Quarterly Report • Nov 19, 2008
Quarterly Report
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Audited/Unaudited
All numbers presented in this report are unaudited with the exception of those dated 31 Dec. 2007
| 4 KEY FIGURES |
|---|
| ------------------ |
Letter from the Board
| GROUP FINANCIALS | |||
|---|---|---|---|
| (in EUR m) | 1 Jan. - 30 Sep. 2008 | 1 Jan. - 30 Sep. 2007 | Change |
| Revenues | 75.8 | 60.8 | 24.7% |
| EBITDA | 34.5 | 82.6 | -58.2% |
| EBT | -5.6 | 50.8 | -111.0% |
| Consolidated result for the period | -5.7 | 55.5 | -110.2% |
| FFO | 29.9 | 22.1 | 82.6% |
| NAV/share | 14.81 | 15.55 | -4.7% |
| NNNAV/share | 14.81 | 15.55 | -4.7% |
| 30 Sep. 2008 | 31 Dec. 2007 | Change | |
| Equity | |||
| 829.5 | 870.9 | -4.7% | |
| Liabilities | 1,141.4 | 964.6 | 18.3% |
| Total assets | 1,970.9 | 1,835.5 | 7.4% |
| Equity ratio | 42.1% | 47.4% | -5.3pp |
| SHARE | |
|---|---|
| ISIN | DE000A0LD2U1 |
| Symbol | AOX |
| Prime Sector | Financial Services |
| Industry Group | Real Estate |
| Market Segment | Prime Standard, Frankfurt |
| Indices | S-DAX, EPRA, German REIT Index, S&P/Citigroup Global REIT Index |
| Share Capital (notional) | EUR 56,000,000 |
| Market Capitalization (September 30)1 | EUR 490,000,000 |
| Issued Shares | 56,000,000 |
| Treasury Shares (September 30) | 1,375,755 |
| Shares outstanding (September 30) | 54,624,245 |
| Free Float | 39 % |
1 Market Capitalization calculated with all 56 million shares as basis.
Letter from the Board
Dear Shareholders and Business Partners, Ladies and Gentlemen,
For the first time since alstria is public we do not feel like commenting in depth on the result of the past quarter. This is not to say that those results were poor. As a matter of fact alstria has scored some of its biggest operational successes in Q3 08. With the new leases signed we have achieved our target of 20,000 sqm of new leases for this year (out of 60,000 sqm vacancy at the beginning of the year). This was achieved following the lease up of 13,000 sqm in Hamburg to the local transportation agency, a few months only after the building was vacated by the previous tenant.
Like each and every one of you, we have lived in the last couple of months through times where we had to think about the unthinkable and go through analyses that all (previous) risk management systems would qualify as "unlikely". We had to question whether or not it was safe to keep alstria's liquidity at the bank. We had to wonder whether or not our insurance counterparty was still acceptable.
More than ever we felt that our attention should be focused on reviewing our business case, our assets and our liabilities, as well as our short and long term perspectives. We felt that yesterday's certainties needed to be revalued. That one should take a different view on future developments, and also that long term plans needed to be reassessed. Most importantly, we feel that it is time to be in movement. Standing still and hoping for better days is not an option.
In the last three years we have resisted to the voices suggesting that our portfolio should have shorter-term leases, more vacancy and should be financed with more debt. We have resisted the voices that were critical on the nontrading strategy, and suggesting to us to play more the yield compression game. With hindsight this was the right think to do. Long term predictable cash-flows supported by high quality tenants (over 50 percent of public, or agency tenants) are our strengths to overcome the difficult times ahead. Tenant relationship and high real estate added value to our customers is our driver.
Our operating strategy has always been to help our tenants to optimize the cost of running their real estate. We believe that there is no contradiction in reducing the overall real estate costs of our costumers and increasing the returns of alstria. The immediate feedback from operations is that our customers are more and more interested in our concept, and willing to work it out.
We will stay focused on our asset management strategy. We want to deliver returns by working on our real estate the good old real estate way. It is not all about covenants and financing, hedges and interest rates. It is a lot about real estate. We have eighty-nine REAL ESTATE assets to be taken care off, each of them presenting opportunities and challenges. alstria has been set up to be close to them.
Key Figures I Introduction I alstria-Share I Management Report I Consolidated Financial Statements I FFO I Notes I Appendix I
Letter from the Board
The market is worried about our LTV covenant. alstria's main syndicated loan LTV is at 57.5 percent whereas the loan covenant is at 60 percent. Although alstria has one of the most conservative balance sheets of the German property companies, we did not stand still. We have been active in the last 6 months in order to monitor and manage the LTV in the best interest of the company. We have already taken into account in our books the yield movement so far, and have sold assets at premium to the latest valuations. This gives us a lot of confidence that the room still available will be sufficient to weather potential downward value shift in the last quarter of 2008.
Change has come to balance sheets of real estate companies, too. Change will bring challenges first and a lot of opportunities next. The change the industry is facing will require real estate to deleverage at all levels. 90 percent plus leverage will not be available, 85 percent will have to go down to 75 percent and listed real estate companies will have to be part of the process. Maybe not today, or tomorrow, but this will come. There are several ways of deleveraging real estate companies. As we did in the past, we want to act in a structured manner, size the company's options. We want to take into consideration all the shareholder interest before making any decision.
Letter from the Board
We remain on track as far as our guidance is concerned, as we still expect revenues of EUR 101 million and FFO of EUR 40 million for the full year. We have reviewed our payout policy and do not feel that in light of the latest change in the environment, it would be advisable, although it was originally planned, to increase the dividend from the level of last year. We would therefore maintain, until further notice, our dividend payment recommendation to the next AGM at the level paid for FY07. The additional cash retained in the company will allow us to increase our operating flexibility, allowing us to better address unexpected changes in the environment.
We are also convinced that those companies that do their homework now will be faced with ample opportunity to shift back into growth mode at a later stage. Although we are looking to act quickly, we are not willing to rush. We are doing the homework of alstria. Conscientiously, we are sizing all the new alternatives and options for the future development of the company. Now is the time to get prepared.
Hamburg, November 19, 2008
With kind regards
Olivier Elamine Chief Executive Officer
Alexander Dexne Chief Financial Officer
alstria's share price could not elude the downturn development of the stock markets. Being rather volatile, alstria's share price on September 30, 2008, closed at EUR 8.75, below the level it was traded at the end of 2007 (EUR 10.25 closing price).
For the reporting period this reflects a decrease in alstria's share price of -14.6 percent. The development of the EPRA/EUROPE index was -35 percent and the EPRA Germany Index -44 percent.
Though improving in the first quarter of the year, our share price shows a downward swing in the second and third quarter of the term. alstria's shares are trading at a significant discount to their Triple Net Asset Value of EUR 14.81 (December 31, 2007: EUR 15.55).
At balance sheet date alstria owned 1,375,755 treasury shares due to the buy back program started in November last year. For the time being, it is intended to hold the acquired shares as treasury stock and eventually use them according to the authorization of the shareholders meeting. Potential uses may in-clude using the shares in future acquisition projects, or resell them in the market.
The General Meeting of alstria on June 5, 2008 resolved to distribute a dividend of EUR 28,400k (EUR 0.52 per outstanding share). The dividend was distributed on June 6, 2008.
