Quarterly Report • May 11, 2010
Quarterly Report
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Interim Report 1st Quarter 2010
| Business model | Direct and indirect investments in commercial real estate. First REIT in Germany to acquire interests in closed-end real estate funds against the issue of shares or payment of a purchase price (so-called UPRE IT) |
|---|---|
| Sectors | Offices, Retail, Logistics/ Light industrial |
| Region | Germany, focusing on regional locations |
| Portfolio | Direct investments and participations in closed-end real estate funds |
| Properties | 32 properties (directly held) |
| 46 properties (held indirectly via 13 closed-end real estate funds) | |
| Market value | € 234.5 million *) |
| Potential rent | € 20.7 million **) |
*) Fair Value's share as of March 31, 2010, based on market valuations as of December 31, 2009
**) Fair Value's share as of March 31, 2010
| January 1 to March 31, | ||
|---|---|---|
| € thousand | 2010 | 2009 |
| Revenues and earnings | ||
| Rental revenues | 3,145 | 2,565 |
| EBIT | 2,035 | 1,272 |
| Consolidated net profit | 1,209 | 426 |
| Earnings per share (€) | 0.13 | 0.05 |
| Adjusted consolidated net profit (EPR A-Earnings) |
1,488 | 1,335 |
| EPR A-Earnings per share |
0.16 | 0.14 |
| Funds from operations (FFO) | 863 | 260 |
| FFO per share (€) | 0.09 | 0.03 |
| March 31, | December 31, | |
|---|---|---|
| 2010 | 2009 | |
| Assets and capital | ||
| Non-current assets | 186,052 | 185,393 |
| Current assets | 17,325 | 18,416 |
| Total assets | 203,377 | 203,809 |
| Equity / Net asset value | 72,841 | 72,720 |
| Equity ratio including minority interests | 44% | 43% |
| Number of outstanding shares | 9,325,572 | 9,347,790 |
| Net asset value /share (€) | 7.81 | 7.78 |
| EPR A NAV/share (€) |
8.89 | 8.72 |
| Staff (including Management Board) | 3 | 3 |
| To our shareholders |
|
|---|---|
| Letter to shareholders | 6 |
| Fair Value's share | 8 |
| Portrait of Fair Value REIT-AG | 12 |
| Group interim management report | |
| Business report | 20 |
| I. Business activities and general conditions |
20 |
| i. O verview of business activity and corporate structure |
20 |
| ii. E conomic environment |
20 |
| II. Information about the real estate portfolio | 22 |
| III. Overall statement on the Group's economic situation and analysis of income, assets and the financial status |
24 |
| i. O verall statement on the economic situation of the Group |
24 |
| ii. Income position |
25 |
| iii. Financial position | 26 |
| iv. Net asset position | 26 |
| IV. Report regarding business with related persons | 27 |
| Supplementary report | 28 |
| Risk report | 28 |
| Opportunities and Forecast | 28 |
| Co nsolidated interim financial statements |
|
| Consolidated balance sheet | 32 |
| Consolidated income statement | 34 |
| Consolidated statement of comprehensive income | 35 |
| Consolidated cash flow statement | 36 |
| Statement of changes in consolidated equity | 38 |
| Notes | 39 |
| Declaration by legal representative | 53 |
| Liabilities and Po rtfo lio |
|
| Financial liabilities in detail | 57 |
| Method of real estate valuation | 58 |
| Individual property information and Fair Value REIT-AG's share according to proportionate interest |
60 |
| Glossary | 64 |
| Imprint | 66 |
To our shareholders
Frank Schaich
Dear shareholders and business partners, ladies and gentlemen,
Confidence is the driving force behind our globally networked economic system. However, excessive confidence can lead to carelessness and encourage speculative bubbles, whereas too little confidence stokes fears and can push markets over the edge into the abyss.
In recent years we have experienced both extremes and the globalised nature of the economic system has resulted in all businesses being affected to a greater or lesser extent. Following a number of years of excessive confidence leading to sometimes exorbitant increases in the value of real estate, outside Germany at least, these markets subsequently rapidly dried up and lost their liquidity to the extent that even supposedly safe assets temporarily considerably lost in value.
The global economy experienced a major recession that impacted economies across the world in unprecedented fashion. Germany, the world's leading exporter at the time, was therefore particularly affected. Only the global and concerted help provided by political decision makers and central banks in the form of emergency measures and stimulus packages, combined with injections of liquidity and very low interest rates, could stave off complete disaster.
From mid-2009, the global economy began to pick up again and, since then, Germany has again enjoyed increasing export volumes and more positive economic forecasts. Confidence is slowly returning, but there remains a degree of nervousness.
With imminent insolvency of Greece, economic confidence has been and will again be put to the test this spring. The Euro is under pressure and many people are even questioning the monetary union itself. The lines of credit hastily established for Greece by the euro countries and the International Monetary Fund are aimed at providing much needed reassurance in the markets.
The reasoning behind such initiatives has been clearly communicated by the politicians: the issue is not Greece as such, but rather economic and ultimately political stability throughout Europe. The positive aspect of this issue is the current weakness of the Euro, which – through exports – is helping Europe and Germany to keep the economy going and supporting corporate profits.
Against this macroeconomic background, we are able to give you a report, just a week before our Annual General Meeting on May 17, 2010 in Munich, on developments in the first quarter of 2010 – a quarter which has been good for us and in line with our expectations.
The group's net rental income of € 2.6 million represents an improvement of approximately 40% on the same period in the previous year. It should, however, be noted in this respect that the subsidiary IC 13 has only been fully consolidated in terms of earnings since the beginning of 2010. In a like-for-like comparison, i.e. without the inclusion of the IC 13 subsidiary, income increased by 10% compared to the previous year.
The operating profit of € 2.0 million represents a 60% increase on the previous year. The increase on the previous year is 16% on a like-for-like basis.
Since rental income is almost identical to the previous year, if IC 13 is not included, it is the actively reduced general administration costs at holding level that become evident in the improvement in the operating result. This significant reduction in costs is the result of our efforts in recent months. Another factor is the lower maintenance expenses compared to the same period in the previous year.
The € 1.2 million (€ 0.13 per share) consolidated profit of Fair Value REIT-AG is thus significantly higher than the figure of € 0.4 million (€ 0.05 per share) in the previous year. The consolidated net income adjusted for special items and market value changes (EPRA result) was € 1.5 million or € 0.16 per share and thus 11% higher than the figure in the previous year of € 1.3 million or € 0.14 per share. This adjusted result demonstrates the high degree of stability of our business model.
Despite the excellent results in the first quarter, we stick to our forecast for the adjusted consolidated net income (EPRA earnings) for the 2010 fiscal year of € 4.2 million or € 0.45 per share. Contracted rents will fall as a result of the closing of the sale of two more properties taking effect during the second quarter of 2010 and, in addition, we know from experience that planned repairs and maintenance only begin to become apparent in financial statements from the second quarter and onwards.
The German real estate market all in all has shown itself to be very resilient over the last couple of years, and we have benefited from this stability with our diversified portfolio of properties. This can be seen in the success we have had with extending existing contracts and agreeing new contracts. Our Fair Value-attributable occupancy rate on the balance sheet date was 93.9%, which is admittedly lower than at the same point in time in the previous year (95.2%), but if rental contracts already agreed upon but not yet in force are taken into account the occupancy rate is close to the high level from the previous year. Our basis for generating revenue thus remains very stable.
The positive performance of the German stock index (DAX) in recent months highlights the confidence the capital markets have in the ongoing recovery in our economy. Even though the capital markets lately had to experience some corrections because of the situation in Greece, we believe that the recovery will last. The company's earnings support this assessment. Experience has shown that listed real estate companies generally regain the confidence of investors and join the DAX trend with a lag of a few months. We have the firm intention to utilise the resulting opportunities arising for Fair Value REIT-AG.
With kind regards,
Yours
Frank Schaich Management Board
| Sector | Real Estate (REIT) |
|---|---|
| WKN (German Securities Code)/ISIN | A0MW97 / DE000A0MW975 |
| Bloomberg | FVI:GR |
| Reuters | FVIG.DE |
| Share capital | 47,034,410.00 € |
| Number of shares (non-par value shares) | 9,406,882 |
| thereof circulating on March 31, 2010 | 9,325,572 |
| Proportion per share in the share capital | € 5 |
| Initial listing | November 16, 2007 |
| High/low 2010 | € 4.98 / 4.00 (XETR A) |
| Market capitalization on March 31, 2010 | € 39.3 million (XETR A) |
| Market segment | Prime Standard |
| Stock exchanges | Prime Standard: Frankfurt, XETR A |
| OTC: Stuttgart, Berlin-Bremen, Duesseldorf, Munich | |
| Designated Sponsor | DZ-Bank |
| Indices | DAXsubsector Real Estate-Index |
| DAXsubsector All Real Estate-Index | |
| RX REIT-Index |
Share chart Fair Value REIT-AG incl. NAV vs. DAX Subsector Real Estate (January 1, 2010 – May 3, 2010)
Fair Value REIT-AG DAXsubsector Real Estate
Comparison of Fair Value REIT-AG with the DAXsubsector Real Estate-Index (ISIN DE0007203820, German Securities Code (WKN) 720382, I2VB), which currently comprises 18 shares including Fair Value REIT-AG (Source: Deutsche Börse AG).
To our shareholders Group interim
International stock markets continued to be characterised by considerable fluctuations during the first months of 2010. After a solid start to the year, concerns about the financial situation in some southern European countries led to profits being taken, which resulted in indexes declining quite significantly from mid-January. However, as a result of economic data being better than expected, in both Germany and the USA, investors subsequently returned to the market with renewed vigour, which
Free Float 41,42 % H.F.S. Zweitmarkt Invest 2 GmbH & Co. KG 8,13 % resulted in the German Share Index (DAX) reaching 6,332 points in April 2010, its highest level for approximately 18 months - since the outbreak of the financial crisis.
H.F.S. Zweitmarkt Invest 5 GmbH & Co. KG 7,44 % H.F.S. Zweitmarkt Invest 4 GmbH & Co. KG 7,44 % H.F.S. Zweitmarkt Invest 3 GmbH & Co. KG 7,44 % IC Immobilien Holding AG 9,39 % IC Immobilien Service GmbH 6,34 % IC Fonds GmbH 2,34 % IFB Beteiligungen AG i. L. 5,44 % Bayerische Beamten Lebensversicherung a.G. 3,76 % However, the Fair Value share could not benefit from the general market recovery that began in March 2010 and it had a tendency to move sideways during this period. After an initial peak at € 4.98 during the first quarter, the Fair Value share price fell back to € 4.20 in February before settling down around the € 4.40 level for the rest of the quarter. The financial figures reported by the company at the end of March did not have any great effect on the share price either. A large sell order placed at the end of April led to a brief dip in the share price to a level under € 4.00, after which the price recovered considerably.
Eigene Aktien 0,86 % Overall, the Fair Value share has not developed in the early months of the year in line with its benchmark index, the DAX subsector Real Estate. On the balance sheet date of March 31, 2010, the market capitalisation of the company was € 39.3 million, based on a share price of € 4.20 and the approximately 9.35 million shares currently in circulation.
During the first three months of the current fiscal year, 235,041 Fair-Value REIT-AG shares in total (previous year 86,846) were traded on all exchanges. The resulting trading volume was € 1,023,500 (previous year: € 337,400), which equates to an average share price of € 4.35 per share (previous year € 3.89). The average daily volume was therefore 3,731 shares/ € 16,200 (previous year € 5,300).
*)In accordance with § 26 WpHG Article 1 the voting rights of the H.F.S. Zweitmarkt Invest 2 GmbH & Co. KG, the H.F.S. Zweitmarkt Invest 3 GmbH & Co. KG, the H.F.S. Zweitmarkt Invest 4 GmbH & Co. KG as well as the H.F.S. Zweitmarkt Invest 5 GmbH & Co. KG totalling 30.45% are attributed to the UniCredito Italiano S.p.A., Milan, Italy. Furthermore under § 26 WpHG Article 1 the voting rights of the IC Immobilien Holding AG, the IC Immobilien Service GmbH as well as the IC Fonds GmbH with a total of 18.07% are attributed to the IC Immobilien Holding AG, Unterschleißheim, Germany. The regulations of the REITlaw are untouched by these attributions.
Fair Value REIT-AG aims to provide all stakeholders with comprehensive and traceable information. One of the company's particular objectives is the attainment of the best possible transparency and credibility of its corporate communication. For this reason, as part of its financial reporting process, Fair Value regularly provides extensive insights into the business developments of its holdings as well as detailed additional information regarding the real estate portfolio as well as financial liabilities in the Group and in the associated companies.
This is intended to provide the existing and potential shareholders of the company with the opportunity to form a sophisticated assessment regarding the company's business developments and equity story of the Fair Value Group.
Moreover, Fair Value REIT-AG maintains a constant dialogue with the capital markets, and the Management Board has established frequent contacts with analysts, investors and capital markets media. The company regularly participates in capital market conferences and presents its equity story and business results to domestic and international investors during roadshows.
Currently the company is covered by two research companies (DZ-Bank and Independent Research). The Company intends to successively increase its research coverage.
Additional information on the share can also be obtained from its website www.fvreit.de in the investor relations section.
| May 17, 2010 | Annual General Meeting (Munich, Germany) |
|---|---|
| August 12, 2010 | Semi-annual Report 2010 |
| October 2010 | Presentation, 10th Conference of the Real Estate Share Initiative (Frankfurt, Germany) |
| November 15, 2010 | Interim Report First to Third Quarter 2010 |
| November 22 - 24, 2010 | Presentation at "German Equity Forum" (Deutsches Eigenkapitalforum, Frankfurt, Germany) |
To our shareholders Group interim
The key expertise of Fair Value REIT-AG relates to the acquisition and management of German commercial properties. The company also has a business model that makes it unique among real estate companies listed on the stock market in Germany: the company acquires properties directly as well as via participations in real estate partnerships, in particular closed-end real estate funds.
The portfolio currently consists of 78 properties with a lettable space of approximately 454,000 m2 . These properties are spread throughout Germany. Of this lettable space, approximately 43,000 m² is available in the 32 properties held directly by the company. The company also holds 22 further properties via six subsidiaries, with lettable space of approximately 132,000 m². The remaining 279,000 m² are available in 24 properties held by seven associated companies.
The closing for two properties* sold by subsidiaries in 2009 took place during the first quarter of the current fiscal year, which resulted in the size of the property portfolio being reduced by two properties in comparison to December 31, 2009.
Based on individual valuations, the market value of all the properties on December 31, 2009, amounted to € 521.8 million. It should be noted here that two properties** held by a subsidiary were sold during 2009 but the closing had not yet taken place by the balance sheet date. These properties are valued using the notarized purchase price, in one case with a reduction corresponding to the cost of renovation work still to be carried out by the seller. Based on the size of the participations in the respective individual closed-end real estate funds, the total market value of Fair Value properties was calculated as € 234.5 million.
