciation of buildings 7,534 7,303 Unscheduled depreciation of real estate 0 3,688 Depreciation of other assets, office furniture and equipment 289 313 Low-value assets 8 28 8,140 11,532 CA IMMOBILIEN ANLAGEN AKTIENGESELLSCHAFT, VIENNA ANNEX 1 2 45 Other operating expenses Taxes, which do to fall under taxes on income are made up as follows: €1,000 2021 2020 Real estate charges passed on to tenants 208 208 Non- deductible input VAT 653 614 Court fees 0 25,475 861 26,297 The court fees were for a clai m for damages filed against the Republic of Austria and the state of Carinthia in the amount of ap- proximately €1.9 billion in connection with the privatisation of the Bundeswohnbaugesellschaften in 2004. Other expenses are made up as follows: €1,000 2021 2020 Expenses directly related to properties Operating costs passed on to tenants 5,132 4,707 Maintenance costs 955 2,377 Own operating costs (vacancy costs) 717 1,170 Administration and agency fees 47 156 Other 162 263 Subtotal 7,013 8,673 General administrative costs Legal, auditing and consultancy fees 7,977 3,533 Office rent including operating costs 748 735 Administrative and management costs 725 449 Advertising and representation expenses 520 382 Costs charged to group companies 362 215 Supervisory Board remuneration 308 357 Licence costs 301 162 Other fees and bank charges 255 248 Bond issue related expenses 0 5,668 Other 1,181 1,200 Subtotal 12,377 12,949 Total other operating expenses 19,390 21,622 Income from investments This item comprises dividends paid from companies in Austria in amount of €53,623 K (2020: €123,201 K) as well as companies in Germany and Central Eastern Europe in amount of €125,863 K (2020: €177 K). Income from loans from financial assets This item comprises interest income from loans. Other interest and similar income The income mainly refers to valuation of derivatives (2020: interest amounts from an intercompany loan granted to a subsidiary). CA IMMOBILIEN ANLAGEN AKTIENGESELLSCHAFT, VIENNA ANNEX 1 2 46 Income from the disposal and revaluation of financial assets and short-term securities €1,000 2021 2020 Release of impairment due to increase in value 1,675 3,397 Repayment of loans above book value 375 204 Sale of financial assets 9,316 18 11,366 3,619 Expe nses for financial assets and interest receivables in current assets €1,000 2021 2020 Depreciation of financial assets 34,495 3,239 Loss from disposal 1 263 34,496 3,502 of which due to dividends payments 34,174 1,026 Interest and si milar expenses €1,000 2021 2020 Interest costs for bonds 24,691 23,095 Interest for bank liabilities for the financing of real estate assets 2,161 2,200 Expenses for derivative transactions 1,074 2,588 Costs and commitment interest for other loans 1,222 227 Negative interest 2,238 896 Interest costs in respect of affiliated companies 74 766 Expenses for repurchase of bonds 0 4,862 31,460 34,634 T axes on income €1,000 2021 2020 Tax compensation tax group members 2,340 12,741 Corporate income tax – 482 – 187 Deferred taxes 826 191 Tax revenues 2,684 12,745 CA IMMOBILIEN ANLAGEN AKTIENGESELLSCHAFT, VIENNA ANNEX 1 2 47 OTHER INFORMATION 12. Affiliated companies CA Immobilien Anlagen AG, Vienna, is the main parent company of CA Immo Group. The consolidated financial statements are drawn up pursuant to International Financial Reporting Standards (IFRS) and the supplementary provisions of section 245a of the Austrian Commercial Code (UGB) and filed at the Vienna Commercial Court. The main shareholder SOF-11 Klimt CAI S.à.r.l., Luxembourg, is not obliged to prepare consolidated financial statements in Lux- embourg and is not obliged to publish voluntary prepared consolidated financial statements. 13. Corporate bodies of CA Immobilien Anlagen Aktiengesellschaft, Vienna Management Board Silvia Schmitten-Walgenbach (from 1.1.2022) Dr. Andreas Schillhofer (from 1.6.2019) Keegan Viscius (from 1.11.2018) Andreas Quint (until 31.12.2021) Total salary payments (excluding salary-based deductions) to Management Board members amounted to €3,464 K (€2,763 K in 2020). The salary-based deductions totaled €198 K (2020: €172 K). Total fixed salary compon ents amounted to €1,581 K (€1,588 K in 2020) and were made up of the basic salary of €1,410 K (2020: €1,410 K), other benefits (in particular remuneration in kind for cars, expense allowances and travel expenses) of €48 K (2020: €55 K) and contributions to pension funds of €123 K (2020: €123 K). V ariable compensation comp onents amounted to €1,269 K (2020: €1,175 K). Special payments amounted to €307 K (2020: €0 K). As at the balance sheet date 31.12.2021, severance payment provisions for Management Board members totaled €311 K (31.12.2020: €412 K). There were no payment obligations to former members of the Management Board (i.e. not in office in the reporting year). As a consequence of the termination of the activity for one Management Board member, as at 31.12.2021, provi- sions for bonus es (at 100% target achievement level) in amount of €2,157 K as well as a payable from contract termination in amount of €307 K are booked. No loans or advances were granted to members of the Management Board. As at 31.12.2021, based on assumption of 100% target achievement, provisions amounting to €5,329 K (31.12.2020: €3,460 K) had been made up for the Management Board under the variable remuneration system. Supervisory Board Elected by the General Meeting: Torsten Hollstein, Chairman Jeffrey G. Dishner, Deputy Chair Dr. Monika Wildner, Deputy Chair Univ.-Prof. MMag. Dr. Klaus Hirschler Michael Stanton Dr. Florian Koschat (until 6.5.2021) Delegated by registered share: Sarah Broughton Laura Rubin Delegated by works council: Georg Edinger, BA, REAM (IREBS) Nicole Kubista Sebastian Obermair Walter Sonnleitner CA IMMOBILIEN ANLAGEN AKTIENGESELLSCHAFT, VIENNA ANNEX 1 2 48 As at the balance sheet date, the Supervisory Board comprised five capital representatives elected by the Annual General Meeting, two capital representatives appointed by means of registered shares and four employee representatives. In business year 2021 (for 2020), total remuneration of €328 K (2020: €309 K) was paid out (including attendance fees of €113 K; €84 K in 2020). Moreover, expenditure of €202 K was reported in connection with the Supervisory Board in business year 2021 (2020: €78 K). Of this, cash outlays for travel expenses accounted for approximately €13 K (2020: €9 K) and other expenditure (including training costs and license costs) accounted for €33 K (2020: €52 K). Legal and other consultancy services accounted for €156 K (2020: €17 K). No other fees (particularly for consultancy or brokerage activities) and no loans or advances were paid to Supervisory Board members. Total Supervisory Board remuneration of €299 K for business year 2021 will be proposed to the Annual General Meeting on the basis of the same criteria (fixed annual payment of €30 K per Supervisory Board member plus attendance fee of €1 K per meeting), taking account of the waiver of remuneration for Supervisory Board members appointed on the basis of registered shares or related to the Starwood Group respectively. The remuneration was taken into account in the financial statements as at 31.12.2021. All business transactions conducted between the company and members of the Supervisory Board which oblige such members to perform services for the CA Immo AG outside of their Supervisory Board activities in return for remuneration of a not inconsid- erable value must conform to industry standards and be approved by the Supervisory Board. The same applies to contracts with companies in which a Supervisory Board member has a significant economic interest. Sarah Broughton, Laura Rubin and Jeffrey G. Dishner perform comprehensive management functions within Starwood Capital Group. In the business year 2021, Starwood Capital Group (via its vehicle SOF-11 Klimt CAI S.à r.l.) increased its stake in CA Immo AG from around 28.25% of the share capi- tal to around 57.89% as part of an anticipated mandatory offer pursuant to Sections 22 et seq. of the Austrian Takeover Act as well as further acquisitions on and off the stock exchange. Starwood Capital Group (Starwood) Since 27.9.2018, SOF-11 Klimt CAI S.à r.l. is the company's largest single shareholder. As of 31.12.2021, SOF-11 Klimt CAI S.à.r.l. held 61,654,765 bearer shares and four registered shares of CA Immo AG, this corre- sponds to 57.89% of the company's share capital. SOF-11 Klimt CAI S.à.r.l. is a company controlled by Starwood Capital Group ("Starwood"). Starwood is a private investment company with a global focus on real estate, energy, infrastructure, oil and natural gas. 14. Employees The average number of staff employed by the company during the business year was 72 (2020: 70). 15. Auditor's remuneration There is no indication of the auditor's remuneration for the business year pursuant to section 237 para 14 of the Austrian Com- mercial Code (UGB), as this information is contained in the consolidated financial statements of CA Immo AG. 16. Events after the balance sheet date In January 2022 an affiliated company in Hungary was sold. CA Immo AG has drawn in the first quarter 2022 the revolving credit facility in the amount of €300 M. On 18.03.2022, CA Immobilien Anlagen AG was served with an action for annulment directed against the resolutions on the distribution of an additional basic dividend and a super dividend adopted by the Extraordinary General Meeting on 30.11.2021. CA IMMOBILIEN ANLAGEN AKTIENGESELLSCHAFT, VIENNA ANNEX 1 2 49 Ukraine Russia’s invasion of Ukraine has distressed the world economy. The immediate global implications are higher inflation and lower economic growth. The crisis has substantially increased uncertainty and volatility to global financial markets. Major equity indices have deteriorated since the outbreak of the crisis and debt capital markets have been completely closed for a certain time or are only very limited accessible. The risk of further escalations in the conflict as well as additional geopolitical tensions will remain a key topic. CA Immo AG and its subsidiaries have not any properties in Russia or Ukraine in its portfolio. CA Immo AG continuously moni- tors the development of the stock and financial markets. There is no significant currency risk for the subsidiaries of CA Immo AG as rents are generally linked to the EUR and the amount of liquid funds in foreign currencies is regularly monitored. The war in Ukraine and the resulting sanctions and countermeasures may have an impact on the CA Immo AG financial state- ments. The global impact of war could impact the valuation of real estate properties and the determination of expected credit losses. Furthermore, there could be effects on project developments, eg. due to delays in the supply chains, fluctuating financing rates and rising construction costs. The increased uncertainty could also lead to extended marketing periods. The effects cannot be finally assessed due to the dynamic development, but are subject to ongoing evaluations. Despite the uncertainty and possible direct and indirect effects, the CA Immo AG assumes that the Russia-Ukraine war will not affect the company's ability to continue as a going concern. 17. Proposal for the appropriation of net earnings It is proposed that from the net retained earnings of €440,138,865.80 no dividend is distributed to the shareholders. The net retained earnings in the amount of €440,138,865.80 is intended to be carried forward. The profit appropriation proposal reflects the current assessment of the Management and Supervisory Boards. Besides the current geopolitical environment and the in- creased uncertainty and volatility of the markets, the background for this decision is the fact that after the first tranche of €2.50 per share was paid out on 15.12.2021, also the second tranche of €2.50 special dividend per share was paid on 15.3.2022, which was decided in the Extraordinary General Meeting on 30.11.2021. Vienna, 23.3.2022 The Management Board Silvia Schmitten-Walgenbach (Chief Exec utive Officer) Dr. Andreas Schillhofer (Chief Financial Officer) Keegan Viscius (Chief Investment Officer) CA IMMOBILIEN ANLAGEN AKTIENGESELLSCHAFT, VIENNA ANNEX 1 2 50 CA IMMOBILIEN ANLAGEN AKTIENGESELLSCHAFT, VIENNA APPENDIX 1 2 51 Acquisition and production costs as at 1.1.2021 Addition Disposal Acquisition and production costs as at 31.12.2021 € € € € I. Intangible fixed assets Software 3,173,471.63 980,242.05 28,937.00 4,124,776.68 3,173,471.63 980,242.05 28,937.00 4,124,776.68 II. Tangible fixed assets 1. Land and buildings a) Land value 50,658,941.08 0.00 14,329,831.68 36,329,109.40 b) Building value 310,476,523.29 164,500.62 27,960,295.58 282,680,728.33 361,135,464.37 164,500.62 42,290,127.26 319,009,837.73 2. Other assets, office furniture and equipment 4,006,611.55 72,507.05 536,398.74 3,542,719.86 365,142,075.92 237,007.67 42,826,526.00 322,552,557.59 III. Financial assets 1. Investments in affiliated companies 3,121,903,905.23 497,555,075.58 184,196,939.78 3,435,262,041.03 2. Loans to related companies 538,239,806.52 0.00 245,573,770.78 292,666,035.74 3. Investments in associated companies 274,251.50 5,000.00 0.00 279,251.50 3,660,417,963.25 497,560,075.58 429,770,710.56 3,728,207,328.27 4,028,733,510.80 498,777,325.30 472,626,173.56 4,054,884,662.54 ASSET ANALYSIS FOR THE BUSINESS YEAR 2021 CA IMMOBILIEN ANLAGEN AKTIENGESELLSCHAFT, VIENNA APPENDIX 1 2 52 Accumulated depreciation as at 1.1.2021 Depreciation and amortisation in 2021 Reversal of impairment losses in 2021 Accumulated depreciation disposal Accumulated depreciation as at 31.12.2021 Book value as of 31.12.2021 Book value as at 31.12.2020 € € € € € € € 2,630,990.47 308,994.96 0.00 25,937.00 2,914,048.43 1,210,728.25 542,481.16 2,630,990.47 308,994.96 0.00 25,937.00 2,914,048.43 1,210,728.25 542,481.16 7,096,294.27 0.00 0.00 5,638,184.68 1,458,109.59 34,870,999.81 43,562,646.81 107,256,271.69 7,533,933.16 0.00 16,312,761.36 98,477,443.49 184,203,284.84 203,220,251.60 114,352,565.96 7,533,933.16 0.00 21,950,946.04 99,935,553.08 219,074,284.65 246,782,898.41 2,712,668.62 297,165.43 0.00 429,273.21 2,580,560.84 962,159.02 1,293,942.93 117,065,234.58 7,831,098.59 0.00 22,380,219.25 102,516,113.92 220,036,443.67 248,076,841.34 183,180,230.31 34,488,396.23 1,675,000.00 0.00 215,993,626.54 3,219,268,414.49 2,938,723,674.92 0.00 0.00 0.00 0.00 0.00 292,666,035.74 538,239,806.52 899.00 6,206.29 0.00 0.00 7,105.29 272,146.21 273,352.50 183,181,129.31 34,494,602.52 1,675,000.00 0.00 216,000,731.83 3,512,206,596.44 3,477,236,833.94 302,877,354.36 42,634,696.07 1,675,000.00 22,406,156.25 321,430,894.18 3,733,453,768.36 3,725,856,156.44 253 CA IMMOBILIEN ANLAGEN AKTIENGESELLSCHAFT, VIENNA APPENDIX 2 Direct investments Company Registered office Share capital Interest in % Profit/loss 31.12.2021 Shareholders' equity as at 31.12.2021 Profit/loss 31.12.2020 Shareholders' equity as at 31.12.2020 in 1.000 in 1.000 in 1.000 in 1.000 CA Immo Holding B,V, Amsterdam 32,000,000 EUR 100 -2,083 EUR 29,801 EUR -11,627 EUR 292,859 EUR CA Immo d,o,o, Belgrad 32,822,662 RSD 100 1,540 RSD 5,101 RSD 2,660 RSD 3,561 RSD CA Holding Szolgáltató Kft Budapest 13,000,000 HUF 100 41,992 HUF 836,997 HUF 74,314 HUF 795,006 HUF Duna Irodaház Kft,, Budapest Budapest 277,003,01 HUF 100 -153,186 HUF 14,688,47 HUF -682,339 EUR 13,099,924 EUR Duna Termál Hotel Ingatlanfejlesztö Kft, Budapest 390,906,65 HUF 100 -384,787 HUF 14,411,02 HUF -388,493 EUR 14,505,387 EUR Duna Business Hotel Ingatlanfejlesztö Kft, Budapest 452,844,53 HUF 100 267,716 HUF 19,203,78 HUF -196,421 EUR 16,994,538 EUR Kapas Center Kft, Budapest 772,560,00 HUF 100 326,997 HUF 2,159,218 HUF 38,017 HUF 1,832,221 HUF Kilb Kft, Budapest 30,000,000 HUF 100 410,356 HUF 3,933,462 HUF 381,707 HUF 3,523,106 HUF Millennium Irodaház Kft, Budapest 997,244,94 HUF 100 -93,680 HUF 10,131,82 HUF -290,336 EUR 9,736,453 EUR R 70 Invest Budapest Kft, Budapest 5,270,000 HUF 100 -100,826 HUF 1,362,262 HUF 311,407 HUF 1,463,088 HUF Váci 76 Kft, Budapest 3,100,000 HUF 100 338,197 HUF 5,723,879 HUF -259,925 HUF 5,385,683 HUF CA Immo Invest GmbH Frankfurt 50,000 EUR 51 -330 EUR 17,193 EUR -23 EUR 17,522 EUR DRG Deutsche Realitäten GmbH Frankfurt 500,000 EUR 49 169 EUR 669 EUR 303 EUR 803 EUR CAINE B,V, Hoofddorp 101,000,00 EUR 100 -314 EUR 4,349 EUR -465 EUR 48,769 EUR Visionary Prague, s,r,o, Prague 200,000 CZK 100 49,974 CZK 241,000 CZK -46,624 CZK 267,286 CZK CA Immo Bitwy Warszawskiej Sp, z o,o, Warsaw 47,956,320 PLN 100 5,008 PLN 73,220 PLN Acquisition 2021 Acquisition 2021 CA Immo New City Sp,z,o,o Warsaw 116,000 PLN 100 -385 PLN -304 PLN -34 PLN 82 PLN CA Immo P14 Sp,z,o,o Warsaw 10,000 PLN 100 -944 PLN 152,747 PLN 3,677 PLN 153,690 PLN CA Immo Saski Crescent Sp, z o,o, Warsaw 140,921,25 PLN 100 -2,367 PLN 151,646 PLN Acquisition 2021 Acquisition 2021 CA Immo Saski Point Sp, z o,o, Warsaw 55,093,000 PLN 100 6,407 PLN 66,384 PLN Acquisition 2021 Acquisition 2021 CA Immo Sienna Center Sp, z o,o, Warsaw 116,912,64 PLN 100 2,794 PLN 156,636 PLN Acquisition 2021 Acquisition 2021 CA Immo Warsaw Spire B Sp, z o,o, Warsaw 5,050,000 PLN 100 10,861 PLN 286,281 PLN Acquisition 2021 Acquisition 2021 CA Immo Warsaw Spire C Sp, z o,o, Warsaw 2,050,000 PLN 100 17,742 PLN 259,522 PLN Acquisition 2021 Acquisition 2021 CA Immo Warsaw Towers Sp, z o,o, Warsaw 155,490,90 PLN 100 8,312 PLN 174,304 PLN Acquisition 2021 Acquisition 2021 CA Immobilien Anlagen Beteiligungs GmbH & Co Finanzierungs KG Vienna 7,000 EUR 100 5,470 EUR 13,288 EUR 234 EUR 8,051 EUR CA Immo BIP Lie g enschaftsverwaltun g GmbH Vienna 3,738,127 EUR 39 357 EUR 10,342 EUR 1,042 EUR 10,985 EUR CA Immo International Holdin g GmbH Vienna 35,000 EUR 100 194,642 EUR 2,112,927 EUR 30,504 EUR 1,971,285 EUR CA Immo Konzernfinanzierun g s GmbH Vienna 100,000 EUR 100 2,817 EUR 432,888 EUR 271 EUR 203,406 EUR CA Immo Rennwe g 16 GmbH Vienna 35,000 EUR 100 -1,902 EUR 8,553 EUR -409 EUR 454 EUR EBL Nord 2 Immobilien GmbH Vienna 35,000 EUR 50 7 EUR 56 EUR 7 EUR 49 EUR EBL Nord 2 Immobilien Eins GmbH & Co KG Vienna 10,000 EUR 50 -18 EUR 501 EUR -47 EUR 519 EUR EBL Nord 2 Immobilien Zwei GmbH & Co KG Vienna 10,000 EUR 50 -9 EUR 8 EUR -12 EUR 7 EUR Information on participations for 2021 is based on preliminary figures in financial statements prepared according to local accounting standards, INFORMATION ABOUT GROUP COMPANIES MANAGEMENT REPORT CA IMMOBILIEN ANLAGEN AKTIENGESELLSCHAFT, VIENNA ANNEX 2 25 5 COMPANIES BY REGION Number of companies 1) 31.12.2021 31.12.2020 Austria 18 19 - Of which joint ventures 3 3 Germany 2) 98 98 - Of which joint ventures 22 23 Central and Eastern Europe 3) 50 67 - Of which joint ventures 2 2 Group-wide 165 184 - Of which joint ventures 25 28 1) Joint ventures involving consolidated companies. 2) Includes one company in Switzerland. 