CA Immobilien Anlagen AG

Annual Report (ESEF) • Mar 24, 2021

5299003ICAPV07J0R1802020-01-012020-12-31iso4217:EUR5299003ICAPV07J0R1802019-01-012019-12-31iso4217:EURxbrli:shares5299003ICAPV07J0R1802020-12-315299003ICAPV07J0R1802019-12-315299003ICAPV07J0R1802018-12-315299003ICAPV07J0R1802018-12-31ifrs-full:IssuedCapitalMember5299003ICAPV07J0R1802018-12-31ifrs-full:SharePremiumMember5299003ICAPV07J0R1802018-12-31ifrs-full:TreasurySharesMember5299003ICAPV07J0R1802019-01-012019-12-31ifrs-full:IssuedCapitalMember5299003ICAPV07J0R1802019-01-012019-12-31ifrs-full:SharePremiumMember5299003ICAPV07J0R1802019-01-012019-12-31ifrs-full:TreasurySharesMember5299003ICAPV07J0R1802019-12-31ifrs-full:IssuedCapitalMember5299003ICAPV07J0R1802019-12-31ifrs-full:SharePremiumMember5299003ICAPV07J0R1802019-12-31ifrs-full:TreasurySharesMember5299003ICAPV07J0R1802020-01-012020-12-31ifrs-full:IssuedCapitalMember5299003ICAPV07J0R1802020-01-012020-12-31ifrs-full:SharePremiumMember5299003ICAPV07J0R1802020-01-012020-12-31ifrs-full:TreasurySharesMember5299003ICAPV07J0R1802020-12-31ifrs-full:IssuedCapitalMember5299003ICAPV07J0R1802020-12-31ifrs-full:SharePremiumMember5299003ICAPV07J0R1802020-12-31ifrs-full:TreasurySharesMember5299003ICAPV07J0R1802018-12-31ifrs-full:RetainedEarningsMember5299003ICAPV07J0R1802018-12-31ifrs-full:RevaluationSurplusMember5299003ICAPV07J0R1802018-12-31ifrs-full:OtherReservesMember5299003ICAPV07J0R1802018-12-31ifrs-full:EquityAttributableToOwnersOfParentMember5299003ICAPV07J0R1802018-12-31ifrs-full:NoncontrollingInterestsMember5299003ICAPV07J0R1802019-01-012019-12-31ifrs-full:RetainedEarningsMember5299003ICAPV07J0R1802019-01-012019-12-31ifrs-full:RevaluationSurplusMember5299003ICAPV07J0R1802019-01-012019-12-31ifrs-full:OtherReservesMember5299003ICAPV07J0R1802019-01-012019-12-31ifrs-full:EquityAttributableToOwnersOfParentMember5299003ICAPV07J0R1802019-01-012019-12-31ifrs-full:NoncontrollingInterestsMember5299003ICAPV07J0R1802019-12-31ifrs-full:RetainedEarningsMember5299003ICAPV07J0R1802019-12-31ifrs-full:RevaluationSurplusMember5299003ICAPV07J0R1802019-12-31ifrs-full:OtherReservesMember5299003ICAPV07J0R1802019-12-31ifrs-full:EquityAttributableToOwnersOfParentMember5299003ICAPV07J0R1802019-12-31ifrs-full:NoncontrollingInterestsMember5299003ICAPV07J0R1802020-01-012020-12-31ifrs-full:RetainedEarningsMember5299003ICAPV07J0R1802020-01-012020-12-31ifrs-full:RevaluationSurplusMember5299003ICAPV07J0R1802020-01-012020-12-31ifrs-full:OtherReservesMember5299003ICAPV07J0R1802020-01-012020-12-31ifrs-full:EquityAttributableToOwnersOfParentMember5299003ICAPV07J0R1802020-01-012020-12-31ifrs-full:NoncontrollingInterestsMember5299003ICAPV07J0R1802020-12-31ifrs-full:RetainedEarningsMember5299003ICAPV07J0R1802020-12-31ifrs-full:RevaluationSurplusMember5299003ICAPV07J0R1802020-12-31ifrs-full:OtherReservesMember5299003ICAPV07J0R1802020-12-31ifrs-full:EquityAttributableToOwnersOfParentMember5299003ICAPV07J0R1802020-12-31ifrs-full:NoncontrollingInterestsMember CA IMMO Datei: Master_Jahresabschluss_2015.docx; Gespeichert von naderer am 18.03.2016 15:15:00 ANNUAL FINANCIAL REPORT 2020 I.A.W. ARTICLE 124 OF THE AUSTRIAN STOCK EXCHANGE ACT 2 3 4 7 12 15 21 29 34 45 47 48 59 61 84 GROUP MANAGEMENT REPORT Group structure Economic environment Property markets Property assets Investment properties Investment properties under development property evaluation Financing Results Outlook Supplementary report Risk report Information acc. Section 243A UGB (Austrian Commercial Code) ESG Report ESG Appendix CONSOLIDATED FINANCIAL STATEMENTS 96 99 100 101 102 105 A. CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED 31.12.2020 B. CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31.12.2020 C. CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31.12.2020 D. CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR 2020 E. CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31.12.2020 F. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT 31.12.2020 107 210 211 216 244 DECLARATION OF THE MANAGEMENT BOARD DUE TO SECTION 124 OF THE AUSTRIAN STOCK EXCHANGE ACT (CONSOLIDATED FINANCIAL STATEMENTS) AUDITOR’S REPORT (CONSOLIDATED FINANCIAL STATEMENTS) STATUTORY FINANCIAL STATEMENTS MANAGEMENT REPORT DECLARATION OF THE MANAGEMENT BOARD DUE TO SECTION 124 OF THE AUSTRIAN STOCK EXCHANGE ACT (STATUTORY FINANCIAL STATEMENTS AND MANAGEMENT REPORT) AUDITOR’S REPORT (STATUTORY FINANCIAL STATEMENTS AND MANAGEMENT REPORT) CONTACT/DISCLAIMER/IMPRINT 282 CONTENT 277 276 GROUP MANAGEMENT REPORT GROUP MANAGEMENT REPORT 3 CA Immo is a real estate company with its headquarters in Vi enna and branch offices in Germany, Poland, Romania, Serbia, Czechia and Hungary. The parent company of the Group is CA Immobilien Anlagen Aktiengesellschaft, a listed company based in Vienna whose main activity is the strategic and operational management of subsidiary compa- nies at home and abroad. The various branch offices act as largely decentralised profit centres. Other subsidiaries (with- out separate local teams) are present in the Netherlands, Slo- vakia and Cyprus. With the sale of the Zagrebtower office building in the 3rd quarter of 2020, the exit from Croatia took place. As at key date 31 December 2020, the Group com- prised 184 companies (31.12.2019: 185) with 437 employees (414 on 31.12.2019). The core business of the CA Immo Group is the letting, management and development of high quality commercial real estate with a clear focus on office properties. The com- pany, which has a high degree of in-house construction ex- pertise, covers the entire value chain in the field of commer- cial real estate. The objective is to build up a focused portfo- lio of high quality, high earning investment properties within the core markets of Germany, Austria, the Czechia, Poland, Hungary and Romania. Additional earnings will be generated through the preparation and utilisation of land re- serves in the development area. CA Immo either transfers completed projects to its portfolio or sells them to investors. The Group currently controls property assets of around € 5.6 bn in Germany, Austria and Eastern Europe. Austria The company’s domestic properties are overseen in subsid- iary companies of CA Immobilien Anlagen AG. As at 31 De- cember 2020, the parent company also directly held property assets of approximately € 322.9 m (€ 317.3 m on 31.12.2019). As at 31 December 2020, the total Austrian portfolio com- prised solely investment properties with a market value of € 530.0 m (€ 572.9 m on 31.12.2019). COMPANIES BY REGION Number of companies 1) 31.12.2020 31.12.2019 Austria 19 19 - Of which joint ventures 3 3 Germany 2) 98 98 - Of which joint ventures 23 27 Central and Eastern Europe 3) 67 68 - Of which joint ventures 2 2 Group-wide 184 185 - Of which joint ventures 28 32 1) Joint ventures involving consolidated companies. 2) Includes one company in Switzerland. 3) Includes holding companies in Cyprus and the Netherlands established in connection with Eastern European investments. Germany The operational platform for all Group activities in Ger- many is CA Immo Deutschland GmbH, which has branches in Berlin, Frankfurt and Munich. Aside from in- vestment properties, the company’s property assets mainly comprise properties under construction and unde- veloped plots alongside a portfolio of properties intended for trading or sale. Investment properties are largely held in direct holdings and let and managed by DRG Deutsche Realitäten GmbH, a joint venture set up with the Aus- trian estate agent and property management firm ÖRAG. A number of development projects (in Munich and Mainz, for example) are being realised through joint ven- tures. Construction management is carried out by CA Immo subsidiary omniCon, which also performs these services for third parties. Eastern Europe (CEE) In the CEE region, the strategic focus is also on commercial class A buildings in the respective capitals. The portfolio of investment properties in CEE and one development project are directly held via CA Immo participating interests. All Eastern European properties are managed by regional subsid- iaries under the name CA Immo Real Estate Management. GROUP STRUCTURE GROUP MANAGEMENT REPORT GROUP MANAGEMENT REPORT 4 THE ECOMONIC TREND 1) Following the outbreak of the Covid-19 pandemic and the severe recession in 2020, the International Monetary Fund (IMF) illustrated a positive picture of the global economy in its World Economic Outlook Update pub- lished in January 2021. Although recent vaccine approv- als have raised hopes of a turnaround in the fight against the pandemic this year, renewed waves and new variants of the virus are a cause for concern. Amid this extraordi- nary uncertainty, the global economy is projected to grow by 5.5% in 2021 and 4.2% in 2022. The forecast for 2021 has been revised upwards by 0.3 percentage points from the previous forecast, reflecting expectations of a vac- cine-triggered pick-up in economic activity later in the year and additional political support in some major econ- omies. The projected growth rebound this year follows a severe collapse in 2020 that had an acute negative impact on the global economy. The decline in global growth for 2020 is estimated at -3.5%, 0.9 percentage points above the previous forecast, reflecting stronger-than-expected momentum in the second half of 2020. According to an initial estimate of the annual growth rate for 2020, based on seasonally and calendar-adjusted quarterly data, GDP fell by 7.2% in the euro area and by 6.8% in the EU. As suggested by the current forecast, GDP in the EU will rise by about 4% in 2021, which is less than previously projected, and by about 3% in 2022. This means that the output of the European economy in 2022 would be roughly back at pre-crisis levels. The depth of the recession seen in 2020 and the speed of re- covery in 2021 and 2022 are expected to vary widely across member states. CORE MARKETS OF CA IMMO IN 2020 2) Compared with the previous quarter, seasonally ad- justed GDP fell by 0.7% in the euro area and by 0.5% in the EU in the fourth quarter of 2020. This is according to a preliminary flash estimate published by Eurostat. These declines follow a strong recovery in the third quarter of 2020 (+12.4% in the euro area and +11.5% in the EU) and the sharpest falls since the start of the time series in 1995 in the second quarter (–11.7% in the euro area and –11.4% in the EU). 1) Sources: International Monetary Fund, European Commission, Oxford Economics In December 2020, the seasonally adjusted unemploy- ment rate in the euro area was 8.3%, unchanged from No- vember 2020 and an increase of 90 basis points from De- cember 2019. The unemployment rate in the EU came to 7.5% in December 2020, also unchanged compared with November 2020 and an increase of 100 basis points from December 2019. At the end of the third quarter of 2020, with the impact of government action in response to the Covid-19 con- tainment measures still reflected in increased financing needs, the public debt-to-GDP ratio stood at 97.3% in the euro area, compared with 95.0% at the end of the second quarter of 2020. In the EU, the ratio increased from 87.7% to 89.8%. Compared with the third quarter of 2019, the public debt-to-GDP ratio increased in both the euro area (from 85.8% to 97.3%) and the EU (from 79.2% to 89.8%). The increases are due to two factors – signifi- cant rises in public debt and falling GDP. Annual inflation of –0.3% in the euro area in December 2020 was well below the ECB's target of below, but close to 2.0% (December 2019: 1.3%). This compares to 0.3% in the European Union (December 2019: 1.6%). The low- est annual rates were recorded in Greece (–2.4%), Slove- nia (–1.2%) and Ireland (–1.0%). The highest annual rates were recorded in Poland (3.4%), Hungary (2.8%) and the Czechia (2.4%). The economy in Austria contracted in 2020, with real GDP falling by 7.5%. The inflation rate stood at 0.3% in December 2020, with the unemployment rate at 7.5%. Gross public debt as % of GDP climbed to 79.1%. The negative economic growth in Germany was re- flected in a GDP decline of 5.5%. In pan-European com- parison, Germany is thus below the corresponding aver- ages of the EU or the euro area. The unemployment rate in Germany increased from 3.2% to 4.6% in the course of the year. The inflation rate for Germany was reported at –0.7% in December 2020. The positive economic trend of previous years on CA Immo's core markets in Central and Eastern Europe did not remain intact throughout 2020. The effects of the Covid-19 pandemic led to negative growth rates, as in Germany and Austria. 2) Sources: Eurostat, European Commission, Bloomberg, Financial Times ECONOMIC ENVIRONMENT GROUP MANAGEMENT REPORT 5 Within the Central and Eastern European core markets, Poland and Romania showed the smallest decline in 2020 at –3.0% and –5.3% respectively. GDP in Hungary dropped by 5.6% in 2020, in the Czechia by 6.8%. The unemployment rate in the Central and Eastern European countries remains significantly lower than in the EU-27 and the euro area average. It stands at 3.1% in the Czechia, 3.3% in Poland, 4.3% in Hungary and 4.9% in Romania. The inflation rate was robust in 2020 and also above the euro area average in all core Central and Eastern Euro- pean countries. Romania reported an inflation rate of 1.8% for December 2020, while the 2020 annual rate in the Czechia was 2.4%. The annual inflation rate in Hun- gary arrived at 2.8%, in Poland at 3.4%. The strong employment growth of previous years slowed down in the Czechia and Hungary and declined slightly in Poland and Romania. ECONOMIC DATA FOR CA IMMO CORE MARKETS Growth rate of real GDP 1) Annual inflation rates 2) Unemploy- ment rate 3) Public budget balance Gross public debt Growth rate of employment 2020 2019 in % in % as % of GDP 3Q 2020 as % of GDP 3Q 2020 as % of GDP 3Q 2020 EU – 27 -6.8 1.6 0.3 7.5 -5.6 89.6 0.1 Eurozone – 19 -7.2 1.3 -0.3 8.3 -5.8 97.3 0.1 Austria -7.5 1.4 1.0 5.8 -6.8 79.1 0.5 Germany -5.5 0.6 -0.7 4.6 -4.6 70.0 0.1 Poland -3.0 4.6 3.4 3.3 -4.6 56.7 - 0.1 Czechia -6.8 2.3 2.4 3.1 -4.4 38.4 0.3 Hungary -5.6 4.6 2.8 4.3 -3.8 74.3 0.0 Romania -5.3 4.2 1.8 4.9 -10.0 43.1 - 0.3 Source: Oxford Economics, Eurostat 1) Change on the previous year (%); 2) Change on the previous year as at December 2020; 3) As at December 2020, except Hungary: November 2020 THE MONEY MARKET AND INTEREST ENVIRONMENT 1) At its most recent meeting on 21 January 2021, the Gov- erning Council of the ECB decided to leave the interest rate for main refinancing operations and the interest rates for the marginal lending facility and the deposit facility unchanged at 0.00%, 0.25% and -0.50% respectively. "The Governing Council expects the key ECB interest rates to remain at their present or lower levels until it has seen the inflation outlook robustly converge to a level sufficiently close to, but below, 2% within its projection horizon, and such convergence has been consistently re- flected in underlying inflation dynamics.“ The European Central Bank's expansionary monetary market policy of previous years culminated in 2020 with the outbreak of the Covid-19 pandemic and the accompa- nying recession. In addition to the asset purchase pro- gramme (APP) of € 20 bn per month, the Governing Council has approved purchases under the Pandemic 1) Sources: European Central Bank., Eurostat, Bloomberg, Moody’s Analytics 2) Sources: European Commission, European Central Bank, Financial Times Emergency Purchase Programme (PEPP) with a total en- velope of € 1.85 bn. "The Governing Council will con- tinue the purchases under the pandemic emergency pur- chase programme (PEPP) until at least the end of March 2022 and, in any case, until it judges that the coronavirus crisis phase is over." The purchases under the PEPP will be conducted to preserve favourable financing conditions over the pandemic period. If favourable financing condi- tions can be maintained with asset purchase flows that do not exhaust the envelope over the net purchase time horizon of the PEPP, the envelope need not be used in full. Equally, the envelope can be recalibrated if required to maintain favourable financing conditions to help counter the negative pandemic shock to the path of infla- tion. The ECB Governing Council will continue to reinvest the redemption amounts from maturing securities pur- chased under the PEPP until at least the end of 2023. In any case, the future roll-off of the PEPP portfolio will be GROUP MANAGEMENT REPORT GROUP MANAGEMENT REPORT 6 managed to avoid interference with the appropriate mon- etary policy stance. In addition, the Governing Council will continue to provide ample liquidity through its refi- nancing operations. In particular, the third series of tar- geted longer-term refinancing operations (TLTRO III) re- mains an attractive source of funding for banks, support- ing bank lendings to firms and households. The 3-month Euribor rate remained in negative terri- tory, fluctuating between –0.16% and –0.55% in the pe- riod under review. After hitting historic lows at the be- ginning of 2020, yields on 10-year government bonds is- sued by euro area members jumped in March, due to the global outbreak of the Covid-19 pandemic and the accom- panying economic crisis, trading at around mid-2019 lev- els. In the following months, prices fell again due to the economic recovery and a more positive outlook, ending the year at around pre-crisis levels. Both the supportive development of government bonds and the expansive monetary policy of central banks had a strong impact on the corporate bond market. As a result, a record amount of more than USD 2.9 tn of investment- grade corporate bonds were issued globally in 2020 (+20% year-on-year). Nevertheless, the percentage changes in the global offer differed significantly over the four quarters of 2020. Following annual increases of 14% in the first quarter and 69% in the second quarter (to an unrivalled US$ 1.1 tn), the world's largest estimate of in- vestment-grade corporate bond issuance saw annual de- clines of 6% in the third quarter and 3% in the fourth quarter. CA Immo also took advantage of the excellent conditions to issue two large-volume bonds in February and October 2020. OUTLOOK 2) The fundamental challenge of the current year will re- main the fight against the Covid-19 pandemic. Despite in- itial progress in the global vaccination campaigns, the in- cidence of infection is likely to remain dynamic. Above all, the various mutations represent a factor of uncer- tainty that will make substantial easing of restrictive measures in Europe, for example, much more difficult in the first quarter. In spring, more favourable weather con- ditions could lead to a decline in new infections. In addi- tion, vaccine availability should improve from the sum- mer onwards, making infection protection accessible to the wider population. With a potential improvement in the pandemic situation from spring onwards, a recovery in economic growth could then be felt across the board. The European Commission expects global containment measures to remain in place during 2021 before being in- creasingly relaxed later on. As a result, the global econ- omy should grow strongly again in 2021. Furthermore, in its most recent growth forecast from au- tumn 2020, the European Commission expects the Euro- pean economy to grow by about 4% in 2021 and by about 3% in 2022, thus returning to pre-crisis levels in the course of 2022. However, the speed of recovery in 2021 and 2022 is believed to vary considerably across member states. This reflects not only differences in the severity of the pandemic and the stringency of containment measures, but also differences in economic structures and domestic policy responses. Christine Lagarde, President of the ECB, recently warned governments and central banks against reacting to the first signs of economic recovery from the coronavirus crisis in the coming months by reducing incentives too quickly, even as inflation begins to rise. Tightening policy measures too hastily could lead to "very serious risks". GROUP MANAGEMENT REPORT 7 THE REAL ESTATE MARKET IN AUSTRIA 1) The investment market Owing to the Covid-19 pandemic and the consequent economic slump, the total amount invested in real estate in Austria plummeted by almost 50% to approximately € 3.3 bn in 2020; Vienna accounted for around 72% of this figure. Residential properties represented the largest proportion of the total investment volume (37%) fol- lowed by office investments (around 33%); industrial and logistical properties accounted for approximately 14%. International investors, especially from Germany, were notably active in 2020 and responsible for more than two thirds of the investment volume. Five large-volume ac- quisitions (transactions with a value in excess of € 100 m) in the office and residential sectors were the main reason for this high proportion. Based on expected transactions, an investment volume of roughly € 4.0 bn is forecasted for 2021. In 2020, the pandemic had a partly significant impact on the development of yields in Europe. Austria proved relatively stable, although even here considerable write- ups and write-downs were reported at times. As in the previous year, prime yields for office properties declined moderately and now stand at the historic low level of 3.35% for properties in Vienna’s central business district (CBD). The office property market The total office stock in Vienna amounted to approxi- mately 11.4 million sqm at year end. The completion vol- ume for office premises totalled approximately 94,500 sqm in 2020, an increase of around 130% com- pared to the previous year. However, the completion vol- ume for 2020 was some 30% below the average value for the last five years. Compared to the previous year, lettings performance was stable in 2020 at approximately 203,300 sqm. Alt- hough the pandemic-induced economic crisis was al- ready impacting the office market in 2020, the worst of the effects are expected to be seen during 2021. For this reason, CBRE Research is working on the assumption that lettings performance will decline, partly in view of the 1) Sources: CBRE; Data supplied by CBRE Research Austria Real Estate Mar- ket Outlook 2021 persistently fraught situation as regards the levels of new construction in the next two years. In the course of 2020, the vacancy rate fell by around 20 basis points to 4.6%. Given the low levels of new con- struction and the high level of pre-letting, CBRE Research expects the vacancy rate to fall further in 2021 in spite of suppressed demand. Monthly peak rents in Vienna remained steady at € 25.00/sqm. Throughout the crisis, demand has re- mained high for prime quality offices in attractive loca- tions, whereas lower-standard properties in less favoura- ble locations will have to contend with lower demand in future. O FFICE MARKET DEVELOPMENT VIENNA 2020 2019 Chan g e in %/bps Take up in sqm 203,300 218,100 -6.80 Vacancy rate in % 4.60 4.75 -15 bps Peak rent in €/sqm net exclusive 25.00 25.00 0.00 Prime yield in % 3.35 3.55 -10 bps Sources: Data provided by CBRE Research Note: floor space take-up includes owner-occupied transactions THE REAL ESTATE MARKET IN GERMANY 2) The investment market Approximately € 79 bn was invested on the German real estate investment market in 2020. This represented a fall of 5.5% on the all-time high of the previous year – yet still constituted the second best result since records began. Thanks to a rally towards the end of the year, some € 23 bn was invested in the final quarter. The trans- action volume for commercial real estate in Germany to- talled approximately € 59 bn (12% below the previous year’s value). Office properties remained the asset class in highest demand, accounting for a proportion of just under 47%. In contrast to the overall market, the top seven markets reported sharp declines. Seven large-volume transactions of € 500 m or more were registered in 2019, with just two 2) Sources: CBRE; Data supplied by CBRE Research, Germany Real Estate Market Outlook 2021, Berlin, Munich, Frankfurt Office MarketView Q4 2020; Oxford Economics PROPERTY MARKETS GROUP MANAGEMENT REPORT GROUP MANAGEMENT REPORT 8 transactions of that size reported in 2020. Moreover, far fewer hotels and shopping centres were traded. With the exception of Stuttgart and Munich, the transaction vol- ume reported for 2020 exceeded the respective 10-year average, significantly in some instances. This underlined the attractiveness of these investment destinations for both national and international investors. The high de- gree of pressure to invest has meant prime yields on of- fice properties have remained at an all-time low. On Germany’s commercial real estate investment mar- ket, CBRE Research expects a transaction volume well in excess of € 50 bn in 2021. This will be driven by success in the fight against the Covid-19 pandemic and, above all, product availability. From an investor’s viewpoint, the focus is still on office properties. Given the exceptional circumstances that currently prevail, there is a growing trend towards core and core-plus properties in estab- lished locations within the big office markets. In the pre- sent climate, defensive investment products with reliable tenants are experiencing a surge in demand. Since it will not be possible to meet this demand on the supply side, however, CBRE Research is expecting yields on these products to compress further. Although the investment market for commercial real es- tate in Berlin reported a 34% drop on the previous year’s record value, the result of € 7.6 bn exactly matched the level for the last five years. Despite the decline in com- parison with the prior year, Berlin remains one of the most attractive markets in the Federal Republic or indeed Europe. In view of the high demand, the prime yield for office properties has fallen marginally to 2.65%. An investment volume of € 7.2 bn was reported on the commercial property market in Frankfurt, which achieved 3% growth on the previous year – its third highest result after 2007 and 2018. The final quarter of the year accounted for just under half of the volume. As in the previous year, office properties accounted for roughly 80% of the transaction volume. Even during the pandemic, the prime yield for centrally located office properties held stable at 2.90%. The commercial investment market in Munich, mean- while, was 54% down on the previous (record) year with 1) Sources: CBRE: Data supplied by CBRE Research, Munich, Frankfurt, Ber- lin Office MarketView Q4 2020; Oxford Economics a volume of € 4.9 bn. Office properties contributed al- most two thirds of the total volume (€ 3.1 bn, or 63%). Owing to continually high demand for real estate loca- tions offering stable value, the prime yield declined mar- ginally to 2.55%. The office property market 1) In 2020, the outbreak of the Covid-19 pandemic led to a severe global recession. In common with many other countries, Germany introduced general lockdowns and travel restrictions in the spring and again in the winter. As a result, market activity was severely impaired across many sectors – as reflected in the total GDP decline of 5.3% (against +0.6% in 2019 and +1.3% in 2018). The challenging conditions presented by the pandemic and the economic consequences thereof served to suppress demand for office space in comparison with the previous year. Given the shortage of floor space in many inner city areas, though, this did not lead to lower rental rates (even if the pace of rental rate rises seen in recent years has slowed). Floor space take-up in Munich totalled 558,500 sqm in 2020. This was equivalent to a 27% decrease on the prior year, and the lowest annual result since 2009. Following on from the historic low of 2019 (2.9%), the office va- cancy rate had reached 3.8% by year end. This was partly due to the larger number of vacated premises, and partly due to a rise in unlet premises owing to completions. Of- fice rents have been unaffected by the pandemic to date. The attainable peak monthly rent remained unchanged year-on-year at € 39.50/sqm. The weighted average rent was approximately € 21.41 per month, 7% above the pre- vious year’s figure. Given the persistent shortage of high quality, modern premises, tenants are still showing a willingness to pay appropriate rates for superior quality in good locations. The completion volume of approximately 338,500 sqm in 2020 (new buildings and core refurbishments) was more than 30% above the value for the previous year. Twelve percent of floorspace was unlet when it came onto the market. The stock of office space was approxi- mately 22.0 million sqm at year end. GROUP MANAGEMENT REPORT 9 OFFICE MARKET DEVELOPMENT IN CA IMMO CORE MARKETS IN GERMANY 2020 2019 Chan g e in %/bps Berlin Take u p in s q m 660,500 998,900 -33.90 Vacanc y rate in % 2.60 1.20 140 b p s Peak rent in €/s q m net exclusive 38.50 37.50 2.70 Prime y ield in % 2.65 2.70 -5 b p s Frankfurt am Main Take u p in s q m 330,200 552,500 -40.20 Vacanc y rate in % 7.00 6.90 10 b p s Peak rent in €/s q m net exclusive 44.00 44.00 0.00 Prime y ield in % 2.90 2.90 0 b p s Munich Take u p in s q m 558,500 763.500 -26.90 Vacanc y rate in % 3.80 2.90 90 b p s Peak rent in €/s q m net exclusive 39.50 39.50 0.00 Prime y ield in % 2.55 2.60 -5 b p s Sources: Data provided by CBRE Research Note: floor space take-up includes owner-occupied transactions Office space take-up in Frankfurt stood at 330,200 sqm in 2020, equivalent to a decline of 40% on the previous year. This was mainly due to poor performance in the first half, with users reluctant to commit to leases during the first lockdown. High quality office premises with first class fit-out were the focus of lettings activity, accounting for 65% of floor space take-up. The vacancy rate stood at 7.0%, only slightly above the previous years’ level. The peak monthly rent was also unchanged at € 44.00/sqm per month. Compared to the previous year, the weighted average market rent increased by 7% to € 23.13 per sqm owing to the higher number of rental agreements con- cluded in the higher-priced segment. The completion vol- ume exceeded the prior year’s figure of 158,700 sqm at 185,800 sqm. According to the information currently available, the completion pipeline contains an approximate total of 587,000 sqm to the end of 2023, of which 40% has al- ready been absorbed by the market in the form of leasing and owner-occupancy. The pre-letting rate for 2021 alone stands at 68%. Completion of the high-rise office/hotel building ONE in Frankfurt, CA Immo’s largest develop- ment project at present, is scheduled for 2022. The stock of office space was approximately 11.5 million sqm at the end of the year. 1) Sources: Data supplied by CBRE Research Berlin confirmed office space take-up of 660,500 sqm in 2020, down 34% on the previous year’s figure. The va- cancy rate rose to 2.6% in the course of the year (2019: 1.2%). On the lettings market, many leasing decisions were deferred in 2020. Although the result fell well short of the very strong performance of previous years, this was pandemic-related and does not point to a structural cri- sis. Despite the decline in floor space take-up and the ris- ing vacancy rate caused by the Covid-19 pandemic, the peak monthly rent level rose by € 1.00 per sqm to stand at € 38.50 per sqm. The weighted average rent also main- tained its strong upward trend, rising 8.1% to € 28.02/sqm per month. Approximately 296,700 sqm of new floor space was completed during 2020. According to CBRE Research, more than 50% of the one million sqm of floor space expected to come to the market in 2021 has already been pre-let. The stock of office space was ap- proximately 18.4 million sqm at year end. THE REAL ESTATE MARKET IN CENTRAL AND EASTERN EUROPE 1) The investment market The impact of the Covid-19 pandemic and the economic implications for real estate markets are also being felt in Central and Eastern Europe. In 2020, a year defined by GROUP MANAGEMENT REPORT GROUP MANAGEMENT REPORT 1 0 economic recession, it was not possible to maintain the rapid pace of recent years. This was also the case in CA Immo’s core cities of Warsaw, Prague, Budapest and Bucharest. The volume of commercial real estate transac- tions registered in these cities (€ 5.7 bn) was a little more than 30% short of the previous year’s value. Compared to 2019, the office investment volume in the aforemen- tioned cities declined by just over 40% to € 2.9 bn. By city, Warsaw accounted for the largest volume (43%), fol- lowed by Budapest (21%), Prague (20%) and Bucharest (16%). An investment volume of € 1.5 bn was reported in War- saw, with the office sector accounting for over 85%. The prime yield was approximately 4.50% (4.25% in 2019). Despite the decline in the investment volume in Prague (from € 3.1 bn in 2019 to € 2.7 bn), demand from national and international investors for high quality, sustainable real estate in good locations remained high. A shortage of suitable products was responsible for the downturn. As in the previous year, the prime yield stood at 4.25%. In 2020, the investment volume in Budapest fell by 41% to € 1.0 bn (€ 1.7 bn in 2019). Yields on prime office properties experienced a widening to 5.75%. Bucharest reported an approximate investment volume of € 550 m (down 15% on the previous year), with the of- fice sector accounting for some 85%. The prime yield re- mains at 7.00%. The office property markets 2) In all core cities of CA Immo (Warsaw, Prague, Budapest and Bucharest), it was not possible to sustain the positive development of lettings seen over recent years due to the impact of the Covid-19 pandemic. Vacancy rates were seen to increase on all core markets. While prime yields remained unchanged in Prague and Bucharest, they ex- panded by 25 and 50 basis points respectively in Warsaw and Budapest. By contrast, peak rents remained largely stable. At the end of 2020, total office space in Warsaw was ap- proximately 5.9 million sqm, with some 314,000 sqm 2) Sources: Data supplied by CBRE Research completed in the course of the year. With 576,800 sqm currently under construction, total floor space is ex- pected to exceed six million sqm in the course of 2021. The office pipeline is heavily focused on the CBD of the Polish capital. Office space take-up amounted to 383,000 sqm in 2020, below the prior year’s level. The vacancy rate increased by 210 basis points on the previ- ous year’s value to stand at 9.9% at year end. The peak monthly rent level in central locations was approxi- mately € 25.00 per sqm. The office property market in Prague experienced a subdued 2020. By the end of 2020, the stock of office space had increased by roughly 149,600 sqm to some 3.7 million sqm. Lettings performance only accounted for around 65% of the previous year’s value at approxi- mately 178,800 sqm. The vacancy rate had risen 150 ba- sis points to 7.0% by the end of the year. For this reason, peak rents in central locations declined only marginally to € 22.50/sqm per month. Floor space take-up for the year in Budapest was ap- proximately 190,000 sqm in 2020, around 47% below the previous year’s level. Total office space was around 3.9 million sqm by the end of the year. As expected, the completion volume for 2020 comfortably exceeded the prior year’s figure with 231,900 sqm, just above the previ- ous record figure attained in 2018 (approximately 230,000 sqm). The vacancy rate rose by 350 basis points to 9.1%, reversing the downward trend seen since 2012. Compared to the previous year’s figure, the peak monthly rent fell slightly to € 25.00/sqm. Around 141,200 sqm of office space was let in Bucha- rest by the end of 2020, down 52% on the previous year. The stock of office space totalled 3.0 million sqm by year end thanks to a completion volume of approximately 155,200 sqm. The vacancy rate increased by 130 percent- age points to stand at 12.4% at year end. Despite this, the peak monthly rent in Bucharest rose marginally to € 18.75 per sqm. GROUP MANAGEMENT REPORT 1 1 OFFICE MARKET DEVELOPMENT IN THE CA IMMO CORE MARKETS IN CENTRAL AND EASTERN EUROPE 2020 2019 Chan g e in %/bps Budapest Take up in sqm 190,000 362,000 -47.50 Vacancy rate in % 9.10 5.60 350 bps Peak rent in €/sqm net exclusive 25.00 26.00 -3.80 Prime yield in % 5.75 5.25 50 bps Bucharest Take up in sqm 141,200 291,300 -51.50 Vacancy rate in % 12.40 11.10 130 bps Peak rent in €/sqm net exclusive 18.75 18.50 1.40 Prime yield in % 7.00 7.00 0 bps Prague Take up in sqm 178,800 276,100 –35.20 Vacancy rate in % 7.00 5.50 150 bps Peak rent in €/sqm net exclusive 22.50 23.00 -2.20 Prime yield in % 4.25 4.25 0 bps Warsaw Take up in sqm 383,000 584,000 -34.4 Vacancy rate in % 9.90 7.80 210 bps Peak rent in €/sqm net exclusive 25.00 25.00 0.00 Prime yield in % 4.50 4.25 25 bps Sources: Data provided by CBRE Research. Note: floor space take-up includes owner-occupied transactions GROUP MANAGEMENT REPORT GROUP MANAGEMENT REPORT 12 Business areas and core markets The CA Immo Group divides its core activity into the business areas of investment properties and investment properties under development. In both of these business areas, CA Immo specialises in commercial real estate with a clear focus on office properties in capital cities in the centre of Europe. The objective is to expand the focused portfolio of high quality and profitable investment prop- erties within the core markets of Germany, Austria, Czechia, Poland, Hungary and Romania. Additional earn- ings will be generated through the preparation, develop- ment and utilisation of land reserves in the development area. € 5.6 bn property assets By the transfer of own project completions into the in- vestment portfolio as well as a positive revaluation result, the value of property assets has increased in 2020 by 8% up to € 5.6 bn (2019: € 5.2 bn). Of this figure, investment properties account for € 4.7 bn (85% of the total portfo- lio), property assets under development represent € 0.8 bn (14%) and short-term properties 1) € 69 m (1%). With a proportion of 54% of total property assets, Ger- many is the biggest regional segment. PROPERTY ASSETS OF THE CA IMMO GROUP AS AT 31.12.2020 (PORTFOLIO VALUES) in € m Investment properties 2) Investment properties under development Short-term property assets 3) Property assets Property assets in % Austria 530.0 0.0 0.0 530.0 9.5 Germany 2,228.5 751.9 35.2 3,015.6 53.9 Czechia 387.9 39.2 0.0 427.1 7.6 Hungary 524.2 0.0 0.0 524.2 9.4 Poland 590.2 0.0 0.0 590.2 10.5 Romania 390.6 0.0 0.0 390.6 7.0 Other countries 84.5 0.0 33.9 118.4 2.1 Total 4,736.0 791.1 69.1 5,596.2 100.0 Share of total portfolio 85% 14% 1% 2) Includes properties used for own purposes; incl. the recently completed office building NEO (Munich) and the quarter garage (Zollhafen Mainz), which are still in the stabilisation phase 3) Short-term property assets include properties intended for trading or sale 1) Incl. properties intended for trading or sale PROPERTY ASSETS GROUP MANAGEMENT REPORT 13 CHANGES TO THE PORTFOLIO IN 2020 In the 2020 business year, CA Immo continued its strate- gic capital rotation programme and its portfolio focus on large-scale, modern office properties in core cities throughout the Group. The aim here is to profitably dis- pose of properties that are unprofitable or unviable ac- cording to the portfolio strategy or which are not part of the core core business. CA Immo invests the proceeds of the sale in in the value-enhancing continuation of its first-class German development development pipeline and in attractive portfolio acquisitions. Project completions (for own stock) In 2020, CA Immo transferred two internally developed buildings with an investment volume totalling approxi- mately € 138.1 m to its own portfolio 1) . Assuming full oc- cupancy, these will boost rental revenue by around € 8 m annually over the years ahead. In the first quarter, CA Immo completed the six-storey MY.B office building in Berlin's Europacity, which has around 14,800 sqm of lettable space, and added it to its own portfolio. The building is fully let; all office tenants have already moved in. In the third quarter, the NEO office building in Munich, developed by CA Immo, was put into operation and sim- ultaneously added to the CA Immo investment portfolio; the first tenants have already moved in. Completed in 2020 and part of the CA Immo investment portfolio: NEO of- fice building, Munich PROPERTY ASSETS BRIDGE 2019 TO 2020 AND KEY FIGURES 2020 Austria Germany CEE Total Pro p ert y assets 31.12.2019 € m 572.9 2,588.8 2,024.6 5,186.4 Ac q uisition of new p ro p erties € m 0.0 127.5 92.3 219.8 Ca p ital ex p enditure 2) € m 3.3 213.4 49.8 266.5 Chan g e from valuation/im p airment/de p reciation € m 7.1 267.6 – 76.0 198.8 Chan g es lease incentive € m 0.6 1.0 2.8 4.5 Dis p osals € m – 53.9 – 186.8 – 42.6 – 283.2 Other chan g es € m 0.0 4.0 – 0.6 3.5 Pro p ert y assets 31.12.2020 € m 530.0 3,015.6 2,050.6 5,596.2 Rental income (actual) 3) € m 29.7 78.3 127.6 235.6 Annualised rental income € m 28.3 78.3 136.0 242.6 Economic vacanc y rate for investment p ro p erties % 8.9 1.2 6.6 5.2 Gross y ield (investment p ro p erties) % 5.4 3.6 6.8 5.2 2) Excluding maintenance 3) Includes annual rental income from properties sold in 2020 (€ 5.0 m) 1) Excl. the quarter garage Zollhafen Mainz (€ 7.2 m) GROUP MANAGEMENT REPORT GROUP MANAGEMENT REPORT 14 Acquisitions At the beginning of April, CA Immo acquired the fully let office building "Am Karlsbad 11" at the southern end of Berlin's Potsdamer Platz office submarket. The build- ing, which has around 10,100 sqm of lettable space, is very well connected to the rest of the city, thanks in part to its location at the Gleisdreieck underground station. At the end of 2020, CA Immo acquired the fully let office building "Pohlstraße 20" in the vicinity of Potsdamer Platz in Berlin-Mitte and the property "Am Karlsbad 11". The property has a total lettable area of around 7,800 m². At the end of October, CA Immo completed the acquisi- tion of Postepu 14, a landmark office building in War- saw's Mokotow district. The property has a lettable area of around 34,500 sqm and is almost fully let to tenants with strong credit ratings such as AstraZeneca and Sam- sung Electronics. The purchase price was around € 87 m with annual gross rental income of around € 6.5 m, which corresponds to a gross initial yield of 7.5%. New in the CA Immo investment portfolio: Warsaw office building Postepu 14 Sales At the end of June, the landmark building cube berlin, which was developed by CA Immo and completed in the first quarter of 2020, was handed over to the end investor fully let. CA Immo had already sold the building, which is located directly at Berlin's main railway station, in a forward sale at the end of 2016; the sale has now been completed. With the sale of the Zagrebtower office building closing at the end of September, CA Immo withdre w from the small, non-strategic market of Croatia. The purchase price was 5% above the book value as at 30 June 2020. The 79 m high, fully let office tower offers a total of 25,900 sqm of rental space. In October, CA Immo sold the NEO LIVING residential building in Munich's Baumkirchen Mitte quarter. The to- tal floor space of the residential building, which was completed in September 2020, amounts to around 5,200 sqm. NEO LIVING is part of the NEO building en- semble developed by CA Immo, which also has a hotel and office tower in addition to the residential part sold. The property comprises 50 high-quality rental flats and three commercial units on the ground floor. CA Immo was also able to sell several non-core plots at attractive conditions, including a plot in the Zollhafen Mainz quarter development, a hotel plot in Lübeck (the closing took place in February 2021), as well as one de- velopment plot each in Dortmund and Düsseldorf (the closing of the latter two transactions is expected in Q2 2021). With the sale of two retail plots in Graz, Austria, CA Immo withdrew from the last Austrian secondary city. All sales were made at prices above the last book value – underlini ng the intrinsic value of the CA Immo portfo- lio in the current market environment. With th is strategic capital rotation, CA Immo is e xpanding in its core mar- kets, strengthening sustainable earnings an d improving its portfolio quality and management efficiency. Property assets sold in 2020 1) generated total trading revenue of € 229.8 m (2019: € 67.1 m) and contributed € 55.3 m to the result (compared to € 19.4 m in 2019). Investments In 2020, CA Immo invested a total of € 271.4 m (2019: € 257.7 m) in its property portfolio (investments and maintenance). Of this figure, € 60.7 m was earmarked for modernisation and optimisation measures and € 210.8 m was devoted to the furtherance of development projects. 1) Incl. sale of properties held at equity (proportionately owned by CA Immo) GROUP MANAGEMENT REPORT 1 5 Contributing around 85% of total property assets, the investment property area is CA Immo’s main source of income. The principle objective of the company is the continual optimisation of its portfolio and the retention and acquisition of tenants with a view to securing stable and recurring rental revenue. Details on sustainability is- sues regarding the investment portfolio can be found in the ESG report. € 4.7 bn investment portfolio As at key date 31 December 2020, the Group’s invest- ment portfolio incorporated a total rentable effective area of 1.4 m sqm with an approximate book value of € 4.7 bn (2019: € 4.3 bn). With a share of 42% of book value, the Central and Eastern Europe (CEE) segment accounts for the largest proportion of the investment portfolio. In 2020, CA Immo generated total rental income of € 238.2 m (€ 217.8 m in 2019); the CEE segment ac- counted for roughly 56% of total rental revenue. On the basis of annualised rental revenue, the asset portfolio produced a yield of 5.2% 2) (5.5% 3) in 2019). In line with the strategic portfolio focus, the office share of the total portfolio has steadily increased over recent years and stands almost unchanged at the previous year’s level of 90%. Stable high occupancy The occupancy rate for the investment portfolio stands quite stable at 94.8% 2) on 31 December 2020 (31 December 2019: 96.1% 3) ). CA Immo records full occu- pancy of its existing portfolio in almost all core markets. INVESTMENT PROPERTIES: KEY FIGURES BY COUNTRY Book value investment properties Rentable area Occupancy rate Annualised rental income Yield in € m in sqm in % in € m in % Austria 524.7 215,699 91.1 28.3 5.4 Germany 2,129.3 407,032 98.8 77.1 3.6 Czechia 387.9 131,661 97.0 22.0 5.7 Hungary 524.2 218,621 89.2 34.3 6.5 Poland 555.1 171,782 94.0 36.8 6.6 Romania 390.1 164,557 94.9 31.8 8.1 Other countries 82.9 46,448 94.2 7.9 9.6 Subtotal 4,594.2 1,355,799 94.8 238.2 5.2 Other investment properties 4) 141.8 17,974 Total investment properties 4,736.0 1,373,773 4) Incl. properties used for own purposes; incl. the office building NEO (Munich) and the quarter garage Zollhafen Mainz, which have been completed and taken over into the portfolio in 2020 and are still in the stabilisation phase 1) This chapter shows, among other things, performance indicators for our investment properties such as occupancy rate and yield. Properties used for own purposes, “Right-of-use” assets and project completions still in the stabilization phase are not included in the calculation of these fig- ures. For this reason, these types of property are also excluded from the portfolio book values and the rentable area in the table "Investment prop- erties: key figures by country” and reported separately in the line “Other investment properties” 2) Excl. properties used for own purposes; excl. the project completions NEO (Munich) and the quarter garage Zollhafen Mainz, which have been transferred to the investment portfolio in 2020 and are still in the stabilisa- tion phase 3) Excl. properties used for own purposes; excl. the project completions Orhideea Towers (Bucharest), ViE (Vienna) and MY.O (Munich), which have been still in the stabilisation phase as at 31 December 2019 Office DISTRIBUTION OF BOOK VALUE INVESTMENT PROPERTIES BY MAIN USAGE (Basis: € 4.7 bn) Retail Hotel Other 90% 2% 6% 2% INVESTMENT PROPERTIES 1) GROUP MANAGEMENT REPORT GROUP MANAGEMENT REPORT 16 LIKE-FOR-LIKE COMPARISON OF PROPERTIES IN THE STABILISED PORTFOLIO AS AT 31.12.2019 The like-for-like view of the portfolio provides an over- view of the organic development of the most relevant portfolio indicators in a year-on-year comparison, ad- justed for portfolio changes (asset additions and dispos- als). The increase in balance sheet value over the course of 2020 mainly resulted from a positive revaluation result in Germany. Declines in rental income in Hungary and non-strategic locations in Central and Eastern Europe were offset by significant increases in Romania and Czechia. Gross yields decreased by 9 basis points mainly due to balance sheet value increases in Germany. The oc- cupancy rate decreased by 36 basis points over the period under review. Declines in Hungary and Poland were partly compensated by increases in Romania and Czechia. Book values Rental income P&L Gross yield in % 1) Occupancy rate in % 2) € m 2020 2019 2020 2019 2020 2019 2020 2019 Austria 471.6 483.4 25.4 26.1 5.6 5.6 92,2 94.7 Germany 1,708.6 1,575.4 63.3 63.2 3.7 3.9 98,6 98.9 Czechia 387.9 390.7 21.1 20.6 5.7 5.5 97,0 95.6 Hungary 524.2 525.1 33.8 34.0 6.5 6.6 89,2 93.2 Poland 467.3 491.8 29.6 29.3 6.5 6.3 94,3 95.7 Romania 311.1 319.2 23.3 21.6 7.9 7.6 95,6 96.2 Other 3) 116.8 129.7 10.2 10.7 9.5 8.7 92,8 93.8 Total 3,987.5 3,915.3 206.8 205.4 5.3 5.4 94,7 96.0 1) Annualised contractual rent / book value 2) Economic occupancy (annualized contractual rent / contractual rent at full occupancy) 3) Serbia, Slovakia Lettings performance 2020 Across the Group, CA Immo let around 13 6,200 sqm of rentable area in 2020 (2019: around 268,000 sqm), of which pre-lettings of development projects accounted for 4% (around 5,100 sqm). Excluding these pre-lettings, this equates to lettings performance of 9% for the Group’s to- tal investment portfolio, which amounts to around 1.4 m sqm. New lettings and contract expansions by existing tenants accounted for 24%; contract extensions by exist- ing tenants represent 76%. Office space accounted for around 88% of total lettings performance. 41 % of lease contracts (in terms of letting volume) are concluded for terms of more than five years. As at 31 De- cember 2020, the WALT (Weighted Average Lease Term) was 4.0 years (2019: 4.2 years). CA Immo has a sector-di- versified tenant structure with a high proportion of com- panies from the service and technology sector. The 20 largest tenants account for around 33% of total rental in- come (on the basis of annualised rental revenue). LETTINGS PERFORMANCE BY SEGMENT in sqm Pre-lease development projects New lease investment properties Lease extensions Total Germany 5,105 8,188 15,829 29,122 Austria 0 10,059 8,463 18,522 CEE 0 13,478 75,114 88,592 Total 5,105 31,725 99,407 136,237 GROUP MANAGEMENT REPORT 1 7 EXPIRY PROFILE OF LEASE AGREEMENTS BASED ON ANNUALISED RENTAL INCOME 1) 1) Lease term until the next possible end of the contract LARGEST TENANTS (TOP 20) Sector Region Share in % of total rent 1) PWC Professional Services Germany 3.1% InterCityHotel Consumer Services & Leisure Germany 2.5% The European Border and Coast Guard Agency Professional Services CEE 2.5% Google Germany Technology Germany 2.0% BRITISH AMERICAN TOBACCO Manufacturing Industrial & Energy CEE 1.9% Morgan Stanley Financial Services CEE 1.8% KPMG Professional Services Germany 1.8% Land Berlin Public Sector / Regulatory Body Germany 1.7% TOTAL Manufacturing Industrial & Energy Germany 1.7% Robert Bosch Manufacturing Industrial & Energy Austria 1.6% Verkehrsbüro Consumer Services & Leisure Austria 1.6% JetBrains Technology Germany 1.5% Bundesanstalt für Immobilienaufgaben Public Sector / Regulatory Body Germany 1.5% Hypoport Technology Germany 1.4% salesforce.com Germany Technology Germany 1.1% Accenture Business Services CEE 1.0% VOBA Vermietungs- und Verpachtungs GmbH Financial Services Austria 1.0% ORANGE Consumer Services & Leisure CEE 1.0% FINASTRA Technology CEE 0.9% S.C. THALES SYSTEMS ROMANIA Technology CEE 0.9% 1) Based on annualised rental revenue Business & Professional Services TENANTS BY INDUSTRY ON THE BASIS OF ANNUALISED RENTAL REVENUE Financial Services Technology Consumer Services & Leisure Public Sector/ Regulatory Body Manufacturing, Industrial & Energy Other 26% 12% 21% 17% 9% 13% 2% GROUP MANAGEMENT REPORT GROUP MANAGEMENT REPORT 1 8 EPRA Yields The type and scope of yield disclosures often vary and the metrics used are not consistently defined. In order to provide comparable reporting in terms of yields across Europe, EPRA has defined two yield measures. The EPRA net initial yield is calculated as annualized rental income based on rents at the balance sheet date, less non-refundable property operating costs, divided by the market value of the property. The EPRA "topped up" yield is calculated using an adjustment in respect of the granting of rent-free periods (or other unexpired lease in- centives such as discounted lease periods and step-rents). EPRA YIELDS € K Austria Germany Czechia Hungary Poland Romania CEE others Total Investment p ro p erties 1) 504,306 1,813,758 393,731 529,440 471,973 315,400 118,534 4,147,142 Annualised cash rental income ( g ross) 24,863 67,305 20,346 33,246 29,274 23,530 9,925 208,488 p ro p ert y o p eratin g ex p enses – 7,917 – 8,159 – 899 – 3,763 – 1,961 980 – 1,068 – 22,788 Annualised cash rental income (net) 1) 16,946 59,146 19,447 29,482 27,313 24,510 8,856 185,700 EPRA Net Initial Yield 3.4% 3.3% 4.9% 5.6% 5.8% 7.8% 7.5% 4.5% Lease incentives 762 –1,138 718 549 340 –212 292 1,310 EPRA "to pp ed-u p " Net Initial Yield 3.5% 3.2% 5.1% 5.7% 5.9% 7.7% 7.7% 4.5% 1) Based on the like-for-like portfolio EPRA vacancy rate Vacancy rate reporting is not standardized across the real estate industry. In order to promote comparable and consistent reporting, the EPRA requirements specify a single, clearly defined vacancy rate disclosure.The EPRA vacancy rate is to be expressed as a percentage equal to the expected rental value of vacant space divided by the expected rental value of the entire portfolio.The EPRA vacancy rate is calculated only for completed properties (investment, trading and including share of joint ven- tures’ vacancy), but excluding properties under develop- ment. EPRA VACANCY Vacancy ERV Full Reversion ERV EPRA Vacancy Rate Austria 2.8 29.3 9.4% Germany 1.0 113.4 0.9% Hungary 4.2 40.2 10.4% Poland 2.3 38.2 6.1% Czechia 0.7 22.9 3.0% Romania 1.7 32.3 5.3% other Countries 0.5 8.1 6.0% CEE 9.4 141.7 6.6% Total 13.1 284.3 4.6% GROUP MANAGEMENT REPORT 1 9 THE AUSTRIA SEGMENT The asset portfolio in Austria comprises a rentable effec- tive area of 218.2 k sqm with a market value of around € 530.0 m (2019: € 572.9 m) according to current valua- tions. In 2020, this portfolio generated rental income of € 28.3 m (€ 29.6 m in 2019), equivalent to an average yield of 5.4% 1) (5.7% 2) in 2019). In 2020 CA Immo invested around € 5.6 m in its Aus- trian investment portfolio (investments and maintenance costs), compared to € 18.8 m in 2019. Lettings performance In Austria, around 19,000 sqm of office space was newly let or extended in 2020. The economic occupancy rate in the asset portfolio was 91.1% 1) as at the key date (95.1% 2) in 2019). The decrease in occupancy is due to the takeo- ver of the ViE office building (completed at the end of 2018) with an occupancy rate of around 80% (as of 31 De- cember 2020) into the stabilised portfolio. INVESTMENT PROPERTIES AUSTRIA: KEY FIGURES in € m 31.12.2020 3) 31.12.2019 4) Change book value 524.7 517.2 1.4% Annualised rental income 5) 28.3 29.6 – 4.3% Gross yield in % 5.4 5.7 – 30 bp Economic vacancy rate in % 8.9 4.9 400 bp 3) Excl. properties used for own purposes; excl. the project completions NEO (Munich) and the quarter garage Zollhafen Mainz, which have been transferred to the investment portfolio in 2020 and are still in the stabili- sation phase 4) Excl. properties used for own purposes; excl. the project completion MY.O (Munich), which has been still in the stabilisation phase as at 31 December 2019 5) Monthly contractual rent as at key date multiplied by 12 THE GERMANY SEGMENT In 2020, the value of the German investment portfolio was significantly raised by the transfer of completed pro- jects to the portfolio, two property acquisitions as well as a positive revaluation result. Compared to the previous year, completion of the CA Immo office projects MY.B 1) Excludes properties used for own purposes 2) Excludes properties used for own purposes and the project completion ViE in Vienna, which was still in the stabilisation phase as at 31.12.2019 3) Excludes properties used for own purposes, excl. the project completions NEO (Munich) and the quarter garage Zollhafen Mainz, which are still in the stabilisation phase (Berlin) and NEO (Munich) in combination with the pur- chase of the Berlin office buildings "Am Karlsbad 11" and “Pohlstraße 20”, has had a year-on-year effect on all key portfolio figures (for details on projects completed in 2020, refer to the ‘Property assets’ section). As at the key date, CA Immo held investment properties in Germany with an approximate market value of € 2,228.5 m (€ 1,725.5 m in 2019) and a rentable effective area of 422 k sqm (2019: 369 k sqm). By portfolio value, 47% of the total investment portfolio is in Germany. The German investment portfolio mainly comprises modern office buildings developed by CA Immo in central loca- tions of Berlin, Munich and Frankfurt. Rental income of € 77.1 m was generated in 2020, com- pared to € 61.9 m 2) in 2019. The yield on the portfolio was 3.6% 3) as at 31 December 2020 (2019: 3.9% 4 ). CA Immo spent approximately € 24.7 m on maintaining its German investment properties (investments and maintenance costs) in 2020 (2019: € 23.2 m). Occupancy rate stable at 99% The occupancy rate for the asset portfolio in Germany remained almost unchanged at a very high level of 98.8% 3) on 31 December 2020 (98.9% on 31 December 2019) 4) . In Germany, approximately 24,000 sqm of floor space was newly let or extended during 2020. INVESTMENT PROPERTIES GERMANY: KEY FIGURES 3) in € m 31.12.2020 4) 31.12.2019 5) Change Book value 2,129.3 1,575.4 35.2 Annualised rental income 6) 77.1 61.9 24.5 Gross yield in % 3.6 3.9 – 30 bp Economic vacancy rate in % 1.2 1.1 10 bp 3) Excludes properties used for own purposes 4) Excl. the project completions NEO (Munich) and the quarter garage Zollhafen Mainz, which are still in the stabilisation phase 5) Excl. the project completion MY.O (Munich), which was still in the stabi- lisation phase as at 31.12.2019 6) Monthly contractual rent as at key date multiplied by 12 4) Excludes properties used for own purposes, excl. the project completion MY.O (Munich), which was still in the stabilisation phase as at 31.12.2019 GROUP MANAGEMENT REPORT GROUP MANAGEMENT REPORT 2 0 THE CEE SEGMENT CA Immo has been investing in CEE since 1999. As at the key date, the company holds investment properties in six countries of CEE and SEE. As at key date 31 December 2020, the value of the CEE investment properties was € 1,977.4 m (€ 2,009.6 m on 31 December 2019), equivalent to a share (by portfolio value) of around 42% of the total investment portfolio. In this region, CA Immo concentrates on high quality, cen- trally located office properties in capital cities, which make up 100% of the overall CEE portfolio. The portfolio is maintained and let by the company´s local teams on site. 56% of rental revenue from CEE The company’s asset portfolio comprises 733 k sqm of rentable effective area (2019: 750 k sqm) which generated rental income of € 132.8 m in 2020 (compared to € 126.2 m in 2019) 1) . This represents 56% of CA Immo’s total rental revenue. The portfolio produced a gross yield of 6.8% (2019: 6.6% 1) ). In 2020, CA Immo invested € 30.3 m (2019: € 23.9 m) in its CEE investment portfolio. Occupancy rate at 93% 3) The economic occupancy rate (measured on the basis of annualised rental income) was 93.4% as at 31 December 2020 (2019: 95.0%) 1) . Total lettings performance for the CEE segment amounted to roughly 89,000 sqm of rentable office space in 2020; thereof 15% accounted for new let- tings of investment properties (incl. lease expansions), 85% were lease extensions. INVESTMENT PROPERTIES IN CEE: KEY FIGURES Book value investment properties Annualised rental income 3 ⁾ Occupancy rate Yield in € m in € m in % in % Poland 555.1 36.8 94.0 6.6 Hungary 524.2 34.3 89.2 6.5 Romania 390.1 31.8 94.9 8.1 Czechia 387.9 22.0 97.0 5.7 Other countries 4) 82.9 7.9 94.2 9.6 Total 1,940.2 132.8 93.4 6.8 3) Monthly contractual rent as at key date multiplied by 12 4) Includes two office properties in Belgrade (Serbia) 1) Excludes properties used for own purposes; excl. the project completion Orhideea Towers (Bucharest), which was still in the stabilisation phase as at 31.12.2019 Germany DISTRIBUTION OF BOOK VALUE INVESTMENT PROPERTIES BY COUNTRY (Basis: € 4.7 bn) Hungary Austria Poland Czechia Romania Other 47% 11% 11% 12% 8% 8% 3% GROUP MANAGEMENT REPORT 21 Project development as a driver of organic growth CA Immo enhances the quality and ensures the organic growth of its portfolio by developing properties and transferring to its investment portfolio upon completion. CA Immo benefits in this from its extensive stock of land reserves in Germany (mostly in central locations of Mu- nich, Frankfurt and Berlin) as well as an internal devel- opment platform that enables the company to exploit the full depth of the real estate value chain. From site devel- opment and the procurement of planning permission to construction management, letting and the transfer of completed properties to its own portfolio or sales to in- vestors, CA Immo performs the full range of project de- velopment services. Details on sustainability aspects in the project develop- ment area can be found in the ESG report. Four project completions in 2020 In 2020, CA Immo completed two properties for sale (cube berlin office building, NEO LIVING residential building in Munich) and one office building each in Ber- lin and Munich for its own portfolio (for details, please see the ‘Property assets’ section). In total, CA Immo com- pleted properties with an investment volume totaling ap- proximately € 286.5 m in 2020, of which € 145.3 m was for its own portfolio and € 141.2 m was earmarked for sale. Pre-letting on projects In 2020, CA Immo signed lease agreements for 5,100 sqm of usable space in development projects under construction. This includes, among other things, a long- term lease agreement for around 3,500 sqm of rental space in the NEO office building in Munich, which was completed in the third quarter of 2020 and taken over into the portfolio. 