Fair Value REIT-AG's share
Contracted rental return in% based on proportionate market values
* Aachen (BBV 03) and Seligenstadt (BBV 06)
** Hamm and Passau (both BBV 06)
11
With a current proportionate contractual annual rent of approximately € 19.4 million, the portfolio thereby generates attractive rental returns before costs of 8.3% of the total market value. Full occupancy would provide potential rental returns of 8.8% before costs. At the same, considerable planning certainty and sustainability of rental revenues are provided by a revenue-based occupancy rate of 93.9% (previous year 95.2%) of the potential proportionate rent and an average remaining contractual lease period of 6.4 years (previous year 6.7 years).
Rental agreements with proportionate contracted rents of € 0.4 million payable to Fair Value expired during the first quarter of the 2010 fiscal year. In the same quarter, approximately 50% of this rental income could be secured by means of lease extensions or new leases. Furthermore, the occupancy rate rises to 94.7% of the potential rent through leases that commence after the balance sheet date.
Fair Value REIT-AG also has a tenant structure characterised by high credit ratings. The largest individual tenant is Sparkasse Südholstein, which contributes a 14.5% share of the proportionate contracted rent of the portfolio. Other important tenants include strong retailers such as Edeka Group, Metro Group, Kaufland Group and REWE Group in total amounting to 26.4%. Approximately 40.5% of the potential rent relate to a large number of small business partners. This well-distributed tenant structure improves the already established risk diversification approach in the Fair Value REIT-AG investment strategy.
| March 31, 2010 |
|
|---|---|
| Sparkasse Südholstein | 14.5% |
| Metro Group | 9.9% |
| Edeka Group | 9.4% |
| BBV Holding AG | 5.7% |
| Kaufland Gruppe | 4.9% |
| Schweizerhof Hotel | 4.7% |
| ABB Grundbesitz GmbH | 3.0% |
| HPI Germany | 3.0% |
| REWE Group | 2.2% |
| comdirect bank AG | 2.2% |
| Other | 40.5% |
| Sum | 100.0% |
* according to potential rent
(in % of Fair Value's proportionate market value as of March 31, 2010)
Due to the generalistic approach of the company regarding the type of use of the properties, the portfolio is comparatively independent from developments in individual locations and industry sectors.
The Fair Value REIT-AG real estate portfolio is also characterised by a large number of properties and considerable regional diversification. The portfolio properties are spread across Germany and Fair Value is represented in almost all of the 16 Federal States. The dependence of the portfolio on regional developments, both in terms of rental trends and valuation changes, is thereby reduced considerably.
The Group's financial liabilities (parent company and subsidiaries), which amount to approximately € 107 million, are underpinned by fixed-term loans and effective interest rate swaps (68%). For 32% of the financial liabilities in the Group the variable credits were not hedged against rising interest. Overall, the weighted average interest rate for the Group was 4.3% p.a. as of March 31, 2010. The average remaining term of the current agreements totalled 4 years, and the distribution of the remaining term can be seen in the graph on the next page.
* After taking Fair Values share into consideration
The financial liabilities of the associated companies totalled € 233 million on March 31, 2010, (of which approximately € 82 million can be proportionately attributed to Fair Value). The current terms of credit have an average remaining term of 3.8 years. Approximately 50% of the liabilities held by the associated companies consist of fixed-term loans, with the rest being variable rate loans. As the latter are equipped with interest rate hedges, they are viewed as also being fixed-term loans. The average weighted interest rate for the associated companies on the balance sheet date was 5.6%.
To our shareholders Group interim
Taking into account the proportionate participations of Fair Value REIT-AG in the subsidiaries and associated companies, the pro-forma, proportionately consolidated weighted average interest rate was 5.1% and the remaining term was 4.3 years.
A detailed breakdown of the individual financial liabilities in accordance with IFRS (including allocation to the respective companies) on March 31, 2010, as well as information about compliance with
any mortgage lending level requirements for and the debt service coverage, is available in the "Liabilities and portfolio" chapter.
In conjunction with its comfortable liquidity situation and its mandatory high equity ratio, Fair Value REIT-AG achieves a high degree of financial solidity with regard to its investments.
* After taking Fair Values share into consideration
Fair Value REIT-AG (also referred to hereinafter as Fair Value) acquires and manages commercial real estate in Germany. Investment activities currently focus primarily on office and retail properties in regional centres.
The uniqueness of the Fair Value REIT-AG business model lies within the combination of direct investment in real estate and the acquisition of interests in real estate partnerships. Participation may be made by way of a contribution in kind, hence the exchange of interests against shares in Fair Value, but also through the purchase of interests against the payment of a purchase price.
The company is in direct ownership of a portfolio of 32 commercial properties. The majority of these are used as bank branches by Sparkasse Südholstein. The lettable space of these properties, which are located in the German federal state of Schleswig-Holstein, amounts to 42,948 m². Using individual valuations, the market value of the "Sparkasse portfolio" was determined to be approximately €45.5 million (previous year € 47.3 million) on December 31, 2009.
The company also holds participations in 13 closedend real estate funds. These consist of six subsidiaries and seven associated companies. The holdings in the associated companies are less than 50%.
Following the completed sale of two properties in the first quarter of 2010, the subsidiaries hold a total of 22 properties with a total lettable space of 131,403 m² and a market value of € 97.3 million (previous year € 103.3 million on like for like basis).
The associated companies hold a total of 24 properties with a total lettable space of 279,163 m² and a market value of € 379.0 million (previous year € 392.0 million).
On March 31, 2010, the overall portfolio of direct holdings and participations had an income-based occupancy of 93.9% (previous year 95.2%) of the potential rental income of € 20.7 million (previous year € 20.8 million on a like-for-like basis). The potential rental income consists of the sum of actual rental contract income and market rents for vacant spaces.
Fair Value REIT-AG is independently led by the company's Management Board, who has many years of experience in commercial property acquisition, portfolio management and participations in closedend real estate funds. The main activities of the three members of staff (including the Management Board) involve the strategic management of the group, risk management and investor relations.
The Management Board works closely with the company's Supervisory Board, which is involved in all important company decisions. The Supervisory Board has three members.
Major parts of the accounting and property management activities are outsourced via service agreements to IC Immobilien Service GmbH, an IC Real Estate Group company based in Unterschleißheim near Munich in Germany. The corporate group has approximately 140 employees and manages an investment volume of approximately € 5 billion for private and institutional investors.
Since the beginning of 2010, the German economy has seen a moderate improvement. This shallow upturn is primarily due to the recovery in the global economy, although there are considerable regional differences in this recovery. As the current primary drivers of growth are the emerging markets, the major part of this dynamism will have no impact on exports directed towards the USA, the Euro zone and Eastern Europe. As the economic recovery continues, stronger domestic demand will therefore become increasingly important.
Inflation increased slightly during the first quarter of the year. According to the German Federal Statistics Office (Destatis), the consumer price index in Germany increased by 1.1% in March 2010 compared to March 2009. The primary drivers of inflation have been electricity and oil and petroleum products. However, this is still lower than the 10 year average value of 1.5% and the European Central Bank (ECB) target inflation rate of 2.0%. The ECB interest remained unchanged at 1.0% during the reporting period.
As the economy recovered during spring, unemployment fell slightly. In March 2010, approximately 3.57 million (previous year 3.59 million) people, or 8.5% (previous year 8.6%) of the civilian labour force, were without work. However, it should be noted that the implementation of labour market initiatives, such as short working hours, distorts the comparison with the previous year. Taking into account such measures, unemployment actually rose compared to the previous year, thus demonstrating the fact that the economic crisis has also affected the German labour market.
Sources:
German Federal Employment Agency, Destatis – German Federal Statistics Office, DIW, ifo Institute
In the office rental market, the beginning of the year has been characterised by lease extensions. It can also be noted that landlords are less ready to offer further lease incentives, which should lead to an increased
willingness on the part of tenants to conclude deals and a stabilisation of rents. In the six main centres for office space*, a leasing turnover of 590,000 m² could be registered in the first quarter of 2010. Turnover thus increased after six successive negative quarters, and was approximately 6% higher than the turnover in the comparison period (approx. 550,000 m²). The figures differ considerably between regions and have been partly distorted by the conclusion of certain large leasing contracts.
Despite restrained levels of new construction, there has been a considerable increase in empty office space compared to the previous year. In the six main centres for office space, approximately 7.9 million m² of office space were vacant at the end of March 2010 (equating to 10% of all office space), compared to a figure of approximately 7.1 million m² or 9% in the previous year. However, during the first quarter of 2010 the vacancy increase was less significant.
The retail market has had a steady start to the year, supported by an upturn in consumer confidence during early 2010. Industry experts are thus predicting that there will continue to be excess demand in good locations, regardless of the size of the local population, and hence no structural vacancies in such places. Rents in these market segments should therefore not be subject to downward pressure.
The critical indicators for business development in the logistics sector pointed to expansion in early 2010, although the assessments were still cautious. However, logistics service providers in particular have expectations of solid growth. Leasing turnover has developed very differently in the conurbations in comparison to other locations. Considerable increases have been registered in the conurbations whereas other areas have seen declines. On balance, approximately 0.8 million m² could be leased during the first quarter of 2010, compared to approximately 1 million m² in the previous year.
During the first three months of 2010, the investment market for commercial property was encouragingly dynamic and, with transaction volumes of approximately € 4.7 billion, was almost three times the volume of the same period during the previous year. This development can be interpreted as evidence that domestic and international investors have confidence in Germany as a location for real estate investments but due to the basis effect it should not be overinterpreted. As investors continue to focus on low risk core objects, top yields remain stable for all types of use.
Sources:
Jones Lang LaSalle, Kempers, BVL /DIW, CB Richard Ellis * Berlin, Düsseldorf, Frankfurt/Main, Hamburg, Munich, Stuttgart
The properties in the Fair Value Group's portfolio are partly directly owned by the parent company and are partly held by subsidiaries (defined as companies in which the parent company has a participation share of more than 50%). The full consolidation of the subsidiaries results in the net assets attributable to minority interests being registered as liabilities of the Fair Value Group, in accordance with IFRS accounting standards.
Properties held by associated companies (participation share less than 50%) are also included in the portfolio. The participations in the associated companies are equity-accounted, which means that only proportionate net assets attributable to Fair Value REIT-AG appear on the assets side of the balance sheet. The Group consolidated income statement displays the proportionate, ongoing results of the associated companies in the income from participations.
The following table provides information about real estate attributable to the group and to associated companies. The right hand side shows rents and market values, taking into account the respective proportionate participation of Fair Value REIT-AG on March 31, 2010.
The occupancy rate of the properties held by the Group and by associated companies fell slightly compared to the previous year, from 95.2% to 93.9%, if the proportionate share held by the parent company Fair Value REIT-AG is taken into account. The weighted average of the remaining terms of the leases amounted on the balance sheet date to 6.4 years, compared to 6.7 years in the previous year.
As of March 31, 2010, the closing had still not occurred for two retail properties sold in 2009 in Hamm and Passau (both BBV 06) with a net purchase price of € 5.3 million. These properties are shown as current assets on the balance sheet.
| Fair Value REIT-AG's share | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Short name |
Direct investments and participations | Plot size 0) |
Lettable space 0) |
Annu alised contrac tual rent March 31, 2010 0) |
Market value Decem ber 31, 2009 0), 1) |
Partici pating interest March 31, 2010 |
Annu alised con tractual rent March 31, 2010 |
Market value Decem ber 31, 2009 1), 2) |
Occu pancy level March 31, 2010 3), 5) |
Average remai ning term of rental agree ments 4), 5) |
| [m²] | [m²] | [€ K] | [€ K] | [%] | [€ K] | [€ K] | [%] | [years] | ||
| Direct investments | ||||||||||
| "Sparkassen-Portfolio" | 58,624 | 42,948 | 3,242 | 45,527 | 100.00 | 3,242 | 45,527 | 98.5 | 11.8 | |
| Total direct investments | 58,624 | 42,948 | 3,242 | 45,527 | 100.00 | 3,242 | 45,527 | 98.5 | 11.8 | |
| Subsidiaries | ||||||||||
| IC 07 | IC Fonds & Co. Büropark Teltow KG 6) | 5,324 | 9,731 | 441 | 7,110 | 75.73 | 334 | 5,385 | 63.6 | 2.2 |
| IC 03 | IC Fonds & Co. Forum Neuss KG | 19,428 | 12,064 | 488 | 7,320 | 71.58 | 349 | 5,240 | 77.3 | 1.3 |
| IC 01 | IC Fonds & Co. München-Karlsfeld KG | 7,019 | 3,375 | 319 | 4,340 | 55.79 | 178 | 2,421 | 92.6 | 10.4 |
| BBV 06 BBV Immobilien-Fonds Nr. 6 GmbH & Co. KG |
93,232 | 71,617 | 4,654 | 50,342 | 55.55 | 2,585 | 27,964 | 90.2 | 4.2 | |
| BBV 03 BBV Immobilien-Fonds Nr. 3 GmbH & Co. KG |
25,172 | 12,781 | 681 | 6,820 | 53.79 | 366 | 3,669 | 95.7 | 2.2 | |
| IC 13 | IC Fonds & Co. Gewerbeportfolio | |||||||||
| Deutschland 13. KG | 22,357 | 21,835 | 2,539 | 21,380 | 50.04 | 1,270 | 10,698 | 94.7 | 4.6 | |
| Total subsidiaries | 172,532 | 131,403 | 9,122 | 97,312 | 5,083 | 55,377 | 88.3 | 4.0 | ||
| Total Group | 231,156 | 174,351 | 12,364 | 142,839 | 8,325 | 100,904 | 92.0 | 7.1 | ||
| Associated companies | ||||||||||
| BBV 14 BBV Immobilien-Fonds Nr. 14 | ||||||||||
| GmbH & Co. KG | 16,196 | 38,022 | 5,968 | 83,920 | 45.11 | 2,692 | 37,856 | 94.1 | 4.6 | |
| IC 12 | IC Fonds & Co. SchmidtBank-Passage KG | 4,226 | 8,380 | 475 | 7,340 | 40.22 | 191 | 2,952 | 77.2 | 2.9 |
| BBV 02 BBV Immobilien-Fonds Erlangen GbR | 6,350 | 2,770 | 220 | 1,650 | 39.68 | 87 | 655 | 100.0 | 2.3 | |
| IC 15 | IC Fonds & Co. Gewerbeobjekte | |||||||||
| Deutschland 15. KG | 21,335 | 33,080 | 2,980 | 35,110 | 38.37 | 1,144 | 13,472 | 98.9 | 8.8 | |
| BBV 10 BBV Immobilien-Fonds Nr. 10 | ||||||||||
| GmbH & Co. KG | 177,231 | 96,203 | 10,088 | 117,240 | 38.37 | 3,870 | 44,981 | 93.0 | 5.0 | |
| IC 10 | IC Fonds & Co. Rabensteincenter KG | 11,203 | 9,981 | 713 | 8,940 | 26.14 | 186 | 2,337 | 96.4 | 1.9 |
| BBV 09 BBV Immobilien-Fonds Nr. 9 GmbH & Co. KG |
114,912 | 90,728 | 11,716 | 124,800 | 25.11 | 2,942 | 31,343 | 100.0 | 7.6 | |
| Total associated companies | 351,453 | 279,163 | 32,160 | 379,000 | 11,113 | 133,595 | 95.4 | 5.9 | ||
| Total proportionate portfolio | 19,438 | 234,499 | 93.9 | 6.4 | ||||||
0 ) Does not consider the respective participating interest
1 ) According to valuation by CB Richard Ellis GmbH, Frankfurt / Main, December 31, 2009
2 ) Proportionate market values attributable to Fair Value based on percentage of participations; IC15 holds only 94.2% in Chemnitz-Passage KG; however, due to negative equity of the minority shareholder on property company level the property is to be attributable to IC15 with 100%
3 ) Contractual rent/(contractual rent + vacant space at standard market rent)
4 ) Income-weighted
5 ) (Sub) totals for rental level and average remaining term taking the respective percentage of participations into account
i. Overall statement of the Group's economic situation
Operating activities were in line with expectations during the first quarter of 2010. The net rental income increase of € 0.8 million in comparison to the previous year, to € 2.6 million, was due to the fact that the IC 13 subsidiary was fully consolidated for the first time. In the previous year, the smaller participation at that time resulted in this company being included with the proportionate profit in the income from participations. On a like-for-like basis, that is without the subsidiary, net rental income exceeded the previous year's figure by 10%.