3) Includes three holding companies in the Netherlands and one company in Cyprus established in connection with Eastern European investments. Germany The operational platform for all Group activities in Germany is CA Immo Deutschland GmbH, which has branches in Berlin, Frankfurt and Munich. Aside from investment properties, the company’s property assets mainly comprise properties under construction and undeveloped plots alongside a portfolio of properties intended for trading or sale. Investment properties are largely held in direct holdings and let and managed by DRG Deutsche Realitäten GmbH, a joint venture set up with the Austrian estate agent and property management firm ÖRAG. A number of development projects (in Munich and Mainz, for example) are being realised through joint ventures. Construction manage- ment is carried out by CA Immo subsidiary omniCon, which also performs these services for third parties. Eastern Europe (CEE) In the CEE region, the strategic focus is also on commer- cial class A buildings in the respective capitals. The CEE investment property portfolio is held by direct or indirect CA Immo subsidiaries. All Eastern European properties are managed by regional subsidiaries under the name CA Immo Real Estate Management. GROUP STRUCTURE CA Immo is a real estate company with its headquarters in Vi enna and branch offices in Germany, Poland, Roma- nia, Serbia, Czechia and Hungary. The parent company of the Group is CA Immobilien Anlagen Aktiengesellschaft, a listed company based in Vienna whose main activity is the strategic and operational management of subsidiary companies at home and abroad. The various branch of- fices act as largely decentralised profit centres. Following the liquidation of almost all Cypriot companies and the exit from Slovakia, further subsidiaries exist in the Neth- erlands. As at key date 31 December 2021, the Group comprised 165 companies (31.12.2020: 184) with 441 em- ployees (437 on 31.12.2020). The core business of the CA Immo Group is the letting, management and development of high quality commer- cial real estate with a clear focus on office properties. The company, which has a high degree of in-house construc- tion expertise, covers the entire value chain in the field of commercial real estate. The objective is to build up a focused portfolio of high quality, high earning invest- ment properties within the core markets of Germany, Austria, Poland, Romania, the Czech Republic and Hun- gary. For Romania, the evaluation of all strategic options, including a potential sale of the entire portfolio, was started at the end of November 2021. Additional earnings contributions are generated by the preparation and utilisation of land reserves in the development business area. CA Immo either transfers completed projects to its portfolio or sells them to investors. The Group currently controls property assets of around €6.3 bn in Germany, Austria and Eastern Europe (€5.6 bn on 31.12.2020). Austria The company’s domestic properties are held in direct or indirect subsidiaries of CA Immobilien Anlagen AG. As at 31 December 2021, the parent company also directly held property assets of approximately €302 m (€323 m on 31.12.2020). As at 31 December 2021, the total Austrian portfolio comprised solely investment properties with a market value of €497 m (€530 m on 31.12.2020). CA IMMOBILIEN ANLAGEN AKTIENGESELLSCHAFT, VIENNA ANNEX 2 2 56 THE ECONOMIC TREND 1) Over the past decade intensifying geopolitical risk has been a constant feature of world politics, yet the world economy and financial markets have shrugged it off. Rus- sia’s invasion of Ukraine is likely to break this pattern, because it will result in the isolation of the world’s 11th- largest economy and one of its largest commodity pro- ducers. The immediate global implications will be higher inflation, lower growth and disruption to financial mar- kets as deeper sanctions take hold. The longer-term fall- out could be a further debilitation of the system of global- ised supply chains and integrated financial markets. The impact of the Russia-Ukraine crisis on the worlds’ econ- omy cannot be quantified properly yet and depends on further geopolitical development. Therefore it has not been taken into account in the latest economic forecasts. Following the outbreak of the Covid-19 pandemic with a severe recession in 2020 and the subsequent economic recovery in 2021, the International Monetary Fund (IMF) drew a more cautious but still positive outlook for the global economy in its World Economic Outlook update published in January 2022 (and therefore not taking into account latest geopolitical happenings). The global econ- omy was entering 2022 weaker than previously expected. Countries had reimposed mobility restrictions with the spread of the new Omicron Covid-19 variant. Rising en- ergy prices and supply disruptions have led to higher and broader-based inflation than anticipated, particularly in the United States and many emerging and developing economies. Global growth is expected to slow from 5.9%in 2021 to 4.4% in 2022 - half a percentage point lower for 2022 than anticipated in the October 2021 World Economic Outlook, mainly due to forecast cuts in the two largest economies (USA, China). Revised assumptions related to the "Build Back Better" fiscal policy packages, as well as an earlier withdrawal of accommodative monetary policy and persistent supply constraints, led to a downward re- vision of 1.2 percentage points for the United States. In China, pandemic-related disruptions associated with the Covid-19 zero-tolerance policy and protracted financial tensions among real estate companies led to a downgrade of 0.8 percentage point. 1) Sources: Eurostat, European Commission, Bloomberg, Financial Times, The Economist Furthermore, high inflation is expected to persist longer than projected in the October 2021 World Economic Out- look, with continued supply chain disruptions and high energy prices in 2022, further fuelled by the Russia- Ukraine crisis. According to an initial estimate of the annual growth rate for 2021, based on seasonally and calendar-adjusted quarterly data, GDP in the euro area and the EU increased by 5.2%. According to the current forecast, GDP in the EU shall increase by around 4.0% in 2022 and by around 2.8% in 2022. This means that the output of the Euro- pean economy at the end of this year would be roughly back at its pre-crisis level. CA IMMO CORE MARKETS IN 2021 2) Compared with the previous quarter, seasonally ad- justed GDP increased by 0.3% in the euro area and by 0.4% in the EU in Q4 2021. This is the result of a prelim- inary flash estimate published by Eurostat. In Q3 2021, GDP had increased by 2.3% in the euro area and by 2.2% in the EU. Compared to the corresponding quarter of the previous year, seasonally adjusted GDP in the fourth quarter of 2021 increased by 4.6% in the euro area and by 4.8% in the EU, after +3.9% in the euro area and +4.1% in the EU in the previous quarter. In December 2021, the seasonally adjusted unemploy- ment rate in the euro area was 7.0%, down from 7.1% in November 2021 and from 8.2% in December 2020, and the unemployment rate in the EU was 6.4% in December 2021, down from 6.5% in November 2021 and from 7.5% in December 2020. At the end of the third quarter of 2021, the government debt-to-GDP ratio was 97.7% in the euro area, compared to 98.3% at the end of the second quarter of 2021, while in the EU the ratio decreased from 90.9% to 90.1%. In both the euro area and the EU, the public debt-to-GDP ra- tio decreased at the end of the third quarter due to the re- covery in GDP, while debt continued to increase due to the financing needs of government responses to the Covid-19 pandemic measures used to mitigate the eco- nomic and social impact. Compared to the third quarter of 2020, the government debt-to-GDP ratio increased in 2) Sources: Eurostat, European Commission, Bloomberg, Financial Times, The Economist ECONOMIC ENVIRONMENT CA IMMOBILIEN ANLAGEN AKTIENGESELLSCHAFT, VIENNA ANNEX 2 2 57 both the euro area (from 96.6% to 97.7%) and the EU (from 89.2% to 90.1%). Annual inflation in the euro area in January 2022 is es- timated at 5.1%, up from 5.0% in December 2021, ac- cording to a flash estimate published by Eurostat, the sta- tistical office of the European Union. In terms of the main components of inflation in the euro area, energy is ex- pected to have the highest annual rate in January (28.6%, up from 25.9% in December). The economy in Austria grew by 4.5% in real GDP terms in 2021. The inflation rate was 3.8% and the unem- ployment rate was 4.9% in December 2021. Gross public debt as a percentage of GDP decreased to 84.1% in the third quarter of 2021. Positive economic momentum in Germany was re- flected in GDP growth of 2.9% in 2021. In a pan-Euro- pean comparison, Germany is below the average for the EU and the euro zone though. The unemployment rate in Germany decreased from 4.0% to 3.2% over the course of the year. The inflation rate for Germany in December 2021 was reported at 5.7%. Within the core Central and Eastern European markets, Hungary and Romania showed the strongest economic growth in 2021 at 7.1% and 5.9%, respectively. GDP in Poland and Czechia increased by 5.7% and 3.3%, respec- tively. The unemployment rate in the Central and Eastern Eu- ropean countries remains significantly lower than in the EU-27 and the euro area average. It is 2.1% in Czechia, 2.9% in Poland, 3.7% in Hungary and 5.4% in Romania. The inflation rate showed a significant increase in 2021 and was above the euro area average in all core Central and Eastern European countries. Poland reported an in- flation rate of 8.0% for December 2021, while the annual figure in Hungary was 7.4%. Annual inflation was regis- tered at 6.7% in Romania and 5.4% in Czechia. ECONOMIC DATA FOR CA IMMO CORE MARKETS Growth rate of real GDP 1) Annual inflation rates 2) Unemploy- ment rate 3) Public budget balance Gross public debt Growth rate of employment 2021 2020 in % in % as % of GDP 3Q 2021 as % of GDP 3Q 2021 as % of GDP 3Q 2021 EU – 27 5.3 -5.9 5.3 6.4 –3.7 90.1 0.9 Eurozone – 19 5.3 -6.4 5.0 7.0 –4.0 97.7 1.0 Austria 4.5 -6.7 3.8 4.9 –1.4 84.1 1.4 Germany 2.9 -4.6 5.7 3.2 –2.4 69.4 0.4 Poland 5.7 -2.5 8.0 2.9 –1.0 56.6 - 0.5 Czechia 3.3 -5.8 5.4 2.1 –6.0 40.5 0.2 Hungary 7.1 -4.7 7.4 3.7 –5.6 80.3 0.8 Romania 5.9 -3.7 6.7 5.4 –7.1 48.5 - 0.4 Source: Eurostat 1) Change on the previous year (%); 2) Change on the previous year as at December 2021; 3) As at December 2021 THE MONEY MARKET AND INTEREST ENVIRONMENT 1) At its most recent meeting on March 10, 2022, the Gov- erning Council expressed its full support to the people of Ukraine. It said it will ensure smooth liquidity condi- tions and implement the sanctions decided by the Euro- pean Union and European governments. They will take whatever action is needed to fulfil the ECB’s mandate to pursue price stability and to safeguard financial stability. 1) Sources: European Central Bank, Eurostat, Bloomberg Based on its updated assessment and taking into ac- count the uncertain environment, the Governing Council revised the purchase schedule for its Asset Purchase Pro- gramme (APP) for the coming months. Monthly net pur- chases under the APP will amount to €40 bn in April, €30 bn in May and €20 bn in June. The calibration of net purchases for the third quarter will be data-dependent and reflect its evolving assessment of the outlook. If the incoming data support the expectation that the medium- term inflation outlook will not weaken even after the end CA IMMOBILIEN ANLAGEN AKTIENGESELLSCHAFT, VIENNA ANNEX 2 2 58 of its net asset purchases, the Governing Council will conclude net purchases under the APP in the third quar- ter. If the medium-term inflation outlook changes and if financing conditions become inconsistent with further progress towards the 2% target, the Governing Council stands ready to revise its schedule for net asset purchases in terms of size and/or duration. The Governing Council also intends to continue rein- vesting, in full, the principal payments from maturing se- curities purchased under the APP for an extended period of time past the date when it starts raising the key ECB interest rates and, in any case, for as long as necessary to maintain favourable liquidity conditions and an ample degree of monetary accommodation. Moreover, the Governing Council of the ECB decided to leave the interest rate for main refinancing operations and the interest rates for the marginal lending facility and the deposit facility unchanged at 0.00%, 0.25% and −0.50% respectively. Any adjustments to the key ECB in- terest rates will take place some time after the end of the Governing Council’s net purchases under the APP and will be gradual. The path for the key ECB interest rates will continue to be determined by the Governing Coun- cil’s forward guidance and by its strategic commitment to stabilise inflati on at 2% over the medium term. Accord- ingly, the Governing Council expects the key ECB inter- est rates to remain at their present levels until it sees in- flation reaching 2% well ahead of the end of its projec- tion horizon and durably for the rest of the proj ection horizon, and it judges that realised progress in underly- ing inflation is sufficiently advanced to be consistent with inflation stabilising at 2% over the medium term. In the first quarter of 2022, the Governing Council has been conducting net asset purchases under the Pandemic Emergency Purchase Programme (PEPP) at a lower pace than in the previous quarter. It will discontinue net asset purchases under the PEPP at the end of March 2022. The Governing Council intends to reinvest the principal pay- ments from maturing securities purchased under the PEPP until at least the end of 2024. In any case, the fu- ture roll-off of the PEPP portfolio will be managed to avoid interference with the appropriate monetary policy stance. The Council said, that “the pandemic has shown that, under stressed conditions, flexibility in the design and conduct of asset purchases has helped to counter the 2 Sources: European Commission, European Central Bank, Financial Times, The Economist impaired transmission of monetary policy and made the Governing Council’s efforts to achieve its goal more effec- tive”. The Governing Council will continue to monitor bank funding conditions and ensure that the maturing of oper- ations under the third series of targeted longer-term refi- nancing operations (TLTRO III) does not hamper the smooth transmission of its monetary policy. It will also regularly assess how targeted lending operations are con- tributing to its monetary policy stance. As announced be- fore, it expects the special conditions applicable under TLTRO III to end in June this year. The 3-month Euribor continued to move in negative ter- ritory and fluctuated between -0.53% and -0.61% in the reporting period. Since December 2021, a clear upward trend in the Euribor has been noticeable. Following historic lows in bond yields on 10-year gov- ernment bonds issued by eurozone members at the end of 2020, a slight upward trend was recognizable in the course of 2021. Since the fourth quarter of 2022, this trend has intensified. After the 10-year German Bund turned positive in spring 2021 for the first time since 2019, there were recurring crossings above and below the zero percent mark. Since the end of last year, however, the yield has risen steadily to just under 0.5% in the meantime. OUTLOOK 2 Even though the future impact of the Russia-Ukraine crisis on the worlds’ economy cannot be assessed properly at this point in time it already has substantially increased uncertainty and volatility on global markets, which has also been reflected in deteriorating financial market conditions. The Russian invasion has, beyond the human cost of the conflict, already driven commodity prices higher — and there could be profound and pro- tracted effects on macroeconomic prospects around the world such as energy supply disruptions or price shocks and sustained inflationary pressures. The risk of further escalations in the conflict as well as additional geopoliti- cal tensions will remain a key topic to watch in 2022. CA IMMOBILIEN ANLAGEN AKTIENGESELLSCHAFT, VIENNA ANNEX 2 2 59 In its January 2022 World Economic Outlook, the Inter- national Monetary Fund projects economic growth of 4.4% in 2022 and 3.8% in 2023. Inflation is expected to remain high in the near future, averaging 3.9% in devel- oped economies and 5.9% in developing and emerging economies in 2022 before declining in 2023. The impact of the Russia-Ukraine crisis has not been taken into ac- count in these forecasts. Assuming that the pandemic reduces its impact, higher inflation could ease if supply chain disruptions subside, monetary policy tightens, and demand shifts from goods- intensive consumption to services. However, the Russia- Ukraine crisis has opposite effects due to the sharp rise in commodity costs and the renewed impairment of sup- ply chains. “The Russian invasion of Ukraine is a watershed for Eu- rope,” the ECB said in a statement after its governing council’s meeting in Frankfurt on March 10, adding that it would “take whatever action is needed to pursue price stability and to safeguard financial stability”. Mar- ket participants interpreted the move to speed up the ECB’s exit from buying more bonds as a signal that it could raise interest rates in the fourth quarter in an ef- fort to contain soaring inflation — which would be the first such move for more than a decade. However, the ECB also gave itself more leeway to wait longer before raising interest rates after its bond-buying ends. Chris- tine Lagarde said Russia’s invasion of Ukraine had cre- ated “a major shock” for the eurozone economy, adding that the central bank was forecasting higher inflation and lower growth over the next three years. “Inflation could be considerably higher in the near term,” Lagarde said. “However, in all scenarios, inflation is expected to stabilise around our target by 2024.” The emergence of new Covid-19 variants could further prolong the pandemic and cause renewed economic dis- ruption. Global access to vaccines, tests and treatments is essential to reduce the risk of further dangerous Covid-19 variants. This will require increased stockpile production, as well as better supply systems in each country and more equitable international distribution. In addition, supply chain disruptions, energy price vol- atility, and local wage pressures mean that uncertainty about inflation and the stance of monetary policy is high. If leading economies raise policy rates, risks could emerge for financial stability and emerging and devel- oping economies' capital flows, currencies, and fiscal positions, especially as debt has increased significantly over the past two years. CA IMMOBILIEN ANLAGEN AKTIENGESELLSCHAFT, VIENNA ANNEX 2 2 60 THE REAL ESTATE MARKET IN AUSTRIA 1) The investment market Due to the seasonal slowdown of the pandemic and governmental support for companies, a further slump in the investment market, as seen in the previous year, was interrupted; thus, an increase of around 25% (€4.3 bn) was reported in Austrian real estate in 2021 compared to the previous year. Around €2.8 bn (65%) of the invest- ments were registered in Vienna. Office investments with a focus on core properties in premium locations in com- bination with residential properties accounted for the largest share of the total volume. Contrary to the general trend, retail also recorded an upswing, which can be at- tributed to two large deals and therefore does not appear to be a long-term trend. The Austrian investment market has been stable last year and was able to continue the trend of the previous year. The prime yield for office properties fell moderately and is currently at the historically low level of 3.20% (−15 bps compared to the previous year) for properties in Vienna's Central Business District (CBD). The office property market Vienna's total office stock amounted to approximately 11.4 m sqm at the end of 2021 and was therefore almost unchanged from the previous year. The completion vol- ume of office space totaled around 65,000 sqm in 2021, around 32% less than in 2020. The low completion vol- ume continues to highlight the lack of new office proper- ties in Vienna. The letting performance was also somewhat below the previous year's level and, at around 166,200 sqm, rec- orded a decline of approximately 18.2%. The Covid-19 pandemic-related economic crisis has also had a negative impact on the office market in 2021. CBRE Research therefore assumes a slightly rising letting performance in the next two years, also due to the still tense situation with regard to low new supply coming to the market. The vacancy rate fell by around 40 bps to approxi- mately 4.2% over the course of 2021. CBRE Research ex- pects the vacancy rate to settle at approximately 4.0% in 2022 and 2023 due to limited additional space, high level of pre-letting and a slight increase in demand. The 1) Sources: CBRE; Data supplied by CBRE Research Austria Real Estate Mar- ket Outlook 2021 monthly prime rent in Vienna rose by around 4% over last year to €26.0 per sqm per month. Above all, top of- fices in attractive locations remain in