95% of development activity in Germany As at 31 December 2020, the development division 1) represented around 15% (equivalent to approximately € 826.3 m) of CA Immo’s total property assets (2019: € 878.5 m). Accounting for a share of 95% (by book value), the focus of project development activity is still firmly on Germany. Developments and land reserves in CEE account for the remainder of property assets under development (€ 39.2 m). Investment properties under de- velopment in Germany with a total book value of € 787.1 m are divided into projects under construction accounting for around € 432.5 m and development pro- jects in preparation and land reserves (€ 354.6 m). INVESTMENT PROPERTIES UNDER DEVELOPMENT BY COUNTRY 1) Landbank Projects under construction Total investment properties under development in Mio. € Book value Book value in % Book value Book value in % Book value Book value in % Austria 0,0 0,0 0,0 0,0 0,0 0,0 Frankfurt 192.5 54.2 241.0 51.1 433.5 52.5 Berlin 99.5 28.0 173.5 36.8 273.0 33.0 Munich 62.7 17.7 17.9 3.8 80.6 9.8 Germany 354.6 100.0 432.5 91.7 787.1 95.3 Czechia 0.1 0.0 39.1 8.3 39.2 4.7 Hungary 0.0 0.0 0.0 0.0 0.0 0.0 Poland 0.0 0.0 0.0 0.0 0.0 0.0 Romania 0.0 0.0 0.0 0.0 0.0 0.0 Other countries 0.0 0.0 0.0 0.0 0.0 0.0 CEE 0.1 0.0 39.1 8.3 39.2 4.7 Total 354.8 100.0 471.6 100.0 826.3 100.0 1) Incl. projects under construction and plots held for trading or sale (short-term property assets) INVESTMENT PROPERTIES UNDER DEVELOPMENT GROUP MANAGEMENT REPORT GROUP MANAGEMENT REPORT 22 THE AUSTRIA SEGMENT During business year 2020, CA Immo had no activities in the field of investment properties under development in Austria. THE G ERMANY SEGMENT CA Immo’s development activity in Germany focuses mainly on large scale, mixed-use urban projects in Berlin, Munich and Frankfurt. As at 31 December 2020, CA Immo held rentable effective area under construction amounting to 109 k sqm in Germany with a total invest- ment volume (including plots) of around € 637.1 m (2019: € 858.9 m). In addition to the current project vol- ume, CA Immo holds German land reserves with a value of € 354.6 m (incl. properties held for trading or sale). These existing reserves will form the basis of further value-creating development activity by CA Immo over the years ahead. PROJECTS UNDER CONSTRUCTION 1) in € m Total Investment 2) Outstanding construction costs Planned rentable effective area in sqm Gross yield on cost in % City Main usage Utilisation in % 3) Scheduled completion Projects (own stock) ZigZag 16.8 3.0 4,695 5.1 Mainz Office 35 Q3 2021 ONE 412.0 191.8 68,548 5.6 Frankfurt Office 33 Q1 2022 Mississippi House 40.0 17.6 13,383 6.6 Prague Office 40 Q3 2021 Missouri Park 24.5 10.8 7,376 6.3 Prague Office 14 Q3 2021 Hochhaus am Europaplatz 141.3 81.8 22,948 6.3 Berlin Office 100 Q4 2023 Grasblau 67.0 43.4 13,258 8.5 Berlin Office 0 Q4 2022 Total 701.6 348.4 130,208 6.1 1) Excl. Joint Ventures (residential construction). All projects included in the table are 100% owned by CA Immo 2) Incl. plot 3) Utilisation: pre-letting rate 2 1 DEVELOPMENT OF URBAN DISTRICT EUROPACITY IN BERLIN JOHN F. KENNEDY HAUS office / 18,000 sqm / 2015 / rented 1 INTERCITY HOTEL BERLIN hotel / 20,600 sqm / 2013 / rented 2 MONNET 4 office / 8,100 sqm / 2015 / rented 3 TOUR TOTAL office / 14,200 sqm / 2012 / rented 4 OFFICE BUILDING HEIDESTRASSE 58 office / 12,800 sqm / 2018 / rented 5 HAMBURGER BAHNHOF museum 6 INVESTMENT PROPERTIES L BÜROGEBÄUDE AM KUNSTCAMPUS office / 7,900 sqm / 2019 / rented 7 MY.B office / 14,800 sqm / 2020 / rented 8 4 3 5 6 8 7 (usage / usable area in sqm / completion / status) PROJECTS UNDER CONSTRUCTION LAND RESERVE L 1 L 9 UPBEAT offi ce / 3,0 sqm / 202 / in planning stage 1 PROJECTS IN PLANNING STAGE HIGH-RISE BUILDING ON EUROPAPLATZ offi ce / 2,00 sqm / 2023 / under construction 9 GROUP MANAGEMENT REPORT 25 Main focus of current development activity in Ger- many Berlin The Europacity district is taking shape around Berlin’s main railway station, drawing together office, residential, hotel and cultural uses across some 60 hectares. Reputa- ble companies such as KPMG and IntercityHotel have al- ready signed up as tenants. As at the key date, CA Immo had one office project under development in this urban district: At the end of 2019, CA Immo started the construction of the 84-metre office high-rise Hochhaus am Europaplatz adjacent to Berlin’s main station. The Landmark structure – CA Immo’s ninth property development in the Eu- ropacity district – was fully pre-let to KPMG before con- struction work had begun. Outside Europacity, CA Immo started construction of the Grasblau office building in the immediate vicinity of Potsdamer Platz in the first half of the year. Among other things, the project boasts an attractive city centre location – with excellent transport links and local amenities – combined with a quiet and green microlocation, transpar- ent architecture and generous open spaces. Munich At the end of July, the urban development and land- scape planning competition for the Munich urban dis- trict development Eggarten-Siedlung was concluded. The competition was organized by the two property owners CA Immo and Büschl Unternehmensgruppe with the aim of developing the area into a future-oriented and sustain- able model quarter for cooperative housing construction, mobility, energy and climate protection (see also ESG re- port). The results of the competition are now the basis for the further development plan procedure. Frankfurt In the Frankfurt Europaviertel, centrally located be- tween the banking district and the exhibition grounds, CA Immo is developing the 190-metre office and hotel high-rise structure ONE. After completion of the high- rise, which is scheduled for 2022, the international NH Hotel Group will open a nhow lifestyle hotel with 375 rooms in the ONE. At the end of September, CA Immo, in cooperation with the City of Frankfurt, launched an architectural competi- tion for a CA Immo site ("Millennium Area") in Frank- furt's Europaviertel. The aim of the competition is to de- velop a mixed-use building complex with two high-rise buildings and a perimeter block development with a total gross floor area of approx. 185,000 sqm. The competition area of approx. 8,700 sqm is situated in a central location not far from Frankfurt's main train station on the western edge of Frankfurt's banking district. The urban develop- ment contract concluded between the City of Frankfurt and CA Immo for the development of the site provides for a high-quality urban mix of apartments, office space, a hotel and a day-care center, as well as additional restau- rant, retail, service and leisure space. The architectural competition for the CA Immo land reserve (marked red) in Frankfurt's Europaviertel was launched. To the left: ONE construction site Mainz In partnership with Stadtwerke Mainz, CA Immo has been developing Zollhafen Mainz, a new urban district on the banks of the Rhine spanning some 22 hectares, since 2015. In the 2nd quarter, the joint venture partners CA Immo and UBM began construction of the Kauf- mannshof residential and office building in Zollhafen Mainz. A total of 50 high-quality flats and around 3,100 sqm of office space will be built. THE CEE SEGMENT The CEE segment accounts for property assets under de- velopment (including land reserves) with an approximate book value of € 39.2 m as at 31 December 2020. In the sought-after Karlin district, CA Immo has two prime quality office buildings under construction in the River City Prague complex. Mississippi House and Mis- souri Park will complement CA Immo’s attractive office complex, which currently comprises three class A struc- tures (Amazon Court, Nile House and Danube House). The two buildings will offer rentable effective area total- ing some 21,000 sqm. GROUP MANAGEMENT REPORT GROUP MANAGEMENT REPORT 26 Property valuation constitutes the fundamental basis on which a real estate company is appraised, and is thus the most important factor in determining net asset value. In addition to property-specific criteria, there are many eco- nomic and political factors that can affect the develop- ment of property values. In the office property sector, which represents the core business of the CA Immo Group, the general economic conditions – especially where economic growth and the employment rate are concerned – directly influence the real estate cycle. Other key variables having a major influence on the demand sit- uation on real estate investment markets include interest levels and geopolitical events. Given their economic im- plications and varying impact on the capital and real es- tate markets of different sectors, unforeseeable and excep- tional situations (such as the outbreak of the Covid-19 pandemic) can also have a direct impact on property val- uations. External valuation reports to international standards The value of real estate is generally determined by inde- pendent expert appraisers outside the company using rec- ognised valuation methods. External valuations are car- ried out in line with standards defined by the Royal Insti- tution of Chartered Surveyors (RICS). RICS defines fair value as the estimated value at which an asset or liability can be sold to a willing buyer by a willing seller on the valuation date in the framework of a transaction in the usual course of business after a reasonable marketing pe- riod, whereby the buyer and seller each act knowledgea- bly, prudently and without compulsion. The valuation method applied by the expert appraiser in a particular case is mainly determined by the stage of development and usage type of a property. Rented commercial properties (which makes up the bulk of the CA Immo Group’s portfolio) is generally val- ued according to the investment method; fair values are based on capitalised rental revenue or the discounted cash flows expected in future. In addition to current con- tractual rents and lease expiry profiles, the qualified as- sessment of the expert appraiser determines and takes ac- count of other parameters such as, in particular, the at- tainable market rent and the equivalent yield for a prop- erty. The residual value procedure is applied to sites in the development and construction phase. In this case, fair values are determined following completion, taking ac- count of outstanding expenses and incorporating an ap- propriate developer profit in line with construction pro- gress. Other possible risks are considered, amongst other things, related to future attainable rents, initial yields and financing rates. Interest rates are influenced in particular by general market behaviour as well as locations and us- age types. The closer a project comes to the point of com- pletion, the larger the proportion of parameters derived from actual and contractually stipulated figures. Sites are valued according to the investment method, shortly be- fore and after completion. In the case of land reserves where no active develop- ment is planned for the near future, the comparable value method (or the residual value method) is applied, de- pending on the property and the status of development. For almost 100% of the total property assets, external valuations were carried out on the key date 31.12.2020 or values were based on binding purchase agreements. Other property assets were valued internally. In 2020, all valua- tions were performed exclusively by CB Richard Ellis for the first time. Market environment in 2020 Owing to the outbreak of the Covid-19 pandemic and the consequent economic slump, the environment in the core markets of Germany, Austria and CEE was restrained (see also the ‘Property markets’ section). With investment activity remaining stable in the German real estate mar- ket, yields were also stable or marginally down. General lockdowns and travel restrictions served to impair market activity more and more as the year progressed. Most of the main indicators for the lettings market – including let- tings performance and occupancy rates – were therefore in decline in Germany’s office capitals. Given the consist- ently high level of demand for premium office properties and the stable peak rent levels in Germany, yields were further compressed in this category. Despite this, the CA Immo Group was able to take ad- vantage of a generally settled market environment thanks to strong market positions in the cities of Munich, Frank- furt and Berlin. On the office property market in Vienna, interest from investors was robust and the operational en- vironment was stable. Given the shortage of supply, how- ever, the transaction volume declined. The core Central PROPERTY VALUATION GROUP MANAGEMENT REPORT 2 7 and Eastern European markets of Warsaw, Prague, Buda- pest and Bucharest were similarly characterised by re- strained operational development in 2020. For 2020 as a whole, the CA Immo Group posted a highly positive revaluation result of €183.5 m (against € 462.8 m in 2019). AUSTRIA The office market in Vienna was largely stable in 2020. Although the completion volume for office premises in- creased by around 130% in 2020 compared to the previ- ous year’s value, this was some 30% below the average value for the last five years. Lettings performance was un- changed on the prior year’s level. Although the pan- demic-induced economic crisis was already impacting the office market in 2020, more serious effects are ex- pected to be seen during 2021. In the course of 2020, the vacancy rate fell by around 15 basis points to 4.6%. The revaluation result in Austria totalled € -12.5 m on the key date (2019: € 3.3 m). Year on year, the average gross yield on investment properties fell from 5.7% to 5.4% (fully consolidated real estate). GERMANY As in previous years, robust development on the Ger- man office property market boosted values in the Group’s Germany segment. Rising market values for office proper- ties in Berlin and the successful implementation of devel- opment projects were the main reasons for this. As at 31.12.2020, the revaluation result for Germany was € 270.0 m (€ 385.2 m on 31.12.2019). The largest contri- butions to the revaluation gain in terms of amount came from valuation gains in the investment portfolio, espe- cially in Berlin (including Tour Total, Hallesches Ufer, Spreebogen, MY.B, John F. Kennedy Haus, Königliche Direktion and Heidestrasse 58) and from properties at the planning and development stages in the German capital (Hochhaus am Europaplatz, Grasblau) and Munich (VIERTEL FOUR OANS); the Millennium Tower project in Frankfurt, for which building rights are being obtained, also contributed. Year on year, the gross yield fell from 3.9% to 3.6% (fully consolidated real estate). The value of CA Immo’s hotel properties in Germany fell by € 24.7 m in 2020. In- cluding the hotel properties in Austria, the value of the hotel portfolio has declined by € 35.6 m. VALUATION RESULT FOR AUSTRIA 1) Book value in € m Revaluation/ Impairment Gross yield in % 31.12.2020 in € m 31.12.2019 31.12.2020 Investment properties²⁾ 524.7 -12.5 5.7 5.4 Investment properties under development 0 0 Assets held for sale 0 0 Total 524.7 -12.5 1) Based on fully consolidated properties 2) Excludes properties used for own purposes GROUP MANAGEMENT REPORT GROUP MANAGEMENT REPORT 2 8 VALUATION RESULT FOR GERMANY 1) Book value in € m Revaluation/ Impairment Gross yield in % 31.12.2020 in € m 31.12.2019 31.12.2020 Investment properties²⁾ 2,221.0 167.0 3.9 3.6 Investment properties under development 751.9 103.0 Properties held for trading 35.2 0.0 Total 3,008.0 270.0 1) Based on fully consolidated properties 2) Excludes properties used for own purposes CENTRAL AND EASTERN EUROPE The impact of the Covid-19 pandemic and the economic implications for real estate markets are also being felt in Central and Eastern Europe. In 2020, a year defined by economic recession, it was not possible to maintain the rapid pace of recent years. During 2020, the activity of in- vestment and lettings slowed in all core cities of CA Immo (Warsaw, Prague, Budapest and Bucharest), causing floor space take-up to decline and vacancy rates to climb. The Warsaw market, in which peak yields evi- dently fell, was particularly hard hit. The revaluation result for the Central and Eastern Eu- rope segment as at the key date amounted to € - 74.0 m (2019: € 74.3 m). Year on year, the gross yield for the CA Immo portfolio rose from 6.6% to 6.8% (fully con- solidated real estate). VALUATION RESULT FOR CENTRAL AND EASTERN EUROPE 1) Book value in € m Revaluation/ Impairment Gross yield in % 31.12.2020 in € m 31.12.2019 31.12.2020 Investment properties 1,977.4 -69.7 6.6 6.8 Investment properties under development 39.2 3.2 Properties held for trading 33.9 -7.5 Total 2,050.6 -74.0 1) Based on fully consolidated properties GROUP MANAGEMENT REPORT 29 As a real estate company, CA Immo operates in a capi- tal-intensive sector where success is heavily dependent on access to loan capital. Ensuring the most effective pos- sible structuring and optimisation of the capital structure is highly important; alongside successful management of the real estate portfolio, this is one of the key factors in the overall result of CA Immo. Balance sheet profile remains strong As at 31.12.2020, the total financial liabilities of the CA Immo Group stood at € 2.8 bn, above the previous year’s value of € 2.1 bn. After deduction of the Group’s cash and cash equivalents, net debt amounted to € 1.9 bn at year end (against € 1.7 bn in 2019). The com- pany has thus maintained an extremely robust balance sheet with a healthy equity ratio of 45.9% (2019: 50.4%), which in conservative debt figures equates to gearing (net) of 60.4% (2019: 55.8%) or a loan-to-value (LTV, net) of 33.8% (2019: 31.9%). Financing costs, a key element in long-term earnings, stood at € – 42.3 m (2019: € – 43.1 m). In addition to the financing facilities that have already been secured and are therefore reflected on the balance sheet, the CA Immo Group also has financing lines that have not yet been utilized, which serve to finance devel- opment projects under construction in Germany and will be successively valued by the banks as construction pro- gresses. This financing facility amounted to € 320 m at the reporting date, taking into account joint ventures in the amount of the interest held. In addition, the company has an unused financing line (revolving credit facility) of € 45 m at holding company level. Investment grade rating In December 2015, following a wide-ranging creditwor- thiness analysis, Moody’s Investors Service, the interna- tional rating agency, classified CA Immobilien Anlagen AG with a Baa2 investment grade (long-term issuer) rat- ing with stable outlook. CA Immo's investment grade rating makes it possible to increase the financing flexibility and thus further opti- mize the financing structure by improving access to the institutional debt capital markets. This broadens the range of financing options available to the Group. The key indicators in retaining and upholding the in- vestment grade rating, which is of strategic significance to the CA Immo Group, are a strong balance sheet with low gearing, long-term recurring earnings power, an asso- ciated solid interest coverage ratio and a sufficiently large quota of unsecured properties. Moody’s confirmed both the Baa2 rating and the stable outlook in a credit opinion on 18 January 2021. When the core shareholder Starwood Capital made an anticipatory mandatory offer to the shareholders and owners of con- vertible bonds of CA Immo, the rating agency placed the rating ‘under review for downgrade’ as well as the out- look to ‘under review’. According to an announcement by Moody’s, this change reflects uncertainty over whether Starwood will “acquire control of CA Immo and whether this will mean changes to the business, finance and li- quidity profile of CA Immo”. FINANCING GROUP MANAGEMENT REPORT GROUP MANAGEMENT REPORT 30 Maturity profile The chart above shows the maturity profile of the finan- cial liabilities of the CA Immo Group as at 31.12.2020 (as- suming options to extend are exercised). As at the key date, amounts shown as due in 2021, secured mortgages in Austria, Germany and Central and Eastern Europe and one unsecured corporate bond issued in 2016 with an an- nual coupon of 1.875% amounted to approximately € 187 m. Of this amount, around € 107 m relates to the corporate bond maturing in July 2021 and around € 77 m to investment loans (of which around € 46 m relates to the German portfolio). In 2020, construction financing for completed office projects transferred to the asset portfolio (MY.O in Mu- nich, MY.B in Berlin and ViE in Vienna) with a total vol- ume of approximately € 145 m was rolled over into long- term financing. New bank financing has been agreed for the Hochhaus am Europaplatz project in Berlin (approxi- mately € 105 m) and the Hafeninsel project in Mainz (ap- proximately € 32 m). Falling financing costs Over recent years, continual optimisation of the financ- ing structure and advantageous market conditions have facilitated significant reductions in financing costs. As the table shows, average financing costs for the CA Immo Group on the basis of fully consolidated financial liabili- ties stood at 1.50% as at key date 31.12.2020. The figure includes derivatives used for interest rate hedging in the form of interest rate swaps. If the latter are excluded, the average interest rate is somewhat lower at 1.36%. FINANCING COSTS 1) in € m Outstanding nominal value Nominal value swaps Average cost of debt excl. derivatives Average cost of debt incl. derivatives Average debt maturity Average swap maturity Investment properties Austria 184.1 106.6 1.8 2.4 7.9 8.5 Germany 670.1 350.7 1.0 1.4 5.5 7.4 Czechia 62.0 62.0 1.4 1.9 4.7 4.7 Hungary 0.0 0.0 0.0 0.0 0.0 0.0 Poland 86.4 71.0 1.4 1.7 4.7 4.9 Romania 0.0 0.0 0.0 0.0 0.0 0.0 Other countries 0.0 0.0 0.0 0.0 0.0 0.0 Total 1,002.7 590.3 1.2 1.6 5.9 7.0 Development projects 51.3 0.0 1.5 1.5 7.0 0.0 Short-term property assets 0.0 0.0 0.0 0.0 0.0 0.0 Financing on parent company level 1,741.5 0.0 1.4 1.4 4.2 0.0 Total 2,795.4 590.3 1.3 1.5 4.9 7.0 1) The data includes only fully consolidated financing GROUP MANAGEMENT REPORT 31 BASIC PARAMETERS OF THE FINANCING STRATEGY Financing Strategy The financing strategy of the CA Immo Group is based on a balanced mix of secured and unsecured financing instruments with the aim of minimising financing costs and the risk of rate changes while maximising average terms and flexibility. Maintaining and improving the investment grade rating in the medium term on the basis of a solid balance sheet structure with a strong equity base and sustainable profit- ability is a key strategic component, which is also re- flected in the objective of a long-term defensive and ro- bust financial profile. As regards financial indicators, long-term objectives fluctuate between 45-50% for the Group’s equity ratio and 35-40% for the loan-to-value ratio (net financial lia- bilities to property assets). The interest rate hedging ratio as at the key date was approximately 94%; this should be kept at a high level to cushion the risk of interest rate rises. Financing structure Following two issues in 2020, unsecured financing in the form of bonds placed on the capital market currently accounts for the majority of the total financing volume with a share of around 62% of the total financing vol- ume). The remaining financing volume comprises mort- gage loans secured by real estate, which are taken out in those (subsidiary) companies in which the respective real estate is held. Unsecured financing The share of unsecured financing at the level of the Group parent company has gradually increased since the company received its investment grade rating in 2015 and at the reporting date comprised seven corporate bonds placed on the capital market with a total volume of around € 1,540 m and one convertible bond with a vol- ume of € 200 m. The book value of unmortgaged proper- ties – a key criterion in the Group’s investment grade rat- ing – stood at around € 2.5 bn on 31.12.2020, above the comparable value for the previous period (€ 2.4 bn on 31.12.2019). This was equivalent to a ratio of roughly 46% of total property assets. 1 The outstanding volume of corporate bonds due in 2021/2022/2023 in- cludes the repurchase carried out in 1Q 2020. Bonds As at key date 31.12.2020, CA Immo had the following outstanding bonds registered for official trading on the Vienna Stock Exchange (with the exception of the con- vertible bond, which trades on the Third Market): ISIN Type Out- standing vo- lume 1 Tenor Cou- pon AT0000A1CB33 Corporate bond 142 m € 2015-2022 2.750% AT0000A1JVU3 Corporate bond 117 m € 2016-2023 2.750% AT0000A1LJH1 Corporate bond 107 m € 2016-2021 1.875% AT0000A1TBC2 Corporate bond 175 m € 2017-2024 1.875% AT0000A1YDF1 Convertible bond 200 m € 2017-2025 0.75% AT0000A22H40 Corporate bond 150 m € 2018-2026 1.875% XS2099128055 Corporate bond 500 m € 2020-2027 0.875% XS2248827771 Green bond 350 m € 2020-2025 1.000% The bonds are unsecured financings of the Group par- ent company, which rank pari passu with each other and with all other unsecured financings of CA Immobilien Anlagen AG. With the exception of the corporate bond 2015-2022 and the convertible bond, the terms and con- ditions of the bonds include a loan-to-value (LTV) cove- nant. The two bonds issued in 2020 also contain two fur- ther covenants relating to the secured financing volume and the interest rate coverage of the Group. Benchmark bond issue in 2020 In January 2020, CA Immo tapped the Eurobond market for the first time and successfully issued a € 500 m fixed- rate unsubordinated unsecured benchmark bond with a seven-year maturity and an annual coupon of 0.875%. The international rating agency Moody’s Investors Ser- vice Ltd. has rated the bond with an investment grade rating of Baa2 in line with the corporate rating. The issue proceeds were mainly used to finance and refinance real estate (including the company’s future acquisitions and development projects) and to optimise the debt capital structure. In this context, the company decided at the same time to invite holders to offer the outstanding bonds due in 2021 (€ 140 m, 1.875%), 2022 (€ 175 m, 2.750%) and GROUP MANAGEMENT REPORT GROUP MANAGEMENT 32 2023 (€ 150 m, 2.750%) to the company for cash buy- back. A total nominal amount offered in the approximate amount of € 99 m has been accepted and thus repur- chased. This transaction represents an important milestone in the realisation of the company’s growth strategy; it has accelerated optimisation of the capital structure and opened up access to the most liquid international loan capital market, thereby enhancing the market position of CA Immo. While the financing structure has been further diversified, average financing costs have fallen as average due terms on financial liabilities have been extended. Green bond issue in 2020 In October 2020, CA Immo once again turned the excep- tionally favourable market conditions to its advantage with the successful issue of an unsecured, fixed-rate € 350 m green bond. The issue has a term of five years and an annual coupon of 1.0%. The transaction gener- ated strong demand from more than 150 investors and was more than five times oversubscribed. Net proceeds will be used to (re)finance sustainable buildings in full or in part in accordance with the sus- tainability bond framework. The framework was pro- vided by Sustainalytics, a leading global supplier of ESG and corporate governance research as well as ratings for investors 2 . This covers the financing and refinancing of commercial real estate which either has sustainability certification (e.g. LEED or DGNB in gold) or which has a primary energy requirement at least 25% below nation- ally defined standards (such as the EnEV energy saving ordinance in Germany or the PENB building energy per- formance certificate in the Czechia). Two examples of the use of proceeds include the Grasblau sustainable devel- opment project currently under construction in Berlin and Mississippi House and Missouri Park in Prague. 2 For more information, please visit https://www.caimmo.com/de/un- ternehmen/nachhaltigkeit-csr/ As a leading company in the European office real estate sector, we unreservedly support the climate targets of the United Nations and the associated transition to a low-car- bon and sustainable economy. In order to meet the associ- ated requirements in the best possible way and to secure our competitiveness in the long term, we anchor corre- sponding measures, processes and objectives in our strate- gic positioning. With the Green Bond transaction, we have emphatically underpinned this commitment and at the same time taken advantage of the opportunity to further op- timize our financing structure and reduce average financing costs. Convertible bond The convertible bond issued in October 2017 with a volume of € 200 m and a term of 7.5 years has a coupon (payable semi-annually) of 0.75%. The initial conversion price was fixed with a conversion premium of 27.50% above the volume-weighted average price (VWAP) for the CA Immo shares on the day of issue. The initial conver- sion price of € 30.5684 now stands at €29.7675 after ad- justment following the dividend payment in August 2020. The convertible bonds will be redeemed at 100% of the nominal amount at the end of the term in the absence of premature conversion or repayment. For conversion, the company may choose to effect repayment through the provision of shares in the company, payment or a combi- nation of the two. Secured financing CA Immo has business relations with a large number of financing partners. With around 13% of total outstanding financial liabilities, the main financing bank in terms of the credit volume is the UniCredit Group. As the diagram shows, DG Hyp, Deutsche Hypo, Deutsche Postbank, ING and Bayern LB also accounted for significant shares as at the key date. GROUP MANAGEMENT REPORT 3 3 Long-term interest rate hedging Since interest expenses makes up the biggest expense item in the income statement for most real estate compa- nies (alongside administrative overheads), interest rate rises can have a major impact on earnings – especially since rental revenue is usually based on long-term agree- ments, which means increases in financing costs cannot be directly counterbalanced by higher revenue. For this reason, the CA Immo Group’s financing strategy involves hedging a substantial proportion of interest expenditure against fluctuation over the long term. Interest swaps are currently used as interest hedging tools. The ratio of fixed-interest bonds, which has been rising over recent quarters, also makes up a major part of the interest rate hedging ratio. Of the derivatives deployed, interest swap agreements account for a nominal value of € 815.8 m (€ 531.8 m on 31.12.2019) and interest rate floors account for € 43.0 m (€ 43.9 m on 31.12.2019). The weighted average term re- maining on derivatives used for interest rate hedging was around 7.0 years on the key date, compared to a weighted remaining term of 4.9 years on financial liabilities. In terms of the balance sheet, a distinction is drawn be- tween those contracts directly attributable to a loan (thus meeting the criteria for hedge accounting as cash flow hedges) and those for which these preconditions are not met (fair value derivatives). For cash flow hedges, the change in the fair value on the relevant key date is recog- nised directly in equity; for fair value derivatives, by con- trast, the change is recognised as expenditure in the in- come statement under ‘Income from derivative transac- tions’. As at key date 31.12.2020, contracts with a nomi- nal value of € 633.7 m in total and a fair value of € –80.9 m were classified as fair value derivatives (31.12.2019: € 575.6 m and € –102.8 m respectively). As at 31.12.2020, the company held contracts classified as cash flow hedges with a nominal amount of € 225.0 m and an attributable fair value of € –2.6 m. Variable rate debt FINANCIAL DEBT AS OF 31.12.2020 (Basis: € 2.8 bn) Variable, but hedged through derivatives Fixed rate debt 6.4% 21.0% 72.6% Bonds FINANCING SPLIT BY BANKS (Basis: € 2.8 bn) Other Unicredit DG Hyp Deutsche Postbank AG ING Bank Bayern LB 62% 7% 13% 6% 3% 3% 3% Deutsche Hypo 3% GROUP MANAGEMENT REPORT GROUP MANAGEMENT 34 KEY FIGURES FROM THE INCOME STATEMENT Sustained earnings Rental income for CA Immo increased by 6.7% to € 235.6 m in 2020. By region, around 56% of total rental income was generated by the Central and Eastern Euro- pean portfolio, followed by Germany with around 33% and Austria with around 13%. In addition to the successful management of the invest- ment portfolio with a high occupancy rate, this positive development is related to the organic portfolio growth of recent months. Three high-quality office properties MY.O (Munich), MY.B and the Kunstcampus office building (both in Berlin) were completed and added to the portfo- lio. Furthermore, higher occupancy rates in the office build- ings Orhideea Towers (Bucharest) and ViE (Vienna), which were also successfully developed, as well as in the acquired office buildings Warsaw Spire C (Warsaw), Cam- pus 6.1 (Bucharest) and Visionary (Prague) made a posi- tive contribution to year-on-year rental growth. Incentive arrangements from various lease agreements (in particular rent-free periods) are amortised on a straight line basis for the total term of the lease contract. Rental income therefore shows the effective economic rent and not the actual cash-relevant rent during the pe- riod. Of the rental income for business year 2020, straight line amortisation of this kind accounted for € 4.2 m (2019: € 1.6 m). In year-on-year comparison, property expenses directly attributable to the asset portfolio, including own operat- ing expenses, remained flat at € –26.0 m (2019: € –25.9 m). This expenditure item consists of vacancy costs and operating expenses that cannot be passed on (€ –5.2 m), agency fees (€ –1.2), maintenance (€ –4.9 m), allowances for bad debt (€ –6.1 m) and other directly attributable expenses (€ –9.2 m). The net rental income generated by the rental activities after deduction of direct management costs increased by 7.7% from € 194.7 m to € 209.7 m. The Covid-19 pan- demic had a negative impact of € –6.8 m on net rental in- come as of the reporting date. This mainly relates to re- serves for bad debts and to a lower degree rent reduc- tions, which are, however, counterbalanced by opposing effects from incentive agreements (rent-free periods). All agreed rent adjustments, such as the granting of rent-free periods, are to be distributed on a straight line basis over the respective term of the underlying lease agreement. On the other hand, a positive effect of € 3.7 m (release of pro- visions for property-related taxes) was recorded in the second quarter in connection with proceedings concern- ing the payment of building taxes decided in favour of the CA Immo Group. The operating margin on letting activities (net rental in- come in relation to rental income), an indicator of the ef- ficiency of the rental business, increased from 88.2% in the previous year to 89.0%. Other expenditure directly attributable to project devel- opment stood at € –2.2 at year end (2019: € –3.2 m). Office RENTAL INCOME BY MAIN USAGE (Basis: € 235.6 m) Other Hotel 89% 5% 6% Germany RENTAL INCOME BY COUNTRY (Basis: € 235.6 m) Poland Hungary Austria Romania Czechia Other 33% 13% 14% 13% 12% 9% 5% RESULTS GROUP MANAGEMENT REPORT 3 5 CHANGE IN RENTAL INCOME FROM 2019 TO 2020 1) € m Austria Germany Central- and Eastern Europe Total 2019 29.7 66.4 124.6 220.7 Change Resulting from change in vacancy rate, indexation or rental price –0.6 –0.5 –0.1 –1.2 Resulting from new acquisitions 0.0 1.1 1.0 2.1 Resulting from whole-year rental for the first time 0.8 5.2 2.9 8.9 Resulting from completed projects 0.0 6.1 0.0 6.1 Resulting from sale of properties –0.3 0.0 –0.8 –1.1 Total change in rental income 0.0 11.9 3.0 14.9 2020 29.7 78.3 127.6 235.6 1) Included are non-performance components of operating costs according to IFRS 16 amounting to € 10.7 m. INDIRECT EXPENSES € m 2020 2019 Personnel expenses –45.9 –41.7 Legal, auditing and consulting fees –9.1 –8.2 Third party acquired development services –1.9 –2.6 Office rent –0.8 –0.7 Travel expenses and transportation costs –0.4 –1.2 Other expenses internal management –2.7 –3.0 Other indirect expenses 1) –29.0 –2.9 Subtotal –89.7 –60.3 Own work capitalised in investment property 15.2 14.3 Change in properties held for trading 1.4 2.5 Indirect expenses –73.2 –43.5 1) The figure includes potential court fees associated with the action for damages brought by CA Immobilien Anlagen AG in the second quarter of 2020 against the Republic of Austria and the state of Carinthia in connection with the privatisation of the federal housing companies (BUWOG) completed in 2004. GROUP MANAGEMENT REPORT GROUP MANAGEMENT 36 Property sales result Trading revenue of € 43.3 m (previous year: € 12.3 m) was generated in 2020 in connection with the scheduled sale of properties held in current assets and construction services. This income was offset by book value deduc- tions and other directly attributable expenditure of € –35.4 m. The trading portfolio thus contributed a total of € 7.9 m to the result (2019: € –1.3 m). The largest contri-bution to earnings in terms of value was generated by the sale of the NEO Living residential project developed by CA Immo in Munich. Profit from the sale of investment properties of € 43.9 m was above the previous year’s value of € 15,615.6 m. The largest gain in value terms was contributed by the sale of the Cube office building in Berlin and the sale of non- strategic real estate in Graz. Income from services Gross revenue from services dropped by –3.9% to € 8.2 m (2019: € 8.5 m). Alongside development revenue for third parties via the subsidiary omniCon as a major contribution, this item contains revenue from asset man- agement and other services to joint venture partners. Indirect expenditures In 2020 indirect expenditures rose by 68.4% from € –43.5 m in the previous year to € –73.2 m. This item also contains expenditure counterbalancing the afore- mentioned gross revenue from services. The figure includes potential court fees associated with the action for damages brought by CA Immobilien Anla- gen AG in the second quarter of 2020 against the Repub- lic of Austria and the state of Carinthia in connection with the privatisation of the federal housing companies (BUWOG) completed in 2004. Adjusted for this one-off effect of around € –25.5 m, indirect expenses were 9.7% higher than in the previous year at € –47.7 m. While the Group's personnel expenses increased over the year as shown in the table above (€ –45.9 m com- pared with € –41.7 m in the previous year), material costs were reduced year-on-year. At € 15.2 m (2019: € 14.3 m), the item "Own work capitalized" remained essentially unchanged. This item may be regarded as an offsetting position to the indirect expenditures which counterbalance the por- tion of internal project development expenditure, pro- vided it is directly attributable to individual develop- ment projects and thus qualifies for capitalisation. Other operating income Other operating income amounted to a total of € 1.2 m compared to the 2019 reference value of € 0.7 m. Earnings before interest, taxes, depreciation and amortisation (EBITDA) Earnings before interest, taxes, depreciation and amorti- zation (EBITDA) amounted to € 195.6 m, up 13.9% on the previous year's figure of € 171.7 m. This increase is mainly due to the higher rental income and the signifi- cant increase in net income from disposals compared with 2019. The contribution of the individual regional segments to the overall result was as follows: With an EBITDA of € 109.2 m, the Central and Eastern Europe segment gener- ated the largest share of around 56%. The largest EBITDA contribution from the Central and Eastern European core markets is attributable to Hungary, with generated EBITDA of € 28.6 m (15%), followed by Romania with € 26.9 m (14%) and Poland with € 26.4 m (14%). The Germany segment accounted for € 92.4 m (47%), while the Austria segment made no positive contribution to Group EBITDA with € –6.1 m. EBITDA adjusted for the BUWOG one-off effect amounted to € 221.1 m, a significant increase of 28.7% on the previous year's figure, reflecting the robust devel- opment of the company's operating business. Revaluation result The total revaluation gain of € 352.1 m in 2020 was counterbalanced by a revaluation loss of € –168.6 m. The cumulative revaluation result of € 183.5 m was therefore significantly positive, but substantially below the value of the previous year (2019: € 462.8 m). The property valu- ation effect of € 205.0 m booked in the fourth quarter of 2020 therefore more than compensated for the valuation loss of € –21.5 m booked for the first three quarters. The result reflects the continued attractive market envi- ronment in Germany, and particularly in Berlin, CA Im- mo's largest portfolio segment, despite the Covid-19 pan- demic. In addition, the company's profitable real estate development activities generated positive value adjust- ments, both in terms of the progress of current projects under construction and the development of land re- serves. On the other hand, there were also negative ef- fects, which were primarily concentrated on properties directly affected by the consequences of the pandemic with the main types of use being hotels and retail, as well as on investment properties in Central and Eastern Eu- rope. GROUP MANAGEMENT REPORT 3 7 In regional terms, the revaluation result in Germany to- taled € 270.0 m. The largest contributions in terms of value were made by the Berlin portfolio and in particular properties such as Hamburger Bahnhof, Tour Total and Hallesches Ufer. Other significant increases in value in- cluded the MY.O portfolio building in Munich and the 100% pre-let high-rise development project Hochhaus am Europaplatz in Berlin. In addition, there were posi- tive value adjustments of land plots under development in Frankfurt and Munich. On the other hand, Austria recorded a valuation loss of € –12.5 m. Central and Eastern Europe recorded negative value adjustments amounting to € –74.0 m. In Central and Eastern Europe, a reduction in market values was mainly observed due to market changes (increase in mar- ket yields), although upward adjustments in market val- ues were also observed for individual properties due to property-specific factors. In Austria, market value reduc- tions were recorded for hotel and retail properties. Result from joint ventures Current results of joint ventures consolidated at equity are reported under ‘Result from joint ventures’ in the consolidated income statement. In 2020 this contribution totalled € 1.9 m (2019: € 3.7 m). The low contribution to earnings reflects the reduced volume of joint ventures as part of strategic portfolio focusing. Earnings before interest and taxes (EBIT) Earnings before interest and taxes (EBIT) totalled € 375.4 m and were –40.8% below the corresponding fig- ure for the previous year (€ 633.7 m) due to the lower re- valuation result. In regional terms, the Germany segment accounted for the lion's share of Group EBIT at € 360.2 m. Austria gen- erated EBIT of € –19.5 m in 2020, and Central and East- ern Europe € 34.8 m. Financial result The financial result for 2020 was € –27.2 m, compared to € –94.4 m last year. In detail, the elements of the finan- cial result developed as follows: The Group's financing costs, a key element in long-term earnings, went up mainly due to the higher financing vol- ume to € –42.3 m (2019: € –43.1 m). This item includes a positive effect in connection with proceedings concern- ing the payment of building taxes amounting to € 5.2 m (release of provisions for interest on arrears) decided in favour of the CA Immo Group. In addition to interest paid as shown in the income statement, financing costs of € 4.9 m (2019: € 5.9 m) with a weighted average inter- est rate of 1.30% (2019: 1.71%) were capitalised in busi- ness year 2020 in connection with the construction of real estate. The result from derivatives came to € 21.4 m (2019: € –59.2 m). The result for 2020 includes a derivative valu- ation in the amount of € 32.2 m for the convertible bond issued in October 2017 (2019: € –38.4 m). This instru- ment consists of a debt component and, due to the cash repayment option of CA Immo, an embedded derivative that must be separated. The embedded derivative of the convertible bond is reported at fair value. The interest rate development over 2020 also resulted in a negative valuation effect of the company's interest rate derivatives of € –10.8 m (2019: € –20.7 m). At € –3.6 m, the result from financial investments was below the figure for the reference period (2019: € 11.5 m). The previous year's figure included the dividend from the investment in Immofinanz (€ 4.3 m), which was suc- cessfully sold in the fourth quarter of 2019. Other items in the financial result (other financial re- sult, income from associated companies and exchange rate differences) totalled € –2.7 m (2019: € –3.6 m). The figure for the first quarter of 2020 includes a one-off ef- fect relating to the repurchase of outstanding corporate bonds in the amount of € –5.1 m. Earnings before taxes (EBT) Earnings before taxes (EBT) of € 348.3 m (2019: € 539.3 m) showed a significant year-on-year decline of –35.4% based on the earnings developments described above. Taxes on income Taxes on earnings amounted to € –94.3 m in 2020 (2019: –146.0 m). Consolidated net income At € 254.0 m, consolidated net income for the period was –35.4% below the previous year's figure of € 393.3 m. Earnings per share (basic) amounted to € 2.73 (2019: € 4.23 per share). Cash flow Cash flow from operating activities takes account of changes in current assets linked to the sale of properties intended for trading and totalled € 185.1 m (2019: € 117.6 m). GROUP MANAGEMENT REPORT GROUP MANAGEMENT 38 Cash flow from investment activities, which comprises the net balance between investments and real estate sales, stood at € –334.7 m in 2020 compared to the previ- ous year’s value of € –39.9 m. Cash flow from financing activities was € 650.1 m (2019: € –12.8 m). CASH-FLOW-STATEMENT – SHORT VERSION € m 2020 2019 Change in % Cash and cash equivalents - beginning of the business year 439.1 374.5 17 Cash flow from - business activities 185.1 117.6 57 - Investment activities –334.7 –39.9 >100 - financing activities 650.1 –12.8 n.m. Changes in cash and cash equivalents 500.5 65.0 >100 Other changes 1) –4.7 –0.3 >100 Changes in cash and cash equivalents - the end of the business year 934.9 439.1 >100 1) Includes exchange rate movements from foreign currency, reclassification to a disposal group and expected credit losses on cash and cash equiva- lents Funds from O perations (FFO) An FFO I of € 133.8 m was generated in 2020, 0.4% above the previous year's value of € 133.3 m. FFO I per share stood at € 1.44 at the key date, a similar increase of 0.4% in year-on-year comparison (2019: € 1.43 per share). The FY 2020 guidance of > € 126 m was therefore outperformed. FFO I, a key indicator of the Group's long- term earnings power, is reported before taxes and ad- justed for the sales result and other non-recurring effects. Adjusted non-recurring effects totalled € 22.9 m (2019: € 9.3 m). These primarily related to administrative ex- penses (€ 26.7 m, including expenses in connection with the action for damages brought by CA Immo in the sec- ond quarter in connection with the privatisation of the federal housing companies and associated legal costs of around € 26.1 m) and operating expenses of € –3.7 m. The latter essentially include a positive effect booked in the second quarter due to the release of provisions for prop- erty-related taxes. Adjusted non-recurring effects of the previous year primarily included expenses in connection with property developments (€ 3.1 m), financing ex- penses (€ 2.8 m) and administrative expenses (€ –0.7 m). FFO II, including trading, other non-recurring resuts and after taxes, is an indicator for the Group’s overall profitability and totalled € 141.1 m, compared to € 122.3 m (up 15.4% from the previous year). FFO II per share amounted to € 1.52 (2019: € 1.31 per share). FFO II adjusted for the BUWOG one-off effect amounted to € 167.7 m, a substantial increase on the previous year's figure of 38.3% (2019: € 1.80 per share). GROUP MANAGEMENT REPORT 39 FUNDS FROM OPERATIONS (FFO) € m 2020 2019 Net rental income (NRI) 209.7 194.7 Income from services 8.2 8.5 Other operating income/expenses excl. services 1.2 –2.4 Other operating income/expenses 9.4 6.1 –73.2 –43.5 3.9 4.7 –42.3 –43.1 3.5 10.4 Indirect expenses Result from joint ventures Financ e costs Result from financial investments 1 Non-recurring adjustments 2 ) 22.9 4.0 FFO I (excl. trading and pre taxes) 133.8 133.3 Result from trading and construction works 7.9 –1.3 Result from the sale of investment properties 43.9 15.6 Result from disposal of joint ventures 0.1 –0.1 At-equity result property sales 3.4 5.1 55.3 19.4 –1.2 0.0 –5.1 0.0 –26.4 –9.3 Property sales result Result from disposal of assets at fair value Other financial results Other adjustments 3 ) Current income tax –15.5 –21.1 FFO II (incl. trading and after taxes) 141.1 122.3 1) Excluding IFRS 9 value adjustment 2) Adjustment for property sales and other non-recurring results 3) Includes other non-recurring results adjusted in FFO I BALANCE SHEET ANALYSIS Assets As at the balance sheet date, long-term assets amounted to € 5,660.4 m (83.0% of total assets). The growth of in- vestment property assets on the balance sheet to € 4,723.1 m (31 December 2019: € 4,292.9 m) reflects the strong portfolio growth both organically from the compa- ny's own development project pipeline and externally by selective acquisitions of investment properties in the core markets Berlin and Warsaw. The balance sheet item ‘Property assets under develop- ment’ slightly declined by –3.2% to € 791.1 m compared to 31 December 2019. Total property assets (investment properties, properties used for own purposes, property assets under development and property assets held as current assets) amounted to € 5,596.2 m on the key date, hence up on the level for the end of 2019 (€ 5,186.4 m). The net assets of joint ventures are shown in the bal- ance sheet item ‘Investments in joint ventures’, which stood at € 57.6 m on the key date (31 December 2019: € 67.8 m). Cash and cash equivalents stood at € 934.9 m on the balance sheet date, above the level for 31 December 2020 (31 December 2019: € 439.1 m). This significant increase reflects, among other things, part of the net proceeds of around € 400 m from CA Immo's Eurobond capital mar- ket transaction in the first quarter and the green bond is- sue in the fourth quarter with a volume of € 350 m. Liabilities Equity In 2020, the Group’s equity stood at € 3,128.3 m, 5.4% up from € 2,968.0 m. Apart from the net profit for the pe- riod of € 254.0 m, this figure also reflects the dividend payment (€ –93.0 m). Since the start of the year, the Group’s total assets in- creased by around 15.8% to € 6,820.3 m (31 December GROUP MANAGEMENT REPORT GROUP MANAGEMENT 40 2019: € 5,888.7 m). Despite the increase in assets, the eq- uity ratio of 45.9% on the key date remained within the strategic target range (31 December 2019: 50.4%). Interest-bearing liabilities On the reporting date, interest-bearing liabilities amounted to € 2,827.5 m, 34.8% above the previous year’s value of € 2,097.3 m. The increase is related to the bond issues mentioned above. Net debt (interest-bearing liabilities less cash and cash equivalents) increased from € 1,656.3 m in the previous year to € 1,890.6 m. Gearing (ratio of net debt to shareholders’ equity) was 60.4% at year-end (31 December 2019: 55.8%). The loan-to-value ratio (financial liabilities less cash and cash equivalents to property assets) stood at 33.8% on the key date, com- pared to 31.9% in the previous year. 100% of interest-bearing financial liabilities are in eu- ros. CA Immo has a comprehensive interest rate hedging strategy to hedge against interest rate risk; for more de- tails, see the section on ‘Financing’. KEY BALANCE SHEET AND FINANCING FIGURES € m 31.12.2020 31.12.2019 Shareholders' equity 3,128.3 2,968.0 Long-term interest-bearing liabilities 2,622.2 1,850.9 Short-term interest-bearing liabilities 205.3 246.5 Cash and cash equivalents –934.9 –439.1 Restricted cash –2.1 –1.9 Net debt 1,890.5 1,656.3 Equity ratio 45.9 50.4 Gearing (net) 60.4 55.8 Gearing (gross) 90.4 70.7 Loan-to-value (net) 33.8 31.9 Loan-to-value (gross) 50.5 40.4 GROUP MANAGEMENT REPORT 4 1 CONSOLIDATED STATEMENT OF FINANCIAL POSITION: SHORT VERSION 2020 2019 Change € m in % € m in % in % Properties assets 5,527.1 81 5,125.0 87 8 Investments in joint ventures 57.6 1 67.8 1 –15 Intangible assets 3.0 0 5.2 0 –42 Financial and other assets 68.3 1 91.4 2 –25 Deferred tax assets 4.4 0 1.8 0 >100 Long-term assets 5,660.4 83 5,291.2 90 7 Assets held for sale and relating to disposal groups 37.1 1 0.0 0 n.m. Properties held for trading 35.2 1 61.3 1 –43 Receivables and other assets 152.8 2 97.0 2 57 Securities 0.0 0 0.0 0 n.m. Cash and cash equivalents 934.9 14 439.1 7 >100 Short-term assets 1,159.9 17 597.5 10 94 Total assets 6,820.3 100 5,888.7 100 16 Shareholders' equity 3,128.3 46 2,968.0 50 5 Shareholders' equity as a % of total assets 45.9 50.4 Long-term interest-bearing liabilities 2,622.2 38 1,850.9 31 42 Short-term interest-bearing liabilities 205.3 3 246.5 4 –17 Other liabilities 328.2 5 350.4 6 –6 Deferred tax assets 536.3 8 473.0 8 13 Total liabilities and shareholders' equity 6,820.3 100 5,888.7 100 16 GROUP MANAGEMENT REPORT GROUP MANAGEMENT 42 EPRA NET ASSET VALUE (NAV) In order to ensure comparability with other listed prop- erty companies, CA Immo reports individual key figures in accordance with the standards of EPRA (European Public Real Estate Association), the leading interest group for listed property companies. These key figures may differ from the values determined in accordance with IFRS rules. CA Immo follows EPRA's 'Best Practice Recommendations' (www.epra.com). EPRA NAV KEY FIGURES 31.12.2020 EPRA NAV € m 3.818,6 EPRA NAV p er share € 41,05 EPRA NNNAV € m 3.363,1 EPRA NNNAV p er share € 36.15 EPRA NRV € m 4,346.7 EPRA NRV p er share € 43.58 EPRA NTA € m 3,999.3 EPRA NTA p er share € 40.09 EPRA NDV € m 3,423.4 EPRA NDV p er share € 34.32 Net Asset V alue (NAV) NAV (IFRS) stood at € 3,128.3 m on 31 December 2020 (€ 33.63 per share, undiluted) against € 2,968.0 m at the end of 2019 (€ 31.90 per share); this re presents an in- crease per share of 5.4%. Aside from the annual result, the change reflects the other changes to equity. Adjusted to account for the dividend payment of € 93.0 m, or € 1.00 per share, the growth in NAV per share for business year 2020 was 8.6% (undiluted). The table below shows the conversion of NAV to NNNAV in compliance with the best practice policy rec- ommendations of the European Public Real Estate Associ- ation (EPRA). The EPRA NAV (undiluted) was € 41.05 per share on the key date (2019: € 38.36 per share). The EPRA NNNAV (undiluted) per share after adjustments for finan- cial instruments, liabilities and deferred taxes, stood at € 36.15 per share as at 31 December 2020 (2019: € 33.69 per share). The number of shares outstanding was 93.0 million on the key date (31 December 2019: 93.0 mil- lion). A potential dilution effect of the Group's issued convert- ible bond (€ 200 m) was considered in the calculation of the net asset value. The conversion price of the converti- ble bond was € 29.77 on 31 December 2020, compared to the share price of € 31.35. A conversion at this conversion price would increase the number of outstanding shares by approximately 6.7 million. GROUP MANAGEMENT REPORT 4 3 NET ASSET VALUE (NAV AND NNNAV AS DEFINED BY EPRA) € m 31.12.2020 diluted 31.12.2020 undiluted 31.12.2019 undiluted E q uit y (NAV) 3,128.2 3,128.2 2,967.9 Exercise of o p tions 235.3 0.0 0.0 NAV after exercise of o p tions 3,363.5 3,128.2 2,967.9 NAV/share in € 33.72 33.63 31.90 Value ad j ustment for 1) - Own used p ro p erties 9.7 9.7 7.5 - Short-term p ro p ert y assets 151.0 151.0 127.3 - Financial instruments 0.4 0.4 0.0 Deferred taxes 529.2 529.2 466.1 EPRA NAV after ad j ustments 4,053.9 3,818.6 3,568.9 EPRA NAV p er share in € 40.64 41.05 38.36 Value ad j . for financial instruments – 0.4 – 0.4 0.0 Value ad j ustment for liabilities – 32.2 – 64.6 – 99.6 Deferred taxes – 396.3 – 390.5 – 335.3 EPRA NNNAV 3,625.0 3,363.1 3,133.9 EPRA NNNAV p er share in € 36.34 36.15 33.69 Share p rice (ke y date) 31.35 31.35 37.45 Number of shares excl. treasur y shares 99,747,036 93,028,299 93,028,299 1) Includes proportionate values from joint ventures With the publication of the EPRA Best Practices Recom- mendations Guidelines October 2019, the net asset value reporting was revised with the aim of better reflecting re- cent market and company developments. As a conse- quence, EPRA NAV and EPRA NNNAV were replaced by three new Net Asset Valuation metrics: EPRA Net Rein- statement Value, EPRA Net Tangible Assets and EPRA Net Disposal Value. CA Immo intends to report only these new key figures as of Q1 2021, which are defined by EPRA as follows 1 : EPRA Net Reinstatement Value: The objective of the EPRA Net Reinstatement Value measure is to highlight the value of net assets on a long- term basis. Assets and liabilities that are not expected to crystallise in normal circumstances such as the fair value movements on financial derivatives and deferred taxes on property valuation surpluses are therefore excluded. Since the aim of the metric is to also reflect what would be needed to recreate the company through the invest- ment markets based on its current capital and financing 1 Source: EPRA – Best Practices Recommendations Guidelines (October 2019) structure, related costs such as real estate transfer taxes should be included. EPRA Net Tangible Assets: The underlying assumption behind the EPRA Net Tan- gible Assets calculation assumes entities buy and sell as- sets, thereby crystallising certain levels of deferred tax li- ability. EPRA Net Disposal Value: Shareholders are interested in understanding the full extent of liabilities and resulting shareholder value if company assets are sold and/or if liabilities are not held until maturity. For this purpose, the EPRA Net Disposal Value provides the reader with a scenario where deferred tax, financial instruments, and certain other adjustments are calculated as to the full extent of their liability, in- cluding tax exposure not reflected in the Balance Sheet, net of any resulting tax. This measure should not be viewed as a “liquidation NAV” because, in many cases, fair values do not represent liquidation values. GROUP MANAGEMENT REPORT GROUP MANAGEMENT 4 4 NET ASSET VALUE (NRV, NTA AND NDV AS DEFINED BY EPRA) € m 31.12.2020 31.12.2019 EPRA NRV EPRA NTA EPRA NDV EPRA NRV EPRA NTA EPRA NDV IFRS Equity attributable to shareholders 3,128.2 3,128.2 3,128.2 2,967.9 2,967.9 2,967.9 i) Hybrid instruments (Convertible) 235.3 235.3 235.3 264.1 264.1 264.1 Diluted NAV 3,363.5 3,363.5 3,363.5 3,231.9 3,231.9 3,231.9 ii.a) Revaluation of IP (if IAS 40 cost option is used) 9.7 9.7 8.2 7.5 7.5 6.1 ii.b) Revaluation of IPUC (if IAS 40 cost option is used) 0.0 0.0 0.0 0.0 0.0 0.0 ii.c) Revaluation of other non-current investments 0.0 0.0 0.0 0.0 0.0 0.0 iii) Revaluation of tenant leases held as finance leases 0.0 0.0 0.0 0.0 0.0 0.0 iv) Revaluation of trading properties 151.0 138.8 110.9 127.3 117.5 94.0 Diluted NAV at Fair Value 3,524.2 3,512.0 3,482.5 3,366.8 3,356.9 3,332.1 v) Deferred taxes in relation to fair value gains of IP 531.2 451.9 470.6 438.3 vi) Fair value of financial instruments 40.5 37.4 29.6 29.6 vii) Goodwill as a result of deferred tax –2.0 –2.0 –2.0 –4.5 –4.5 –4.5 viii.a) Goodwill as per the IFRS balance sheet 0.0 0.0 0.0 0.0 viii.b) Intangibles as per the IFRS balance sheet 0.0 0.0 ix) Fair value of fixed interest rate debt –57.2 –47.4 x) Revaluation of intangibles to fair value 0.0 0.0 xi) Purchasers' costs 252.8 0.0 211.4 0.0 NAV 4,346.7 3.999.3 3.423.4 4.073.9 3.820.3 3.280.2 Fully diluted number of shares 99,747,036 99,747,036 99,747,036 99,657,313 99,657,313 99,657,313 NAV per share in € 43.58 40.09 34.32 40.88 38.33 32.91 FINANCIAL PERFORMANCE INDICATORS The strategic focus of business activity at CA Immo is the long-term increase in the value of the company. This is supported by key financial performance indicators which are important tools to identify the factors that con- tribute to the sustained increase in enterprise value and quantifying those factors for the purposes of value man- agement. The primary financial performance indicator is the net income generated on the Company’s average equity (re- turn on equity or RoE). The aim is to generate a figure higher than the calculated cost of capital (assuming a me- dium-term rate of around 7.0%), thus generating share- holder value. At 8.3% in 2020 (2019: 14.0%), this figure was above the target value. The decline compared with the previous year is due to lower revaluation gains. With the successful strategy implementation of recent years and strong positioning of the CA Immo Group, the ground was prepared for generating a return on equity over the long term, and one that exceeds the cost of eq- uity (see the "Strategy" section). The other quantitative factors used to measure and manage our shareholders' long-term return include the change in NAV per share, operating cash flow per share, and Funds from Operations (FFO I and FFO II) per share (please refer to the table above and “Balance Sheet” and “Key Figures per Share” in the flap of the annual report). Since the key financial indicators ultimately demon- strate the operational success of the property business, they are preceded by a series of other non-financial per- formance indicators which are key to measuring and managing the operational business. The non-financial performance indicators relating to environmental, em- ployee and social issues as well as human rights and the fight against corruption and bribery are presented and ex- plained in detail in the ESG report and appendix. GROUP MANAGEMENT REPORT 4 5 ANTICIPATED DEVELOPMENTS AND THE MAIN OPPORTUNITIES AND THREATS The fundamental challenge of the current year will re- main the fight against the Covid-19 pandemic. Despite in- itial progress in the global vaccination campaigns, the in- cidence of infection is likely to remain dynamic. With a potential improvement in the pandemic situation from spring onwards, a recovery in economic growth could then be felt across the board. It can be expected that global containment measures re- main in place d uring 2021 before being increasingly re- laxed later on. As a result, the global economy should grow strongly again in 2021. Current economic growth forecasts expect the European economy to grow by about 4% in 2021 and by about 3% in 2022, thus returning to pre-crisis levels in the course of 2022. The long-term impact of the pandemic and its economic consequences cannot be conclusively assessed given the dynamic situation, and is subject to ongoing evaluation. Temporary restrictions on current operations (also caused by exit restrictions, curfews, border closings, school/busi- ness shutdowns and other constraints) may affect the CA Immo Group, tenants, customers and suppliers as well as authorities. The consequences in terms of finance, general business and real estate in particular cannot be fully gauged (e.g. payments by tenants which are not in accordance with contracts, delays in construction activi- ties, effects on real estate markets, development of cove- nants for current financings, effects on planned real estate transactions). The CA Immo Group applies a wide range of possible measures to minimise the impact. Strategy Thanks to the successfully implemented strategy pro- grams of recent years, CA Immo enjoys an excellent mar- ket position in its core markets. Despite the challenging economic conditions resulting from the Covid-19 pan- demic, the core segment of investment properties (around 85% of total property assets) is expected to continue to perform robustly. Furthermore, in addition to the continuation of organic growth through profitable project development activities, selective acquisitions of investment properties with value creation potential in the core markets are to be realised. The expected increase in annual rental income, combined with an optimized financing structure, should further en- hance the sustainable profitability of CA Immo. The company's portfolio strategy continues to be based on a high-quality portfolio in terms of both location and building quality and a clear focus on attractive metropoli- tan areas in Central and Eastern Europe. In this context, strategic capital rotation will be implemented on an ongo- ing basis. Following the exit from the non-strategic mar- kets of Zagreb (September 2020), Graz (December 2020) and Bratislava (March 2021), a sale of the two office buildings in Belgrade is also planned. Sales within the of- fice portfolios in the strategic core markets and reinvest- ment of the sales proceeds in acquisitions of strategic in- vestment properties or in the company's development pipeline are aimed at optimizing the quality of the portfo- lio in terms of location, physical and sustainable building quality, and management efficiency. Development Four development projects were successfully completed in 2020, and further office building completions are planned for the following year in Mainz (ZigZag) and Pra- gue (Mississippi House and Missouri Park). The develop- ment of extensive land reserves in central locations in the German cities of Munich, Frankfurt and Berlin represents significant long-term organic growth potential for CA Immo, which is to be realized successively once the necessary conditions and requirements have been met. In March 2021, one of the largest leases in the compa- ny's history was concluded with Deutsche Kreditbank AG (DKB) for 34,850 sqm of rental space. The 100% pre-let- ting achieved marks the start of the development of the high-quality "Upbeat" office building in Berlin's Europac- ity with a planned investment volume of around € 300 m. For more information and details, please refer to the chapters "Strategy," "Investment properties," "Investment properties under development," and "Development poten- tial. Financing CA Immo has an extremely robust balance sheet and fi- nancing structure with a very solid liquidity position. The inaugural issuance of a benchmark bond and a green bond in 2020 represents a milestone in the implementa- tion of the growth strategy, which has significantly accel- erated the diversification of the financing structure and its optimization. For more information and details, please refer to the "Financing" section. Moody’s confirmed both the Baa2 rating and the stable outlook in a credit opinion on 18 January 2021. When the core shareholder Starwood Capital made an anticipatory OUTLOOK GROUP MANAGEMENT REPORT GROUP MANAGEMENT 4 6 mandatory offer to the shareholders and owners of con- vertible bonds of CA Immo, the rating agency placed the rating ‘under review for downgrade’ as well as the out- look to under review. According to an announcement by Moody’s, this change reflects uncertainty over whether Starwood will “acquire control of CA Immo and whether this will mean changes to the business, finance and li- quidity profile of CA Immo”. Key business factors Key factors that may influence the business development planned for 2021 include: – Economic developments in the regions in which CA Immo is active and the effe cts of these on demand for rental premises and rental prices (core indicators in- clude GDP growth, employment and inflation). – The developm ent of general interest rate levels. – The financing e nvironment as regards the avai lability and cost of long-term finan cing with outside capital (both secure d financing from banks on property level and u nsecured capital market financing on gro up level), and accor dingly the developm ent of the market for real estate investment, price trends and their impact on the valuation of the CA Immo portfolio. – The speed at which planned development proj ects are realised will al so depend on th e market factors outlined above and the a v ailability of necessary debt and equity. – CA Immo is rel ying on companies returning to their physical offices as the pandemic recedes. In this con- text, it remains to be seen how the crisis-induced expan- sion of digital work processes and the establis hment of work-from-hom e will affect de mand for office property in the medium term. – Political, fiscal, legal and economic risks, transparenc y and the development level on our real estate markets. Divide nd and annual earnings target 2021 For business year 2020, the Management Board plans to propose a dividend of € 1.00 per share with dividend en- titlement. The annual target for FFO I, a key indicator of the Group's recurring earnings, will be announced in the con- text of the presentation of the first quarter in May 2021. GROUP MANAGEMENT REPORT 4 7 The following activities are reported for the opening months of business year 2021: Anticipated mandatory takeover offer of Starwood Capital On January 8, SOF-11 Klimt CAI S.