During the reporting period, Fair Value REIT-AG achieved an operative cash flow at the group level ("Funds from Operations", FFO) of € 0.9 million or € 0.09 per share (previous year €0.3 million or € 0.03 per share). On the balance sheet date, the group's cash and cash equivalents amounted to € 10.2 million (previous year € 10.4 million).
The valuation of interest rate hedges had a negative impact totalling € 1.2 million, due to further decreases in the market interest rates. Of this amount, € 0.2 million were allocated to the profit and loss statement and € 1 million went to the reserve for changes in value at the expense of group equity.
In the first quarter of 2010, the Fair Value Group obtained a consolidated net income of € 1.2 million (previous year € 0.4 million). This equates to a profit of € 0.13 per share (previous year € 0.05).
The consolidated net income, adjusted for fluctuations in market value, as defined by the recommendations of the EPRA (EPRA result) was € 1.5 million (€ 0.16 per share), an 11% increase on the previous year's figure of € 1.3 million (€ 0.14 per share).
| Adjustment for extrordinary factors | ||||||||
|---|---|---|---|---|---|---|---|---|
| Income Statement | According to Consolidated January 1 to March 31, |
Profits / losses on sale or valuation January 1 to March 31, |
Interest rate swaps | January 1 to March 31, |
Adjusted Consolidated Income Statement January 1 to March 31, |
|||
| Adjusted consolidated income (EPR A-Earnings) |
2010 | 2009 | 2010 | 2009 | 2010 | 2009 | 2010 | 2009 |
| Net rental income | 2,633 | 1,854 | 2,633 | 1,854 | ||||
| General administrative expenses | -528 | -571 | -528 | -571 | ||||
| Other operating income and expenses | -19 | -1 | -19 | -1 | ||||
| Earnings from sale of investment properties | -53 | - | 53 | - | - | |||
| Valuation result | - | -10 | 10 | - | - | |||
| Operating income | 2,033 | 1,272 | 53 | 10 | 2,086 | 1,282 | ||
| Income from participations | 852 | 500 | 3 | 375 | 239 | 504 | 1,094 | 1,379 |
| Interest income | 12 | 62 | 12 | 62 | ||||
| Interest expense | -1,250 | -1,204 | 15 | 46 | -1,235 | -1,158 | ||
| Income before minority interests | 1,647 | 630 | 56 | 385 | 254 | 550 | 1,957 | 1,565 |
| Minority interests | -438 | -204 | -24 | -5 | -7 | -21 | -469 | -230 |
| Consolidated net income (loss) | 1,209 | 426 | 32 | 380 | 247 | 529 | 1,488 | 1,335 |
With consolidated total assets of € 203.4 million (December 31, 2009: € 203.8 million), consolidated equity amounted to € 72.8 million (December 31, 2009: € 72.7 million) on the balance sheet date.
Pursuant to § 15 of the REIT law, the group equity, including the minority interests of € 15.7 million, amounts to € 88.6 million. This equates to 46.4% (December 31, 2009: 45.5%) of the immovable assets.
In the first three months of 2010, the Fair Value Group registered revenues (rental income including income from operating and incidental costs) of € 3.6 million (previous year € 2.8 million). Of this sum, 73% was from the subsidiaries segment and 27% from the direct investments segment.
The net rental result of the Group amounted to € 2.6 million (€ 1.9 million in the previous year). The operating result of € 2.0 million was approximately € 0.8 million better than the previous year's result.
The respective changes in key indicators compared to the previous year, of approximately € 0.7 million and € 0.8 million respectively, are primarily the result of the first time inclusion of the revenues from the IC 13 subsidiary. In the previous year, these revenues were still part of the result from equity accounted investments.
The income from equity accounted investments was € 0.9 million for the first three months of 2010, which is a significant increase on the figure of € 0.5 million in the previous year, although the proportionate net rental income of the associated companies was € 2.4 million and thus € 0.5 million lower than the
previous year. Approximately 40% of the positive difference of € 0.9 million in the results from equity accounted investments is due to lower valuation losses for the properties, and a further 30% relates to lower interest and administrative expenses due to the change in status of the company IC 13. The remaining 30% of the positive difference is due to a lower impact of the valuation of derivative financial instruments.
At the group level, interest expenses were € 1.2 million, an increase of approximately € 0.1 million or 9% compared to the previous year. This is a result of the change in status of the IC 13 subsidiary. Without this change in status, net interest expenses would have been 4% lower than in the previous year.
Following deduction of proportionate income due to non-controlling interests in the subsidiaries, the Fair Value Group registered consolidated net income of € 1.2 million, compared to € 0.4 million in the previous year.
During the reporting period, Fair Value achieved an operative cash flow ("Funds from Operations", FFO) of € 0.9 million or € 0.09 per share compared to figures of € 0.3 million, or € 0.03 per share, in the previous year.
Taking into account changes in assets and liabilities, a cash inflow from operating activities of € 0.3 million was recorded. The previous year saw a cash outflow from operating activities of € 3.3 million. This outflow of funds from the previous year mainly resulted from the payment of VAT liabilities of a down payment recieved in 2008 for the preliminary termination of a general lease agreement.
Investment activities resulted in a net cash inflow of € 2.9 million, due to the sale of two investment properties. There was a cash outflow from financing activities, due to repayments of financial liabilities of € 1.2 million due to the acquisition of own shares for € 0.1 million.
Overall, cash and cash equivalents in the group increased during the reporting period by € 2 million to € 10.2 million (previous year € 10.4 million).
Of the total assets, 91% (€ 186.1 million) are noncurrent assets. Of these, € 137.6 million relate to property held as financial investments (unchanged since December 31, 2009) and the equity-accounted participations in the associated companies are assessed at € 48.1 million (December 31, 2009: € 47.4 million). The increase over the December 31, 2009 figure relates to the proportionate ongoing income (see also Note 4).
Current assets of € 17.3 million are made up of € 10.2 million cash and cash equivalents (59%) and 30% non-current assets available for sale. The latter relate to two properties that have been sold but for which the transfer of risk and reward is expected to take place during the second quarter of 2010. The other € 1.8 million (11%) consist of receivables and miscellaneous assets.
The assets were financed by liabilities (€ 130.5 million or 64%; December 31, 2009: € 131.1 million) and by equity (€ 72.8 million or 36%; December 31, 2009: € 72.7 million). It should be noted here that the minority interests in subsidiaries (€ 15.7 million) are listed as liabilities in accordance with IFRS. If the non-controlling interests were considered as equity, as proposed in the REIT Act, the equity would increase to 44% of the total assets.
The Group's financial liabilities amounted to a total of € 107.1 million or 53% of the total assets (December 31, 2009: € 108.3 million). Of these liabilities, 4% or € 4.3 million are due for repayment within one year.
Of the other liabilities of € 1 million, 82% are due for repayment within one year.
From the addition of the market value of the properties and the participations, there was a net asset value (NAV) on 31 March 2010 of € 72.8 million (December 31, 2009: € 72.7 million) after deduction of the financial liabilities and other balance sheet items.
The net asset value is a key indicator for the evaluation of real estate investment companies. Based on the 9,325,572 shares in circulation on the balance sheet date, the NAV per share was € 7.81, compared to € 7.78 on December 31, 2009.
| March | December | |
|---|---|---|
| Balance sheet NAV | 31, | 31, |
| in € thousand | 2010 | 2009 |
| Market value of properties | 137,587 | 137,587 |
| Equity-accounted participations | 48,103 | 47,442 |
| Other assets minus derivative financial instruments, provisions |
||
| and payables | 11,032 | 12,683 |
| Minority interests | -15,714 | -15,296 |
| Financial liabilities | -107,119 | -108,316 |
| Other liabilities | -1,048 | -1,380 |
| Net asset value | 72,841 | 72,720 |
| Net asset value per share * | 7.81 | 7.78 |
The "Best Practice Recommendations" of the European Public Real Estate Association (EPRA) provide an acknowledged guideline for supplementing the IFRS reporting for real estate companies with a transparent NAV calculation. The performance figure calculated below (EPRA-NAV) is determined using this guideline. As deferred taxes are not relevant to Fair Value REIT-AG due to its REIT status, the following EPRA-NAV figure also equates to the NNAV performance figure applied by some experts.
| March | December | |
|---|---|---|
| EPR A-NAV |
31, | 31, |
| in € thousand | 2010 | 2009 |
| NAV pursuant to consolidated balance sheet |
72,841 | 72,720 |
| Market value of derivative financial instruments |
5,853 | 5,027 |
| Minority interests | -447 | -421 |
| Market value of derivative financi al instruments of equity-accoun ted participations (proportionate) |
4,625 | 4,196 |
| EPRA -NAV |
82,872 | 81,522 |
| EPRA -NAV per share* |
8.89 | 8.72 |
* on balance sheet date December 31, 2009 based on the 9,406,882 circulating shares
Companies in the IC Real Estate Group, which have a total participation in Fair Value REIT-AG of 18.09%, provide the Group with accounting and property management services. Relevant details about this and regarding relationships to other closely related companies and persons are available in the Fair Value REIT-AG 2009 Annual Report, in Group Note No. 33 on pages 97-100. Information regarding the status of receivables and liabilities on the balance sheet date can be found in Group Note No. 12. There are further service provision agreements in place with the subsidiaries and associated companies.
No transactions were carried out during the first three months of 2010 with members of the Supervisory Board, the Managing Director or with close relatives of members of the Supervisory Board or the Managing Director.
No events having a significant influence on the earnings position, financial status or assets position have occurred since the end of the reporting period.
As a result of its business activities, Fair Value is exposed to certain risks. In addition to risks relating to the economic cycle, the main risks are vacancy risks, loss of rent risks, interest rate risks and liquidity risks. The company's risk management system and the general risks faced by the business are described in detail on pages 41-46 of the 2009 Fair Value REIT-AG Annual Report.
Overall, the Management Board does not expect any risks to arise in the 2010 business year that could endanger the existence of Fair Value REIT-AG.
With an income-based occupancy of 92% with a weighted remaining lease term of 7.1 years, the Fair Value Group's portfolio of properties provides a sound and stable revenue basis. This statement also is true to a large extent for the associated companies, which have a proportionate occupancy rate of 95.4% and a weighted remaining lease term of 5.9 years. The overall occupancy rate of the proportionately held properties in the Fair Value portfolio is 93.9% of the proportionate potential rental income. This figure would rise to 94.7% if the already agreed upon leases were to be taken into account.
Based on the performance during the first quarter of 2010 being in line with expectations, the Management Board confirms the forecast for 2010. This forecast envisages adjusted consolidated net income based on IFRS (EPRA earnings) of € 4.2 million for 2010, which equates to € 0.45 per share. The forecast for FFO ("Funds from Operations") for 2010 remains unchanged at € 2.7 million, which equates to € 0.29 per share.
With the inclusion of as yet uncertain revenues from property sales resulting from additional portfolio adjustments, the Management Board is expecting a surplus in 2010 based on German GAAP allowing (in compliance with the provisions of the German REIT law) a dividend payment of € 0.10 per share in 2011.