Portfolio Overview
Earnings Position > Financial and Asset Position
Risk and Opportunity Report
Recent Development and Outlook
In the first three months of 2008 alstria closed several transactions announced in Q4 2007 and acquired a vacant office property located in Hamburg in the second quarter. Within the third quarter alstria started to dispose selected properties. So far sales contracts for three properties and a plot of land have been notarized. All transactions achieved higher sales prices than the respective fair values.
The portfolio consists of 92 properties with approx. 953,000 sqm across Germany. The total vacancy rate of the portfolio is around 7.7 percent which corresponds to approx. 73,000 sqm. The increased vacancy rate is mainly driven by the execution of an early termination agreement with BKK Mobil Oil in Hamburg (approximately 10,500 sqm were vacated one year in advance and alstria received EUR 1,000 k in compensation) and the acquisition of a 3,100 sqm vacant office building in Hamburg. This vacancy was partly compensated by new lease-ups of 7,000 sqm.
In the beginning of October alstria announced the letting of approx. 13,000 sqm to Hamburger Hochbahn AG on a 20 year lease basis. For more detail on the current vacancy rate and lease up please refer to the section "Recent Development and Outlook" of this report.
The Weighted Average Unexpired Lease Length of the portfolio is at 10 years. For a detailed description of the alstria portfolio please refer to our annual report 2007.
1 Based on net lettable area
2 Based on passing rent
Portfolio Overview
Earnings Position
Financial and Asset Position > Risk and Opportunity Report
Recent Development and Outlook
Also in the first nine months of 2008 alstria was able to further increase revenues and improve operating efficiency. Revenues were EUR 75,798 k (EUR 60,767 k previous year) with real estate operating expenses of around 8.7 percent of revenues at EUR 6,604 k. Net rental income increased by EUR 11,951 k up to EUR 69,203 k compared to the first three quarters of 2007.
Compared to the year end figures 2007 we undertook a negative adjustment on the fair value of investment property for the first nine months of EUR -29,816 k. This amount contains EUR -2,321 k negative adjustment of acquisition expenses relating to the first time inclusion of the Berlin, Darwinstrasse and the Hamburg, Max-Brauer-Allee assets as well as the Blue portfolio.
Administrative and personnel expenses are at
EUR 9,242 k for the nine months (Q1-Q3 2007 EUR 9,921 k). Total recurring operating expenses are at 12.2 percent of total revenues for the first three quarters 2008 (Q1-Q3 2007 16.3 percent). This improvement shows that the measures to enhance efficiency gains of overhead expenses have been successfully implemented.
Other operating income includes the reversal of accruals (EUR 1,116 k and a one time separation payment of around EUR 1,000 k relating to the early termination of a lease agreement (BKK Mobil Oil; see page 10)).
Significantly influenced by the valuation result, alstria closed the first nine months of 2008 with a net operating result of EUR 32,588 k compared to EUR 68,383 k for the previous year's reference period.
Hamburg, Kanalstraße 44
Portfolio Overview
Earnings Position
Financial and Asset Position > Risk and Opportunity Report
Recent Development and Outlook
| FUNDS FROM OPERATIONS | |||
|---|---|---|---|
| 1 Jan. - | 1 Jan. - | Change | |
| (in EUR k) | 30 Sep. 2008 | 30 Sep. 2007 | |
| Pre-tax income (EBT) | -5,578 | 50,831 | -56,410 |
| less financial result | -39,381 | -25,789 | -13,592 |
| plus non-cash expenses | 679 | 230 | 449 |
| plus other adjustments | 0 | 5,732 | -5,732 |
| EBITDA | 34,481 | 82,582 | -48,101 |
| less net loss/gain from fair value | |||
| adjustments on investment property | -29,816 | 25,419 | -55,235 |
| less net loss/gain from fair value | |||
| adjustments on financial derivatives | 1 -4,946 |
9,289 | -14,235 |
| plus financial result | -39,381 | -25,789 | -13,592 |
| Funds from operations (FFO) | 29,862 | 22,085 | 7,777 |
FFO is not a measure of operating performance or liquidity under generally accepted accounting principles, in particular IFRS, and should not be considered as an alternative to the Company's income or cash-flow measures as determined in accordance with IFRS. Furthermore, no standard definition exists for FFO. Thus, the FFO or measures with similar names as presented by other companies may not necessarily be comparable to the Company's FFO. EBITDA is not a measure of operating performance or liquidity under generally accepted accounting principles, in particular IFRS, and should not be considered as an alternative to the Company's income or cash-flow measures as determined in accordance with IFRS. Furthermore, no standard definition exists for EBITDA. Thus, EBITDA or measures with similar names as presented by other companies may not necessarily be comparable to the Company's EBITDA.
1 Fair value loss (including ineffective SWAP portion (EUR 3,832 k)) disregarding realised fair value gains of EUR 2,328 k. > Portfolio Overview
Earnings Position
Financial and Asset Position > Risk and Opportunity Report
Recent Development and Outlook
Funds from operations (FFO) were EUR 29,862 k for the reporting period. The strong increase as compared to Q1-Q3 2007 resulted mainly from the improvement of net rental income to EUR 69,203 k linked to the further acquisitions closed during the reporting period, which is reflected by an increase of EUR 11,951 k compared to the first three quarters 2007. As a result, FFO per share were at EUR 0.53 in the first nine months of 2008 (Q1-Q3 2007: EUR 0.39).
EBITDA were EUR 34,481 k in the first three quarters 2008 as compared to EUR 82,582 k last year. The main reason for this significant difference are fair value adjustments that positively affected last years results and impact the reported result negatively: Namely a fair value gain of EUR 9,289 k on derivatives and a fair value gain of EUR 25,419 k on investment properties positively influenced last years EBITDA. In contrast, the fair value adjustments in the reporting period had a negative impact of EUR -34,762 k (EUR -29,816 k on investment properties and EUR -4,946 k on derivatives). This year's operating performance was largely driven by top line growth.
Berlin, Marburger Strasse 10
Portfolio Overview
Earnings Position
Financial and Asset Position > Risk and Opportunity Report
Recent Development and Outlook
In order to limit the P&L impact of the volatility of the interest rate markets, we have changed the accounting policy of our derivatives and are now applying hedge accounting on all the hedges that qualify.
This allows the full loss or gain on the
qualifying derivatives to be recognized through the cash flow hedge reserve (for more details please refer to the Notes to the Condensed Interim Consolidated Financial Statements as of March 31, June 30 and September 30, 2008). An overview of the composition of the fair values is given in the following table:
| HEDGING INSTRUMENTS | ||||
|---|---|---|---|---|
| (in EUR k) | Notional | 30 Sep. 08 | 31 Dec. 07 | Change |
| Swap - 3.6165% |
625,000 | 16,147 | 18,939 | -2,792 |
| Swap - 3.1925% |
80,880 | 3,175 | 3,761 | -586 |
| Swap - 3.9087% |
148,785 | 2,585 | 0 | 2,585 |
| Swap - 4.1160% |
100,000 | 1,649 | 0 | 1,649 |
| Cap - 4.9000%* |
75,000 | 902 | 1,126 | -224 |
| Cap - 4.0000%** |
80,880 | 0 | 1,811 | -1,811 |
| Cap - 3.8000%** |
41,721 | 0 | 961 | -661 |
| Cap - 3.8000%** |
26,185 | 0 | 604 | -604 |
| Swap - 4.6000% |
95,000 | -217 | 0 | -217 |
| Swap - 4.9000% |
75,000 | -1,326 | 0 | -1,326 |
| Total | 1,199,665 | 22,915 | 27,202 | -4,287 |
The following table shows the changes of alstria's financial instruments by category:
| 27,202 |
|---|
| -73 |
| -3,832 |
| 1,215 |
| 731 |
| 4,079 |
| -6,407 |
| 22,915 |
alstria-Share I Introduction I I Management Report I Consolidated Financial Statements I FFO I Notes I Appendix I
Portfolio Overview
Earnings Position
Financial and Asset Position > Risk and Opportunity Report
Recent Development and Outlook
In the first nine months of 2008 - EUR 73 k represents the effective change in value of the swaps, which is recorded in equity as a "cash flow hedging reserve" account.