à r.l. announced the intention to launch an anticipatory mandatory for all shareholders and bondholders of CA Immo and to further increase their existing shareholding of 29.999893% of the total outstanding voting rights in the Company. The Offer Document was published on 22 February 2021. As of this date, shareholders and holders of convertible bonds of CA Immo have the opportunity to accept the Offer and tender their shares and convertible bonds into the Offer. The acceptance period ends on 9 April2021 at 5pm (CET). The price initially offered to CA Immo sharehold- ers of € 34.44 per CA Immo share was increased to € 36.00 on 26 February 2021 (“Share Offer Price”). The price offered to convertible bondholders is approx. € 138,628.59 (initially € 132,621.35) for each convertible bond with nominal value of € 100,000 (“Convertible Bond Offer Price”). The Share Offer Price and the Con- vertible Bond Offer Price are on a cum dividend basis. The anticipated mandatory offer is directed at the acqui- sition of all outstanding CA Immo shares and convertible bonds that are not held by the Bidder or by CA Immo it- self. However, no minimum acceptance threshold is pro- vided for. The completion of the Offer is subject to the condition precedent of antitrust clearance in Austria, Germany and Poland. The statement of the Management and Supervisory Boards regarding this offer was pub- lished on 8 March 2021 and is available – along with the offer document – on the company's website in the Inves- tor Relations section (caimmo.com). Sales CA Immo and Mainzer Stadtwerke AG, as joint venture partners of Zollhafen Mainz GmbH Co. KG, have nota- rised the sale of the construction sites "Hafeninsel I" and "Marina" to LBBW Immobilien Development GmbH on 22 December 2020. The sales price (50% share) is signifi- cantly higher than the last CA Immo book value (accord- ing to IAS 2) as of the third quarter of 2020. The closing of the transaction is scheduled for the first quarter of 2021. In December 2020, CA Immo signed a contract for the sale of a plot in Düsseldorf. The contract is conditional on the sale of the adjacent plot of land owned by a third party. The CA Immo Group has valued the plot at its stand-alone fair value as at 31.12.2020. No revaluation to the fair value resulting from the joint transaction was made, as the completion of the transaction is dependent on a third party and the decision does not lie entirely within the control of CA Immo. In 2020 CA Immo did not realise any effect on profit or loss from this sale transac- tion. At the end of February 2021, CA Immo completed the sale of the Bratislava Business Center 1 and 1 Plus (BBC 1) office buildings. The office complex comprises a lettable area of around 25,500 sqm. The sale of BBC 1 marks the exit from the small non-core market of Slo- vakia. Lease agreements In March 2021 CA Immo signed a long-term lease agree- ment with Deutsche Kreditbank AG (DKB) for 34,850 sqm of rental space in the landmark office development Up- beat in Berlin’s urban district Europacity. Upbeat is being developed as a high-quality and sustainable office build- ing and targeted to have at least DGNB (Gold), WiredScore (Platin), and WELL (Gold) certifications. Upon signing, the development project is now 100% pre- leased. CA Immo's total investment (including the plot) amounts to around € 300 m. Construction is expected to start in the second half of 2021 and be complete in 2025. RESEARCH AND DEVELOPMENT Technological and social change continues to transform the office environment and the knowledge-based econ- omy. To (re-)develop office properties today in such a way that they can be efficiently and profitably managed in future, CA Immo monitors changes to working pro- cesses and corporate requirements in terms of premises; at the same time, it trials new technical solutions along with space and building concepts on selected develop- ment projects. Currently, the focus is on new require- ments with regard to energy efficiency, environmental protection and protective measures with regard to viral infections (pandemic protection). In the course of theoretical and practical research activ- ity, CA Immo maintains partnerships with other compa- nies and research institutions. For example, CA Immo is a partner to the Office 21 joint research project of the Fraunhofer IAO Institute (www.office21.de) and the Inno- vation platform RE!N (Real Estate Innovation Network) with the objective of pilot testing own innovation ap- proaches at an early stage. CA Immo also actively partici- pates in relevant platforms for the real estate sector (for details on our memberships, please see the ESG report). SUPPLEMENTARY REPORT GROUP MANAGEMENT REPORT GROUP MANAGEMENT REPORT 4 8 RISK REPORT GROUP MANAGEMENT REPORT 4 9 RISK MANAGEMENT AT CA IMMO To ensure the success of CA Immo as a business in the long term and enable the company to meet its strategic objectives, effective management of new and existing risks is essential. A commensurate measure of risk must be accepted if we are to utilise market opportunities and exploit the potential for success they hold. For this rea- son, risk management and the internal monitoring system (IMS) deliver an important contribution to the Group’s corporate governance (defined as the principle of respon- sible management). CA Immo's risk management system is based on the fol- lowing elements: – Risk culture: CA Immo's reput ation is central to our identity and business success. Therefore, com p liance with established principles of corporate governance and value manag ement is a matter of course. For CA Immo, risk culture implies the raising of risk awareness and the establishment o f a conscious approach to risk in day-to- day business –for managers and individu al employees alike. – Risk strategy: The risk strategy describes how r i sks stemming from business strateg y are managed and iden- tifies the risks in terms of th eir impact on the company’s economic situation and the rel evant guidelines on man- aging risks. Strategic align ment and tolerance of risk With the approval of the Corporate Development com- mittee established in 2019 and the Supervisory Board, the Management Board defines the strategic direction of the CA Immo Group as well as the nature and extent of risks the Group is prepared to accept in pursuit of its strategic objectives. The Risk Management department supports the Management Board in assessing the risk environment and developing potential strategies to raise long-term stakeholder value. An internal risk committee comprising representatives from all business areas and the CFO has also been set up; this convenes quarterly or, if necessary, in special sessions (in response to the Covid-19 situation, for example). The purpose of the committee is to provide additional assurance in regularly assessing the Group's risk situation across departmental boundaries and intro- ducing measures as necessary. The aim of this is to en- sure the company adopts the best possible direction from the alternatives available. Identification of risks and assessment CA Immo evaluates the opportunity/threat situation through quarterly reporting. Risk is assessed in relation to specific properties and projects as well as (sub)portfolios. The company incorporates early warning indicators such as rent forecasts, vacancy analyses, continual monitoring of lease agreement periods and the possibility of termina- tions; construction costs are also tracked throughout pro- ject implementation. Scenarios are envisaged regarding the value trend for the real estate portfolio, exit strategies and liquidity planning; these supplement risk reporting and promote reliable planning. CA Immo observes the precautionary principle by applying the full investment horizon to long-term planning and investment decisions. The company also evaluates specific risks at regular inter- valsevery three years, focusing on content, effect and like- lihood of occurrence. An annual update is also carried out with regard to the estimated impact on the result, as- sets or liquidity of CA Immo (‘extent of damage’) and the probability of occurrence within a period of one year. Measures and controls already implemented are taken into account to determine the net risk. The Management Board uses this data as the basis for determining the se- verity and type of risks that it regards as acceptable in pursuing its strategic objectives. Strategies adopted by the Management Board are incorporated into the Group’s three-year planning; this assists the Group in communi- cating its willingness to take risks and its expectations, both internally and externally. The risk policy of CA Immo is defined by a range of guidelines, observance of which is continually monitored and documented by controlling processes. Risk manage- ment is obligatory at all levels of the company. The Man- agement Board is involved in all risk-relevant decisions and bears overall responsibility for such decisions. At all levels, decisions are subject to the dual verification prin- ciple. Internal Auditing, an independent division, re- views operational and business processes, appointing ex- perts from outside as necessary; it acts independently in reporting and evaluating audit results. Evaluating the functionality of risk management The proper functioning of the risk management system is evaluated annually by the Group auditor in line with the requirements of C Rule no. 83 of the Austrian Corpo- rate Governance Code. The results are reported to the Management Board and the audit committee. GROUP MANAGEMENT REPORT GROUP MANAGEMENT REPORT 5 0 KEY FEATURES OF THE INTERNAL MONITORING SYSTEM (IMS) CA Immo’s internal monitoring system covers all princi- ples, procedures and measures designed to ensure the ef- fectiveness, cost-effectiveness and accuracy of accounting as well as compliance with relevant legal regulations and company guidelines. The IMS is integrated into individ- ual business processes, taking account of management processes. The objectives of the IMS are to preclude and expose errors in accounting and financial reporting, thus enabling amendments to be introduced in good time. Transparent documentation makes it possible to depict accounting, financial reporting and auditing processes. All operational areas are incorporated into the financial reporting process. Competent local management teams are responsible for implementing and monitoring the IMS; the managing directors of subsidiaries are required to perform their own checks in order to assess and docu- ment compliance with monitoring measures. The effec- tiveness of the IMS is regularly assessed by the Group Au- diting department while the cost-effectiveness of business processes is continually evaluated. The results of these assessments are reported to the responsible executive boards, the full CA Immo Management Board and (at least once a year) the audit committee. STRATEGIC RISKS CA Immo defines strategic risk as the danger of unex- pected deviations from company plans or the losses that can result from management policy decisions on the di- rection taken by the company. These risks generally arise from unexpected changes in the macroeconomic market environment. Many of the risks mentioned here are not actively manageable. Amongst other things, the economic success of CA Immo depends on the development of real estate markets of relevance to the Group. Key factors influenc- ing the economic trend include the general situation of the global economy, the trend in rental prices, the infla- tion rate, levels of national debt and interest rates. In the office properties segment, factors such as economic growth, industrial activity, the unemployment rate and consumer confidence play a major role alongside other factors critical to the economic trend. These circum- stances – all of which are beyond the company’s control – may have a negative impact on the broad economic pic- ture in Europe and thus adversely affect economically powerful countries like Germany and Austria; they may also impair the finance and real estate sector generally. Any downturn in the economic situation has the poten- tial to reduce demand for real estate, which in turn can adversely affect occupancy rates, property values and even the liquidity of real estate. Although the economic environment remains character- ised by low interest rates and relatively high property portfolio valuations, the possibility of an interest rate rise negatively affecting the real estate market – and thus property valuations and the divestment plans of CA Immo – cannot be discounted. Acquiring equity and loan capital could become significantly more difficult, making expansion plans almost or completely impossible. The possible reintroduction of national currencies by in- dividual eurozone members would also have grave conse- quences for the economies and financial markets of Eu- rope. Finally, the departure of individual nations from European currency union could lead to a complete col- lapse of the monetary system. Geopolitical risks such as political instability, lack of basic legislation and arbitrary government practices offset the economic opportunities offered by enterprises in other countries. Consequently, enterprises operating in unstable regions must allow for significant impacts on their business activities, such as tax increases, customs duties, export bans, expropriations and asset seizures. Where properties are concentrated too strongly in a single region, these factors can also have a considerable influ- ence on the profitability of the CA Immo Group. Impact of the Covid-19 pandemic Across the board, business year 2020 was impacted by the global Covid-19 pandemic as many countries imposed general lockdowns and travel restrictions. As a result, market activity was severely affected in many sectors as of the second quarter of 2020. The pandemic continues to have Europe firmly in its grip. As infection figures skyrocketed practically every- where from the third quarter of 2020 onwards, countries once again responded with far-reaching restrictions. Re- newed lockdowns are likely to cause the European econ- omy to contract even more sharply than had been ex- pected in mid-2020 (see also "Economic environment" chapter). The real estate sector is also experiencing the conse- quences of the pandemic already, with some real estate GROUP MANAGEMENT REPORT 5 1 markets reporting significantly lower levels of transaction activity and liquidity. Hotels are closing due to low occu- pancy rates and retailers are increasingly requesting rent deferrals or rent reductions in the face of significant sales losses. Some construction sites cannot operate as planned. The short- and long-term economic impact of the Covid-19 pandemic on real estate markets remains highly uncertain. The longer the crisis lasts, the more complex and severe the effects become. Due to the pandemic and the associated economic slump, the real estate transaction market has declined sharply, with the exception of Germany. The volume of commercial property transactions registered in CA Immo's core markets was between 30% (Eastern Europe) and 50% (Austria) down on the previous year. In Germany, the de- cline amounted to less than 6% in comparison with the record result of the previous year. Transactions were paused or even cancelled due to difficulties in pricing and financing. With the exception of Vienna, where letting performance has remained steady so far and the effects are only ex- pected in 2021, all of CA Immo's core cities have seen a decline in demand for office space and/or an increase in vacancy rates due to the challenging conditions caused by the pandemic and its economic impact. Now that both transaction and letting activities have declined signifi- cantly, extended marketing and vacancy periods for unlet units are also likely in the future. As demand for office space is primarily dependent on macroeconomic develop- ments, it remains to be seen how the significant decline in office space take-up in 2020 will actually develop in fiscal year 2021. It also remains unclear how the expansion of digital working processes linked to the crisis and the rise of the home office will affect demand for office space in the medium term. The possibility of the office market be- ing more strongly influenced in future by the trends to- wards flexible office space leases and co-working cannot be ruled out. Across its tenant base (office, hotel, retail), the Group is confronted with requests for waivers, reductions or defer- rals of rental payments. The legal framework varies from country to country. In the event of Covid-19-related offi- cial shut-downs or restrictions of operations, Austrian law provides for a special statutory right to reduce rent, whereas in other countries, in the absence of specific stat- utory provisions, there is generally an obligation to pay rent; a right to reduce rent can only be established by way of exception and in individual cases via general legal pro- visions (such as the lapse of the contractual basis). How- ever, deviating contractual provisions can also justify a tenant's right to reduce rents. The extent to which the measures taken to contain the Covid-19 pandemic will lead to insolvencies of individual tenants and thus to an increase in vacancy rates cannot yet be estimated and will largely depend on the duration of the crisis. In particular the hotel, restaurant and non-systematically relevant re- tail sectors are suffering disproportionately from the pre- vailing situation. Depending on the asset class, further rent waivers, rent reductions and rent deferrals are likely. CA Immo responds to this risk by analysing the property portfolio, tenant structure and cash flow, among other things, and performs various scenarios to assess the risks. Case-by-case assessment is generally necessary. In view of the uncertain future impact of the Covid-19 pandemic and the related current and future measures on the property markets, plus the fact that it is difficult to distinguish between short-term effects and longer-term structural market changes, CA Immo regularly reviews its property valuations. Following a near-complete external valuation of the Group's portfolio in the fourth quarter of 2020, values for the property assets as at the reporting date of 31 December 2020 were updated or adjusted on the basis of binding purchase agreements or external val- uations. Taking into account the current exceptional cir- cumstances and low levels of transactions, property valu- ations must continue to be handled with greater caution than is normally necessary, especially in the core markets of Austria and Eastern Europe. Given the current market conditions – with rising con- struction costs, supply and timing problems, fluctuating financing rates, uncertain marketing periods and a lack of comparative values – it is inevitable that a higher uncer- tainty factor will apply to project developments. Land values could therefore fluctuate much more than would be the case under normal circumstances. For further information on changes in fair values, please refer to the chapter ‘Property Valuation’. The long-term effects of the outbreak of the Covid-19 pandemic remain to be seen, although volatility and un- certainty on stock markets, corporate profit warnings and negative economic forecasts underline the potential dan- gers to the European and global economies. The effects cannot be conclusively assessed given the fast-moving sit- uation, and are subject to ongoing evaluation. Temporary GROUP MANAGEMENT REPORT GROUP MANAGEMENT REPORT 5 2 restrictions on current operations (also caused by exit re- strictions, curfews, border closings, school/business shut- downs and other constraints) may affect the CA Immo Group, tenants, customers and suppliers as well as au- thorities. The consequences in terms of finance, general business and real estate in particular cannot be fully gauged (e.g. payments by tenants which are not in accord- ance with contracts, delays in construction activities, ef- fects on real estate markets, development of covenants for current financings, effects on planned real estate transac- tions). The CA Immo Group applies a wide range of possi- ble measures to minimise the impact. Information on the wide-ranging protective measures implemented by CA Immo in the course of the Covid-19 pandemic to ensure a safe working environment for CA Immo employees, tenants and workers on CA Immo construction sites can be found in the ESG report. PROPERTY-SPECIFIC RISKS Risks linked to the market environment and composition of the portfolio The real estate market is determined by macroeconomic development and demand for properties. Economic insta- bility and restricted access to loan capital and equity- based financing can lead to business partners opting out. Where the liquidity of the real estate investment market is insufficient, there is a risk that sales of individual proper- ties with a view to strategic adjustment of the real estate portfolio may prove impossible or only possible under unacceptable conditions. Many factors that can lead to unfavourable developments are outside of CA Immo’s control. These include changes to available income, eco- nomic output, interest rates and tax policy. Economic growth, unemployment rates and consumer confidence also influence supply and demand levels for real estate at a local level. This can affect prices of properties, market rents and occupancy rates while adversely affecting the value of properties and associated income. For this rea- son, strongly negative effects on earning power and prop- erty valuations cannot be ruled out. Property values depend not only on the development of rental rates, but also on real estate starting yields. Given the general market environment, there is still a risk that starting yields for commercial real estate will be adjusted upwards. The historically high price of property invest- ment is combining with low real estate yields to create risks to the value of properties in the CA Immo portfolio. Due to sustained pressure from investors, there is also the risk that properties are only available to purchase at in- flated prices. The possibility of an increase in general in- terest rates that forces property yields up and subse- quently property values down cannot be ruled out. CA Immo counters market risk by spreading its portfo- lio across various countries. CA Immo counters country- specific risk by concentrating on strategic core regions through local subsidiaries with their own on-site staff, and through appropriate regional allocation within those core markets. The focus here is on markets that exhibit the long-term structural trends of increasing urbanisation, positive demographic change, and structural supply shortages as well as high investment liquidity. Market knowledge, continual evaluation of strategy, monitoring of the portfolio and purposeful portfolio management in the context of strategic decision-making (e.g. defining exit strategies, medium-term planning of sales) enable the company to respond quickly to economic and political events. CA Immo negates transfer risk by repatriating liq- uid assets from investment markets with a low credit standing. Active portfolio management aims to prevent concentration risk and maintain a balanced portfolio structure. CA Immo is currently active in Germany, Aus- tria and selected CEE markets. Germany is currently the largest single market of CA Immo, accounting for a share of 55% of the total portfolio, although regional portfolio target distribution envisages a medium-term increase in the German share to 60-65%. CA Immo is part of the EPRA Developed Europe Index, which supports the capi- tal market positioning and the overall rating. To this end, an aggregate EBITDA contribution of Germany, Austria and Poland of more than 50% is targeted. In order to maintain critical market relevance, real estate assets of approximately € 500 m are to be held in each core city. In terms of asset classes, CA Immo concentrates on modern, high-quality office properties, with a focus on prime in- ner-city locations. The development business segment also realises property developments and construction projects with other usage types (e.g. residential, hotel), which are generally sold after successful development or completion. For single investments, CA Immo currently defines con- centration risk as a limit value of 5% of the total portfo- lio. The only property in this category as at the balance sheet date was the Skygarden office building in Munich. The portfolio as a whole is highly diversified: the top ten Group assets represent less than 30% of the total portfo- lio. The concentration risk in respect of single tenants is GROUP MANAGEMENT REPORT 5 3 also manageable. As at 31 December 2020, the top ten ten- ants were generating some 21% of rental revenue. With an approximate share of 3% of total rental income, Price- waterhouseCoopers followed by Intercity Hotel GmbH are currently the biggest individual tenants in the portfolio. In general, single tenants should not account for more than 5% of total annual rental income over an extended period, although tenants with excellent credit ratings (AAA/AA) may be an exception. For single-tenant build- ings, such scenarios should be avoided unless the tenant's credit rating is considered excellent (AAA/AA). A single- tenant scenario is defined as a case where more than 75% of the annual rental income (single property level) is at- tributable to a single tenant. Generally, rental income from single-tenant buildings should not exceed 20% of total annual rental income. In addition, the average lease term for single-tenant properties should exceed 10 years. CA Immo creates sustainable value through a compre- hensive value chain, from leasing and management to the construction, planning and development of investment properties with highly developed in-house expertise. This reduces functional (performance) risks while maximizing opportunities along the value chain (developer profit). Although, land reserves and land development projects present specific risks owing to the high capital commit- ment and absence of steady cash inflows, they also offer considerable potential for value increases through the se- curing or enhancement of building rights. Risks are regu- larly reduced via the sale of non-strategic land reserves. The acquisition of building rights on remaining land will be accelerated through the company's own capacity. Overall, CA Immo is aiming for a balanced portfolio; on the basis of balance sheet values, this means around 85% profitable properties and 15% development projects un- der construction, including land bank reserves. Other concentration risks arising from factors such as the existence of several properties with a market value of more than € 100 m in the same city, the sector mix of ten- ants, the identity of contractual partners, suppliers or lenders, etc., which cannot be effectively measured or limited in quantitative terms, are subject to regular re- view. Political and economic trends in the countries in which CA Immo is active also have a significant impact on occu- pancy rates and rent losses. The earning power and mar- ket value of a property is adversely affected where the Group is unable to extend a rental agreement due to ex- pire under favourable conditions or find (and retain for the long term) suitably solvent tenants. The creditworthi- ness of a tenant, especially during an economic down- turn, may diminish over the short or medium term, which can affect rental revenue in turn. In critical situations, the Group can cut rents to maintain an acceptable occupancy rate. Through careful monitoring and proactive measures (such as demanding securities and screening the credit- worthiness and reputation of tenants), the Group’s rent default risk has remained at the low level, despite the negative impact of the Covid-19 pandemic on individual tenants. Subject to the unpredictable economic impact of the pandemic, a decline in rental income cannot be ex- cluded. All outstanding receivables are evaluated quar- terly and adjusted according to the level of risk. The risk of lost rent is taken into account to a sufficient degree in the estimation of property values. Many of the Group’s lease agreements contain stable value clauses, often tak- ing account of consumer price indices for particular countries. The level of revenue from such rental contracts and new lettings depends heavily on the inflation trend (sustainable value risk). Competition for reputable tenants is intense on the let- tings market; rent levels are under pressure in many mar- kets. To remain attractive to tenants, CA Immo could be forced to accept lower rental rates. Moreover, incorrect as- sessments of the attractiveness of locations or potential usages can make lettings more difficult or significantly impair desired lease conditions. To a lesser extent, the Group’s portfolio also includes special asset classes such as shopping malls and hotels whose operation involves certain risks. Poor running of a centre, inadequate corporate management of tenants, de- clining footfall and increasing competition can force rental rates down and lead to the loss of key tenants, which in turn leads to rent losses and problems with new lettings. Although CA Immo does not operate any hotels itself, the Group’s earnings situation also depends on the quality of external hotel management and the develop- ment of hotel markets. As mentioned earlier, the negative effects of the Covid-19 pandemic-related lockdowns im- posed by the authorities have had a particularly severe impact on hotel operators and the retail sector. Risks associated with the project development area Costs are generally sustained at the early stages of real estate development projects; revenue is not generated un- til the latter phases of a project. Many development pro- jects may be associated with cost overruns and delays in completion that are frequently beyond the control of GROUP MANAGEMENT REPORT GROUP MANAGEMENT REPORT 5 4 CA Immo. This can adversely affect the economic viabil- ity of individual projects and lead to contractual penal- ties and compensation claims. If no suitable tenants are found, this can lead to vacancy after completion. CA Immo takes steps such as cost monitoring, variance analyses and long-term liquidity planning to manage such risks to a large extent. With few exceptions, projects are only started subject to appropriate pre-letting that can cover future debt service through rental income. Excep- tions are only made in special project and/or market situ- ations (e.g. extreme regional shortage of leasable space with foreseeable rising rents and low letting risk during the project phase) and require explicit reviews when ob- taining project approval. Saturation of the construction industry presents risk to CA Immo as regards the (on time) availability of construc- tion services and the level of building costs. This is now noticeable not only in Germany – the core market for the company's development projects – but in all CA Immo's core regions. Despite making provision for rising costs within project reserves, the fact that further rises in con- struction costs could present a risk to budget compliance and the overall success of a project cannot be ruled out. Another risk is that current property yields might change, thereby reducing target developer profits, even though projects have been calculated defensively. For this reason, CA Immo is increasingly reliant on appropriate market and cost analyses in the development area as well. Pro- jects currently in progress are generally on time and within approved budgets; they are continually monitored as regards cost risk. Risks from sales transactions Sales transactions can produce risks linked to contrac- tual agreements and assurances. These might relate to guaranteed income from rental payments and can subse- quently reduce purchase sums agreed or received. Suffi- cient financial provision has been made to counter recog- nised risks to revenue from transacted sales, and liquidity risk is considered in liquidity planning. Contractual obli- gations in the form of follow-on costs (e.g. residual con- struction work) form part of relevant project cost esti- mates. Environmental and climate risks Environmental and safety regulations include active and latent obligations to remediate contaminated sites. Com- plying with these provisions can entail considerable in- vestment expenses and other costs. These obligations may apply to real estate currently or formerly owned by CA Immo, or currently or formerly managed or developed by the company. In particular, the provisions cover con- tamination with undiscovered harmful materials or nox- ious substances, munitions and other environmental risks such as soil pollution, etc. Several regulations impose sanctions on the discharge of emissions into air, soil and water: this can render CA Immo liable to third parties, significantly impact the sale and letting of affected prop- erties and adversely affect the generation of rental reve- nue from such properties. Natural disasters and extreme weather conditions can also cause considerable damage to real estate. In principle, insurable risks are insured to the usual extent (e.g. all-risk insurance for development projects). Unless sufficient insurance is in place to cover such damage, this can have an adverse impact. To mini- mise the risk, CA Immo incorporates these considerations into its due diligence audit prior to every purchase; ap- propriate guarantees are required from sellers. Wherever possible, the CA Immo Group makes use of environmen- tally sustainable materials and energy-saving technolo- gies. CA Immo observes the ecological precautionary principle by ensuring all (re)development projects qualify for certification. As a responsible player in the European real estate sector, CA Immo fully supports the United Nations' climate goals and the associated transition to a low-car- bon, sustainable economy. In order to meet the associated requirements in the best possible way and to secure long- term competitiveness, CA Immo has anchored corre- sponding measures, processes and goals in its strategic approach (including sustainability certification, sustaina- bility reporting, ESG reporting and green financing). De- tailed information on this – in particular on climate risks and opportunities – can be found in the ESG Report. GENERAL BUSINESS RISKS Operational and organisational risks Weaknesses in the CA Immo Group’s structural and process organisation can lead to unexpected losses or ad- ditional expenditure. This risk can arise from shortcom- ings in EDP and other information systems as well as hu- man error and inadequate internal inspection procedures. Flawed program sequences as well as automated EDP and information systems pose a significant operational risk where their type and scope fail to take account of busi- ness volumes or prove vulnerable to cybercrime. Human risk factors include an insufficient understanding of cor- porate strategy, inadequate internal risk monitoring (and GROUP MANAGEMENT REPORT 5 5 especially business process controls) and excessive deci- sion-making authority at individual level, which can lead to unconsidered actions or a proliferation of decision- making bodies that hinder flexible responses to changes in the market. Some real estate management tasks and other administrative duties are outsourced to external third parties. In the process of transferring administrative tasks, it is possible that knowledge of managed properties and administrative processes can be lost, and that CA Immo could prove incapable of identifying and con- tractually committing suitable service providers within the necessary timeframe. Nonetheless, the expertise possessed by a company and its workforce constitutes a significant competitive factor and a unique point of distinction over competitors. When key members of staff leave, therefore, the company is ex- posed to the risk of loss of expertise, which generally re- quires a significant commitment of corporate resources (money, time, recruitment of new employees) to redress the balance. CA Immo takes various measures to counter these risk factors. In the case of corporate mergers, struc- tured processes of organisational integration are observed. Process organisation (i.e. system/process integration) is firmly established; activities to ensure the long-term im- plementation of operational processes are ongoing. The Group structure is regularly scrutinised and examined to ensure predefined structures take account of the size of the company. CA Immo counters risks linked to personal expertise (which can arise with the resignation of key knowledge holders) through regular transfers of knowledge (via training courses) and by documenting know-how (in manuals, etc.); far-sighted staff planning also plays a part. Legal risks In the course of normal business activity, the companies of the Group can become involved in legal disputes, both as plaintiffs and as defendants. Such cases are heard in various jurisdictions. In each case, different procedural law means that competent courts are not always equally efficient; moreover, in certain cases the complexity of is- sues in dispute can make for protracted proceedings or lead to other delays. CA Immo believes it has made suffi- cient financial provisions for legal disputes. At present, no lawsuits or arbitration proceedings that could threaten the company’s survival are imminent or pending. In the spring of 2020, CA Immo filed a claim for damages against the Republic of Austria and the state of Carinthia for unlawful and culpably biased influence on the best bidder procedure in the context of privatisation of Fed- eral Residential Property companies in 2004 (‘BUWOG’) and for the unlawful failure to win the best bidder proce- dure. The first-instance (though not yet final) criminal verdicts against the defendants (ex-Federal Minister of Fi- nance Grasser et al.), announced in early December 2020, confirmed that actions taken in connection with the BUWOG privatisation proceedings were unlawful and bi- ased. The criminal court referred CA Immo to the civil courts with the asserted private party claims against the defendants for damages of € 1.9 bn. A more detailed as- sessment of the specific effects of the criminal proceed- ings on the pending proceedings for damages will only be possible after written judgment has been issued and, sub- sequently, appeal proceedings have been concluded with a final criminal judgment. A criminal judgment has no procedural binding effect on civil claims for damages as- serted against the Republic of Austria and the state of Carinthia. As a precautionary measure, a provision of ap- proximately € 25 m has been formed for court fees in con- nection with the damages proceedings. It is not possible to predict changes to legal provisions, case law and administrative practice, or the impact of these on business results; such changes may adversely af- fect real estate values or the cost structure of the CA Immo Group. CA Immo proactively manages such le- gal risks by taking numerous measures. These include the regular assessment of historical and existing legal risks, continual monitoring of legislative changes and changes in case law, the incorporation of lessons learned into business processes and continuous informative and train- ing measures. Organised crime, and particularly fraud and extortion, is a general risk to commercial activity. Many countries con- tinue to perform very poorly in combating corruption. Such illegal activity can lead to considerable financial re- percussions and negative publicity. The risk of corruption is addressed by the code of conduct (‘zero tolerance’) and the related gifts and donations policy. Employees are re- quired to report any suspicions internally. Employees and external third parties can also report suspected miscon- duct anonymously via the electronic whistleblower sys- tem set up by CA Immo (Whistleblower System (caimmo.com)). The Supervisory Board is informed at least once a year about measures taken to combat corrup- tion. Corruption-related matters are audited on the basis of the audit plan approved by the audit committee or on the basis of special audit assignments issued by the Man- agement Board, audit committee or full Supervisory GROUP MANAGEMENT REPORT GROUP MANAGEMENT REPORT 5 6 Board. All operating Group companies are reviewed for corruption risks on a regular basis. Taxation risk For all companies, current income and capital gains is subject to income tax in the respective country. Important discretionary decisions must be taken regarding the level of tax provisions that need to be formed. The extent to which active deferred taxes are recognised must also be determined. Subject to compliance with certain requirements, reve- nue from the sale of participating interests is fully or par- tially exempted from income tax. Even where a company intends to meet the requirements, passive deferred taxes are fully applied to property assets according to IAS 12. Key assumptions must also be made regarding the ex- tent to which deductible temporary differences and loss carry forwards are set off against future taxable profits, and thus the extent to which active deferred taxes can be recognised. Uncertainty arises regarding the amount and timing of future income and the interpretation of complex tax regulations. Where there is uncertainty over the appli- cation of income tax to business transactions, an assess- ment will be required as to whether or not the responsible tax authority is likely to accept the interpretation of the tax treatment of such transactions. In case of doubt, the CA Immo Group enters the tax obligation as the most likely amount on the basis of that assessment. Such doubt and complexity can mean that future tax payments turn out to be significantly higher or lower than the obliga- tions currently assessed as probable and recognised in the balance sheet. The CA Immo Group holds a large part of its real estate portfolio in Germany, where many complex tax regulations must be observed. In particular, these in- clude (i) provisions on the transfer of hidden reserves to other assets, (ii) legal regulations on real estate transfer tax charges and the possible accrual of real estate transfer tax in connection with direct or indirect changes of con- trol in German partnerships and corporations and (iii) the deduction of input taxes on construction costs in the case of development projects. The CA Immo Group makes every effort to ensure full compliance with all tax regula- tions. Nonetheless, there are circumstances (some of which are outside the CA Immo Group’s control) such as changes to the shareholding structure, changes in legisla- tion or changes in interpretation on the part of tax author- ities and courts which could lead to the aforementioned taxation cases being treated differently, which in turn would influence the assessment of tax in the consolidated financial statements. Partner risks Since CA Immo undertakes a number of development projects as joint ventures, the company depends on the solvency and performance capability of partners to some extent; moreover, the Group is exposed to credit risk in respect of its counterparties. Depending on the agreement in question, CA Immo could also bear joint liability for costs, taxes and other third-party claims with its co-inves- tors and, where a co-investor opts out, be forced to accept liability for their credit risk or their share of costs, taxes or other liabilities. FINANCIAL RISKS Liquidity, investment and refinancing risk (Re)financing on the financial and capital markets is one of the most important considerations for a real estate company. In particular, CA Immo requires loan capital to refinance existing loans and to finance development pro- jects and acquisitions. In effect, therefore, the company is dependent on the readiness of banks and capital markets to provide additional loan capital and extend existing fi- nancing agreements under acceptable terms. Market con- ditions for real estate financing are constantly changing. The attractiveness of financing alternatives depends on a range of factors, not all of which can be influenced by the Group (market interest rates, required securities and so on). This can significantly impair the ability of the Group to raise the completion level of its development portfolio, invest in suitable acquisition projects or meet its obliga- tions in connection with financing agreements. Although the CA Immo Group has a sufficient level of liquidity as things stand, we must take account of re- strictions at individual subsidiary level; access to cash and cash equivalents is limited owing to obligations to current projects and a liquidity requirement to stabilise loans exists in certain instances. There is also a risk that planned sales will be prevented, delayed or transacted at prices lower than expected. Other risks arise from unfore- seen additional funding obligations in relation to project financing and breaches of covenant in the property fi- nancing area or corporate bonds and convertible bonds is- sued by CA Immo. Where these requirements are violated or default occurs, the relevant contractual partners are en- titled to accelerate financing and demand immediate re- payment. This could impel the Group to sell real estate or arrange refinancing under unfavourable terms. GROUP MANAGEMENT REPORT 5 7 CA Immo has fluctuating stocks of cash and cash equiv- alents which the company invests according to its partic- ular operational and strategic needs and objectives. Suffi- cient equity capitalisation will be required for the com- pany to retain its Baa2 investment grade (long-term is- suer) rating as granted by Moody’s in December 2015. CA Immo counters risk of this kind by continually mon- itoring covenant agreements and effectively planning and securing liquidity. The financial consequences of strate- gic aims are also taken into account. To control liquidity peaks, the Group has secured a revolving overdraft facil- ity at parent company level. This also ensures the Group can meet unexpected cash flow requirements. In line with the investment horizon for real estate, loans are invaria- bly agreed on a long-term basis. In principle, appropriate financing (e.g. loan or bond) must be guaranteed before binding contracts are concluded in connection with real estate acquisitions. As an alternative and supplement to established means of (equity) capital procurement, the company has also entered into equity partnerships (joint ventures) at project level in the past. Even with meticulous planning, it is not possible to eliminate liquidity risk, particularly where capital re- quests linked to joint venture partners are not viable. CA Immo Deutschland has a high capital commitment, which is typical of development projects. Financing has been secured for all projects under construction; addi- tional financing is required for new project launches. Interest rate risk Market-led fluctuations in interest rates affect both the level of financing costs and the fair value of interest hedg- ing transactions concluded. For financing purposes, CA Immo uses banks at home and abroad and issues cor- porate bonds, thereby opting for a mix of long-term fixed- rate and floating-rate loans. To hedge against impending interest rate changes and associated fluctuations in fi- nancing costs, greater use is made of derivative financial instruments (interest rate caps, swaps and floors) in the case of floating-rate loans. However, hedging transactions of this kind may prove to be inefficient or unsuitable for achieving targets; they may also result in losses that affect earnings. Moreover, the valuation of derivatives can im- pact negatively on profits and shareholders’ equity. The extent to which the Group utilises derivative instruments is guided by assumptions and market expectations in re- spect of the future interest level, and especially the 3- month Euribor rate. Should these assumptions prove in- correct, the result can be a significant rise in interest ex- penditure. Continual monitoring of the interest rate risk is therefore essential. No risks constituting a serious and permanent threat to the company exist at the present time. Moreover, CA Immo is increasingly obtaining fi- nance from the capital market. Fixed-interest loans (in the form of corporate bonds, for example) and loans hedged through derivatives currently account for 94% of the total financing volume. Continual optimisation of the financ- ing structure in recent years has served to improve the maturity profile and raise the quota of hedged financial li- abilities while reducing average borrowing costs. The pool of unencumbered assets – a key factor in the com- pany’s investment grade rating – was also raised, and the rating of CA Immo was consolidated. The financing pro- file has thus become more robust. Currency risk Since CA Immo is active on a number of markets out- side the eurozone, the company is subject to various cur- rency risks. Where rents are payable in currencies other than the euro on these markets and cannot be fully ad- justed to current exchange rates in time, incoming pay- ments may be reduced by means of exchange rate changes. Where expenses and investments are not trans- acted in euros, exchange rate fluctuations can impair the payment capacity of Group companies and adversely af- fect the Group’s profits and earnings situation. CA Immo generally counters such risk in that foreign currency inflows are secured by pegging rents to the euro; no significant and direct currency risk exists at present. The pegging of rents affects the creditworthiness of ten- ants and thus produces an indirect currency risk that can result in payment bottlenecks and loss of rent. Since in- coming payments are mainly received in local currency, however, free liquidity (rental revenue less operating costs) is converted into euros upon receipt. This process is continually overseen by the responsible country man- agers. There is no currency risk on the liabilities side. Currency risks linked to construction projects are hedged according to need on a case-by-case basis, taking account of the currency underlying the order and lease agreement, likely exchange rate development and the calculation rate. GROUP MANAGEMENT REPORT GROUP MANAGEMENT REPORT 5 8 GROUP MANAGEMENT REPORT 5 9 SHAREHOLDER STRUCTURE The company’s capital stock amounted to € 718,336,602.72 on the balance sheet date. This was di- vided into four registered shares and 98,808,332 bearer shares each with a proportionate amount of the capital stock of € 7.27. The bearer shares trade on the prime market segment of the Vienna Stock Exchange (ISIN: AT0000641352). With a shareholding of around 28% as at 31 December 2020 (27,908,386 bearer shares and four registered shares), SOF-11 Klimt CAI S.à r.l., Luxembourg, a com- pany managed by Starwood Capital Group, is the largest shareholder of CA Immo. Starwood is a global financial investor focusing on real estate investments. The remain- ing shares of CA Immo are in free float held by both insti- tutional and private investors. S IMMO Group and BlackRock Inc. count to the larger shareholders of CA Immo with stakes of about 6% and 4% respectively. No other shareholders with a stake of more than 4% are identified. For more information on the organisation of the shares and the rights of shareholders, please refer to the Corporate Governance Report (Corporate Governance (caimmo.com)). CAPITAL DISCLOSURES At the 31st Annual General Meeting of 9 May 2018, the Management Board was authorized, with the consent of the Supervisory Board, to increase the capital stock by up to € 359,168,301.36 (approx. 