Munich, May 5, 2010
Fair Value REIT-AG
Frank Schaich
| Note | March 31, | December 31, | |
|---|---|---|---|
| € thousand | No. | 2010 | 2009 |
| Assets | |||
| Non-current assets | |||
| Intangible assets | 4 | 4 | |
| Property, plant and equipment | 9 | 12 | |
| Investment property | 3 | 137,587 | 137,587 |
| Equity-accounted investments | 4 | 48,103 | 47,442 |
| Other receivables and assets | 349 | 348 | |
| Total non-current assets | 186,052 | 185,393 | |
| Current assets | |||
| Non-current assets available for sale | 5 | 5,252 | 8,237 |
| Trade receivables | 1,167 | 1,307 | |
| Income tax receivables | 65 | 63 | |
| Other receivables and assets | 598 | 528 | |
| Cash and cash equivalents | 10,243 | 8,281 | |
| Total current assets | 17,325 | 18,416 | |
| Total assets | 203,377 | 203,809 |
| Note | March 31, | December 31, | |
|---|---|---|---|
| € thousand | No. | 2010 | 2009 |
| Equity and liabilities | |||
| Equity | |||
| Subscribed capital | 47,034 | 47,034 | |
| Share premium | 46,167 | 46,167 | |
| Reserve for changes in value | 6 | (6,426) | (5,446) |
| Retained earnings | (13,536) | (14,745) | |
| Treasury shares | 7 | (398) | (290) |
| Total equity | 72,841 | 72,720 | |
| Non-current liabilities | |||
| Minority interests | 15,714 | 15,296 | |
| Financial liabilities | 8 | 102,773 | 104,004 |
| Derivative financial instruments | 5,853 | 5,027 | |
| Other liabilities | 191 | 286 | |
| Total non-current liabilities | 124,531 | 124,613 | |
| Current liabilities | |||
| Provisions | 196 | 261 | |
| Financial liabilities | 8 | 4,346 | 4,312 |
| Trade payables | 606 | 809 | |
| Other liabilities | 857 | 1,094 | |
| Total current liabilities | 6,005 | 6,476 | |
| Total shareholders' equity and liabilities | 203,377 | 203,809 |
| Note | January 1 to March 31, | ||
|---|---|---|---|
| € thousand | No. | 2010 | 2009 |
| Rental income | 3,145 | 2,565 | |
| Income from operating and incidental costs | 456 | 272 | |
| Leasehold payments | (57) | (57) | |
| Real estate-related operating expenses | (911) | (926) | |
| Net rental result | 2,633 | 1,854 | |
| General administrative expenses | 9 | (528) | (571) |
| Other operating income | 3 | 2 | |
| Other operating expenses | (20) | (3) | |
| Other operating income and expenses (total) | (17) | (1) | |
| Net income from the sale of investment properties | 2,985 | 0 | |
| Expenses in connection with the sale of investment properties | (3,038) | 0 | |
| Result from sale of investment properties | 5 | (53) | 0 |
| Valuation result | 0 | (10) | |
| Operating result | 2,035 | 1,272 | |
| Result from equity-accounted investments | 4 | 852 | 500 |
| Interest income | 10 | 62 | |
| Interest expense | 10 | (1,250) | (1,204) |
| Income before minority interests | 1,647 | 630 | |
| Minority interest in the result | (438) | (204) | |
| Net income | 1,209 | 426 | |
| Earnings per share in € (basic /diluted) | 0.13 | 0.05 |
| Note | January 1 to March 31, | ||
|---|---|---|---|
| € thousand | No. | 2010 | 2009 |
| Net income | 1,209 | 426 | |
| Other results | |||
| Change in cash flow hedges | (811) | (1,176) | |
| Thereof due to minority interests | 20 | 89 | |
| Change in cash flow hedges of associated companies | (189) | (354) | |
| (980) | (1,441) | ||
| Comprehensive income/loss | 229 | (1,015) |
| January 1 to March 31, | |||||
|---|---|---|---|---|---|
| € thousand | 2010 | 2009 | |||
| Net income | 1,209 | 426 | |||
| Adjustments to consolidated earnings for reconciliation to cash flow from operating activities |
|||||
| Amortization of intangible assets and depreciation of property, plant and equipment | 3 | 74 | |||
| (Profits) Losses from the disposal of investment properties | 53 | 0 | |||
| Valuation result | 0 | 10 | |||
| Income from equity-accounted investments | (852) | (500) | |||
| Withdrawals from equity-accounted investments | 2 | 0 | |||
| Minority interest in the result | 438 | 204 | |||
| Disbursement to minority interests | 0 | 0 | |||
| Result from the valuation of derivative financial instruments | 15 | 46 | |||
| FFO (funds from operations) subtotal | 868 | 260 | |||
| Change in assets, equity and liabilities | |||||
| (Increase)/decrease in trade receivables | 140 | 565 | |||
| (Increase)/decrease in other liabilities | (73) | 580 | |||
| (Decrease)/increase in provisions | (65) | (81) | |||
| (Decrease)/increase in trade payables | (203) | (848) | |||
| (Decrease)/increase in other liabilities | (332) | (3,778) | |||
| Cash flow from operating activities | 335 | (3,302) |
Consolidated financial statements
| bilities and Portfolio | |
|---|---|
| ------------------------ | -- |
| January 1 to March 31, | ||
|---|---|---|
| € thousand | 2010 | 2009 |
| Cash flow from operating activities | 335 | (3,302) |
| Income from the disposal of investment properties | 2,932 | 0 |
| Investments in property, plant and equipment and intangible assets | 0 | (77) |
| Cash flow from investment activities | 2,932 | (77) |
| Purchase of treasury shares | (108) | 0 |
| Repayment of financial liabilities | (1,197) | (281) |
| Cash flow from financing activities | (1,305) | (281) |
| Cash effective change of liquid funds | 1,962 | (3,660) |
| Cash and cash equivalents – start of period | 8,281 | 14,039 |
| Cash and cash equivalents – end of period | 10,243 | 10,379 |
| Additional disclosures: | ||
| Interest received | 12 | 76 |
| Interest paid | 1,246 | 1,200 |
| € thousand (except for circulating shares) |
Shares in circulation |
Subscri bed capital |
Share premium |
Reserve for changes in value |
Retained earnings |
Own shares |
Total |
|---|---|---|---|---|---|---|---|
| Balance at January 1, 2009 | 9,406,882 | 47,034 | 46,167 | (4,575) | (11,839) | 0 | 76,787 |
| Net income | 0 | 0 | 0 | (1,441) | 426 | 0 | (1,015) |
| Balance at M arch 31, 2009 |
9,406,882 | 47,034 | 46,167 | (6,016) | (11,413) | 0 | 75,772 |
| Balance at January 1, 2010 | 9,347,790 | 47,034 | 46,167 | (5,446) | (14,745) | (290) | 72,720 |
| Purchase of treasury shares | (22,218) | 0 | 0 | 0 | 0 | (108) | (108) |
| Net income | 0 | 0 | 0 | (980) | 1,209 | 0 | 229 |
| Balance at M arch 31, 2010 |
9,325,572 | 47,034 | 46,167 | (6,426) | (13,536) | (398) | 72,841 |
Notes
Following its registration as an Aktiengesellschaft on July 12, 2007, Fair Value REIT-AG ("the company") has been listed on the stock exchange since November 16, 2007. It became a REIT on December 6, 2007.
As a result of its participation in a total of thirteen closed-end real estate funds, the company must prepare consolidated financial statements.
Basis of the preparation – The Interim Consolidated Financial Statement has been prepared on the basis of the International Financial Reporting Standards ("IFRSs") in compliance with IAS 34 "Interim Financial Reporting".
Investment properties and financial derivatives are valued at fair value; interests held in associated companies are equity-accounted. All other valuations are based on cost.
Consolidation – All subsidiaries are included in the consolidated financial statement. The scope of consolidation has not changed since December 31, 2009.
Accounting and valuation methods – The same accounting and valuation methods are used for the quarterly report as for the consolidated financial statement on December 31, 2009.
Comparative figures – The comparison columns in the income and cash flow statements relate to the period from January 1 to March 31, 2009. Due to other partners terminating their holdings, the participation of Fair Value in IC13 increased to 50.04% on December 31, 2009. Following this status change, the fund is now fully consolidated.
| € thousand | Direct investments |
Participations | Total |
|---|---|---|---|
| Acquisition costs | |||
| Balance at January 1, 2010/ M arch 31, 2010 |
51,832 | 117,971 | 169,803 |
| Changes in value | |||
| Balance at January 1, 2010 / March 31, 2010 | (6,305) | (25,911) | (32,216) |
| Fair values | |||
| Balance at January 1, 2010 / March 31, 2010 | 45,527 | 92,060 | 137,587 |
The fair values used for the investment properties are those determined on December 31, 2009 by CB Richard Ellis GmbH, Frankfurt. For explanations of the assumptions on which the DCF method is based, please refer to page 67 of the 2009 Annual Report.
| € thousand | IC 10 | IC 12 | IC 15 | BBV 02 | BBV 09 | BBV 10 | BBV 14 | Total |
|---|---|---|---|---|---|---|---|---|
| Proportionale equity | ||||||||
| As of January 1, 2010 | (69) | 2,445 | 6,329 | 186 | 11,570 | 17,283 | 15,754 | 53,498 |
| Withdrawals | 0 | 0 | 0 | 0 | 0 | (2) | 0 | (2) |
| Proportion of earnings | 1 | 25 | 118 | 7 | 168 | 298 | 235 | 852 |
| Loss from cash flow hedge | 0 | 0 | 0 | 0 | 0 | (189) | 0 | (189) |
| As of March 31, 2010 | (68) | 2,470 | 6,447 | 193 | 11,738 | 17,390 | 15,989 | 54,159 |
| Changes in value | ||||||||
| Balance at January 1, 2010 / March 31, 2010 | 69 | (196) | (704) | (77) | (1,180) | (1,844) | (2,124) | (6,056) |
| Carrying amounts | ||||||||
| As of December 31, 2009 | 0 | 2,249 | 5,625 | 109 | 10,390 | 15,439 | 13,630 | 47,442 |
| As of March 31, 2010 | 1 | 2,274 | 5,743 | 116 | 10,558 | 15,546 | 13,865 | 48,103 |
This refers to participations with holdings of between 20% and 50%. The increase of € 661,000 in this item in comparison to December 31, 2009 consists of the proportionate results of € 852,000 accruing to Fair Value from these companies for the reporting period minus the proportionate change not affecting net income in the value change reserves, which amounted to a total of € 189,000, and the withholding tax on interest income and solidarity surcharges of € 2,000. The value adjustment arises from the present value of company expenses not taken into account in the market valuations of the properties. For further information regarding the difference in value, please refer to the explanations on page 69 of the 2009 Annual Report.
Additional financial information pertaining to the equity-accounted associated companies is provided in the following tables, with the figures based on the group's participation in each of the associated companies rather than the respective companies in their entirety (100%). The proportionately distributed assets and debts of these companies are as follows prior to provision for changes in value:
| IC 10 | IC 12 | IC 15 (consolidated) |
BBV 02 | |||||
|---|---|---|---|---|---|---|---|---|
| Mar 31, | Dec 31, | Mar 31, | Dec 31, | Mar 31, | Dec 31, | Mar 31, | Dec 31, | |
| € thousand | 2010 | 2009 | 2010 | 2009 | 2010 | 2009 | 2010 | 2009 |
| Fair Value REIT-AG's share | 26.14% 26.14% 40.22% 40.22% 38.37% 38.37% 39.68% 39.68% | |||||||
| Property, plant and equipment | 0 | 0 | 0 | 0 | 0 | 3 | 0 | 0 |
| Investment property | 2,337 | 2,337 | 2,952 | 2,952 | 13,472 | 13,472 | 655 | 655 |
| Trade receivables | 35 | 33 | 55 | 71 | 114 | 63 | 12 | 12 |
| Other receivables and assets | 4 | 0 | 6 | 1 | 256 | 249 | 13 | 13 |
| Cash and cash equivalents | 46 | 46 | 422 | 392 | 1,432 | 1,566 | 59 | 55 |
| Provisions | (4) | (3) | (5) | (4) | (11) | (9) | (1) | (1) |
| Financial liabilities | (1,969) | (1,977) | (930) | (936) | (8,724) | (8,816) | (527) | (533) |
| Derivative financial instruments | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Trade payables | (6) | (3) | (16) | (15) | (8) | (41) | (6) | (7) |
| Other liabilities | (511) | (502) | (14) | (16) | (84) | (158) | (12) | (8) |
| Net assets | (68) | (69) | 2,470 | 2,445 | 6,447 | 6,329 | 193 | 186 |
| BBV 09 | BBV 10 | BBV 14 | Total | |||||
|---|---|---|---|---|---|---|---|---|
| Mar 31, | Dec 31, | Mar 31, | Dec 31, | Mar 31, | Dec 31, | Mar 31, | Dec 31, | |
| € thousand | 2010 | 2009 | 2010 | 2009 | 2010 | 2009 | 2010 | 2009 |
| Fair Value REIT-AG's share | 25.11% 25.10% 38.37% 38.37% 45.11% 45.09% | |||||||
|---|---|---|---|---|---|---|---|---|
| Property, plant and equipment | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 3 |
| Investment property | 31,337 | 31,325 | 44,985 | 44,985 | 37,856 | 37,840 133,594 133,566 | ||
| Trade receivables | 70 | 43 | 94 | 89 | 176 | 216 | 556 | 527 |
| Other receivables and assets | 108 | 85 | 41 | 10 | 506 | 478 | 934 | 836 |
| Cash and cash equivalents | 2,033 | 1,883 | 2,488 | 2,468 | 702 | 767 | 7,182 | 7,177 |
| Provisions | (3) | (10) | (2) | (9) | (5) | (12) | (31) | (48) |
| Financial liabilities | (18,825) | (18,981) | (28,079) | (28,324) | (23,014) | (23,193) | (82,068) | (82,760) |
| Derivative financial instruments | (2,751) | (2,538) | (1,874) | (1,658) | 0 | 0 | (4,625) | (4,196) |
| Trade payables | (15) | (30) | (173) | (196) | (161) | (226) | (385) | (518) |
| Other liabilities | (216) | (207) | (90) | (82) | (71) | (116) | (998) | (1,089) |
| Net assets | 11,738 | 11,570 | 17,390 | 17,283 | 15,989 | 15,754 | 54,159 | 53,498 |
| IC 10 | IC 12 IC 13 |
IC 15 (consolidated) |
BBV 02 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|
| January 1 to | January 1 to | January 1 to | January 1 to | January 1 to | ||||||
| March 31, | March 31, | March 31, | March 31, | March 31, | ||||||
| € thousand | 2010 | 2009 | 2010 | 2009 | 2010 | 2009 | 2010 | 2009 | 2010 | 2009 |
| Fair Value REIT-AG's share | 26.14% 26.14% 40.22% 40.22% | 50.04% | 38.37% 38.37% 39.68% 39.68% | |||||||
| Rental income | 48 | 47 | 48 | 53 | 318 | 287 | 301 | 20 | 23 | |
| Income from operating and incidental costs |
19 | 18 | 30 | 25 | 43 | 27 | 27 | 3 | 3 | |
| Real estate-related operating expenses | (28) | (40) | (40) | (42) | (85) | (75) | (64) | (7) | (12) | |
| Net rental income | 39 | 25 | 38 | 36 | 276 | 239 | 264 | 16 | 14 | |
| General administrative expenses | (2) | (2) | (4) | (4) | (15) | (15) | (17) | (1) | (3) | |
| Other operating expenses and income (balance) |
0 | 9 | 3 | 1 | 0 | (1) | (2) | (1) | 6 | |
| Gains from sale of investment properties | 0 | 0 | ||||||||
| Valuation result | 0 | 0 | 0 | 0 | (90) | (3) | (27) | 0 | (8) | |
| Operating result | 37 | 32 | 37 | 33 | 171 | 220 | 218 | 14 | 9 | |
| Net interest expense | (36) | (32) | (12) | (11) | (151) | (102) | (112) | (7) | (6) | |
| Valuation of derivative financial instruments |
0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |
| Financial result | (36) | (32) | (12) | (11) | (151) | (102) | (112) | (7) | (6) | |
| Economic result | 1 | 0 | 25 | 22 | 20 | 118 | 106 | 7 | 3 |
It should be noted that the reporting period in 2009 includes the results of IC13. Due to other partners terminating their holdings on December 31, 2009, the Fair Value REIT-AG participation in IC13 increased to 50.04%, at which point the company became fully consolidated.
The valuation loss of a total of € 3,000 results from the depreciation of capital expenditures incurred at the Quickborn property (IC15). In the previous year, the valuation loss of € 375,000 was based on the company's own estimated depletion of the benefits arising from a number of existing rental agreements concluded on the basis of rents which, at the time, were above market level (so called over-rents).
| BBV 09 | BBV 10 | BBV 14 | Total | |||||
|---|---|---|---|---|---|---|---|---|
| January 1 to | January 1 to | January 1 to | January 1 to | |||||
| March 31, | March 31, | March 31, | March 31, | |||||
| € thousand | 2010 | 2009 | 2010 | 2009 | 2010 | 2009 | 2010 | 2009 |
| Fair Value REIT-AG's share | 25.11% 25.10% 38.37% 38.37% 45.11% | 45.09% | ||||||
| Rental income | 745 | 746 | 962 | 1,059 | 676 | 686 | 2,786 | 3,233 |
| Income from operating and incidental | ||||||||
| costs | 18 | 19 | 66 | 68 | 152 | 167 | 315 | 370 |
| Real estate-related operating expenses | (44) | (41) | (257) | (151) | (258) | (283) | (709) | (718) |
| Net rental income | 719 | 724 | 771 | 976 | 570 | 570 | 2,392 | 2,885 |
| General administrative expenses | (21) | (32) | (36) | (41) | (51) | (63) | (130) | (177) |
| Other operating expenses and income | ||||||||
| (balance) | (8) | 0 | 2 | 0 | 2 | 1 | (3) | 15 |
| Gains from sale of investment properties | 0 | 0 | ||||||
| Valuation result | 0 | (132) | 0 | (77) | 0 | (41) | (3) | (375) |
| Operating result | 690 | 560 | 737 | 858 | 521 | 467 | 2,256 | 2,348 |
| Net interest expense | (310) | (310) | (412) | (423) | (286) | (299) | (1,165) | (1,344) |
| Valuation of derivative financial | ||||||||
| instruments | (212) | (428) | (27) | (76) | 0 | 0 | (239) | (504) |
| Financial result | (522) | (738) | (439) | (499) | (286) | (299) | (1,404) | (1,848) |
| Economic result | 168 | (178) | 298 | 359 | 235 | 168 | 852 | 500 |
| March | December | |
|---|---|---|
| 31, | 31, | |
| € thousand | 2010 | 2009 |
| Office property Aachen | ||
| ("BBV 03") | 0 | 1,520 |
| Retail property Hamm | ||
| ("BBV 06") | 1,352 | 1,352 |
| Retail property Seligenstadt | ||
| ("BBV 06") | 0 | 1,465 |
| Retail property Passau | ||
| ("BBV 06") | 3,900 | 3,900 |
| 5,252 | 8,237 |
The valuation of such assets equates to the notarized purchase prices. An exception is the Hamm property, for which the agreed cost of renovation work, amounting to € 270,000, has been treated as a reduction of the purchase price.