demand, whereas properties with lower building standards in weaker loca- tions will probably have to expect less demand in the fu- ture. A steady increase in focus on the topic of ESG and certifications can also be observed on the market. OFFICE MA RKET DEVELOPMENT VIENNA 2021 2020 Chan g e in %/bps Take up in sqm 166,200 203,300 −18.2 Vacancy rate in % 4.2 4.6 −40 bps Prime rent in €/sqm net 26.00 25.00 4.0 Prime yield in % 3.20 3.35 −15 bps Sources: Data provided by CBRE Research Note: floor space take-up includes owner-occupied transactions THE REAL ESTATE MARKET IN GERMANY 2) The investment market In 2021, the German real estate market was unaffected by the Covid-19 pandemic developments, achieving a record result of €111.0 bn; this represents an increase of approximately 40% compared to 2020 results. The record merger activity in the residential segment has had a ma- jor positive impact on this development. The commercial real estate sector contributed €62.1 bn (+5% y-o-y); there continues to be a strong focus on office properties in prime locations that can adapt to hybrid work thanks to their flexibility and location. With a turnover of around €30.0 bn, office properties accounted for 50% of the total commercial real estate investment volume. The share of the top 7-markets in Germany increased from around 53.0% in 2020 to 57.0% in 2021. Berlin, Co- logne, Munich and Stuttgart showed significantly higher volumes of transactions, whereas supply-related declines had to be recorded in Frankfurt, Düsseldorf and Ham- burg. In 2021, a total of 125 major transactions above the €100 m mark were registered of which 79 transactions were in the office segment, 23 transactions related to lo- gistics properties and 13 were retail deals. In the top 7-lo- cations there was a clear trend towards individual trans- actions, as a result of which portfolio transactions in 2) Sources: CBRE; Data supplied by CBRE Research, Germany Real Estate Market Outlook 2022, Berlin, Munich, Frankfurt Office MarketView Q4 2021; Oxford Economics PROPERTY MARKETS CA IMMOBILIEN ANLAGEN AKTIENGESELLSCHAFT, VIENNA ANNEX 2 2 61 these markets fell by around 32% y-o-y. Furthermore, the excess demand in all top 7-markets for prime properties is leading to a compression of prime yields. CBRE Research expects the German commercial real es- tate investment market to achieve a transaction volume of well above €55.0 bn in 2022, which would be only slightly below the record levels of 2021. The decisive factor will be product availability, which already proved to be a challenge in some markets in the previ- ous year. From an investor's perspective office proper- ties remain in focus. Particularly in the current excep- tional times, the trend is moving even more towards core and core-plus properties in established locations in the major office market centers. Defensive investment products with solid tenants have experienced an addi- tional boost in demand, which, however, could not be fully met on the supply side. CBRE Research therefore assumes that yields for these products will sharpen even further. The share of foreign investment declined from 46% in 2020 to 39% in 2021 in line with strong domestic de- mand. Nevertheless, the share of North American inves- tors increased significantly, by 34% y-o-y to €6.7 bn and approximately 11% of total investments. The Berlin investment market for commercial real es- tate recorded a record value of €11.8 bn and an increase of more than 50% compared to the previous year. Main contribution to this result has been a large number of transactions over €100 m in the last quarter of the year. The prime yield for office properties fell slightly to 2.50% due to the high demand for high quality office space (−15 bps y-o-y). In 2021, a transaction volume of around €2.5 bn has been registered on the commercial property market in Düsseldorf. This is around a third less than in 2020. Nevertheless, the Düsseldorf commercial real estate mar- ket showed a positive trend towards the end of the year. In the last quarter of 2021, €1.3 bn has been invested; more than in the three preceding quarters combined. Of- fice properties represent the core of Düsseldorf’s commer- cial property market, accounting for approximately 73% of the total transaction volume. Prime yields fell by around 25 bps y-o-y to a record low of 2.75%. 3) Sources: CBRE: Data supplied by CBRE Research, Munich, Frankfurt, Ber- lin Office MarketView Q4 2021; Oxford Economics The commercial property market in Frankfurt regis- tered investments of €5.5 bn. With a decline of approxi- mately 23% y-o-y, the market recorded the weakest overall result since 2014; this is due to a lack of prod- uct, which does not allow demand to be matched. As in the previous year, office properties accounted for well over 80% of transactions. The prime yield for CBD of- fices fell by 20 bps to 2.70% in 2021. The commercial investment market in Munich recorded a 46% increase y-o-y with a volume of €7.2 bn, slightly less than in the record year 2019, due to a strong fourth quarter in which around €3.2 bn was transacted. Office properties accounted for approximately 83% of the total volume at around €6.0 bn. Due to unabated strong de- mand for real estate locations with stable values, the prime yield fell slightly by 5 bps to 2.50%. The office property market 3) 2021 again has been characterized by further lock- downs and restrictions of public gatherings which had an impact on the economic situation. Various industries as well as inflation and GDP were negatively impacted by global supply chain disruptions. Furthermore, hy- brid forms of work have been adapted in most indus- tries due to restrictions and expansion of digital infra- structure. Nevertheless, in Germany in particular, there is a strong confidence in offices as a sustainable real es- tate investment while at the same time demand for of- fice space started rising again significantly in all mar- kets. Lack of prime inner-city space generally resulted in an upward trend in rental price dynamics. Berlin registered a 23.7% y-o-y take-up increase in 2021 with office take-up of 817,000 sqm. The vacancy rate rose slightly over the course of the year to approxi- mately 2.8% (2020: 2.4%). Lettings recorded a signifi- cant gain compared to the previous year, not least due to the unbroken confidence in the importance of the office for companies in Germany. Due to the comparably low vacancy rate in Berlin combined with the lack of pre- mium space the prime rent rose by €2.5 per sqm to €41.00 per sqm per month. The weighted average monthly rent remains almost unchanged from the previ- ous year at €27.99 per sqm (€28.02 per sqm in 2020). Around 510,700 sqm of new space was completed in 2021, which is significantly less compared to the forecast CA IMMOBILIEN ANLAGEN AKTIENGESELLSCHAFT, VIENNA ANNEX 2 2 62 at the beginning of the year. According to CBRE Research, around 1.2 m sqm of space is now expected to be added to the market in 2022. The office stock at the end of the year was around 20.2 m sqm. OFFICE MARKET DEVELOPMENT IN CA IMMO CORE MARKETS IN GERMANY 2021 2020 Chan g e in %/bps Berlin Take u p in s q m 817,000 660,500 23.70 Vacanc y rate in % 2.80 2.40 40 bp s Prime rent in €/s q m net 41.00 38.50 6.50 Prime y ield in % 2.50 2.65 − 15 b p s Frankfurt am Main Take u p in s q m 436,800 330,200 32.30 Vacanc y rate in % 8.60 7.00 160 b p s Prime rent in €/s q m net 45.50 44.00 3.40 Prime y ield in % 2.70 2.90 − 20 bp s Düsseldor f Take u p in s q m 301,500 293,500 2.70 Vacanc y rate in % 9.00 7.50 150 b p s Prime rent in €/s q m net 28.50 28.50 0.00 Prime y ield in % 2.75 3.00 − 25 bp s Munich Take u p in s q m 643,900 558,500 15.30 Vacanc y rate in % 4.50 3.80 70 bp s Prime rent in €/s q m net 41.50 39.50 5.10 Prime y ield in % 2.50 2.55 − 5 b p s Sources: Data provided by CBRE Research Note: floor space take-up includes owner-occupied transactions Office take-up in Frankfurt amounted to 436,800 sqm in 2021 (+32.3% y-o-y). The fall of pandemic-related re- strictions in the second half of the year generally im- proved results in the last quarters of 2021. High quality office space with high-class fit outs was the focus of leas- ing activities accounting for 62% of take-up. The vacancy rate amounted to 8.6% and thus increased by 160 bps y- o-y. The prime rent in Frankfurt also saw an increase to €45.50 per sqm per month (+3% y-o-y) due to a lack of premium space. The weighted average rent, on the other hand, fell by 7% to €21.57 per sqm under the pressure from rising vacancy. The completion volume of around 200,400 sqm was slightly above the level of the previous year (185,800 sqm). According to current forecasts, a total of around 587,000 sqm is in the completion pipeline by the end of 2024. The total stock was reported at around 11.5 m sqm at the end 2021. Düsseldorf confirmed a take-up of 301,500 sqm, show- ing little change from the 293,500 sqm in the previous year. Prime quality properties with a high standard of fit- out are sought after by tenants in Düsseldorf and account for 57% of total take-up. The vacancy rate increased by around 150 bps y-o-y to approximately 9.00%. Neverthe- less, the monthly prime rent, unaffected by increased pressure from growing vacancies, remained unchanged at €28.50 per sqm. The weighted average monthly rent in- creased from around €15.20 per sqm per month to €16.30. Completions of 96,300 sqm were on par with pre- vious year's level (99,300 sqm). The office stock at the end of the year amounted to around 9.5 m sqm. Munich recorded a take-up of 643,900 sqm in 2021. This corresponds to an increase of 15.3% y-o-y. The of- fice vacancy rate increased to approximately 4.5% in Q4 2021 (+70 bps y-o-y) due to more vacant space in ex- CA IMMOBILIEN ANLAGEN AKTIENGESELLSCHAFT, VIENNA ANNEX 2 2 63 isting stock but also more unlet space from recent com- pletions. Prime rents were unaffected by the pandemic and the growing vacancy rate. The achievable monthly prime rent rose y-o-y to €41.50 per sqm (+5% y-o-y). At around €23.95 per month the weighted average rent is 11.9% above the previous year's level. Due to the contin- uing shortage of modern and high quality space, tenants continue to be willing to pay corresponding prices for higher quality in central locations. The completion volume of around 321,900 sqm in 2021 (new buildings and core refurbishments) fell by approxi- mately 5% y-o-y. Total office space stock amounted to around 22.0 m sqm at the end of the year. THE REAL ESTATE MARKET IN CENTRAL AND EASTERN EUROPE 1) The investment market In Central and Eastern Europe, the effects of the Covid- 19 pandemic and its economic consequences on the real estate markets are already slightly less visible than in 2020. The positive momentum of the last few years be- fore the start of the pandemic could slowly be resumed. This is also evident in CA Immo's core cities Warsaw, Prague, Budapest and Bucharest. The commercial prop- erty transaction volume of €9.1 bn registered in these cit- ies has exceeded the 2020 values by almost 60%. The of- fice investment volume in the cities mentioned rose by just over 26% y-o-y from €2.9 bn to €3.7 bn, Warsaw ac- counted for the largest volume (46%), followed by Buda- pest (26%), Prague (17%) and Bucharest (11%). In Warsaw, an investment volume of €5.6 bn was regis- tered in 2021 of which approximately 31% was in the of- fice sector. The prime office yield is approximately 4.50% (2020: 4.60%). Despite a continued decline in investment volume of 1.8 bn in 2021 (2020: €2.7 bn) in Prague, demand from national and international investors for high quality, ESG compliant properties in good locations remained strong. The sharp decline can be explained by a persistent lack of corresponding products. As in the previous year, the prime yield was stable at 4.25%. In 2021, the investment volume in Budapest shows a positive trend and rose to €1.2 bn (2020: €1.0 bn), of 1) Sources: Data supplied by CBRE Research which around 82% was accounted for by offices. Prime yields for top office properties fell by 50 bps y-o-y and stood at 5.25%. Bucharest registered an investment volume of around €490 m in 2021 (−11% y-o-y), of which around 81% was in the office sector. The prime yield is reported at 6.75%, 25 bps below the previous year's result. The office property market 2) All of CA Immo's Central and Eastern European core markets (Warsaw, Prague, Budapest and Bucharest) achieved a modest increase in take-up with the exception of Warsaw, where activity fell slightly. All markets saw further increases in vacancy rates, with the lowest in- crease in Budapest and the highest in Warsaw. Prime rents, on the other hand, remained largely constant with a minimal negative trend, with the exception of Prague, where a positive trend can be observed. At year-end 2021, the total office space in Warsaw was around 6.1 m sqm, following the completion of around 325,000 sqm during the year. Currently, 323,000 sqm space is under construction and new supply of around 230,000 sqm is expected during 2022. The office pipeline is heavily concentrated in the CBD of the Polish capital. At 356,600 sqm, office take-up in 2020 was only slightly below the previous year's level. The vacancy rate in- creased by 280 bps y-o-y to approximately 12.7% at year- end. The prime rent in central locations was around €25.50 per sqm per month (+€0.5 per sqm y-o-y). The weighted average rent in central locations improved slightly from the previous year to €19.5 per sqm. The office property market in Prague experienced an- other quiet year in 2021, characterized by a lack of new space. The office stock was expanded by around 57,000 sqm to around 3.8 m sqm by the end of 2021. Take-up reached around 217,300 sqm, approximately 21.5% above the previous year's volume, but still well below 2019 levels. The vacancy rate increased by 80 basis points to 7.8% at the end of the year. Due to the lack of new supply prime rents in central locations were never- theless rising to €24.00 per sqm per month. The annual take-up in Budapest in 2021 was around 217,900 sqm, which is approximately 14.7% above the previous year's level. The total office space at the end of 2) Sources: Data supplied by CBRE Research CA IMMOBILIEN ANLAGEN AKTIENGESELLSCHAFT, VIENNA ANNEX 2 2 64 the year was around 4.0 m sqm. As expected, the comple- tion volume in 2021 was significantly below the 2020 level at 44,500 sqm. CBRE Research nevertheless expects a new record figure of up to 303,000 sqm for the coming year. The vacancy rate increased slightly by 10 bps to 9.2%. Due to the high number of expected completions in 2022 and 2023, a further increase in vacancy is ex- pected. The prime rent decreased over the year and is now stated at €24.00 per sqm per month. By the end of 2021, about 162,800 sqm of office space was let in Bucharest, an increase of approximately 16.0% compared to the previous year. The office stock totaled 3.2 m sqm at the end of the year, following a completion volume of around 245,100 sqm. The vacancy rate in- creased by further 70 bps and stood at 13.1% at year-end. The prime rent in Bucharest remained stable at €18.75 per sqm per month. OFFICE MARKET DEVELOPMENT IN THE CA IMMO CORE MARKETS IN CENTRAL AND EASTERN EUROPE 2021 2020 Chan g e in %/bps Warsaw Take up in sqm 356,600 383,000 −6.90 Vacancy rate in % 12.70 9.90 280 bps Peak rent in €/sqm net 25.50 25.00 2.00 Prime yield in % 4.50 4.60 −10 bps Prague Take up in sqm 217,300 178.800 21.50 Vacancy rate in % 7.80 7.00 80 bps Peak rent in €/sqm net 24.00 22.50 6.7 Prime yield in % 4.25 4.25 0 bps Budapest Take up in sqm 217,900 190,000 14.70 Vacancy rate in % 9.20 9.10 10 bps Peak rent in €/sqm net 24.00 25.00 −4.0 Prime yield in % 5.25 5.75 −50 bps Bucharest Take up in sqm 163,800 141,200 16.00 Vacancy rate in % 13.10 12.40 70 bps Peak rent in €/sqm net 18.75 18.75 0.00 Prime yield in % 6.75 7.00 −25 bps Sources: Data provided by CBRE Research. Note: floor space take-up includes owner-occupied transactions CA IMMOBILIEN ANLAGEN AKTIENGESELLSCHAFT, VIENNA ANNEX 2 2 65 The CA Immo Group divides its core activity into the business areas of letting investment properties and develop- ing real estate. In both of these business areas, CA Immo specialises in commercial real estate with a clear focus on office properties in capital cities in the centre of Europe. The objective is to expand the focused portfolio of high quality and profitable investment properties within the core markets of Germany, Austria, Poland, the Czech Republic, Hungary and Romania. Additional earnings will be gener- ated through the development, construction and utilisation of land reserves in the development area. CA IMMO GROUP'S PROPERTY ASSETS As a result of the transfer of own project completions into the investment portfolio as well as a positive valua- tion result, CA Immo has increased the value of its prop- erty assets in 2021 by 12% up to €6.3 bn (2020: €5.6 bn). Of this figure, investment properties account for €5.0 bn (80% of the total portfolio), property assets under devel- opment represent €1.1 bn (18%) and short-term proper- ties 1) €162 m (3%). With a proportion of 60% of total property assets, Germany is the biggest regional segment. 