While the fair value changes of derivatives not categorized as cash flow hedge (CAPs) are shown in the income statement under "Net gain/loss from fair value adjustments on financial derivatives", the ineffective impact of changes in fair value of the cash flow hedges and the interest payments and accruals on swaps and caps are stated in the financial result.
Our current average hedge rate is 3.8 percent with an average maturity of 3.5 years.
FINANCIAL RESULT BREAKDOWN
alstria has a EUR 1,139 million syndicated loan facility in place that was arranged by J.P. Morgan, Natixis and HSH Nordbank. The utilization of this facility is presently at EUR 1,102.9 million (EUR 1,098.9 million taken into account the deduction according to IFRS effective interest rate method). The facility is used by alstria to partially finance the current investment property base. The interest rate on this syndicated loan is based on the three months EURIBOR floating rate plus a spread dependent on the average lease length of the property portfolio and the loan to value ratio. Following the recent acquisition, the current spread paid by alstria is 65 basis points above three month EURIBOR.
| (in EUR k) | 01 Jan. - 30 Sep. 2008 | 01 Jan. - 30 Sep. 2007 |
|---|---|---|
| Syndicated Loan - Interest and similar costs | -44,177 | -30,094 |
| Shareholder - Interests and similare costs | 0 | -1,314 |
| Interest income | 1 8,158 |
4,750 |
| Ineffective portion SWAP | -3,832 | 0 |
| Other | 470 | -183 |
| Total | -39,381 | -26,841 |
The resulting loss before tax is at EUR -5,578 k for the first three quarters of 2008 (Q1-Q3 2007 profit before tax of EUR 50,831 k). Consolidated net loss is at EUR -5,653 k (Q1-Q3 2007 net profit of EUR 55,510 k). The reason for the decrease of the consolidated net result compared to same period in 2007 resulted from a net loss from fair value adjustments in investment property of EUR -29,816 k compared to a net gain in the first nine months of 2007 (EUR 25,419 k) and a significant decrease of the net gain on financial derivatives (EUR 1,215 k in Q1-Q3 2008 against EUR 9,289 k Q1-Q3 2007). Altogether these valuation effects accounts for EUR -63,309 k difference.
1 EUR 7,241k of the income are interest refunds for the derivatives; in Q1-Q3 2007 -EUR 32 k interest expenses for derivatives are shown under syndicated loan costs
Portfolio Overview
Earnings Position
Financial and Asset Position > Risk and Opportunity Report
Recent Development and Outlook
| CONSOLIDATED INCOME STATEMENT | ||
|---|---|---|
| From January 1 to September 30, 2008 | 1 Jan. - 30 Sep. 2008 | 1 Jan. - 30 Sep. 2007 |
| (in EUR k) | ||
| Net rental income | 69,203 | 57,252 |
| Operational Expenses | -9,242 | -9,921 |
| Net other income | 2,443 | -4,367 |
| Net gain/loss from fair value adjustments | ||
| on investment properties | -29,816 | 25,419 |
| Net operating profit before | ||
| finance costs | 32,588 | 68,383 |
| Net gain/loss from fair value adjustments | ||
| on financial derivatives | 1,215 | 9,289 |
| Financial result | -39,381 | -26,841 |
| Earnings before tax (EBT) | -5,578 | 50,831 |
| Income tax income/expense | -75 | 4,679 |
| Consolidated Loss/Profit | ||
| for the Period | -5,653 | 55,510 |
| EPS | -0.10 | 0.99 |
| EPS Diluted | -0.10 | 0.99 |
Portfolio Overview
Earnings Position
Financial and Asset Position
Risk and Opportunity Report > Recent Development and Outlook
Cash flow from operating activities for the nine months period was at EUR 28,997 k. The strong improvement of alstria's operating performance reflected in the increase of the FFO (EUR 7,777 k) as compared to the previous year's period was overcompensated by changes in working capital.
Cash flows from investing activities were impacted by the payments for the Bilfinger Berger portfolio (also referred to as "BLUE" portfolio; EUR 105,770 k), the HUK Coburg portfolio (EUR 50,262 k), as well as the purchase price payments for the acquisition of the properties in Berlin, Darwinstrasse (EUR 52,350 k) and Hamburg, Max-Brauer-Allee (EUR 4,310 k).
In the course of the sale of the investment property Osterbekstrasse 96, Hamburg, Cash inflows of EUR 11,000 k were generated in the third quarter.
As the economic transfer of the property happened after the end of the reporting period the EUR 11,000 k are booked on the balance sheet as prepayments under other current liabilities.
Cash flow from financing activities reflects the further EUR 171,453 k drawdown of the loan for the payments of the abovementioned investment properties and the payment of dividend (EUR 28,400 k).
As a result, alstria closes the first nine months of 2008 with a cash position of EUR 54,584 k.
The total investment property value is at EUR 1,859,2971 k as compared to EUR 1,693,718 k at the beginning of the year:
| CHANGE IN INVESTMENT PROPERTIES | |
|---|---|
| Investment properties | |
| as at 31 Dec. 2007 | 1,693.72 |
| Acquisitions | 215.01 |
| Reclassification | -19.61 |
| Revaluations | -29.82 |
| Investment properties | |
| as at 30 Sep. 2008 | 1,859.30 |
One building (Baeckerbreitergang, Hamburg; EUR 3.1 million) is no longer stated as investment property but shown under development property. The equity and liability side of the balance sheet reflects a total equity position of EUR 829,527 k with an equity ratio of 42.1 percent. Three investment properties (Duesternstrasse, Hamburg, Osterbekstrasse, Hamburg and Nikolaistrasse, Leipzig; EUR 16,5 milion) have been reclassified to investments held for sale in 2008.
The REIT equity ratio which is defined as total equity divided by investment properties is at 44.2 percent. According to the G-REIT Act the minimum requirement for compliance is a G-REIT equity ratio calculated at year end of 45 percent. The G-REIT status is unaffected as long as the G-REIT ratio at the end of the business year is not below 45 percent for three consecutive business years.
1 Excluding EUR 16.5 m investment properties held for sale
Portfolio Overview
Earnings Position
Financial and Asset Position
Risk and Opportunity Report > Recent Development and Outlook
The Triple Net Asset Value (NNNAV) dropped from EUR 15.55 per share to EUR 14.81 per share. Dividend payments (EUR -28,400 k), further acquisition of treasury shares (EUR -7,868 k) and the consolidated loss for the period (EUR -5,653 k) were responsible for the reduction of alstria's equity. In total this lead to a decrease of equity from EUR 870,876 k to EUR 829,527 k .