50% of the current capital stock) by issuance of up to 49,404,168 new ordinary bearer shares in return for contributions in cash or in kind (also in several tranches and by exclusion of share- holders’ subscription rights if required). The authorisa- tion is valid until 18 September 2023. In the same annual general meeting, the ‘contingent capital 2013’ was reduced from € 100,006,120 to € 47,565,458.08 in order to serve the 0.75% convertible bonds 2017-2025. Further, the Management Board was au- thorized, with the consent of the Supervisory Board, until 8 May 2023 to issue convertible bonds up to a total nomi- nal amount of € 750 m with conversion and/or subscrip- tion rights in respect of up to 19,761,667 ordinary bearer shares of the company representing a pro-rata amount of the share capital of the company of up to € 143,667,319.09 (‘contingent capital 2018’), also in sev- eral tranches and to determine all other terms of the con- vertible bonds as well as in respect of the issuance and the conversion procedure. Under this authorisation, con- vertible bonds may only be issued, if the total number of new shares for which conversion and/or subscription rights are granted by such convertible bonds shall not ex- ceed 20% of the share capital at the time this authorisa- tion is resolved upon. The shareholders’ subscription rights were excluded (article 174 para 4 in connection with article 153 Austrian Stock Corporation Act (AktG)). At the 32nd Annual General Meeting held on 9 May 2019, the Management Board was authorised in accord- ance with article 65 para 1 no 8 and para 1a and para 1b Austrian Stock Corporation Act (AktG) for a period of 30 months from the date of the adopted resolution (until 8 November 2021), with the consent of the Supervisory Board, to repurchase treasury shares in the company, whereas the company’s stock of treasury shares must not exceed 10% of its share capital. The consideration shall not be lower than 30% and shall not exceed 10% of the average unweighted market price at the close of the mar- ket on the ten trading days preceding the repurchase. The Management Board is further authorised to determine the respective other terms and conditions of the repurchase, whereby the treasury shares may be acquired at the dis- cretion of the Management Board via the stock exchange, by way of a public offer, or by any other lawful and ap- propriate way, in particular off market, and/or from indi- vidual shareholders and under exclusion of the share- holders’ pro rata rights (reverse subscription right). The authorisation may be exercised in full or in part or in multiple partial amounts and in pursuit of one or more purposes by the company, subsidiaries (article 189a no 8 Commercial Code (UGB)) or by third parties for their ac- count. The authorisation may be repeatedly exercised. In addition, the Management Board was authorised, with the consent of the Supervisory Board, to transfer the ac- quired treasury shares by all legally permissible means and to determine the terms and conditions of the transfer of shares or to cancel the treasury shares without an addi- tional resolution by the General Meeting. No use has been made of the share buyback programme in the year under review. As at 31 December 2020, CA Immobilien Anlagen AG held 5,780,037 treasury shares in total; given the total number of voting shares is- sued (98,808,336), this is equivalent to around 6% of the voting shares. INFORMATION ACC. SECTION 243A UGB (AUSTRIAN COMMERCIAL CODE) GROUP MANAGEMENT REPORT GROUP MANAGEMENT REPORT 6 0 INFORMATION ON THE MANAGEMENT AND SUPERVISORY BOARDS According to the articles of association, the Manage- ment Board of CA Immo comprises one, two or three per- sons. The age limit for Management Board members is defined as 65 in the Articles of Association. The final term of office for Management Board members concludes at the end of the Annual General Meeting that follows the 65th birthday of a Board member. The Supervisory Board comprises no less than three and no more than twelve members. At any time, Supervisory Board members ap- pointed through registered shares may be asked to step down by the person entitled to nominate and replaced by another. The provisions of the Articles of Association re- garding terms of office and elections to appoint replace- ments do not apply to them. The other Supervisory Board members are elected by the Annual General Meeting. The age limit for Supervisory Board members is defined as 70 in the Articles of Association. Supervisory Board mem- bers must step down from the Board at the end of the An- nual General Meeting that follows their 70th birthday. The Shareholder’s Meeting resolves on the dismissal of members of the Supervisory Board on the basis of a ma- jority of at least 75% of the capital stock represented (ar- ticle 21 of the Articles of Association of CA Immo). CHANGE-OF-CONTROL CLAUSES All Management Board contracts contain a change of con- trol clause assuring payments in the event of premature ter- mination of Management Board duties following a change of control. A change of control occurs either where a share- holder or group of shareholders attains 25% of voting rights in the Annual General Meeting, or they are obliged to make a mandatory takeover bid where the investment threshold of 30% is exceeded. Corporate mergers always constitute a change of control. The contractual regulations provide for extraordinary termination rights as well as continued remu- neration (including variable remuneration) for the remain- ing term of the employment contract. According to the cal- culation basis, compensation for fixed remuneration may not exceed two years’ fixed salary. Moreover, the company has to grant the Management Board member a contractually agreed percentage part payment to compensate for the loss of variable remuneration not exceeding 80% of two years’ fixed salary, depending on the specific sphere of activity and the position of the Management Board member in ques- tion. The exercising of a special right of termination in the event of a change of control in the sphere of Starwood Capi- tal, the major shareholder, has been contractually excluded for all Management Board members. GROUP MANAGEMENT REPORT 6 1 CA Immo is an investor, developer and long-term holder of high-quality office buildings. Our strategic busi- ness model is geared towards sustainable value creation, taking into account ecological, economic, social and legal dimensions. This goes hand in hand with our claim to meet the diverse interests and needs of CA Immo stake- holders in a targeted and responsible manner, thereby se- curing competitiveness in the long term. With this in mind, we evaluate and manage the requirements of our stakeholders as well as the impact of our business activi- ties on our ecological and social environment. This re- port shows our strategic positioning, goals and action plan on the topic of sustainability and provides an over- view of corresponding activities in 2020. Integrated Sustainability Reporting CA Immo is not obliged to prepare a consolidated non- financial report in accordance with section 267a of the Austrian Commercial Code (Nachhaltigkeits- und Diver- sitätsverbesserungsgesetz, or NaDiVeG). As a public inter- est entity, we nevertheless voluntarily prepare a corre- sponding report. In order to prepare our sustainability topics as clearly as possible and in an internationally comparable manner, we base our reporting on two common international standards: the EPRA Sustainability Best Practice Recom- mendations 3rd Edition (sBPRs) and the recommenda- tions of the Task Force on Climate Related Financial Dis- closures (TCFD). An overview of all sustainability topics integrated into the annual report in accordance with these standards can be found in the appendix including the corresponding page references and definition of the report boundaries. The EPRA sBPR Guidelines provide – based on the standards of the Global Reporting Initiative (GRI) – a con- sistent method for the comparable presentation of the sustainability performance of real estate companies and cover the categories environment, social and governance (ESG). The TCFD recommendations stand for consistent disclosure of climate-related financial risks. Furthermore, in the 2020 financial year, we collected and explained for the first time the Sustainable Develop- ment Goals (SDGs) of the United Nations, which are taken into account in our sustainability strategy. From the 2021 financial year, the EU Taxonomy Regula- tion will set an important standard for future sustainabil- ity reporting. The topics and approaches of this regula- tion have already been taken into account in the prepara- tion of our ESG materiality analysis. Reporting boundaries and coverage A detailed definition of the reporting boundaries and -methodology can be found in the ESG Appendix. Reporting: Status and Outlook In the 2019 business year, CA Immo began to expand its sustainability reporting in line with the EPRA sBPR rec- ommendations. In September 2020, we reached a first milestone in this initiative, when our sustainability re- port, which is integrated into the 2019 annual report, was awarded an EPRA sBPR Gold Award for the first time as well as an EPRA sBPR Most Improved Award. The goal for the coming reporting periods is to further expand our reporting in line with international standards, best prac- tice examples and the requirements of our stakeholders. In the 2020 business year, CA Immo actively reviewed and commented on diverse ESG ratings, including the ISS ESG Corporate Rating, Climate Disclosure Project (CDP) and MSCI ESG Rating. Moreover, we were ranked in the VÖNIX sustainability index of the Vienna Stock Exchange for another consecu- tive year. The aim of these reporting and rating activities is to optimise the transparency and comparability of our sustainability performance. Opportunities that present themselves in the form of more favourable green bond is- suing conditions are to be used more intensively in the future to optimise our financing structure. As part of the planned expansion of sustainability reporting, the canon of ESG rating reviews relevant to CA Immo is also to be ESG REPORT GROUP MANAGEMENT REPORT GROUP MANAGEMENT REPORT 6 2 expanded and both the quantity and quality of the infor- mation submitted to the rating agencies further increased. Third-party verification The contents of this sustainability report have not been verified by independent third parties. The audit of the fi- nancial statements by the auditor only checked whether the necessary non-financial information has been dis- closed. No statement was made about the quality of the disclosed data. Stakeholder dialogue and engagement The interests and concerns of our stakeholders shape our self-image and guide our strategic decisions. Inten- sive dialogue with our diverse stakeholder groups helps us to understand their needs and to tailor our actions ac- cordingly. Details on our activities in this regard can be found in the Corporate Governance Report. Corporate culture and awareness raising for sustainability In 2019, CA Immo launched a Group-wide project to de- fine and manage its strategic sustainability activities un- der the motto "Tomorrow Proof by CA Immo". The goals, framework conditions, measures and mile- stones of the project were presented several times at man- agement meetings. In parallel with the expansion of ex- ternal reporting, the internal communication of sustaina- bility topics and activities is also to be intensified in 2021, among other things through the formation of fur- ther working groups and virtual training sessions. Organisational anchoring and management of sustainability issues Information on the organisational anchoring, internal control and steering processes of sustainability issues as well as the responsibility of the Management Board in this context can be found in the Corporate Governance Report. 1) Impact of the environment, society and the economy on the business model, strategy and financial position of CA Immo Relevance and priorities of CA Immo sustainability reporting To ensure that sustainability reporting and strategy fol- lows the right priorities, CA Immo carried out an analysis for the first time in the 2020 business year to determine the key sustainability issues. A corresponding list of top- ics was drawn up on the basis of the reporting of relevant competitors, regulations and sustainability standards as well as an internal analysis of the impact of CA Immo's business activities on the environment, society and the economy. The materiality analysis of this range of topics was sub- sequently carried out taking into account three dimen- sions: business relevance ("outside-in ") 1) , the significance of the impact of our business activities ("inside-out") 2) and a stakeholder assessment. Nearly the entire second man- agement level of CA Immo was actively involved in this analysis process. In the course of the stakeholder survey, all CA Immo employees were invited to prioritise the in- dividual topics from their own point of view; the partici- pation rate was around 50%. A corresponding topic as- sessment from the perspective of the other CA Immo stakeholder groups (including tenants, investors, banks) was carried out by their internal CA Immo contacts. The results of this three-dimensional materiality analy- sis are presented below in the form of a matrix. The six focus topics derived from this (strongest impact on the environment, society and economy, while at the same time having a high stakeholder relevance) define the framework within which CA Immo can make a relevant contribution to a sustainable economy – and the associ- ated key risks and opportunities. They subsequently de- termine the focus of ongoing sustainability reporting, strategic objectives and operational measures. The report- ing on the focus topics is marked by the corresponding symbols. The sustainability topics included in addition to the focus topics in the matrix below are also covered in our reporting, sometimes in less detail. 2) Impact of CA Immo on the environment, society and the economy GROUP MANAGEMENT REPORT 6 3 Due to the current dynamic developments in relation to ESG issues, both the regulatory environment and stake- holder needs, the materiality matrix will in future be sub- ject to a comprehensive reassessment at least every two years. Social, environmental and economic impacts, risks and opportunities arising from CA Immo business activities A key step in identifying and weighting the sustainabil- ity issues relevant to CA Immo was to evaluate the im- pact of our business activity on the environment, society and the economy across the entire value chain. This in- cluded the following direct (own activities) and indirect (supply chain) material impacts, risks and opportunities. Environment: – Environmental standards in project development (en- ergy efficiency and CO 2 emissions in the construction process as well as product definition, material selec- tion, resource consumption and circular economy) – Brownfield vs. greenfield development (biodiversity) – Management of energy efficiency and CO 2 emissions, waste generation and water consumption in building operations. Society and economy: – Social standards in urban district and project develop- ment (product definition, e.g. social infrastructure, af- fordable housing), response to social change – Health and safety for tenants, contractors and own em- ployees in building operations and on construction sites, dealing with pandemic risks – Working conditions and income effects of own and ex- ternal employees (contractors), employee rights, staff development and retention – Independent and responsible corporate governance, compliance with social and environmental require- ments, observance of human rights, avoidance of cor- ruption and bribery, reputational risk. CA IMMO SUSTAINABILITY MATERIALITY MATRIX AND FOCUS AREAS The diagram shows an overview of the relevant CA Immo sustainability topics according to their impact intensity on the environment, society and the econ- omy (horizontal axis) and stakeholder relevance (vertical axis). The relevance to the company's success is reflected in the size of the circular areas. The coloured area indicates the CA Immo focus areas (equally high impact and stakeholder relevance). GROUP MANAGEMENT REPORT GROUP MANAGEMENT REPORT 6 4 UN Sustainable Development Goals (SDGs) As a top player in the European real estate sector, CA Immo supports the Sustainable Development Goals (SDGs) 1) of the United Nations (see diagram). Our posi- tioning and activities are in line with the SDGs; the most important fields of action are listed in the following table and explained in overview form. Memberships CA Immo is actively involved in the relevant platforms of the real estate industry and contributes to further de- velopment and research in the real estate sector through its memberships and cooperations. As an active member, it has for many years supported organisations that – promote sustainable urban and project development, e.g. the German Sustainable Building Council (DGN B) or the Urban Land Institute (ULI) – publicly repres ent and standardise relevant to pics and concer ns of the real estate industry, e.g. the European Public Real Estate Association (EPRA), the Zentraler Im- mobilien Ausschuss (ZIA) or the Initiative Corporate Gover nance (ICG). In 2020, CA Immo joined the ES G Circle of Real Estate (ECORE) 2) and participated in the develo pment of a European scoring standard wh ich is intended to make sustainabilit y in real estate portfolios transpare nt, measurable and comparable. The aim of this commitment is to strengthen long-term competitiveness at both operational and corporate level through innovation, best practice and cross-company co- operation (see also the section on research and develop- ment). A complete list of all CA Immo memberships can be found on our Group website at www.caimmo.com/membership. 1) https://www.sdgwatch.at/en/about-sdgs/ 2) www.ecore-scoring.com GROUP MANAGEMENT REPORT 65 FOCUS AREAS OF CA IMMO IN THE CONTEXT OF INTERNATIONAL SUSTAINABILITY INITIATIVES Focus Area Description Main topics of the EU Taxonomy Regulation UN Sustainable De- velopment Goals (SDGs) Climate & Energy We want to contribute to keeping global warming below 2° Celsius. Therefore, we have set ourselves the goal of reducing the energy consumption and CO 2 footprint in the construction and operation of our buildings and increasing the resilience of our portfo- lio to climate risks. By raising awareness among our tenants, employees and suppliers, we aim to promote climate and environmentally friendly behaviour within our sphere of influence. – Climate Change Mitigation – Climate Change Adaptation Sustainable Procure- ment & Supply Chain We develop office and hotel properties exclusively according to high sustainability standards. We ensure compliance with the associated requirements for sus- tainable procurement in the supply chain through a wide range of environmental and social requirements for contractors and suppliers. – Pollution Resource Conservation & Circular Economy We take initiatives that lead to reduced resource consumption, the reuse and recycling of materials and waste in the construction, operation and refur- bishment of buildings. – Circular Economy – Water Sustainable Urban Disctrict Development W e specialise in the environmentally friendly revi- talisation of old inner-city sites (brownfield develop- ment). In doing so, we pay attention to the protection of biodiversity and create mixed-use urban neigh- bourhoods with sustainable infrastructure and a high quality of life that are attractive, inclusive and acces- sible. – Ecosystems Business Ethics, Cor- porate Governance & Compliance Responsible cor porate governance and compliance with socially, environmentally and economically rel- evant requirements form the basis of our business ac- tivities. We are committed to strengthening workers´ rights, preventing human rights abuses and acting in accordance with the principles of non-discrimina- tion, equal opportunities and zero tolerance of cor- ruption and bribery throughout our sphere of influ- ence. – Human Rights – Workers´ rights – Fight against corruption Health & Safety W e create safe, healthy and attractive working envi- ronments for tenants, employees and service provid- ers – both in building operations and in project de- velopment. We support our employees and pay atten- tion to their needs, health and individuality. GROUP MANAGEMENT REPORT GROUP MANAGEMENT REPORT 6 6 CA Immo Sustainability Agenda: Goals, principles and measures Our sustainable business agenda summarises all current key corporate objectives, principles and actions in the context of our focus areas. With this programme, CA Immo wants to actively contribute to achieving the climate and environmental goals defined by the Euro- pean Union (climate neutrality by 2050) and the general transition to a sustainable economy. Supplementary tables and information according to EPRA, TCFD and NaDiVeG standards can be found in the ESG Appendix. CA IMMO AGENDA FOR SUSTAINABLE BUSINESS OPERATIONS Focus areas Targets & Principles Measures Climate & Energy – Reduction of average CO 2 emissions in building operation (avoid avoida- ble emissions, compensate for una- voidable emissions) – Reduction of energy consumption of the investment portfolio (reduce avoidable emissions) – Increase the climate resilience of the portfolio – 100% electricity from renewable energy sources in the existing portfo- lio by 2023 (purchased from the landlord) – Compensation of CO 2 emissions in building operation through the pur- chase of certificates for electricity and gas purchased from the landlord – Development of a green lease strategy to increase the share of renewable electricity (purchased from the tenants) in the investment portfolio – Digital measurement of energy key figures for 100% of the multi-tenant office portfo lio by 2025 – Active energy management and energy optimisation of the investment portfolio – Development of all new office and hotel buildings according to at least DGNB Gold or LEED Gold certification standard – Definition of a Group-wide standard for sustainable project develop- ment based on tenant needs and the EU Taxonomy Regulation Sustainable Procure- ment & Supply Chain – Social and environmental require- ments in CA Immo Procurement Di- rective – Obligation of all construction service providers to comply with the sus- tainability standards according to DGNB Gold or LEED Gold (e.g. mate- rial declaration, worker protection) Resource Conservation & Circular Economy – Increase the share of recycled/recy- clable waste – Reduction of water consumption – Implementation of an active waste management system and water con- sumption monitoring in building operations – Green lease contracts for optimisation of waste separation Sustainable Urban Dis- trict Development – Clear focus on brownfield develop- ments (revitalisation of old sites) – 100% of all buildings currently developed by CA Immo are brownfield developments – Continuation of the strategic focus on revitalisation of old sites – Development of all new office and hotel buildings according to at least DGNB Gold or LEED Gold certification standard Health & Safety – Avoiding accidents in buildings and on construction sites – Maintaining the long-term perfor- mance of own and external employ- ees (tenants, contractors) – Consideration of a wide range of measures for the health and comfort of future users already in the course of building planning and develop- ment (DGNB, LEED, WELL certification standards) – Standardised safety concepts on construction sites and in building op- eration – Comprehensive protective measures in the wake of the Covid-19 pan- demic – Occupational health care, flexible working time models GROUP MANAGEMENT REPORT 6 7 EN VIRONMENT CA Immo wants to make a contribution to keeping global warming below 2° Celsius and protecting the envi- ronment. We have therefore set ourselves the goal of re- ducing the carbon footprint of our buildings, increasing the resilience of our portfolio to climate risks and evalu- ating and, if necessary, intensifying the measures we have taken to date to protect the environment. 1. CLIMATE RISKS AND OPPORTUNITIES Climate change and its consequences for our environ- ment are a global threat, the manifold effects of which are already being felt in many countries today. The future so- cietal, climate policy and technological developments as- sociated with climate change are subject to a high degree of uncertainty, as is the speed at which this process of change will take place. Much will depend on how sensi- tive the climate system is to changes in greenhouse gas emissions, and how much higher levels of warming will actually affect our environment and how quickly individ- ual countries and societies adapt their environmental be- haviour. Although global CO 2 emissions in 2020 are estimated to have decreased by around 7% from the previous year due to the Covid-19 constraints 1) , a halving of emissions by 2030 is needed to limit global warming to 1.5° Celsius 2) . The graph on the top right shows a scenario analysis for the development of global CO 2 emissions and the result- ing global warming by 2100. 1) Global Carbon Project, Global Carbon Budget 2020 2) Global Carbon Project, Global Carbon Budget 2019, IPCC Special Report on “Global Warming of 1.5°C” Scenario analysis for global climate warming The role of the real estate sector in the fight against climate change Overall, buildings in the EU are responsible for 40% of energy consumption and 36% of direct and indirect greenhouse gas emissions, mainly through construction, use, renovation and demolition. Around 75% of build- ings in Europe are considered inefficient and only 0.4 to 1.2% of the building stock is renewed annually. 3) Stricter energy standards for buildings, higher energy refurbish- ment rates and technological change (e.g. more intensive use of renewable energy sources such as heat pump tech- nologies) are key components to achieve the EU climate targets. CA Immo climate risks and opportunities The analysis of specific climate risks for our business is extremely complex and involves a number of unknown variables. In 2020, we reviewed our general risk cata- logue for completeness in this regard and partially sup- plemented and evaluated the climate risks relevant to our business as well as general sustainability risks. In future, these risks will be re-evaluated and assessed annually and approved by the Management Board. If the assess- ments reveal the need for additional measures or changes in strategy, these are subsequently implemented accord- ingly by the responsible departments. CA Immo pursues a proactive approach to ensure that any risks are mini- mised through early countermeasures and that the com- pany can react to any changes in good time. 3) https://ec.europa.eu/info/news/focus-energy-efficiency-buildings-2020- feb-17_en GROUP MANAGEMENT REPORT GROUP MANAGEMENT REPORT 6 8 Human-induced climate change represents a risk that unfolds on two levels. In assessing the specific climate risks for CA Immo, we have used these levels for classifi- cation purposes: – Physical risks: Direct, physical damage to prop erty, plant and eq uipment due to the changing climate, trig- gered by extreme weather events (acute risks) or contin- uous climate change such as ri sing sea levels or higher temperatures (chronic risks). – T ransition risks: Economic risks triggered by the transi- tion to a low-carbon economy. This risk group includes regulatory risks (as a result of new or stricter legal regu- lations) and risks due to changes in the market, demand and technologi es (market and competition risk s) or loss of reputation (reputation risk). PHYSICAL RISKS Type of risk Group Probability Time horizon 1) Potential financial impacts Action and strategic precaution Natural disasters and extreme weather events Acute Hi gh Short – Physical damage and deterioration of buildings (possibly enhanced by high portfolio concentration within a city) – Delivery delays and material shortages (interrupted supply chains) – Interruption of production or operations – Ongoing control, maintenance and ser- vicing of the buildin gs – Forward-looking project development and high building quality of the CA Immo portfolio increase the resili- ence of the existing portfolio Gradual changes in temperature and precipitation, rising sea level Chroni c Hi gh Long – Changes in raw material and input prices – Higher energy consumption and operatin g costs for buildings (e.g. due to increase in cooling demand) – Higher maintenance and construction costs to make buildings climate resilient – Increase of insurance premiums or no in- surance coverage possible – CA Immo does not currently hold any buildings in coastal regions or flood ar- eas – Risk prevention, e.g. through flood pro- tection concepts in buildings in river locations and improved drainage sys- tems – Im p lementation of efficient coolin g and sun protection systems 1) Time horizon: Short: 0-1 year, Medium: 1-5 years, Long: more than 5 years GROUP MANAGEMENT REPORT 6 9 TRANSITION RISKS Type of risk Proba- bility Time horizon 1) Potential financial impacts Action and strategic precaution Regulatory risks Stricter targets and legislation on decarbonisation, energy efficiency and adaptation to climate change High Medium – Higher construction costs due to increas- ing requirements for energy efficiency of buildings and CO 2 -neutral construction process – Higher investments in energy retrofit- ting/refurbishment of the building stoc k – Compliance costs (penalties, levies) – Increased taxes and/or loss of subsidies – Investments in energy retrofitting/refurbishment of the building stock – Forward-looking project development and high building quality of the CA Immo portfolio increase the resilience of the existing portfolio – Targeted energy and sustainability management – Buildings developed by CA Immo exceed current en- ergy efficiency and environmental protection re- quirements (stay ahead of regulation) Market risks Pressure from the capital market to reduce CO 2 emissions High Short – Declining share price (loss of reputation) – Higher financing costs, reduced availabil- ity of debt capital – Transparent sustainability reporting – In 2020, CA Immo successfully issued its first Green Bond. This ecological financing strategy is to be fur- ther expanded in the future Change in market demand toward energy-efficient buildings (changing tenant needs) High Medium – Decreasing real estate values – Poorer marketability – Lower rent levels, lower rental income (stranding risk) – At present, there are hardly any explicit environ- mental requirements on the part of our tenants; an intensification of demand towards sustainable build- ings is foreseeable – CA Immo has a high-quality portfolio with a high proportion of sustainability certifications – Buildings developed by CA Immo exceed current en- ergy efficiency and environmental protection re- quirements Reputational risks Attractiveness as an employer, stakeholder trust High Short – Competitive disadvantages due to high employee turnover – Disadvantages in the fight for the best brains – Responsible business model with clear commitment to sustainability and climate protection brings clear advantages in recruiting – Trans p arent sustainabilit y re p ortin g creates trust and strengthens loyalty 1) Time horizon: Short: 0-1 year, Medium: 1-5 years, Long: more than 5 years GROUP MANAGEMENT REPORT GROUP MANAGEMENT REPORT 7 0 CLIMATE OPPORTUNITIES Opportunities Potential financial impacts Action and strategic precaution Resource efficiency: More efficient buildings – Lower operating costs through efficiency gains, reduced water and energy consumption – Higher value of the portfolio – Sustainability certifications and high building quality of the CA Immo portfolio increase the resilience of the ex- isting portfolio – Active energy management and energy optimisation of the existing portfolio – Implementation of all new office and hotel buildings to at least DGNB Gold or LEED Gold certification standard Energy source: Use of renewable or low-emission energies – Low dependency on future fossil fuel price increases through efficiency improvements, use of renewable energy and low-emission technologies for property operation – Possibility of using political incentives for a low-emission economy (public money, public funding, etc.) – 100% electricity from renewable energy sources in exist- ing portfolio by 2025 (purchased by the landlord) – Definition of a standard for sustainable project develop- ment based on tenant needs and the EU Taxonomy Regu- lation Products and services : Green buildings – Reputation gain due to higher demand for products/ser- vices with low emissions ("green buildings") – Competitive advantage through rapid adaptations of the building stock (modern technologies and innovation to op- timize energy efficiency and reduce emissions) – Competitive advantage through transparent and future-ori- ented environmental reporting – CA Immo has a high-quality portfolio with a high propor- tion of sustainability certifications – Buildings developed by CA Immo exceed current re- quirements for energy efficiency and environmental pro- tection – Since 2011, CA Immo has developed all new office and hotel buildings to at least DGNB Gold or LEED Gold cer- tification standard – Evaluation of the use of findings from project develop- ment for GHG emission reduction in the existing build- ing stock – Transparent sustainability reporting Markets: New business areas, target groups and financing opportunities – Increased revenue, com p etitive advanta g e throu g h access to new and emerging markets – Green bond issues: Lower financing costs, better availabil- ity of debt capital – Responsible business model with clear, early commit- ment to sustainability and climate protection brings ex- tensive competitive advantages in customer and investor relations – CA Immo successfully issued its first Green Bond in 2020. This ecological financing strategy is to be ex- panded further in the future Resilience – Increased market valuation due to resilience planning (e.g. infrastructure, location, building condition) – Lower maintenance costs and costs for refurbishment due to high building resilience – Clear strategic commitment to high-quality core products in resilient, inner-city metropolitan locations GROUP MANAGEMENT REPORT 7 1 2. GROUP LEVEL CA Immo´s commitment to climate and environmental protection applies at both operational and Group level. We can make a contribution here by reducing our air travel and the CO 2 emissions of the company cars we pro- vide to employees. With this in mind, we are increasingly offering employees the opportunity to use electric or hy- brid vehicles as company cars and are step by step in- stalling electric charging stations in our own buildings, which can be used by both tenants and employees. As at 31 December 2020, a total of 154 electric charging sta- tions were available in CA Immo office buildings across the Group. Of these, 58 charging stations were newly in- stalled internationally in 2020. The company cars locally available to all CA Immo employees at short notice (pool cars) are to be gradually converted to electric vehicles in the coming years. Our travel policy also stipulates that employees use rail instead of air travel wherever possible and that interna- tional meetings are held virtually. Through further activi- ties such as the promotion of the BahnCard or job tickets for local public transport, we want to encourage our em- ployees to switch from car to public transport. In 2020, as part of the switch to purchasing green elec- tricity and gas for all CA Immo multi-tenant buildings, the supply of energy from renewable energy sources for CA Immo offices used by the company itself was also ini- tiated. In the course of this, emissions from the operation of our owner-occupied office space will also be offset in future by the purchase of certificates. An overview of wa- ter and energy consumption and the resulting CO 2 emis- sions as well as the waste generated in owner-occupied CA Immo office space can be found in the ESG Appendix. 1) By book value 3. INVESTMENT PROPERTIES CA Immo holds international investment properties of many different kinds at many stages of the property lifecycle. Around 90% of the building stock 1) is office property, a large proportion of which contains several rental units each (multi-tenant buildings). In order to en- sure the longest possible value retention, marketability and comprehensive sustainability of all properties, CA Immo relies on integrated quality and sustainability management. Group-wide Energy Management CA Immo continuously collects and analyses the international consumption data and the CO 2 emis- sions generated by heat and electricity consumption of its office portfolio (see table below and EPRA table in the ESG Appendix). This data flows into the portfolio moni- toring, on the basis of which decisions on maintenance measures are made. The facility management contracts of CA Immo properties include extensive standard services for energy management with the aim of further expand- ing data collection and continuously improving the en- ergy management of the properties. In 2019, the average CO 2 emission intensity (annual CO 2 emissions per sqm rentable area) of the CA Immo office portfolio based on energy consumption procured by the landlord (Scope 1+2, excluding tenant electricity) was re- duced by around 12% compared to the previous year. This reduction is based on a year-on-year decrease in all energy consumption values of the overall portfolio in 2018 and 2019 (–10% electricity consumption like-for- like, procured by the landlord; –3% fuels consumption like-for-like; –3% energy consumption from district heat- ing like-for-like). Total average energy intensity (electric- ity, gas and district heating purchased by CA Immo ex- cluding tenant electricity per sqm rentable area) fell by 6% year-on-year. GROUP MANAGEMENT REPORT GROUP MANAGEMENT REPORT 7 2 As the consumption data for 2020 was not yet available in full at the time of reporting, the energy consumption and the CO 2 emission data based on it shown in the table below for 2020 are provisional estimates. According to this projection, the trend towards lower average energy consumption across the entire CA Immo portfolio should continue as the portfolio continues to grow. Lower con- sumption due to the Covid-19-related reduction in office use in 2020 was taken into account here (see extrapola- tion methodology in the ESG Appendix. ENERGY CONSUMPTION DATA AND CO 2 -FOOTPRINT OF THE CA IMMO OFFICE PORTFOLIO 1) EPRA Code Boundaries Unit of measure 2018 2019 % change 2020 (estimated) 2) % change Building energy intensity (excl. tenant electricity) Energy-Int Common areas + shared services kWh/sqm/a 187 177 –5.5 144 –18.7 Building GHG emissions intensity (Scope 1+2) GHG-Int Common areas + shared services kgCO 2 e/sqm/a 52.4 46.3 –11.6 36.9 –20.3 Gross Leasable Space (GLA) Whole building sqm 940.605 1.067.523 13.5 1.072.216 0.4 Number of Properties Whole building number 48 of 48 54 of 54 12.5 55 of 55 3.7 1) Information on reporting boundaries and analysis methodology of the consumption values can be found in the ESG Appendix. The consumption data shown (and the resulting emissions) include the electricity purchased by CA Immo for common areas and energy for heating and cooling throughout the building. Electricity purchased directly by tenants or centrally by CA Immo for tenants' areas (recorded via submetering) is excluded, as consumption values for tenant electricity are not available for all buildings. A detailed table of energy consumption and emission values of the CA Immo office portfolio in ac- cordance with EPRA Best Practice Recommendations can be found in the ESG Appendix. 2) The energy consumption and emission data for 2020 are preliminary estimates, as the consumption data for 2020 was not yet fully available at the time of reporting. Information on the extrapolation mode can also be found in the ESG Appendix. In order to ena ble even more detailed and timely energy monitoring in the future, including the analysis of weak points, the development of a Group-wide, digitally sup- ported energy management system is planned. Through the continuous conversion to smart meters (digital me- ters) and the implementation of an energy data manage- ment software, an effective monitoring and controlling of the current consumption and emission data is to be estab- lished. Corresponding tenders and negotiations have started in 2020, and the nationwide introduction of digi- tal meters is expected to take place in Germany and Aus- tria in 2021. Climate & Energy: Reduction of carbon emissions through conversion of building operations to green energy The national bundling and Group-wide conversion of energy procurement to CO 2 -neutral, renewable energy sources was initiated in 2020. The country-spe- cific contracts cover the period 2020-2025 and include the purchase of green electricity and climate-neutral gas for all common areas and landlord-provided shared ser- vices (e.g. cooling, heating) in our multi-tenant portfolio as well as the electricity supply in our own-used CA Immo offices. As all tenant electricity in the CEE countries of Hungary, Romania, Poland and the Czechia is purchased centrally by CA Immo, the contracts in these countries also include all tenant electricity. If the local availability of green electricity and gas is not 100%, remaining CO 2 emissions will be offset by the pur- chase of certificates. Through centralised purchasing, we expect cost savings of around € 2 m by the end of 2025, which we will pass on in full to our tenants. In the same period, the conversion of CA Immo building operations to green electricity and gas should bring about an esti- mated reduction in CO 2 emissions of around 280,000 t across the Group. The award of t he electricity and gas supply contracts for the German and Austrian portfolio was completed in July and November 2020, respectively, and the supply of the Austrian and Polish buildings has been switched to green electricity since 1 January 2021. The tenders for the re- maining CEE countries are currently underway – the con- clusion of the outstanding gas and electricity supply con- tracts is expected for the end of the first quarter of 2021. The conversion of real operations to green electricity and CO 2 -neutral gas will take place after the current energy contracts expire and should be completed by the end of 2023. GROUP MANAGEMENT REPORT 7 3 At the end of the past business year, CA Immo also ini- tiated the optimisation of district heating contracts for its building portfolio with the aim of also reducing the CO 2 emissions caused by this energy source and realising cost savings at the same time. Negotiations with suppliers will continue in 2021. CA Immo has set itself the goal of working with its ten- ants to minimise the environmental impact of building operations. In the CEE countries Hungary, Romania, Po- land and the Czechia, all tenant electricity is purchased centrally by CA Immo. In Austria and Germany, however, our tenants are responsible for concluding electricity contracts and deciding whether to purchase "green" or "grey" electricity. As part of Group-wide energy procure- ment, framework agreements were negotiated in 2020 that will enable tenants also in these regions to par- ticipate in CA Immo's green electricity purchases in fu- ture. In order to reduce the CO 2 emissions of the entire buildings, including tenant electricity, in our Austrian and German portfolio as well, CA Immo is focusing on raising awareness among its tenants and green lease agreements. Corresponding contractual components are being drawn up and will be rolled out to new and exist- ing leases in the coming years. Climate & Energy: Energetic and climate-friendly modernisation of investment properties In order to sustainably optimise the energy effi- ciency of its portfolio, CA Immo is implementing the following measures, among others: – Replacing old pumps with energy-saving high-effi- ciency pumps – Replacing conventional lighting with LED technology with modern sensors – Motion detectors in common and adjoining rooms for better lighting control – Installation of heat recovery in ventilation systems – Modernisation and system improvements, e.g. in heat- ing and cooling control (modernisation of inefficient cooling media) and electrical systems – Extensive energy management to identify optimisation potentials of each individual building – Installation of effective shading and cooling systems as well as flood protection systems in riverfront buildings to increase climate resilience (if required). Resource conservation and circular economy in building operations Since 2018, CA Immo has been collecting and pub- lishing data on water consumption and waste gen- eration in its office buildings. As CA Immo organises wa- ter purchases centrally for all office buildings, water con- sumption data is available for all buildings included in the analysis (2019: 56 office buildings, see table below). In 2019, water consumption intensity (average annual water consumption per sqm) decreased by over 6% year- on-year (absolute water consumption like-for-like: –10.6%). WATER CONSUMPTION AND WASTE RECYCLING QUANTITIES OF THE CA IMMO OFFICE PORTFOLIO 1) EPRA Code Unit of measure 2018 2019 % change Building water consumption intensity Water-Int l/sqm/a 573.7 536.5 –6.5 Gross leasable area (GLA) sqm 954,825 1,094,571 14.6 Number of properties Number 49 of 49 56 of 56 14.3 Waste recycling Waste-Int Weight of waste by disposal route (%) 17 18 100bp Gross leasable area (GLA) sqm 894,226 1,021,144 14.2 Number of properties Number 47 of 49 52 of 56 10.6 1) Information on reporting boundaries and analysis methodology of the consumption values can be found in the ESG Appendix. All key figures refer to the entire building (boundaries). At the time of reporting, there was insufficient data for a meaningful estimate of the 2020 consumption values. Due to less frequent office use in 2020 in light of the Covid-19 pandemic, we expect a significant year-on-year decrease. 2) Proportion of total annual waste disposed of through reuse or recycling. GROUP MANAGEMENT REPORT GROUP MANAGEMENT REPORT 7 4 For 2019, the waste data for 52 of 56 office buildings could be collected. The recycling rate (incl. reuse) was 18%. In terms of efficient operating cost and sustainabil- ity management, our aim is to close the corresponding data gaps and optimise existing disposal and supply con- cepts. An evaluation process launched at the end of 2020 is intended to clarify the extent to which the implemen- tation of an active waste management and water con- sumption monitoring system during ongoing building op- eration can improve data quality, increase the waste recy- cling rate and reduce water consumption over the coming years. In addition, green lease contracts should contrib- ute to better waste separation Sustainability certification as objective proof of portfolio quality Sustainable in-house project development for its own stock to enhance the quality of the investment portfolio has been an important component of CA Immo's sustaina- bility strategy for many years. In order to provide trans- parent, internationally comparable and objective proof of building quality across the entire portfolio, CA Immo also has strategic core investment properties certified. In 2020, the certification process was completed for one office building in Belgrade as well as a hotel property in Frankfurt; one certified office building in Warsaw was ac- quired and added to the portfolio. On the other hand, a certified investment building (Zagrebtower) was sold. As at 31 December 2020, 43 office properties and 2 hotel properties have been certified according to DGNB, LEED or BREEAM standards (2019: 44 and 1, respectively). A further five investment buildings (four German project completions and one investment building in Warsaw) were in the certification process. By book value, around 69% of the total CA Immo portfolio (all asset classes; 2019: 73%) and 72% of the total office portfolio (2019: 81%) were certified. By rentable area, certified stock comprised some 67% of the total portfolio (2019: 63%) and 75% of the office portfolio (2019: 78%). The book value of the certified property assets (all asset classes) was approximately € 3,265 m as at 31 December 2020 (31 December 2019: € 3,163 m); including the build- ings in the certification process as at reporting date, the value was € 3,714 m. CERTIFIED PROPERTY ASSETS BY REGION 1) in € m Total portfolio Certified portfolio Share of certified portfolio Germany 2,229 1,246 56% Austria 530 119 23% CEE 2,011 1,901 95% Total 4,770 3,265 69% 1) By book value. Basis: Properties 100% owned by CA Immo (fully consoli- dated). CERTIFIED PROPERTY ASSETS BY BOOK VALUE 1) 1) Property assets 100% owned by CA Immo (fully consolidated) CERTIFICATES OF THE CA IMMO OFFICE PORTFOLIO BY BOOL VALUE (BASIS: € 4.3 BN) DGNB Gold LEED Gold DGNB Platinum LEED Platinum BREEAM Very Good BREEAM Excellent Not certified 13% 14% 10% 9% 15% 4% 28% BREEAM Interim 7% GROUP MANAGEMENT REPORT 7 5 4. PROJECT AND URBAN DISTRICT DEVELOPMENT Sustainable urban district development CA Immo contributes to shaping the appearance of ma- jor cities such as Berlin, Frankfurt, Munich and Prague through property and district development. CA Immo specialists cover the entire value chain: From land prepa- ration and participation in the master plan and the pro- curement of building rights (zoning), to the realisation of the surrounding infrastructure such as roads, squares, parks, playgrounds and ecological compensation areas to the construction and operation of new buildings. This re- sults in mixed-use inner-city neighbourhoods with short distances and a high quality of life that provide access to safe green and public spaces and therefore are attractive, inclusive and accessible for city dwellers. Buildings de- veloped by CA Immo are characterised by high technical and architectural quality, flexible use of space and low energy consumption. Sustainability certification for new developments Since 2011, CA Immo has been developing office and hotel properties in accordance with high sustainability standards (at least DGNB 1) Gold or LEED 2) Gold certifica- tion), taking into account the many years of experience gained from ongoing building operations. At the begin- ning of every project development there is a site-specific and target group-oriented product definition, which, among other things, defines the standard and the level of the sustainability certification. The corresponding mini- mum standards for ecological, socio-cultural and func- tional, technical, location and process quality are derived from this. OVERVIEW SUSTAINABILITY STANDARDS OF PROJECTS UNDER CONSTRUCTION City Project System Category Berlin Hochhaus am Europaplatz DGNB Gold Berlin Grasblau DGNB Gold Prague Mississippi House LEED Platinum Prague Missouri Park LEED Platinum Frankfurt ONE DGNB Platin 1) www.dgnb-system.de/de/gebaeude/neubau/kriterien/ In the course of the certification process, an external au- ditor accredited according to the respective standard (DGNB, LEED) accompanies the entire planning and con- struction process and ensures the implementation of the agreed sustainability criteria. The sustainability goals of the project are recorded in a pre-certificate based on the building design. Their implementation is checked by the certifier after completion of the building and is and con- firmed with the issuance of the final certificate. Sustainable Procurement & Supply Chain CA Immo's procurement process ensures that the high ecological requirements are met in accordance with the certification standard provided for the projected building in each case (see above). All contractors (suppli- ers) are obliged to comply with the defined sustainability standards throughout the entire supply chain in the course of the award process. Resource Conservation & Circular Economy In the course of its development projects CA Immo takes into account a wide range of and measures to conserve resources (design for circularity). Criteria such as responsible resource extraction, ease of deconstruction or the use of recycled materials are applied in many CA Immo project developments, insofar as this can be mapped in the context of the overall project. The greatest possible flexibility and reversibility of use for a wide range of user requirements in terms of future office landscapes, conversion and repurposing are key re- quirements for every new new building, which are taken into account right from the planning phase. For example, the shell of the building is designed to be as future-proof as possible by keeping floor heights, depths and ceiling loads as neutral as possible in terms of use, and by taking into account occupancy reserves in the supply shafts. The aim is to enable a variety of flexible uses in the life cycle of the building and to avoid extensive conversion work in the course of the building's life cycle, including premature demolition. Disposal logistics and recycling management for opti- mised waste separation are installed at all CA Immo con- struction sites. This includes daily waste collection, sep- aration and disposal by external disposal logisticians. CA Immo's construction subsidiary omniCon is responsi- ble for waste disposal logistics on construction sites in 2) www.usgbc.org/leed/why-leed GROUP MANAGEMENT REPORT GROUP MANAGEMENT REPORT 7 6 Germany, while the Development department is respon- sible for this at all other locations. Sustainable urban district development: Brownfield development Since taking over the German district developer Vivico Real Estate GmbH in 2008, CA Immo has been developing large inner-city sites that were previ- ously derelict or used for industrial purposes into mod- ern urban districts (brownfield development). As part of the revitalisation of these old (brownfield) sites, some of which have been used for industrial and commercial pur- poses for over 100 years and by Deutsche Bahn, special- ists from CA Immo's construction subsidiary omniCon are implementing a wide range of measures to prepare and develop the land. This special brownfield develop- ment expertise of CA Immo covers the following environ- mental aspects of site preparation, among others: – Technical site assessment: inventory of buildings, un- derground "old buildings", deconstruction – Explosive ordnance risks and explosive ordnance clear- ance measurem ent – Evaluation of contaminated site risks (soil, wa ter, soil air); soil and groundwater remediation – Evaluatio n of waste and dispos al services – Measures for the protection of biodiversity: nature con- servation surveys of flora and fauna – Species pr otection: relocation measures for pr otected animal species such as lizards, green toads an d bats Creation of biot opes, green compensation area s – Infrastructural development: construction of f uture pub- lic roads, paths, squares, playgrounds and pa rks. EXAMPLE OF SUSTAINABLE PROJECT DEVELOPMENT: MISSISSIPPI HOUSE AND MISSOURI PARK, PRAGUE GROUP MANAGEMENT REPORT 7 7 SOCIAL ENGAGEMENT CA Immo also takes measures in the social sphere to set positive impulses and responsible standards within its sphere of influence. Our strategy focuses in particular on health & safety, employment & working conditions and the social aspects of a sustainable supply chain and ur- ban district development. Other topics from our material- ity analysis are also explained. 1. TENANTS AND SERVICE PROVIDERS Health & Safety Safe and health-promoting working conditions for occupiers and external service providers, both in ongoing building operations and in the course of con- struction projects, are a basic prerequisite for our corpo- rate success. CA Immo stands for strict compliance with all legal requirements in the area of health and safety. Our aim is to prevent accidents resulting in sick leave in or around our buildings, in our own offices and on con- struction sites. In addition, our activities focus on main- taining the long-term performance and well-being at work of all occupiers. In all project developments carried out throughout the Group, health and safety considerations are integrated both in the planning and construction phase and with re- gard to subsequent tenants/occupiers of the buildings. The safety and health protection coordinator (SiGeKo), who is already involved in the planning phase, coordi- nates all those involved in the construction work. This coordinator carries out regular safety inspections and in- tervenes immediately when hazardous conditions are identified. In addition, each contractor is required to ap- point its own safety officer. The risk of the individual ac- tivities is assessed by the SiGeKo and appropriate pre- cautions are defined and compliance is monitored on site. All safety measures are incorporated as an overall safety and health protection plan in the respective con- struction site regulations of the project, compliance with which is mandatory for all project participants. In addition, CA Immo strives not only to comply with, but also to exceed all legal requirements relating to po- tential negative impacts on stakeholders (such as con- struction noise or increased particulate pollution) in all its project developments. Health and safety assessments are also carried out in all buildings throughout the Group during ongoing building operations. All legal requirements, e.g. concerning elec- trical installations, elevator systems and fire protection measures, are complied with. The safety and functional- ity of technical building systems are regularly checked by means of expert inspections, maintenance and functional tests in order to prevent malfunctions and equipment failures. The frequency of these inspections is based at least on the national legal requirements. If deficiencies are identified, their rectification is initiated immediately. External facility managers are responsible for functional safety and compliance with fire protection regulations in the course of their work. Tenant Comfort & Wellbeing Workplace quality has a significant impact on the health, motivation and productivity of office occupants. That is why CA Immo considers the safety and health im- pacts of buildings as early as the planning, design and development phase of construction projects. A wide range of measures to promote the health and comfort of future tenants are implemented in the course of our pro- ject developments, such as a pleasant indoor climate, ideal acoustic, thermal and visual conditions, and the creation of spaces for social interaction, often with greened outdoor areas. In this respect, CA Immo relies on additional certification standards for selected buildings. The WELL building standard specifies measures to pro- mote health and well-being in buildings in the categories of air, water light movement, thermal comfort, nutrition, noise, materials, spirit and community (wellcerti- fied.com). Currently, one CA Immo office building in Pra- gue holds a gold WELL Core and Shell certification. Fur- ther projects, such as the Mississippi House and Missouri Park office buildings that CA Immo is currently develop- ing in Prague, are earmarked for WELL certification. GROUP MANAGEMENT REPORT GROUP MANAGEMENT REPORT 7 8 Covid-19 In 2020, compliance with all additional safety precau- tions prescribed in the context of the Covid-19 pandemic was continuously monitored and ensured in our build- ings and on the construction sites. No delays were rec- orded at CA Immo construction sites as a result of the pandemic, and all construction projects could be contin- ued according to plan. In order to ensure the safety of tenants and employees as best as possible and to be able to act quickly if neces- sary, CA Immo set up an international Health & Safety Taskforce at an early stage. Since the beginning of March 2020, this taskforce has been coordinating weekly on cur- rent developments and implementing appropriate recom- mendations for hygiene measures at regional level in the common areas of our buildings and in the own-used of- fice spaces. A corresponding action plan was continu- ously revised in the course of 2020 and adapted to the current local infection situatioun and the guidelines of the national health authorities in the cities in which CA Immo is represented with investment buildings and own branch offices. Measures and internal rules of con- duct for several scenarios and escalation levels were in- cluded to ensure a safe environment for all building users at all times. Based on this, the following protective measures, among others, were implemented in the com- mon areas of CA Immo buildings: – Increased cleaning frequenc y (several times a day) and disinfection – Provision of dis infectant at the building recept ion desk, including instructions o n hand disinfectio n – Posting of dista nce rules for elevator use and recom- mendation for use of stairwells – Mand atory use of mouth-nose protection in al l common areas – Cha nge of filter type and/or regular replacem ent of air conditioning filters – Increasing air c irculation (e.g. by extending the operat- ing hours of ventilation units) and deactivating recircu- lation mode, as well as intensifying air humidification in the buildings to reduce the viral load in the indoor air (as far as cor responding technical requirem ents are available) – Permanent operation of exhaust air systems i n toilets – Partial closure of showers in the common are a s. All operating personnel receiv ed specific training on the new operating procedures and Covid-19 prevention measures. This also included employee behaviour in the event of a confirmed or possible presence of a person in- fected with Covid-19. Tenant Relations & Retention CA Immo has had local teams on the ground in its core cities for many years, taking care of active tenant support and retention as well as the efficient management and maintenance of our buildings. Our experts are well ac- quainted with the respective market conditions, the na- ture and possibilities of our regional portfolio buildings, and the individual needs of our tenants. Ongoing interac- tion with our tenants, combined with our strong regional and international portfolio presence, enables us to offer tailored solutions for a wide range of tenant needs. High building quality, good inner-city locations, a reliable track record in project development for our own portfolio (built to suit) and our continuity as a long-term portfolio holder offer our tenants stability and security. Sustainable procurement & Supply Chain CA Immo screens business partners – in particular construction companies – as part of the award pro- cess not only with regard to their professional qualifica- tions and economic situation, but also with regard to so- cial aspects. In the case of construction services, CA Immo obliges and checks its contractors and supply chain partners for compliance with statutory regulations on occupational health and safety, workplace and work- ing time regulations and collective agreements. In addi- tion to the economic evaluation of bids, compliance with social and environmental standards is requested from po- tential contractors and taken into account in award pro- cesses. Details on these standards and the associated con- trol mechanisms can be found in the CA Immo Procure- ment policy at https://www.caimmo.com/en/investor-re- lations/corporate-governance/our-values/. GROUP MANAGEMENT REPORT 7 9 2. EMPLOYEES Our employees are our most valuable resource; their ex- pertise and commitment are crucial to our success. CA Immo values a corporate culture that is characterised by pride, trust and self-determined work. As an em- ployer, we want to create the best possible conditions for our employees to develop their potential, strengths and competencies to the full. We offer safe and attractive working environments, a wide range of international de- velopment opportunities and careful, forward-looking personnel development with the aim of offering our em- ployees what our office properties stand for: a "place where people love to work". Employment & Working Conditions The number of staff employed by CA Immo across the Group as of December 31, 2020 was 437 1) (31.12.2019: 414) 2) . Germany is CA Immo's most employee-intensive core market, accountin g for around 52% of the work- force, followed by CEE (24%) and Austria (18%). The re- maining 6% is accounted for by employees of the 100% construction subsidiary omniCon branch in Basel. Of the total of 252 employees in Ger many, 119 (201 9: 106) were employe d by omniCon as of th e reporting date (of which 25 were emplo yed by the omniCon branch in Basel). As an employer , CA Immo has been locally anch ored in its markets for many years an d employs almost exclusively local staff in its international branches. In principle, CA Immo employs staff on full-time, per- manent contracts. CA Immo supports the work-life-bal- ance and compatibility of career and family at different stages of employees' lives by offering flexible working hours and part-time models, work-from-home arrange- ments, individual parental leave models and paternity leave. Employees on leave are integrated into the internal information network and have the opportunity to partici- pate in annual team meetings and company events. In ad- dition, a large number of employee-related regulations were defined in cooperation with the Austrian Works Council within the framework of company agreements. In 2020, CA Immo once again conducted a Group-wide analysis of employee satisfaction in cooperation with Great Place to Work (GPTW). Compared to the last GPTW survey conducted in 2016, the satisfaction rate stood nearly unchanged at 86% (2016: 85%). The survey is standardised and assesses satisfaction dimensions such as pride, fairness, respect, camaraderie and credibility. The employees who took part in the survey (76% of total employees) were particularly positive about factors such as teamwork, working environment, portfolio, reputation, focus on sustainability and stability. PERSONNEL DISTRIBUTION WITHIN THE CA IMMO GROUP 1) Headcount Number of employees Share of women Joining / Leaving New hires 2) Turnover 3) 31.12.2019 31.12.2020 Change 2020 Ø 31.12.2020 2020 2020 2020 in % in % in % in % Austria 80 80 0 80 63 12/11 15 14 Germany/Switzerland 4) 233 252 8 244 38 45/23 18 9 CEE 101 105 4 102 72 11/5 11 8 Total 414 437 6 426 51 68/39 16 9 1) Headcounts. Thereof around 11% part-time staff, incl. 26 employees on unpaid leave; excl. 22 employees of joint venture companies. 