1) Incl. properties intended for trading or sale PORTFOLIO OF CA IMMOBILIEN ANLAGEN AG Property assets directly held by CA Immobilien Anla- gen AG represent a rentable effective area of 122,805 sqm (2020: 142,751 sqm). As at the balance sheet date, these assets comprised seven investment properties in Austria with a market value (including prepayments made and construction in progress) of €219,074 K (eight investment properties; €246,783 K on 31.12.2020). This portfolio gen- erated rental income of €15,484 K in 2021 (€15.662 K in 2020). Lettings An approximate of 20,670 sqm of floor space was newly let or extended in 2021 (21,800 sqm in 2020). Of this, around 17,480 sqm relates to extensions or renewals of existing contracts. The economic occupancy rate in the investment portfolio is around 84% (2020: 88%). Investments In 2021, the company invested €165 K in its asset port- folio (€1,741 K in 2020). Investments concerned tenant fit-outs in the ViE office building. Disposals In 2021, CA Immo continued its path of selling non- core property assets with the successful sale of Wolfgang- gasse 58-60 office building (20,300 sqm) in Vienna. In- come of €14,683 K was generated from the sale. . PROPERTY ASSETS CA IMMOBILIEN ANLAGEN AKTIENGESELLSCHAFT, VIENNA ANNEX 2 2 66 KEY FIGURES FROM THE INCOME STATEMENT CA Immo recorded a 9% increased in rental income to €16,877 K in 2021 (€15,430 K in 2020). Operating ex- penses passed on to tenants also increased by 9% from €4,912 K in 2020 to €5,335 K in 2021. Management reve- nue for services provided to subsidiaries fell by –14% year-on-year to €7,825 K (€9,139 K in 2020). As a result, this led to a 2% increase in gross revenues to €30,739 K (€30,228 K in 2020), distributed as follows: Austria 78%, Germany 1% and 21% in Eastern Europe. Other operating income increased by 164% to €15,521 K (€5,881 K in 2020). In 2021, income of €14,683 K (€0 K in 2020) was generated from the sale of the property Wolf- ganggasse 58-60 in Vienna. No write-ups were made to tangible assets in 2021 (€5,137 K in 2020). Income from the reversal of provisions amounted to €194 K (€304 K in 2020) and mainly relates to provisions for legal fees, the Annual General Meeting and frustrated expenses in con- nection with the acquisition of a company. The other op- erating income of €644 K (2020: €440 K) resulted from cost transfers, insurance proceeds and the reversal of de- ferred income from public grants. Personnel expenses increased by 5% from €15,388 K in 2020 to €16,113 K in 2021. In 2021, the company em- ployed 72 staff members on average (70 staff members in 2020). Depreciation charged to tangible assets totalled €–8,140 K (€–11,532 K in 2020). No impairment losses were recognised on real estate in the financial year 2021 (€–3,688 K in 2020). Other operating expenditures totalled €–20,251 K (€–47,919 K in 2020). Of this, an amount of €–861 K was attributable to tax expense. The prior-year comparative amounted to €–26,297 K and included, in particular, court fees of €25,475 K for the damages proceedings of €1.9 bn initiated in 2020 in connection with the privatisa- tion of Federal Residential Property companies in 2004 (‘BUWOG’) and for the unlawful failure to win the best bidder procedure. Other expenses directly related to properties stood at €–7,013 K (€8,673 K in 2020). An amount of €–12,377 K (€–12,949 K in 2020) was spent on general administrative costs such as project-related legal, auditing and consulting fees, advertising and marketing or administrative management costs. As a result, the developments described above led to a positive operating result of €1,757 K compared to €–38,730 K in the previous year. The company received income from investments total- ling €179,486 K (€123,378 K in 2020) via subsidiary divi- dend distributions. This item was offset by expenses linked to financial assets of €–34,496 K compared to €–3,502 K in 2020. Income of €14,109 K (€19,796 K in 2020) was generated from loans granted to subsidiaries. The item other inter- est and similar income stood at €3,315 K (compared to €431K in 2020). Income from the disposal and revaluation of financial investments amounted to €11,366 K (€3,619 K in 2020) and include write-ups on investments in affiliated com- panies amounting to €1,675 K (€3,397 K in 2020). This item was offset by write-downs on equity holdings of €–34,496 K (€–3,239 K in 2020), of which €–34,174 K due to dividend distributions (€–1,026 K in 2020). Interest expense decreased in total by –9% to €–31,460 K (€–34,634 K in 2020). Interest for bank loans or real estate financing declined by –2% to €–2,161 K (€–2,200 K in 2020). The costs and commitment interest for other bank financing amounted to €–1,222 K (€–227 K in 2020). Negative interest increased from €–896 K in 2020 to €–2,248 K in 2021. Expenses for de- rivative transactions fell to €–1,074 K (€–2,588 K in 2020). Interest costs in respect of affiliated companies declined from €–766 K in 2020 to €–74 K in 2021. The largest amount, totalling €–24,691 K, concern interest costs for bonds; last year, this figure stood at €–27,957 K and also included the expenses from the re- purchase of bonds. Due to the factors outlined above, the financial result rose by 30% to €142,320 K (€109,088 K in 2020). Earn- ings before taxes stood at €144,077 K (against €70,358 K in 2020). After taking into account taxes on income of €2,684 K (€12,745 K in 2020), the annual net profit as at 31 December 2021 stands at €146,761 K, compared to €83,103 K on 31 December 2020 (+77%). After taking into account the profit carried forward from the previous year in the amount of €293,378 K (€814,502 K in 2020) remain- ing after the dividend payment of €6.00 per dividend- bearing share, the annual financial statements of CA Im- mobilien Anlagen AG show a net profit of €440,139 K (€897,605 K in 2020). RESULTS CA IMMOBILIEN ANLAGEN AKTIENGESELLSCHAFT, VIENNA ANNEX 2 2 67 Proposed dividend for 2021 After a thorough evaluation, the Management Board has decided to propose to the Annual General Meeting to be held on 5 May 2022, to deviate from the previous divi- dend policy and to carry forward the entire net profit for the 2021 financial year to new account. The background to this decision is the fact that from the net profit re- ported as of 31 December 2020 a dividend totaling €3.50 per share was already distributed in the 2021 financial year, and a further dividend of €2.50 per share was dis- tributed to shareholders in the current financial year on 15 March 2022. Especially, in view of the current geopo- litical environment and the increased market uncertainty and volatility, no additional dividend payment is planned for the 2021 financial year. Cash-flow In the year under review, cash-flow from operating ac- tivities (operating cash-flow plus changes in net working capital) stood at €160,577 K (€139,521 K in 2020). Cash- flow from investment activities was €–56.312 K (€–195,735 K in 2020) and cash-flow from financing ac- tivities was €–512.467 K (€690,347 K in 2020). BALANCE SHEET ANALYSES Assets CA Immobilien Anlagen AG's total assets declined year- on-year from €4,460,251 K as at 31 December 2020 to €4,081,488 K as at 31 December 2021. Fixed assets increased slightly from €3,725,856 K as at 31 December 2020 to €3,733,454 K on 31 December 2020. Fixed assets accounted for 91% of total assets on 31 December 2021 (84% on 31.12.2020). Intangible as- sets, which solely comprise EDP software, increased to €1,211 K (€542 K on 31.12.2020). Following the success- ful sale of the property Wolfganggasse 58-60 in Vienna, the company's property assets at the balance sheet date comprised a total of seven properties in Austria with a book value of €219,074 K (€246,783 K on 31.12.2020). Tangible fixed assets recorded a decrease of –11% to- talled €220,036 K (€248,077 K on 31.12.2020). In 2021, no impairment losses (€3,688 K in 2020) and no write- ups (€5,137 K in 2020) were recognized on property, plant and equipment. Financial assets rose by 1% to €3,512,207 K (€3,477,237 K on 31.12.2020). As of the balance sheet date, the book value of investments in affiliated companies stood at €3,219,268 K (€2,938,724 K on 31.12.2020). The change mainly results from shareholder contributions and the acquisition of several companies. In addition, two sub- sidiaries in Austria were merged in 2021. Current assets showed a significant decrease by –53% from €724,466 K as at 31 December 2020 to €339,524 K on 31 December 2021. The downturn is mainly the result of the payment of the additional basic dividend of €2.50 per dividend-bearing share resolved by the Extraordinary General Meeting at the end of November 2021, which was paid out on 15 December 2021, as well as the pay- ment of subsidies to subsidiaries. Receivables recorded an increase of 77% to €53,308 K (€30,048 K on 31.12.2020). On 31 December 2021, the company has cash and cash equivalents of €286,216 K (€694,418 K on 31.12.2020). Liabilities As at the balance sheet date shareholders' equity de- creased by –10% to €2,213,327 K (€2,470,783 K on 31.12.2020). The equity ratio on the key date was approxi- mately 54% (55% on 31.12.2020). Equity covered 59% of fixed assets (66% on 31.12.2020). Provisions amounted to €18,641 K (€43,439 K on 31.12.2020). In the previous year, the provision for court fees (amounting to €25,475 K) for the damages proceed- ings initiated in 2020 in connection with the privatisation of Federal Residential Property companies in 2004 (‘BUWOG’) represented the largest item. These court fees were recognised in other tax expense in the previous year. An amount of €8,774 K was recognized for bonus pay- ments (€6,730 K on 31.12.2020). Provisions for derivative transactions amount to 3,547 K (€6,657 K on 31.12.2020). Liabilities declined from €1,939,666 K at the end of 2020 to €1,843,375 K as at 31 December 2021. The proportion of unsecured financing at the Group parent company level has steadily grown since the company was rated invest- ment grade in 2015. Following the complete conversion of the convertible bond with a volume of €200 m and the re- demption of a corporate bond maturing in July 2021 (€107 m), six CA Immo corporate bonds (including one green bond) were trading on the unlisted securities market of the Vienna Stock Exchange and partly on the regulated market of the Luxembourg Stock Exchange (Bourse de Luxembourg) as of the balance sheet date. The total nom- inal value of the corporate bonds amounted to €1,434,032 K (€1,741,481 K on 31.12.2020). CA IMMOBILIEN ANLAGEN AKTIENGESELLSCHAFT, VIENNA ANNEX 2 2 68 The bonds provide unsecured financing at Group parent company level; they are on equal footing to one another and to all other unsecured financing of CA Immo- bilien Anlagen AG. Except for the 2015-2022 corporate bond, bond conditions contain a loan-to-value (LTV) cov- enant. The two bonds issued in 2020 contain two further covenants relating to the secured financing volume and the Group's interest rate coverage. Liabilities to banks comprise only investment loans amounting to €100,833 K (€111,134 K on 31.12.2020). DEVELOPMENT OF SHAREHOLDERS' EQUITY €1.000 31.12.2020 Capital increase Dividend payments Annual result 31.12.2021 Share capital 676,316 55,892 0 0 732,208 Tied capital reserves 854,841 144,118 0 0 998,959 Retained Earnings 42,021 0 0 0 42,021 Net profit 897,605 0 –604,227 146,761 440,139 Total equity 2,470,783 200,010 –604,227 146,761 2,213,327 FINANCIAL PERFORMANCE INDICATORS The strategic focus of business activity at CA Immo is the long-term increase in the value of the company. This is supported by key financial performance indicators which are important tools to identify the factors that contribute to the sustained increase in enterprise value and quantifying those factors for the purposes of value management. Performance indicators of the CA Immo Group The primary financial performance indicator is the net income generated on the Company’s average equity (re- turn on equity or RoE). The aim is to produce a figure higher than the calculated cost of capital (assuming a medium-term rate of around 7.0%), thus generating shareholder value. The other quantitative factors used to measure and manage our shareholders' long-term return include the change in NAV per share, operating cash flow per share, and Funds from Operations (FFO I and FFO II) per share. FFO I, a key indicator of the Group’s long-term earning power, is reported before taxes and adjusted for the sales result and other non-permanent effects. FFO II, which in- cludes the sales result and applicable taxes, is an indica- tor of the overall profitability of the Group. NON-FINANCIAL PERFORMANCE INDICATORS Since the key financial indicators ultimately demon- strate the operational success of the property business, they are preceded by a series of other non-financial per- formance indicators which are key to measuring and managing the operational business. The key non-financial performance indicators of opera- tional property business are among others as follows: – The occupancy rate is an indicator of the quality of the portfolio and the success in managing it. The economic occupancy rate of CA Immoblien Anlagen AG in its in- vestment property portfolio remained unchanged year- on-year at around 84% (around 88% on 31 D ecember 2020). – The vacancy rate shows the ratio of unlet space to the total space in the real estate portfolio and therefore plays an important role in terms of the return to be gen- erated. The higher the vacancy rate, the lower the rental income. The real estate portfolio of CA Immoblien An- lagen AG has a vacancy rate of around 16% as of 31 De- cember 2021 (around 12% on 31 December 2 020). – WAULT – Weighted Average (Unexpired) Lease Term is a key indicator in the commercial real estate sector. It provides information on the average remaining lease CA IMMOBILIEN ANLAGEN AKTIENGESELLSCHAFT, VIENNA ANNEX 2 2 69 term of the real estate portfolio and amounts to 3.9 years at CA Immoblien Anlagen AG as of 31 December 2021 (3.9 years on 31 December 2020). – The quality of a location and its infrastructure are critical to the marketability of properties. The majority of CA Immo office properties are situated in CBD- or central business locations of Central- and Eastern European cities. – Sustainability Certificate: The development of sustaina- ble buildings for its own stock to enhance the quality of the investment portfolio has been an important part of CA Immo's sustainability strategy for many years. In or- der to provide transparent, internationally comparable and objective proof of building quality across the entire portfolio, CA Immo also has strategic core investment properties certified. – Local pres ence and market knowledge : A decentralised organisational structur with own branches in the core markets ensure s efficient management and tenant reten- tion. – R eduction of the carbon intensity of the investment portfolio as an indication for a targeted active improve- ment of the energy performance of the buildin gs and thus an increase in the attractiveness of the existing portfolio. CA Immo focuses in particular on measures such as increasing the energy efficiency of buildings. This includes renovation and modernization measures, a gradual switch to renewable energy sources, and the incorporation into the company' s own portfoli o of its own project completions that have been realised with a view to sustainability. The non-financial performance indicators relating to en- vironmental, e mployee and social issues as well as re- spect for human rights and the fight against corruption and bribery are presented and explained in detail in the Group Management Report ("ESG Report" section). ENVIRONMENT AND SOCIAL ASPECTS CA Immo is an investor, developer and long-term holder of high-quality office buildings. Our strategic busi- ness model is geared towards sustainable value creation, taking into account ecological, economic, social and legal dimensions. This goes hand in hand with our claim to meet the diverse interests and needs of CA Immo stake- holders in a targeted and responsible manner, thereby se- curing competitiveness in the long term. With this in mind, we evaluate and manage the requirements of our stakeholders as well as the impact of our business activi- ties on our ecological and social environment. CA Immo wants to make a contribution to keeping global warming below 2° Celsius and protecting the envi- ronment. We have therefore set ourselves the goal of re- ducing the carbon footprint of our buildings, increasing the resilience of our portfolio to climate risks and evalu- ating and, if necessary, intensifying the measures we have taken to date to protect the environment. Social, environmental and economic impacts, risks and opportunities arising from CA Immo business activities A key step in identifying and weighting the sustainabil- ity issues relevant to CA Immo was to evaluate the im- pact of our business activity on the environment, society and the economy across the entire value chain. This in- cluded the following direct (own activities) and indirect (supply chain) material impacts, risks and opportunities. Environment: – Environmental standards in project development (en- ergy efficiency and CO 2 emissions in the construction process as well as product definition, material selec- tion, resource consumption and circular economy) – Brownfield vs. greenfield development (biodiversity) – Management of energy efficiency and CO 2 emissions, waste generation and water consumption in building operations Society and economy: – Social standards in urban district and project develop- ment (product definition, e.g. social infrastructure, af- fordable housing), response to social change – Health and safety for tenants, contractors and own em- ployees in building operations and on construc tion sites, dealing with pandemic risks – Working conditions and income effects of own and ex- ternal employees (contractors), employee righ ts, staff development and retention – Independent and responsible corporate governance, compliance with social and environmental require- ments, observa nce of human rights, avoidance of cor- ruption and bribery, reputational risk CA Immo climate risks and opportunities The analysis of specific climate risks for our business is extremely complex and involves a number of unknown variables. In 2020, we reviewed our general risk catalog for completeness in this regard and partially supple- mented and evaluated the climate risks relevant to our business as well as general sustainability risks. In future, these risks will be re-evaluated and assessed annually CA IMMOBILIEN ANLAGEN AKTIENGESELLSCHAFT, VIENNA ANNEX 2 2 70 and approved by the Management Board. If the assess- ments reveal the need for additional measures or changes in strategy, these are subsequently implemented accord- ingly by the responsible departments. CA Immo pursues a proactive approach to ensure that any risks are mini- mised through early countermeasures and that the com- pany can react to any changes in good time. Social engagement CA Immo also takes measures in the social sphere to set positive impulses and responsible standards within its sphere of influence. Our strategy focuses in particular on health & safety, employment & working conditions and the social aspects of a sustainable supply chain and ur- ban district development. Further information on the topic of "Environment and Social Responsibility" can be found in the Group Man- agement Report ('ESG Report' chapter). Employees Our employees are our most valuable resource; their ex- pertise and commitment are crucial to our success. CA Immo values a corporate culture that is characterized by pride, trust and self-determined work. As an em- ployer, we want to create the best possible conditions for our employees to develop their potential, strengths and competencies to the full. We offer safe and attractive working environments, a wide range of international de- velopment opportunities and careful, forward-looking personnel development with the aim of offering our em- ployees what our office properties stand for: a "place where people love to work". As an employer, CA Immo has been locally anchored in its markets for many years and employs almost exclu- sively local staff in its international branches. In princi- ple, CA Immo employs staff on full-time, permanent con- tracts. CA Immo supports the work-life-balance and com- patibility of career and family at different stages of em- ployees' lives by offering flexible working hours and part- time models, home office arrangements, individual pa- rental leave models and paternity leave. Employees on leave are integrated into the internal information network and have the opportunity to participate in annual team meetings and company events. In addition, a large num- ber of employee-related regulations were defined in co- operation with the Austrian Works Council within the framework of company agreements. For information on diversity, equality, inclusion and employee rights, please refer to the Group Management Report ('ESG Report' chapter). PERSONNEL DISTRIBUTION WITHIN THE CA IMMO GROUP 1) Headcount Number of employees Share of women Joining / Leaving New hires 2) Turnover 3) 31.12.2020 31.12.2021 Change 2021 Ø 31.12.2021 2021 2021 2021 in % in % in % in % Austria 80 92 15 86 62 21/10 24 12 Germany/Switzerland 4) 252 247 –2 250 39 15/20 6 8 CEE 105 102 –3 106 72 10/13 9 12 Total 437 441 1 442 51 46/43 10 10 1) Headcounts, thereof around 11% part-time staff, incl. 31 employees on unpaid leave; excl. 20 employees of joint venture companies, the calculations for this table are based on the GRI guidelines (GRI 401-1, 402) 2) New hires: Joiners 2021 / average number of employees in 2021 (Headcount) 3) Turnover: Leavers 2021 / average number of employees in 2021 (Headcount); 4) At the end of 2021, 19 local employees were employed at the Basel branch of the 100% CA Immo construction subsidiary omniCon, which was estab- lished in 2014 CA IMMOBILIEN ANLAGEN AKTIENGESELLSCHAFT, VIENNA ANNEX 2 2 71 SHARE CAPITAL & SHAREHOLDER STRUCTURE Due to the change-of-control clause of the convertible bond triggered by the Starwood offer, almost all converti- ble bond holders have exercised their conversion rights. Since the end of April, the conversion rights have been serviced by conditional capital and partly by issuing new shares. Overall, the total number of voting rights in- creased by 7,688,090 from 98,808,336 to a total of 106,496,426 voting rights. As of the end of April 2021, the share capital increased by a total of €55,892,414.30 from €718,336,602.72 and amounted to €774,229,017.02 at the balance sheet date, divided into four registered shares and 106,496,422 bearer shares, each with a propor- tionate amount of the capital stock of €7.27. The bearer shares trade on the prime market segment of the Vienna Stock Exchange (ISIN: AT0000641352). With a shareholding of around 58% as at 31 December 2021 (61,654,765 bearer shares and four registered shares), SOF-11 Klimt CAI S.