The following table shows the key metrics of the NNNAV and NNNAV per share calculation according to EPRA :
| NNNAV PER SHARE | ||
|---|---|---|
| (in EUR k) | 30 Sep. 08 | 31 Dec. 07 |
| NAV | 829,527 | 870,876 |
| NAV/share | 14.81 | 15.55 |
| Effect of exercise of options, convertibles | ||
| and other equity interests | - | - |
| Diluted NAV, after the exercise of options, | ||
| convertibles and other equity interests | 829,527 | 870,876 |
| Revaluation of investment properties | ||
| (if IAS 40 cost option is used) | - | - |
| Development properties held for investment | - | - |
| Revaluation of other non current investment | - | - |
| Fair value of tenant leases held as finance leases | - | - |
| Fair value of trading properties | - | - |
| Fair value of Financial Instruments | -22,915 | -27,202 |
| Diluted EPRA NAV | 806,612 | 843,674 |
| Diluted EPRA NAV/share | 14.40 | 15.07 |
| Fair Value of Financial Instruments | 22,915 | 27,202 |
| Fair Value of Debt | - | - |
| Deffered Tax | - | - |
| Diluted EPRA NNNAV | 829,527 | 870,876 |
| NNNAV/share | 14.81 | 15.55 |
1 See also the statement of shareholders' equity in the consolidated financial statements section, page 26.
2 EPRA: European Public Real Estate Association, Best Practises Committee, Schiphol Airport, The Netherlands. > Portfolio Overview > Earnings Position
Financial and Asset Position
Risk and Opportunity Report > Recent Development and Outlook
The long term loan position is at EUR 1,098,889 k up from EUR 927,400 k. The main changes in the long term loan position over the last nine months resulted from the refinancing of the new acquisitions.
Current liabilities are at EUR 40,912 k which is
mainly related to accrued interest that will become due under the syndicated loan agreement within one year, trade payables and other accruals. EUR 11,000 k of prepayments have been accrued under other current liabilities in relation to the disposal of Osterbekstrasse 96, Hamburg.
Erfurt, Am Roten Berg 5
Portfolio Overview
Earnings Position
Financial and Asset Position > Risk and Opportunity Report
Recent Development and Outlook
The risks and opportunities alstria is exposed to are described in detail in the annual report 2007. The risk reporting structure within the alstria group was updated for the preparation of this interim report. There have been no significant changes in the alstria group's risks and opportunities situation compared with the risks and opportunities outlined in the management report of the 2007 annual report. It is therefore assumed that the reported risks and opportunities will remain substantially unchanged in the last quarter of 2008.
On the basis of all known particulars and circumstances, there moreover exist no risks that can endanger the alstria group's survival for the foreseeable future.
Within the third quarter alstria started to dispose selected properties. So far sales contracts for three properties and a plot of land have been closed.
Under the sales agreement dated June 27, 2008, alstria concluded the disposal of a plot of land of Vahrenwalder Strasse, Hanover (split off without the building). The transfer of possession, benefits and burdens is expected to take place in the fourth quarter.
Under the sales agreement dated July 31, 2008, alstria concluded the disposal of the property Osterbekstrasse 96, Hamburg. The economic transfer and final closing of the transaction took place on October 1, 2008.
Under the sales agreement dated August 1, 2008, alstria concluded the disposal of the property Duesternstrasse 10, Hamburg. The economic transfer and final closing of the transaction took place on October 1, 2008.
Under the sales agreement dated September 8, 2008, alstria concluded the disposal of the property Nikolaistrasse 16, Leipzig. The transfer of possession, benefits and burdens is expected to take place in the fourth quarter.
All transactions achieved higher sales prices than their respective fair values.
Portfolio Overview
Earnings Position
Financial and Asset Position > Risk and Opportunity Report
Recent Development and Outlook
| OVERVIEW DISPOSAL | Fair Values | Sales Price | Surplus | Change |
|---|---|---|---|---|
| (in EUR k) | ||||
| Hamburg, Düsternstrasse 10 | 4,000 | 4,950 | 950 | 23.8 % |
| Hamburg, Osterbekstrasse 96 | 10,575 | 11,000 | 425 | 4.0 % |
| Hanover, Vahrenwalder Strasse 133 | 0 | 1,250 | 1,250 | na |
| Leipzig, Nikolaistrasse 16 | 1,925 | 2,000 | 75 | 3.9% |
| Total | 16,500 | 19,200 | 2,700 | 16.4 % |
In the beginning of October alstria announced the letting of approx. 13,000 sqm to Hamburger Hochbahn AG on a 20 year lease basis. The space at Steinstrasse 5-7, which was vacated earlier this year by BKK Mobil Oil, will be extensively reconstructed by alstria before it will be handed over to the new tenant around April 2010. This building, which is located near the main train station in an area highly demanded by tenants, is now fully let, just a few months after being vacated. With this new lease signed, the vacancy rate of alstria's portfolio goes down from 7.7 percent to 6.5 percent.
The total area leased by alstria during the year 2008 amounts to more than 20,000 sqm, which represents one third of the existing vacancy at the beginning of 2008.
It is our intention to restructure the current credit facility well before its expiry in November 2011 with the objective to increase capacity and flexibility and also to have a more structured maturity of the new facility.
In order to open the field for more capital market orientated debt financing we would also need to move from a secured to an unsecured debt structure.
The first steps of the new financing strategy are implemented. We agreed on a new EUR 95 millions, 7 years, non recourse loan on the properties Gaensemarkt 36 and Drehbahn 36, Hamburg, with Deutsche Hypothekenbank. The transaction of this finance restructuring took place in October 2008. Under the new agreement the leverage on these assets has increased from currently EUR 78.5 m to EUR 95 m. accordingly; the transaction provided us with EUR 16.5 m of additional cash.
Following the refinancing of two assets in Hamburg and the closing of two transactions, alstria has undertaken to repay part of its borrowing under its main syndicated loan facility. Following this actions alstria has reduced its outstanding debt by 1 percent.
Portfolio Overview
Earnings Position
Financial and Asset Position > Risk and Opportunity Report
Recent Development and Outlook
| Sources | EUR m | Uses | EUR m |
|---|---|---|---|
| New loan | 95 | Syndicated loan | 107.5 |
| Cash from disposal | 9 | Transaction costs | 0.5 |
| Additional cash | 4 | ||
| Total | 108 | Total | 108 |
In view of the positive operational development in the first nine month alstria is able to look at the remaining quarter of the 2008 financial year with confidence. Our operational efficiency gains correspond with the employment of skilled experts in order to improve processes, and with the insourcing of the financial accounting activities, which leads to a decrease of administration costs.
The higher than expected growth of the
German CPI has a positive income effect and triggered the CPI adjustment clauses on around 35 percent of our leases allowing alstria to additionally generate approximately EUR 1.5 million of annualized revenues from the second quarter of 2008 on. Based on the fact that the closing of the recent acquisitions are in line with our adjusted schedule, the management of alstria reinforces its revenues expectations of around EUR 101 m. The corresponded FFO expectation remains at EUR 40 m for the year 2008.
The management report contains statements relating to anticipated future developments. These statements are based on current assessments and are by their very nature exposed to risks and uncertainty. Actual developments may differ from those predicted in these statements.