2) New hires: Joiners 2020 / average number of employees in 2020 (Headcount) 3) Turnover: Leavers 2020 / average number of employees in 2020 (Headcount); 4) At the end of 2020, 25 local employees were employed at the Basel branch of CA Immo's wholly owned construction subsidiary omniCon, which was established in 2014. 1) Of which around 11% part-time employees (PTE); incl. 26 employees on unpaid leave 2) Of which around 11% are PTE; including 23 employees on unpaid leave GROUP MANAGEMENT REPORT GROUP MANAGEMENT REPORT 8 0 Regular internal communication and a trusting and constructive exchange between the Supervisory Board, management and employees are important to us. Rele- vant information is passed on to all employees in a com- prehensive and timely manner via various channels, in- cluding physical or virtual CEO info meetings, info mails, management meetings and team jour fixes. The Works Council, which is based at the Vienna headquarters, co- operates closely with the HR department. Corresponding coordination meetings are held every 14 days. The Man- agement Board and the Works Council meet on a quar- terly basis to discuss company developments and rele- vant employee issues. Four employee representatives from the Austrian Works Council sit on the Supervisory Board of CA Immo. Their activities enable co-determina- tion on the Supervisory Board, including the right to have a say in far-reaching corporate decisions. CA Immo offers employees a range of voluntary social benefits, independent of the working time model: Meal vouchers or food subsidy, Bahn-card 25 or 50, job tickets, further training support, kindergarten allowance, group health insurance, group accident insurance, job-related allowances and company pension scheme (pension fund). In addition to the fixed salary, all employees can participate in the company's success in the form of a vari- able profit-sharing bonus. This is linked to the achieve- ment of budgeted annual targets and a positive Group re- sult. Talent Management & Human Resources Development As part of its strategic training and development pro- gram (CA Immo Academy), CA Immo provides its em- ployees with a wide range of regular internal and exter- nal training and development opportunities. It also sup- ports the professional development of its employees with training days, flexible working hours and financial assis- tance for the completion of (dual) studies. Further infor- mation on the subject of training and further education can also be found at www.caimmo.com/en/careers/. Every CA Immo employee holds an appraisal interview with his or her manager at least once a year to assess per- formance, define goals and develop his or her personal career. Individual training plans and goals can be defined in line with both the individual development potential of employees and the company's need for expertise and qualifications. In 2020, 99% of employees had an annual appraisal, with the remaining 1% being accounted for by employees who joined in the fourth quarter of 2020. AVERAGE ABSENCES FROM WORK BY REGIONS in days Vacation Illness Qualification in hours in days Austr ia 1) Women 15.2 6.7 31.1 3.9 Men 32.2 3.0 22.4 2.8 Ger many 2) Women 27.8 6.1 8.0 1.0 Men 28.3 5.0 8.3 1.0 CEE 3) Women 18.0 0.4 6.3 0.8 Men 19.8 1.9 7.4 0.9 1) Excludes one long-term sick leave case (LTSL). Including these LTSL, the average of sick leaves of women in Austria would be 7.6 days. 2) Excludes six long-term sick leave cases (LTSL). Including these LTSL, the average of sick leaves of women in Germany would be 7.3 days and of men 8.4 days 3) Excludes one long-term sick leave case (LTSL). Including these LTSL, the average of sick leaves of men in CEE would be 2.2 days. PERSONNEL DISTRIBUTION BY AGE AND CATEGORIES (TOTAL: 437 EMPLOYEES) 1) in % Employees (371) 2) ≤ 28 years 29-48 years ≥ 49 years Female 6% 40% 9% Male 4% 26% 15% Total 10% 66% 24% Managers (63) 3) ≤ 28 years 29-48 years ≥ 49 years Female 0% 25% 6% Male 0% 40% 29% Total 0% 65% 35% Management Board (3) ≤ 28 years 29-48 years ≥ 49 years Female 0% 0% 0% Male 0% 33% 67% Total 0% 33% 67% Total employees (437) 38 286 113 1) Excl. 22 employees of joint venture companies. The percentages relate to the number of employees in the respective category 2) Of which 1% with disabilities 3) Managers were defined as follows: Group manager, Managing Director, Head of department, head of division, team leader. GROUP MANAGEMENT REPORT 8 1 Health and safety at work Two occupational accidents were recorded in the 2020 reporting year. The resulting absences did not exceed one month in each case. No other significant work-related injuries, illnesses or days lost by CA Immo employees were reported in 2020. Safety and health plans are drawn up at all CA Immo construction sites; the company's own employees received regular safety brief- ings at the sites (see also the section Tenants & Service Providers, Health & Safety). External safety specialists carry out regular rounds and checks in all own-used CA Immo offices. The frequency of these inspections is based on national legal require- ments and ranges from four times to once a year. The main topics include workplace evaluation, fire protec- tion, indoor climate factors and alone work/alone work- place. No identifiable technical safety deficiencies and resulting acute hazards or risks to employees were identi- fied at any CA Immo site in 2020. In order to protect the physical and mental health of employees in the long term, CA Immo offers the follow- ing measures and incentives as part of its occupational health care programme: – Ongoing physical and virtual (digital) informations on health-promoting work (place) design. – Regular voluntary first aid courses – Lectures by medical professionals on health promotion and stress prevention/management – Annual voluntary free tick and flu vaccinations Covid-19 In addition to the security measures in the common ar- eas of our buildings as listed in the "Tenants & Service Providers" section, the following Covid-19 protection measures are also implemented in the own-used CA Immo offices: – Provision of mouth-nose protection at the reception – Mandatory use of mouth-nose protection in all general building and office areas (except at own workplace) – Reducing courier deliveries, including private packages, to a minimum. A special catalogue of measures to create a safe working environment for CA Immo employees in all office prem- ises used by the company itself has been continuously adapted and communicated internally. For example, due to the Covid-19 pandemic, an extended work-from-home regulation has been in force for all CA Immo employees since March 13, 2020. In May, the CA Immo branches were gradually opened with voluntary office presence, a maximum of 50% office occupancy and mandatory mask- ing in all shared office areas. Until further notice, busi- ness trips and presence meetings will only be held in ex- ceptional cases. CA Immo did not take advantage of any short-time work or other government subsidies related to the pandemic during 2020. Thanks to early investment in modern IT equipment (e.g. laptops for all employees) and conver- sion to digital processes, all employees were able to con- tinue working largely undisturbed in their home offices or office workplaces while complying with Group-wide security precautions. Accompanying training for manag- ers on adapting the management culture and tools to the changed conditions, as well as a virtual conference sys- tem available throughout the Group, enabled unrestricted productivity and collaboration even in times of 100% work-from-home. Further information on health and safety for employees can be found in our CSR Policy at https://www.caimmo.com/en/investor-relations/corpo- rate-governance/our-values/ For information on diversity, equality, inclusion and employee rights, please refer to the Corporate Govern- ance Report. Additional employee-related data can be found in the ESG Appendix. Outlook 2021 CA Immo continued to increase its headcount in 2020. In line with the company's expansionary development, staff growth is expected to continue in the coming years. The aim for the coming years is to further improve em- ployee satisfaction, to develop human resources in line with the rapidly changing general conditions and to clearly position the CA Immo employer brand to support international recruiting. GROUP MANAGEMENT REPORT GROUP MANAGEMENT REPORT 8 2 3. SUSTAINABLE URBAN DISTRICT DEVELOPMENT As an international investor, owner of inner-city of- fice buildings and urban district developer, CA Immo also has an impact on the social environment in its core cities. Our goal is to create urban districts in which people will enjoy living tomorrow just as much as they do today: attractive, mixed-use districts with good public transport links that combine working, living, so- cial and cultural facilities and thus enable people to live within a short distance of each other. In the course of its urban district developments, CA Immo ensures efficient inner-city land use while maintaining a high quality of stay by creating (play and sports) squares, parks, schools, daycare centers, local amenities, public roads and (bicycle) paths. By specialis- ing in the revitalisation of brownfield sites, CA Immo opens up places that were previously inaccessible or only accessible to a small number of people, mostly due to for- mer industrial use, to all city dwellers as places to work or live, green spaces, meeting places, recreation and local amenities. 19 CA Immo portfolio buildings or 24% of the total investment portfolio (by area) are located in urban districts that have been appropriately developed, up- graded and opened up to the public by CA Immo. Procurement of building rights for residential development In the course of its urban district development projects, CA Immo has procured building rights for more than one million sqm of gross floor space of residential construc- tion in Frankfurt, Munich, Regensburg, Mainz, Berlin and Vienna over the past two decades. This corresponds to more than 12,000 residential units. Around 3,300 resi- dential units were developed by CA Immo itself, in many cases with joint venture partners. Further extensive land reserves for urban residential quarters in Munich are cur- rently in various stages of land preparation and zoning (see the chart below on the Munich urban district Eg- garten-Siedlung). EXAMPLE OF SUSTAINABLE URBAN DISTRICT DEVELOPMENT: EGGARTEN-SIEDLUNG, MUNICH GROUP MANAGEMENT REPORT 8 3 4. COMMUNITY ENGAGEMENT Cultural and social sponsoring In the course of developing inner-city districts and con- verting former industrial sites, CA Immo has for many years made space and buildings available free of charge or at low cost for interim cultural use. One example of this is the Rieck Halls, which are used as exhibition space, and the Hamburger Bahnhof property at Berlin's main train station. CA Immo also promotes selected charitable institutions, hospitals and schools in their core cities. In 2020, for ex- ample, we supported the construction of a Covid-19 hos- pital in Bucharest and the delivery of appropriate protec- tive equipment to hospitals; in Budapest, CA Immo pro- vided funds to equip socially disadvantaged children with laptops for home schooling. In total, CA Immo do- nated around € 91,100 to social and medical institutions in 2020. Corporate volunteering CA Immo promotes the commitment of its employees to the common good. In accordance with a new policy drawn up in 2020, all CA Immo employees have the op- portunity to spend up to two working days a year ac- tively working for the common good. BUSINESS ETHICS, CORPORATE GOVERNANCE & COMPLIANCE CA Immo wants to make an active contribution to a sustainable economy with integrity within its sphere of influence. This commitment requires the in- volvement of many, both our own employees and exter- nal partners. Through targeted information and clear standards and guidelines, we aim to raise awareness among our employees and contractors of the issues we consider relevant and to encourage or oblige them to sup- port our principles and initiatives. All information on corporate governance, compliance, anti-corruption and human rights can be found in the Corporate Governance Report. Relevant policies are available on our Group web- site at caimmo.com/sustainability, including: – Code of Ethics & Code of Cond uct – G ifts and Donati ons Policy – CSR Policy – Procurement Policy GROUP MANAGEMENT REPORT GROUP MANAGEMENT REPORT 8 4 MATERIAL NON-FINANCIAL PERFORMANCE INDICATORS UNDER SECTION 267 PARA. 2 UGB (NADIVEG). CA Immo Focus areas EPRA-Indicators Environmental issues Climate & Energy, Resource Conservation & Circular Economy, Sustainable procurement & Supply chain, Sustainable urban district development Elec-Abs, Elec-LFL, DH&C-Abs, DH&C-LFL, Fuels-Abs, Fuels-LFL, Energy-Int, GHG-Dir-Abs, GHG-Indir-Abs2, GHG-Indir-Abs3, GHG-Int, Water-Abs, Water-LFL, Water-Int, Waste-Abs, Waste-LFL, Cert-Tot Employee issues Health & Safet y , Sustainable procurement & Supply chain Diversity-Emp, Diversity-Pay, Emp-Dev, Emp- Turnover, H&S-Emp, Emp-Training, H&S-Asset, H&S-Comp, Comty-Eng Social issues Health and safety, Sustainable procurement / supply chain Respect for human rights Business Ethics, Corporate Governance & Compliance Gov-Board Gov-Select Gov-CoI Combating corruption and bribery Business Ethics, Corporate Governance & Compliance REPORTING ACCORDING TO THE TASK FORCE ON CLIMATE-RELATED FINANCIAL DISCLOSURES (TCFD) Topics Chapter Governance The Board's monitoring of climate-related risks and opportunities Corporate Governance Report Management´s role in assessing and managing climate-related risks and o pp ortunities Corporate Governance Report Strategy Short-, mid- and long-term climate-related risks and opportunities the or g anisation has identified ESG report Impact from risks and opportunities on the organisation´s o p erations , strate gy and financial p lannin g ESG report Preparation of the organisation's strategy in consideration of various climate-related scenarios ESG report Risk Management The or g anisation's p rocess for identif y in g climate-related risks ESG re p ort The or g anisations' p rocesses for mana g in g climate-related risks ESG re p ort Integration of the above processes in the organisations general risk mana g ement ESG report Indicators and goals The organisations indicators for evaluating climate-related risks and opportunities ESG Appendix Carbon emissions of Scope 1, 2 and 3 under the Greenhouse Gas Protocol and associated risks ESG Appendix, ESG report Goals for mana g in g climate-related risks and o pp ortunities ESG re p ort ESG APPENDIX 8 5 GROUP MANAGEMENT REPORT EPRA SUSTAINABILITY PERFORMANCE MEASURES We report on our environmental, social and governance engagement in accordance with the EPRA Sustainability Best Practice Recommendations 3rd Edition (sBPR). We address the EPRA sBPR across three sections: – Overarching recommendations (see this and next page) – Sustainability performance indicators – Narrative on pe rformance (see ESG and Corporate Gov- ernance Report ) 5. OVERARCHING RECOMMENDATIONS ACC. TO EPRA Organisational boundaries For our data boundary, we take an operational control approach. All key figures stated in the course of ESG re- porting refer to CA Immobilien Anlagen AG and all fully consolidated subsidiaries in the respective reporting pe- riod or reporting date (unless otherwise stated). Conse- quently, reporting includes exclusively portfolio proper- ties that were in operation and fully-owned by CA Immo throughout the year under review. Properties that were acquired, sold or completed in the reporting period (fi- nancial year) and thus were not part of our investment portfolio for the entire period were not included (this concerns three buildings in 2019). Coverage We seek to report on all properties within the organisa- tional boundaries defined above, and for which we are responsible for utilities consumption. This includes properties which are: – allocated to the office asset cla ss (main type of use) – multi-tenant buildings (as in single-tenant buildings the procureme nt of energy, water and waste disposal is usu- ally organised directly by the tenant) – single-tenant buildings for which an adequate database on energy co nsumption is avai lable. Office properties form the core segment of CA Immo; as at the reporting date, office properties accounted for 90% of the total portfolio, the rest was accounted for by hotels (6%) and other types of use (4%). Hotels are single-tenant buildings for which we do not have consumption data and are therefore outside the reporting boundary. In order to be able to provide a comprehensive data col- lection for the total energy consumption of our buildings, we seek to obtain tenant consumption data (tenant elec- tricity purchased directly by the tenant) from both all sin- gle-tenant buildings and multi-tenant buildings. In some cases, such a presentation would require estimating con- sumption to a level that would not allow for a meaning- ful analysis at this time. Thus, for the 2019 financial year, we have excluded three office buildings that are fully let to a single tenant (single-tenant buildings) from the data collection; four single-tenant buildings were recorded and integrated into the consumption data analysis due to the sufficient availability of data. The table "CO 2 footprint and consumption data of the office portfolio 2018/2019" includes the consumption data of 56 existing buildings (including utility consump- tion for seven CA Immo owner-occupied offices located in CA Immo buildings). In total, 76% of the entire CA Immo investment portfolio (by gross lettable area) was included in the consumption data analysis in the 2019 business year. The consumption figures for the three offices used by CA Immo itself that are not located in CA Immo buildings are shown separately. Reporting period The reporting on the consumption data of our invest- ment portfolio refers to the calendar year that ended on 31 December 2019, as the consumption data of our build- ings for 2020 was only available for about 50% of the buildings (in terms of rental space) by the editorial dead- line of the report. The rest of the sustainability reporting refers to the reporting date 31 December 2020, unless oth- erwise stated. Extrapolation methodology for 2020 consumption data Consumption data for the calendar year 2020 was only available for about 50% of the properties (in terms of rental space) by the editorial deadline for this report. In order to nevertheless be able to give an indication of con- sumption in 2020 (as stated in the ESG Report, we ex- trapolated selective consumption data on the basis of the 2019 consumption values, taking into account change factors. For this purpose, the percentage change in the ex- isting consumption data from 2019 to 2020 was deter- mined for each type of energy (electricity, district heat- ing, natural gas) and region (Germany, Austria & CEE) and multiplied by the total consumption values for 2019. Both the changes in consumption due to weather condi- tions and the reduced occupancy of office space due to the pandemic were taken into account. The EPRA tables in the ESG Appendix show the full 2018 and 2019 con- sumption data only. GROUP MANAGEMENT REPORT GROUP MANAGEMENT REPORT 8 6 Scope of reporting In reporting on the consumption data of our existing portfolio, we follow the scope definition of the Green- house Gas Protocol. This only includes resources that we procure as a landlord to supply the common areas and provide shared services (heating, cooling), Scope 1 and 2: – Scope 1: Direct emissions from the combustion of en- ergy sources procured dire ctly by CA Immo (natural gas) – Scope 2: Indire ct emissions from the provision of en- ergy sources procured by CA Immo outside CA Immo properties (electricity and district heating) – Scope 3: Indirect emissions generated within the CA Immo value chain. This inc ludes energy vo lumes procure d directly by tenants or procured by CA Immo for direct onward transmission to its tenants (s ubmeter- ing). Portfolio G HG emissions have been calculated using 2018 and 2019 location-based conversion factors pro- vided by the IEA (for electricity) and the DEFRA (district heating and fuels). Estimation of landlord-obtained utility consumption Total energy consumption is based on invoices and me- ter readings where applicable. Water consumption is also based on invoices. No estimates were made for water and energy data (electricity, gas, district heating & cooling), this is applicable to absolute and like-for-like measures. In some cases, we have converted waste data indicated in volumetric units. For this we have used density conver- sion factors developed by the UK Environment Agency. Boundaries – Reporting on landlord and tenant consumption Where possible, the total consumption quantities (en- ergy and water) of the properties were recorded. The total energy quantities include energy purchased by the land- lord to supply the technical building equipment and common areas, energy purchased by the tenant, and en- ergy purchased by the landlord, which is passed on di- rectly to the tenants and recorded and invoiced as part of submetering. All three components are reported sepa- rately. Water consumption is based on the entire building and therefore also includes tenant consumption. Waste data covers tenant and landlord waste as CA Immo is re- sponsible for waste contracts. Analysis – Normalisation Intensities Energy-Int (building energy intensity), GHG- Int (greenhouse gas emission intensity) and Water-Int (water intensity) were calculated using the gross lettable floor area (sqm, excluding garage parking spaces, includ- ing basement and storage area) as the denominator for whole buildings. We are aware of the potential mismatch between the consumption numerator and the denomina- tor in the presentation of the overall building energy in- tensity indicator, where consumption of electricity in some properties relates only to the common areas and shared services provided by the landlord, while for other buildings data on tenant electricity is also available. For our own offices we report intensity performance indica- tors using the floor area we occupy in these buildings. Analysis – Segment analysis Segment analysis has been conducted on a geographical basis. The office portfolio includes properties in Ger- many, Austria and CEE (Czechia, Hungary, Poland, Ro- mania, Serbia, Croatia and Slovakia). Analysis – Like-for-like analysis Like-for-like analysis includes all properties that were in continuous operation and part of the CA Immo portfo- lio in the last two full reporting years (operational con- trol). To ensure meaningful comparability, the individual performance indicators only include properties for which consumption data is available from both years. Key employee figures Employee figures are reported on the basis of headcounts (HC) of all fully consolidated companies (including em- ployees on unpaid leave and part-time employees, ex- cluding students and interns). If a key figure was calcu- lated with a different basis, this is explained in more de- tail in a footnote. 8 7 GROUP MANAGEMENT REPORT ENERGY, WATER CONSUMPTION AND CO 2 FOOTPRINT OF THE OFFICE PORTFOLIO 2018/2019 Total Portfolio Indicator EPRA Boundaries Unit of measure 2018 6) 2019 % change Electricity consumption Elec-Abs Total ener gy consum p tion from electricit y kWh 139,391,171 160,787,083 15.3% Landlord obtained, common areas/shared services 79,880,822 81,224,305 1.7% Landlord obtained, tenant areas (submetered) 51,077,470 60,214,306 17.9% Tenant obtained, tenant area 8,432,879 19,348,472 129.4% % from renewable sources 0% 0% Electricity consumption LFL Elec-LFL Total ener gy consum p tion from electricit y 139,391,171 131,192,066 – 5.9% Landlord obtained, common areas/shared services 79,880,822 71,611,015 – 10.4% Landlord obtained, tenant areas (submetered) 51,077,470 53,415,697 4.6% Tenant obtained, tenant area 8,432,879 6,165,353 – 26.9% Energy consumption from district heating and cooling DH&C-Abs Whole buildin g , landlord obtained 38,035,104 44,624,557 17.3% Whole buildin g , tenant obtained N/A 1,425,438 N/A % from renewable sources 0% 0% Energy consumption from district heatin g and coolin g LFL DH&C-LFL Whole building 38,035,104 37,011,172 –2.7% Energy consumption from fossil fuels Fuels-Abs Whole building 58,150,897 63,022,091 8.4% % from renewable sources 0% 0% Ener gy consum p tion from fossil fuels LFL Fuels-LFL Whole buildin g 58,150,897 56,251,777 – 3.3% Building energy intensity Energy-Int Whole building kWh/sqm 226 247 9.3% Building energy intensity, landlord-obtained Whole building, excl. electricity submetered to tenant areas (tenant electricity) 187 177 –5.5% Direct GHG emission (total) Sco p e 1 1) GHG-Dir-Abs Whole buildin g kgCO 2 e (location based) 1) 10,697,439 11,586,611 8.3% Indirect GHG emission (total) Sco p e 2 1) GHG-Indir-Abs 2) Whole buildin g 38,580,517 37,828,213 – 1.9% Indirect GHG emission (total) Sco p e 3 1) GHG-Indir-Abs 3) Whole buildin g 23,487,898 29,989,984 27.7% Building GHG emissions intensity (Scope 1+2) GHG-Int Whole building, excl. electricity submetered to tenant areas (tenant electricity) kgCO 2 e/sqm 52.39 46.29 –11.6% Total water consum p tion Water-Abs Whole buildin g 4) m 3 547,792 587,224 7.2% Water consum p tion LFL Water-LFL Whole buildin g 4) 547,792 489,637 – 10.6% Buildin g water consum p tion intensit y Water-Int Whole buildin g m³/ s q m 0.57 0.54 – 6.5% Type and number of assets certified Cert-Tot 5) % of portfolio certified 79 81 2.53 1) For information on CO 2 conversion factors and scope definition, see ESG Appendix, 2) GHG-Indir-Abs excludes emissions from consumption that is exclusively attributable to rental space, This is considered scope 3, 3) Reported emissions are assigned to Scope 3, but these values by no means represent full Scope 3 emissions, 4) Municipal supply 5) Base: office properties; 6) Due to changes in data collection and improvements in overall data quality, 2018 consumption data differs slightly from the data reported in the 2019 Annual Report. No estimates were made for water and energy data (electricity, gas, district heating & cooling), neither for absolute nor like-for-like data. LFL: like-for-like GROUP MANAGEMENT REPORT GROUP MANAGEMENT REPORT 8 8 Germany Austria CEE Germany Austria CEE 2018 6) 2019 13,193,134 9,456,052 116,741,986 21,546,998 11,949,447 127,290,638 6,301,408 7,914,899 65,664,515 5,270,429 8,877,544 67,076,332 - - 51,077,470 - - 60,214,306 6,891,726 1,541,153 - 16,276,569 3,071,903 - 0% 0% 0% 0% 0% 0% 13,193,134 9,456,052 116,741,986 9,769,059 9,569,285 111,853,722 6,301,408 7,914,899 65,664,515 5,270,429 7,902,562 58,438,025 - - 51,077,470 - - 53,415,697 6,891,726 1,541,153 - 4,498,630 1,666,723 - 8,404,881 7,118,590 22,511,633 8,853,922 7,274,604 28,496,031 N/A N/A N/A 1,425,438 - - 0% 0% 0% 0% 0% 0% 8,404,881 7,118,590 22,511,633 8,853,922 6,736,494 21,420,756 4,507,880 3,926,979 49,716,038 4,708,384 4,326,723 53,986,984 0% 0% 0% 0% 0% 0% 4,507,880 3,926,979 49,716,038 4,708,384 3,329,311 48,214,082 145.61 154.97 293.78 190.17 154.29 279.77 116.40 143.32 214.37 114.09 134.16 199.46 829,270 722,407 9,145,762 865,636 795,468 9,925,507 4,104,964 2,513,771 31,961,782 3,410,850 2,560,021 31,857,342 2,766,339 229,632 20,491,927 6,143,030 442,661 23,404,293 29.89 24.46 63.91 25.91 21.98 55.72 46,305 50,589 450,899 56,113 54,263 476,848 46,305 50,589 450,899 51,421 50,938 387,278 0.26 0.38 0.70 0.29 0.36 0.64 80 19 89 71 33 96 8 9 GROUP MANAGEMENT REPORT WASTE GENERATED IN THE OFFICE PORTFOLIO 2018/2019 Total Portfolio Indicator EPRA code Boundaries Unit of measure 2018 1) 2019 % change Total waste Whole b uildin g Tonnes 9,673 13,653 41.1 Weight of waste by disposal route (absolute) Waste-Abs Landfill with or without energy recovery Tonnes 4,068 8,395 106.4 Incineration with or without energy recovery 3,681 2,640 –28.3 Reuse - 79 N/A Rec y clin g 1,614 2,286 41.7 Materials Recover y Facilit y 193 232 20.2 Com p ost 117 7 – 94.0 Other - 12 N/A Total diverted 5,605 5,257 – 6.2 Weight of waste by disposal route (%) Waste-Abs Landfill with or without energy recovery % disposal route 42% 61% - Incineration with or without energy recovery 38% 19% Reuse 0% 1% Rec y clin g 17% 17% Materials Recover y Facilit y 2% 2% Com p ost 1% 0% Other 0% 0% Total diverted 58% 39% Total weight of waste like- for-like Total building Tonnes 9,673 12,053 24.6 Like-for-like weight of waste by disposal route (absolute) Waste-LFL Landfill with or without energy recovery Tonnes 4,068 7,254 78,3 Incineration with or without energy recovery 3,681 2,498 –32.1 Reuse - 79 N/A Rec y clin g 1,614 1,987 23.1 Materials Recover y Facilit y 193 219 13.47 Com p ost 117 4 – 96.3 Other - 12 N/A Total diverted 5,605 4,800 – 14.4 Like-for-like weight of waste by disposal route (%) Waste-LFL Landfill with or without energy recovery % disposal route 42% 60% - Incineration with or without energy recovery 38% 21% Reuse 0% 1% Rec y clin g 17% 16% Materials Recover y Facilit y 2% 2% Com p ost 1% 0% Other 0% 0% Total diverted 58% 40% 1) Due to changes in data collection and improvements in overall data quality, 2018 consumption data differs slightly from the data reported in the 2019 Annual Report. No estimates were made for waste data, neither absolute nor like-for-like. In some cases, we converted waste data reported in volumetric units. Density conversion factors developed by the UK Environment Agency were used. GROUP MANAGEMENT REPORT GROUP MANAGEMENT REPORT 9 0 Germany Austria CEE Germany Austria CEE 2018 1) 2019 2,046 2,197 5,430 866 2,291 10,496 - 2,122 1,946 0 2,166 6,229 987 - 2,694 442 25 2,173 - - - 68 - 12 820 75 719 286 97 1,903 149 - 44 54 2 176 90 - 27 4 - 3 - - - 12 - 0 2,046 75 3,484 866 125 4,267 0% 97% 36% 0% 95% 59% 48% 0% 50% 51% 1% 21% 0% 0% 0% 8% 0% 0% 40% 3% 13% 33% 4% 18% 7% 0% 1% 6% 0% 2% 4% 0% 1% 0% 0% 0% 0% 0% 0% 1% 0% 0% 100% 3% 64% 100% 5% 41% 2,046 2,197 5,430 866 2,109 9,078 - 2,122 1,946 - 2,026 5,228 987 - 2,694 442 - 2,056 - - - 68 - 12 820 75 719 286 83 1,618 149 - 44 54 - 165 90 - 27 4 - 0 - - - 12 - 0 2,046 75 3,484 866 83 3,850 0% 97% 36% 0% 96% 58% 48% 0% 50% 51% 0% 23% 0% 0% 0% 8% 0% 0% 40% 3% 13% 33% 4% 18% 7% 0% 1% 6% 0% 2% 4% 0% 1% 0% 0% 0% 0% 0% 0% 1% 0% 0% 100% 3% 64% 100% 4% 42% 9 1 GROUP MANAGEMENT REPORT ENERGY, WATER CONSUMPTION AND CO 2 FOOTPRINT OF OWN-USED OFFICES 2018/2019 Indicator EPRA code Unit of measure 2018 1) 2019 % change Total electricit y consum p tion 2) Elec-Abs kWh 244 ,058 140,019 -42.6% Electricity consumption LFL Elec-LFL 144,626 140,019 -3.2% Total ener gy consum p tion from district heatin g and coolin g 2) DH&C-Abs 367,065 231,730 -36.9% Consumption from district heating and cooling LFL DH&C-LFL 194,980 231,730 18.8% Total energy consumption from fossil fuels 3) Fuels-Abs - - - Building energy intensity Energy-Int kWh/sqm 100 97 -3.1% Direct GHG emission (total) Scope 1 GHG-Dir-Abs tCO 2 e (location based) - - - Indirect GHG emission (total) Scope 2 GHG-Indir-Abs 142 90 -36.5% GHG emissions intensity of areas GHG-Int kgCO 2 e/sqm 23.28 23.56 1.2% Total water consumption 4) Water-Abs m 3 996 850 -14.7% Water consumption LFL 4) Water-LFL 574 850 48.0% Building water consumption intensity Water-Int l/ sqm 163.64 222.39 35.9% Type and number of assets certified Cert-Tot Type and number 2 (DGNB Gold) 2 (DGNB Gold) 0 1) Due to changes in data collection and improvements in overall data quality, 2018 consumption data differs slightly from the data reported in the 2019 Annual Report 2) For the indicators total electricity consumption and energy consumption from district heating and cooling, the percentage from renewable sources is 0% 3) There is no fuel consumption in any own used office 4) Data relates to municipal supply No estimates were made for water, waste and energy data (electricity, gas, district heating & cooling), neither for absolute nor for like-for-like data. LFL: like- for-like. The table contains data on three (2018: four) own-used offices not located in CA Immo buildings (CA Immo branches in Munich and Frankfurt – omniCon and CA Immo). WASTE GENERATION IN OWN-USED OFFICES 2018/2019 Indicator EPRA code Boundaries Unit of measure 2018 1) 2019 % change Like-for-like 2018 2019 % change Weight of waste by disposal route (absolute) Waste- Abs Total Waste Tonnes 112.73 31.38 –72 31.38 31.38 0 Landfill with or without energy recovery 81.35 0.00 –100 - - - Incineration with or without energy recovery 6.41 6.41 0 6.41 6.41 0 Reuse - - - - - - Rec y clin g 24.74 24.74 0 24.74 24.74 0 Materials Recover y Facilit y - - - - - Com p ost - - - - - Other 0.23 0.23 0 0.23 0.23 0 Total diverted 31.38 31.38 0 31.38 31.38 0 Weight of waste by disposal route (%) Waste- Abs Landfill with or without ener gy recover y % disposal route 72% 0% - - - - Incineration with or without energy recovery 6% 20% 20% 20% Reuse - - - - Rec y clin g 22% 79% 79% 79% Materials Recover y Facilit y - - - - Com p ost - - - - Other - 1% 1% 1% Total diverted 28% 100% 100% 100% 1) Due to changes in data collection and improvements in overall data quality, the 2018 consumption data differs slightly from the data reported in the 2019 Annual Report. Waste data by weight was not available for Klaus-Mann-Platz 1 (CA Immo branch office in Munich) GROUP MANAGEMENT REPORT GROUP MANAGEMENT REPORT 9 2 COVERAGE OF THE CA IMMO OFFICE PORTFOLIO 2018/2019 1) 1) This table shows the lettable area, number of buildings and percentage coverage of the total building stock (according to the definition of the scope of the report) on which the respective consumption data are based) 2) Lettable area of applicable properties 3) Number of applicable properties 4) Coverage of lettable area in % 5) Total building, excluding tenant electricity, LFL: like-for-like 2018 2019 Indicator EPRA Area 2) Number 3) Coverage 4) Area 2) Number 3) Coverage 4) Total electricit y consum p tion Total ener gy consum p tion from electricit y Elec-Abs 954,825 s q m 49 out of 49 100.00% 1,094,571 s q m 56 out of 56 100.00% Landlord obtained , common areas/shared services 940,605 s q m 48 out of 48 100.00% 1,067,523 s q m 54 out of 54 100.00% Landlord obtained , tenant area ( submetered ) 532 , 317 s q m 27 out of 31 85.48% 749 , 817 s q m 35 out of 35 100.00% Tenant obtained consum p tion , tenant area 43 , 520 s q m 2 out of 18 13 , 97% 344 , 755 s q m 15 out of 21 75.83% Electricit y consum p tion LFL Total ener gy consum p tion from electricit y Elec-LFL 954,825 s q m 49 out of 49 100.00% 954,825 s q m 49 out of 49 100.00% Landlord obtained , common areas/shared services 940,605 s q m 48 out of 48 100.00% 940,605 s q m 48 out of 48 100.00% Landlord obtained , tenant area ( submetered ) 532 , 317 s q m 27 out of 31 85.48% 532 , 317 s q m 27 out of 31 85.48% Tenant obtained consum p tion , tenant area 43 , 520 s q m 2 out of 18 13.97% 43 , 520 s q m 2 out of 18 13.97% Energy consumption from district heating and cooling Landlord obtained, whole b uildin g DH&C-Abs 470,632 s q m 24 out of 25 97.07% 524,694 s q m 27 out of 27 100.00% Tenant obtained, whole buildin g N/A N/A N/A 27,048 s q m 2 out of 2 100.00% Consumption from district heating and cooling LFL DH&C-LFL 470,632 sqm 24 out of 25 97.07% 470,632 sqm 24 out of 25 97.07% Energy consumption from fossil fuels Whole building Fuels-Abs 469,973 sqm 24 out of 24 100.00% 574,964 sqm 28 out of 28 100.00% Energy consumption from fossil fuels LFL Fuels-LFL 469,973 sqm 24 out of 24 100.00% 469,973 sqm 24 out of 24 100.00% Building energy intensity Energy-Int 954,825 sqm 49 out of 49 100.00% 1,094,571 sqm 56 out of 56 100.00% Building energy intensity landlord-obtained 5) 940,605 sqm 48 out of 48 100.00% 1,067,523 sqm 54 out of 54 100.00% Direct GHG emission (total) Scope 1 GHG-Dir-Abs 469,973 sqm 24 out of 24 100.00% 600,735 sqm 29 out of 29 100.00% Indirect GHG emission (total) Scope 2 GHG-Indir-Abs 954,825 sqm 49 out of 49 100.00% 1,067,523 sqm 54 out of 54 100.00% Indirect GHG emission (total) Scope 3 GHG-Indir-Abs 593,337 sqm 29 out of 49 62.14% 1,011,646 sqm 50 out of 56 92.42% Building GHG emissions intensity (Scope 1+2) GHG-Int 5) 940,605 sqm 48 out of 48 100.00% 1,067,523 sqm 54 out of 54 100.00% Water consumption Water-Abs 954,825 sqm 49 out of 49 100.00% 1,094,571 sqm 56 out of 56 100.00% Water consumption LFL Water-LFL 954,825 sqm 49 out of 49 100.00% 954,825 sqm 49 out of 49 100.00% Building water consumption intensity Water-Int 954,825 sqm 49 out of 49 100.00% 1,094,571 sqm 56 out of 56 100.00% Total waste 894,226 sqm 47 out of 49 95.14% 1,021,144 sqm 52 out of 56 93.29% Weight of waste by disposal route (absolute and %) Waste-Abs 894,226 sqm 47 out of 49 95.14% 1,021,144 sqm 52 out of 56 93.29% Weight of waste by disposal route (abs. and %) LFL Waste-LFL 894,226 sqm 47 out of 47 100.00% 894,226 sqm 47 out of 47 100.00% Type and number of assets certified Cert-Tot 803,540 sqm 40 out of 49 84.16% 888,942 sqm 44 out of 56 81.21 9 3 GROUP MANAGEMENT REPORT COVERAGE OF THE CA IMMO OWN-USED OFFICES 2018/2019 2018 2019 Indicator EPRA Office space Coverage Office space Coverage Total electricity consumption Elec-Abs 6,087 sqm 4 out of 4 3,820 sqm 3 out of 3 Like-for-like electricity consumption Elec-LFL 3,820 sqm 3 out of 3 3,820 sqm 3 out of 3 Total energy consumption from district heating and cooling DH&C-Abs 6,087 sqm 4 out of 4 3,820 sqm 3 out of 3 LFL consumption from district heating and cooling DH&C-LFL 3,820 sqm 3 out of 3 3,820 sqm 3 out of 3 Total energy consumption from fossil fuels Fuels-Abs 1) – – – – Building energy intensity Energy-Int 6,087 sqm 4 out of 4 3,820 sqm 3 out of 3 Direct GHG emission (total) Scope 1 GHG-Dir-Abs N/A N/A N/A N/A Indirect GHG emission (total) Scope 2 GHG-Indir-Abs 6,087 sqm 4 out of 4 3,820 sqm 3 out of 3 Building GHG emissions intensity GHG-Int 6,087 sqm 4 out of 4 3,820 sqm 3 out of 3 Total water consumption Water-Abs 6,087 sqm 4 out of 4 3,820 sqm 3 out of 3 Like-for-like water consumption Water-LFL 3,820 sqm 3 out of 3 3,820 sqm 3 out of 3 Building water consumption intensity Water-Int 6,087 sqm 4 out of 4 3,820 sqm 3 out of 3 Weight of waste by disposal route (absolute and %) Waste-Abs 5,102 sqm 3 out of 4 2,883 sqm 2 out of 3 Like-for-like Weight of waste by disposal route (absolute and %) Waste-LFL 2,883 sqm 2 out of 2 2,883 sqm 2 out of 2 Type and number of assets certified Cert-Tot 2,883 sqm 2 out of 4 2,883 sqm 2 out of 3 1) There is no energy consumption from fossil fuels in any of the own-used offices CERTIFICATION OF THE ASSET PORTFOLIO – EPRA CERT-TOT 1) Buildin g Certification 2018 2019 2020 BREEAM - Excellent Covera g e in s q m 90 , 393 150 , 333 80 , 990 Number of buildin g s 4 5 2 BREEAM - Ver y g ood Covera g e in s q m 152 , 002 171 , 317 265 , 128 Number of buildin g s 8 10 14 BREEAM - Interim Covera g e in s q m 0 0 78 , 029 Number of buildin g s 0 0 3 Leed - Platinum Covera g e in s q m 77 , 155 144 , 728 144 , 723 Number of buildin g s 5 5 5 Leed - Gold Covera g e in s q m 330 , 975 255 , 733 160 , 884 Number of buildin g s 13 13 8 DGNB - Platinum Covera g e in s q m 48 , 335 85 , 418 85 , 755 Number of buildin g s 3 5 5 DGNB - Gold Covera g e in s q m 104 , 680 81 , 413 81 , 413 Number of buildin g s 7 6 6 1) Basis: office properties, Gross leasable area (GLA) in sqm GROUP MANAGEMENT REPORT GROUP MANAGEMENT REPORT 9 4 SOCIAL UND GOVERNANCE PERFORMANCE MEASURES ACCORDING TO EPRA Social EPRA code Chapter Unit of measure / Definition Coverage 31.12.2020 Gender diversity Diversity-Emp Corporate Governance Report % of employees Supervisory Board 1) 67% Male 33% Female Executive Board 100% Male 0% Female Managers 2) Employees 68% Male 32% Female 45% Male 55% Female Gender pay Diversity-Pay 3) Ratio in % Su p ervisor y Board 0 Executive Board 4) 0 Managers 2) Employees –2.1 8.2 2020 Performance a pp raisals Em p -Dev ESG Report % of total workforce All employees 99 New hires Emp-Turnover Total number 68 Rate in % 5) 16 Turnover Total number ( Exits ) 39 Rate in % 6) 9.2 In j ur y rate 7) H&S-Emp Rate in % 0% Lost da y rate 8) Rate in % 0% Absentee rate 9) Rate in % 1.8% Fatalities 10) Number 0 Training and development Emp-Training Average hours of training per employee Men: 9.9 Women: 12.4 Health and safety assessments H&S-Asset ESG Rep ort Percentage of buildings (by rentable area) inspected for health and safety issues (e.g. fire safety, water quality) 11) % of total investment portfolio (by sqm) 83% (DE: 58%, AT: 89%, CEE: 99%) Health and safety compliance H&S-Co mp All legal requirements are complied with, and any deficiencies identified are rectified immediately in all properties (100%) Description Community engagement Comty-Eng ESG Report Share of properties (by rentable area) located in urban district developed by CA Immo (Brownfield Development) % of total investment portfolio 24% (DE: 58%, AT: 38%, CEE: 0%) Governance Composition of the highest governance body Gov-Board Corporate Governance Report Total number of Management Board Management Board Supervisory Board Supervisory Board Supervisory Board 3 Total number of Supervisory Board (independent) 5 Average tenure (years) of Supervisory Board 12) 5 Supervisory Board members 13) with competencies relating to environmental and social topics 5 Nominating and selecting the highest governance body Gov-Select Description Supervisory Board and Management Board Process for managing conflicts of interest Gov-CoI Description 1) Total Supervisory Board, incl. 8 shareholder and 4 employee representatives 2) Managers include Group managers, Managing Directors of the regional offices, heads of departments, divisional heads, team leaders 3) Difference in average total compensation (base salary and bonus) per employee category (function, level, country) of women and men in % 4) The Management Board is 100% male, 5) New hire rate: new hires 2020 / average employees 2020 (headcount) 6) Staff turnover: staff leaving in 2020 / average employees in 2020 (headcount), 7) Injury rate: number of injuries & occupational accidents / total hours worked by all employees, 8) Lost day rate: Number of absence days due to injuries due to accidents at work / total working time of all employees in hours, 9) Absentee rate: total number of absence days (illness) / total working time of all employees in days, 10) Fatalities: Number of deaths due to occupational disease or accident, 11) In 2020, all multi- tenant office buildings (excluding new acquisitions in 2020) have been inspected for H&S. In single-tenant buildings (incl. hotels), the tenant is responsi- ble for H&S assessments and inspections . 12) General average appointment period, 13) Independent / non-executive Supervisory Board Members. 9 5 GROUP MANAGEMENT REPORT INFORMATION ON CA IMMO EMPLOYEES TYPES OF EMPLOYMENT AND WORK MODELS 1) Performance measures Gender Unit of measure 31.12.2019 31.12.2020 Em p lo y ment Total em p lo y ment Female HC 214.0 223.0 Male HC 200.0 214.0 Total HC 414.0 437.0 New hires Female HC 36.0 27.0 Male HC 38.0 41.0 Total HC 74.0 68.0 Leavin g s Female HC 21.0 13.0 Male HC 21.0 26.0 Total HC 42.0 39.0 Fluctuation Female HC 10% 6% Male HC 11% 12% Total HC 10% 9% Em p lo y ment contracts 2) Full-time HC N/A 364 Part-time HC N/A 47 Un p aid leave HC N/A 26 Total HC N/A 437 Tem p orar y em p lo y ees HC 0 0 All-in HC N/A 400 Health Occu p ational diseases Number/ y ear 0 0 Occu p ational accidents Number/ y ear 2 2 Education & trainin g Number of em p lo y ees trained HC 414 437 Trainin g time in hours Hours/ y ear 10 , 651 4 , 892 Social dialo g ue Number of collective a g reements Number 0 0 Bar g ainin g a g reements Number 8 8 Number of meetin g s of the works council with the mana g ement board Number/ y ear 4 4 1) Excl. joint ventures; HC: Headcount. 2) This data was collected for the first time for business year 2020. It was not collected for business year 2019 (N/A). CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 97 A. CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED 31.12.2020 99 B. CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31.12.2020 100 C. CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31.12.2020 101 D. CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31.12.2020 102 E. CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 2020 105 F. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT 31.12.2020 107 CHAPTER 1: INFORMATION ABOUT THE COMPANY AND GENERAL NOTES 107 a) Information concerning the Company 107 b) Accounting principles 107 c) Presentation and structuring of the group note s 107 d) Scope of consolidation 108 e) Acquisitions and establishments of companies /company stakes 108 f) Disposals of companies/company stakes 110 g) Consolidation methods 111 h) Foreign currency translation 113 i) Covid-19 pandemic – impact on CA Immo Group 114 CHAPTER 2: PROFIT AND LOSS 117 2.1. Operating segments 117 2.2. Rental income 124 2.3. Result from operating costs and other expenses directly related to properties rented 125 2.4. Other expenses directly related to properties under development 125 2.5. Result from trading and construction works 126 2.6. Result from sale of investment properties 127 2.7. Income from services rendered 128 2.8. Indirect expenses 128 2.9. Other operating income 129 2.10. Depreciation and impairment losses/reversal 129 2.11. Joint ventures result 129 2.12. Finance expenses 130 2.13. Result from derivatives 130 2.14. Result from financial investments 131 2.15. Other financial results 131 2.16. Result from associated companies 132 2.17. Financial result 132 2.18. Other comprehensive income 2.19. Earnings per share CHAPTER 3: LONG-TERM ASSETS 134 3.1. Long-term property assets 134 3.2. Own used properties 147 3.3. Office furniture and equipment and intangible assets 149 3.4. Investments in joint ventures 152 3.5. Other assets 154 CHAPTER 4: CURRENT ASSETS 157 4.1. Assets and liabilities held for sale 157 4.2. Properties held for trading 158 CONTENT CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 98 4.3. Receivables and other assets 158 4.4. Securities 161 4.5. Cash and cash equivalents 162 CHAPTER 5: EQUITY AND FINANCING 163 5.1. Shareholders‘ equity 163 5.2. Interest bearing liabilities 164 5.3. Other liabilities 166 5.4. Liabilities in disposal groups 167 CHAPTER 6: PROVISIONS 168 6.1. Provisions 168 CHAPTER 7: TAXES 173 7.1. Income taxes 173 7.2. Current income tax receivables 178 7.3. Income tax liabilities 178 CHAPTER 8: FINANCIAL INSTRUMENTS AND RISK MANAGEMENT 179 8.1. Financial instruments 179 8.2. Derivative financial instruments and hedging transactions 181 8.3. Risks from financial instruments 184 CHAPTER 9: OTHER DISCLOSURES 189 9.1. Information for cash flow statement 189 9.2. Other obligations and contingent liabilities 193 9.3. Leases 194 9.4. Transactions with related parties 196 9.5. Employees 199 9.6. Costs for the auditors 199 9.7. Events after balance sheet date 200 9.8. New and amended standards and interpretations 200 a) Changes in presentation, which have a material effect on the consolidate d financial statements 200 b) First-time application of new and revised standards and interpretations not materially influencing the consolidate d financial statements 200 c) New or revised standards and interpretations not yet in force 201 9.9. List of group companies 202 DECLARATION OF THE MANAGEMENT BOARD PURSUANT TO SECTION 124 (1) OF THE AUSTRIAN STOCK 210 211 EXCHANGE ACT AUDITOR’S REPORT CONSOLIDATED FINANCIAL STATEMENTS 9 9 € K Note 2020 2019 Rental income 2.2. 235,609 220,730 Operating costs charged to tenants 2.3. 53,260 51,757 Operating expenses 2.3. –57,738 –55,327 Other expenses directly related to properties rented 2.3. –21,466 –22,410 Net rental income 209,665 194,750 Other expenses directly related to properties under development 2.4. –2,154 –3,157–3,157 Income from the sale of properties and construction works 43,335 12,344 Book value of properties sold incl. ancillary and construction costs –35,387 –13,617 Result from trading and construction works 2.5. 7,949 –1,273 Result from the sale of investment properties 2.6. 43,930 15,650 Income from services rendered 2.7. 8,166 8,500 Indirect expenses 2.8. –73,176 –43,464 Other operating income 2.9. 1,204 721 EBITDA 195,584 171,728 Depreciation and impairment of long-term assets –4,662 –4,626 Changes in value of properties held for trading –871 95 Depreciation and impairment/reversal 2.10. –5,533 –4,531–4,531 Revaluation gain 352,110 491,752 Revaluation loss –168,611 –28,985 Result from revaluation 183,499 462,767 Result from joint ventures 2.11. 1,898 3,729 Result of operations (EBIT) 375,448 633,693 Finance costs 2.12. –42,311 –43,148 Other financial results 2.15. –5,067 0 Foreign currency gains/losses 2.17. 2,385 –618 Result from derivatives 2.13. 21,429 –59,165 Result from financial investments 2.14. –3,589 11,535 Result from associated companies 2.16. 0 –2,967 Financial result 2.17. –27,154 –94,363 Net result before taxes (EBT) 348,295 539,330 Current income tax –15,242 –19,967 Deferred taxes –79,099 –126,060 Income tax expense 7.1. –94,341 –146,026 Consolidated net income 253,953 393,303 thereof attributable to non-controlling interests 5 21 thereof attributable to the owners of the parent 253,948 393,282 Earnings per share in € (basic) 2.19. €2.73 €4.23 Earnings per share in € (diluted) 2.19. €2.34 €4.23 A. CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED 31.12.2020 CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 1 00 € K Note 2020 2019 Consolidated net income 253,953 393,303 Other comprehensive income Cash flow hedges - changes in fair value –620 0 Foreign currency gains/losses –111 –14 Income tax related to other comprehensive income 198 0 Other comprehensive income for the period (realised through profit or loss) 2.18. –533 –14 Revaluation securities 0 19,441 Revaluation IAS 19 –80 –1,549 Income tax related to other comprehensive income 28 –726 Other comprehensive income for the period (not realised through profit or loss) 2.18. –52 17,166 Other comprehensive income for the period 2.18. –585 17,152 Comprehensive income for the period 253,368 410,455 thereof attributable to non-controlling interests 5 21 thereof attributable to the owners of the parent 253,363 410,434 B. CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31.12.2020 CONSOLIDATED FINANCIAL STATEMENTS 1 01 € K Note 31.12.2020 31.12.2019 ASSETS Investment properties 3.1. 4,723,068 4,292,893 Investment properties under development 3.1. 791,136 817,107 Own used properties 3.2. 12,896 15,030 Office furniture and equipment 3.3. 7,531 7,768 Intangible assets 3.3. 2,998 5,169 Investments in joint ventures 3.4. 57,629 67,755 Other assets 3.6. 60,728 83,667 Deferred tax assets 7.1. 4,382 1,810 Long-term assets 5,660,368 5,291,199 Long-term assets as a % of total assets 83.0% 89.9% Assets held for sale and relating to disposal groups 4.1. 37,092 0 Properties held for trading 4.2. 35,200 61,340 Receivables and other assets 4.3. 136,375 73,814 Current income tax receivables 7.2. 16,391 23,198 Cash and cash equivalents 4.5. 934,863 439,139 Short-term assets 1,159,921 597,491 Total assets 6,820,289 5,888,690 LIABILITIES AND SHAREHOLDERS' EQUITY Share capital 718,337 718,337 Capital reserves 791,372 791,372 Other reserves –3,981 –3,396 Retained earnings 1,622,491 1,461,571 Attributable to the owners of the parent 3,128,218 2,967,884 Non-controlling interests 89 84 Shareholders' equity 5.1. 3,128,308 2,967,968 Shareholders' equity as a % of total assets 45.9% 50.4% Provisions 6.1. 34,249 34,571 Interest-bearing liabilities 5.2. 2,622,161 1,850,864 Other liabilities 5.3. 113,503 129,561 Deferred tax liabilities 7.1. 536,317 473,010 Long-term liabilities 3,306,228 2,488,006 Current income tax liabilities 7.3. 14,464 22,867 Provisions 6.1. 117,409 109,297 Interest-bearing liabilities 5.2. 205,301 246,478 Other liabilities 5.3. 46,932 54,073 Liabilities relating to disposal groups 4.1. 1,647 0 Short-term liabilities 385,753 432,716 Total liabilities and shareholders' equity 6,820,289 5,888,690 C. CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31.12.2020 CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 1 02 € K 2020 2019 restated Operating activities Net result before taxes 348,295 539,330 Revaluation result incl. chan g e in accrual and deferral of rental income –187,422 – 187,422 –464,359 – 464,359 De p reciation and im p airment/reversal 5,533 4,531 Result from the sale of lon g -term p ro p erties and office furniture and other e q ui p ment –43,893 – 43,893 –15,624 – 15,624 Finance costs, other financial results and result from financial investments 50,968 31,612 Forei g n currenc y g ains/losses –2,385 – 2,385 618 Result from derivatives –21,429 – 21,429 59,165 Result from j oint ventures and associated com p anies –1,898 – 1,898 –762 – 762 Other non-cash ex p enses 25,475 0 Taxes p aid excl. taxes for the sale of lon g -term p ro p erties and investments –9,016 – 9,016 –19,494 – 19,494 Interest p aid (excludin g interest for financin g activities) –11,521 – 11,521 –484 – 484 Interest received (excludin g interest from investin g activities) 7,200 686 Cash flow from o p erations 159,906 135,220 Pro p erties held for tradin g 26,417 –16,359 – 16,359 Receivables and other assets 9,419 5,824 Provisions –8,980 – 8,980 –3,350 – 3,350 Other liabilities –1,698 – 1,698 –3,706 – 3,706 Cash flow from chan g e in net workin g ca p ital 25,158 –17,591 Cash flow from o p eratin g activities 185,064 117,629 Investin g activities Ac q uisition of and investment in lon g -term p ro p erties incl. p re p a y ments –321,283 – 321,283 –215,133 – 215,133 Ac q uisition of com p anies, less cash and cash e q uivalents of € 1,706 K (2019: € 0 0 K) –132,169 – 132,169 –2,366 – 2,366 Ac q uisition of office e q ui p ment and intan g ible assets –2,085 – 2,085 –2,714 – 2,714 Dis p osal of securities 0 133,985 Dis p osal of investment p ro p erties and other assets –1,831 – 1,831 21,554 Dis p osal of investment p ro p ert y com p anies, less cash and cash e q uivalents of € 4,817 K (2019: € 1,007 K) 129,179 17,283 Dis p osal of at e q uit y consolidated entities (includin g loans g ranted to these entities) 580 6,456 Loans made to j oint ventures –2,545 – 2,545 –2,450 – 2,450 Loan re p a y ments made b y j oint ventures 0 2,100 Re p a y ment of financial assets 0 9 Taxes p aid relatin g to the sale of lon g -term p ro p erties and investments –5,347 – 5,347 –20,347 – 20,347 Dividend distribution/ca p ital re p a y ment from at e q uit y consolidated entities and other investments 7,369 26,961 Interest p aid for ca p ital ex p enditure in investment p ro p erties –4,792 – 4,792 –5,504 – 5,504 Ne g ative interest p aid –1,802 – 1,802 –861 – 861 Interest received from financial investments 64 1,163 Cash flow from investin g activities –334,663 –39,864 Financin g activities Cash inflow from loans received 111,056 135,183 Cash inflow from the issuance of bonds 836,747 0 Cash outflow from the re p urchase of bonds –103,380 – 103,380 0 Costs p aid for issuance of bonds 0 –70 – 70 Dividend p a y ments to shareholders –93,028 – 93,028 –83,725 – 83,725 Dividends to shareholders of non-controllin g interests 0 –128 – 128 Re p a y ment of loans incl. interest rate derivatives –65,626 – 65,626 –30,203 – 30,203 Other interest p aid –35,669 – 35,669 –33,854 – 33,854 Cash flow from financin g activities 650,101 –12,798 Net chan g e in cash and cash e q uivalents 500,502 64,967 Fund of cash and cash e q uivalents 1.1. 439,391 374,519 Chan g es in the value of forei g n currenc y –1,325 – 1,325 –95 – 95 Chan g es due to classification of dis p osal g rou p –3,086 – 3,086 0 Fund of cash and cash e q uivalents 31.12. 935,482 439,391 Ex p ected credit losses cash and cash e q uivalents –619 – 619 –253 – 253 Cash and cash e q uivalents 31.12. ( balance sheet ) 934,863 439,139 D. CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31.12.2020 CONSOLIDATED FINANCIAL STATEMENTS 1 03 The interest paid in 2020 (excluding negative interest on deposits) totalled € –51,982 K (2019: € –39,842 K). The in- come taxes paid in 2020 added up to € –14,363 K (2019: € –39,841 K). Starting 2020, CA Immo Group presents the items “Interest paid (excluding interest for financing activities)” and “Interest received (excluding interest from investing activities)” separately in the cash flow from operations because they result in interest to/ from tax authorities. This also leads to a restatement of the comparative figures for 2019. Due to this adjustment, “Interest paid“ in the amount of € –484 K is no longer disclosed in the cash flow from financing ac- tivities but in the cash flow from operating activities for 2019. Furthermore, due to this adjustment, "Interest received" in the amount of € 686 K is no longer disclosed in the cash flow from investing activities but in the cash flow from opera-ting activities for 2019. The total lease payments in 2020 amount to € –5,016 K (2019: € –4,217 K). Additional information for the cashflow statement is provided in note 9.1. CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 1 04 CONSOLIDATED FINANCIAL STATEMENTS 1 05 € K Note Share capital Capital reserves - Others Capital reserves - Treasury share reserve As at 1.1.2019 718,337 885,607 –95,775 Foreign currency gains/losses 2.18. 0 0 0 Revaluation securities 2.18. 0 0 0 Revaluation IAS 19 2.18. 0 0 0 Consolidated net income 0 0 0 Comprehensive income for 2019 0 0 0 Dividend payments to shareholders 5.1. 0 0 0 Reclassification (other comprehensive income, not realised through profit or loss) 0 0 0 Subsequent change of acquisition costs for shares in non- controlling interests 0 1,540 0 As at 31.12.2019 5.1. 718,337 887,147 –95,775 As at 1.1.2020 718,337 887,147 –95,775 Cash flow hed g es - chan g es in fair value 2.18. 0 0 0 Forei g n currenc y g ains/losses 2.18. 0 0 0 Revaluation IAS 19 2.18. 0 0 0 Consolidated net income 0 0 0 Com p rehensive income for 2020 0 0 0 Dividend p a y ments to shareholders 5.1. 0 0 0 As at 31.12.2020 5.1. 718,337 887,147 –95,775 E. CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 2020 CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 1 06 Retained earnings Valuation result (hedging - reserve) Other reserves Attributable to shareholders of the parent company Non-controlling interests Shareholders' equity (total) 1,118,663 0 12,804 2,639,635 62 2,639,697 0 0 –14 –14 0 –14 0 0 18,226 18,226 0 18,226 0 0 –1,060 –1,060 0 –1,060 393,282 0 0 393,282 21 393,303 393,282 0 17,152 410,434 21 410,455 –83,725 0 0 –83,725 0 –83,725 33,351 0 –33,351 0 0 0 0 0 0 1,540 1 1,541 1,461,571 0 –3,396 2,967,884 84 2,967,968 1,461,571 0 –3,396 2,967,884 84 2,967,968 0 –422 – 422 0 –422 – 422 0 –422 – 422 0 0 –111 – 111 –111 – 111 0 –111 – 111 0 0 –52 – 52 –52 – 52 0 –52 – 52 253,948 0 0 253,948 5 253,953 253,948 –422 –163 253,363 5 253,368 –93,028 – 93,028 0 0 –93,028 – 93,028 0 –93,028 – 93,028 1,622,491 –422 –3,559 3,128,218 89 3,128,308 CONSOLIDATED FINANCIAL STATEMENTS 1 07 CHAPTER 1: INFORMATION ABOUT THE COMPANY AND GENERAL NOTES a) Information concerning the Company CA Immobilien Anlagen Aktiengesellschaft and its subsidiaries constitute an international real estate group (the “CA Immo Gro up”). The parent company is CA Immobilien Anlagen Aktiengesellschaft ("CA Immo AG"), which has its head office at 1030 Vienna, Mechelgasse 1. CA Immo Group owns, develops and manages office, commercial, logistics and residential properties in Austria and Germany as well as in Eastern Europe. CA Immo AG is listed on the prime market segment of the Vienna Stock Exchange and is included in the ATX (Austrian Traded Index of leading compa- nies). b) Accounting principles The consolidated financial statements of CA Immo AG were prepared in acc ordance with the International Financial Reporting Standards (IFRS) as adopted by the European Union and thereby fulfil the additional requirements of § 245a par. 1 of the Austrian Commercial Code (UGB). The consolidated financial statements are based on the acquisi- tion cost method, with the exception of investment properties (including standing investments and properti es under development), properties hel d for sale, securities, other investments, derivative financial instruments and provisions for cash-settled share-based payment plans, w hich are measured at fair value. The net item fr om pension obligations is presente d as a provision, comprising the present value of the obligations less the fair value of the plan asse t. The co nsolidated financial statements are presented in thousands of Euros ("€ K"), rounded according to the commer- cial rounding method. The use of automatic data processing equipment may lead to rounding differences in the addi- tion of rounded amounts and percentage rates. c) Presentation and structuring of the group no tes The pre paration and presentation of the financial statements require management to make relevant decisions regard- ing the choice of the accounting methods as well as the sequence and the relevance of the disclosures, taking into account the requirements of the users of the financial statements. CA Immo Group presents all items of the consoli- dated income statement and the consolidated statement of financial position together with information about main de- cisions, assumptions and estimations as well as the accounting policies for these items. This structure offers the users of the financial statements a clear overview of the information about the group figures and relating explanations and disclosures. The following symbols indicate the different contents of the chapters: Main decisions, assumptions and estimations Accounting policies The financial statements contain financial information prepared by taking into account materiality considerations. The materiality of the CA Immo Group is determined by quantitative and qualitative aspects. The quantitative aspects are evaluated by means of ratios to balance sheet total, performance indicators and/or main items of cash flow. The dis- closures in the notes of the CA Immo Group are assessed at each end of the financial period, weighing the efficient preparation of the financial statements and the transparent presentation of the relevant information. F. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT 31.12.2020 CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 1 08 d) Scope of consolidation The consolidated financial statements comprise the ultimate parent company CA Immo AG and the companies listed in Note 9.9. Changes in scope Full consolidation Joint ventures at equity As at 1.1.2020 153 32 Acquisition of shares in companies 2 0 New establishment of companies 3 0 Disposal of companies due to liquidation or restructuring –3 –1 Transition consolidation 3 –3 Sales of entities –2 0 As at 31.12.2020 156 28 thereof foreign companies 139 25 Investments in unconsolidated structured entities As at 31.12.2020, as in the previous year, there are no investments in unconsolidated structured entities. Effective date of initial or deconsolidation The consolidation of a subsidiary begins on the day on which the group gains control over the subsidiary. It ends when the group loses control over the subsidiary. Assets, liabilities, income and expenses of a subsidiary are recog- nized in the financial statements as of the date on which the group gains control of the subsidiary until the date the control ceases. CA Immo Group determines the date of the initial consolidation or deconsolidation taking into account efficiency and materiality considerations. Consolidation The control concept of IFRS 10 leads to the existence of joint ventures within CA Immo Group, which, due to contractual arrangements, despite a shareholding percentage higher than 50% are included in the consolidated finan- cial statements using the at-equity method in line with IFRS 11. e) Acquisitions and establishments of companies/company stakes CA Immo Group acquired the following entities in 2020. CONSOLIDATED FINANCIAL STATEMENTS 1 09 Company name/domicile Interest held in % Purpose Purchase price in € K Initial consolidation date CA Immo P14 Sp.z.o.o. 100% Property company 21,788 29.10.2020 Brandenburg Properties 7 B.V. 100% Property company 51,686 30.12.2020 Total investments - Initial consolidation 73,474 Skygarden Arnulfpark Verwaltungs GmbH (previously 50%) 50% Property company 13 1.1.2020 Boulevard Süd 4 Verwaltungs GmbH (previously 50%) 50% Property company 0 28.10.2020 Boulevard Süd 4 GmbH & Co.KG (previously 50%) 50% Pro j ect com p an y 0 28.10.2020 Total investments - Transition consolidation 13 Total 73,487 CA Immo Group determines at the time of acquisition of companies (legal entities) whether the acquisition repre- sents a business or a group of assets and liabilities. The following indicators are used for the assessment of busi- ness units: – the acquired entity comprises a number of properties – the acquired entity conducts substantive pr oce sses, apart from owning and letting properties – the entity employs personnel carrying out substantive processes. In order to determine whether a transaction represents an acquisition of assets and liabilities or a business combina- tion according to IFRS 3, CA Immo Group does not make use of the practical expedient (concentration test). Initial consolidation In 2020 CA Immo Group acquired the shares in two property companies (fair values amounted to € 143,020 K at date of initial consolidation) amounting to € 73,474 K. These transactions are acquisitions of assets and liabilities and not business combinations in accordance with IFRS 3. Net assets acquired are presented below: € K Total Investment properties 143,020 Other assets 1,061 Cash and cash equivalents 1,412 Deferred taxes 2,173 Financial liabilities –73,074 Provisions –86 Other liabilities –1,031 Net assets acquired 73,474 The outsta nding purchase prices for the acqusitions made in 2020 amount to € 4,343 K (out of which acquisition re- lated costs amount to € 3,718 K). In addition to the outstanding liability, there is also an outstanding receivable in the amount of € 1,492 K. CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 1 10 Newly established companies For the foundation of companies, equity amounting to € 61 K was paid. Transition consolidation Following the acquisition of remaining stakes from former joint venture partners, CA Immo Group increased its share- holding from 50% to 100%. The investments were accounted for as shares in joint ventures under the equity method until the transition date, due to lack of control. Since the acquisition, the three companies are fully consolidated. These transactions are an acquisition of assets and liabilities and not a business combination in accordance with IFRS 3. The purchase prices for the acquisition of shares amounted to € 13 K and was fully paid. Net assets acquired are presented below: € K Total Other assets 82 Cash and cash equivalents 294 Provisions –151 Other liabilities –282 Receivables from/payables to affiliated companies 92 Net assets acquired 35 thereof decrease investments in joint ventures –22 f) Dispos als of companies/company stakes CA Immo Group disposed of the following interests in entities in the business year 2020: Company name/domicile Interest held in % Consolidation method before change in participation Sales price € K Deconsolidation date CA Immo Berlin Lehrter Stadtquartier 9 GmbH 100 Full consolidation 89,598 30.6.2020 Europolis Zagrebtower d.o.o. 100 Full consolidation 32,593 30.9.2020 Total affiliated entities 122,191 The outsta nding sales prices in relation to sales made in 2020 amounted to € 1,179 K as at 31.12.2020. In addition to the outstanding above mentioned receivable, there is also an outstanding liability amounting to € 784 K. CONSOLIDATED FINANCIAL STATEMENTS 1 11 The fully consolidated entities comprised the following net assets as of the date of the sale: € K Total Investment properties –194,958 Other assets –852 Cash and cash equivalents –4,817 Deferred taxes 15,971 Provisions 6,091 Other liabilities 2,195 Financial liabilities 70,200 Receivables from/payables to affiliated companies 12,707 Net change –93,465 thereof proportional net assets sold –93,465 g) Cons olidation methods All companies under the control of the parent company are fully consolidated in the consolidated financial state- ments. A company is initially consolidated as of the time control is gained by the parent. Companies are decon- solidated when control ceases. All intra-group transactions between companies included in the scope of full consolida- tion, the related revenues and expenses, receivables and payables, as well as unrealised intra-group profits, are fully eliminated. Profit and loss amounts resulting from “upstream” and “downstream” transactions with joint ventures or associated companies are eliminated in accordance with the share of CA Immo Group in these companies (except for real estate properties measured at fair value). If the company (legal entity) acquired is not a business, the acquisition is not a business combination according to IFRS 3. Correspondingly, the acquisition is only an acquisition of assets and liabilities, which are recognised with their proportional acquisition cost. The acquisition costs are allocated to the acquired assets (especially investment proper- ties) and liabilities as well as the non-controlling interests, based on their relative fair value at the date of acquisition of the subsidiary. If a business is acquired, the acquisition is classified as a business combination according to IFRS 3. In order to qua- lify as a business there must be at least one input factor (such as workforce, intellectual property or rights) and one sub- stantive process (transformation of the input factors) that contributes significantly to the ability to generate output. The subsidiary is consolidated for the first time using the acquisition method, by recognising its identifiable assets and liabilities at fair value as well as a goodwill and non-controlling interests, if applicable. The goodwill represents any amount by which the fair value of the transferred amount (usually the purchase price for the acquired business) and (if applicable) for the non-controlling interest, exceeds the fair value of the identifiable assets and liabilities, in- cluding any deferred taxes. Non-controlling interests are initially recognized proportionally at fair value of the identifiable net assets of the entity acquired and subsequently measured according to the changes in shareholders' equity attributable to the non-contro- lling interests. Total comprehensive income is attributed to the non-controlling interests even if this results in a nega- tive balance of non-controlling interests. According to the classification of interest as shareholders’ equity or liabilities, the non-controlling interests are recognized within shareholders’ equity respectively as other liabilities. Acquisitions or sales of shares in a subsidiary that do not result in an establishment or loss of control are accounted for as equity transactions. The book values of the controlling and non-controlling interests are adjusted to reflect the changes in the respective interests in the subsidiary. Any difference between the amount by which the non-controlling CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 1 12 interests are adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to the shareholders of the parent company. In case of a partial sale of shares in a subsidiary, previously fully consolidated, all assets and liabilities of the former subsidiary are excluded from the consolidated balance sheet, at the moment control is lost. As a result, the remaining shares are recognised as joint ventures, associated entities or financial instrument according to IFRS 9, with applicable fair value at the transition consolidation date through profit or loss. If an acquisition of shares in an entity, previously accounted for as joint venture, associate or financial instrument according to IFRS 9, leads to control over that entity, then its assets and liabilities are recognized in the consolidated statement of financial position following the transitional consolidation and previously held investment is derecognized at their fair value through profit or loss. Joint ventures CA Immo Group enters into joint ventures with one or more partner companies in the course of establishing invest- ment property or project development partnerships, whereby joint management of these ventures is established by con- tract. Interests in jointly managed companies are accounted for according to the equity method in the consolidated fi- nancial statements of CA Immo Group (AEJV – at equity joint ventures). Associated companies An associated company is an entity under significant influence of the Group that is neither a subsidiary nor an inte- rest in a joint venture. The results, assets and liabilities of associated companies are included in the financial state- ments using the equity method of accounting (AEA – at equity associates). Equity method According to the equity method, investments in joint ventures and associates are initially recognised at the date of acquisition in the consolidated statement of financial position at cost, including directly attributable ancillary costs. The subsequent measurement is affected by any increase/decrease of this value, based on the group’s share in profit or loss and the other comprehensive income (adjusted by interim gains and losses resulting from transactions with the group), dividends, contributions and other changes in the equity of the associated company, as well as by impairment. Once the book value of the interest in an associated company has decreased to zero and possible long-term loans to the associated companies are impaired to zero as well, additional losses are recognised as a liability only to the extent that CA Immo Group has a legal or effective obligation to make further payments to the associated company. CONSOLIDATED FINANCIAL STATEMENTS 1 13 h) Foreign currency translation Transactions in foreign currencies The individual group companies record foreign currency transactions at the exchange rate prevailing at the date of the relevant transaction. Monetary assets and liabilities in foreign currency existing at the reporting date are translated into the particular functional currency at the exchange rate prevailing at that date. Any resulting foreign currency gains or losses are recognised in the income statement of the relevant business year. The currency translation of assets and liabilities is based on the following exchange rates: Bid Sale Bid Sale 31.12.2020 31.12.2020 31.12.2019 31.12.2019 Switzerland CHF 1.0767 1.0895 1.0769 1.0897 USA USD 1.2251 1.2351 1.1154 1.1254 The monetary assets and liabilities in foreign currency are converted at the exchange rate of t he reporting date. The resulting foreign currency gains and losses are recorded in the respective financial year. Translation of companies’ individual financial statements denominated in foreign currencies The group reporting currency is the Euro (EUR). Since the Euro is generally also the functional currency of those com- panies included in the consolidated financial statements that are domiciled outside the European Monetary Union in Eastern Europe, the financial statements prepared in a foreign currency are translated in accordance with the temporal method. Under this method, investment properties (including properties under development) as well as monetary assets and liabilities are translated at closing rates, whereas own used properties as well as other non-monetary assets are translated at historical exchange rates. Items in the income statement are translated at the average exchange rates of the relevant reporting period. Gains or losses resulting from the currency translation are recognised in the income state- ment. Within CA Immo Group there were four subsidiaries in Hungary whose financial statements were set up in Euro until 31.12.2019. Starting 1.1.2020 the reporting currency was changed to Forint according to local requirements. For the consolidated financial statements no material impact occurred as a result of this change. The functional currency of management companies in Eastern Europe is the respective local currency in each case. The amounts in the statements of financial position are translated at the exchange rate at the reporting date. Only share- holders' equity is translated at historical rates. Items of the income statement are translated at the average exchange rates of the relevant reporting period. Gains and losses arising from the application of the closing rate method are recog- nised in other comprehensive income. CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 1 14 Individual financial statements were translated on the basis of the following rates of exchange: Closing rate Average exchange rate Closing rate Average exchange rate 31.12.2020 2020 31.12.2019 2019 Croatia HRK 7.5369 7.5350 7.4426 7.4174 Poland PLN 4.6148 4.4742 4.2585 4.3018 Romania RON 4.8694 4.8428 4.7793 4.7517 Russia RUB not applicable not applicable not applicable 66.3889 Serbia RSD 117.5802 117.5730 117.5928 117.8478 Czechia CZK 26.2450 26.4963 25.4100 25.6589 Hungary HUF 365.1300 354.1642 330.5200 326.0275 D etermination of the functional currency In determining the functional currency CA Immo Group differentiates basically between property entities and management entities. Functional currency: property entities In the real estate transaction market in the countries where CA Immo Group owns investment properties, the proper- ties and property entities are usually purchased and sold in Euro due to the active international investors in those mar- kets. In addition, CA Immo Group almost entirely concludes lease contracts in Euro, or, in case these contracts are not concluded in Euro, they are almost entirely indexed to the Euro exchange rate. Hence, the Euro has the most influence on the sales price of goods (real estate sales) and services (rental services) offered by CA Immo. This fact is also stated in external valuation reports, as values are stated in Euro. Moreover, CA Immo finances its property in Euro. The price of the most essential cost factor of a real estate company is therefore also determined in Euro. In consideration of the above mentioned factors, the Euro is determined as the functional currency of CA Immo Group’s property companies, which are included in the consolidated financial statements and located outside the terri- tory of the European Monetary Union. Functional currency: management entities The invoicing of services (management services provided to the property companies by management companies) in Eastern Europe is carried out in the respective local currency. The prices are set in the respective local currency, which therefore have the most significant influence on the sales prices of the provided services. Furthermore, these companies also employ staff which is paid in the respective local currency. The prices for the key cost factors are therefore deter- mined based on the respective local currency. Cash flow is generated mostly independently from the parent company. In consideration of the above mentioned factors, the respective local currency is the functional currency of CA Immo’s management companies, which are included in the consolidated financial statements and located outside the territory of the European Monetary Union. i) Covid-19 pandemic – impact on CA Immo Group Business year 2 020 was significantly impacted by the Covid-19 pandemic effects as many countries impose d general lockdowns and travel restrictions. As a result, market activity was severely affected in many sectors starting in the second quarter of 2020. CONSOLIDATED FINANCIAL STATEMENTS 1 15 The real estate sector is reporting significantly lower levels of transaction activity and liquidity. Hotels are closing and retailers are increasingly requesting rent deferrals or rent reductions given the significant sales losses. Some construction sites cannot function as planned. The short- and long-term economic impact of the Covid-19 pandemic on real estate markets remains highly uncertain. The longer the crisis lasts, the more complex the issues become. Due to the pandemic and the associated economic slump, the real estate transaction market has significantly declined, with the exception of Germany. The volume of commercial property transactions registered in CA Immo's core markets was between 30% (Eastern Europe) and 50% (Austria) lower than the previous year. In Germany, the decline amounted to less than 6% in comparison with the record result of the previous year. Transactions were postponed or even can- celled due to difficulties in pricing and financing. Except Vienna, where letting performance has remained stable so far and the effects are only expected in 2021, all CA Immo's core cities have seen a decline in demand for office space and/or an increase in vacancy rates due to the cha- llenging conditions imposed by the pandemic and its economic impact. Now that both transaction and letting activities have significantly declined, extended marketing activities and long vacancy periods for unlet units are also expected in the future. Given the current extraordinary market conditions – with increasing construction costs, supply and timing problems, fluctuating financing rates, uncertain marketing periods and a lack of comparative values – it is inevitable that a higher uncertainty factor will apply to project developments. Land values could therefore fluctuate much more than would be the case under normal circumstances. There were no delays on CA Immo Group’s construction sites caused by the pan- demic and all projects could be continued as scheduled. In order to ensure the safety of tenants and employees and to be able to react quickly if required, CA Immo AG has appointed a Health and Safety Taskforce, which starting March 2020, reacts on the developments and establishes hy- gienic measures to be taken at regional level in the respective office spaces. An action plan was set up and is updated whenever necessary, based on the actual infection numbers and the Directives of the National Health System existing in each of the cities where CA Immo Group owns investment properties and subsidiaries. These also include measures and internal rules of conduct for multiple scenarios and escalation levels to ensure a safe environment for all building users at all times. Due to the Covid-19 pandemic a Home-Office rule is in place for all employees. Offices of CA Immo Group subsidia- ries are open with voluntary office attendance, maximum 50% attendance and mandatory mask wearing in all office spaces. Business trips and meetings are only to be made in exceptional cases. Going Concern The Covid-19 pandemic had no significant impact on the financial position, financial performance and cash flows of CA Immo Group as at 31.12.2020. However, due to further/ or lack of legal measures, it cannot be ruled out that the pandemic could have negative effects on individual countries/ real estate properties or tenant groups (in particular offices, hotels, retail). Thus the effects of the Covid-19 pandemic on the future financial position of the CA Immo Group cannot be conclusively assessed and are continuously evaluated. Financial Covenants Bank financings in CA Immo Group are subject to so-called financial covenants. In the case of investment properties, these are usually LTV (Loan to Value), ISCR (Interest Service Coverage Ratio) and DSCR (Debt Service Coverage Ratio) or, in the case of project financing, LTC (Loan to Cost) and ISCR (Interest Service Coverage Ratio). Given the ongoing negative economic development, it cannot be ruled out that there will be a breach of contractual conditions (financial covenants, in particular DSCR) in the future due to tenant defaults. CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 1 16 As at 31.12.2020 no financial covenants of the CA Immo Group were breached. The effects of the Covid-19 pandemic on possible future breaches of financial covenants of the CA Immo Group are continuously evaluated. This particularly relates to properties for which the main type of use is as a hotel or as retail. Revaluation result In particular, there were value adjustments for the properties directly affected by the consequences of the pandemic, with the main asset type being hotel and retail. Net rental income Rent waivers and rent decreases, as well as increase in allowances for bad debts impacted net rental income by € –7,960 K. Positive counter-effects from straight line amortization of lease incentive agreements (rent frees) over the remaining lease term amount to € –1,166 K. Financial instruments (IFRS 9) The ongoing Covid-19 pandemic led to an increase in receivables from hotel and retail tenant groups. This resulted in an increase in expected credit losses. CA Immo Group calculates the expected credit losses based on the aging of re- ceivables and expected insolvency rates for each country. Government grants CA Immo Group did not make use of any state aid (neither short-time work, grants nor deferrals). CONSOLIDATED FINANCIAL STATEMENTS 1 17 CHAPTER 2: PROFIT AND LOSS 2.1. Operating segments 3) € K Austria Germany 2020 Income producing Develop- ment Total Income producing Develop- ment Total Rental income 29,658 9 29,666 64,414 15,509 79,923 Rental income with other o p eratin g se g ments 612 0 612 599 9 608 O p eratin g costs char g ed to tenants 6,625 0 6,625 10,269 1,488 11,758 O p eratin g ex p enses – 8,009 0 – 8,009 – 11,049 – 2,637 – 13,686 Other ex p enses directl y related to p ro p erties rented – 7,186 0 – 7,186 – 6,109 – 947 – 7,056 Net rental income 21,700 9 21,709 58,124 13,422 71,546 Other ex p enses directl y related to p ro p erties under develo p ment 0 – 3 – 3 0 – 2,405 – 2,405 Result from tradin g and construction works 0 11 11 0 18,324 18,324 Result from the sale of investment p ro p erties 17,051 0 17,051 0 26,083 26,083 Income from services rendered 0 0 0 1,746 8,848 10,594 Indirect ex p enses – 1,057 – 85 – 1,142 – 7,594 – 13,944 – 21,538 Other o p eratin g income 25 3 28 447 150 596 EBITDA 37,720 –67 37,653 52,722 50,478 103,200 De p reciation and im p airment/reversal – 534 0 – 534 – 253 – 4,638 – 4,890 Result from revaluation – 12,519 0 – 12,519 132,039 137,976 270,015 Result from j oint ventures 0 0 0 0 0 0 Result of o p erations (EBIT) 24,666 –67 24,600 184,509 183,815 368,324 Timin g of revenue reco g nition Pro p erties held for tradin g 0 25 25 0 18,682 18,682 Sale of investment p ro p erties 57,265 0 57,265 0 90,181 90,181 Total income IFRS 15 - transferred at a p oint in time 57,265 25 57,290 0 108,863 108,863 O p eratin g costs char g ed to tenants 6,625 0 6,625 10,269 1,488 11,758 Income from the sale of p ro p erties and construction works 0 0 0 0 43,524 43,524 Income from services rendered 0 0 0 1,746 8,848 10,594 Total income IFRS 15 - transferred over time 6,625 0 6,625 12,015 53,860 65,875 Total income IFRS 15 63,890 25 63,914 12,015 162,723 174,738 31.12.2020 Pro p ert y assets 1) 530,031 239 530,270 1,841,149 1,327,497 3,168,647 Other assets 67,876 523 68,398 149,257 437,021 586,278 Deferred tax assets 0 0 0 1,808 2,641 4,449 Se g ment assets 597,907 761 598,669 1,992,214 1,767,160 3,759,374 Interest- b earin g liabilities 205,584 0 205,584 704,357 433,585 1,137,942 Other liabilities 29,353 106 29,459 37,819 182,930 220,748 Deferred tax liabilities incl. current income tax liabilities 40,585 2 40,587 336,969 146,754 483,723 Liabilities 275,523 107 275,630 1,079,145 763,269 1,842,413 Shareholders' e q uit y 322,385 654 323,039 913,069 1,003,891 1,916,960 Ca p ital ex p enditures 2) 3,301 0 3,301 128,639 227,970 356,610 1) Property assets include rental investment properties, investment properties under development, own used properties, properties held for trading and properties availa- ble for sale. 2) Capital expenditures include all acquisitions of properties (long-term and short-term) including additions from initial consolidation, office furniture and other equip- ment and intangible assets; thereof € 4,627 K (31.12.2019: € 25,023 K) in properties held for trading. 3) The segment reporting does not show a right of use asset and a corresponding lease liability resulting from an intercompany lease as per IFRS 16 between the entities of the CA Immo Group. These intercompany contracts are recognized as regular income/expense in the segment reporting as before and eliminated in column “Consolida- tion”. CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 1 18 Eastern Europe core regions Eastern Europe other regions Total segments Transition Total Income producing Development Total Income producing Holding Consolidation 114,839 0 114,839 12,793 237,221 0 – 1,612 235,609 0 0 0 0 1,220 0 – 1,220 0 31,183 0 31,183 3,774 53,339 0 – 78 53,260 – 32,056 0 – 32,056 – 4,055 – 57,807 0 69 – 57,738 – 6,167 0 – 6,167 – 1,043 – 21,453 0 – 14 – 21,466 107,798 0 107,798 11,468 212,521 0 –2,855 209,665 0 – 158 – 158 0 – 2,566 0 412 – 2,154 0 0 0 0 18,335 0 – 10,386 7,949 250 0 250 – 383 43,001 0 928 43,930 279 0 279 0 10,873 9,072 – 11,778 8,166 – 13,288 – 274 – 13,561 – 1,344 – 37,586 – 48,089 12,499 – 73,176 175 0 175 478 1,277 64 – 138 1,204 95,215 –431 94,783 10,220 245,855 –38,953 –11,318 195,584 – 423 0 – 423 – 9 – 5,857 – 480 805 – 5,533 – 61,483 3,216 – 58,267 – 15,729 183,499 0 0 183,499 0 0 0 0 0 0 1,898 1,898 33,308 2,784 36,093 –5,519 423,498 –39,434 –8,616 375,448 0 0 0 0 18,707 0 – 18,523 183 17 0 17 32,682 180,145 0 – 89 180,056 17 0 17 32,682 198,852 0 –18,612 180,240 31,183 0 31,183 3,774 53,339 0 – 78 53,260 0 0 0 0 43,524 0 – 372 43,152 279 0 279 0 10,873 9,072 – 11,778 8,166 31,461 0 31,461 3,774 107,735 9,072 –12,228 104,579 31,479 0 31,479 36,455 306,587 9,072 –30,840 284,819 1,892,911 39,250 1,932,161 118,398 5,749,476 0 – 153,282 5,596,194 202,556 14,586 217,143 8,568 880,387 1,476,137 – 1,136,811 1,219,713 1,344 0 1,344 0 5,794 33,627 – 35,039 4,382 2,096,812 53,836 2,150,648 126,966 6,635,657 1,509,765 –1,325,133 6,820,289 739,576 16,500 756,076 71,092 2,170,695 1,797,369 – 1,140,602 2,827,462 51,848 8,516 60,364 2,652 313,223 79,141 – 78,626 313,739 60,308 390 60,698 3,178 588,186 1,431 – 38,836 550,780 851,733 25,406 877,139 76,922 3,072,104 1,877,941 –1,258,064 3,691,981 1,245,080 28,430 1,273,510 50,044 3,563,553 –368,177 –67,069 3,128,308 107,845 20,959 128,805 2,590 491,305 454 – 13,876 477,883 – CONSOLIDATED FINANCIAL STATEMENTS 1 19 € K Austria Germany 2019 Income p roducin g Development Total Income p roducin g Development Total Income p roducin g Rental income 29,704 7 29,711 62,941 5,126 68,066 105,462 Rental income with other o p eratin g se g ments 543 0 543 450 9 459 0 O p eratin g costs char g ed to tenants 6,545 0 6,545 9,025 209 9,233 30,325 O p eratin g ex p enses – 7,868 0 – 7,868 – 10,017 – 364 – 10,381 – 31,431 Other ex p enses directl y related to p ro p erties rented – 3,422 0 – 3,422 – 4,920 – 510 – 5,430 – 10,881 Net rental income 25,503 7 25,510 57,478 4,469 61,948 93,474 Other expenses directly related to properties under develo p ment 0 –32 –32 0 –3,127 –3,127 0 Result from tradin g and construction works 0 1,360 1,360 0 15,018 15,018 0 Result from the sale of investment p ro p erties 4,843 0 4,843 – 32 10,670 10,638 412 Income from services rendered 0 0 0 1,377 8,988 10,366 351 Indirect ex p enses – 1,178 – 170 – 1,348 – 6,210 – 12,621 – 18,830 – 12,766 Other o p eratin g income 2 2 4 426 199 625 105 EBITDA 29,171 1,166 30,337 53,040 23,597 76,637 81,576 De p reciation and im p airment/reversal – 621 0 – 621 – 106 – 2,988 – 3,093 – 590 Result from revaluation 3,347 0 3,347 227,847 157,279 385,126 80,462 Result from j oint ventures 0 0 0 0 0 0 0 Result of o p erations (EBIT) 31,897 1,166 33,063 280,781 177,888 458,669 161,448 Timin g of revenue reco g nition Pro p erties held for tradin g 0 2,241 2,241 0 27,777 27,777 0 Sale of investment p ro p erties 16,332 0 16,332 0 7,374 7,374 442 Total income IFRS 15 - transferred at a p oint in time 16,332 2,241 18,574 0 35,151 35,151 442 O p eratin g costs char g ed to tenants 6,545 0 6,545 9,025 209 9,233 30,325 Income from the sale of p ro p erties and construction 0 0 0 0 18,092 18,092 0 Income from services rendered 0 0 0 1,377 8,988 10,366 351 Total income IFRS 15 - transferred over time 6,545 0 6,545 10,402 27,289 37,691 30,676 Total income IFRS 15 22,878 2,241 25,119 10,402 62,440 72,842 31,117 31.12.2019 restated Pro p ert y assets 1) 572,892 253 573,145 1,558,752 1,175,974 2,734,726 1,754,821 Other assets 17,874 3,274 21,148 151,206 406,947 558,153 201,524 Deferred tax assets 0 0 0 347 1,881 2,228 514 Se g ment assets 590,766 3,528 594,293 1,710,305 1,584,802 3,295,106 1,956,859 Interest- b earin g liabilities 207,960 0 207,960 669,656 298,909 968,565 774,422 Other liabilities 16,960 603 17,563 29,453 194,677 224,130 50,010 Deferred tax liabilities incl. current income tax 49,489 1 49,491 298,636 129,483 428,119 55,596 Liabilities 274,409 605 275,014 997,744 623,070 1,620,814 880,029 Shareholders' e q uit y 316,356 2,923 319,279 712,561 961,732 1,674,292 1,076,831 Ca p ital ex p enditures 2) 16,776 0 16,776 5,200 213,146 218,345 17,204 CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 1 20 Eastern Europe core re g ions Eastern Europe other re g ions Total se g ments 4) Transition Total Development Total Income p roducin g Development 4) Total 4) Holding 4) Consolidation 4) 5,049 110,511 14,103 0 14,103 222,391 0 – 1,662 220,730 0 0 0 0 0 1,003 0 – 1,003 0 1,282 31,607 4,384 0 4,384 51,770 0 – 13 51,757 – 1,500 – 32,931 – 4,665 0 – 4,665 – 55,845 0 518 – 55,327 – 1,217 – 12,098 – 1,463 0 – 1,463 – 22,413 0 3 – 22,410 3,614 97,088 12,360 0 12,360 196,906 0 –2,156 194,750 –351 –351 0 –7 –7 –3,517 0 360 –3,157 0 0 0 0 0 16,378 0 – 17,650 – 1,273 – 522 – 110 – 217 219 2 15,373 0 277 15,650 0 351 0 0 0 10,717 8,990 – 11,206 8,500 – 1,326 – 14,092 – 1,406 – 33 – 1,438 – 35,709 – 21,267 13,513 – 43,464 0 105 77 15 91 826 206 – 311 721 1,415 82,991 10,813 195 11,008 200,973 –12,072 –17,174 171,728 0 – 590 – 9 0 – 9 – 4,314 – 403 187 – 4,531 2,064 82,527 – 8,232 0 – 8,232 462,767 0 0 462,767 0 0 0 0 0 0 0 3,729 3,729 3,480 164,928 2,572 195 2,767 659,427 –12,475 –13,259 633,693 0 0 0 0 0 30,018 0 – 29,733 286 1,238 1,680 13,150 3,467 16,617 42,003 0 541 42,545 1,238 1,680 13,150 3,467 16,617 72,022 0 –29,191 42,830 1,282 31,607 4,384 0 4,384 51,770 0 – 13 51,757 0 0 0 0 0 18,092 0 – 6,034 12,058 0 351 0 0 0 10,717 8,990 – 11,206 8,500 1,282 31,958 4,384 0 4,384 80,578 8,990 –17,252 72,315 2,520 33,637 17,535 3,467 21,001 152,600 8,990 –46,444 115,146 94,819 1,849,641 175,009 0 175,009 5,332,520 0 – 146,150 5,186,370 14,516 216,040 9,484 0 9,484 804,825 903,643 – 1,007,958 700,509 0 514 314 0 314 3,055 42,120 – 43,365 1,810 109,335 2,066,194 184,806 0 184,806 6,140,399 945,763 –1,197,473 5,888,690 67,941 842,363 88,356 0 88,356 2,107,245 1,002,711 – 1,012,614 2,097,342 9,666 59,677 5,023 0 5,023 306,393 84,103 – 62,993 327,502 1,476 57,072 4,726 0 4,726 539,408 2,576 – 46,107 495,877 79,083 959,112 98,106 0 98,106 2,953,045 1,089,390 –1,121,713 2,920,722 30,252 1,107,083 86,700 0 86,700 3,187,354 –143,627 –75,760 2,967,968 5,069 22,273 2,788 0 2,788 260,183 1,051 – 7,704 253,529 4) In the segments Development Eastern Europe Other Regions , the balance sheet values (loans granted and loans) relating to the associated company ZAO Avielen were adjusted because the associated company was sold in 2019. These were now allocated to the Holding segment as of December 31, 2019, as there was no longer a for- eign connection as of December 31, 2019. The adjustments result in shifts of € 10,503 K in the Development Eastern Europe Other Regions segment with correspond- ing offsetting effects in the reconciliation columns "Holding" and "Consolidation". The change has no impact on the consolidated financial statements 2019. CONSOLIDATED FINANCIAL STATEMENTS 1 21 Segment information The operating segments generate gross revenues and other income from rental activities, the sale of properties held for trading, the sale of properties as well as from development services. Gross revenues and other income are allocated to the country and segment the properties or services are located/provided in. Business relationships within an operating segment are consolidated within the segment. Business relationships with other operating segments are disclosed separately and reconciliations to the consolidated income statement and consolidated statement of financial position are presented in the “Transition Consolidation” column. The accounting principles of the reportable segments correspond to those described under “Summarized presentation of accounting methods”. In line with IFRS 16, segment reporting does not include any rights of use/lease liabilities from rental and lease agreements existing between companies of the CA Immo Group. As in the past, such intercom- pany contracts are recognized as income/expense in the segment reporting and eliminated in the column “Transition Consolidation”. Transactions between operating segments are allocated as follows: - Manageme nt fees for services performed by the holding segment (e.g. property managemen t, financial negotiation, purchase and sale of properties, accounting, controlling) are charged on the basis of actual fees and allocated to the individual segments on the basis of the invoiced services. They are recognised in the column “Holding” as income from services rendered. - Manageme nt companies are assigned to the segments according to their main activities. Management fees charged by these companies are allocated based on the invoiced services to the individual operating segm ent of the respective region and are recognised in the segment, which the management company has been assigned to, as income from ser- vices rendered. - Eastern Europe core region segment consists of Hungary, Poland, Romania and Czechia. - Eastern Europe other region segment consists of Serbia, Croatia, Russia (sold in 2019) and Slovakia. The segments were identified on the basis of the information regularly used by the company’s principal decision makers when deciding on the allocation of resources and assessing profitability. The principal decision-making body of CA Immo Group is the Management Board. It controls the individual properties (basic reporting segments) that are aggregated into reportable business segments by regions (based on the geographic region), and within the regions by income producing property and property under development based on the stage of development of the properties. The aggregation of the regions mainly takes place based on evaluation of the market dynamics and the risk profiles which mainly impact economic characteristics. According to the assessment of CA Immo Group, the properties in the portfo- lio need to be separated into investment properties and investment properties under development, based on the crite- ria “nature of products and services” and “nature of production processes” according to IFRS 8. The properties are allocated to the reporting segments according to location/region, their category and the main activities of the management/holding companies. Items that cannot be directly attributed to a property or segment management structure are disclosed in the column “holding”. The presentation corresponds to CA Immo Group’s inter- nal reporting system. The following segments have been identified: - Income producing properties: Investment properties rented including the related rights of use, own used properties including rights of use for own used properties and investment properties pursuant to IFRS 5 - Development: Properties under development and land banks, completed development properties (investment proper- ties) until the second annual reporting date after completion (depending on the tenancy rate or beginning of the sales process), development services for third parties, properties under development pursuant to IFRS 5, and properties held for trading - Holding: general management and financing activities of CA Immo Group. CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 1 22 Joint ventures are included with 100% of the assets and liabilities as well as revenues and expenses of the entities in the segment, irrespective of the method of consolidation into the financial statements. Adjustments in accordance with the consolidation method in CA Immo Group are shown in the column “Transition Consolidation”. A significant percentage of total rental income of CA Immo Group is generated in the segment Eastern Europe core regions. A material proportion of the investment properties of CA Immo Group is located in these countries: 2020 2019 Segment Eastern Europe core regions before consolidation € K Share in % € K Share in % Rental income Poland 30,638 26.7% 29,314 26.5% Romania 29,342 25.6% 26,634 24.1% Czechia 21,064 18.3% 20,560 18.6% Hungary 33,795 29.4% 34,003 30.8% Total rental income 114,839 100.0% 110,511 100.0% Book value of investment properties IAS 40 Poland 590,185 30.5% 519,691 28.1% Romania 390,598 20.2% 399,030 21.6% Czechia 427,150 22.1% 405,775 21.9% Hungary 524,229 27.1% 525,144 28.4% Total book value investment property according to IAS 40 1,932,161 100.0% 1,849,641 100.0% CONSOLIDATED FINANCIAL STATEMENTS 1 23 2.2 Rental income € K 2020 2019 Basic rental income 218,935 205,321 Conditional rental income 474 1,520 Income from non-service components of service charges 10,675 10,227 Change in accrued rental income related to lease incentive agreements 4,172 1,592 Settlement from cancellation of rent agreements 1,354 2,070 Rental income 235,609 220,730 CA Immo Grou p generates rental income from the following types of property: 2020 Austria Germany Eastern Europe core regions Eastern Europe other regions Total € K Share in % € K Share in % € K Share in % € K Share in % € K Share in % Office 17,519 59.1% 63,903 81.6% 114,835 100.0% 12,793 100.0% 209,050 88.7% Hotel 5,589 18.8% 8,325 10.6% 0 0.0% 0 0.0% 13,914 5.9% Retail 4,140 14.0% 36 0.0% 0 0.0% 0 0.0% 4,175 1.8% Others 2,410 8.1% 6,056 7.7% 4 0.0% 0 0.0% 8,470 3.6% Rental income 29,658 100% 78,320 100% 114,839 100% 12,793 100% 235,609 100% 2019 Austria Germany Eastern Europe core regions Eastern Europe other regions Total € K Share in % € K Share in % € K Share in % € K Share in % € K Share in % Office 16,716 56.3% 51,052 76.9% 110,494 100.0% 14,103 100.0% 192,366 87.2% Hotel 5,861 19.7% 9,038 13.6% 0 0.0% 0 0.0% 14,899 6.7% Retail 4,745 16.0% 25 0.0% 0 0.0% 0 0.0% 4,771 2.2% Others 2,381 8.0% 6,313 9.5% 0 0.0% 0 0.0% 8,694 3.9% Rental income 29,704 100% 66,428 100% 110,494 100% 14,103 100% 220,730 100% CA Immo G roup generates rental income from a multitude of tenants. No single tenant generates more than 10% of the total rental income of CA Immo Group. Rental revenues according to IFRS 16 are recognised on a straight-line basis over the lease term. Lease incentive agreements, such as rent-free periods, reduced rents for a certain period or one-off payments, which can be freely used in the course of their businesses, are included in rental income. Therefore, the lease incentives are allocated on a straight-line basis over the entire expected, respectively remaining contractual lease term accordingly. In the case of leases with constant rent adjustment over the term (graduated rents), such adjustments are likewise recognised on a straight-line basis over the lease term. Any adjustments attributable to inflation, in contrast, are not spread over the un- derlying lease term. The lease term over which rental income is allocated on a straight-line basis comprises the non- CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 1 24 terminable period as well as any further periods for which the tenant can exercise an option, with or without making additional payments, provided that the exercise of the option is estimated as being probable at the inception of the lease. Rental revenues comprise also components of the service charges reconciliation for which CA Immo Group does not provide the tenant with a separate service however the tenant must reimburse them (for example property taxes, build- ing insurance, usufruct expenses), these being presented under ”Income from non-service components of service charges”. Conditional rental income, which is based on revenues generated in the business premises, are recognised in profit or loss in the period in which they are assessed. Rental income is measured at the fair value of the consideration received or outstanding, less any directly related re- ductions. Payments received from tenants for the early termination of a lease and payments for damages of rented premises are recognised as rental income in the period in which they are incurred. 2.3. Result from operating costs and other expenses directly related to properties rented € K 2020 2019 Operating costs charged to tenants 53,260 51,757 Operating expenses –57,738 –55,327 Own operating costs –4,478 –3,570 Maintenance costs –4,925 –6,489 Agency fees –1,212 –2,336 Bad debt losses and reserves for bad debts –6,120 –454 Other directly related expenses –9,210 –13,131 Other expenses directly related to properties rented –21,466 –22,410 Total –25,944 –25,980 According to IFRS 16, the item “Other directly related expens es“ contains expenses from non-service components. These relate mainly to property taxes and building insurance expenses and amount to € 6,705 K in 2020 (2019: € 9,992 K). In Eastern Europe, a lawsuit linked to the payment of building taxes was decided in favour of CA Immo Group. In 2020 this had a positive impact of € 3,698 K in “Other directly related expenses” given the reversal of the relevant tax provision. Rent waivers and rent decreases, as well as an increase in allowances for bad debts impacted net rental income by € –7,960 K. This was offset by the amortization of lease incentive agreements (rent frees) over the remaining lease term in the amount of € –1,166 K. All agreed rent changes as well as granting of rent free periods are amortized over the du- ration of the respective lease agreement on a straight line basis. CONSOLIDATED FINANCIAL STATEMENTS 1 25 Operating costs incurred by CA Immo Group for properties rented, which trigger a separate performance obliga- tion (non-lease components) to tenants, are presented in the consolidated income statement in “operating costs charged to tenants”. Based on an analysis of primary performance responsibility, inventory risk as well as pricing com- petence, CA Immo Group has to be considered as principal for service charges as it has the primary responsibility for providing the service and is the direct counterpart in case of performance disruptions. The item “operating costs charged to tenants” contains only non-lease components that are within the scope of IFRS 15. 2.4. Other expenses directly related to properties under development € K 2020 2019 Operating expenses related to investment properties under development –733 –1,057 Property advertising costs –103 –249 Project development and project execution –1,155 –1,668 Operating expenses related to investment properties under development long- term assets –1,990 –2,974 Operating expenses related to investment properties under development –108 –72 Property advertising costs 0 –10 Project development and project execution –56 –101 Operating expenses related to investment properties under development short- term assets –164 –183 Other expenses directly related to properties under development –2,154 –3,157 2.5. Result from trading and construction works € K 2020 2019 Trading property - transferred at a point in time 183 286 Trading property and contruction work - transferred over time 43,152 12,058 Income from the sale of properties and construction works 43,335 12,344 Book value of properties sold incl. ancillary costs 207 –823 Construction costs –35,594 –12,793 Book value of properties sold incl. ancillary and construction costs –35,387 –13,617 Result from trading and construction works 7,949 –1,273 Result from trading and construction works in % from revenues 18.3% –10.3% The item “income from trading and constr uction works” includes income from the sale of properties intended for trading, which is depending on contract stipulations realized at a point or over time, as well as income from con- struction works (construction of a building on the land of a customer, whereby CA Immo Group as a builder carries out a construction contract with or without a general contractor), which are transferred over time. CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 1 26 2.6. Result from sale of investment properties € K Austria Germany Eastern Europe core regions Eastern Europe other regions 2020 Austria Germany Eastern Europe core regions Eastern Europe other regions 2019 Sales prices for interests in property companies 0 89,598 17 32,593 122,208 0 0 –37 17,637 17,600 Book value of net assets sold excl. goodwill 0 –63,150 0 –30,315 –93,465 0 0 0 –16,087 –16,087 Goodwill of sold properties 0 0 0 0 0 0 0 0 0 0 Revaluation result for the year 0 205 0 –1,980 –1,775 0 0 0 –630 –630 Subsequent costs and ancillary costs 0 –1,244 12 –326 –1,557 0 425 –24 60 461 Results from the sale of investment property (share deals) 0 25,409 29 –28 25,410 0 425 –61 980 1,343 Income from the sale of investment proper ties 57,265 583 0 0 57,848 16,332 7,374 1,238 0 24,945 Book value of properties sold –53,860 0 2 0 –53,858 –11,569 0 –1,193 0 –12,762 Goodwill of sold properties –2,090 0 0 0 –2,090 –16 0 –43 0 –59 Revaluation result for the year 20,020 0 0 0 20,020 354 0 –477 0 –123 Subsequent costs and ancillary costs –3,712 91 220 0 –3,401 –96 2,459 –58 0 2,306 Results from the sale of investment property (asset deals) 17,624 674 222 0 18,519 5,006 9,833 –532 0 14,307 Result from the sale of investment properties 17,624 26,083 251 –28 43,930 5,006 10,258 –594 980 15,650 The boo k value of net assets sold (= equity) for share deals includes investment property in the amount of € 194,958 K (2019: € 17,414 K), for which selling prices totaling to € 216,515 K (2019: € 17,619 K) were agreed. CA Immo Group signed in December 2020 a sales contract for a land plot in Düsseldorf. The contract is conditional upon the sale of the neighboring land plot of a third party. CA Immo Group has valued the plot at its stand-alone fair value as at 31.12.2020. No revaluation to the arising fair value from the joint transaction was made, given the fact that the execution of the transaction depends on a third party and the decision is not wholly within the control of CA Immo Group. In 2020 no profit or loss effect out of this sale transaction was recognized. CONSOLIDATED FINANCIAL STATEMENTS 1 27 Revenues from the sale of investment properties Income from the sale of properties is recognised when: - CA Immo Group does not retain any rights of disposal or effective cotrol in respect of the object sold (control), - the amount of the revenues and the expenses incurred or to be incurred in connection with the sale can be reliably determined, and - it is sufficiently probable that the economic benefit from the sale will flow to CA Immo Group. Non-current earnings received in advance are measured at par value and subsequently with a reasonable market in- terest rate reflecting maturity and risk. The accrued interest is recognised in the consolidated income statement in the financial result. Result from the sale of investment properties In accordance with IAS 40, investment properties are measured at each reporting date and changes in fair values are recognised in profit or loss, as result from revaluation (revaluation gain/loss). When property assets are sold, the valuation result realised during the current business year is reclassified to the result from the sale of investment proper- ties together with other expenses in relation to the disposal. The book value of goodwill that has been allocated to a property sold is recognised as part of the disposal within the result from the sale of investment properties. 2.7. Income from services rendered € K 2020 2019 Revenues from service contracts 7,927 7,831 Management revenues and other fees 239 669 Income from services rendered 8,166 8,500 R evenue recognition according to IFRS 15 Revenues are to be recognized in according with IFRS 15, when a performance obligation is fulfilled by transfer- ring an agreed good or service to the customer. An asset is deemed to be transferred when the customer gains control of that asset. Control over a good or a service is transferred at a specific point in time if the obligation is not satisfied over a period of time. If one of the following criteria is met, the performance obligation is fulfilled over a period of time: a) the customer simultaneously receives and consumes all of the benefits provided by the entity as the entity per- forms; b) the entity’s performance creates or enhances an asset that the customer contr o ls as the asset is created; or c) the entity’s performance does not create an asset with an alter native use to the entity and the entity has an enforce- able claim of payment for performance comple ted to date. If a performance obligation is met over a period of time, according to IFRS 15, the contract related transaction price as well as contract performance and acquisition costs must be recognized as revenues or expenses, in accordance with the performace progress as at balance sheet date. The cost-to-cost method is used in the CA Immo Group for the ongoing monitoring of construction projects and is a reliable method for determining the progress of the service performance. Thereby, to determine the performance progress, the ratio of the contract respectively construction costs incurred up to balance sheet date to the estimated total contract costs, respectively construction costs (cost-to-cost method) is applied. Revenues from services rendered A rendered service is a service for a customer, which can be satisfied in time-based units (for example time based advice for building conversion, planning services or project assistance). Income from service contracts is recognized to the extent of the services rendered up to the reporting date (accounting by time unit). CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 137 Revenues from construction contracts CA Immo Group also offers services in the form of construction supervision for customers, which are handled as construction contracts. The income from construction contracts (e.g. project management, construction supervision and acceptance of, for example building construction, interior works or development of land) is recorded in accordance with the provision of services, in accordance with IFRS 15. 2.8. Indirect expenses € K 2020 2019 Personnel expenses –45,899 –41,737 Legal, auditing and consulting fees –9,068 –8,217 Third party acquired development services –1,866 –2,560 Office rent –820 –676 Travel expenses and transportation costs –358 –1,190 Other expenses internal management –2,707 –3,004 Other indirect expenses –29,004 –2,904 Subtotal –89,722 –60,288 Own work capitalised in investment property 15,151 14,336 Change in properties held for trading 1,394 2,488 Indirect expenses –73,176 –43,464 In 2020 CA Immo Group filed an action for damages against the Republic of Austria and the state of Carinthia in the amount of approx. € 1.9 bn in connection with the privatization of the state residential construction company (BUWOG) in 2004. In this respect, other indirect expenses include court fees of € 25,475 K. Personnel expenses include contributions to staff welfare funds in the amount of € 119 K (2019: € 110 K) and to pen- sion and relief funds in the amount of € 422 K (2019: € 423 K). CA Immo Group capitalizes indirect expenses (mainly personnel expenses) to the extent that they can be attributed to the construction cost of properties under development and properties held for trading. The assign- ment is based on the activities of the departments for the developments. These internally-produced capitalised ex- penses and capitalised changes in work-in-progress respectively are reported as an adjustment of the indirect expenses. As long as these services are rendered to joint ventures of CA Immo Group, no decrease of the indirect expenses, but “income from services rendered” is recognised. 2.9. Other operating income € K 2020 2019 Discharge of lapsed liabilities 21 0 Other income 1,182 721 Other operating income 1,204 721 CONSOLIDATED FINANCIAL STATEMENTS 1 29 2.10. Depreciation and impairment losses/reversal € K 2020 2019 Regular depreciation –2,043 –1,720 Depreciation right of use assets –2,209 –2,259 Impairment loss on goodwill –410 –646 Impairment loss on properties held for trading –988 –118 Reversal of impairment loss previously recognised on properties held for trading 118 213 Depreciation and impairment/reversal –5,533 –4,531 Explan ations with regard to the measurement of depreciation and impairments/reversal of impairments can be found in chapters “3.2. Own used properties”, “3.3. Office furniture and equipment and intangible assets” and “4.2. Proper- ties held for trading”. 2.11. Joint ventures result € K 2020 2019 At equity consolidation of investments in joint ventures 1,809 3,808 Result from sale of joint ventures 90 –80 Result from joint ventures 1,898 3,729 2.12. Finance expenses € K 2020 2019 Interest expense banks –20,109 –18,115 Interest expense bonds –22,317 –18,786 Interest expense convertible bond –4,914 –4,826 Interest expenses lease liabilities –1,267 –1,325 Other interest and finance costs 1,378 –6,381 Capitalised interest 4,918 6,286 Finance costs –42,311 –43,148 In Eastern Europe, a lawsuit li nked to the payment of building taxes was decided in favour of CA Immo Group. In 2020, this led to a positive effect in the amount of € 5,190 K in “other interest and finance costs” due to the reversal of provision for late interest payments. Finance costs comprise interest payable for external financing, interest recognised by the effective interest-rate method (if not required to be capitalised according to IAS 23), interest for lease liabilities determined according to the effective interest-rate method (if not required to be capitalized according to IAS 23), interest for committed exter- nal funds not yet received, current interest on derivative transactions, the interest costs arising from the calculation of retirement benefits, the net result attributable to non-controlling interests in limited partnerships and expenses similar to interest. Interest is deferred over time by the effective interest-rate method. The net result of non-controlling interests in limited partnerships contains the pro rata net income of non-controlling partners of limited partnerships in Germany, CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 1 30 whose capital contribution, updated with the profit share, is recognised as debt in the statement of financial position under “other liabilities”. 2.13. Result from derivatives € K 2020 2019 Valuation interest rate derivative transactions –10,780 –20,748 Valuation derivative convertible bond 32,208 –38,418 Result from derivatives 21,429 –59,165 The item "valuation interest rate derivative transactions " includes the following items: € K 2020 2019 Valuation of interest rate swaps without cash flow hedge relationship –11,314 –21,068 Valuation interest rate floors 535 321 Valuation interest rate derivative transactions –10,780 –20,748 2.14. Result from financial inv estments € K 2020 2019 Interest income from loans to joint ventures 1,546 1,492 Interest income on bank deposits 28 25 Revenues from dividends 1,142 5,778 Expected credit losses for cash and restricted cash –355 –46 Negative interest on deposits –1,934 –890 Revaluation of other investments –5,595 1,120 Result from disposal of other investments –1,171 0 Other interest income 2,750 4,057 Result from financial investments –3,589 11,535 The negative valuation of other investments results from the decrease in fair value. 2.15. Other financial results CA Immo Group repurchased outstanding corporate bonds in 2020 with a total nominal value of € 98.5 m. This led to a one-time negative effect of € –5,067 K. CONSOLIDATED FINANCIAL STATEMENTS 1 31 2.16. Result from associated companies € K 2020 2019 ZAO „Avielen A.G.“, St. Petersburg 0 –2,967 0 –2,967 The result from associated companies includes the changes in value resulting from disposal or from subsequent valuations of the loans granted to associated entities. 2.17. Financial result € K Category 1) 2020 2019 Interest expense Interest AC –42,311 –43,148 Other financial results Realisation –5,067 0 Foreign currency gains/losses Valuation 3,622 –745 Realisation –1,237 127 Interest rate swaps Valuation FVtPL –11,314 –21,068 Interest rate floors Valuation FVtPL 535 321 Derivative convertible bond Valuation FVtPL 32,208 –38,418 Interest income Interest AC 4,325 5,574 Negative interest on deposits Interest AC –1,934 –890 Financial investments Dividends FVtPL/ FVOCI 1,142 5,778 Financial investments Valuation FVtPL –5,595 1,120 Result from disposal of other investments Realisation FVtPL –1,171 0 Expected credit losses for cash and restricted cash Valuation AC –355 –46 Net result of financial instruments –27,154 –91,396 Result from associated companies Valuation AEA 0 –2,963 Realisation AEA 0 –4 Result from associated companies 0 –2,967 Financial result –27,154 –94,363 1) AC – amortised cost, FVtPL – fair value through profit or loss, FVOCI – fair value through other comprehensive income, AEA – at equity In 2019 the impairment for associated companies amounting to € –2,963 K corresponded to the segment Eastern Europe other re gions development. In 2019, the loans granted to associated companies were sold together with the in- vestment in associates. Foreign currency gains and losses mainly relate to the result of exchange rate differences in connection with financing and investment transactions, as well as the changes in value and the result from the realisation of for- ward exchange transactions. CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 1 32 2.18. Other comprehensive income 2020 € K Valuation result (Hedging) Currency translation reserve Reserve from valuation of securities Reserve according to IAS 19 Total Other comprehensive income before taxes –620 –111 0 –80 –812 Income tax related to other comprehensive income 198 0 0 28 226 Other comprehensive income for the period –422 –111 0 –52 –585 thereof: attributable to the owners of the parent –422 –111 0 –52 –585 2019 € K Valuation result (Hedging) Currency translation reserve Reserve from valuation of securities Reserve according to IAS 19 Total Other comprehensive income before taxes 0 –14 19,441 –1,549 17,877 Income tax related to other comprehensive income 0 0 –1,215 490 –726 Other comprehensive income for the period 0 –14 18,226 –1,060 17,152 thereof: attributable to the owners of the parent 0 –14 18,226 –1,060 17,152 Reserves accor ding to IAS 19 include actuarial gains and losses from post-employment defined benefit plans as well as actuarial gains and losses from the plan assets. 