à r.l., Luxembourg, a com- pany managed by Starwood Capital Group, is the largest shareholder of CA Immo. Starwood is a global financial investor focusing on real estate investments. The remain- ing shares of CA Immo are held in free float by both insti- tutional and private investors who, with the exception of Petrus Advisers Ltd. (4.57% as of 18 March 2022), each hold a stake below the 4% threshold required by law to be reported. For more information on the organisation of the shares and the rights of shareholders, please refer to the Corporate Governance Report (Corporate Governance (caimmo.com)). CAPITAL DISCLOSURES At the 31st Annual General Meeting of 9 May 2018, the Management Board was authorized, with the consent of the Supervisory Board, to increase the capital stock by up to €359,168,301.36 (approx. 50% of the current capital stock) by issuance of up to 49,404,168 new ordinary bearer shares in return for contributions in cash or in kind (also in several tranches and by exclusion of share- holders’ subscription rights if required). In addition to the conditional capital available for this purpose, author- ised capital of €9,098,448.62 was used to service the con- version rights exercised by holders of convertible bonds, resulting in unused authorised capital of €350,069,852.74 as of 31 December 2021, which can be drawn down until 18 September 2023 at the latest. In the same Annual General Meeting the Management Board was authorized, with the consent of the Supervi- sory Board, until 8 May 2023 to issue convertible bonds up to a total nominal amount of €750 m with conversion and/or subscription rights in respect of up to 19,761,667 ordinary bearer shares of the company representing a pro-rata amount of the share capital of the company of up to €143,667,319.09 (‘contingent capital 2018’), also in several tranches and to determine all other terms of the convertible bonds as well as in respect of the issuance and the conversion procedure. Under this authorisation, convertible bonds may only be issued, if the total number of new shares for which conversion and/or subscription rights are granted by such convertible bonds shall not ex- ceed 20% of the share capital at the time this authorisa- tion is resolved upon. The shareholders’ subscription rights were excluded (article 174 para 4 in connection with article 153 Austrian Stock Corporation Act (AktG)). At the 34th Annual General Meeting held on 6 May 2021, the Management Board was authorised in accord- ance with article 65 para 1 no 8 and para 1a and para 1b Austrian Stock Corporation Act (AktG) for a period of 30 months from the date of the adopted resolution (until 5 November 2023), with the consent of the Supervisory Board, to repurchase treasury shares in the company, whereas the company’s stock of treasury shares must not exceed 10% of its share capital. The consideration shall not be lower than 30% and shall not exceed 10% of the average unweighted market price at the close of the mar- ket on the ten trading days preceding the repurchase. The Management Board is further authorised to determine the respective other terms and conditions of the repurchase, whereby the treasury shares may be acquired at the dis- cretion of the Management Board via the stock exchange, by way of a public offer, or by any other lawful and ap- propriate way, in particular off market, and/or from indi- vidual shareholders and under exclusion of the share- holders’ pro rata rights (reverse subscription right). The authorisation may be exercised in full or in part or in multiple partial amounts and in pursuit of one or more purposes by the company, subsidiaries (article 189a no 8 Commercial Code (UGB)) or by third parties for their ac- count. The authorisation may be repeatedly exercised. In addition, the Management Board was authorised, with the consent of the Supervisory Board, to transfer the ac- quired treasury shares by all legally permissible means and to determine the terms and conditions of the transfer of shares or to cancel the treasury shares without an addi- tional resolution by the General Meeting. INFORMATION ACC. SECTION 243A UGB (AUSTRIAN COMMERCIAL CODE) CA IMMOBILIEN ANLAGEN AKTIENGESELLSCHAFT, VIENNA ANNEX 2 2 72 No use has been made of the share buyback programme in the year under review. As at 31 December 2021, CA Immobilien Anlagen AG held 5,780,037 treasury shares in total; given the total number of 106,496,426 vot- ing shares issued, this corresponds to approximately 5% of the voting shares. INFORMATION ON THE MANAGEMENT AND SUPERVISORY BOARDS According to the articles of association, the Manage- ment Board of CA Immo comprises one, two or three per- sons. The age limit for Management Board members is defined as 65 in the Articles of Association. The final term of office for Management Board members concludes at the end of the Annual General Meeting that follows the 65th birthday of a Board member. The Supervisory Board comprises no less than three and no more than twelve members. At any time, Supervisory Board members ap- pointed through registered shares may be asked to step down by the person entitled to nominate and replaced by another. The provisions of the Articles of Association re- garding terms of office and elections to appoint replace- ments do not apply to them. The other Supervisory Board members are elected by the Annual General Meeting. The age limit for Supervisory Board members is defined as 70 in the Articles of Association. Supervisory Board mem- bers must step down from the Board at the end of the An- nual General Meeting that follows their 70th birthday. The Shareholder’s Meeting resolves on the dismissal of members of the Supervisory Board on the basis of a ma- jority of at least 75% of the capital stock represented (ar- ticle 21 of the Articles of Association of CA Immo). CHANGE-OF-CONTROL CLAUSES The new Management Board contracts concluded in fis- cal year 2021 do not contain any commitments assuring payments in the event of premature termination of Man- agement Board duties following a change of control (“change of control” provisions). COMMITTED TO OBSERVING THE AUSTRIAN CORPORATE GOVERNANCE CODE Compliance with legal provisions applicable in the CA Immo Group’s target markets is a high priority for the company. The Management Board and Supervisory Board are committed to observing the Austrian Corporate Governance Code 11) and thus to transparency and princi- ples of good corporate management. The rules and rec- ommendations of the version of the Corporate Govern- ance Code applicable in business year 2021 (January 2021 amendment) are implemented almost in full. Dis- crepancies are noted in respect of C Rules no. 2 (right of appointment to the Supervisory Board) and no. 45 (exec- utive positions with competitor companies). The evalua- tion carried out by Ernst & Young Wirtschaftsprüfungs- gesellschaft m.b.H. concerning compliance with rules 1 to 76 of the Austrian Corporate Governance Code for business year 2021 found that declarations of conformity submitted by CA Immo with regard to compliance with the C and R Rules of the Code were correct. The corpo- rate governance report is also available on the company’s web site at Corporate Governance (caimmo.com). 11) The Austrian Corporate Governance Code may be viewed on the web site of the Austrian Working Group for Corporate Governance at www.corporate-governance.at. CA IMMOBILIEN ANLAGEN AKTIENGESELLSCHAFT, VIENNA ANNEX 2 2 73 ANTICIPATED DEVELOPMENTS AND MAIN OPPORTUNITIES AND THREATS Russia's invasion of Ukraine has shaken the global econ- omy. The immediate global impact will be higher infla- tion, lower growth and dislocations in financial markets. The crisis has significantly increased uncertainty and volatility in global equity and financial markets. Major equity indices have performed negatively since the onset of the crisis and debt capital markets have been com- pletely closed for a period of time or are currently very limited in access. The risk of a further escalation of the conflict and additional geopolitical tensions must con- tinue to be monitored. The CA Immo Group has no properties in Russia or Ukraine in its portfolio and monitors developments on the stock and financial markets. In addition, we counter exchange rate risk by generally pegging rents to the euro and converting liquid funds in foreign currencies into eu- ros on an ongoing basis. This means that the CA Immo Group is not exposed to any significant currency risk. The war in Ukraine and the resulting sanctions and countermeasures may have an impact on the CA Immo Group's balance sheet. The global consequences of the war could have an impact on the valuation of receivables and the calculation of expected credit losses. Further- more, increased caution is required in property valua- tions due to the uncertainty. We are constantly evaluating current developments and possible effects on the com- pany. Despite the uncertainty and possible direct and in- direct effects, the CA Immo Group assumes that the Rus- sia-Ukraine war will not affect the company's long-term ability to conduct business successfully. The emergence of new Covid-19 variants could further prolong the pandemic and cause renewed economic dis- ruption. Global access to vaccines, tests and treatments is essential to reduce the risk of further dangerous Covid-19 variants. This will require increased stockpile produc- tion, as well as better supply systems in each country and more equitable international distribution. In addition, supply chain disruptions, energy price volatility, and lo- cal wage pressures mean that uncertainty about inflation and the stance of monetary policy is high. If leading economies raise policy rates, risks could emerge for fi- nancial stability and emerging and developing econo- mies' capital flows, currencies, and fiscal positions, espe- cially as debt has increased significantly over the past two years. Portfolio strategy In addition to the increased focus of the portfolio on Class A office buildings in the core markets of Berlin, Munich, Vienna, Prague and Warsaw, our focus remains on sustainability and intensive tenant retention. The goal with our buildings is to offer the best product, the best support and the greatest possible flexibility for our ten- ants. The special synergy of being an experienced developer of green buildings and manager of an international Class A office portfolio in attractive metropolitan areas makes us the ideal partner for blue-chip companies. We want to use and further develop these strengths to expand our good market position in the long term. The profitable sale of non-strategic properties as part of the strategic capital rotation programme should also lead to a strong EBITDA-effective sales result and a corre- sponding inflow of liquidity. The reinvestment of the sales proceeds in acquisitions of strategic investment properties or in the company's development pipeline are aimed at optimizing the quality of the portfolio in terms of location, physical and sustainable building quality, and management efficiency. As part of this portfolio optimisation programme, we decided, together with the Supervisory Board of CA Immo, to start evaluating all strategic options for Romania, including a potential sale of the entire portfolio. Development In 2021, we were able to add three more of ou r own pro- ject completions to our portfolio as planned with the completion of office projects in Prague and Mainz. CA Immo’s largest development project ONE in Frankfurt with a total investment volume of around €430 m is due for completion in the second quarter of 2022. In addition, the Grasblau office project in Berlin (total investment vol- ume of around €70 m) is expected to complete towards the end of the business year. The development of extensive land reserves in central locations in the German cities of Munich, Frankfurt and Berlin represents significant long-term organic growth potential for CA Immo, which is to be realized succes- sively once the necessary conditions and requirements have been met. OUTLOOK CA IMMOBILIEN ANLAGEN AKTIENGESELLSCHAFT, VIENNA ANNEX 2 27 4 Key business factors Key factors that may influence the business development planned for 2022 include: – Economic developments in the regions in which CA Immo is active and the effects of these on demand for rental premises and rental prices (core indicators in- clude GDP growth, employment and inflation). – The developm ent of general interest rate levels. – The financing environment as regards the availability and cost of long-term financing with outside capital (both secured financing from banks on property level and unsecured capital market financing on group level), and accordingly the development of the market for real estate investment, price trends and their impact on the valuation of the CA Immo portfolio. – The speed at which planned development projects are realised will also depend on the market factors outlined above and the availability of necessary debt and equity. – CA Immo is relying on companies returning to their physical offices as the pandemic recedes. In this con- text, it remains to be seen how the crisis-induced ex- pansion of digital work processe s and the establishment of work-from-home will affect demand for office prop- erty in the medium term. – Political, fiscal, legal and economic risks, transparency and the development level on our real estate markets. Dividend At the beginning of November 2021, the majority share- holder SOF-11 Klimt CAI S.à r.l. requested that an extraor- dinary general meeting be convened to resolve on special dividends totaling €5.00 per dividend-bearing share to be paid to all shareholders in two tranches. The Extraordi- nary General Meeting was held virtually on November 30, 2021 and resolved to adopt the proposed resolutions. After a thorough evaluation, we have decided to propose to the Annual General Meeting to be held on 5 May 2022 to deviate from the previous dividend policy and to carry forward the entire balance sheet profit for the 2021 finan- cial year. The background to this decision is the fact that, as outlined above, dividends totalling €3.50 per share have already been distributed in the 2021 financial year from the net profit reported as at 31 December 2020, and a further dividend of €2.50 per share was distributed to shareholders in the current financial year on March 15, 2022. Especially in view of the current geopolitical envi- ronment and the increased uncertainty and volatility in the markets, no additional dividend payment is planned for the 2021 financial year. Earnings target 2022 Due to n umerous dynamic change factors, both in terms of the general conditions for the office sector and from an operational perspective for the current financial year, we plan to specify the FFO I target for the 2022 financial year in the second quarter. RESEARCH AND DEVELOPMENT Technological and social change continues to transform the office environment and the knowledge-based econ- omy. In order to develop and revitalize office properties today in such a way that they can be efficiently and prof- itably managed in future, CA Immo monitors changes to working processes and corporate requirements in terms of premises; at the same time, it trials new technical solu- tions along with space and building concepts on selected development projects. The current focus is on new re- quirements relating to energy efficiency, environmental protection and protective measures in relation to viral in- fections (pandemic protection). In the course of theoretical and practical research activ- ity, CA Immo maintains partnerships with institutions involved in real estate related research. For example, CA Immo is a partner to the Office 21 joint research pro- ject of the Fraunhofer IAO Institute (www.office21.de) and the Innovation platform RE!N (Real Estate Innovation Network), with the objective of pilot testing external and own innovation approaches at an early stage. CA Immo is also an active member of relevant platforms in the real estate industry. CA IMMOBILIEN ANLAGEN AKTIENGESELLSCHAFT, VIENNA ANNEX 2 2 75 RISK REPORT CA IMMOBILIEN ANLAGEN AKTIENGESELLSCHAFT, VIENNA ANNEX 2 2 76 RISK MANAGEMENT AT CA IMMO To ensure the success of CA Immo as a business in the long term and enable the company to meet its strategic objectives, effective management of new and existing risks is essential. A commensurate measure of risk must be accepted if we are to utilise market opportunities and exploit the potential for success they hold. For this rea- son, risk management and the internal monitoring system (IMS) deliver an important contribution to the Group’s corporate governance (defined as the principle of respon- sible management). CA Immo's risk management system is based on the fol- lowing elements: – Risk culture: CA Immo's reput ation is central to our identity and business success. Therefore, compliance with established principles of corporate governance and value management (Code of Ethics, Code of Conduct) is a matter of course. For CA Immo, risk culture implies raising of risk awareness and consciously addressing risks in day-to-day business – both for managers and in- dividual employees. – Risk strategy: The risk strategy describes how risks aris- ing from CA Immo’s business strategy or busine ss model are managed. It sets out the framework for the nature, extent and appropriateness of risks, thus reflecting the company’s own definition of a “sensible” approach to risks and describing these risks in terms of their impact on the economic situation of the company and the guidelines for managing risks that are to be derived from this. Strategic alignment and tolerance of risk With the approval of the Corporate Development com- mittee established in 2019 and the Supervisory Board, the Management Board defines the strategic direction of the CA Immo Group as well as the nature and extent of risks the Group is prepared to accept in pursuit of its strategic objectives. The Risk Management department supports the Management Board in assessing the risk en- vironment and developing potential strategies to raise long-term stakeholder value. An internal risk committee comprising representatives from all business areas and the CFO has also been set up; this convenes quarterly or, if necessary, in special sessions (for example, on the topic of the Covid-19 pandemic). The purpose of the committee is to provide additional assurance in regularly assessing the Group's risk situation across departmental boundaries and introducing measures as necessary. The aim of this is to ensure the company adopts the best pos- sible direction from the alternatives available. Identification of risks and assessment At CA Immo, the opportunity/risk situation is assessed on a quarterly basis within the framework of reports that are prepared, among other things, on the basis of the re- sults of the risk committee. Risk is assessed in relation to specific properties and projects as well as (sub)portfo- lios. The company incorporates early warning indicators such as rent forecasts, vacancy analyses, continuous monitoring of lease agreement periods and the possibil- ity of terminations; construction costs are also tracked throughout project implementation. Scenarios are envis- aged regarding the value trend for the real estate portfo- lio, exit strategies and liquidity planning; these supple- ment risk reporting and promote reliable planning. CA Immo observes the precautionary principle by apply- ing the full investment horizon to long-term planning and investment decisions. The company now also evalu- ates specific risks once a year, focusing on content, effect and likelihood of occurrence. An annual update is also carried out with regard to the estimated impact on the re- sult, assets or liquidity of CA Immo (‘extent of damage’) and the