Consolidated Income Statement > Consolidated Statement of Changes in Equity
Consolidated Cash Flow Statement
| Assets | Notes | 30 Sep. 2008 | 31 Dec. 2007 |
|---|---|---|---|
| (in EUR k) | |||
| Assets | |||
| Investment property | 6.1 | 1,859,297 | 1,693,718 |
| Development property | 6.2 | 3,109 | 0 |
| Other property, plant and equipment | 1,264 | 1,494 | |
| Intangible assets | 347 | 359 | |
| Derivatives | 3; 6.3 | 23,556 | 0 |
| Total non-current assets | 1,887,573 | 1,695,571 | |
| Current assets | |||
| Investment properties held for sale | 6.1 | 16,500 | 0 |
| Trade receivables | 6.4 | 6,649 | 2,646 |
| Accounts receivable from affiliates | 27 | 77 | |
| Derivatives | 3 | 902 | 27,202 |
| Income tax receivables | 0 | 1,949 | |
| Other receivables | 4,693 | 5,039 | |
| Cash and cash equivalents | 54,584 | 103,036 | |
| Total current assets | 83,354 | 139,949 | |
| Total assets | 1,970,927 | 1,835,520 |
Consolidated Statement of Changes in Equity
Consolidated Cash Flow Statement
| Equity and liabilities | Notes | 30 Sep. 2008 | 31 Dec. 2007 |
|---|---|---|---|
| (in EUR k) | |||
| Equity | |||
| Share capital | 7.1 | 56,000 | 56,000 |
| Capital surplus | 7.1 | 755,292 | 754,647 |
| Hedging reserve | 3; 7.1 | -73 | 0 |
| Treasury shares | 7.1 | -14,983 | -7,115 |
| Retained earnings | 7.1 | 33,291 | 67,344 |
| Total equity | 829,527 | 870,876 | |
| Liabilities | |||
| Long-term loans, net of current portion | 7.2 | 1,098,889 | 927,400 |
| Derivatives | 1,543 | 0 | |
| Other non-current liabilities | 3 | 56 | 56 |
| Total non-current liabilities | 1,100,488 | 927,456 | |
| Current liabilities | |||
| Short-term loans | 12,235 | 8,936 | |
| Trade payables | 7,100 | 3,068 | |
| Payables to affiliates | 5 | 15 | |
| Profit participation rights | 52 | 5 | |
| Liabilities of current tax | 21 | 5,332 | |
| Other current liabilities | 20,107 | 19,832 | |
| VAT liabilities | 1,392 | 0 | |
| Total current liabilities | 40,912 | 37,188 | |
| Total liabilities | 1,141,400 | 964,644 | |
| Total equity and liabilities | 1,970,927 | 1,835,520 |
Consolidated Income Statement > Consolidated Statement of Changes in Equity
Consolidated Cash Flow Statement
| (in EUR k) Notes |
01. 07. - 30. 09. 2008 |
01. 07. - 30. 09. 2007 |
01. 01. - 30. 09. 2008 |
01. 01. - 30. 09. 2007 |
|---|---|---|---|---|
| Gross rental income | 26,166 | 21,698 | 75,798 | 60,767 |
| Income less expenses from | ||||
| passed on expenses | 171 | 200 | 9 | 200 |
| Real estate operating expenses | -2,075 | -1,557 | -6,604 | -3,715 |
| Net rental income | 24,262 | 20,341 | 69,203 | 57,252 |
| Administrative expenses | -1,465 | -2,819 | -5,507 | -7,627 |
| Personnel expenses 8.1 |
-1,108 | -870 | -3,735 | -2,294 |
| Other income | 201 | 351 | 2,669 | 543 |
| Other expenses | -22 | -4,847 | -226 | -4,910 |
| Net loss/gain from fair value | ||||
| adjustments on investment property | 0 | 94 | -29,816 | 25,419 |
| Net operating profit | ||||
| before finance costs | 21,868 | 12,250 | 32,588 | 68,383 |
| Net financing costs | -16,398 | -8,820 | -39,381 | -26,841 |
| Net gain from fair value | ||||
| adjustments on financial | ||||
| derivatives | -731 | -9,116 | 1,215 | 9,289 |
| Profit before tax (EBT) | 4,739 | -5,686 | -5,578 | 50,831 |
| Income tax income/expense | 0 | 17,088 | -75 | 4,679 |
| Consolidated profit/loss | ||||
| for the period | 4,739 | 11,402 | -5,653 | 55,510 |
| Attributable to: Shareholder | 4,739 | 11,402 | -5,653 | 55,510 |
| Earnings/loss per share in EUR: | ||||
| Basic, for profit for the year attributable | ||||
| to ordinary equity holders of the parent | 0.09 | 0.20 | -0.10 | 0.99 |
| Diluted, for profit for the year attributable | ||||
| to ordinary equity holders of the parent | 0.09 | 0.20 | -0.10 | 0.99 |
Balance Sheet
Consolidated Income Statement
Consolidated Statement of Changes in Equity > Consolidated Cash Flow Statement
| CONSOLIDATED STATEMENT OF CHANGE IN EQUITY JANUARY 1 TO SEPTEMBER 30, 2008 | ||||
|---|---|---|---|---|
| Notes | Share | Capital | Hedging | Treasury | Retained | Total | |
|---|---|---|---|---|---|---|---|
| (in EUR k) | capital | surplus | reserve | shares | earnings | Equity | |
| As of January 1, 2008 | 56,000 | 754,647 | 0 | -7,115 | 67,344 | 870,876 | |
| Changes in Q1-Q3 2008 | |||||||
| Consolidated profit/loss | |||||||
| for the year | - | - | - | - | -5,653 | -5,653 | |
| Payment of dividends | 9 | - | - | - | - | -28,400 | -28,400 |
| Valuation financial | |||||||
| derivatives | 3;6.3;7.1 | - | - | -73 | - | - | -73 |
| Share-based payments | 7.1 | - | 653 | - | - | - | 653 |
| Changes of treasury shares | - | - | - | -7,868 | - | -7,868 | |
| Other Contributions to | 7.1 | ||||||
| capital surplus | - | -8 | - | - | - | -8 | |
| As of September 30, 2008 | 56,000 | 755,292 | -73 | -14,983 | 33,291 | 829,527 | |
Balance Sheet
Consolidated Income Statement > Consolidated Statement of Changes in Equity
Consolidated Cash Flow Statement
| Notes | Share | Capital | Hedging | Treasury | Retained | Total |
|---|---|---|---|---|---|---|
| (in EUR k) | capital | surplus | reserve | shares | earnings | Equity |
| As of January 1, 2007 | 8,000 | 375,066 | 0 | 0 | 14,533 | 397,599 |
| Changes in Q1-Q3 2007 | ||||||
| Consolidated profit/loss | ||||||
| for the year | - | - | - | - | 55,510 | 55,510 |
| Changes in the consolidated group | - | -586 | - | - | - | -586 |
| Valuation shareholder loan | - | 646 | - | - | - | 646 |
| Share-based payments | - | 710 | - | - | - | 710 |
| Contributions to share capital | 48,000 | - | - | - | - | 48,000 |
| Contributions to capital surplus (IPO) | - | 240,000 | - | - | - | 240,000 |
| Expenses in connection witht IPO | - | -10,969 | - | - | - | -10,969 |
| Other Contributions to | ||||||
| capital surplus | - | 154,690 | - | - | - | 154,690 |
| As of September 30, 2007 | 56,000 | 759,557 | 0 | 0 | 70,043 | 885,600 |
Balance Sheet
Consolidated Income Statement
Consolidated Statement of Changes in Equity > Consolidated Cash Flow Statement
| Notes | 1 Jan. - | 1 Jan. - | |
|---|---|---|---|
| (in EUR k) | 30 Sep. 2008 | 30 Sep. 2007 | |
| 1. Operating activities | |||
| Consolidated profit/loss for the year | -5,653 | 55,510 | |
| Unrealized valuation movements | 28,601 | -34,708 | |
| Interest income | -8,158 | -6,892 | |
| Interest expense | 46,972 | 31,351 | |
| Result from income taxes | 75 | -4,679 | |
| Other non-cash income (-)/expenses (+) | |||
| and IPO-costs | 646 | 0 | |
| Result from deferred taxes | 0 | -9,788 | |
| Depreciation and amortisation | 380 | 230 | |