2.19. Earnings per share 2020 2019 Weighted average number of shares outstanding pcs. 93,028,299 93,028,299 Consolidated net income € K 253,948 393,282 Basic earnings per share € 2.73 4.23 CONSOLIDATED FINANCIAL STATEMENTS 1 33 2020 Weighted average number of shares outstanding pcs. 93,028,299 Dilution effect: Convertible bond pcs. 6,659,902 Weighted average number of shares pcs. 99,688,201 Consolidated net income attributable to the owners of the parent € K 253,948 Dilution effect: Convertible bond effective interest/valuation derivative convertible bond € K –27,294 Less taxes € K 6,823 Consolidated net income attributable to the owners of the parent adjusted by dilution effect € K 233,478 Diluted earnings per share € 2.34 CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 1 34 CHAPTER 3: LONG-TERM ASSETS 3.1. Long-term property assets Investment Property (IAS 40) – Movements and classification € K Income producing investment properties Investment properties under development Total Book values As at 1.1.2019 3,755,196 651,575 4,406,771 Initial Application IFRS 16 31,835 0 31,835 Current investment/construction 58,909 166,678 225,588 Disposals –11,263 –4,523 –15,786 Reclassification of own used properties –1,070 0 –1,070 Transfers 155,313 –155,313 0 Revaluation 303,325 158,688 462,014 Change in lease incentives 648 0 648 As at 31.12.2019 4,292,893 817,107 5,110,000 Purchase of real estate and real estate companies 219,825 0 219,825 Current investment/construction 45,926 203,289 249,215 Disposals –249,064 0 –249,064 Reclassification to assets held for sale –33,894 0 –33,894 Reclassification from IAS 40 to IAS 2 0 –1,030 –1,030 Reclassification from advance payments to IAS 40 4,020 0 4,020 Transfers 335,664 –335,664 0 Revaluation 94,166 107,577 201,744 Change in lease incentives 13,531 –143 13,388 As at 31.12.2020 4,723,068 791,136 5,514,204 The curre nt capital expenditures (construction costs in 2020) for investment properties under development mainly relate to Frankfurt ONE (€ 105,263 K), CUBE (€ 7,907 K), Berlin Europaplatz 04 (€ 27,215 K), ZigZag Zollhafen Mainz (€ 7,511 K), Hallesches Ufer 74-76 (€ 8,583 K) Baumkirchen Mitte MK (€ 7,777 K) in Germany as well as several other projects in Germany and Czechia. The capital expenditures in income producing investment properties relate mainly to München Nymphenburg (€ 10,277 K) and Cube (€ 4,767 K) in Germany. The purchase of real estate and real estate com- panies relates to the office buildings Am Karlsbad 11 and Pohlstraße 20 in Germany and Postepu 14 in Poland. The re- classification of the advance payment relates fully to the acquired office building Am Karlsbad 11 in Germany. The re- classifications from investment properties under development to income producing investment properties relate to the CUBE, My.B, Baumkirchen NEO, Quartiersgarage Mainz and Millenium Tower in Germany. The reclassification of real estate assets from IAS 40 to IAS 2 concerns entirely Baumkirchen Mitte. The disposals for the current year relate to the sale of the CUBE office building in Germany and the Zagrebtower office building in Croatia. Previous year disposals mainly relate to the sale of a hotel in Austria and the sale of an undeve- loped plot of land in Slovakia. The fair value of the properties assigned as collateral for external financings totals € 3,036,646 K (31.12.2019: € 2,790,911 K). CONSOLIDATED FINANCIAL STATEMENTS 1 35 In 2020, borrowing costs relating to the construction of properties totaling € 4,918 K (2019: € 5,868 K) were capitalised at a weighted average interest rate of 1.30% (2019: 1.71%). In 2020, government grants amounted to € 103 K (2019: € 0 K). The following table provides an overview of the book values as at the respective reporting dates: € K Income producing investment properties Investment properties under development Total As at 1.1.2019 Fair value of properties 3,739,762 651,432 4,391,194 Incentives agreements 15,434 143 15,577 Fair value/book value 3,755,196 651,575 4,406,771 As at 31.12.2019 Fair value of properties 4,276,811 816,964 5,093,775 Lease incentive agreements 16,082 143 16,225 Fair value/book value 4,292,893 817,107 5,110,000 As at 31.12.2020 Fair value of properties 4,693,569 791,136 5,484,705 Lease incentive agreements 29,498 0 29,498 Fair value/book value 4,723,068 791,136 5,514,204 Classification of real estate assets with mixed utilisation Some pro perties are of mixed use – they are used both to generate rental income and appreciation in value as well as partially for administrative purposes. If these respective portions can be sold individually, CA Immo Group recog- nises them separately. If the portions cannot be separated, the entire property is only classified as an investment prop- erty if the own used part occupies less than 5.0% of the total useful area. Classification of real estate assets with change in use Changes in classification for real estate assets (standing investments, investments under development, own used, held for trading) are to be considered when a change in the use is made. Transfers in or out from investment property are made, for example when: – beginning or ending of owner occupied property or beginning of the development of an own used prop erty (transfer in or from own used properties), – beginni ng of the actual development with the purpose of sale (transfer from investment pr operty to properties held for trading). Classification of investment pr operties The item “investment properties” consists of investment properties and properties under development that are held neither for own use nor for sale in the ordinary course of business, but to generate rental income and to appreciate in value. Usufruct rights for developed land and the rental of parking spaces for subletting lead to the recognition of right of use assets, which are assigned to the item “investment properties”. Properties under development are reclassified to investment properties upon completion of the main construction works. CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 1 36 Valuation of investment properties Investment properties are measured according to the fair value model. Changes in the current book value before revaluation (fair value of previous year plus subsequent/additional acquisition or construction cost less subsequent acquisition cost reductions as well as the impact from the deferral of lease incentives) are recognised in the income statement under “result from revaluation”. Investment grants are accounted for as deduction of construction costs. Borrowing costs arising during property construction are allocated to the construction costs if they have been used for a qualifying asset (direct and generally borrowed funds). A qualifying asset is an asset that takes a substantial period of time (in principle more than 12 months) to be ready for its intended use or for sale. In cases in which debt is not di- rectly attributable to an individual qualifying asset, the proportional amount of the total finance costs is allocated to the qualifying asset. The capitalisation rate for the generally borrowed funds is calculated as a weighted average of the borrowing cost for all loans, however with the exception of debt specifically raised for the qualifying asset. All other borrowing costs are recognised in profit or loss in the period in which they are incurred. Valuation of right of use assets The carrying amount of the right of use asset in form of usufruct rights for the developed land as well as for rented parking spaces intended for sublease corresponds to the lease liability. These rights of use fulfill the definition of investment property and are therefore to be measured at fair value subsequently. The scheduled depreciation for these rights of use assets is not applicable and is replaced by the revaluation recognized in the profit or loss instead. The valuation reports prepared by the appraisers reflect the fair value of the respective property as a whole, as it is expected to be attainable on the market. The fair value prepared by the appraiser represents the expected realizable amount of the pr operty. As the lease liabi- lity is separately accounted for, the presentation of the investment property without the right of use asset would lead to an incorrect result. For this reason the fair value according the appraisal has to be increased by the lease liability as at balance sheet date. Investment Property (IAS 40) - Valuation Assessment of fair value Around 99.9% (31.12.2019: 99.9%) of the properties in Austria, about 98.1% (31.12.2019: 94.7%) of the proper- ties in Germany, and 100% (31.12.2019: 100%) of the properties in Eastern Europe, according to segment reporting, were subject to an external valuation as of the reporting date 31.12.2020. The values of other properties were deter- mined based on binding purchase agreements or internally based on the previous year’s valuations. CA Immo Group generally commissions external valuation reports every six months. CA Immo Group provides on property level all ma- terial and valuation related information and documents to the appraisers. Before finalization of the valuation reports internal controls (e.g. input testing) and plausibility checks are applied. Afterwards the experts finalize the valuation reports. The external valuations are made in accordance with the standards defined by the Royal Institution of Chartered Sur- veyors (RICS). The RICS defines the market value as the estimated amount for which an asset or liability could be ex- changed on the valuation date between a willing buyer and a willing seller in an arm’s length transaction, after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion. The selection of the independent, external real estate experts for CA Immo Group is based, on the one hand on profe- ssional qualification, which is measured by national and international standards, such as HypZert, RICS or public appointments and swearing-ins and on the other hand by giving consideration to local market presence and penetra- tion. CONSOLIDATED FINANCIAL STATEMENTS 1 37 The valuation method applied by the expert for each property particularly depends on the property’s stage of deve- lopment and its type of use. Rented commercial properties, which constitute the largest portion of CA Immo Group’s portfolio, are mainly valued by the investment method. The fair value represents the present value of the future expected rental income. These are calculated based on two time units: firstly “term”, with mainly contractual secured rents over the average expected re- maining lease term and secondly “reversion”, for which the experts include further parameters, in particular the market rent achievable for the object. Both periods are capitalized with an adequate interest rate (term yield/ reversionary yield). For properties under development and construction, the residual method is applied. Under this method, the market value is based on the estimated market value upon completion, less expected outstanding expenses and after applying a reasonable developer profit in the range of 6% to 25% of the market value upon completion (31.12.2019: 8% to 20%). Developer profit for properties under development, which are nearly completed, ranges at the bottom of the margin according to their reduced risk. Risks of investment properties (after completion) considered are, the estimated future rents and initial yields in the range from 2.8% to 5.2% (31.12.2019: 3.6% to 5.2%) and financing interest rates in the range from 2.0% to 4.0% (31.12.2019: 2.0% to 3.0%). The rates vary in particular depending on the general market cli- mate, location and type of use. The closer a project is to completion, the greater the portion of parameters that are based on actual or contractually fixed amounts. After completion or immediately before completion, the properties are valued by applying the investment method (see above), adjusted for outstanding work. The following table shows the essential input factors for the valuation of investment property (the fair value of the classes Office Austria and Office Germany also includes the fair value of own used properties) and property under de- velopment (the properties are assigned to each class based on their main use). The tables show for the properties in each classification the minimum and maximum values for rent and yield, as well as the area-weighted average values for rent, vacancy and yield and the average remaining lease terms calculated in years. CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 1 38 Classification investment properties incl. own used properties Fair value 31.12.2020 Fair value 31.12.2019 Inputs Range 2020 Range 2019 Valuation technique investment method € K € K Office Austria 367,000 356,800 average weighted actual-rent €/m² p.m. 11.32 10.77 Actual-rent €/m² p. m. 7.22 – 26.99 7.47 – 28.49 Market-rent €/m² p. m. 6.54 – 24.33 6.30 – 24.12 average remaining lease term in years 4.19 5.99 average vacancy % 11.96 8.23 Yield Term min/max/weighted average % 3.35 / 6.25 / 4.48 3.35 / 7.50 / 4.79 Yield Reversion min/max/weighted average % 3.20 / 6.75 / 4.72 3.20 / 7.50 / 4.97 Office Germany 1,989,342 1,467,559 average weighted actual-rent €/m² p.m. 18.11 17.41 Actual-rent €/m² p. m. 10.62 – 27.15 10.36 – 25.29 Market-rent €/m² p. m. 11.99 – 29.06 7.00 – 27.82 average remaining lease term in years 8.96 7.91 average vacancy % 2.92 1.15 Yield Term min/max/weighted average % 0.00 / 4.10 / 3.14 2.95 / 5.00 / 3.48 Yield Reversion min/max/weighted average % 3.45 / 4.60 / 3.82 3.45 / 5.50 / 4.05 Office Eastern Europe 1,977,415 2,009,574 average weighted actual-rent €/m² p.m. 14.62 14.26 Actual-rent €/m² p. m. 8.82 – 21.36 9.93 – 21.34 Market-rent €/m² p. m. 6.77 – 18.75 8.50 – 18.60 average remaining lease term in years 3.12 3.54 average vacancy % 6.49 5.85 Yield Term min/max/weighted average % 4.60 / 10.00 / 6.87 3.90 / 8.75 / 6.52 Yield Reversion min/max/weighted average % 4.70 / 12.00 / 6.83 4.85 / 9.25 / 6.71 Office total 4,333,758 3,833,933 Retail Austria 90,100 94,000 average weighted actual-rent €/m² p.m. 13.38 14.01 Actual-rent €/m² p. m. 13.38 – 13.38 14.01 – 14.01 Market-rent €/m² p. m. 12.92 – 12.92 12.90 – 12.90 average remaining lease term in years 3.13 1.74 average vacancy % 13.12 7.31 Yield Term min/max/weighted average % 4.65 / 4.65 / 4.65 4.40 / 4.40 / 4.40 Yield Reversion min/max/weighted average % 4.60 / 4.60 / 4.60 4.40 / 4.40 / 4.40 Retail total 90,100 94,000 * The book values of “Office Germany” and “Office Eastern Europe” classes include right of use assets in amount of € 572 K (31.12.2019: € 1,309 K), respec- tively € 37,245 K (31.12.2019: € 29,914 K). CONSOLIDATED FINANCIAL STATEMENTS 1 39 Classification investment properties incl. own used properties Fair value 31.12.2020 Fair value 31.12.2019 Inputs Range 2020 Range 2019 Valuation technique investment method € K € K Hotel Austria 60,900 74,600 average weighted actual-rent €/m² p.m. 10.18 10.07 Actual-rent €/m² p. m. 10.04 – 11.05 9.91 – 11.05 Market-rent €/m² p. m. 10.00 – 12.00 11.05 – 12.00 average remaining lease term in years 6.93 7.93 average vacancy % 0.00 0.00 Yield Term min/max/weighted average % 5.25 / 5.75 / 5.67 4.75 / 5.25 / 5.17 Yield Rever sion min/max/weighted average % 5.50 / 6.00 / 5.92 5.00 / 5.75 / 5.65 Hotel Germany 169,700 193,100 average weighted actual-rent €/m² p.m. 15.71 16.09 Actual-rent €/m² p. m. 15.41 – 16.97 15.61 – 16.97 Market-rent €/m² p. m. 14.39 – 16.00 15.69 – 16.97 average remaining lease term in years 14.49 15.41 average vacancy % 1.05 1.11 Yield Term min/max/weighted average % 3.80 / 4.75 / 4.06 3.60 / 4.20 / 3.74 Yield Rever sion min/max/weighted average % 4.30 / 5.15 / 4.48 4.10 / 4.60 / 4.19 Hotel total 230,600 267,700 Other Austria 17,900 51,440 average weighted actual-rent €/m² p.m. 1.35 1.34 Actual-rent €/m² p. m. 1.35 – 1.35 1.34 – 1.34 Market-rent €/m² p. m. 0.98 – 0.98 0.98 – 0.98 average remaining lease term in years 1.02 0.98 average vacancy % 0.00 0.00 Yield Term min/max/weighted average % 6.25 / 6.25 / 6.25 6.25 / 6.25 / 6.25 Yield Rever sion min/max/weighted average % 6.15 / 6.15 / 6.15 6.15 / 6.15 / 6.15 Other Germany 67,110 60,520 average weighted actual-rent €/m² p.m. 4.48 4.35 Actual-rent €/m² p. m. 3.51 – 7.11 3.51 – 7.11 Market-rent €/m² p. m. 3.44 – 7.11 3.44 – 7.11 average remaining lease term in years 4.60 4.36 average vacancy % 0.76 3.99 Yield Term min/max/weighted average % 2.35 / 6.50 / 4.40 2.50 / 7.00 / 4.84 Yield Rever sion min/max/weighted average % 4.65 / 6.00 / 5.19 4.75 / 8.00 / 5.94 Other total 85,010 111,960 CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 1 40 Classification investment properties under development Fair value 31.12.2020 Fair value 31.12.2019 Inputs Range 2020 Range 2019 Valuation technique residual value € K € K Office Germany 509,900 515,580 Expected-rent €/m² p. m. 18.50 – 33.50 14.00 – 33.00 Construction cost €/m² 1,801 – 3,673 2,092 – 2,919 Related cost in % of Constr. cost 19.36 – 32.28 23.00 – 27.40 Office Eastern Europe 39,100 14,930 Expected-rent €/m² p. m. 15.50 – 15.50 15.75 – 15.75 Construction cost €/m² 1,290 – 1,410 1,433 – 1,447 Related cost in % of Constr. cost 10.00 – 10.00 9.10 – 10.00 Other Germany 0 1,100 Expected-rent €/m² p. m. - 14.00 – 33.00 Construction cost €/m² - 2,092 – 2,919 Related cost in % of Constr. cost - 23.00 – 27.40 Development total 549,000 531,610 Land bank s which are not currently under development or which are not expected to be developed in the near future are valued through comparable transactions method. Classification investment properties under development Fair value 31.12.2020 Fair value 31.12.2019 Inputs Range 2020 Range 2019 Comparative method € K € K Landbank Germany 241,986 285,352 min-max valuation approach / m² plot area 2.25 – 22,503.08 2.25 – 21,516.65 Landbank Eastern Europe 150 145 min-max valuation approach / m² plot area 29.87 – 29.87 28.88 – 28.88 Landbank total 242,136 285,497 Interaction bet ween the input factors The essential input factors that determine the fair values for investment property are the actual rents and market rents as well as the interest rates (yields). Increasing rents (e.g. a short supply and increased demand) would cause increasing fair values. Vice versa, the fair value decreases when the rents are decreasing. Increasing yields (e.g. the market expects increasing interest rates due to increasing risks – excessive supply, etc.) would cause decreasing fair values. Conversely, the fair value would increase if the yield decreases (e.g. higher demand for this type of investment property). Both input factors act reinforcing – as well in a positive or negative way – when they appear jointly. This means that a strengthened demand for rental space as well as a simultaneously strengthened demand for such investment property would cause an even greater increase of the fair value. Vice versa, a decrease in the demand for rental space as well as a decreased market demand for investment property would cause an even heavier decrease of the fair value. For properties under development, construction costs are another essential input factor. The market value of proper- ties is mainly determined by the expected rental income and the yield. It is in this area of conflict that new develop- ment projects are planned and calculated. Given that the calculated construction costs, which are a major influencing factor in development, could change during the development phase because of both market related factors (e.g. shortage of resources on the markets or oversupply) and planning-related factors (e.g. necessary additional changes, unforeseea- ble problems, subsequent savings, etc.), they have a significant influence on profitability. These additional opportuni- ties/risks are given appropriate consideration in a developer’s profit (risk/profit). CONSOLIDATED FINANCIAL STATEMENTS 1 41 The fair value for rented properties, properties under development as well as land banks corresponds to level 3 of the fair value hierarchy according to IFRS 13. Hierarchy classification The following tables show the development of separate classes that are assigned according to IFRS 13 to level 3 of the fair value hierarchy: Office Office Office Retail € K Austria Germany Eastern Europe Austria As at 1.1.2019 335,800 1,091,100 1,883,670 96,900 Initial Application IFRS 16 0 1,814 29,961 0 Additions 16,583 18,891 20,952 69 Disposals 0 0 –65 0 Valuation 4,265 201,555 73,189 –2,946 Reclassification between classes 0 155,313 0 0 Change in lease incentives 151 –1,114 1,866 –23 As at 31.12.2019 = 1.1.2020 356,800 1,467,559 2,009,574 94,000 Additions 2,211 23,150 28,868 1,089 Disposals 0 –152,958 –42,562 0 Purchase of real estate and real estate companies 0 127,495 92,330 0 Valuation 7,268 190,186 –79,192 –5,044 Reclassification IFRS 5 0 0 –33,894 0 Reclassification between classes 0 333,214 0 0 Change in lease incentives 721 697 2,292 55 As at 31.12.2020 367,000 1,989,342 1,977,415 90,100 * The fair value of the classes Office Austria and Office Germany also includes the fair value of the own used properties. The advance payment in 2019 for the purchase of the property Am Karlsbad 11 in Berlin was reclassified from long- term receivables and other assets to investment properties in 2020, as the transaction was completed. Hotel Hotel Others Others € K Austria Germany Austria Germany As at 1.1.2019 85,500 170,200 50,650 53,920 Initial Application IFRS 16 60 0 0 0 Additions 123 765 0 2,041 Disposals –11,510 0 0 0 Valuation 444 21,407 790 4,559 Change in lease incentives –16 728 0 0 As at 31.12.2019 = 1.1.2020 74,600 193,100 51,440 60,520 Additions 0 90 0 285 Disposals 0 0 –53,860 0 Valuation –13,544 –23,840 20,320 –274 Reclassification between classes 0 0 0 6,470 Change in lease incentives –156 349 0 109 As at 31.12.2020 60,900 169,700 17,900 67,110 CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 1 42 € K Development Development Land banks Land banks Germany Eastern Europe Germany Eastern Europe As at 1.1.2019 377,760 0 258,046 15,755 Initial Application IFRS 16 0 0 0 0 Additions 153,918 3,785 8,975 0 Disposals 0 0 –60 –4,463 Valuation 110,874 1,105 47,830 –1,107 Reclassification between classes –125,873 10,040 –29,440 –10,040 Change in lease incentives 0 0 0 0 As at 31.12.2019 = 1.1.2020 516,680 14,930 285,352 145 Additions 171,077 20,959 11,267 0 Valuation 57,270 3,211 47,077 5 Reclassification IAS 2 0 0 –1,030 0 Reclassification between classes –234,984 0 –100,680 0 Change in lease incentives –143 0 0 0 As at 31.12.2020 509,900 39,100 241,986 150 Sensitivity of the property val uation All valuations represent an estimate of the price that could be obtained in a transaction taking place at the valua- tion date. Valuations are based on assumptions, such as the existence of an active market in the region concerned. Un- foreseen macroeconomic or political crises could have a significant influence on the market. Such events can trigger panic buying or selling, or a general reluctance to conclude business transactions. If a valuation date falls within a pe- riod immediately following an event of this kind, the data underlying the valuation may be questionable, incomplete or inconsistent, which inevitably affects the reliability of the estimate. The outbreak of the Covid-19 pandemic has affected many aspects of daily life and the global economy. Many coun- tries have imposed general lockdowns and travel restrictions. As a result, in 2020 market activity was severely affected in many sectors. The short- and long-term economic effects of the Covid-19 pandemic on the real estate markets are currently highly uncertain. Some real estate markets have significantly lower levels of transaction activity and liquid- ity. Recent economic data show a relaunch of economic activity in the Euro area, although the level of activity is well below the level prevailing before the outbreak of the Covid-19 pandemic and the outlook remains highly uncertain. Although containment policies have been relaxed around the world, the global recovery remains uneven and uncertain. Since the consequences of current and future measures cannot be foreseen at this point in time, the effects of Covid-19 on the real estate markets and the group’s property values are regularthe ly reviewed. For properties that currently have a high vacancy rate or short-term leases the influence of the appraiser’s assump- tions on the property value is higher than for properties with cash flows that are secured by long-term contracts. The property values established by external appraisers depend on several parameters, some of which influence each other in a complex way. For the purposes of a sensitivity analysis for sub-portfolios in respect of changes in value caused by the change in one parameter, individual input factors vary (while other factors stay unchanged) in order to present possible changes. The below tables illustrate the sensitivity of the fair values to a change in expected rental income (for the purposes of this model, defined as market rent) and in the yields (term yield – capitalization interest rate for the average expected CONSOLIDATED FINANCIAL STATEMENTS 1 43 remaining term of the current rental contracts and reversionary yield – capitalization interest rate for expected rental income after expiration of the current rental contracts) for all investment properties, other than properties held for sale. 2020 Office Austria Change in Yield (in % of initial yield) –10% –5% 0% 5% Change in market rent of 10% –10% 0.83% 5.99% 11.14% 16.30% 21.46% –5% –4.41% 0.43% 5.28% 10.12% 14.97% 0% –9.13% –4.57% 0.00% 4.57% 9.13% +5% –13.41% –9.09% –4.78% –0.46% 3.85% +10% –17.30% –13.21% –9.12% –5.03% –0.95% 2019 Office Austria Change in Yield (in % of initial yield) –10% –5% 0% 5% Change in market rent of 10% –10% 1.59% 6.45% 11.31% 16.17% 21.03% –5% –3.74% 0.81% 5.36% 9.91% 14.46% 0% –8.55% –4.27% 0.00% 4.27% 8.55% +5% –12.90% –8.87% –4.85% –0.83% 3.20% +10% –16.85% –13.06% –9.26% –5.46% –1.66% 2020 Office Germany Change in Yield (in % of initial yield) –10% –5% 0% 5% Change in market rent of 10% –10% 2.46% 7.07% 11.67% 16.28% 20.88% –5% –3.07% 1.23% 5.53% 9.82% 14.12% 0% –8.05% –4.02% 0.00% 4.02% 8.05% +5% –12.54% –8.77% –4.99% –1.22% 2.56% +10% –16.63% –13.08% –9.53% –5.98% –2.43% 2019 Office Germany Change in Yield (in % of initial yield) –10% –5% 0% 5% Change in market rent of 10% –10% 2.45% 7.13% 11.81% 16.49% 21.17% –5% –3.14% 1.22% 5.59% 9.96% 14.33% 0% –8.18% –4.09% 0.00% 4.09% 8.18% +5% –12.73% –8.89% –5.06% –1.22% 2.62% +10% –16.86% –13.25% –9.65% –6.04% –2.43% CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 1 44 2020 Office Eastern Europe Change in Yield (in % of initial yield) –10% –5% 0% 5% Change in market rent of 10% –10% 1.87% 6.80% 11.72% 16.64% 21.57% –5% –3.69% 0.93% 5.55% 10.17% 14.79% 0% –8.70% –4.35% 0.00% 4.35% 8.70% +5% –13.23% –9.13% –5.02% –0.92% 3.19% +10% –17.35% –13.47% –9.59% –5.71% –1.83% 2019 Office Eastern Europe Change in Yield (in % of initial yield) –10% –5% 0% 5% Change in market rent of 10% –10% 2.05% 6.87% 11.69% 16.51% 21.33% –5% –3.50% 1.02% 5.54% 10.06% 14.58% 0% –8.50% –4.25% 0.00% 4.25% 8.50% +5% –13.03% –9.02% –5.01% –1.00% 3.00% +10% –17.14% –13.35% –9.56% –5.78% –1.99% 2020 Retail Austria Change in Yield (in % of initial yield) –10% –5% 0% 5% Change in market rent of 10% –10% 0.60% 5.97% 11.35% 16.72% 22.09% –5% –4.74% 0.32% 5.37% 10.43% 15.49% 0% –9.55% –4.77% 0.00% 4.77% 9.55% +5% –13.90% –9.38% –4.86% –0.35% 4.17% +10% –17.85% –13.57% –9.28% –5.00% –0.72% 2019 Retail Austria Change in Yield (in % of initial yield) –10% –5% 0% 5% Change in market rent of 10% –10% 0.02% 5.69% 11.35% 17.02% 22.68% –5% –5.32% 0.03% 5.38% 10.72% 16.07% 0% –10.12% –5.06% 0.00% 5.06% 10.12% +5% –14.47% –9.67% –4.87% –0.06% 4.74% +10% –18.43% –13.86% –9.29% –4.72% –0.15% CONSOLIDATED FINANCIAL STATEMENTS 1 45 2020 Hotel Austria Change in Yield (in % of initial yield) –10% –5% 0% 5% Change in market rent of 10% –10% 3.21% 7.54% 11.86% 16.18% 20.51% –5% –2.41% 1.60% 5.62% 9.63% 13.65% 0% –7.48% –3.74% 0.00% 3.74% 7.48% +5% –12.06% –8.57% –5.08% –1.59% 1.90% +10% –16.23% –12.96% –9.70% –6.43% –3.17% 2019 Hotel Austria Change in Yield (in % of initial yield) –10% –5% 0% 5% Change in market rent of 10% –10% 3.23% 7.35% 11.48% 15.61% 19.74% –5% –2.22% 1.61% 5.44% 9.26% 13.09% 0% –7.12% –3.56% 0.00% 3.56% 7.12% +5% –11.55% –8.23% –4.91% –1.60% 1.72% +10% –15.57% –12.47% –9.37% –6.27% –3.18% 2020 Hotel Germany Change in Yield (in % of initial yield) –10% –5% 0% 5% Change in market rent of 10% –10% 4.74% 8.07% 11.39% 14.71% 18.04% –5% –0.71% 2.34% 5.40% 8.45% 11.50% 0% –5.63% –2.81% 0.00% 2.81% 5.63% +5% –10.08% –7.48% –4.88% –2.28% 0.32% +10% –14.13% –11.73% –9.32% –6.91% –4.51% 2019 Hotel Germany Change in Yield (in % of initial yield) –10% –5% 0% 5% Change in market rent of 10% –10% 4.55% 7.75% 10.96% 14.17% 17.37% –5% –0.70% 2.25% 5.19% 8.14% 11.08% 0% –5.43% –2.71% 0.00% 2.71% 5.43% +5% –9.70% –7.20% –4.69% –2.19% 0.32% +10% –13.60% –11.28% –8.96% –6.64% –4.32% CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 1 46 2020 Other Austria Change in Yield (in % of initial yield) –10% –5% 0% 5% Change in market rent of 10% –10% 0.45% 5.96% 11.47% 16.98% 22.49% –5% –4.97% 0.23% 5.43% 10.64% 15.84% 0% –9.84% –4.92% 0.00% 4.92% 9.84% +5% –14.25% –9.59% –4.92% –0.25% 4.42% +10% –18.27% –13.83% –9.39% –4.95% –0.51% 2019 Other Austria Change in Yield (in % of initial yield) –10% –5% 0% 5% Change in market rent of 10% –10% 0.47% 6.15% 11.83% 17.51% 23.20% –5% –5.12% 0.24% 5.60% 10.97% 16.33% 0% –10.15% –5.07% 0.00% 5.07% 10.15% +5% –14.70% –9.88% –5.07% –0.26% 4.55% +10% –18.83% –14.26% –9.68% –5.10% –0.53% 2020 Other Germany Change in Yield (in % of initial yield) –10% –5% 0% 5% Change in market rent of 10% –10% 1.16% 6.45% 11.74% 17.03% 22.32% –5% –4.38% 0.59% 5.56% 10.53% 15.50% 0% –9.37% –4.68% 0.00% 4.68% 9.37% +5% –13.88% –9.45% –5.03% –0.60% 3.82% +10% –17.97% –13.78% –9.60% –5.41% –1.22% 2019 Other Germany Change in Yield (in % of initial yield) –10% –5% 0% 5% Change in market rent of 10% –10% 1.12% 6.00% 10.87% 15.74% 20.62% –5% –4.01% 0.57% 5.15% 9.73% 14.31% 0% –8.63% –4.31% 0.00% 4.31% 8.63% +5% –12.81% –8.73% –4.65% –0.58% 3.50% +10% –16.61% –12.75% –8.88% –5.02% –1.16% CONSOLIDATED FINANCIAL STATEMENTS 1 47 For the development projects, which are valued by residual value method, the table below illustrates the sensitivity of the fair value to an increase or decrease in the projected outstanding development and construction costs. Development projects actively being developed were used as the basis. 2020 Still outstanding capital expenditures in € m –10% –5% Initial value +5% +10% Still outstanding capital expenditures 1,229.6 1,297.9 1,366.2 1,434.5 1,502.8 Fair value 685.6 617.3 549.0 480.7 412.4 Changes to initial value 24.9% 12.4% 0.0% –12.4% –24.9% 2019 Still outstanding capital expenditures in € m –10% –5% Initial value +5% +10% Still outstanding capital expenditures 519.9 548.8 577.7 606.6 635.5 Fair value 589.4 560.5 531.6 502.7 473.8 Changes to initial value 10.9% 5.4% 0.0% –5.4% –10.9% The sensitivity analysis of the projects unde r development are based on an average percentage of completion of approximately 29% (2019: 41%) as at the balance sheet date, related to total construction costs. The sensitivity only relates to the outstanding costs of the building constructions works. The outstanding capital expenditures will reduce with the increase of the percentage of completion. Based on the residual value method this leads to an increase in the fair value of the projects under development. An increase or decrease in the still outstanding capital expenditures leads to the reverse movement in the fair value of the projects under development, within the residual value method. 3.2. Own used properties € K Own used properties Right of use assets of own used properties Total Book values As at 1.1.2019 5,223 0 5,223 Initial Application IFRS 16 0 9,561 9,561 Current investment/construction 1,148 87 1,235 Depreciation and amortisation –276 –1,783 –2,059 Reclassification of own used properties 1,070 0 1,070 As at 31.12.2019 7,165 7,865 15,030 Current investment/construction 0 40 40 Disposals –47 –23 –70 Depreciation and amortisation –410 –1,694 –2,103 As at 31.12.2020 6,709 6,188 12,896 CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 1 48 The following table provides an overview of the book values as at the respective reporting dates: € K Own used properties Right of use assets of own used properties Total As at 1.1.2019 Acquisition costs 10,683 0 10,683 Accumulated depreciation –5,460 0 –5,460 Net book value 5,223 0 5,223 As at 31.12.2019 Acquisition costs 10,489 9,648 20,137 Accumulated depreciation –3,324 –1,783 –5,107 Net book value 7,165 7,865 15,030 As at 31.12.2020 Acquisition costs 10,443 9,625 20,068 Accumulated depreciation –3,734 –3,437 –7,171 Net book value 6,709 6,188 12,896 Impairment los ses If an indication exists that a long term non-financial asset (own used properties as well as right of use assets assigned to this category) might be impaired, CA Immo Group performs an impairment test. CA Immo calculates the recoverable amount for the asset or smallest identifiable group of assets that generate cash inflows from continued use that are largely independent from the cash inflows from other assets (cash-generating unit). The recoverable amount is the higher of the fair value less the cost to sell (net realisable value) and the value in use of the corresponding asset (or group of assets). The value in use is the present value of the expected future cash flows that are likely to be generated by the continued use of an asset (or group of assets) and its retirement at the end of its useful life. If this recoverable amount is lower than the carrying value of the asset (or group of assets), the asset is written off to the lower value. These write-offs are reported in the consolidated income statement under “depreciation and impair- ment/reversal”. If at a later date the impairment ceases to exist, the impairment loss is reversed to profit or loss up to the carrying amount of the amortised original acquisition or production cost. Classification of properties Properties used for administration purposes are presented under the line “own used properties” if these proper- ties can be sold separately or their own use amounts to more than 5.0% of the total usable area. The rights of use for the rent of space used for administration purposes are also included in this balance sheet item. Measurement Own used properties are measured in accordance with the cost method, i.e. acquisition or production cost or fair value at the date of reclassification less regular depreciation and impairment losses. The valuation of rights of use for properties rented for administration purposes is carried out according to the cost method, i.e. at the present value of the lease payments (lease liability) and reduced by the scheduled depreciation and impairments. Investment grants are accounted for as deduction of production costs. CONSOLIDATED FINANCIAL STATEMENTS 1 49 The estimated useful life of own used properties, applying the principle that each part of an item with a significant cost shall be depreciated separately, is 70 to 75 years for the structural work, 15 to 70 years for the facade, 20 years for the building equipment and appliances, 15 to 20 years for the roof, and 10 to 20 years for the tenant’s finishing works. The scheduled depreciation for the right of use assets of own used properties is carried out on a straight-line basis over the expected rental period. This is determined individually based on the underlying contracts. 3.3. Office furniture and equipment and intangible assets € K Office furniture and equipment Right of use assets of office furniture and equipment Total office furniture and equipment Goodwill Software Total intangible assets Book values As at 1.1.2019 5,938 0 5,938 5,187 502 5,689 Initial Application IFRS 16 0 957 957 0 0 0 Currency translation adjustments –3 –1 –4 0 0 0 Current additions 2,174 342 2,516 0 516 516 Disposals –18 –32 –50 –59 0 –59 Depreciation and amortisation –1,113 –476 –1,589 0 –331 –331 Impairment 0 0 0 –646 0 –646 As at 31.12.2019 6,978 790 7,768 4,481 687 5,169 Currency translation adjustments –31 –2 –33 0 0 0 Current additions 1,269 490 1,759 0 685 685 Disposals –81 –77 –158 –2,090 –12 –2,102 Depreciation and amortisation –1,290 –515 –1,806 0 –343 –343 Impairment 0 0 0 –410 0 –410 As at 31.12.2020 6,844 687 7,531 1,981 1,017 2,998 CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 1 50 The following table shows the composition of the book values at each of the reporting dates: € K Office furniture and equipment Right of use assets of office furniture and equipment Total office furniture and equipment Goodwill Software Total intangible assets As at 1.1.2019 Acquisition costs 11,590 0 11,590 21,742 4,239 25,981 Accumulated impairment/amort isation –5,651 0 –5,651 –16,555 –3,737 –20,292 Book values 5,938 0 5,938 5,187 502 5,689 As at 31.12.2019 Acquisition costs 13,212 1,231 14,443 14,244 4,698 18,941 Accumulated impairment/amort isation –6,234 –441 –6,675 –9,762 –4,010 –13,773 Book values 6,978 790 7,768 4,481 687 5,169 As at 31.12.2020 Acquisition costs 14,264 1,317 15,581 5,124 5,366 10,490 Accumulated impairment/amort isation –7,420 –630 –8,051 –3,143 –4,349 –7,492 Book values 6,844 687 7,531 1,981 1,017 2,998 Goodwill impairment Goo dwill is tested for impairment at each balance sheet date, with individual properties representing the cash generating units. Due to the specific nature of the recognised goodwill, the recoverable amount for the cash generating unit cannot be determined without taking into account the expected tax charge. Hence, the book value of the cash gen- erating unit includes, in addition to the allocated goodwill, the directly attributable deferred taxes of the single proper- ties. The recoverable amount is determined on the basis of value in use. This amount is derived from the fair value of a property which is mainly determined on the basis of external valuation reports. The present value of the income tax payments is determined considering after-tax yield (which represents the yield of the property after tax effects of the relevant country) on the expected income tax payments. The impairment test assumes, based on experience, an average retention period for properties held by CA Immo Group as at 31.12.2020 of 2 years for investment properties. Due to the assumption of the retention period decreasing each year and thus of a reduced discounting period each year, further impairment losses of the goodwill corresponding to the reduction in the present value benefit are expected in future periods. CONSOLIDATED FINANCIAL STATEMENTS 1 51 The following sensitivity analysis shows the impact in goodwill impairment of changes in significant parameters for the impairment test. 2020 Goodwill impairment in € K Change in yield (in % of initial yield) +5% +5% +10% +10% Change in market rent –5% –10% –5% –10% Impact on the profit and loss statement –58.9 –91.0 –91.2 –122.7 2019 Goodwill impairment in € K Change in yield (in % of initial yield) +5% +5% +10% +10% Change in market rent –5% –10% –5% –10% Impact on the profit and loss statement –170.7 –317.3 –306.3 –445.6 Intangible assets The goodwill represents the amount by which the fair value of the amount transferred (usually the purchase price for the acquire d business) and (if applicable) for the non-controlling interest, exceeds the fair value of the identifiable assets and liabilities, including any deferred taxes. It mainly represents the benefit resulting from the fact that the deferred tax liabilities acquired will become due only in a future period. Goodwill is not amortised, but is tested for impairment at each period end. A possible impairment is directly connected to the reduction of the fair value of the property or to taxation changes in the country of the cash generating unit. Parameters determined by the appraisers within the scope of the external pro- perty valuation are largely used for the impairment test. Other intangible assets mainly comprise software and are recognised at acquisition cost less straight-line amortisation and impairment losses. Software is amortised over a useful life of 2 to 5 years. CA Immo Group makes use of the option under IFRS 16 and does not recognise any rights of use for software. Office furniture and equipment Office furniture and equipment are measured in accordance with the cost method, i.e. acquisition or production cost less regular depreciation and impairment losses. The initial valuation of rights of use for office furniture and equipments carried out according to the cost method, i.e. at the present value of the lease payments (lease liability), and subsequently reduced by scheduled depreciation and impairments. Office furniture and equipment are depreciated on a straight-line basis over their estimated useful life, which ranges from 2 to 15 years. The scheduled depreciation of the rights of use for office furniture, equipment and other assets is carried out on a straight-line basis over the expected rental period. This is determined individually based on the under- lying contracts. CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 1 52 3.4. Investments in joint ventures CA Immo Group is engaged in the following material joint ventures: Name Project Partner Share of CA Immo Group (Prior Year) Registered office Region/Country Investment Type of investment Aggregation Number entities (Prior Year) Eggarten Büschl Group represented by Park Immobilien Projekt Eggarten Holding GmbH & Co. KG 50% (50%) Munich Germany Development Sum of entities 2 (2) Mainz Mainzer Stadtwerke AG 50.1% (50.1%) Mainz Germany Development Sum of entities 3 (3) The joint ventu re “Eggarten” plans the development and sale of properties in Munich. The joint venture Mainz plans the development and sale of land plots in the customs harbour in Mainz. None of the joint ventures are listed and all have 31.12. as the key date. In all cases, except the Mainz joint ventures, the profit share is in accordance with the ownership share. The financial statements of the joint ventures are prepared in compliance with the accounting policy of CA Immo Group and included in the consolidated financial statements in accordance with the equity method. Joint ventures are set up by CA Immo Group for strategic reasons and structured as independent investment compa- nies. They consist of common agreements, groups of independent investment companies (sum), or separate investment companies (subsidiaries). The structure depends on the strategic background e.g. development of properties, financing or investment volume. As at 31.12.2020, there are no unrecognized losses from joint ventures (31.12.2019: € 0 K). There are no unrecognized contractual obligations for the CA Immo Group concerning the acquisition or disposal of shares in joint ventures or for assets that are not accounted for. The presented information of joint ventures does not include any consolidation within the CA Immo Group. CONSOLIDATED FINANCIAL STATEMENTS 1 53 The following table shows material interests in joint ventures: € K 2020 2019 Eggarten Mainz Eggarten Mainz Rental income 48 1,689 57 1,666 Depreciation and impairment/reversal –5 –152 –1 –151 Finance costs –124 –1,218 –61 –1,056 Income tax expense 0 –389 –1 –1,883 Consolidated net income –372 10,278 –332 13,705 Total comprehensive income 0 0 0 0 Comprehensive income for the period –372 10,278 –332 13,705 Long-term assets 49 2,540 53 2,501 Other short-term assets 91,991 99,014 90,712 96,239 Cash and cash equivalents 115 851 56 847 Total assets 92,154 102,404 90,822 99,587 Other long-term liabilities 0 41,610 0 45,714 Interest-bearing liabilities 9,151 31 7,283 41 Long-term liabilities 9,151 41,640 7,283 45,755 Other short-term liabilities 181 23,986 346 18,875 Interest-bearing liabilities 5 13 5 38 Short-term liabilities 186 23,999 350 18,913 Shareholders' equity 82,817 36,766 83,168 34,919 Proportional equity as at 1.1. 41,581 17,477 41,750 15,521 Proportional profit of the period –186 5,133 –169 6,855 Dividends received 0 –4,224 0 –4,899 Proportional equity as at 31.12. 41,395 18,386 41,580 17,477 Intercompany profit elimination and other consolidation effects 0 –4,520 0 –2,522 Book value investments into joint ventures 31.12 41,395 13,866 41,580 14,955 CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 1 54 The following table summarizes non-material interests in joint ventures: € K 2020 2019 restated Proportional equity as at 1.1. 8,578 140,565 Proportional profit of the period –1,050 –159 Capital increases 208 0 Capital decrease –5,064 –335 Dividends received –3,299 –131,493 Proportional equity as at 31.12. –628 8,578 Intercompany profit elimination and other consolidation effects –60 344 Disposals 0 –7 Transition consolidation –22 0 Allowance of loans and receivables 3,076 2,304 Book value investments into joint ventures 31.12 2,367 11,220 As at 31.12.2019 the investm ent in the joint venture „Tower 185” was considered as a material interest. As at 31.12.2020 the investment in “Tower 185” was considered as a non-material interest and the prior year information was restated. 3.5. Other assets € K 31.12.2020 31.12.2019 Other financial assets 45,470 45,578 Long-term receivables and other assets 15,258 38,089 60,728 83,667 € K Acquisition costs incl. recognized interests as at 31.12.2020 Changes in value accumulated until 31.12.2020 Book values as at 31.12.2020 Changes in value recognized in profit or loss 2020 Loans to joint ventures 12,002 –3,076 8,926 –772 Loans and receivables 12,002 –3,076 8,926 –772 Other investments 31,326 3,535 34,861 –5,595 Other investments 31,326 3,535 34,861 –5,595 Interest rate floors 726 956 1,682 535 Derivative financial instruments 726 956 1,682 535 Total other financial assets 44,054 1,415 45,470 –5,832 Other investments mainly include non-controlling interests in G ermany. CONSOLIDATED FINANCIAL STATEMENTS 1 55 € K Acquisition costs incl. recognized interests as at 31.12.2019 Changes in value accumulated until 31.12.2019 Book values as at 31.12.2019 Changes in value recognized in profit or loss 2019 Loans to joint ventures 5,329 –2,304 3,025 –564 Loans to associated companies 0 0 0 –2,963 Other loans 22,870 –22,870 0 6 Loans and receivables 28,199 –25,174 3,025 –3,521 Other investments 32,276 9,130 41,406 1,120 Other investments 32,276 9,130 41,406 1,120 Interest rate floors 726 421 1,148 321 Derivative financial instruments 726 421 1,148 321 Total other financial assets 61,201 –15,623 45,578 –2,081 Long-term rec eivables and other assets € K 31.12.2020 31.12.2019 Cash and cash equivalents with drawing restrictions 11,708 15,154 Receivables from trading property and construction work (transferred over time) 0 15,545 Advance payment for investment property acquisition 0 4,020 Other receivables from joint ventures 1,137 1,282 Receivables from property and share sales 61 59 Other receivables and assets 2,353 2,029 Long-term receivables and other assets 15,258 38,089 € K Other investments As at 1.1.2019 41,098 Valuation P/L 1,120 Distributions/capital reduction –813 As at 31.12.2019 = 1.1.2020 41,406 Valuation P/L –5,595 Distributions/capital reduction –950 As at 31.12.2020 34,861 The fair value o f other investments corresponds to level 3 of the fair value hierarchy according to IFRS 13. Loans Loans granted to joint ventures are assigned to the category “amortised cost” (AC). They are measured at fair value upon recognition, and subsequently at amortised cost, applying the effective interest-rate method and taking into account any impairment, according to IFRS 9. CA Immo Group generally evaluates loans granted to joint ventures together with the equity held in these entities because the loans are considered as part of the net investment. If the equity of the entities reported under the equity method becomes negative, the loans considered as part of the net invest- ment are impaired to the level of the loss not yet recognized. CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 1 56 Other investments Non-controlling interests are assigned to the category “fair value through profit or loss” (FVtPL). The valuation of the investment is made at fair value upon recognition. Subsequent changes in value are presented in profit or loss as “result from financial investments”. If a listed price on an active market is not available, the fair value of investments which own investment properties will be updated based on internal valuations, mostly based on external professional opinions for the properties. Long-term receivables Trade receivables, other receivables and other financial assets are primary financial instruments that are not listed on active markets and not intended for sale. They are assigned to the measurement category “amortised cost” (AC). They are initially measured at fair value, and thereafter at amortised cost, applying the effective interest-rate method and less expected credit losses. Receivables from the sale of properties having a maturity of more than one year are recognised at their present values and presented as non-current receivables as of the respective reporting date. Cash subject to drawing restrictions of more than 12 months Restricted cash with a longer lock-up period (over 12 months) is presented as financial assets. The expected credit losses for cash and cash equivalents are determined based on the default probability of each financial institution. CONSOLIDATED FINANCIAL STATEMENTS 1 57 CHAPTER 4: CURRENT ASSETS 4.1. Assets and liabilities held for sale As at 31.12.2020 a disposal group with a property in Slovakia (segment Eastern Europe other regions - investment properties) with a fair value of € 33,894 K (31.12.2019: € 0 K) was classified as held for sale. For these assets and liabili- ties, the disposal was agreed by the appropriate level of management of CA Immo Group and a contract of sale was con- cluded or assigned by the time the consolidated financial statements were prepared. The result from revaluation includes an amount of € 0 K (2019: € 0 K) related to investment properties after their reclassification as properties held for sale. Assets and liabilities held for sale € K 31.12.2020 31.12.2019 Assets held for sale 33,894 0 Receivables and other assets 111 0 Cash and cash equivalents 3,086 0 Assets in disposal groups held for sale 37,092 0 Provisions 43 0 Interest-bearing liabilities 1,604 0 Liabilities relating to disposal groups 1,647 0 Net-assets/liabilities included in disposal groups 35,445 0 Investment pro perties held for sale in the amount of € 0 K (31.12.2019: € 0 K) are encumbered with mortgages. € K IFRS 5 properties As at 1.1.2019 14,144 Disposals –14,144 As at 31.12.2019 = 1.1.2020 0 Reclassification IFRS 5 33,894 As at 31.12.2020 33,894 The fair value o f assets held for sale corresponds to level 3 of the fair value hierarchy according to IFRS 13. Classification as “held for sale” Non-current assets and disposal groups are classified as “held for sale” if the relevant book value is expected to be realised from disposal and not from continued use. In this case, the relevant non-current assets and disposal groups are available for immediate sale in their current condition and a disposal is highly probable. Furthermore, the sale must be expected to be completed within one year of the classification as held for sale. Disposal groups consist of assets and liabilities that will be sold together in a single transaction. Non-current assets and disposal groups that are classified as held for sale are generally recognised at the lower of book value and fair value less costs to sell. Investment properties, measured according to the fair value model, interest bearing liabilities measured at amortised cost, as well as deferred taxes valued according to IAS 12 and financial assets according to IFRS 9 are exempt from this rule. CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 1 58 4.2. Properties held for trading 31.12.2020 31.12.2019 € K Acquisition / production costs Accumulated impairment Book values Acquisition / production costs Accumulated impairment Book values At acquisition/production costs 33,042 0 33,042 59,262 0 59,262 At net realisable value 7,288 –5,130 2,158 6,031 –3,953 2,078 Total properties held for trading 40,330 –5,130 35,200 65,293 –3,953 61,340 The fair value of the properties held for trading, which are recognised at acquisition/production costs, amounts to € 113,724 K (31 .12.2019: € 134,132 K) and corresponds to level 3 of the fair value hierarchy. Properties held for trading amounting to € 31,441 K (31.12.2019: € 31,105 K) with a fair value of € 104,856 K (31.12.2019: € 94,140 K) are expected to be realised within a period of more than 12 months. This applies to 13 proper- ties (31.12.2019: 14 properties) in Germany which comprise mainly land banks in Munich. In 2020, borrowing costs amounting to € 0 K (31.12.2019: € 417 K) were capitalised at a weighted average interest rate of 0.00% (2019: 1.75%) on properties held for trading. Interest bearing liabilities in connection with properties held for trading total € 0 K (31.12.2019: € 0 K). Classification as “held for trading” Properties are recognised as held for trading if the relevant property is intended for sale in the ordinary course of business or its specific development has started with the intention of a subsequent sale in the ordinary course of busi- ness (or a corresponding forward-sale agreement was concluded). Measurement Properties held for trading are measured at the lower of acquisition or production cost and net realisable value as of the relevant reporting date. 4.3. Receivables and other assets € K Book values as at 31.12.2020 Book values as at 31.12.2019 Rental and trade debtors 19,220 18,638 Receivables from trading property and construction work (transferred over time) 18,618 1,797 Receivables from property and share sales/ acquisitions 60,164 3,849 Receivables from joint ventures 6,060 6,559 Cash and cash equivalents with drawing restrictions 10,306 10,793 Other accounts receivable 6,962 12,854 Receivables and other financial assets 121,330 54,490 Other receivables from fiscal authorities 11,786 17,014 Contract assets 0 0 Other non financial receivables 3,259 2,310 Other non financial assets 15,045 19,324 Receivables and other assets 136,375 73,814 CONSOLIDATED FINANCIAL STATEMENTS 1 59 The carrying amount of receivables and other assets are based on nominal value and allowance, as follows: € K Nominal value Expected credit losses Book value Nominal value Expected credit losses Book value 31.12.2020 31.12.2020 31.12.2020 31.12.2019 31.12.2019 31.12.2019 Receivables and other financial assets 130,292 –8,962 121,330 59,341 –4,852 54,490 Other non financial assets 15,045 0 15,045 19,324 0 19,324 Receivables and other assets 145,337 –8,962 136,375 78,665 –4,852 73,814 Moveme nts in allowances for receivables and other assets are presented below: € K 2020 2019 As at 1.1. –4,852 –6,411 Additions (value adjustment expenses) –6,177 –1,494 Usage 399 464 Reversal 1,556 837 Disposal / deconsolidation 0 8 Transfer 37 1,741 Currency translation adjustments 74 3 As at 31.12. –8,962 –4,852 The following t able shows the risk profile of receivables and other assets based on their maturity: Maturities receivables and other financial assets € K 2020 2019 Not due 108,965 40,280 Overdue <31 days 4,358 7,507 Overdue 31-90 days 1,924 2,493 Overdue >90 days 6,083 4,210 Overdue total 12,365 14,210 Total 121,330 54,490 CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 1 60 Changes in contract assets and contract liabilities result from: 31.12.2020 31.12 .2019 € K Receivables Contract assets Contract liabilities Receivables Contract assets Contract liabilities As at 1.1. 17,342 0 0 4,172 15,098 0 Increase as a result of changes in the measure of progress 0 42,860 0 0 11,884 0 Reclassification from contract assets to trade receivables 42,860 –42,860 0 17,268 –17,268 0 Prepayments received –42,106 0 0 –4,099 –10,297 0 Net off contract assets and contract liabilities 0 0 0 0 0 0 Interest income present value receivables 523 0 0 0 584 0 As at 31.12. 18,618 0 0 17,342 0 0 As at 31.12.2020 expecte d future income from the sale of properties and construction works (realization over time due to transfer over time) amounts to € 0 K (31.12.2019: € 0 K). Receivables and other financial assets Trade receivables, other receivables and other financial assets are primary financial instruments that are not listed on active markets and not intended for sale. They are assigned to the measurement category “amortised cost” (AC). They are initially measured at fair value, and thereafter at amortised cost, applying the effective interest-rate method less expected credit losses. An expected loss on receivables is calculated based on the maturity, the past due period and the individual payment performance of the relevant debtor, taking into account any security received. The simplified allowance model of IFRS 9 for leasing receivables is applied, so that the expected credit losses for the whole remaining duration of the in- strument are presented. Uncollectible receivables are derecognised. Subsequent payments in respect of receivables for which impairment losses have been incurred, are recognised as income in the consolidated income statement. CA Immo Group limits the credit risk mostly by means of deposits, bank guarantees and related securities. The fol- lowing risk categories exist: Risk category Description Expected credit loss 1 (low risk) Low default risk; timely payments of the counterparty 12 month-expected credit loss 2 (increased risk or simplified approach) Overdue receivables and all leasing receivables due to application of simplified approach. Liftetime expected credit loss 3 (high risk due to delay of payment) Diminished credit standing due to enduring non- payment, bankruptcy or insolvency proceedings Liftetime expected credit loss 4 (derecognition) No expected payments. Full write-off. With the final default the receivable is derecognized. CONSOLIDATED FINANCIAL STATEMENTS 1 61 CA Immo Group sets the expected credit losses based on aging and expected insolvency rates per country (for cate- gory 2 and category 3). For category 1 (low risk) the credit loss for the expected remaining maturity (maximum 12 months) is determined based on CDS (credit default swaps) default rates, for example. Cash subject to drawing restrictions of up to 12 months Cash in banks subject to drawing restrictions of more than 3 but less than 12 months is presented as “receivables and other assets”. Other non-financial instruments Other non-financial assets mainly consist of prepayments, accrued services in progress, receivables from fiscal authorities, prepaid expenses and contract assets (in accordance with IFRS 15). They are measured at cost less any impairment losses, respectively in case of contract assets less any expected credit losses. When revenues for construction projects (for example for owner occupied aparments) are recognized by measuring progress, according to IFRS 15, contract assets, respectively contract liabilities, are presented. The recognized contract assets are netted with prepayments received and presented as “trade and other receivables” and in case of a contract liability as “other liabilities”. 4.4. Securities After the sale of the whole stake in IMMOFINANZ in 2019, CA Immo Group holds no shares as at the reporting date. In 2019 a dividend income amounting to € 4,658 K was recorded in the income statement and in other comprehensive income a change in value not affecting the profit and loss amounting to € 19,441 K was recorded. A reclassification in equity from “other reserves” to “retained earnings” was made due to the sale of the IMMOFINANZ shares in the amount of € 33,351 K. In 2019, the 5,480,556 shares were sold for € 134,002 K with a cumulative effect (difference between sales price and acquisition costs, without dividends) of € 3,687 K. In total, the dividends for the years 2016 - 2019 amounted to € 15,072 K. The securities are primary financial instruments that are quoted on an active market (level 1 of the fair value hie- rarchy). They are classified as “fair value through other comprehensive income” (FVOCI). The initial recognition is at fair value including any transaction costs and the subsequent valuation is at fair value (stock market quotation). All changes in the values of securities are shown in other comprehensive income and in case of a sale, there is no recognition in profit or loss. Dividends from these securities are presented in profit or loss as “result from financial in- vestments”. The securities were assigned to the category “fair value through other comprehensive income” (FVOCI) given the fluc- tuations in the value of IMMOFINANZ AG shares, which otherwise should have been presented in the profit or loss statement, and the thereto related unpredictable volatility should not have influenced the result of the operational real estate business (core business of CA Immo Group). CA Immo Group recognizes securities at the conclusion of the transaction agreement. CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 1 62 4.5. Cash and cash equivalents € K 31.12.2020 31.12.2019 Cash in banks 922,346 435,320 Restricted cash 13,116 4,051 Cash on hand 20 21 Fund of cash and cash equivalents 935,482 439,391 Expected credit losses in cash and cash equivalents –619 –253 Cash and cash equivalents (balance sheet) 934,863 439,139 Cash an d cash equivalents include cash, deposits in banks, as well as fixed-term deposits with an original term of up to three months. This item also includes cash in banks subject to drawing restrictions for a period of less than 3 months, which is used for securing outstanding loans (principal and interest) as well as current investments in deve- lopment projects. The expected credit losses for cash and cash equivalents are determined based on the default probability of each financial institution. For the computation of the expected credit losses, CA Immo Group takes into consideration the expected period it takes to transfer cash and cash equivalents to other financial institutions. CONSOLIDATED FINANCIAL STATEMENTS 1 63 CHAPTER 5: EQUITY AND FINANCING 5.1. Shareholders‘ equity The share capital equals the fully paid in nominal capital of CA Immobilien Anlagen Aktiengesellschaft of € 718,336,602.72 (31.12.2019: € 718,336,602.72). It is divided into 98,808,332 (31.12.2019: 98,808,332) bearer shares and 4 registered shares of no par value. The registered shares are held by SOF-11 Klimt CAI S.