probability of occurrence within a period of one year. Measures and controls already implemented are taken into account to determine the net risk. The Man- agement Board uses this data as the basis for determining the severity and type of risks that it regards as acceptable in pursuing its strategic objectives. Strategies adopted by the Management Board are incorporated into the Group’s three-year planning; this assists the Group in communi- cating its willingness to take risks and its expectations, both internally and externally. The risk policy of CA Immo is defined by a range of guidelines, observance of which is continually moni- tored and documented by controlling processes. Risk management is obligatory at all levels of the company. The Management Board is involved in all risk-relevant decisions and bears overall responsibility for such deci- sions. At all levels, decisions are subject to the dual veri- fication principle. Internal Auditing, an independent di- vision, reviews operational and business processes, ap- pointing experts from outside as necessary; it acts inde- pendently in reporting and evaluating audit results. Evaluating the functionality of risk management The proper functioning of the risk management system is evaluated annually by the Group auditor in line with CA IMMOBILIEN ANLAGEN AKTIENGESELLSCHAFT, VIENNA ANNEX 2 27 7 the requirements of C Rule no. 83 of the Austrian Corpo- rate Governance Code. The results are reported to the Management Board and the audit committee. KEY FEATURES OF THE INTERNAL MONITORING SYSTEM (IMS) CA Immo’s internal monitoring system cove rs all princi- ples, procedures and measures designed to ensure the ef- fectiveness, cost-effectiveness and accuracy of accounting as well as compliance with relevant legal regulations and company guidelines. The IMS is integrated into individ- ual business processes, taking account of management processes. The objectives of the IMS are to preclude and expose errors in accounting and financial reporting, thus ensuring amendments to be introduced in good time. Transparent documentation makes it possible to depict accounting, financial reporting and auditing processes. All operational areas are incorporated into the financial reporting process. Competent local management teams are responsible for implementing and monitoring the IMS; the managing directors of subsidiaries are required to perform their own checks in order to assess and docu- ment compliance with monitoring measures. The effec- tiveness of the IMS is assessed on a random basis by the Group Auditing department while the cost-effectiveness of business processes is continually evaluated. The results of these assessments are reported to the responsible executive boards, the full CA Immo Management Board and (at least once a year) the audit committee. IMPACT OF THE COVID-19 PANDEMIC As in the previous fiscal year, 2021 overall was domi- nated by the effects of the global Covid-19 pandemic. Many countries again imposed general lockdowns and travel restrictions. As a result, market activity in many sectors continued to be severely impacted. The real estate sector is also experiencing the conse- quences of the pandemic already, with some real estate markets reporting significantly lower levels of transaction activity and liquidity. Hotels still have to close due to low occupancy rates and retailers are increasingly requesting rent deferrals or rent reductions in the face of significant sales losses. Some construction sites cannot be operated as planned. CA Immo is experiencing the first effects on con- struction sites, but even after two years of the pandemic, there have been no significant time or financial shortfalls to date. However, the short- and long-term economic im- pact of the Covid-19 pandemic on real estate markets re- mains highly uncertain. The longer the crisis lasts, the more complex and severe the effects will be. Develop- ments remain to be seen. Volatility and uncertainty on stock markets, corporate profit warnings and negative economic forecasts related to the Covid-19 pandemic underline its potential threat to the European and global economies. The real effects can- not be conclusively assessed given the fast-moving situa- tion, and are subject to constant evaluation. Temporary restrictions on the course of operations (also caused by exit restrictions, curfews, border closings, school/busi- ness shutdowns and other constraints) may affect the CA Immo Group, tenants, customers and suppliers as well as authorities. The consequences in terms of finance, general business and real estate in particular cannot be fully gauged (e.g. rent payments not received in accord- ance with the contract, delays in construction activities, effects on real estate markets, development of covenants for financings, consequences for planned real estate trans- actions). However, CA Immo relies on a wide range of possible measures to minimise the impact on the Group. INVESTMENT PROPERTY RISKS Risks linked to the market environment and composition of the portfolio (portfolio risk) The economic success of CA Immo depends, among other things, on the development of real estate markets of relevance to the Group. Key factors influencing the eco- nomic trend include the overall global economy, the trend in rental prices, the inflation rate, levels of national debt and interest rates. In the office properties segment, factors such as economic growth, industrial activity, the unemployment rate and consumer confidence play a ma- jor role alongside other factors critical to the economic trend. These circumstances – all of which are beyond the company’s control – may have a negative impact on the broad economic picture in Europe and thus adversely af- fect economically powerful countries like Germany and Austria; they may also impair the finance and real estate sector generally. Any downturn in the economic situation has the potential to reduce demand for real estate, which in turn can adversely affect occupancy rates, property val- ues and even the liquidity of real estate. Economic insta- bility and limited access to loan capital and equity-based financing can lead to business partners opting out. Where CA IMMOBILIEN ANLAGEN AKTIENGESELLSCHAFT, VIENNA ANNEX 2 27 8 the liquidity of the real estate investment market is insuf- ficient, there is a risk that sales of individual properties with a view to strategic adjustment of the real estate port- folio may prove impossible or only possible under unac- ceptable conditions. Property values depend not only on the development of rental rates, but also on real estate starting yields. Given the general market environment, there is still a risk that starting yields for commercial real estate will be adjusted upwards. The historically high price of property invest- ment is combining with low real estate yields to create risks to the value of properties in the CA Immo portfolio. Due to sustained pressure from investors, there is also the risk that properties are only available to purchase at in- flated prices. The possibility of an increase in general in- terest rates that forces property yields up and subse- quently property values down cannot be ruled out. In view of the uncertain future impact of the Covid-19 pandemic and the related current and future measures on the property markets, plus the fact that it is difficult to distinguish between short-term effects and longer-term structural market changes, CA Immo regularly reviews its property valuations. Following a near-complete external valuation of the Group's portfolio in the fourth quarter of 2021, values for the property assets as at the reporting date of 31 December 2021 were updated or adjusted on the basis of binding purchase agreements or external val- uations. Taking into account the current exceptional cir- cumstances and low levels of transactions, property valu- ations must continue to be handled with greater caution than is normally necessary, especially in the core markets of Austria and Eastern Europe. CA Immo counters market risk by spreading its portfo- lio across various countries. CA Immo counters country- specific risk by concentrating on strategic core regions through local subsidiaries with their own on-site staff, and through appropriate regional allocation within those core markets. The focus here is on markets that exhibit the long-term structural trends of increasing urbanisation, positive demographic change, and structural supply shortages as well as high investment liquidity. Market knowledge, continual evaluation of strategy, monitoring of the portfolio and purposeful portfolio management in the context of strategic decision-making (e.g. defining exit strategies, medium-term planning of sales) enable the company to respond quickly to economic and political events. CA Immo negates transfer risk by repatriating liq- uid assets from investment markets with a low credit standing. Active portfolio management aims to prevent concentration risk and maintain a balanced portfolio structure. CA Immo is currently active in Germany, Aus- tria and selected CEE markets. Germany is currently the largest single market of CA Immo, accounting for a share of 60% of the total portfolio. The regional portfolio target distribution envisages a medium-term target for the Ger- man share of 60-65%. CA Immo is part of the EPRA De- veloped Europe Index, which supports the capital market positioning and the overall rating. To this end, an aggre- gate EBITDA contribution of Germany, Austria and Po- land of more than 50% is targeted. In terms of asset clas- ses, CA Immo concentrates on modern, high-quality of- fice properties, with a focus on prime inner-city loca- tions. The development business segment also realises property developments and construction projects with other usage types (e.g. residential, hotel), which are gen- erally sold after successful development or completion. For single investments, CA Immo currently defines con- centration risk as a limit value of 5% of the total portfo- lio. The only properties in this category as at the balance sheet date were the Skygarden office building in Munich and the ONE project development in Frankfurt. The port- folio as a whole is highly diversified: the top ten Group assets represent less than one-third of the total portfolio. The concentration risk in respect of single tenants is also manageable. As at 31 December 2021, the top ten tenants were generating some 22% of rental revenue. With an ap- proximate share of 3% of total rental income, Pricewater- houseCoopers followed by Intercity Hotel GmbH are cur- rently the biggest individual tenants in the portfolio. In general, single tenants should not account for more than 5% of total annual rental income over an extended pe- riod, although tenants with excellent credit ratings (AAA/AA) may be an exception. For single-tenant build- ings, such scenarios should be avoided unless the tenant's credit rating is considered excellent (AAA/AA). A single- tenant scenario is defined as a case where more than 75% of the annual rental income (single property level) is at- tributable to a single tenant. Generally, rental income from single-tenant buildings should not exceed 20% of total annual rental income. In addition, the average lease term for single-tenant properties should exceed ten years. Other concentration risks arising from factors such as the existence of several properties with a market value of more than €100 m in the same city, the sector mix of ten- ants, the identity of contractual partners, suppliers or CA IMMOBILIEN ANLAGEN AKTIENGESELLSCHAFT, VIENNA ANNEX 2 2 79 lenders, etc., which cannot be effectively measured or limited in quantitative terms, are subject to regular re- view. Political and economic trends in the countries in which CA Immo is active also have a significant impact on occu- pancy rates and rent losses. The earning power and mar- ket value of a property is adversely affected where the Group is unable to extend a rental agreement due to ex- pire under favourable conditions or find (and retain for the long term) suitably solvent tenants. The creditworthi- ness of a tenant, especially during an economic down- turn, may diminish over the short or medium term, which can affect rental revenue in turn. In critical situations, the Group can cut rents to maintain an acceptable occupancy rate. All of CA Immo's core cities have already seen a decline in demand for office space and/or an increase in vacancy rates due to the challenging conditions and economic im- pact of the pandemic. After both transaction and letting activities have declined significantly, extended marketing and vacancy periods for unlet units are also likely in the future. As demand for office space is primarily dependent on macroeconomic developments, it remains to be seen how the in some cases decline in office space take-up in 2021 will develop in fiscal year 2022. It also remains un- clear how the expansion of digital working processes linked to the crisis and the rise of the home office will af- fect demand for office space in the medium term. The pos- sibility of the office market being more strongly influenced in future by the trends towards flexible office space leases and co-working cannot be ruled out. Across its tenant base (office, hotel, retail), CA Immo is confronted with different requests for rent reduction. The legal framework varies from country to country. In the event of Covid-19-related official shut-downs or re- strictions of operations, Austrian law provides for a spe- cial statutory right to reduce rent, whereas in other coun- tries, in the absence of specific statutory provisions, there is generally an obligation to pay rent; a right to reduce rent can only be established by way of exception and in individual cases via general legal provisions (such as the lapse of the contractual basis). However, deviating con- tractual provisions can also justify a tenant's right to re- duce rents. The extent to which the measures taken to contain the Covid-19 pandemic will lead to insolvencies of individual tenants and thus to an increase in vacancy rates cannot yet be estimated and will largely depend on the duration of the crisis. In particular the hotel, restau- rant and non-systematically relevant retail sectors are suf- fering disproportionately from the prevailing situation. Depending on the asset class, further rent waivers, rent reductions and rent deferrals are likely. CA Immo responds to this risk by analysing the property portfolio, tenant structure and cash flow, among other things, and performs various scenarios to assess the risks. Case-by-case assessment is generally necessary. Through careful monitoring and proactive measures (such as de- manding securities and screening the creditworthiness and reputation of tenants), the Group’s rent default risk has remained at the low level, despite the negative impact of the pandemic on individual tenants. Subject to the un- predictable economic impact of the pandemic, a decline in rental income cannot be excluded. All outstanding re- ceivables are evaluated quarterly and adjusted according to the level of risk. The risk of lost rent is taken into ac- count to a sufficient degree in the estimation of property values. Many of the Group’s lease agreements contain sta- ble value clauses, often taking account of consumer price indices for particular countries. The level of revenue from such rental contracts and new lettings depends heavily on the inflation trend (sustainable value risk). Competition for reputable tenants is intense on the let- tings market; rent levels are under pressure in many mar- kets. To remain attractive to tenants, CA Immo could be forced to accept lower rental rates. Moreover, incorrect as- sessments of the attractiveness of locations or potential usages can make lettings more difficult or significantly impair desired lease conditions. To a lesser extent, the Group’s portfolio also includes special asset classes such as shopping malls and hotels whose operation involves its own risks. Poor running of a centre, inadequate corporate management of tenants, de- clining footfall and increasing competition can force rental rates down and lead to the loss of key tenants, which in turn leads to rent losses and problems with new lettings. Although CA Immo does not operate any hotels itself, the Group’s earnings situation also depends on the quality of external hotel management and the develop- ment of hotel markets. Among other things, there are pan- demic measures ordered by the authorities, such as lock- downs, which have a particularly severe impact on hotel operators and the retail sector. CA IMMOBILIEN ANLAGEN AKTIENGESELLSCHAFT, VIENNA ANNEX 2 2 80 RISKS ASSOCIATED WITH THE PROJECT DEVELOPMENT FIELD Costs are generally sustained at the early stages of real estate development projects; revenue is not generated un- til the latter phases of a project. Many development pro- jects may be associated with cost overruns and delays in completion that are frequently beyond the control of CA Immo. This can adversely affect the economic viabil- ity of individual projects and lead to contractual penal- ties and compensation claims. If no suitable tenants are found, this can lead to vacancy after completion. CA Immo takes steps such as cost monitoring, variance analyses and long-term liquidity planning to manage these risks to a large extent. With few exceptions, projects are only started subject to appropriate pre-letting that can cover future debt service through rental income. Excep- tions are only made in special project and/or market situ- ations (e.g. extreme regional shortage of leasable space with foreseeable rising rents and low letting risk during the project phase) and require explicit reviews when ob- taining project approval. Saturation of the construction industry presents risk to CA Immo as regards the (on time) availability of construc- tion services and the level of building costs and quality. This is now noticeable not only in Germany – the core market for the company's development projects – but in all CA Immo's core regions. Despite making provision for rising costs within project reserves, the fact that further rises in construction costs could present a risk to budget compliance and the overall success of a project cannot be ruled out. Another risk is that current property yields might change, thereby reducing target developer profits, even though projects have been calculated defensively. For this reason, CA Immo is increasingly reliant on appro- priate market and cost analyses in the development area as well. Given the current market conditions – with rising construction costs, supply and timing problems, fluctuat- ing financing rates, uncertain marketing periods and a lack of comparative values – it is inevitable that a higher uncertainty factor will apply to project developments. Land values could therefore fluctuate much more than would be the case under normal circumstances. Projects currently in progress are generally on time and within ap- proved budgets; they are continually monitored as re- gards cost risk. CA Immo creates sustainable value through a compre- hensive value chain, from leasing and management to the construction, planning and development of investment properties with highly developed in-house expertise. This reduces functional (performance) risks while maximizing opportunities along the value chain (developer profit). Although, land reserves and land development projects present specific risks (e.g. permit risk) owing to the high capital commitment and absence of steady cash inflows, they also offer considerable potential for value increases through the securing or enhancement of building rights. Risks are regularly reduced via the sale of non-strategic land reserves. The acquisition of building rights on re- maining land will be accelerated through the company's own capacity. Overall, CA Immo is aiming for a balanced portfolio; on the basis of balance sheet values, this means around 85% profitable