The closing has been agreed contingent upon the land registry release from encumbrances, the agreement of the plot owner (leasehold) and final payment of the complete purchase price, and it is expected to take place in the near future.
A further € 53,000 of sales-related costs have been incurred with regard to the Aachen (BBV03) and Seligenstadt (BBV06) properties, which have already been closed.
The three BBV 06 properties are partly financed by loans. With regard to the release from encumbrances of the properties, the lending bank shall receive unscheduled repayments from the purchase prices paid; the amount of repayment is still a matter for negotiation.
The Passau property is a leasehold for which leasehold interest (currently € 209 p.a.) is to be paid until expiry on 28 September 2080. This obligation is assumed by the transferee.
Included in the reserve for changes in value currently reducing the equity capital are changes in value (with no effect on net income) relating to interest rate hedges, to the extent that these fulfil the requirements for "Hedge Accounting". Changes in value amounted to € 980,000 during the reporting period, of which € 811,000 apply to the Group, minus minority interests of € 20,000. Furthermore, this reserve contains the change amounting to € 189,000 in equity-accounted participations, to the extent that these have resulted from the cash flow hedges of the associated companies.
Based on a resolution passed by the Annual General Meeting on May 29, 2009, the Management Board is authorised to acquire treasury stock up until May 28, 2014 up to the total of 10% of the capital stock. With regard to this authorization, the Management Board decided on September 24, 2009 to acquire up to 100,000 shares in the company (equating to approx. 1% of the capital stock).
By the end of the share repurchase programme on January 29, 2010, 81,310 shares had been acquired. The acquisition costs amounted to a total sum of € 398,000 or € 4.89 per share. Taking these shares into account, Fair Value REIT-AG holds approximately 0.86% of the company's capital stock on March 31, 2010.
The company's long and short term financial liabilities, amounting to a total of € 107,119,000, have fallen compared to December 31, 2009 as a result of scheduled repayments of € 1,197,000.
| January 1 to March 31, | |||||
|---|---|---|---|---|---|
| € thousand | 2010 | 2009 | |||
| Personnel expenses | 98 | 161 | |||
| Office costs | 12 | 17 | |||
| Travel and vehicle expenses | 15 | 13 | |||
| Accounting | 36 | 0 | |||
| Stock market listing, general | |||||
| meeting and events | 35 | 36 | |||
| Valuations | 31 | 58 | |||
| Legal and consulting costs | 27 | 52 | |||
| Audit expenses | 45 | 42 | |||
| Remuneration (Supervisory and Advisory Boards, General |
|||||
| Partner) | 21 | 22 | |||
| Fund management | 97 | 63 | |||
| Trustee fees | 27 | 28 | |||
| Amortization and depreciation | 3 | 0 | |||
| Other | 38 | 20 | |||
| Non-deductible VAT | 43 | 59 | |||
| 528 | 571 |
Of the general administration expenses, € 347,000 (65.7%) are attributable to Fair Value and € 181,000 (34.3%) to the subsidiaries.
The reduction in personnel costs results from the departure of a member of the Management Board and a further member of staff. The accounting costs arise from the service contract with IC Immobilien Service GmbH that has been in force since the fourth quarter of 2009. For further information, please refer to pages 98 and 99 of the 2009 Annual Report. The increased costs for fund management are the result of the full consolidation of the subsidiary IC13 (T€ 30).
| January 1 to March 31, | |||||||
|---|---|---|---|---|---|---|---|
| € thousand | 2010 | 2009 | |||||
| Valuation of derivative financial instruments |
(15) | (46) | |||||
| Other interest expenses | (1,235) | (1,158) | |||||
| (1,250) | (1,204) |
Interest expenses include costs relating to the change in the fair value of derivative financial instruments (interest rate hedges) amounting to € 15,000. Of this sum, € 7,000 are attributable to the minority interests. The increase of the interest expenses over the previous year relate to the full consolidation of the subsidiary IC 13 (T€ 143).
| Segment revenues | Segment results | |||||||
|---|---|---|---|---|---|---|---|---|
| January 1 to March 31, | January 1 to March 31, | |||||||
| € thousand | 2010 | 2009 | 2010 | 2009 | ||||
| Direct investments | 976 | 914 | 737 | 604 | ||||
| Subsidiaries | 2,625 | 1,923 | 1,596 | 1,004 | ||||
| 3,601 | 2,837 | 2,333 | 1,608 | |||||
| Earnings from equity-accounted participations | 852 | 500 | ||||||
| Central administrative expenses and other | (298) | (336) | ||||||
| Net interest expense | (1,240) | (1,142) | ||||||
| Minority interest in the result | (438) | (204) | ||||||
| Consolidated Net Income | 1,209 | 426 |
The following shows the results calculation of the segments in a less aggregated form. The "subsidiaries" segment is broken down into the individual companies. The current income of the IC13 subsidiary was included in the equity-accounted participations in the previous year.
| Segment | Segment | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Direct | Subsidiaries | ||||||||||||||
| investments | IC 01 | IC 03 | IC 07 | IC 13 | |||||||||||
| January 1 to | January 1 to | January 1 to | January 1 to | January 1 to | |||||||||||
| March 31, | March 31, | March 31, | March 31, | March 31, | |||||||||||
| € thousand | 2010 | 2009 | 2010 | 2009 | 2010 | 2009 | 2010 | 2009 | 2010 | 2009 | |||||
| Rental income | 811 | 800 | 80 | 87 | 119 | 143 | 111 | 117 | 634 | 0 | |||||
| Income from operating and incidental | |||||||||||||||
| costs | 165 | 114 | 18 | 19 | 39 | 46 | 45 | 8 | 91 | 0 | |||||
| Segment revenue | 976 | 914 | 98 | 106 | 158 | 189 | 156 | 125 | 725 | 0 | |||||
| Leasehold payments | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |||||
| Real estate-related operating expenses | (189) | (217) | (32) | (34) | (54) | (112) | (89) | (63) | (133) | 0 | |||||
| Net rental result | 787 | 697 | 66 | 72 | 104 | 77 | 67 | 62 | 592 | 0 | |||||
| Adminstrative expenses related to | |||||||||||||||
| segment | (49) | (91) | (8) | (4) | (8) | (8) | (9) | (8) | (30) | 0 | |||||
| Other operating expenses and income | |||||||||||||||
| (balance) | (1) | (2) | (14) | 0 | (2) | 0 | (1) | 0 | 1 | 0 | |||||
| Income from sale of investment properties |
0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |||||
| Valuation result | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |||||
| Segment profit | 737 | 604 | 44 | 68 | 94 | 69 | 57 | 54 | 563 | 0 | |||||
| Central administrative costs | (298) | (336) | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |||||
| Income from equity-accounted | |||||||||||||||
| participations | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |||||
| Net interest expenses | (600) | (601) | (24) | (25) | (48) | (50) | (38) | (40) | (143) | 0 | |||||
| Minority interests | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |||||
| Annual result | (161) | (333) | 20 | 43 | 46 | 19 | 19 | 14 | 420 | 0 |
| Segment Subsidiaries |
|||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| BBV 03 | BBV 06 | Total | Consolidation | Group | |||||||
| January 1 to | January 1 to | January 1 to | January 1 to | January 1 to | |||||||
| March 31, | March 31, | March 31, | March 31, | March 31, | |||||||
| € thousand | 2010 | 2009 | 2010 | 2009 | 2010 | 2009 | 2010 | 2009 | 2010 | 2009 | |
| Rental income | 209 | 221 | 1,181 | 1,197 | 2,334 | 1,765 | 0 | 0 | 3,145 | 2,565 | |
| Income from operating and incidental costs |
33 | 32 | 65 | 53 | 291 | 158 | 0 | 0 | 456 | 272 | |
| Segment revenue | 242 | 253 | 1,246 | 1,250 | 2,625 | 1,923 | 0 | 0 | 3,601 | 2,837 | |
| Leasehold payments | 0 | 0 | (57) | (57) | (57) | (57) | 0 | 0 | (57) | (57) | |
| Real estate-related operating expenses | (54) | (60) | (360) | (440) | (722) | (709) | 0 | 0 | (911) | (926) | |
| Net rental result | 188 | 193 | 829 | 753 | 1,846 | 1,157 | 0 | 0 | 2,633 | 1,854 | |
| Adminstrative expenses related to segment |
(46) | (35) | (80) | (89) | (181) | (144) | 0 | 0 | (230) | (235) | |
| Other operating expenses and income (balance) |
0 | 0 | 0 | 1 | (16) | 1 | 0 | 0 | (17) | (1) | |
| Income from sale of investment properties |
(52) | 0 | (1) | 0 | (53) | 0 | 0 | 0 | (53) | 0 | |
| Valuation result | 0 | 0 | 0 | 0 | 0 | (10) | 0 | 0 | 0 | (10) | |
| Segment profit | 90 | 158 | 748 | 665 | 1,596 | 1,004 | 0 | 0 | 2,333 | 1,608 | |
| Central administrative costs | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | (298) | (336) | |
| Income from equity-accounted participations |
0 | 0 | 0 | 0 | 0 | 0 | 852 | 500 | 852 | 500 | |
| Net interest expenses | 0 | 4 | (387) | (430) | (640) | (541) | 0 | 0 (1,240) | (1,142) | ||
| Minority interests | 0 | 0 | 0 | 0 | 0 | 0 | (438) | (204) | (438) | (204) | |
| Annual result | 90 | 162 | 361 | 235 | 956 | 463 | 414 | 296 | 1,209 | 426 |
The following shows, in a less aggregated form, all the allocated and non-allocated assets and debts for the segments, with the "subsidiary" segment being broken down into individual companies.
| Segment Direct |
Segment Subsidiaries |
|||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| investments | IC 01 | IC 03 | IC 07 | IC 13 | ||||||
| March | Decem | March | Decem | March | Decem | March | Decem | March | Decem | |
| 31, | ber 31, | 31, | ber 31, | 31, | ber 31, | 31, | ber 31, | 31, | ber 31, | |
| € thousand | 2010 | 2009 | 2010 | 2009 | 2010 | 2009 | 2010 | 2009 | 2010 | 2009 |
| Intangible assets and property, plant and equipment |
13 | 16 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Investment property | 45,527 | 45,527 | 4,340 | 4,340 | 7,320 | 7,320 | 7,110 | 7,110 | 21,380 | 21,380 |
| Non-current assets held for sale | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Trade receivables | 343 | 319 | 136 | 139 | 102 | 109 | 21 | 13 | 56 | 54 |
| Income tax receivables | 65 | 63 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Other receivables and assets | 422 | 446 | 78 | 77 | 15 | 7 | 17 | 0 | 64 | 34 |
| Cash and cash equivalents | 273 | 1,468 | 99 | 73 | 91 | 92 | 2,377 | 2,565 | 1,944 | 1,839 |
| Subtotal segment assets | 46,643 | 47,839 | 4,653 | 4,629 | 7,528 | 7,528 | 9,525 | 9,688 | 23,444 | 23,307 |
| Participtation in subsidiaries | 30,404 | 30,404 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Equity-accounted participations | 47,538 | 47,540 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Assets total | 124,585 125,783 | 4,653 | 4,629 | 7,528 | 7,528 | 9,525 | 9,688 | 23,444 | 23,307 | |
| Provisions | (134) | (179) | (13) | (11) | (13) | (10) | (12) | (10) | (15) | (12) |
| Trade payables | (117) | (304) | (12) | (9) | (17) | (21) | (20) | (9) | (78) | (89) |
| Other liabilities | (111) | (375) | (78) | (58) | (55) | (64) | (33) | (51) | (70) | (69) |
| Subtotal segment assets | (362) | (858) | (103) | (78) | (85) | (95) | (65) | (70) | (163) | (170) |
| Minority interests | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Financial liabilities | (40,075) | (40,510) | (1,886) | (1,907) | (3,533) | (3,569) | (3,229) | (3,405) | (22,124) | (22,400) |
| Derivative financial instruments | (4,847) | (4,080) | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Liabilities total | (45,284) | (45,448) | (1,989) | (1,985) | (3,618) | (3,664) | (3,294) (3,475) | (22,287) | (22,570) | |
| Net assets | 79,301 | 80,335 | 2,664 | 2,644 | 3,910 | 3,864 | 6,231 | 6,213 | 1,157 | 737 |
| Segment | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Subsidiaries | ||||||||||
| BBV 03 | BBV 06 | Total | Consolidation | Group | ||||||
| March | Decem | March | Decem | March | Decem | March | Decem | March | Decem | |
| 31, | ber 31, | 31, | ber 31, | 31, | ber 31, | 31, | ber 31, | 31, | ber 31, | |
| € thousand | 2010 | 2009 | 2010 | 2009 | 2010 | 2009 | 2010 | 2009 | 2010 | 2009 |
| Intangible assets and property, plant and equipment |
0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 13 | 16 |
| Investment property | 6,820 | 6,820 | 45,090 | 45,090 | 92,060 | 92,060 | 0 | 0 | 137,587 | 137,587 |
| Non-current assets held for sale | 0 | 1,520 | 5,252 | 6,717 | 5,252 | 8,237 | 0 | 0 | 5,252 | 8,237 |
| Trade receivables | 38 | 34 | 471 | 639 | 824 | 988 | 0 | 0 | 1,167 | 1,307 |
| Income tax receivables | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 65 | 63 |
| Other receivables and assets | 254 | 256 | 219 | 178 | 647 | 552 | (122) | (122) | 947 | 876 |
| Cash and cash equivalents | 2,325 | 691 | 3,134 | 1,553 | 9,970 | 6,813 | 0 | 0 | 10,243 | 8,281 |
| Subtotal segment assets | 9,437 | 9,321 | 54,166 | 54,177 | 108,753 | 108,650 | (122) | (122) | 155,274 | 156,367 |
| Participtation in subsidiaries | 0 | 0 | 0 | 0 | 0 | 0 | (30,404) | (30,404) | 0 | 0 |
| Equity-accounted participations | 0 | 0 | 0 | 0 | 0 | 0 | 565 | (98) | 48,103 | 47,442 |
| Assets total | 9,437 | 9,321 | 54,166 | 54,177 | 108,753 | 108,650 (29,961) (30,624) | 203,377 | 203,809 | ||
| Provisions | (3) | (13) | (6) | (26) | (62) | (82) | 0 | 0 | (196) | (261) |
| Trade payables | (113) | (75) | (249) | (302) | (489) | (505) | 0 | 0 | (606) | (809) |
| Other liabilities | (43) | (45) | (660) | (720) | (939) | (1,007) | 2 | 2 | (1,048) | (1,380) |
| Subtotal segment assets | (159) | (133) | (915) | (1,048) | (1,490) | (1,594) | 2 | 2 | (1,850) | (2,450) |
| Minority interests | 0 | 0 | 0 | 0 | 0 | 0 | (15,714) | (15,296) | (15,714) | (15,296) |
| Financial liabilities | 0 | 0 | (36,392) | (36,645) | (67,164) | (67,926) | 120 | 120 (107,119) | (108,316) | |
| Derivative financial instruments | 0 | 0 | (1,006) | (947) | (1,006) | (947) | 0 | 0 | (5,853) | (5,027) |
| Liabilities total | (159) | (133) | (38,313) | (38,640) | (69,660) | (70,467) | (15,592) (15,174) | (130,536) | (131,089) | |
| Net assets | 9,278 | 9,188 | 15,853 | 15,537 | 39,093 | 38,183 (45,553) (45,798) | 72,841 | 72,720 |
| January 1 to March 31, | ||
|---|---|---|
| € thousand | 2010 | 2009 |
| Receivables | ||
| Other | 0 | 6 |
| Liabilities | ||
| Liabilities from loans | 0 | (165) |
| Liabilities from services | (52) | (6) |
| (52) | (165) |
This report was not audited within the meaning of Section 317 of the Handelsgesetzbuch (German GAAP) or subject to an audit review by an auditor and thus does not include an auditor's opinion.