| Movement in receivables | -195 | -13,652 | |
| Movement in payables and provisions | 2,990 | 32,926 | |
| Cash generated from operations | 65,657 | 50,298 | |
| Interest received | 8,133 | 5,867 | |
| Interest paid | -39,728 | -22,523 | |
| Income taxes paid | -5,065 | -1,497 | |
| Cash flows from operating activities | 28,997 | 32,145 | |
| 2. Investing activities | |||
| Acquisition of investment properties | -223,031 | -145,865 | |
| Proceeds from sale of investment properties | 11,000 | 0 | |
| Acquisition of other property plant and equipment | -139 | -45 | |
| Acquisition of subsidiaries | -464 | -16,385 | |
| Cash flows used in investing activities | -212,634 | -162,295 |
Balance Sheet > Consolidated Income Statement
Consolidated Statement of Changes in Equity
Consolidated Cash Flow Statement
| CONSOLIDATED CASH FLOW STATEMENT JANUARY 1 TO SEPTEMBER 30, 2008 | ||
|---|---|---|
| Notes (in EUR k) |
01 Jan. - 30 Sep. 2008 |
01 Jan. - 30 Sep. 2007 |
| 3. Financing activities | ||
| Proceeds from equity contributions | 0 | 304,983 |
| Repurchase of own shares 7.1 |
-7,868 | 0 |
| Proceeds from the issue of bonds and borrowings | 171,453 | 215,577 |
| Payment of dividends 7.1 |
-28,400 | 0 |
| Payment for the redemption of bonds and | ||
| borrowings | 0 | -245,066 |
| Payment of transaction costs | 0 | -355 |
| Payment of IPO costs | 0 | -12,029 |
| Cash flows used in financing activities | 135,185 | 263,110 |
| 4. Cash and cash equivalents at the end of the period | ||
| Change in cash and cash equivalents (subtotal of 1 to 3) | -48,452 | 132,960 |
| Cash and cash equivalents at the beginning of the period | 103,036 | 24,304 |
| Cash and cash equivalents at the end of the period | 54,584 | 157,264 |
| 5. Composition of cash and cash equivalents | ||
| Cash | 54,584 | 157,264 |
| Securities | 0 | 0 |
| Cash and cash equivalents at the end of the period | 54,584 | 157,264 |
| 1 Jan. - | 1 Jan. - | ||
|---|---|---|---|
| (in EUR k) | 30 Sep. 2008 | 30 Sep. 2007 | Change |
| Pre-tax income (EBT) | -5,578 | 50,831 | -56,410 |
| less financial result | -39,381 | -25,789 | -13,592 |
| plus non-cash expenses | 679 | 230 | 449 |
| plus other adjustments | 0 | 5,732 | -5,732 |
| EBITDA | 34,481 | 82,582 | -48,101 |
| less net loss/gain from fair value | |||
| adjustments on investment property | -29,816 | 25,419 | -55,235 |
| less net loss/gain from fair value | |||
| adjustments on financial derivatives | 1 -4,946 |
9,289 | -14,235 |
| plus financial result | -39,381 | -25,789 | -13,592 |
| Funds from operations (FFO) | 29,862 | 22,085 | 7,777 |
FFO is not a measure of operating performance or liquidity under generally accepted accounting principles, in particular IFRS, and should not be considered as an alternative to the Company's income or cash-flow measures as determined in accordance with IFRS. Furthermore, no standard definition exists for FFO. Thus, the FFO or measures with similar names as presented by other companies may not necessarily be comparable to the Company's FFO. EBITDA is not a measure of operating performance or liquidity under generally accepted accounting principles, in particular IFRS, and should not be considered as an alternative to the Company's income or cash-flow measures as determined in accordance with IFRS. Furthermore, no standard definition exists for EBITDA. Thus, EBITDA or measures with similar names as presented by other companies may not necessarily be comparable to the Company's EBITDA.
1 Fair value loss (including ineffective SWAP portion (EUR 3,832 k)) disregarding realised fair value gains of EUR 2,328k.
alstria office REIT-AG, Hamburg, (hereinafter referred to as the "Company" or "alstria office REIT-AG" and together with its subsidiaries the "Group"), is a German stock corporation based in Hamburg. The Group's principal activities are described in detail in section 1 of the notes to the consolidated financial statements for the fiscal year ended December 31, 2007.
The Condensed Interim Consolidated Financial Statements for the period from January 1, 2008 to September 30, 2008 (hereinafter referred to as the "Condensed Interim Consolidated Financial Statements") were authorized for issue by resolution of the Company's management board on November 14, 2008.
These Condensed Interim Consolidated Financial Statements have been prepared in accordance with IAS 34 "Interim Financial Reporting". They do not contain all the disclosures and explanations required in annual financial statements and should therefore be read in conjunction with the consolidated financial statements as of December 31, 2007.
These Condensed Interim Consolidated Financial Statements have not been audited.
The accounting policies adopted in the preparation of the Condensed Interim Consolidated Financial Statements are consistent with those followed in the preparation of the Group's annual financial statements for the fiscal year ended December 31, 2007, except for the adoption of hedge accounting as explained below.
The Group uses derivative financial instruments such as interest rate swaps and caps to hedge its risks associated with interest rate fluctuations. Such derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently remeasured at fair value. Derivatives are carried as assets when the fair value is positive and as liabilities when the fair value is negative.
Any gains or losses arising from changes in fair value on derivatives during the period that do not qualify for hedge accounting are taken directly to profit or loss.
For the purpose of hedge accounting, hedges are classified as cash flow hedges when hedging exposure to variability in cash flows is attributable to a particular risk associated with a recognised liability.
At the inception of a hedge relationship, the Group formally designates and documents the hedge relationship to which the Group wishes to apply hedge accounting and the risk management objective and strategy for undertaking the hedge. The documentation includes identification of the hedging instrument, the hedged item, the nature of the risk being hedged and how the entity will assess the hedging instrument's effectiveness in offsetting the exposure to changes in the hedged item's cash flows attributable to the hedged risk. Such hedges are expected to be highly effective in achieving offsetting changes in fair value or cash flows and are assessed on an ongoing basis to determine that they actually have been highly effective throughout the financial reporting periods for which they were designated.