investment properties and 15% development projects under construction, including land bank reserves. Since CA Immo undertakes a number of development projects as joint ventures, the company depends on the solvency and performance capability of partners to some extent (partner risks); moreover, the Group is exposed to credit risk in respect of its counterparties. Depending on the agreement in question, CA Immo could also bear joint liability for costs, taxes and other third-party claims with its co-investors and, where a co-investor opts out, be forced to accept liability for their credit risk or their share of costs, taxes or other liabilities. FINANCIAL RISKS Capital market, liquidity, investment and refinancing risk (Re)financing on the financial and capital markets is one of the most important considerations for a real estate company. In particular, CA Immo relies on debt capital to refinance existing loans and to finance development pro- jects and acquisitions. In effect, therefore, the company is dependent on the readiness of banks and capital markets to provide additional debt capital and extend existing fi- nancing agreements under acceptable terms. Market con- ditions for real estate financing are constantly changing. The attractiveness of financing options depends on a range of factors, not all of which can be influenced by the Group (market interest rates, required collateral and so on). This can significantly impair the ability of the Group to raise the completion level of its development portfolio, invest in suitable acquisition projects or meet its obliga- tions in connection with financing agreements. CA IMMOBILIEN ANLAGEN AKTIENGESELLSCHAFT, VIENNA ANNEX 2 28 1 Although the CA Immo Group has a sufficient level of liquidity as things stand, we must take account of re- strictions at individual subsidiary level; access to cash and cash equivalents is limited owing to obligations to ongoing projects and a liquidity requirement to stabilise loans exists in certain instances. There is also a risk that planned sales will be prevented, delayed or transacted at prices lower than expected. Other risks arise from un- foreseen additional funding obligations in relation to project financing and breaches of covenant in the prop- erty financing area or corporate bonds issued by CA Immo. Where these requirements are violated or de- fault occurs, the relevant contractual partners are enti- tled to accelerate financing and demand immediate re- payment. This could force the Group to sell properties or arrange refinancing under unfavourable terms. CA Immo has fluctuating stocks of cash and cash equiv- alents which the company invests according to its partic- ular operational and strategic needs and objectives. In or- der to maintain the investment grade - long-term issuer rating from Moody's (currently Baa3 with negative out- look) at an acceptable level, adequate equity capitalisa- tion is also required. CA Immo counters risk of this kind by continually monitoring covenant agreements and effectively plan- ning and securing liquidity. The financial consequences of strategic aims are also taken into account. To control liquidity peaks, the Group has secured a revolving facil- ity at parent company level (e.g. 3-year RCF of €300 m). This also ensures the Group can meet unexpected cash flow requirements. In line with the investment horizon for real estate, loans are invariably agreed on a long-term basis. In principle, appropriate financing (e.g. loan or bond) must be guaranteed before binding contracts are concluded in connection with real estate acquisitions. As an alternative and supplement to established means of (equity) capital procurement, the company has also en- tered into equity partnerships (joint ventures) at project level in the past. Despite careful planning, it is not possible to eliminate liquidity risk, particularly where capital requests linked to joint venture partners are not viable. CA Immo Deutschland has a high capital commitment, which is typical of development projects. Financing has been se- cured for all projects under construction; additional fi- nancing is required for new project launches. Interest rate risk Although the current economic environment remains characterised by low interest rates and relatively high val- uations of real estate portfolios, the possibility of an inter- est rate rise negatively affecting the real estate market – and thus property valuations and the divestment plans of CA Immo – cannot be discounted. Raising equity or debt capital could become considerably more difficult, making expansion plans almost or completely impossible. Market-related fluctuations in interest rates affect both the level of financing costs and the fair value of interest hedging transactions concluded. For financing purposes, CA Immo uses banks at home and abroad and issues cor- porate bonds, thereby opting for a mix of long-term fixed-rate and floating-rate loans. To hedge against im- pending interest rate changes and associated fluctua- tions in financing costs, greater use is made of derivative financial instruments (interest rate caps, swaps and floors) in the case of floating-rate loans. However, hedg- ing transactions of this kind may prove to be inefficient or unsuitable for achieving targets; they may also result in losses that affect earnings. Moreover, the valuation of derivatives can impact negatively on profits and share- holders’ equity. The extent to which the Group utilises derivative instruments is guided by assumptions and market expectations in respect of the future interest level, and especially the 3-month Euribor rate. Should these assumptions prove incorrect, the result can be a significant rise in interest expenditure. Continual moni- toring of the interest rate risk is therefore essential. No risks constituting a serious and permanent threat to the company exist at the present time. Moreover, CA Immo is increasingly obtaining finance from the capital market. Fixed-interest loans (in the form of corporate bonds, for example) and loans hedged through derivatives currently account for 96% of the total financing volume. Continual optimisation of the financing structure in recent years has served to improve the maturity profile and raise the quota of hedged financial liabilities while reducing aver- age borrowing costs. The pool of unencumbered assets was also raised. The financing profile has thus become more robust. Tax risks For all companies, current income and capital gains is subject to income tax in the respective country. Im- portant discretionary decisions must be taken regarding the level of tax provisions that need to be formed. The extent to which active deferred taxes are recognised must also be determined. CA IMMOBILIEN ANLAGEN AKTIENGESELLSCHAFT, VIENNA ANNEX 2 2 82 Subject to compliance with certain requirements, reve- nue from the sale of participating interests may be fully or partially exempted from income tax. Even where a company intends to meet the requirements, passive de- ferred taxes are fully applied to property assets accord- ing to IAS 12. Key assumptions must also be made regarding the ex- tent to which deductible temporary differences and loss carry forwards are set off against future taxable profits, and thus the extent to which active deferred taxes can be recognised. Uncertainty arises regarding the amount and timing of future income and the interpretation of com- plex tax regulations. Where there is uncertainty over the application of income tax to business transactions, an as- sessment will be required as to whether or not the re- sponsible tax authority is likely to accept the interpreta- tion of the tax treatment of such transactions. In case of doubt, the CA Immo Group enters the tax obligation as the most likely amount on the basis of that assessment. Such doubt and complexity can mean that future tax payments turn out to be significantly higher or lower than the obligations currently assessed as probable and recognised in the balance sheet. The CA Immo Group holds a large part of its real estate portfolio in Germany, where many complex tax regula- tions must be observed. In particular, these include (i) provisions on the transfer of hidden reserves to other as- sets, (ii) legal regulations on real estate transfer tax or the possible accrual of real estate transfer tax in connection with direct or indirect changes of control in German partnerships and corporations, (iii) the fiscal recognition of outsourcing operating equipment or (iv) the deduction of input taxes on construction costs in the case of devel- opment projects. The CA Immo Group makes every effort to ensure full compliance with all tax regulations. None- theless, there are circumstances (some of which are out- side the CA Immo Group’s control) such as changes to the shareholding structure, changes in legislation or changes in interpretation on the part of tax authorities and courts which could lead to the aforementioned taxa- tion cases being treated differently, which in turn would influence the assessment of tax in the consolidated fi- nancial statements. Moreover, in connection with past restructuring measures in Eastern Europe, there are uncertainties re- garding the possible retroactive application of any subse- quent tax changes. However, CA Immo considers the probability of an actual charge to be low. With regard to the tax deductibility of internal service charges within the Group, CA Immo always attempts to charge an arm's length price for internal services and to adequately record this in order to comply with all legal requirements (transfer pricing documentation). However, it is possible that the tax authorities may take a different view and come to a different conclusion, which could have tax consequences with regard to the deductibility of internal cost transfers undertaken in the past and thus trigger subsequent tax payments. Currency risks The possible reintroduction of national currencies by individual Eurozone members would also have serious consequences for the European economies and financial markets. Finally, the exit of individual nations from Euro- pean Monetary Union could lead to a complete collapse of the monetary system. Since CA Immo is active on a number of markets out- side the eurozone, the company is subject to various cur- rency risks. Where rents are payable in currencies other than the euro on these markets and cannot be fully ad- justed to current exchange rates in time, incoming pay- ments may be reduced by means of exchange rate changes. Where expenses and investments are not trans- acted in euros, exchange rate fluctuations can impair the payment capacity of Group companies and adversely af- fect the Group’s profits and earnings situation. CA Immo generally counters such risk in that foreign currency inflows are secured by pegging rents to the euro; no significant and direct currency risk exists at pre- sent. The pegging of rents affects the creditworthiness of ten- ants and thus produces an indirect currency risk that can result in payment bottlenecks and loss of rent. Since in- coming payments are mainly received in local currency, however, free liquidity (rental revenue less operating costs) is converted into euros upon receipt. This process is continually overseen by the responsible country man- agers. There is no currency risk on the liabilities side. Currency risks linked to construction projects are hedged according to need on a case-by-case basis, taking account of the currency underlying the order and lease agree- ment, likely exchange rate development and the calcula- tion rate. CA IMMOBILIEN ANLAGEN AKTIENGESELLSCHAFT, VIENNA ANNEX 2 2 83 Transaction risk and risks from sales transactions The German real estate transaction market was unim- pressed by th e pandemic and developments in the sur- rounding countries in 2021 and achieved a record result in terms of investment volume. Due to a seasonal slow- down in the pandemic and government aid for compa- nies, there was no further slump in the Austrian real es- tate market as seen in the previous year. In Central and Eastern Europe, too, the impact of the pandemic and its economic consequences on the real estate markets in 2021 were already less noticeable than in the previous year. The positive momentum of the last few years before the start of the pandemic was slowly resumed. This is also evident in CA Immo's core cities of Warsaw, Prague, Budapest and Bucharest. However, in the current situa- tion, it cannot be excluded that the real estate transaction market will decline again and that transactions will be suspended or even canceled due to problems in pricing and financing. Sales transactions can produce risks linked to contractual agreements and assurances. These might relate to guaranteed income from rental payments and can subsequently reduce purchase sums agreed or received. Sufficient financial provision has been made to counter recognised risks to revenue from transacted sales, and liquidity risk is considered in liquidity planning. Contractual obligations in the form of follow-on costs (e.g. residual construction work) form part of relevant project cost estimates. OTHER RISKS Operational and organisational risks Weaknesses in the CA Immo Group’s structural and process organisation can lead to unexpected losses or additional expenditure. This risk can arise from short- comings in EDP and other information systems as well as human error and inadequate internal inspection pro- cedures. Flawed program sequences as well as auto- mated EDP and information systems pose a high opera- tional risk where their type and scope fail to take ac- count of business volumes or prove vulnerable to cyber- crime (IT and cyber risks). Human risk factors include an insufficient understanding of corporate strategy, inad- equate internal risk monitoring (and especially business process controls) and excessive decision-making author- ity at individual level, which can lead to unconsidered actions or a proliferation of decision-making bodies that hinder flexible responses to changes in the market. Some real estate management tasks and other administrative duties are outsourced to external third parties. In the process of transferring administrative tasks, it is possible that knowledge of managed properties and administra- tive processes can be lost, and that CA Immo could prove incapable of identifying and contractually committing suitable service providers within the necessary timeframe. Nonetheless, the expertise possessed by a company and its workforce constitutes a significant competitive factor and a unique point of distinction over competitors. When key members of staff leave, therefore, the company is exposed to the risk of loss of expertise, which gener- ally requires a significant commitment of corporate re- sources (money, time, recruitment of new employees) to redress the balance (HR risk). CA Immo takes various measures to counter these risk factors. In the case of corporate mergers, structured pro- cesses of organisational integration are observed. Process organisation (i.e. system/process integration) is firmly es- tablished; activities to ensure the long-term implementa- tion of operational processes are ongoing. The Group structure is regularly scrutinised and examined to ensure predefined structures take account of the size of the com- pany. CA Immo counters risks linked to personal exper- tise (which can arise with the resignation of key knowledge holders) through regular transfers of knowledge (via training courses) and by documenting know-how (in manuals, etc.); far-sighted staff planning also plays a part. Legal risks In the course of normal business activity, the compa- nies of the Group can become involved in legal disputes, both as plaintiffs and as defendants. Such cases are heard in various jurisdictions. The law applicable in each case, the varying degrees of efficiency of the compe- tent courts and the complexity of the matters in dispute may in some cases result in a considerable length of pro- ceedings or other delays. CA Immo is confident that it has made sufficient financial provisions for legal dis- putes. At present, no lawsuits or arbitration proceedings that could threaten the company’s survival are imminent or pending. In the spring of 2020, CA Immo filed a claim for dam- ages against the Republic of Austria and the state of Carinthia for unlawful and culpably biased influence on the best bidder procedure in the context of privatisation CA IMMOBILIEN ANLAGEN AKTIENGESELLSCHAFT, VIENNA ANNEX 2 2 84 of Federal Residential Property companies in 2004 (‘BUWOG’) and for the unlawful failure to win the best bidder procedure. The first instance (though not yet fi- nal) criminal verdicts of January 2022 against the defend- ants, ex-Federal Minister of Finance Grasser et al., which are relevant for these civil proceedings, essentially con- firmed that illegal and biased actions were taken to the detriment of CA Immo in connection with the BUWOG privatization proceedings. An assessment of the impact of the criminal proceedings on the pending civil pro- ceedings for damages will only be possible once all ap- peal proceedings have been concluded with a final crim- inal verdict. In 2020, a provision of approximately €25 m has been recognised for court fees in connection with the damages proceedings; the payment of the court fees was made following a ruling of the Federal Administrative Court in 2021. CA Immo has filed an appeal against this ruling with the Constitutional Court. It is not possible to predict changes to legal regulations, case law and administrative practice, or the impact of these on business results and operations; such changes may in particular adversely affect real estate values or the cost structure of the CA Immo Group. CA Immo pro- actively manages such legal risks by taking numerous measures. These include the regular assessment of his- torical and existing legal risks, continual monitoring of legislative changes and changes in case law, the incorpo- ration of lessons learned into business processes and continuous informative and training measures. ESG RISKS Current developments on the capital market (e.g. sus- tainable finance) and new legal requirements are creating pressure for companies to report more prominently than before on ESG risks resulting from their business activi- ties. Environmental, social and governance aspects have also become increasingly important across the real estate sector. Buildings are seen as one of the key factors for cli- mate protection due to their high energy consumption, which is why attention is currently still primarily focused on environmental issues, however, the social and govern- ance factors are also becoming increasingly relevant. Environmental risks Energy use in buildings for lighting, heating or cooling leads to direct or indirect CO 2 emissions. Building materi- als contain carbon that is produced during their extrac- tion, manufacture, transportation and processing. Since carbon is contained in almost every phase of the con- struction and operation of buildings, companies should start implementing appropriate real estate decarbonisa- tion programmes in time to contribute to the ambitious goal of climate neutrality in Europe by 2050. As a responsible player in the European real estate sector, CA Immo fully supports the United Nations' climate goals and the associated transition to a low-car- bon, sustainable economy. In order to meet the associated requirements in the best possible way and to secure long- term competitiveness, CA Immo has anchored corre- sponding measures, processes and goals in its strategic approach (including sustainability certification, sustaina- bility reporting, ESG reporting and green financing). For CA Immo, improving energy efficiency in existing buildings is a key factor in achieving climate neutrality. Since carbon efficiency results depend significantly on decisions made in the planning phase, we pay attention to future environmental impacts at a very