The current declarations by Fair Value REIT-AG's Managing and Supervisory Boards according to Section 161 of the AktG on the German Corporate Governance Code have been made permanently accessible on the company's Website.
Munich, May 2010
Fair Value REIT-AG
Frank Schaich
Declaration by the legal representative
To the best of my knowledge, I declare that, according to the principles of proper consolidated reporting applied, the unaudited consolidated interim financial statements provide a true and fair view of the Group's net assets, financial position and results of operations, that the group interim management report presents the Group's business including the results and the Group's position such as to provide a true and fair view and that the major opportunities and risks of the Group's anticipated development are described.
Munich, May 5,2010
Fair Value REIT-AG
Frank Schaich
Liabilities and Portfolio
| Bookvalue according to |
|||||||||
|---|---|---|---|---|---|---|---|---|---|
| IFRS | Effective | Ac | |||||||
| Total March | interest | Deriva | LTV | tual | DSCR | Actual | |||
| Fund | Object | Bank | 31, 2010 Fixed until | rate | tive | max. | LTV | Min. | DSCR |
| Group | |||||||||
| FVAG | Participation purchase | WIB Westdt. Immobilienbank | -7,250,000 31.07.2011 | 5.17% | 20% | 13% | 18% | 25% | |
| FVAG | Portfolio | WIB Westdt. Immobilienbank | -21,545,560 29.06.2018 | 6.04% | SWAP | 75% | 73% | 110% | 109% |
| FVAG | Portfolio Total Direct investments |
WIB Westdt. Immobilienbank | -11,279,440 29.06.2018 -40,075,000 |
6.04% | SWAP | 75% | 73% | 110% | 109% |
| IC 07 | Teltow | HRE Hypo Real Estate | 3,229,123 31.12.2013 | 5.15% | n / a | n / a | |||
| Total IC 07 | 3,229,123 | ||||||||
| IC 03 | Neuss | HRE Hypo Real Estate | 3,413,321 31.10.2011 | 5.55% | n / a | n / a | |||
| Total IC 03 | 3,413,321 | ||||||||
| IC 01 | Alzey | HRE Hypo Real Estate | -1,028,504 30.09.2013 | 5.15% | n / a | n / a | |||
| IC 01 | Essen | HRE Hypo Real Estate | -857,091 30.09.2013 | 5.15% | n / a | n / a | |||
| Total IC 01 BBV 06 |
Portfolio | HVB HypoVereinsbank | -1,885,595 -26,613,955 29.06.2012 |
2.76% | CAP | n / a | n / a | ||
| BBV 06 | Hannover | HVB HypoVereinsbank | -5,039,008 02.07.2012 | 4.87% | SWAP | n / a | n / a | ||
| BBV 06 | Köln, Seligenstadt | HVB HypoVereinsbank | -4,739,262 02.07.2012 | 4.69% | SWAP | n / a | n / a | ||
| Total BBV | 06 | -36,392,225 | |||||||
| IC 13 | Potsdam | HRE Hypo Real Estate | -2,602,114 31.10.2011 | 2.48% | n / a | n / a | |||
| IC 13 | Neubrandenb. | HRE Hypo Real Estate | -2,589,668 31.07.2011 | 2.48% | n / a | n / a | |||
| IC 13 | Neubrandenb. | HRE Hypo Real Estate | -8,404,467 31.10.2011 | 2.48% | n / a | n / a | |||
| IC 13 | Neubrandenb. | HRE Hypo Real Estate | -2,072,443 31.12.2013 | 3.32% | n / a | n / a | |||
| IC 13 | Neubrandenb. | HRE Hypo Real Estate | -630,850 31.12.2013 | 3.32% | n / a | n / a | |||
| IC 13 | Langenfeld | Corealcredit | -4,360,178 31.10.2011 | 2.48% | n / a | n / a | |||
| IC 13 | Langenfeld | Corealcredit | -67,103 31.10.2011 | 2.48% | n / a | n / a | |||
| IC 13 IC 13 |
Langenfeld Langenfeld |
Corealcredit Corealcredit |
-500,191 31.10.2011 -149,718 28.02.2012 |
2.48% 2.48% |
n / a n / a |
n / a n / a |
|||
| IC 13 | Langenfeld | Corealcredit | -747,129 28.02.2012 | 2.48% | n / a | n / a | |||
| Total IC 13 | -22,123,861 | ||||||||
| Total Group | -107,119,115 | ||||||||
| Associated companies | |||||||||
| BBV 14 | Portfolio | HSH Nordbank | -51,016,522 31.12.2014 | 5.18% | n / a | n / a | |||
| Total BBV | 14 | -51,016,522 | |||||||
| IC 12 | Bankgeb.Chem | WIB Westdt. Immobilienbank | -2,312,086 15.09.2016 | 5.23% | 50% | 32% | 120% | 216% | |
| Total IC 12 | -2,312,086 | ||||||||
| BBV 02 BBV 02 |
Erlangen Erlangen |
BBV Lebensversicherung BBV Lebensversicherung |
-189,608 31.12.2011 -996,173 31.12.2016 |
5.06% 5.23% |
n / a n / a |
n / a n / a |
|||
| BBV 02 | Erlangen | BBV Lebensversicherung | -142,610 31.12.2016 | 5.23% | n / a | n / a | |||
| Total BBV | 02 | -1,328,391 | |||||||
| IC 15 | Chemnitz (Employment office) HSH Nordbank | -3,277,567 30.11.2012 | 5.10% | n / a | n / a | ||||
| IC 15 | Chemnitz (Employment office) HSH Nordbank | -1,458,899 30.11.2012 | 5.10% | n / a | n / a | ||||
| IC 15 | Chemnitz (Employment office) HSH Nordbank | -372,792 30.11.2012 | 5.10% | n / a | n / a | ||||
| IC 15 | Quickborn | Eurohypo | -8,729,967 31.12.2012 | 5.10% | n / a | n / a | |||
| IC 15 | Dresden | HSH Nordbank | -3,230,596 30.09.2012 | 5.10% | n / a | n / a | |||
| IC 15 | Dresden | HSH Nordbank | -659,658 30.09.2012 | 5.10% | n / a | n / a | |||
| IC 15 | Chemnitz-Passage | HVB HypoVereinsbank | -3,259,826 31.12.2014 | 4.67% | n / a | n / a | |||
| IC 15 Total IC 15 |
Chemnitz-Passage | Archon Capital | -1,747,758 30.12.2012 -22,737,063 |
5.10% | n / a | n / a | |||
| BBV 10 | Portfolio | BBV Lebensversicherung | -24,026,117 31.12.2012 | 5.10% | SWAP | n / a | n / a | ||
| BBV 10 | Portfolio | BBV Lebensversicherung | -2,870,604 31.12.2012 | 5.10% | SWAP | n / a | n / a | ||
| BBV 10 | Bookvalue interest rate swaps HVB HypoVereinsbank | -1,464,631 31.12.2012 | 5.10% | n / a | n / a | ||||
| BBV 10 | Portfolio | HVB HypoVereinsbank | -33,116,812 31.12.2013 | 6.21% | SWAP | n / a | n / a | ||
| BBV 10 | Portfolio | HVB HypoVereinsbank | -2,742,078 31.12.2013 | 6.21% | SWAP | n / a | n / a | ||
| BBV 10 | Portfolio | HVB HypoVereinsbank | -8,959,630 31.12.2013 | 6.21% | SWAP | n / a | n / a | ||
| Total BBV | 10 | -73,179,872 | |||||||
| IC 10 | Rabenstein | HRE Hypo Real Estate | -7,534,332 31.12.2016 | 5.23% | n / a | n / a | |||
| Total IC 10 | -7,534,332 | ||||||||
| BBV 09 | Portfolio | NordLB | -45,219,751 31.12.2013 | 6.48% | SWAP | n / a | n / a | ||
| BBV 09 Total BBV |
Portfolio 09 |
NordLB | -29,750,201 31.12.2013 -74,969,952 |
6.48% | SWAP | n / a | n / a | ||
| Total Associated companies | -233,078,218 (Fair Value's share € 82.1 million) |
As in the previous years, Frankfurt-based CB Richard Ellis GmbH (CBRE) was engaged by Fair Value to value its directly and indirectly held properties as of December 31, 2009. CBRE is not a company regulated by a supervisory body, however it does employ publicly appointed, sworn experts, members of the Royal Institution of Chartered Surveyors (RICS) and real estate experts certified by HypZert GmbH in its Valuation division.
According to the Practical Statement (PS) 3.2 of the RICS Valuation Standards (6th edition) from the Royal Institution of Chartered Surveyors (RICS), London, CBRE identified the properties' market values as defined below:
"The estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arm's-length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion."
In terms of concept and content, "market value" according to the definition by the Royal Institution of Chartered Surveyors (RICS) and "fair value" according to IFR and IAS 40 are comparable.
The market value was identified in each case taking into account incidental acquisition costs (land transfer tax, estate agents' fees and notary's and attorneys' fees) and was presented as the net capital value.
The market values of the individual properties was determined using the internationally recognized discounted cash flow method. The discounted cash flow method forms the basis for dynamic
calculations and is used to calculate the value of cash flows anticipated in future on various dates and in differing amounts.
In so doing, after identifying all of the factors relevant for the valuation, the future cash flows, some of which are linked to forecasts, are aggregated on an accrual basis. The balance of the receipts and payments recorded is then discounted to a fixed point in time (valuation date) using the discount rate. in contrast to the German Ertragswertverfahren (income-based approach) according to the Wertermittlungsverordnung (WertV – German Value Calculation Directive), the cash flows are explicitly quantified during the observed period and are not shown as annuity payments.
As the impact of future cash flows falls as a result of the discounting, and as the forecasting insecurity increases over the observed period, as a rule in the case of real estate investments the stabilized net investment income is capitalized over a tenyear period (detailed observation period) using a growthimplicit minimum interest rate (capitalization rate) and discounted to the valuation date.
The assumptions used in the valuation model reflect the average assumptions of the dominant investors on the market on the respective valuation date. These valuation parameters reflect the standard market expectations and the extrapolation of the analyzed past figures for the property to be valued or for one or several comparable properties.
CBRE estimated the valuation parameters as best possible using its best judgment, and these can be broken down into two groups. The property-specific valuation parameters include, for example, rent for initial term and renewals, the probability of existing rental agreements being extended, vacancy periods and vacancy costs, no allocable incidental costs and capital expenditure expected by the owner, fitting and rental costs for initial and renewals as well as property and leasespecific overall interest on the capital tied up in the investment.
The general economic factors include, in particular, changes to market prices and rent during the detailed observation period and the inflation assumed in the calculation model.
According to Guidance note 5 of the RICS Valuation Standards CBRE points out explicitly in its valuation report as of February 12, 2010, that against the background of the currently rapidly changing environment on global financial and national real estate markets the market value is a "snapshot" as of the balance sheet date, which reflects the market conditions valid on the reporting day. CBRE furthermore states that the market value should not be understood as a figure valid for a longer period of time but is subject to market related fluctuations.