Cash flow hedges which meet the strict criteria
for hedge accounting are accounted for as follows:
The effective portion of the gain or loss on the hedging instrument is recognised directly in equity, while any ineffective portion is recognised immediately in profit or loss.
Amounts taken to equity are transferred to profit or loss when the hedged transaction affects profit or loss, such as when the hedged financial income or financial expense is realized.
As of August 1, 2008 alstria Gänsemarkt Drehbahn GP GmbH, Hamburg, and alstria office Gänsemarkt Drehbahn GmbH & Co. KG, Hamburg, have been incorporated. Being hundred percent affiliates to alstria office REIT-AG these companies have been consolidated as part of alstria group. There have been no further changes to the consolidated group since the consolidated financial statements as of December 31, 2007.
The preparation of the consolidated financial statements in accordance with IFRS requires assumptions and estimates to be made for various items which have an effect on the amount and disclosure of the assets and liabilities as well as income and expenses. Actual amounts may differ from these estimates.
alstria office REIT-AG uses the fair value model pursuant to IAS 40.33 et seq. for subsequent measurement. External appraisals were obtained for measurement dated June 30, 2008. For a detailed description of the valuation process we refer to section 8 of the consolidated financial statements as of December 31, 2007.
On August 22, 2007, alstria office REIT-AG concluded a purchase agreement on the acquisition of a property with a purchase price value of EUR 52,350k, with the property being transferred to alstria office REIT-AG with effect of March 3, 2008 (property Darwinstrasse).
On December 12, 2007, alstria office REIT-AG concluded a purchase agreement on the acquisition of further properties with a purchase price value of EUR 105,770k, with the properties being transferred to alstria office REIT-AG with effect of March 3, 2008 (EUR 104,520k) and May 2, 2008 (EUR 1,250k) (BLUE portfolio).
On December 17, 2007, alstria office REIT-AG concluded a purchase agreement on the acquisition of further properties with a purchase price value of EUR 50,262k. The transfer of possession, benefits and burdens took place on April 1, 2008 (Helios portfolio).
Under the purchase agreement dated April 4, 2008, alstria office REIT-AG concluded the acquisition of one further property located in Hamburg with a purchase price value of EUR 4,310k. The property has been transferred to alstria office REIT-AG with effect of June 1, 2008.
Under the sales agreement dated June 27, 2008, alstria office REIT-AG concluded the sale of a plot of land at Vahrenwalder Strasse 133, Hanover, with a total sales price value of EUR 1,250k. The transfer of possession, benefits and burdens is expected to take place in the 4. Quarter 2008.
Under the sales agreement dated July 31, 2008, alstria concluded the disposal of the property Osterbekstrasse 96, Hamburg, with a total sales price value of EUR 11,000k The transfer of possession, benefits and burdens took place on October 1, 2008.
Under the sales agreement dated August 1, 2008, alstria concluded the disposal of the property Düsternstrasse 10, Hamburg, with a total sales price value of EUR 4,950k. The transfer of possession, benefits and burdens took place on October 1, 2008.
Under the sales agreement dated September 8, 2008, alstria concluded the disposal of the property Nikolaistrasse 16, Leipzig, with a total sales price value of EUR 2,000k. The transfer of possession, benefits and burdens is expected to take place in the fourth quarter.
Due to the sales processes, three investment properties have been reclassified to investments held for sale. These properties are Düsternstrasse 10, Hamburg, Osterbekstrasse 96, Hamburg, and Nikolaistrasse 16, Leipzig, with a fair value of EUR 16,500k.
alstria office REIT-AG intends to use one of its office buildings in Hamburg for owner occupation use. For this purpose, the property will be refurbished. Therefore the property was reclassified from investment property according to IAS 40 to development property according to IAS 16.
In the second quarter 2008 alstria office REIT-AG used the market opportunities to restructure its hedging portfolio while keeping the same protection level. With value date April 21, 2008 alstria office REIT-AG entered with Natixis into an off-market interest rate swap with a notional amount of EUR 148,785k at a swap rate of 3.9087%, expiring on January 20, 2012. This swap replaced existing interest rate caps for the same combined notional amount and interest rate with maturity in March and November 2011.
On June 11, 2008 alstria office REIT-AG entered with HSH Nordbank AG into an off-market interest swap with a notional amount of EUR 75,000k at a swap rate of 4.9000%, expiring on December 20, 2012. This swap partly replaces the existing interest rate cap amounting to EUR 150,000k with the same maturity. This transaction is effective as per July 21, 2008.
On September 16, 2008 alstria office REIT-AG entered with HSH Nordbank AG into an off-market interest swap with a notional amount of EUR 95,000k at a swap rate of 4.6000%, expiring on October 20, 2015. This transaction is effective as per July 10, 2013.
Due to the specific nature of the business, the Group considers receivables due up to one year to be current. All receivables as per balance sheet date are due within the next twelve months.
Please refer to the Consolidated Statement of Changes in Equity.
In the balance sheet of the Consolidated Interim Financial Statements as of September 30, 2008, the share capital of alstria office REIT-AG amounted to EUR 56,000k. Captiva 2 Alstria Holding S.à.r.l., Luxembourg, held, directly and indirectly, 61.0% of the shares in the Company, 36.5% of the shares are free float and the remaining 2.5% are treasury shares.
In the first six months of 2008 the Company completed its share buyback programme. For a detailed description of the share buyback programme, please see section 11 of the consolidated financial statements as of December 31, 2007. With resolution of the supervisory board, dated June 5, 2008, the management board members were granted the possibility to receive a part of their resolved bonus payments for the financial year 2007 in the form of alstria shares. Based on this resolution the members of the management board decided to receive in total 9,500 shares as bonus compensation payment. At granting date these shares valued at a closing price of EUR 11.03 each. The 9,500 shares have been charged against the bonus entitlements out of the existing treasury shares. On September 30, 2008 the Company held 1,375,755 non-par value bearer shares of EUR 1 each.
A stock option program was resolved on March 27, 2007 by the supervisory board of the Company and accordingly stock options with a total fair value of EUR 1,997k were issued to members of the management board of the Com-pany on April 3, 2007 and September 5, 2007. Thereof stock options with a fair value of EUR 446k were forfeited as of December 31, 2007 in relation with the retirement of Dr. Michael Börner-Kleindienst. As of September 30, 2008, further EUR 585k (December 31, 2007: EUR 806k) from the allocation of the fair values of the granted stock options over the respective vesting period have been added to the capital surplus. A convertible profit participation rights program was resolved on September 5, 2007 by the supervisory board of the Company and profit participation rights certificates with a fair value according to IFRS 2 of EUR 35k were issued to employees of the Company on September 6, 2007. As of September 30, 2008, the issue of the certificates resulted in a further increase of the capital surplus of EUR 13k (December 31, 2007: EUR 6k) from the allocation of the fair values of the profit participation rights over the respective vesting period. Further 42,000 profit participation rights certificates with a fair value according to IFRS 2 of EUR 331k were issued to employees of the Company on June 6, 2008. As of September 30, 2008, the issue of the certificates resulted in a further increase of the capital surplus of EUR 55k from the allocation of the fair values of the profit participation rights over the respective vesting period.