early stage in our project developments. Where possible, we focus on increasing the proportion of bio-based materials, paying attention to the CO 2 footprint of conventional materials and on-site energy generation (solar panels, heat pumps, heat grids, etc.). Our procurement process also ensures that the high green standards are met in accordance with the certification levels set for the building in question. We require our construction service providers to comply with the sustainability standards according to DGNB Gold or LEED Gold (e.g. material declaration, worker protection). Detailed information on this – in particular on climate risks and opportunities including risk assessment – can be found in the in the Group Management Report ("ESG Report" section). Other environmental and climate risks Environmental and safety regulations include active and latent obligations to remediate contaminated sites. Com- plying with these provisions can entail considerable in- vestment expenses and other costs. These obligations may apply to real estate currently or formerly owned by CA Immo, or currently or formerly managed or developed by the company. In particular, the provisions cover con- tamination with undiscovered harmful materials or nox- ious substances, munitions and other environmental risks such as soil pollution, etc. Several regulations impose sanctions on the discharge of emissions into air, soil and water: this can render CA Immo liable to third parties, CA IMMOBILIEN ANLAGEN AKTIENGESELLSCHAFT, VIENNA ANNEX 2 2 85 significantly impact the sale and letting of affected prop- erties and adversely affect the generation of rental reve- nue from such properties. Natural disasters and extreme weather conditions can also cause considerable damage to real estate. In principle, insurable risks are insured to the usual extent (e.g. all-risk insurance for development projects). Unless sufficient insurance is in place to cover such damage, this can have an adverse impact. To mini- mise the risk, CA Immo incorporates these considerations into its due diligence audit prior to every purchase; ap- propriate guarantees are required from sellers. Wherever possible, the CA Immo Group makes use of environmen- tally sustainable materials and energy-saving technolo- gies. CA Immo observes the ecological precautionary principle by ensuring all (re)development projects qualify for certification. Social risks In the social sector, our strategic focus is on the fol- lowing topics in particular: Compliance with hu- man rights, health & safety, employment & working con- ditions, and social aspects of sustainable urban develop- ment. In the case of construction services, for example, CA Immo requires and monitors its contractors for com- pliance with statutory regulations on occupational health and safety, workplace and working time regulations, and collective bargaining agreements. Information on the key social risks faced by CA Immo and the wide-ranging protective measures implemented by CA Immo in the course of the Covid-19 pandemic to ensure a safe working environment for CA Immo employ- ees, tenants and workers on CA Immo construction sites can be found in the in the Group Management Report ("ESG Report" section). Governance risks Best practice in corporate governance represents an opportunity for CA Immo to increase its value in the long term. Conversely, failure to comply with govern- ance and compliance standards entails high risks, rang- ing from penalties and fines to loss of reputation. These include not only compliance with legal requirements, governance standards and (internal) guidelines, but also a transparent approach to conflicts of interest, granting of appropriate remuneration, promotion of open commu- nication with all stakeholders, and adherence to our ethi- cal principles and corporate values. CA Immo clearly op- poses any form of unequal treatment, human rights viola- tions, organized crime (e.g. fraud, extortion, bribery and corruption), money laundering or terrorism financing. In contrast, we want to promote integrity and diversity at all levels. The risk of corruption is addressed, for example, by the code of conduct (‘zero tolerance’) and the related gifts and donations policy. Employees are required to report any suspicions internally. Employees and external third parties can also report suspected misconduct anony- mously via the electronic whistleblower system set up by CA Immo (Whistleblower System (caimmo.com)). The Supervisory Board is informed at least once a year about measures taken to combat corruption. Corruption-related matters are audited on the basis of the audit plan ap- proved by the audit committee or on the basis of special audit assignments issued by the Management Board, au- dit committee or full Supervisory Board. All operating Group companies are reviewed for corruption risks on a regular basis. Already as part of the tender process, we require our contractors and suppliers (vendors) to accept and com- ply with our Code of Ethics and Code of Conduct as well as the governance, social and environmental standards we have defined. CA Immo screens its business partners – including construction companies in particular – as part of the tender process not only in terms of their pro- fessional qualifications and economic situation, bu t also with regard to social aspects. As part of a third-party compliance check, questionnaires and the use of com- pany and risk databases for undesirable media, sanc- tions, watchlists, etc. are also used to check complian ce with governance, social and environmental standards and taken into account in tendering processes. In the governance field, we pay particular attention to compli- ance with the law, our internal requirements for contrac- tual partners, for example, with regard to business eth- ics, ensuring compliance, and measures to combat cor- ruption, money laundering, and terrorism financing. Details of our key standards and related control mecha- nisms are available at Our values (caimmo.com). CA IMMOBILIEN ANLAGEN AKTIENGESELLSCHAFT, VIENNA ANNEX 2 2 86 Vienna, 23.3.2022 The Management Board Silvia Schmitten-Walgenbach (Chief Executive Officer) Dr. Andreas Schillhofer (Chief Financial Officer) Keegan Viscius (Chief Investment Officer) CA IMMOBILIEN ANLAGEN AKTIENGESELLSCHAFT, VIENNA 2 87 The Management Board confirms to the best of their knowledge that the financial statements of CA Immobilien Anla- gen Aktiengesellschaft, which were prepared in accordance with the applicable accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the CA Immobilien Anlagen Aktiengesellschaft and that the management report gives a true and fair view of the development and performance of the business and po- sition of the company, together with a description of the principal risks and uncertainties the CA Immobilien Anlagen Aktiengesellschaft faces. Vienna, 23.3.2022 The Management Board DECLARATION OF THE MANAGEMENT BOARD DUE TO SECTION 124 OF THE AUSTRIAN STOCK EXCHANGE ACT (BÖRSEGESETZ) Silvia Schmitten-Walgenbach (Chief Executive Officer) Dr. Andreas Schillhofer (Chief Financial Officer) Keegan Viscius (Chief Investment Officer) AUDITOR’S REPORT 2 88 Report on the Financial Statements Audit Opinion We have audited the financial statements of CA Immobilien Anlagen Aktiengesellschaft, Vienna, These financial statements comprise the balance sheet as of December 31, 2021, the income statement for the fiscal year then ended and the notes. Based on our audit the accompanying financial statements were prepared in accordance with the legal regulations and present fairly, in all material respects, the assets and the financial position of the Company as of December 31, 2021 and its financial performance for the year then ended in accordance with Austrian Generally Accepted Accounting Principles. Basis for Opinion We conducted our audit in accordance with the regulation (EU) no. 537/2014 (in the following "EU regulation") and in accordance with Austrian Standards on Auditing. Those standards require that we comply with International Stand- ards on Auditing (ISA). Our responsibilities under those regulations and standards are further described in the "Audi- tor’s Responsibilities for the Audit of the Financial Statements" section of our report. We are independent of the Com- pany in accordance with the Austrian General Accepted Accounting Principles and professional requirements and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evi- dence we have obtained until the date of this auditor’s report is sufficient and appropriate to provide a basis for our opinion by this date. Key Audit Matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the fiscal year. These matters were addressed in the context of our audit of the financial state- ments as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. The following are the key audit matters that we identified: Titel Valuation of investments in and loans to affiliated companies Risk The financial statements of CA Immobilien Anlagen Aktiengesellschaft as of December 31, 2021 show material invest- ments in affiliated companies (TEUR 3,219,268) as well as material loans to affiliated companies (TEUR 292,666). Fur- thermore, the financial statements show impairments of investments in and loans to affiliated companies of TEUR 34,488 and in-come from revaluation of such of TEUR 1,675. All investments in and loans to affiliated companies are tested for impair-ment. These impairment assessments re- quire significant assumptions and estimates. Due to the fact that most of the affiliated companies are real estate companies the impairment test is based on a sim- plified entity value which is mainly influenced by the property valuation reports by external, independent valuation experts or contractually agreed purchase prices. The material risk within the valuation reports exists when determining AUDITOR’S REPORT ) AUDITOR’S REPORT 2 89 assumptions and esti-mates such as the discount/capitalization rate and rental income and for properties under devel- opment the construction and development costs to completion and the developer’s profit. A minor change in these as- sump-tions and estimates can have a material impact on the valuation of invest-ments in and loans to affiliated compa- nies. The respective disclosures relating to investments in and loans to affiliated companies are shown in Section “1 – Fi- nancial assets”, in Section “10 a) – Financial assets” and in appendix 2 – Information about group companies in the financial statements as of December 31, 2021. Consideration in the audit To address this risk, we have critically assessed the assumptions and estimates made by management and the external valuation experts and performed, among others, the following audit procedures with involvement of our internal prop- erty valuation experts: – Assessment of concept and design of the underlying business process – Assessment of the applied methods and the mathematical accuracy of the calculations and supporting documentation – Assessment of design and effectiveness of relevant key controls in the property valuation process based on a sample – Assessment of the competence, capability and objectivity of the external valuation experts engaged by management – Assessment of the applied methods and the mathematical accuracy of selected property-valuation reports as well as assessment of the plausibility of the underlying assumptions (eg. Rental income, discount/capitalization rate, usable space, vacancy rate) by means of comparison with market data if available – Check of certain input-data as included in the valuation reports with data in the accounting system or underlying agreements – Inquiry of proje ct-management for selected properties under development regarding reasons for deviations between plan and actual costs and current estimation of cost to completion; review of actual costs for those projects through review of project-documentation and vouching on a sample basis as well as evaluation of the derived percentage of completion – Assessment of the adequacy and completeness of the disclosures made in the financial statements by the management Other Information Management is responsible for the other information. The other information comprises the information included in the annual report and the annual financial report, but does not include the financial statements, the management report and the auditor’s report thereon. We received the consolidated Corporate Governance Report until the date of this audit opinion; the rest of the annual report is estimated to be provided to us after the date of the auditor's report. Our opinion on the financial statements does not cover the other information and we do not express any form of as- surance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, to consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. AUDITOR’S REPORT 2 90 Responsibilities of Management and of the Audit Committee for the Financial Statements Management is responsible for the preparation of the financial statements in accordance with Austrian Generally Ac- cepted Accounting Principles, for them to present a true and fair view of the assets, the financial position and the fi- nancial performance of the Company and for such internal controls as management determines are necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, management is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of account- ing unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so. The Audit Committee is responsible for overseeing the Company's financial reporting process. Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from ma- terial misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasona- ble assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the EU reg- ulation and in accordance with Austrian Standards on Auditing, which require the application of ISA, always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, indi- vidually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. As part of an audit in accordance with the EU regulation and in accordance with Austrian Standards on Auditing, which require the application of ISA, we exercise professional judgment and maintain professional scepticism through- out the audit. We also: – identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error , as fraud may involve collusion, forgery, intentional omissions, misrepresentatio ns, or the override of internal control. – obtain an u nderstanding of internal control relevant to the audit in order to design audit proce-dures that are appro- priate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. – evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates an d related disclosures made by management. – conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the au- dit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are in-adequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern. – evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. AUDITOR’S REPORT 29 1 We communicate with the Audit Committee regarding, among other matters, the planned scope and timing of the au- dit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide the Audit Committee with a statement that we have complied with relevant ethical requirements re- garding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with the Audit Committee, we determine those matters that were of most signifi- cance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the ad- verse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such commu- nication. Report on Other Legal and Regulatory Requirements Comments on the Management Report Pursuant to Austrian Generally Accepted Accounting Principles, the management report is to be audited as to whether it is consistent with the financial statements and as to whether the management report was prepared in accord- ance with the applicable legal regulations. Management is responsible for the preparation of the management report in accordance with Austrian Generally Ac- cepted Accounting Principles. We conducted our audit in accordance with Austrian Standards on Auditing for the audit of the management report. Opinion In our opinion, the management report for the Company was prepared in accordance with the valid legal require- ments, comprising the details in accordance with Section 243a Austrian Company Code UGB, and is consistent with the financial statements. Statement Based on the findings during the audit of the financial statements and due to the thus obtained understanding con- cerning the Company and its circumstances no material misstatements in the management report came to our attention. Additional information in accordance with Article 10 EU regulation We were elected as auditor by the ordinary general meeting at May 6, 2021. We were appointed by the Supervisory Board on September 14, 2021. We are auditors since the financial year 2017. We confirm that the audit opinion in the Section "Report on the financial statements" is consistent with the additional report to the audit committee referred to in Article 11 of the EU regulation. We declare that no prohibited non-audit services (article 5 par. 1 of the EU regulation) were provided by us and that we remained independent of the audited company in conducting the audit. AUDITOR’S REPORT 29 2 Responsible Austrian Certified Public Accountant The engagement partner is Alexander Wlasto, Certified Public Accountant. Vienna, March 23, 2022 Ernst & Young Wirtschaftsprüfungsgesellschaft m.b.H. Mag. Alexander Wlasto mp Mag. (FH) Isabelle Vollmer mp Wirtschaftsprüfer / Certified Public Accountant Wirtschaftsprüferin / Certified Public Accountant ) This report is a translation of the original report in German, which is solely valid. Publication or sharing with third parties of the financial statements together with our auditor's opinion is only allowed if the financial statements and the management report are identical with the German audited version. This audit opinion is only ap-plicable to the German and complete financial statements with the management report. Section 281 paragraph 2 UGB (Austrian Com- pany Code) applies to alternated versions. CONTACT/DISCLAIMER/IMPRINT 2 93 CONTACT CA Immobilien Anlagen AG Mechelgasse 1 1030 Wien Tel +43 1 532 59 07- 0 Fax +43 1 532 59 07- 510 office@caimmo.com www.caimmo.com Investor Relations Free info hotline in Austria: 0800 01 01 50 Christoph Thurnberger Claudia Höbart Tel. +43 1 532 59 07- 0 ir@caimmo.com Corporate Communications Tel. +43 1 532 59 07- 0 presse@caimmo.com DISCLAIMER This Annual Report contains statements and forecasts which refer to the future development of CA Immobilien Anlagen AG and their companies. The forecasts represent assessments and targets which the Company has formulated on the basis of any and all information available to the Company at present. Should the assumptions on which the forecasts have been based fail to occur, the targets not be met or the risks set out in the risk management report materialise, then the actual results may deviate from the results currently antici- pated. This Annual Report does not constitute an invitation to buy or sell the shares of CA Immobilien Anlagen AG. IMPRINT Published by: CA Immobilien Anlagen AG 1030 Vienna, Mechelgasse 1 Text: Susanne Steinböck, Christoph Thurnberger Claudia Höbart, Julian Wöhrle, Jasmin Lettner Layout: Susanne Steinböck, Jasmin Lettner Graphic design and setting: WIEN NORD Werbeagentur Photos: CA Immo, Marcin Bambit, B+E Fotografie, Andreas Hofer, Christoph Knoch, Studio Horák, Manfred Zentsch Visualizations: bünck + fehse, Dorte Mandru p , Ni g htnurse Ima g es AG, StudioA Production: 08/16 This report has been produced inhouse with firesys We ask for your understanding that gender-conscious notation in the texts of this Annual Report largely had to be abandoned for the sake of undisturbed readability of complex economic matters. The Annual Report is printed on Impact Climate Paper CO2-neutral paper made from 100% recycled materials.