Fair Value REIT-AG's share according to proportionate interest
| Year | Last | Capitaliza | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| of | renovati | Market | Market | Discount | tion | ||||||||
| Primary | cons truc |
on/ moderni |
value December |
value December |
rate December |
rate December |
Lettable | ||||||
| Address | Town | Fund | use | tion | zation | Plot size | 31, 2008 | 31, 2009 Change | 31, 2009 | 31, 2009 | space | ||
| [m²] | [€ K] | [€ K] | [%] | [%] | [%] | [m²] | |||||||
| Direct holdings | |||||||||||||
| Hauptstraße 56e / 56 d | Appen | n / a | Office | 1975 | 1995 | 4,320 | 230 | 225 | -2.2 | 7.10 | 6.60 | 212 | |
| Bleeck 1 | Bad Bramstedt | n / a | Office | 1973 | 2006 | 3,873 | 1,200 | 1,150 | -4.2 | 6.80 | 5.90 | 997 | |
| Oldesloer Straße 24 | Bad Segeberg | n / a | Office | 1982 | 2007 | 5,152 | 9,240 | 8,900 | -3.7 | 6.80 | 6.30 | 9,144 | |
| Königstr. 19-21 | Barmstedt | n / a | Office | 1911 | ongoing | 2,842 | 1,460 | 1,380 | -5.5 | 6.75 | 6.25 | 1,264 | |
| Bahnhofstraße 9 | Bönnigstedt | n / a | Office | 1992 | 2003 | 1,131 | 240 | 230 | -4.2 | 7.10 | 6.80 | 211 | |
| Bahnhofstraße 14 | Boostedt | n / a | Office | 1989 | 2005 | 1,006 | 130 | 120 | -7.7 | 6.50 | 5.90 | 114 | |
| Am alten Markt 9a | Bornhöved | n / a | Office | 1991 | 2005 | 873 | 680 | 660 | -2.9 | 6.80 | 6.10 | 664 | |
| Berliner Damm 6 | Ellerau | n / a | Office | 1990 | 2000 | 1,177 | 410 | 400 | -2.4 | 6.90 | 6.70 | 369 | |
| Pinneberger Straße 155 | Ellerbek | n / a | Office | 1985 | 2001 | 1,708 | 360 | 350 | -2.8 | 6.80 | 5.80 | 356 | |
| Dorfstraße 29 | Geschendorf | n / a | Office | 1985 | 2006 | 1,154 | 230 | 235 | 2.2 | 7.00 | 5.90 | 316 | |
| Hauptstraße 33 | Halstenbek | n / a | Office | 1969 | 2001 | 1,195 | 860 | 820 | -4.7 | 7.40 | 7.00 | 791 | |
| Seestraße 232 | Halstenbek | n / a | Office | 1976 | 2002 | 549 | 90 | 87 | -3.3 | 7.30 | 6.80 | 188 | |
| Friesenstraße 59 | Helgoland | n / a | Office | 1986 | 2000 | 194 | 610 | 570 | -6.6 | 6.60 | 5.70 | 488 | |
| Hamburger Straße 83 | Henstedt-Ulzburgn / a | Office | 1989 | 2004 | 1,219 | 1,100 | 1,060 | -3.6 | 6.70 | 6.20 | 1,005 | ||
| Holstenstraße 32 | Kaltenkirchen | n / a | Office | 1978 | 2005 | 1,893 | 1,970 | 1,830 | -7.1 | 6.90 | 6.50 | 1,581 | |
| Köllner Chaussee 27 | Kölln-Reisiek | n / a | Office | 1990 | 2001 | 1,004 | 180 | 180 | 0.0 | 7.10 | 6.40 | 168 | |
| Hamburger Straße 40 | Leezen | n / a | Office | 1989 | 2005 | 886 | 190 | 190 | 0.0 | 7.00 | 6.60 | 174 | |
| Segeberger Straße 21 | Nahe | n / a | Office | 1971 | 2004 | 1,698 | 700 | 690 | -1.4 | 7.00 | 6.50 | 734 | |
| Ehndorfer Straße 153 | Neumünster | n / a | Office | 1971 | 2003 | 1,685 | 250 | 240 | -4.0 | 7.60 | 7.00 | 346 | |
| Kuhberg 11-13 | Neumünster | n / a | Office | 1989 | 2005 | 5,286 | 15,300 | 14,700 | -3.9 | 6.75 | 6.25 | 11,808 | |
| Röntgenstraße | Neumünster | n / a | Office | 1972 | 1998 | 2,481 | 280 | 275 | -1.8 | 7.30 | 6.70 | 534 | |
| Ulzburger Str. 363 d / e | Norderstedt | n / a | Office | 1994 | 2004 | 2,762 | 1,480 | 1,420 | -4.1 | 6.70 | 6.00 | 1,340 | |
| Ulzburger Str. 545 / 547 | Norderstedt | n / a | Office | 1960 | 1,313 | 510 | 620 | 21.6 | 8.00 | 7.50 | 1,005 | ||
| Damm 49 | Pinneberg | n / a | Office | 1996 | 2007 | 1,383 | 2,370 | 2,280 | -3.8 | 7.00 | 6.50 | 1,930 | |
| Oeltingsallee 30 | Pinneberg | ||||||||||||
| Quellental | n / a | Office | 1970 | 2002 | 2,047 | 660 | 640 | -3.0 | 6.80 | 6.10 | 624 | ||
| Kieler Straße 100 | Quickborn | n / a | Office | 1980 | 2002 | 1,625 | 1,490 | 1,430 | -4.0 | 6.80 | 6.20 | 1,309 | |
| Hauptstraße 49 | Rellingen | n / a | Office | 1983 | 2001 | 828 | 560 | 550 | -1.8 | 7.50 | 6.90 | 524 | |
| Rosenstraße 15 | Sparrieshoop | n / a | Office | 1961 | 1999 | 984 | 200 | 195 | -2.5 | 7.40 | 6.90 | 237 | |
| Willy-Meyer-Straße 3-5 | Tornesch | n / a | Office | 1977 | 2003 | 970 | 590 | 560 | -5.1 | 6.90 | 6.30 | 657 | |
| Am Markt 1 | Trappenkamp | n / a | Office | 1985 | 2005 | 1,190 | 660 | 640 | -3.0 | 6.90 | 6.00 | 787 | |
| Wassermühlenstraße 5 | Uetersen | n / a | Office | 2001 | 2,348 | 1,890 | 1,790 | -5.3 | 6.70 | 5.80 | 1,726 | ||
| Markt 1 | Wahlstedt | n / a | Office | 1975 | 2005 | 1,848 | 1,150 | 1,110 | -3.5 | 6.70 | 6.20 | 1,346 | |
| Sub-total direct holdings | 58,624 | 47,270 | 45,527 | -3.7 | 42,948 | ||||||||
| Subsidiaries | |||||||||||||
| Rheinstr. 8 | Teltow | IC07 | Office | 1995 | 5,324 | 7,500 | 7,110 | -5.2 | 7.70 | 6.70 | 9,731 | ||
| Im Taubental 9-17 | Neuss | IC03 | Logistics | 1990 | 19,428 | 7,720 | 7,320 | -5.2 | 7.70 | 7.10 | 12,064 | ||
| Heidhauser Straße 94 | Essen Heidhausen |
IC01 | Retail | 1990 | 4,776 | 2,600 | 2,700 | 3.8 | 7.00 | 6.60 | 1,386 | ||
| Hospitalstraße 17 - | |||||||||||||
| 19 / Judengasse 21 | Alzey | IC01 | Retail | 1990 | 2007 | 2,243 | 1,740 | 1,640 | -5.7 | 7.00 | 6.50 | 1,989 | |
| Andreasstr. 1 | Ahaus-Wüllen | BBV06 Retail | 1990 | 5,513 | 1,110 | 1,060 | -4.5 | 7.90 | 7.20 | 1,496 | |||
| Andreasstr. 3 - 7 | Ahaus-Wüllen | BBV06 Retail | 1973 | 13,036 | 4,380 | 4,220 | -3.7 | 7.60 | 6.80 | 3,915 | |||
| Marktplatz 3 | Altenberge | BBV06 Retail | 1986 | 1,756 | 1,190 | 1,120 | -5.9 | 7.00 | 6.40 | 1,285 | |||
| Heerenbergerstr. 51 | Emmerich | BBV06 Retail | 1987 | 4,314 | 870 | 850 | -2.3 | 7.60 | 6.80 | 1,415 | |||
| Hubert-Prott-Str. 117 | Frechen | BBV06 Retail | 1988 | 4,282 | 1,270 | 1,210 | -4.7 | 7.30 | 6.70 | 1,225 | |||
| Schwarzer Weg 21-24 | Hamm | BBV06 Retail | 1990 | 2,665 | 1,350 | 1,352 | 0.1 | 7.10 | 6.30 | 1,349 | |||
| Hinüberstr. 6 | Hannover | BBV06 Other | 1981 | 2006 | 3,204 | 20,000 | 18,800 | -6.0 | 7.00 | 6.40 | 19,460 | ||
| Köhlstr. 8 | Köln | BBV06 Logistics | 1982 | 40,591 | 9,360 | 9,550 | 2.0 | 8.10 | 7.30 | 23,626 | |||
| Gutenbergstr. 152 / St. | |||||||||||||
| Töniser Str. 12 | Krefeld | BBV06 Retail | 1990 | 8,417 | 4,100 | 3,440 | -16.1 | 7.80 | 6.80 | 4,683 | |||
Liabilities and Portfolio Glossary
| Fair Value REIT | -AG's share | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Annu | Remaining | |||||||||||
| Annu alized |
alized poten |
Participating interest |
Market value |
Market value |
term of rental |
Income based |
Annu alized |
Annualized | Contractu al rental |
|||
| Vacan | contrac | tial | March 31, | December | December | agree | occupancy | contractu | potential | yield befo | Potential rental yield |
|
| cies | tual rent | rent | 2010 | 31, 2008 | 31, 2009 Change | ments | rate | al rent | rent | re costs | before costs | |
| [m²] | [€ K] | [€ K] | [%] | [€ K] | [€ K] | [%] | [years] | [%] | [€ K] | [€ K] Figures as of March 31, 2010 |
[%] | [%] |
| 0 0 |
19 19 79 79 |
100.00 100.00 |
230 1,200 |
225 1,150 |
-2.2 -4.2 |
7.8 14.6 |
100.0 100.0 |
19 79 |
19 79 |
8.6 6.8 |
||
| 378 | 610 | 637 | 100.00 | 9,240 | 8,900 | -3.7 | 13.0 | 95.7 | 610 | 637 | 6.9 | |
| 0 | 93 93 |
100.00 | 1,460 | 1,380 | -5.5 | 13.8 | 100.0 | 93 | 93 | 6.7 | 6.7 | |
| 0 | 19 19 |
100.00 | 240 | 230 | -4.2 | 7.8 | 100.0 | 19 | 19 | 8.4 | 8.4 8.7 |
|
| 0 | 10 10 |
100.00 | 130 | 120 | -7.7 | 7.8 | 100.0 | 10 | 10 | 8.7 | ||
| 0 0 |
52 52 31 31 |
100.00 100.00 |
680 410 |
660 400 |
-2.9 -2.4 |
7.0 7.8 |
100.0 100.0 |
52 31 |
52 31 |
7.8 7.8 |
||
| 0 | 28 28 |
100.00 | 360 | 350 | -2.8 | 5.5 | 100.0 | 28 | 28 | 8.0 | ||
| 0 | 20 20 |
100.00 | 230 | 235 | 2.2 | 5.9 | 100.0 | 20 | 20 | 8.6 | ||
| 0 | 65 65 |
100.00 | 860 | 820 | -4.7 | 7.8 | 100.0 | 65 | 65 | 7.9 | ||
| 0 | 8 8 |
100.00 | 90 | 87 | -3.3 | 7.8 | 100.0 | 8 | 8 | 9.5 | ||
| 0 | 38 38 |
100.00 | 610 | 570 | -6.6 | 11.5 | 100.0 | 38 | 38 | 6.7 | ||
| 0 | 72 72 |
100.00 | 1,100 | 1,060 | -3.6 | 15.8 | 100.0 | 72 | 72 | 6.8 | ||
| 0 0 |
123 | 123 15 15 |
100.00 100.00 |
1,970 180 |
1,830 180 |
-7.1 0.0 |
15.6 7.8 |
100.0 100.0 |
123 15 |
123 15 |
6.7 8.6 |
|
| 0 | 16 16 |
100.00 | 190 | 190 | 0.0 | 7.8 | 100.0 | 16 | 16 | 8.4 | ||
| 0 | 60 60 |
100.00 | 700 | 690 | -1.4 | 7.8 | 100.0 | 60 | 60 | 8.7 | ||
| 0 | 23 23 |
100.00 | 250 | 240 | -4.0 | 5.8 | 100.0 | 23 | 23 | 9.8 | ||
| 0 | 961 | 961 | 100.00 | 15,300 | 14,700 | -3.9 | 15.2 | 100.0 | 961 | 961 | 6.5 | |
| 0 | 29 29 |
100.00 | 280 | 275 | -1.8 | 6.7 | 100.0 | 29 | 29 | 10.4 | ||
| 43 | 105 | 106 | 100.00 | 1,480 | 1,420 | -4.1 | 12.9 | 98.8 | 105 | 106 | 7.4 | |
| 408 0 |
177 | 49 70 177 |
100.00 100.00 |
510 2,370 |
620 2,280 |
21.6 -3.8 |
3.2 2.8 |
69.9 100.0 |
49 177 |
70 177 |
7.9 7.8 |
|
| 0 | 52 52 |
100.00 | 660 | 640 | -3.0 | 4.5 | 100.0 | 52 | 52 | 8.1 | ||
| 0 | 100 | 100 | 100.00 | 1,490 | 1,430 | -4.0 | 15.8 | 100.0 | 100 | 100 | 7.0 | |
| 0 | 42 42 |
100.00 | 560 | 550 | -1.8 | 7.8 | 100.0 | 42 | 42 | 7.7 | ||
| 0 0 |
17 17 55 55 |
100.00 100.00 |
200 590 |
195 560 |
-2.5 -5.1 |
5.1 6.0 |
100.0 100.0 |
17 55 |
17 55 |
8.9 9.9 |
||
| 0 | 54 54 |
100.00 | 660 | 640 | -3.0 | 6.2 | 100.0 | 54 | 54 | 8.4 | ||
| 0 | 125 | 125 | 100.00 | 1,890 | 1,790 | -5.3 | 12.9 | 100.0 | 125 | 125 | 7.0 | |
| 0 829 |
3,242 | 93 93 3,291 |
100.00 | 1,150 47,270 |
1,110 45,527 |
-3.5 -3.7 |
5.5 11.8 |
100.0 98.5 |
93 3,242 |
93 3,291 |
8.4 7.1 |
|
| 3,196 2,708 |
441 488 |
694 631 |
75.73 71.58 |
5,680 5,526 |
5,385 5,240 |
-5.2 -5.2 |
2.2 1.3 |
63.6 77.3 |
334 349 |
526 451 |
6.2 6.7 |
|
| 0 | 210 | 216 | 55.79 | 1,451 | 1,506 | 3.8 | 12.6 | 96.9 | 117 | 121 | 7.8 | |
| 318 | 110 | 129 | 55.79 | 971 | 915 | -5.7 | 6.2 | 85.4 | 61 | 72 | 6.7 | |
| 0 | 108 | 108 | 55.55 | 609 | 589 | -3.4 | 1.8 | 100.0 | 60 | 60 | 10.2 | |
| 0 | 329 | 473 | 55.55 | 2,404 | 2,344 | -2.5 | 4.8 | 69.5 | 183 | 263 | 7.8 | |
| 0 | 106 | 106 | 55.55 | 653 | 622 | -4.8 | 1.6 | 100.0 | 59 | 59 | 9.5 | |
| 92 | 84 87 |
55.55 | 478 | 472 | -1.1 | 3.6 | 96.8 | 47 | 48 | 9.9 | ||
| 0 | 135 | 135 | 55.55 | 697 | 672 | -3.6 | 3.6 | 100.0 | 75 | 75 | 11.2 | |
| 0 | 144 | 144 | 55.55 | 741 | 751 | 1.3 | 10.3 | 100.0 | 80 | 80 | 10.7 | |
| 0 8,120 |
1,636 648 |
1,636 986 |
55.55 55.55 |
10,979 5,138 |
10,443 5,305 |
-4.9 3.2 |
4.8 1.8 |
100.0 65.7 |
909 360 |
909 548 |
8.7 6.8 |
|
| 0 | 451 | 451 | 55.55 | 2,251 | 1,911 | -15.1 | 0.4 | 100.0 | 251 | 251 | 13.1 | |
| Year | Last | Capitaliza | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| of cons |
renovati on/ |
Market value |
Market value |
Discount rate |
tion rate |
||||||
| Primary | truc | moderni | December | December | December | December | Lettable | ||||
| Address | Town | Fund use |
tion | zation Plot size |
31, 2008 | 31, 2009 Change | 31, 2009 | 31, 2009 | space | ||
| [m²] | [€ K] | [€ K] | [%] | [%] | [%] | [m²] | |||||
| Lippestr. 2 | Lippetal-Herzfeld BBV06 Retail | 1990 | 3,155 | 1,550 | 1,590 | 2.6 | 7.70 | 7.00 | 1,452 | ||
| Zeughausstr. 13 | Meschede | BBV06 Retail | 1989 | 1,673 | 500 | 470 | -6.0 | 7.50 | 6.80 | 1,095 | |
| Äußere Spitalhofstr. 15-17 Passau | BBV06 Retail | 2007 | 2007 2,884 |
4,440 | 3,900 | -12.2 | 7.50 | 7.20 | 8,492 | ||
| Bahnhofstraße 20 a-e | Waltrop | BBV06 Retail | 1989 | 1,742 | 2,870 | 2,780 | -3.1 | 7.40 | 6.70 | 2,124 | |
| Marconistr. 4-8 | Köln | BBV03 Logistics | 1990 | 13,924 | 3,330 | 3,250 | -2.4 | 7.10 | 6.50 | 9,640 | |
| Hauptstr. 51 - 55 | Weyhe-Leeste | BBV03 Retail | 1989 | 2005 11,248 |
3,780 | 3,570 | -5.6 | 7.10 | 6.60 | 3,141 | |
| Max-Planck-Ring 26 / 28 | Langenfeld | IC13 Logistics |
1996 | 14,727 | 10,200 | 9,350 | -8.3 | 7.30 | 6.70 | 10,453 | |
| Friedrich-Engels-Ring 52 Neubrandenburg IC13 | Office | 1996 | 4,705 | 9,550 | 8,330 | -12.8 | 7.10 | 6.30 | 7,558 | ||
| Großbeerenstr. 231 | Potsdam | IC13 Office |
1995 | 2,925 | 3,850 | 3,700 | -3.9 | 6.90 | 6.30 | 3,824 | |
| Sub-total subsidiaries | 172,532 | 103,260 | 97,312 | -5.8 | 131,403 | ||||||
| Total Group | 231,156 | 150,530 | 142,839 | -5.1 | 174,351 | ||||||
| Associated companies | |||||||||||
| Carnotstr. 5 - 7 | Berlin | BBV14 Office | 1995 | 4,583 | 15,600 | 15,100 | -3.2 | 6.60 | 5.90 | 9,863 | |
| Nossener Brücke 8 - 12 | Dresden | BBV14 Office | 1997 | 4,134 | 7,660 | 7,520 | -1.8 | 7.40 | 6.80 | 8,852 | |
| Kröpeliner Str. 26-28 | Rostock | BBV14 Retail | 1995 | 7,479 | 61,400 | 61,300 | -0.2 | 6.30 | 5.90 | 19,307 | |
| Hartmannstr. 3 a - 7 | Chemnitz | IC12 Office |
1997 | 4,226 | 7,760 | 7,340 | -5.4 | 6.60 | 6.00 | 8,380 | |
| Henkestr. 5 | Erlangen | BBV02 Retail | 1984 | 6,350 | 1,770 | 1,650 | -6.8 | 7.20 | 6.50 | 2,770 | |
| Heinrich-Lorenz-Str. 35 | Chemnitz | IC15 Office |
1998 | 4,718 | 3,890 | 3,840 | -1.3 | 7.60 | 7.00 | 5,845 | |
| Am alten Bad 1 - 7, | |||||||||||