This reserve records the portion of the gain or loss on hedging instruments in cash flow hedge that are determined to be an effective hedge.
| OTHER RESERVES | ||
|---|---|---|
| Sep. 30, 2008 |
Dec. 31, 2007 |
|
| (in EUR k) | (unaudited) | (audited) |
| As of January 1 | 0 | 0 |
| Net movement on | ||
| cash flow hedges | -73 | 0 |
| As of September 30 | ||
| / December 31 | -73 | 0 |
As of September 30, 2008, the loans used by alstria office REIT-AG are repayable with EUR 1,102,869k (December 31, 2007: EUR 931,416k). The carrying amount (EUR 1,098,889k; December 31, 2007: EUR 927,400k) takes into account interest liabilities and transaction costs to be allocated under the effective interest method upon raising the liabilities.
In the first nine months of 2008 alstria office REIT-AG drew down new loans with a nominal amount of EUR 171,453k in conjunction with financing new investment properties. The loans are part of the syndicated loan agreement with J.P. Morgan Plc., Natixis, German Branch, and HSH Nordbank AG with a nominal amount of EUR 1,139,800k.
For a detailed description of the syndicated loan agreement, loan terms and grant securization, please see section 11.2 of the consolidated financial statements as of December 31, 2007.
The personnel expenses shown in the profit and loss account in the amount of EUR 3,735k (September 30, 2007: EUR 2,294k (stated in administration expenses)) include bonuses in the amount of EUR 678k (September 30, 2007: EUR 370k). Furthermore, personnel expenses of EUR 585k (September 30, 2007: EUR 710k) relating to stock options granted to the management are included as well as EUR 68k (September 30, 2007: EUR 0k) personnel expenses relating to profit participation rights certificates granted to employees.
In consequence of the transformation into a G-REIT, alstria office REIT-AG is exempted from income taxes.
For a detailed description of the transformation and tax related implications, please see section 12.9 of the consolidated financial statements as of December 31, 2007.
The General Meeting of alstria office REIT-AG on June 5, 2008 resolved to distribute a dividend of EUR 28,400k (EUR 0.52 per share outstanding). The dividend was distributed on June 6, 2008.
During the period from January 1, 2008 to September 30, 2008, on an average twentyseven people (January 1, 2007 to September 30, 2007: on an average fourteen people) were employed by the Company. The average was calculated by the ninth part of the total of employed people at the end of each month. On September 30, 2008, thirty people (December 31, 2007: twenty people) were employed at alstria office REIT-AG, excluding the management board.
In line with the convertible profit participation rights program the supervisory board resolved on September 5, 2007, with granting date June 6, 2008, 42,000 convertible profit participation certificates ("certificates") had been issued to the employees of alstria office REIT-AG. The nominal amount of each certificate is EUR 1.00 and was payable on issuance.
The fair values of the inherent options for conversion are estimated using a binary barrier option model based on the black-scholesassumptions.
The model takes into account the terms and conditions upon which the instruments were granted. For a detailed description of the convertible profit participation rights program, please see section 18 of the consolidated financial statements as of December 31, 2007.
The following table lists the inputs to the model used for the determination of the options for conversion granted on June 6, 2008:
| VALUATION PARAMETERS | |
|---|---|
| Dividend yield (%) | 4.70 |
| Risk-free interest rate (%) | 4.65 |
| Expected volatility (%) | 35.00 |
| Expected life option (years) | 2.00 |
| Exercise share price (EUR) | 2.00 |
| Labour turnover rate (%) | 10.00 |
| Stock price as of | |
| valuation date (EUR) | 11.03 |
The estimated fair value of one option for conversion at the granting date was EUR 8.76.
Under the sales agreement dated July 31, 2008, alstria office REIT-AG concluded the sale of property Osterbekstrasse 96, Hamburg, with a total sales price value of EUR 11,000k. The transfer of possession, benefits and burdens took place on October 1, 2008.
Under the sales agreement dated August 1, 2008, alstria office REIT-AG concluded the sale of property Düsternstrasse 10, Hamburg, with a total sales price value of EUR 4,950k. The transfer of possession, benefits and burdens took place on October 1, 2008.
The newly founded subsidiary alstria Gänsemarkt Drehbahn GmbH & Co. KG entered into a facility agreement of a EUR 95 millions, 7 years, non recourse loan on the properties Gänsemarkt 36 and Drehbahn 36, Hamburg, with Deutsche Hypothekenbank (Actien-Gesellschaft).
The loan amount was paid to alstria office REIT-AG. The allocated loan amount of these assets under the current facility agreement was repaid. In return the possession, benefits and burdens had been transferred to the debtor. The transaction became effective on October 20, 2008.
As of September 30, 2008, the members of the Company's management board are:
Mr. Olivier Elamine (CEO) Mr. Alexander Dexne (CFO)
Pursuant to the Company's articles of association (Section 9), the supervisory board consists of six members, which are elected by the general meeting of shareholders. The expiration of the term of office is identical for all members, i.e., the close of the annual general meeting of shareholders in the year 2011. As of September 30, 2008, the members of the supervisory board are:
Mr. Alexander Stuhlmann (Chairman) Mr. John van Oost (Vice-Chairman) Dr. Johannes Conradi Dr. Christian Olearius (until 31 August 2008) Mr. Richard Mully Mr. Daniel Quai
Dr. Christian Olearius resigned from the supervisory board, effective August 31, 2008.
We assure that, to the best of our knowledge and based on the accounting standards to be applied for interim financial reporting, the shortened Consolidated Interim Report provides a true and fair view of the net worth, financial position and financial performance of the Group and that the Group Interim Management Report presents business progress including the business results and the position of the Group in such a way that it provides a true and fair view, as well as describing the principal opportunities and risks of the Group's anticipated development in the remainder of the financial year.
Hamburg, Germany, November 14, 2008
Olivier Elamine Chief Executive Officer
Alexander Dexne Chief Financial Officer
Financial Calendar > Contact
| FINANZKALENDER | |
|---|---|
| 06. - 08.10.2008 | EXPO REAL, Munich |
| 16.10.2008 | Pan-European Real Estate conference, London |
| 20.10.2008 | Initiative Immobilien Aktie, Frankfurt |
| 11.11.2008 | Deutsches Eigenkapital Forum, Frankfurt |
| 19.11.2008 | Publication of Financial Results of Q3 2008 |
| 24. - 26.11.2008 | Roadshow Sal. Oppenheim, USA |
| 26.11.2008 | Swiss Equity Real Estate Day, Zürich |
| 27. - 28.11.2008 | EPRA Reporting and Accounting Summit, Brüssel |
| 04.03.2009 | 4th HSBC S&M Real Estate Conference, Frankfurt |
| 05. - 06.03.2009 | European Property Seminar (Kempen), New York |
| 10. - 13.03.2009 | mipim, Cannes |
| 31.03.2009 | Publication of Financial Results of the Fiscal Year 2009 |
| 31.03.2009 | Annual Press Conference, Frankfurt |
| 04.04.2009 | REITDay 2009, Frankfurt |
| 27. - 28.05.2009 | 7th Kempen Europena Property Seminar, Amsterdam |
| 10.06.2009 | Annual General Meeting, Hamburg |
| 05.10.2009 | EXPO REAL, Munich |
alstria office REIT-AG Fuhlentwiete 12 20355 Hamburg Tel.: +49 (0) 40 226 341 -300 E-mail: [email protected] www.alstria.de
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