| Theaterstr. 34a | Chemnitz | IC15 Office |
1997 | 3,246 | 5,560 | 5,870 | 5.6 | 6.50 | 6.10 | 5,110 | |
| Königsbrücker Str. 121 a | Dresden | IC15 Other |
1997 | 4,242 | 11,900 | 12,400 | 4.2 | 6.90 | 6.30 | 11,554 | |
| Pascalkehre 15 / 15a | Quickborn | IC15 Office |
1997 | 9,129 | 13,200 | 13,000 | -1.5 | 7.10 | 6.30 | 10,570 | |
| Zum Rotering 5-7 | Ahaus | BBV10 Retail | 1989 | 3,884 | 2,320 | 2,170 | -6.5 | 7.40 | 6.70 | 2,054 | |
| Vor den Fuhren 2 | Celle | BBV10 Retail | 1992 | 21,076 | 12,500 | 12,100 | -3.2 | 7.25 | 6.50 | 10,611 | |
| Nordpassage 1 | Eisenhüttenstadt BBV10 Retail | 1993 | 20,482 | 53,500 | 49,800 | -6.9 | 7.00 | 6.50 | 40,101 | ||
| Altmärker Str. 5 | Genthin | BBV10 Retail | 1998 | 3,153 | 730 | 730 | 0.0 | 7.80 | 6.90 | 1,275 | |
| Robert-Bosch-Str. 11 | Langen | BBV10 Office | 1994 | 6,003 | 17,700 | 17,000 | -4.0 | 7.10 | 6.60 | 13,657 | |
| Hammer Str. 455-459 | Münster | BBV10 Retail | 1991 | 15,854 | 8,570 | 7,960 | -7.1 | 7.20 | 6.70 | 7,353 | |
| Hannoversche Str. 39 | Osnabrück | BBV10 Retail | 1989 | 7,502 | 3,050 | 3,870 | 26.9 | 7.30 | 6.80 | 4,207 | |
| Klingelbrink 10 | Rheda | ||||||||||
| Wiedenbrück | BBV10 Retail | 1991 | 2,455 | 2,110 | 2,510 | 19.0 | 7.20 | 6.40 | 2,235 | ||
| Lerchenbergstr.112 / 113, | |||||||||||
| Annendorfer Str. 15 / 16 | Wittenberg | BBV10 Retail | 1994 | 96,822 | 22,300 | 21,100 | -5.4 | 6.90 | 6.40 | 14,710 | |
| Oberfrohnaer Str. 62 - 74 Chemnitz | IC10 Retail |
1997 | 11,203 | 9,180 | 8,940 | -2.6 | 6.90 | 6.10 | 9,981 | ||
| Leimbacher Straße | Bad Salzungen | BBV09 Retail | 1992 | 22,979 | 13,500 | 12,800 | -5.2 | 7.50 | 6.80 | 10,985 | |
| Mühlhäuser Str. 100 | Eisenach | BBV09 Retail | 1994 | 44,175 | 48,500 | 46,100 | -4.9 | 6.80 | 6.40 | 37,400 | |
| Putzbrunner Str. 71 / 73, | München | ||||||||||
| Fritz-Erler-Str. 3 | Neuperlach | BBV09 Office | 1986 | 10,030 | 38,500 | 36,000 | -6.5 | 6.70 | 6.10 | 19,018 | |
| Weißenfelser Str. 70 | Naumburg | BBV09 Retail | 1993 | 20,517 | 21,000 | 20,100 | -4.3 | 7.25 | 6.75 | 15,180 | |
| An der Backstania 1 | Weilburg | BBV09 Retail | 1994 | 17,211 | 9,750 | 9,800 | 0.5 | 7.30 | 6.70 | 8,145 | |
| Total associated companies | 351,453 | 391,950 | 379,000 | -3.3 | 279,163 | ||||||
| Grand Total | 582,609 | 542,480 | 521,839 | -3.8 | 453,514 |
| AktG | Abbreviation for "Aktiengesetz" (German public limited Companies Act). This act regulates the rights and obligations of corporations limited by shares (German "Aktiengesellschaften" or "AGs"), limited partnerships by shares ("Kommanditgesellschaften auf Aktien" or "KGaAs") and their shareholders. |
|---|---|
| At Equity | Used in consolidation. "At equity" refers to a method of valuing equity interests in companies over which the group can exercise a significant influence (associated companies). When these companies are valued at equity, the associated company's equity is only carried proportionately. |
| Asset M anagement |
Investment-oriented real estate asset management is the strategic, result-oriented investment management/ value creation management of a real estate portfolio on individual property level in the interest of the property owner. This includes activities such as rentals, maintenance and also the disposition of properties. |
| Associated Company |
According to the provisions of the "Handelsgesetzbuch" ("HGB" – German Commercial Code), an associated company is significantly controlled by a group company which holds an interest in the associate. Associated companies are consolidated at equity within the meaning of Section 312 of HGB. |
| Capitalization rate | As is the case for the discount rate, the capitalization rate is also used to calculate the present value of future cash flows. In contrast to discounting, capitalization refers to the compounding of a future recurrent payment. |
| Cash Flow | Cash flow is a key performance indicator (KPI) used to describe profits when analyzing a company. It provides information on the company's financial strength. To derive the cash flow, the net profit is adjusted for non cash relevant earnings positions. |
| Closed-end real estate funds |
A form of investing indirectly in real estate, which is defined by a fixed principal sum. After equity is completely placed, the fund is closed. Trading of participations in these real estate partnerships is possible via a secondary market to a limited extent. |
| Derivate | This term stems from the Latin word "derivare" (to derive). A derivative refers to a financial instrument which is based on an underlying (e.g., equities, bonds, interest, commodities). The derivative comprises the right to buy or sell the underlying at a fixed price at a specific time in the future. The price of the derivative depends on the performance of the price of the underlying. |
| Designated Sponsor | This term is used on the capital markets to refer to a financial services provider (mostly a bank or a securities trading bank). The function of a designated sponsor is to improve trading and pricing of security papers (such as shares) by providing additional liquidity. For this purpose, a designated sponsor offers bid and ask prices (both on the supply and the demand side) in electronic trading. |
| Discount rate | Discounting is a method in compound interest rate calculation. By discounting future cash flows through application of the discount rate and subsequent aggregation of the results their present value is determined. |
| EBIT | Earnings before interest and taxes. EBIT shows a company's operating results and is generally used to assess its earnings. |
| EPRA | European Public Real Estate Association; aims at promoting transparency among publicly listed real estate companies by establishment of consistent standards |
| EPRA result |
Consolidated income determined according to recommendations of EPR A; adjusts the consolidated income according to IFRS for one-off effects (such as sales) as well as valuation changes of properties and financial derivatives; indicator for operative result of portfolio holders |
| EPRA -NAV |
Net asset value determined according to recommendations of EPR A; adjusts the NAV shown on the balance sheet for valuation changes of financial derivatives as well as deferred taxes; indicator for the real estate related enterprise value of portfolio holders |
| Exit Tax | This relates to a tax benefit for profits from the sale of land and buildings to a REIT. The arrangement has a limited term through to December 31, 2009. If a company sells an applicable property to a REIT within this period, tax is only due on 50% of any difference between the carrying amount of the property and the selling price. |
| This accounting term refers to the value of an asset (such as a property) at its current present value, which is based on the future discounted cash flows. |
|---|
| Short for "funds from operations". FFO indicates a real estate company's earnings strength. The figure is calculated by adjusting the net income for the period by not liquidity-related positions, e.g. the valuation result (see consolidated cash flow statement). |
| Hedges are used to shelter certain items (e.g. interest or currencies) against fluctuations in their market value. These transactions aim to fix an economic price (e.g. an interest rate) at a fixed date in the future. |
| Abbreviation for "Handelsgesetzbuch" (German Commercial Code). This act sets out core principles of German commercial law in a total of five books. |
| Abbreviation for "International Financial Reporting Standards". This term refers to international accounting standards which comprise the standards issued by the International Accounting Standards Board (IASB), International Accounting Standards (IAS) and the interpretations of the International Financial Reporting Interpretations Committee (IFRIC). These regulations aim to ensure an internationally comparable, adequate presentation of a company's actual financial position and results of operations. |
| Swaps are derivatives which agree the swap of definite and fixed cash flows at a certain date in the future. In the case of an interest rate swap, the contracting parties undertake to pay a fixed or a variable interest rate for a specific underlying to the respective other contracting party. This mostly aims to hedge against the risk of changes in interest rates or to generate speculative profits. |
| Also known as IR. Describes the relationship, in particular the communication, with potential and current investors in a listed company. These activities aim to provide investors with up-to-date, comprehensive information. |
| Short for "net asset value". This KPI describes the actual enterprise value. Under IFRS regulations, the net asset value mostly corresponds to the balance sheet equity. |
| Potential rent describes the annual rent for an existing property which could currently be received. This is the total of all of the contractual annual rent and any vacancies at market rents adequate for the respective location and property. |
| Listing segment of Deutsche Börse AG, organized under civil law and subject to statutory regulation. Companies listed in this segment have to fulfill particularly high transparency requirements. |
| Short for a "real estate investment trust". The business purpose of a REIT is conducting activities relating to real estate. Under German law this includes, in particular, acquiring, managing and selling commercially used properties. In return for fulfilling the statutory requirements, no corporation or trade tax is paid at the REIT-company level. Instead, the shareholders are taxed to the extent that net income under the commercial code is disbursed as a dividend. In Germany, the corresponding tax rate has totaled 25% since the definitive withholding tax ("Abgeltungssteuer") was introduced. |
| Short for upstream-REIT. Refers to the exchange of participations in closed-end real estate funds for shares of a listed REIT. Although comparable concepts are wide-spread in the USA, Fair Value REIT-AG is the only company to date in Germany to use this business model. |
| Abbreviation for "Wertpapierhandelsgesetz" (German Securities Trading Act). The WpHG regulates trading in securities such as shares or bonds in Germany. The "Bundesanstalt für Finanzdienstleistungsaufsicht" (BaFin – German Financial Services Supervisory Authority) controls the upholding of this act. |
| Stands for exchange electronic trading. This refers to Deutsche Börse AG's computer-assisted trading system |
Fair Value REIT-AG Leopoldstraße 244 80807 Munich Germany
Tel. + 49 (0) 89 / 92 92 8 15 - 01 Fax + 49 (0) 89 / 92 92 8 15 - 15
[email protected] www.fvreit.de
Frank Schaich
Prof. Dr. Heinz Rehkugler, Chairman Christian Hopfer, Vice Chairman Dr. Oscar Kienzle
Registered office: Munich Commercial register at Munich Local Court No. HRB 168 882
Date of publication: May 11, 2010
cometis AG Unter den Eichen 7 65195 Wiesbaden Germany www.cometis.de
Fair Value REIT-AG Cover and pages 4 und 16: Branch of Sparkasse Südholstein, Wassermühlenstraße 5, Uetersen Pages 50, 52 and 63: Branch of Sparkasse Südholstein, Barmstedt, Königstraße 19 - 21
This interim report contains future-oriented statements, which are subject to risks and uncertainties. They are estimations of the management board of Fair Value REIT-AG and reflect its current views with regard to future events. Such expressions concerning forecasts can be recognised by terms such as "expect", "estimate", "intend ","can ", "will" and similar expressions with reference to the company. Factors, that can cause deviations or effects can be (without claim on completeness): the development of the property market, competition influences, alterations of prices, the situation on the financial markets or developments related to general economic conditions. Should these or other risks and uncertainty factors take effect or should the assumptions underlying the forecasts prove to be incorrect, the results of Fair Value REIT-AG could vary from those, which are expressed or implied in these forecasts. The Company assumes no obligation to update such forecasts.
Fair Value REIT-AG Leopoldstraße 244 80807 Munich Germany
Tel. +49 (0) 89 / 92 92 8 15 - 01 Fax +49 (0) 89 / 92 92 8 15 - 15
[email protected] www.fvreit.de
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