à r.l., Luxemburg, an en- tity managed by Starwood Capital Group, each granting the right to nominate one member of the Supervisory Board. The Supervisory Board currently consists of six members elected by the Ordinary General Meeting and two members elected by the registered shares and four delegated by the works council. As at 31.12.2020, CA Immobilien Anlagen AG held 5,780,037 treasury shares in total (31.12.2019: 5,780,037 treasury shares). Given the total number of voting shares issued (98,808,336), this is equivalent to around 5.8% (31.12.2019: 5.8%) of the voting shares. The appropriated capital reserve as reported in the individual financial statements of CA Immobilien Anlagen Ak- tiengesellschaft totals € 854,842 K (31.12.2019: € 854,842 K). Profits can only be distributed up to the amount of the net profit of the parent company disclosed in the individual financial statements in accordance with the Austrian Commer- cial Code (UGB), subject to the existence of any legal dividend payment constraints. In 2020, a dividend amount of € 1.00 (2019: € 0.90) for each share entitled to dividend, totalling € 93,028 K (2019: € 83,725 K), was distributed to the shareholders. The total net profit of CA Immobilien Anlagen Aktiengesellschaft as at 31.12.2020 amounting to € 897,605 K (31.12.2019: € 907,530 K), is not subject to dividend payment constraints (31.12.2019: no dividend pay- ment constraints). The Management Board of CA Immo AG proposes to use part of the retained earnings as at 31.12.2020, amounting to € 897,605 K, in 2021 to distribute a dividend of € 1.00 per share, so that a total of € 93,028 K is to be distributed to shareholders. The remaining retained earnings of € 804,577 K are to be carried forward. As at 31.12.2020, authority exists for the issue of additional capital in the amount of € 359,168,301.36 in the period until 18.9.2023 and for the issue of conditional capital in the amount of € 47,565,458.08 earmarked for the specified purpose of servicing 0.75% of the convertible bonds 2017 – 2025 (conditional capital 2013) as well as a conditional capital in the amount of € 143,667,319.09 earmarked for the specified purpose of servicing convertible bonds which are issued prospectively based on the authorization of the Ordinary General Meeting as of 9.5.2018 (conditional capital 2018). CA Immo AG has an outstanding non-subordinated unsecured convertible bond in an amount of € 200 M and a term until April 2025. The coupon payable semi-annually amounts to 0.75% p.a. and the initial conversion price has been set at € 30.5684 per share. This equaled a conversion premium of 27.50% above the volume weighted average price (VWAP) of the CA Immo shares amounting to € 23.9752 on the launch date. Following the dividend payment amount- ing to € 1.00 per share on 27.8.2020, the conversion price has most recently changed to € 29.7675, in accordance with section 11 (d) (ii) in issuance terms. The convertible bond was issued at 100% of its nominal value of € 100,000 per bond and will be redeemed at 100% of the nominal value, if not previously repaid or converted. At the company’s choice, the redemption may be effected by the provision of shares, cash or a combination of the two. In February 2020, CA Immo AG issued a € 500 M fixed-interest benchmark bond with a term of seven years and an annual coupon of 0.875%. In October 2020, CA Immo AG issued a € 350 M fixed-interest green bond with a term of five years and an annual coupon of 1.0%. CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 1 64 5.2. Interest bearing liabilities 31.12.2020 31.12.2019 € K Short-term Long-term Total Short-term Long-term Total Convertible bond 362 193,846 194,207 362 190,445 190,807 Corporate bonds 123,983 1,418,027 1,542,011 13,904 784,913 798,817 Bonds 124,345 1,611,873 1,736,218 14,265 975,359 989,624 Loans 77,309 968,660 1,045,969 228,399 838,839 1,067,238 Lease liabilities 3,647 41,627 45,275 3,814 36,666 40,480 Other interest- bearing liabilities 80,956 1,010,288 1,091,244 232,213 875,506 1,107,718 205,301 2,622,161 2,827,462 246,478 1,850,864 2,097,342 The E uro is the contract currency of 100% of the loans and bonds (31.12.2019: 100% in EUR). Bonds 31.12.2020 Nominal value in € K Book value excl. interest in € K Deferred interest in € K Nominal interest rate Effective interest rate Issue Repayment Convertible bond 200,000 193,846 362 0.75% 2.57% 4.10.2017 4.4.2025 Bond 2015-2022 142,411 142,290 3,381 2.75% 2.83% 17.2.2015 17.2.2022 Bond 2016-2023 116,621 116,399 2,780 2.75% 2.84% 17.2.2016 17.2.2023 Bond 2016-2021 107,450 107,360 941 1.88% 2.03% 12.7.2016 12.7.2021 Bond 2017-2024 175,000 174,244 2,791 1.88% 2.02% 22.2.2017 22.2.2024 Bond 2018-2026 150,000 147,365 2,152 1.88% 2.24% 26.9.2018 26.3.2026 Bond 2020-2027 500,000 493,166 3,957 0.88% 1.11% 5.2.2020 5.2.2027 Bond 2020-2025 350,000 344,562 623 1.00% 1.34% 27.10.2020 27.10.2025 Total 1,741,482 1,719,233 16,985 31.12.2019 Nominal value in € K Book value excl. interest in € K Deferred interest in € K Nominal interest rate Effective interest rate Issue Repayment Convertible bond 200,000 190,445 362 0.75% 2.57% 4.10.2017 4.4.2025 Bond 2015-2022 175,000 174,731 4,159 2.75% 2.83% 17.2.2015 17.2.2022 Bond 2016-2023 150,000 149,592 3,576 2.75% 2.84% 17.2.2016 17.2.2023 Bond 2016-2021 140,000 139,682 1,227 1.88% 2.03% 12.7.2016 12.7.2021 Bond 2017-2024 175,000 174,015 2,791 1.88% 2.02% 22.2.2017 22.2.2024 Bond 2018-2026 150,000 146,894 2,152 1.88% 2.24% 26.9.2018 26.3.2026 Total 990,000 975,359 14,265 CONSOLIDATED FINANCIAL STATEMENTS 1 65 The corporate bonds and the convertible bonds are subject to financial covenants. These are mainly related to change of control (i.e. the acquisition of a direct or indirect controlling interest in the company in the sense of the Austrian Takeover Act, if this has a significant influence on CA Immo’s ability to meet its obligations under the bonds), cross default (whereby the outstanding amounts may be due if the company or one of its major subsidiaries requires early repayment of another financial obligation for non-compliance with credit terms) or Loan-to-Value ratios (gearing of the company). As at 31.12.2020 no bonds were in breach of covenants (31.12.2019: no breaches). Other interest-bearing liabilities As at 31.12.2020 and 31.12.2019, the terms of other interest-bearing liabilities are as follows: 31.12.2020 Type of financing and currency Effective interest rate as at 31.12.2020 in % Interest variable/fixed/ hedged Maturity Nominal value in € K Book value in € K Fair value of liability in € K Loans 0.70%-1.85% variable 3/2021 - 3/2032 182,718 180,196 180,196 Loans 0.90%-2.64% hedged 12/2021 - 12/2032 580,363 575,487 575,487 Loans 0.70%-3.95% fixed 12/2022 - 6/2030 290,840 290,286 299,288 Loans (total) 1,053,921 1,045,969 1,054,971 Lease liabilities (IAS 40) 0.81%-6.94% fixed 3/2021-8/2104 96,510 37,911 Lease liabilities (other) 0.41%-3.87% fixed 1/2021-12/2025 7,665 7,364 1,158,096 1,091,244 1,054,971 31.12.2 019 Type of financing and currency Effective interest rate as at 31.12.2019 in % Interest variable/fixed/ hedged Maturity Nominal value in € K Book value in € K Fair value of liability in € K Loans 0.70%-1.85% variable 3/2020 - 3/2032 299,503 298,142 298,142 Loans 0.90%-2.75% hedged 3/2020 - 12/2032 518,275 513,397 513,397 Loans 0.70%-3.95% fixed 12/2022 - 12/2028 256,186 255,698 261,539 Loans (total) 1,073,964 1,067,238 1,073,079 Lease liabilities (IAS 40) 0.81%-6.94% fixed 1/2020-8/2104 87,091 31,226 Lease liabilities (other) 0.45%-5.38% fixed 2/2020-12/2025 9,695 9,254 1,170,750 1,107,718 1,073,079 For loans with a variable interest rate, interes t rate derivatives with a nominal value of € 9,978 K (31.12.2019: € 13,497 K) have been set up in order to reduce the effect of changes in the interest rate. The bank financing of CA Immo Group is subject to financial covenants. These are generally for investment properties LTV (loan to value, i.e. ratio between loan amount and the fair value of the property), ISCR (interest service coverage ratio, i.e. the ratio between rental revenues and interest expenses) and DSCR (debt service coverage ratio, i.e. the ratio between rental revenues and debt service of one period) and ratios for investment properties under development LTC (loan to cost, i.e. ratio between debt amount and total project costs) and ISCR (interest service coverage ratio, i.e. the ratio between future rental revenues planned and interest expenses). CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 1 66 Other interest-bearing liabilities, for which the relevant financial covenants were not met as at 31.12.2020, are pre- sented in short-term interest-bearing liabilities regardless of their maturity, because breaches of the financial covenants generally entitle the lender to early termination of the loan agreement. This applies irrespective of the state of negotia- tions with the banks regarding a continuation or amendment of the loan agreements. As at 31.12.2020 no loans were in breach of covenants (31.12.2019: no breaches). Interest-bearing liabilities are assigned to the category "amortised cost" (AC) and recognised upon disbursement at the amount actually received less transaction costs and for the lease liabilities at the present value of the future lease payments. Any difference between the amount received and the repayment amount, respectively between the pre- sent value and the nominal value of the lease liabilities is allocated over the term of the financing, according to the effective interest-rate method, and is recognised as financing costs or, if the conditions set forth in IAS 23 are met, capi- talized as borrowing costs of construction works. A convertible bond requires in principle a split of the financial instrument between an equity component and a debt component. The equity component is replaced due to the cash settlement option of CA Immo AG, with an embedded derivative subject to separation. Embedded derivatives are generally separately recognized, if their economic characte- ristics and risks are not closely related to those of the host contract, if they independently fulfill the definition of deriv- atives and if the entire instrument is not measured at fair value through profit or loss. Initial recognition of the debt component is at fair value of a similar liability that does not include an option to convert into equity instruments. Di- rectly attributable transaction costs are allocated to the debt component. Liabilities from convertible bonds are assigned to the category "amortised cost” (AC) and are measured using the effective interest-rate method. When a change or amendment in the contractual terms of a liability is recognized as a redemption (i.e. the obligations specified in the contract are cancelled or the 10% threshold of the present value test is not met), then all incurred ex- penses and fees are deemed to be part of the gain or loss from the redemption. Changes or amendments in terms of loan agreements that do not result in a redemption, lead to an adjustment of the carrying value of the liability. The change in the fair value, as a result of changed or amended terms, is presented in the profit or loss statement and amortized as effective interest over the remaining duration. 5.3. Other liabilities € K 31.12.2020 31.12.2019 Short-term Long-term Total Short-term Long-term Total Fair value derivative transactions 235 84,975 85,210 0 103,960 103,960 Trade payables 17,722 6,501 24,224 24,770 5,114 29,885 Liabilities to joint ventures 1,445 0 1,445 1,448 0 1,448 Rent deposits 4,812 11,863 16,675 3,751 14,505 18,256 Open purchase prices 941 347 1,288 952 0 952 Settlement of operating costs 2,294 0 2,294 2,148 0 2,148 Other 8,027 9,108 17,134 3,761 5,222 8,983 Financial liabilities 35,241 27,819 63,060 36,831 24,840 61,671 Operating taxes 4,089 0 4,089 4,906 0 4,906 Prepayments received 3,540 283 3,823 8,683 283 8,966 Prepaid rent and other non financial liabilities 3,827 425 4,252 3,653 477 4,131 Non-financial liabilities 11,456 708 12,164 17,242 761 18,003 Total other liabilities 46,932 113,503 160,434 54,073 129,561 183,634 CONSOLIDATED FINANCIAL STATEMENTS 1 67 Financial liabilities Financial liabilities, such as trade payables, are assigned to the category “amortised cost” (AC) and measured upon recognition at fair value and subsequently at amortised cost. For other short-term financial liabilities, the fair value generally corresponds to the estimated sum of all future payments. Other long-term financial liabilities are measured at fair value at initial recognition and are discounted with a timely and risk adequate market rate. Non-financial liabilities Non-financial liabilities refer to liabilities to fiscal authorities and social insurance insitutions, rent prepayments received, advance payments, advance dividends received, as well as contract liabilities (according to IFRS 15). They are recognized at the date of inception at the amount corresponding to the expected outflow of resources and the cost of inception (cashed-in amount). Subsequent changes in value (including interest) are recognised in profit or loss. Where revenues transferred over time occur in a construction project (for example for owner occupied apartments) by means of measure of progress, according to IFRS 15, contract assets, respectivly contract liabilities, should be recog- nized. This item is reported as a net amount offset against the corresponding prepayments received under “trade and other receivables” in case of a contract asset or under “other non-financial liabilities” in case of a contract liability. 5.4. Liabilities in disposal groups We refer to the presentation and explanations in Chapter 4.1. „Assets held for sale and relating to disposal groups“. CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 1 68 CHAPTER 6: PROVISIONS 6.1. Provisions € K Staff Construction services Subsequent costs o f sold properties Others Total As at 1.1.2020 15,644 43,772 42,921 41,531 143,868 Usage –8,515 –37,803 –4,378 –32,087 –82,783 Reversal –1,693 –1,837 –1,459 –1,792 –6,781 Addition 12,257 44,971 6,326 40,098 103,653 Addition from initial consolidation 0 0 0 86 86 Addition from transition consolidation 0 23 0 127 150 Disposal from deconsolidation 0 –5,919 0 –172 –6,091 Transfer 0 –501 501 0 0 Transfer to IFRS 5 0 0 0 –43 –43 Accumulated interest 35 0 0 0 35 Currency translation adjustments –34 –87 0 –315 –436 As at 31.12.2020 17,694 42,619 43,911 47,435 151,658 thereof short-term 11,265 42,326 16,385 47,434 117,409 thereof long-term 6,429 293 27,526 0 34,249 Other provisio ns mainly consist of provisions for services (audit services, tax and legal advice), property taxes, real estate transfer taxes, service expenses for properties, warranty risks and interest connected to tax audits. Provisions are recognised if CA Immo Group has a legal or constructive obligation towards a third party as a re- sult of a past event and the obligation is likely to lead to an outflow of funds. Especially for provisions for con- struction works and expenses related to sold investment properties it is necessary that estimations (eg. of a construction project, qualitative appraisals of service providers, price related risks or for the concrete fulfillment or scope of an obli- gation) are taken into consideration. Such provisions are recognised in the amount representing the best possible esti- mate at the time the consolidated financial statements are prepared. If the present value of the provision determined on the basis of prevailing market interest rates differs substantially from the nominal value, the present value of the obliga- tion is recognised. Provision for employees The provision for employees primarily comprises the present value of the long-term severance obligation of € 505 K (31.12.2019: € 336 K), bonuses of € 11,819 K (31.12.2019: € 10,304 K), and unused holiday entitlements of € 1,446 K (31.12.2019: € 1,408 K). The provision for bonuses comprises a long-term provision for the LTI-(long-term incentive) program amounting to € 600 K (31.12.2019: € 433 K) as well as a short-term provision of € 195 K (31.12.2019: € 463 K). CONSOLIDATED FINANCIAL STATEMENTS 1 69 The following table presents the changes in the present value of the severance payment obligation: € K 2020 2019 Present value of severance obligations as at 1.1 336 182 Usage 0 0 Current service costs 178 138 Interest cost –1 0 Revaluation –8 16 Present value of severance obligations as at 31.12 505 336 The empirical a djustments of the present value of the obligation in respect of changes in projected employee turnover, early retirement or mortality rates are negligible. Net plan assets from pension obligations CA Immo Group has a reinsurance for defined benefit obligations in Germany, which fulfills the criteria for disclosure as plan assets. As the capital value of these defined benefit obligations exceeds the plan assets at the closing date, the net position is presented under the provisions. € K 31.12.2020 31.12.2019 Present value of obligation –10,166 –10,124 Fair value of plan asset 7,001 7,083 Net position recorded in consolidated statement of financial position –3,166 –3,041 Financial adjustments of present value of the obligation –120 –1,540 Experience adjustments of present value of the obligation –36 –62 The developm ent of the defined benefit obligation and of the plan asset is shown in the following table: € K 2020 2019 Present value of obligation as at 1.1. –10,124 –8,533 Current Payment 196 163 Interest cost –82 –152 Revaluation –156 –1,602 Present value of obligation 31.12 –10,166 –10,124 Plan asset as at 1.1. 7,083 7,061 Expected income from plan asset 57 126 Revaluation 67 68 Current Payment –207 –172 Plan asset as at 31.12 7,001 7,083 CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 1 70 The following income/expense was recognized in the income statement: € K 2020 2019 Interest cost –82 –152 Expected income from plan asset 57 126 Pensions costs –25 –27 The following result before taxes was recognized in the other co mprehensive income: € K 2020 2019 Revaluation of pension obligation –156 –1,602 Revaluation of plan assets 67 68 IAS 19 reserve –89 –1,533 Sensitivity analysis regarding t he financial mathematical assumptions is shown in the following table: 2020 € K –0.25% +0.25% change interest rate of 0.25 percentage points –422 417 change pension trend of 0.25 percentage points 362 –380 2019 € K – 0.25% + 0.25% change interest rate of 0.25 percentage points –455 428 change pension trend of 0.25 percentage points 365 –384 Payment obligations to employees Va riable remuneration Long term incentive (LTI) program In order to promote a high level of identification with the company’s objectives, all employees are entitled to variable remuneration in addition to their fixed salary, thus enabling them to participate in the company’s success. In line with the compensation system of the Management Board, the prerequisite for this is the attainment of the budgeted quantita- tive and qualitative annual targets as well as a positive consolidated result. Furthermore, selected executives have the opportunity to participate in a share price-based compensation program. In contrast to the model for the Management Board (phantom shares), participation in the LTI programs started before the 2020 financial year was voluntary. The revolving program had a term (retention period) of three years per tranche and required a personal investment (maxi- mum of 35% of the fixed annual salary). The personal investment was valued at the average share price of the first quarter of the year the tranche started. The number of underlying shares is determined on the basis of this valuation. At the end of the respective three-year performance period, target achievement was defined by means of a target/actual comparison. Performance was measured by the following key figures: NAV growth, TSR (total shareholder return) and FFO (funds from operations) growth. The weighting for NAV and FFO growth was 30% each, and for TSR 40%. Pay- ments were made in cash. CONSOLIDATED FINANCIAL STATEMENTS 1 71 The LTI program was subject to a comprehensive revision (adjustment to market standards) in 2019; the new program provides for changes with regard to the group of participants, the conditions of participation, and the performance indi- cators and was applied for the first time in fiscal year 2020. The new LTI program is revolving and does not provide for any personal investment. The plan grants performance-related remuneration in the form of virtual shares in CA Immo. The final number of virtual shares is determined on the basis of performance criteria linked to the medium-term strat- egy and share performance. The target amount of the LTI is divided by the volume-weighted average CA Immo share price (= closing price on the Vienna Stock Exchange) over the 3-month period prior to 31.12. of the respective bonus year. This method is used to calculate the preliminary number of virtual shares. Based on the performance criteria measured at the end of the four-year performance period, the final number of virtual shares is determined. The LTI is generally determined as of 31.12. of the last year of the four-year performance period. Equal-weighted performance cri- teria for the LTI are Funds From Operations ("FFO") I and Relative Total Shareholder Return ("TSR") against the EPRA Nareit Developed Europe ex UK Index. Each tranche starts with a target value based on the executive's respective func- tion, which would be received at the end of the term of the respective tranche if 100% of the targets were achieved. The amount allocated to a performance criterion is determined by comparing agreed targets with values actually achieved and expressed as a percentage. Allocation between the performance thresholds is linear. The final number of virtual shares is capped at 200% of the preliminary number of virtual shares. For the payout, the final number of virtual shares is multiplied by the volume-weighted average price of the last three months of the performance period. The resulting amount is paid out in cash, subject to a cap of 250% of the LTI target amount. The bonus payment for the Management Board is linked to long-term operational and quality-based targets and also takes account of non-financial performance criteria. It is limited to 200% of the annual salary. Of the variable remuner- ation, half is linked to the attainment of short-term targets defined annually by the remuneration committee (annual bonus). The other half is based on outperformance of the following indicators defined annually by the remuneration committee: return on equity (ROE), funds from operations (FFO) and NAV growth. The level of the bonus actually paid depends on the degree of target attainment: the values agreed and actually achieved at the end of each business year are determined by the Remuneration Committee. Half of performance-related remuneration takes the form of immediate payments (short term incentive); the remaining 50% is converted into phantom shares on the basis of the average rate for the last quarter of the business year relevant to target attainment. The payment of phantom shares is made in cash in three equal parts after 12 months, 24 months (mid term incentive) and 36 months (long term incentive) at the average rate for the last quarter of the year preceding the payment year. For this kind of share-based remuneration, which is settled in cash, the liability incurred is recognised over the vest- ing period as a provision in the amount of the attributable fair value. Until the debt is settled, the attributable fair value is determined afresh on every closing date and settlement date. All changes are recognised in the income statement in the relevant business year. Defined benefit plans upon termination of employment Obligations arising from defined benefit pension plans exist for four individuals in the CA Immo Germany Group. The commitments relate to one pension benefit for an already retired managing director, as well as three ongoing pen- sion benefits. In accordance with IAS 19.63, reinsurance contracts in respect of defined benefit pension obligations are presented as a net debt (asset). Each year, external actuarial calculations are obtained for the defined benefit pension obligations. The defined benefit obligation or liability is calculated according to IAS 19 using the projected unit credit method and based on the follo- wing parameters: CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 1 72 31.12.2020 31.12.2019 Interest rate 0.49% 0.82% Salary increases expected in the future 2.00% 2.00% Accumulation period 25 years 25 years Expected income from plan asset 0.49% 0.82% The actual return on plan asse ts for 2020 is 0.81% (2019: 1.78%). Service cost and interest expense related to the obligation as well as the interest income related to the plan assets are recognised in the year in which they arise. Actuarial gains and losses less deferred taxes related to the obligation and the plan assets are recognised in other comprehensive income. CA Immo Group has a legal obligation to make a one-time severance payment to staff employed in Austria before 1.1.2003 in the event of dismissal or retirement. The amount of this payment depends on the number of years of service and the relevant salary at the time the settlement is payable. It varies between two and twelve monthly salary pay- ments. In CA Immo Group, contract stipulated severance exists for several employees. According to IAS 19, a provision is recognised for this defined benefit obligation. The interest rate used for the computation of this provision amounts to -0.34 % (2019: -0.25%). Defined contribution plans CA Immo Group has the legal obligation to pay 1.53% of the monthly salary of all staff joining companies in Aus- tria after 31.12.2002 into a staff pension fund. No further obligations exist. The payments are considered as staff ex- penses and included in indirect expenses. Based on agreements with a pension fund in Austria and a benevolent fund for small and medium-sized enterprises in Germany, a defined contribution pension commitment exists for employees in Austria and Germany after a certain number of years of service (Austria: 1 year irrespective of age; Germany: immediately upon reaching the age of 27). The contribution is calculated as a percentage of the relevant monthly gross salary, namely 2.5% in Austria and 2.0% in Germany. The contributions paid vest after a certain period (Austria: 3 years; Germany: 3 years) and are paid out as monthly pension upon retirement. CONSOLIDATED FINANCIAL STATEMENTS 1 73 CHAPTER 7: TAXES 7.1. Income taxes € K 2020 2019 Current income tax (current year) –12,258 –19,792 Current income tax (previous years) –2,984 –175 Current income tax –15,242 –19,967 Change in deferred taxes –79,099 –127,636 Tax on valuation of securities in equity 0 1,576 Income tax expense –94,341 –146,026 Effective tax rate (total) 27.1% 27.1% The current inc ome tax (current year) amounting to € –8,582 K (2019: € –13,012 K) results from the segment Germany. The change of current income tax (previous years) mainly results from Germany and refers to tax audit findings. The reasons for the difference between expected income tax expense and effective income tax expense are outlined in the following table: € K 2020 2019 Net result before taxes 348,295 539,330 Expected tax expenses (tax rate Austria 25.0%/prior year 25.0%) –87,074 –134,832 Tax-effective impairment and reversal of impairment losses of investments in affiliated entities 293 558 Non-usable tax losses carried forward –3,792 –740 Non tax-deductible expense and permanent differences –3,022 –3,224 Differing tax rates abroad –17,610 –3,727 Capitalisation of prior years non-capitalised tax losses 3,901 695 Tax-exempt income 874 228 Adjustment of prior periods –1,599 –12 Utilization of prior years non-capitalised tax losses 316 225 Tax-exempt sales 6,478 213 Trade tax effects 309 –151 Amortisation/Reversal of amortisation of deferred tax assets 435 –4,275 At equity consolidation of investments in joint ventures 550 –772 Exchange rate differences not affecting tax –6,059 –22 Change in tax rate 11,586 0 Others 73 –190 Effective tax expense –94,341 –146,026 The impact of ch ange in tax rate in 2020 results from transfer of registered office of real estate companies in Germany. CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 174 Changes in deferred taxes are as follows: € K 2020 2019 Deferred taxes as at 1.1. (net) –471,200 –344,842 Changes from sale of companies 15,971 427 Changes from first consolidation 2,173 0 Changes due to exchange rate fluctuations –5 0 Changes recognised in equity 226 851 Changes recognised in profit or loss –79,099 –127,636 Deferred taxes as at 31.12. (net) –531,935 –471,200 CONSOLIDATED FINANCIAL STATEMENTS 1 75 As at 31.12. deferred tax assets and liabilities are split as follows: € K 31.12.2019 31.12.2020 Type Deferred tax asset Deferred tax liabilities Net amount Consolidated Income Statement Other income Addition/ Disposal/IFRS5/ exchange rate fluctuations Net amount Deferred tax asset Deferred tax liabilities Book value differences IFRS/tax of investment properties 818 –541,357 –540,539 –80,945 0 17,795 –603,690 1,248 –604,938 Difference in depreciation of own used properties and related right-of-use assets 580 –2,505 –1,925 557 0 0 –1,368 603 –1,972 Difference in acquisition costs for assets held for trading 171 –1,135 –963 992 0 0 29 462 –433 Difference in useful life for equipment and related right-of-use assets 180 –203 –24 69 0 0 45 245 –200 Investments in joint ventures 940 –1 940 101 0 0 1,041 1,042 –1 Loans, other investments, securities 0 –6,557 –6,557 1,799 0 0 –4,757 0 –4,757 Revaluation of receivables and other assets 1,137 –199 938 –85 0 0 853 871 –18 Contract assets (IFRS 15) 0 0 0 0 0 0 0 0 0 Revaluation of derivatives assets 0 –366 –366 –141 0 0 –508 0 –508 Revaluation of cash and cash equivalents 84 –2 82 –210 0 0 –128 0 –128 Revaluation of derivatives liabilities 24,109 0 24,109 –5,475 198 0 18,831 18,831 0 Liabilities (incl. lease liabilities) 10,438 –1,198 9,240 3,455 0 –7 12,688 14,515 –1,827 Convertible bond 0 –2,030 –2,030 773 0 0 –1,257 0 –1,257 Provisions 5,527 0 5,527 –394 28 –4 5,157 5,163 –6 Tax losses 40,370 0 40,370 406 0 354 41,129 41,129 0 Deferred tax assets/liabilities before offset 84,353 –555,553 –471,200 –79,099 226 18,138 –531,935 84,109 –616,044 Computation of taxes –82,543 82,543 0 0 –79,727 79,727 Deferred tax assets/liabilities net 1,810 –473,010 –471,200 –531,935 4,382 –536,317 The record ed tax losses include deferred tax assets related to impairment losses on investments in subsidiaries in Austria amounting to € 0 K (31.12.2019: € 0 K), which have to be deferred over the next years for income tax purposes. CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 1 76 Not recognized deferred taxes Not recognized deferred taxes mainly relate to tax loss carryforwards in CA Immo Group, interest losses in CEE and business tax losses in CA Immo Group Germany. Tax loss carryforwards and impairment losses on investments in sub- sidiaries for which deferred taxes were not recognised expire as follows: € K 2020 2019 In the following year 1,305 1,408 Between 1 - 5 years 14,705 8,436 More than 5 years 1,202 4,395 Without limitation in time 178,149 199,587 Total unrecorded tax losses carried forward 195,361 213,827 thereupon non-capitalised deferred tax assets 43,069 47,371 The total taxable temporary differences related to investments in Austrian a ffiliated companies and joint ventures for which no deferred taxes were recognised pursuant to IAS 12.39 amount to € 261,033 K (31.12.2019: € 273,009 K). Tax loss carryforwards and impairment losses on investments in subsidiaries of the Austrian companies that were not recog- nised amount to € 136,433 K (31.12.2019: € 149,162 K). Thereof the unrecognized deferred tax asset related to impair- ment losses on investments which have to be deferred over the next years for income tax purposes amounts to € 1,343 K (31.12.2019: € 3,332 K). The total taxable temporary differences related to investments in foreign affiliated companies, joint ventures and associated companies for which no deferred taxes were recognised pursuant to IAS 12.39 amount to € 110,466 K (31.12.2019: € 94,080 K). Tax loss carry forwards not recognised of foreign entities amount to € 58,927 K (31.12.2019: € 64,664 K). Subject to specific requirements, gains from the disposal of investments in foreign entities are partially or completely exempt from income tax. All companies are subject to local income tax on current results and capital gains in their respective country. Significant estimates are required in respect of the amount of income tax provisions to be recognised. Moreover, it needs to be determined to which extent deferred tax assets should be recognised in the Group consolidated financial statements. Income from the disposal of investments in real estate companies is wholly or partially exempt from income tax in certain countries, when certain conditions are met. Even if the group intends to meet these conditions, the full amount of deferred taxes according to IAS 12 is recognized for investment properties. Material assumptions also need to be assessed if temporary differences and losses carried forward can be offset against taxable profits in the future and if therefore deferred tax assets can be capitalised. Uncertainties exist concerning the amount and effective date of future taxable income and the interpretation of complex tax regulations. Where there is uncertainty over income tax treatments of transactions, an assessment is required in order to evaluate whether it is probable or not that the tax authority will accept the tax treatment. Based on this judgement CA Immo Group recog- nizes the tax obligations with their most likely classified amount. These uncertainties and complexities can result in the fact that future tax payments are much higher or lower than those currently estimated and recognised in the conso- lidated financial statements. CA Immo Group holds a significant part of its real estate portfolio in Germany, being subject to numerous complex tax regulations. In particular, CA Immo Group has to constantly deal with (i) roll-over schemes in order to transfer undis- closed, hidden reserves to other investments, (ii) legal provisions relevant to the real estate transfer tax liability/possible incurrence of real estate transfer tax in the event of direct or indirect shareholder changes in German partnerships and corporations, as well as (iii) the deduction of input VAT on construction costs, as an ongoing issue in the development CONSOLIDATED FINANCIAL STATEMENTS 1 77 phase of projects. CA Immo Group takes all necessary steps in order to comply with the relevant tax rules. However, because of circumstances that are out of CA Immo Groups control, such as changes in ownership structure, tax laws as well as alterations of interpretation by the tax administration and courts, the aforementioned tax issues might be treated differently and, therefore, could have an impact on the tax position in the consolidated financial statements. Uncertainties also relate to the retrospective application of subsequent tax changes concerning completed restructu- rings in Eastern Europe, partly agreed with the tax authorities. CA Immo Group estimates the possibility of incurring actual expenses due to the subsequent change of tax law and their implications for past restructurings, as low. Uncertainties exist in connection with the tax deductibility of service invoicings within the Group. CA Immo Group always aims to charge a price at arm’s length for internal services and to prepare adequate documentation. In addition, external service providers are apppointed for the preparation of transfer pricing documenatation to comply with all legal requirements, but the tax authorities can have a different view and subsequently reach different conclusions. This can lead to tax consequences for the deductibility of internal service invoicings, which could trigger subsequent tax payments for previous periods. Currently existing uncertainties are continually evaluated and may lead to adjustments of estimates. The income tax expense reported for the business year contains the income tax on the taxable income (current and for other periods) of the individual subsidiaries calculated at the tax rate applicable in the relevant country (“current tax”), and the change in deferred taxes recognised in profit or loss (“deferred tax”), as well as the tax effect arising from amounts recognised in equity not giving rise to temporary differences and recognised in equity (e.g. the tax related to ancillary expenses for capital increases as well as the valuation of derivative transactions). Changes in de- ferred taxes resulting from foreign currency translation are included in deferred income tax expense. In line with IAS 12, the calculation of deferred taxes is based on all temporary differences between the tax base of assets or liabilities and their book values in the consolidated statement of financial position. Deferred tax assets on tax losses carried forward are recognised taking into account the fact whether they can be carried forward indefinitely or only up to a certain time as well as the extent of their expected use in the future. The amount of the deferred tax asset recognised is determined based on projections for the next 3 to 5 years which show the expected use of the tax losses carried forward in the near future and on the existence of sufficient taxable temporary differences, mainly resulting from investment property. A group and tax compensation agreement was concluded in Austria for the formation of a tax group as defined by Section 9 of the Austrian Personal Income Tax and Corporate Income Tax Act (KStG) for almost all companies of CA Immo Group. The head of the group is CA Immobilien Anlagen Aktiengesellschaft, Vienna. For certain entities within the CA Immo Germany Group a tax group has been established in accordance with German income tax legislation. The head of the tax group is CA Immo Deutschland GmbH, Frankfurt. Based on profit and loss transfer agreements the members of the tax group are required to transfer their entire profit to the head of the group (be- ing the annual surplus before the profit transfer, less any loss carried forward from the previous year and after recogni- tion or release of reserves). The head of the group has an obligation to balance any annual deficit arising in a group en- tity during the term of the agreement to the extent that such deficits exceed the amounts which can be released from other reserves that have been allocated out of profits earned during the term of the agreement. CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 1 78 7.2. Current income tax receivables This item amounting to € 13,497 K (31.12.2019: € 15,941 K) relates to the CA Immo Germany Group and comprises corporate income tax and trade tax from the fiscal years 2013, 2017, 2018, 2019 and 2020 not yet assessed by the tax authorities as well as results of finalized tax audits. 7.3. Income tax liabilities This includes an amount of € 13,177 K (31.12.2019: € 19,402 K) relating to CA Immo Germany Group and comprises corporate income tax and trade tax for the years 2016, 2019 and 2020 which have not been finally assessed by tax authorities as well as results of finalized tax audits. CONSOLIDATED FINANCIAL STATEMENTS 1 79 CHAPTER 8: FINANCIAL INSTRUMENTS AND RISK MANAGEMENT 8.1. Financial instruments Financial assets by categories Category Classification IFRS 9 1) No financial instruments Book value Fair value € K FVTPL AC 31.12.2020 31.12.2020 Cash and cash equivalents with drawing restrictions 0 11,708 0 11,708 11,762 Derivative financial instruments 1,682 0 0 1,682 1,682 Primary financial instruments 0 12,477 0 12,477 Other investments 34,861 0 0 34,861 34,861 Financial assets 36,544 24,184 0 60,728 Cash and cash equivalents with drawing restrictions 0 10,306 0 10,306 10,351 Other receivables and assets 0 111,024 15,045 126,069 Receivables and other assets 0 121,330 15,045 136,375 Cash and cash equivalents 0 934,863 0 934,863 36,544 1,080,378 15,045 1,131,967 1) FVTPL – fair value through profit or loss, AC – amortised cost Category Classification IFRS 9 1) No financial instruments Book value Fair value € K FVTPL AC 31.12.2019 31.12.2019 Cash and cash equivalents with drawing restrictio ns 0 15,154 0 15,154 15,226 Derivative financial instruments 1,148 0 0 1,148 1,148 Primary financial instruments 0 21,939 4,020 25,960 Other investments 41,406 0 0 41,406 41,406 Financial assets 42,553 37,094 4,020 83,667 Cash and cash equivalents with drawing restrictio ns 0 10,793 0 10,793 10,833 Other receivables and assets 0 43,697 19,324 63,021 Receivables and other assets 0 54,490 19,324 73,814 Cash and cash equivalents 0 439,139 0 439,139 42,553 530,722 23,345 596,620 The fair value o f the receivables and other assets in the category of “Amortised Cost” (AC) essentially equals the book value due to daily and/or short-term maturities. The primary financial instruments mainly consist of loans granted to joint ventures, which are considered and valued as part of the net investment in the entities, as well as long term re- ceivables from trading and construction works (this corresponds to level 3 of the fair value hierarchy). Valuation of investments of FVTPL category corresponds to level 3 of the fair value hierarchy. Financial assets are partially pledged as securities for financial liabilities. CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 180 Financial liabilities by categories Category Classification IFRS 9 1) No financial instruments Book value Fair value € K FVTPL FVOCI AC 31.12.2020 31.12.2020 Convertible bond 0 0 194,207 0 194,207 191,695 Bonds 0 0 1,542,011 0 1,542,011 1,590,203 Loans 0 0 1,045,969 0 1,045,969 1,054,971 Lease liabilities (IFRS 16) 0 0 45,275 0 45,275 Interest-bearing liabilities 0 0 2,827,462 0 2,827,462 Derivative financial instruments 82,596 2,614 0 0 85,210 85,210 Other primary liabilities 0 0 63,060 12,164 75,224 Other liabilities 82,596 2,614 63,060 12,164 160,434 82,596 2,614 2,890,522 12,164 2,987,896 1) FVTPL – fair value through profit or loss, FVOCI – fair value through other comprehensive income, AC – amortised cost The stock exchange price of the convertible bond amounts to € 232,744 K (31.12.2019: € 263,432 K). The fair value of the embed ded derivative of the convertible bond amounts to € 41,049 K (31.12.2019: € 73,257 K). The debt component of the convertible bond and the embedded derivative of the convertible bond are separately reported. Category Classification IFRS 9 1) No financial instruments Book value Fair value € K FVTPL FVOCI AC 31.12.2019 31.12.2019 Convertible bond 0 0 190,807 0 190,807 190,175 Bonds 0 0 798,817 0 798,817 840,413 Loans 0 0 1,067,238 0 1,067,238 1,073,079 Lease liabilities (IFRS 16) 0 0 40,480 0 40,480 Interest-bearing liabilities 0 0 2,097,342 0 2,097,342 Derivative financial instruments 103,960 0 0 0 103,960 103,960 Other primary liabilities 0 0 61,671 18,003 79,675 Other liabilities 103,960 0 61,671 18,003 183,634 103,960 0 2,159,014 18,003 2,280,977 The fair value recognized of the other primary liabilities basically equals the book value, based on the daily and short term due date. CONSOLIDATED FINANCIAL STATEMENTS 1 81 8.2. Derivative financial instruments and hedging transactions 31.12.2020 31.12.2019 € K Nominal value Fair value Book value Nominal value Fair value Book value Interest rate swaps - liabilities 815,759 –44,161 –44,161 531,771 –30,703 –30,703 Total interest rate swaps 815,759 –44,161 –44,161 531,771 –30,703 –30,703 Interest rate floors 42,975 1,682 1,682 43,875 1,148 1,148 Derivative convertible bond 0 –41,049 –41,049 0 –73,257 –73,257 Total derivatives 858,734 –83,528 –83,528 575,646 –102,812 –102,812 - thereof hedging (cash flow hedges) 225,000 –2,614 –2,614 0 0 0 - thereof stand alone (fair value derivatives) - assets 42,975 1,682 1,682 43,875 1,148 1,148 - thereof stand alone (fair value derivatives) - liabilities 590,759 –82,596 –82,596 531,771 –103,960 –103,960 The derivative of the convertible bond results from the cash settlement option of the convertible bond of CA Immo AG and is reported at fair value. As at the balance sheet date 55.1% (31.12.2019: 48.3%) of the nominal value of all loans have been turned into fixed interest rates (or into ranges of interest rates with a cap) by means of interest rate swaps. Interest rate derivatives Nominal value Start End Fixed interest rate as at Reference interest rate Fair value in € K in € K 31.12.2020 31.12.2020 EUR - CFH 225,000 3/2022 1/2029 –0.16% 3M-Euribor –2,614 EUR - stand alone - liabilities 590,759 12/2016-5/2020 12/2021-12/2032 –0.14%-1.19% 3M-Euribor –41,547 Total interest swaps = variable in fixed 815,759 –44,161 Interest rate floors 42,975 5/2018 5/2028 0.00% 3M-Euribor 1,682 Total interest rate derivatives 858,734 –42,479 Interest rate derivatives Nominal value Start End Fixed interest rate as at Reference interest rate Fair value in € K in € K 31.12.2019 31.12.2019 EUR - stand alone - liabilities 531,771 12/2016-4/2019 12/2021-12/2032 0.25%-1.19% 3M-Euribor –30,703 Total interest swaps = variable in fixed 531,771 –30,703 Interest rate floors 43,875 5/2018 5/2028 0.00% 3M-Euribor 1,148 Total interest rate derivatives 575,646 –29,555 CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 1 82 Gains and losses in other comprehensive income € K 2020 2019 As at 1.1. 0 0 Change in valuation of cash flow hedges –620 0 Change of ineffectiveness cash flow hedges 0 0 Reclassification of cash flow hedges 0 0 Income tax cash flow hedges 198 0 As at 31.12. –422 0 thereof: attributable to the owners of the parent –422 0 V aluation of interest rate derivatives The interest rate derivatives are recognised at fair value. The fair values are calculated by discounting the future cash flows from variable payments on the basis of generally recognized financial-mathematical models. The interest rates for discounting the future cash flows are estimated by reference to an observable market yield curve. The calcula- tion is based on inter-bank middle rates. The fair value of the derivatives corresponds therefore to level 2 of the measurement hierarchy according to IFRS 13. A correction of the measurement of the interest rate derivatives due to CVA (Credit Value Adjustment) and DVA (Debt Value Adjustment) is only conducted when the adjustment reaches a significant extent. CA Immo Group also enters into bank financing for investments properties whereby a minimal interest limit is con- tractually agreed. In this case it needs to be investigated whether an embedded derivative subject to separation is pre- sent. An embedded minimal limit on interest rates of a debt instrument is closely linked to the host contract if, at the date of entering the contract, the minimal interest limit is equal or below the prevailing market rate. CA Immo Group examines the existence of an embedded derivative for the necessity of separation from the host contract by comparing the agreed interest plus the valuation of the minimal interest rate limit with the market interest rate (reference interest plus margin). If the market interest rate (reference interest plus margin) exceeds the contractually agreed interest in each future period, there is no obligation to separate the embedded derivative. To date, CA Immo Group has not identi- fied in any loan agreement an embedded derivatives subject to separation. Valuation of the derivative convertible bond Due to the cash settlement option of CA Immo AG, the convertible bond has an embedded derivative subject to separation. The fair value of the separate embedded derivative is determined based on a generally accepted financial mathematics model (Black-Scholes) and parameters observable on the market. Thus the fair value of the derivative of the convertible bond corresponds to level 2 of the measurement hierarchy according to IFRS 13. Derivative financial instruments CA Immo Group uses derivative financial instruments, such as interest rate swaps, floors and forward exchange transactions, in order to hedge against interest and currency risks. These derivative financial instruments are recog- nised at fair value at the time the contract is concluded and remeasured at fair value in the following periods. Deriva- tive financial instruments are recognised as financial assets if their value is positive and as financial liabilities if their fair value is negative. Derivative financial instruments are presented as non-current financial assets or liabilities if their remaining term ex- ceeds twelve months and realisation within twelve months is not expected. All other derivative financial instruments, whose remaining term is below twelve months, are presented as current assets or liabilities. CONSOLIDATED FINANCIAL STATEMENTS 1 83 In July 2020 CA Immo Group concluded forward interest rate swaps (nominal value € 225,000 K, term March 2022 – January 2029). According to IFRS 9, a financial instrument is measured at fair value at initial recognition. However, if the fair value deviates from the transaction price when initially recognized and it is also not observable in an active market, the difference is accrued in line with IFRS 9 and may only be recognized as gain or loss to the extent that it results from a change in a factor (including the time factor) that market participants would consider when pricing the asset or liabi- lity. For this reason, CA Immo has created a deferred item for the difference between the transaction price of the interest rate swaps and their fair value at the initial recognition, which will be released to profit or loss over the term using the effective interest method. The method applied by CA Immo Group when recognizing gains and losses from the subsequent measurement of derivative financial instruments depends on whether the criteria for cash flow hedge accounting (hedging of future cash flows) are met or not. The interest rate swaps were designated as hedging instruments in a cash flow hedge relationship in accordance with IFRS 9. The hedged risk results from the difference between the expected future variable interest payments based on the 3M-Euribor and the future fixed interest rates for construction financing. In the case of derivative financial instruments for which the criteria for cash flow hedge accounting are met and the cash flows are hedged, the part of the profit or loss from the hedging instrument that is determined as an effective hedge is recognized in other comprehensive income. Any remaining profit or loss from the hedging instrument repre- sents an ineffectiveness of the hedge and is recognized in profit or loss. The ineffectiveness of this hedging transaction is measured using the dollar offset method. Expenses and income which are not recognized in the other comprehensive income, are recognized in the profit or loss as ineffectiveness un- der the item “result from derivatives”. The hedging relationship between the hedging instrument and the underlying transaction as well as its ineffectiveness is evaluated and documented when the hedging transaction is concluded and then on an ongoing basis. Pursuant to IFRS 9, derivatives not qualifying for hedge accounting are assigned to the category “fair value through profit or loss” (FVtPL). Changes in the fair value are therefore recognized entirely in profit or loss in the item “result from derivatives”. The fair values of interest rate swaps and floors are calculated by discounting the future cash flows from variable pay- ments on the basis of generally accepted financial models. The interest rates for the discount of the future cash flows are estimated on basis of an interest rate curve, which is observable on the market. Inter-bank middle rates are used for the calculation. A convertible bond requires in principle a split out of the financial instrument between an equity component and a debt component. The convertible bond consists due to the cash settlement option of CA Immo AG of an embedded de- rivative subject to separation. Embedded derivatives are basically to be accounted separately from the host contract if their economic characteristics and risks are not closely related to these of the host contract, if they independently fulfill the definition of a derivative and the entire instrument is not valued at fair value through profit or loss. The embedded derivative is classified as "fair value through profit or loss” (FVtPL) and is measured at fair value through profit or loss at each balance sheet date. The changes in fair value are fully presented in profit or loss as “result from derivatives”. CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 1 84 8.3. Risks from financial instruments Interest rate risk Risks arising from changes in interest rates basically result from long-term loans and interest rate derivatives and relate to the amount of future interest payments (for variable interest instruments) and to the fair value of the financial instrument (for fixed rate instruments). A mix of long-term fixed-rate and floating-rate loans is used to reduce the inte- rest rate risk. In case of floating-rate loans, derivative financial instruments (interest rate floors and interest rate swaps) are also used to hedge the cash flow risk of interest rate changes arising from hedged items. In addition to the general interest rate risk (interest level) there are also risks arising from a possible change in the credit rating, which would lead to an increase or a decrease of the interest margin in the course of a follow-up financing. The following sensitivity analysis outlines the impact of variable interest rates on interest expense. It shows the effect on the result of the financial year 2020 of a change in interest rate by 50 and 100 basis points on the interest expenses. The analysis assumes that all other variables, particularly foreign exchange rates, remain constant. Due to the very low interest rate levels the analysis only shows the effect of increasing interest rates. € K recognised in Profit/Loss Statement at 50 bps at 100 bps Increase Increase 31.12.2020 Interest on variable rate instruments –864 –1,727 Valuation result from fixed rate instruments (Swaps) 27,095 53,075 Valuation result from derivative financial instruments –948 –1,399 25,283 49,949 31.12.2019 Interest on variable rate instruments –1,446 –2,892 Valuation result from fixed rate instruments (Swaps) 18,818 36,821 Valuation result from derivative financial instruments –739 –985 16,633 32,944 V ariable rate instruments contain variable rate financial liabilities not taking into account derivatives. In the case of derivative financial instruments, an interest rate change gives rise to a component recognized in profit or loss (interest and valuation of fair value derivatives). Risks of the embedded derivative of the convertible bond In respect of the derivative of the convertible bond, the risks result from change in the share price of CA Immo AG as well as change in the credit spread between the CA Immo corporate bonds and the benchmark reference rates for Euro- zone government bonds with matching maturities. The following sensitivity analysis shows the change in the fair value of the derivative of the convertible bond at an increase and a decrease, respectively in the share price of CA Immo AG as well as an increase and a decrease, respectively in the credit spread. The analysis assumes that all other variables remain unchanged. CONSOLIDATED FINANCIAL STATEMENTS 1 85 € K recognised in Profit/Loss Statement recognised in Profit/Loss Statement at 10% Share Price at 10% Share Price at 50 bps Credit Spread at 50 bps Credit Spread Increase Decrease Increase Decrease 31.12.2020 Derivative convertible bond –14,296 12,367 –1,957 1,923 31.12.2019 Derivative convertible bond –19,397 17,742 –2,930 2,910 Curre ncy risk Currency risks result from rental revenues and receivables denominated in CZK, HRK, HUF, PLN, RON, CHF and RSD. This foreign currency rental income is secured by linking the rental payments to EUR, so that no major risk remains. Credit risk The book values disclosed for all financial assets, guarantees and other commitments assumed, represent the maxi- mum default risk as no major set-off agreements exist. Tenants provided deposits amounting to € 16,675 K (31.12.2019: € 18,256 K) as well as bank guarantees of € 62,563 K (31.12.2019: € 55,453 K) and group guarantees in the amount of € 44,017 K (31.12.2019: € 44,555 K). The credit risk for liquid funds with banks is monitored according to internal guidelines. Liquidity risk Liquidity risk is the risk that CA Immo Group will not be able to meet its financial obligations as they fall due. CA Immo Group’s approach to managing liquidity is to ensure that it will always have sufficient liquidity to meet lia- bilities when due, whilst avoiding unnecessary potential losses and risks. Loans are usually agreed on a long-term basis in accordance with the long-term nature of real estate. The CA Immo Group manages liquidity risk in several different ways: firstly, by means of distinct liquidity planning and securing to avoid possible liquidity shortages. Secondly, CA Immo Group takes safeguarding measures to control liquidity peaks via a revolving credit line at the level of CA Immo AG. External capital is raised by CA Immo Group from a wide variety of domestic and foreign banks. The contractually agreed (undiscounted) interest payments and repayments for primary financial liabilities and derivative financial instruments are presented in the table below. CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 1 86 31.12.2020 € K Book value 2020 Contractually agreed cash flows Cash flow 2021 Cash flow 2022- 2025 Cash flow 2026 ff Convertible bond 194,207 –206,479 –1,521 –204,958 0 Bonds 1,542,011 –1,639,075 –130,557 –846,956 –661,563 Loans 1,045,969 –1,108,649 –91,165 –447,680 –569,804 Lease liabilities 45,275 –104,175 –3,652 –11,719 –88,803 Trade payables 24,224 –24,224 –17,722 –6,498 –4 Non-controlling interests held by limited partners 4,597 –4,597 0 0 –4,597 Liabilities to joint ventures 1,445 –1,445 –1,445 0 0 Other liabilities 32,794 –32,794 –16,073 –14,824 –1,897 Primary financial liabilities 2,890,522 –3,121,439 –262,136 –1,532,635 –1,326,667 Interest rate derivatives in connection with cash flow hedges 2,614 –2,575 0 –2,455 –120 Interest rate derivatives not connected with hedges 41,547 –40,945 –7,230 –24,943 –8,772 Derivative convertible bond 41,049 0 0 0 0 Derivative financial liabilities 85,210 –43,520 –7,230 –27,398 –8,892 2,975,732 –3,164,959 –269,366 –1,560,034 –1,335,559 The co nvertible bond requires a separation of the financial instrument into a debt component and a separate embed- ded derivative. The derivative of the convertible bond has no cash flows. 31.12.2019 € K Book value 2019 Contractually agreed cash flows Cash flow 2020 Cash flow 2021- 2024 Cash flow 2025 ff Convertible bond 190,807 –208,004 –1,525 –6,087 –200,392 Bonds 798,817 –862,281 –17,656 –689,000 –155,625 Loans 1,067,238 –1,150,427 –241,212 –470,876 –438,339 Lease liabilities 40,480 –96,786 –4,054 –11,811 –80,921 Trade payables 29,885 –29,885 –24,770 –5,112 –2 Non-controlling interests held by limited partners 3,990 –3,990 0 0 –3,990 Liabilities to joint ventures 1,448 –1,448 –1,448 0 0 Other liabilities 26,348 –26,348 –10,612 –14,042 –1,694 Primary financial liabilities 2,159,013 –2,379,170 –301,278 –1,196,929 –880,962 Interest rate derivatives not connected with hedges 30,703 –30,600 –6,112 –18,105 –6,383 Derivative convertible bond 73,257 0 0 0 0 Derivative financial liabilities 103,960 –30,600 –6,112 –18,105 –6,383 2,262,973 –2,409,770 –307,390 –1,215,034 –887,346 For variable interest bearing liablities and der ivatives the cashflows are determined based on assumed values for the underlying forward rates as at the respective balance sheet date. CONSOLIDATED FINANCIAL STATEMENTS 1 87 Capital management The objective of CA Immo Group's capital management is to ensure that the Group achieves its goals and strategies, while optimising the costs of capital effectively and in the interests of shareholders, employees and other stakeholders. In particular, it focuses on achieving a minimum return on invested capital required by the capital market and increas- ing the return on equity. Furthermore, the external investment grade rating should be supported by adequate capitalisa- tion and by raising equity for the growth targets in the upcoming fiscal years. The key parameters in determining the capital structure of the CA Immo Group are: 1. the general ratio of equity to debt and 2. within outside capital, the optimal ratio between the debt secured with real estate, which is recorded at the level of individual property companies, and the unsecured debt at the level of the parent company. Regarding the first parameter, the CA Immo Group aims to maintain an equity ratio of 45% - 50%. As at 31.12.2020 the ratio was 45.9% (31.12.2019: 50.4%). The proportion between the secured and the unsecured debt should generally be balanced. After the issuing activities in 2020 (issuance of a benchmark bond and a green bond) the higher share of 61% (31.12.2019: 47%) is attributable to unsecured corporate bonds and the convertible bond. The remaining share of 39% (31.12.2019: 53%) is attributable to secured property loans, which are usually taken directly by the company in which the property is held. The ratio of unsecured properties associated with the unsecured financing at group level is one of the important criteria for the investment grade rating of CA Immo Group. Net debt and the gearing ratio are other key figures relevant to the presentation of the capital structure of CA Immo Group: € K 31.12.2020 31.12.2019 Interest-bearing liabilities Long-term interest-bearing liabilities 2,622,161 1,850,864 Short-term interest-bearing liabilities 205,301 246,478 Interest-bearing assets Cash and cash equivalents –934,863 –439,139 Cash at banks with drawing restrictions –2,073 –1,914 Net debt 1,890,526 1,656,290 Shareholders' equity 3,128,308 2,967,968 Gearing ratio (Net debt/equity) 60.4% 55.8% In calculating the gearing, for simplicity the book value of th e cash and cash equivalents has been taken into account. The cash at banks with drawing restrictions is included in the calculation of net debt, if it is used to secure the repay- ments of interest bearing liabilities. CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 1 88 CONSOLIDATED FINANCIAL STATEMENTS 1 89 CHAPTER 9: OTHER DISCLOSURES 9.1. Information for cash flow statement Liabilities € K Note Other interest- bearing liabilities Leasing liabilities Convertible bond Bonds As at 1.1.2020 1,067,239 40,480 190,807 798,817 Chan g es in cash flow from financin g activities Cash inflow from loans received 5.2. 111,056 0 0 0 Cash inflow from the issuance of bonds 5.2. 0 0 0 836,747 Re p a y ment of bonds 5.2. 0 0 – 103,380 Dividend p a y ments to shareholders 5.1. 0 0 0 0 Payment/Repayment related to the acquisition of shares from non-controlling interests and dividends to non-controlling interests 5.1. 0 0 0 0 Repayment of loans incl. interest rate derivatives 5.2. –61,596 –3,403 0 0 Other interest p aid 5.2. – 13,602 – 1,267 – 1,514 – 13,051 Total change in cash flow from financing activities 35,859 –4,670 –1,514 720,316 Total change from the purchase of subsidiaries or other business o p erations 1.e 0 9,809 0 0 Total change from the sale of subsidiaries or other business o p erations 1.f –70,200 0 0 0 Effects of chan g es in exchan g e rates 5.2. 105 –2,114 0 0 Chan g e in fair value 8.1. 0 0 0 0 Total Other chan g es related to liabilities 12,967 1,770 4,914 22,878 Total Other chan g es related to e q uit y 0 0 0 0 As at 31.12.2020 1,045,969 45,275 194,207 1,542,011 Other changes r elated to liabilities mainly result from interest expenses, in accordance with Group profit and loss. CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 1 90 Liabilities Derivatives Shareholders' e q uit y Total Other effects in ca sh flow from financin g activities Derivatives assets Derivatives liabilities 0 –1,148 103,960 2,967,968 5,168,122 0 0 0 0 111,056 0 0 0 0 836,747 0 0 0 0 –103,380 0 0 0 – 93,028 –93,028 0 0 0 0 0 –159 0 –468 0 –65,626 0 0 –6,235 0 –35,668 –159 0 –6,703 –93,028 650,101 0 0 0 0 9,809 0 0 0 0 –70,200 0 0 –261 0 –2,269 0 –535 –20,274 0 –20,809 159 0 8,488 0 51,175 0 0 0 253,368 253,368 0 –1,682 85,210 3,128,308 6,039,298 CONSOLIDATED FINANCIAL STATEMENTS 1 91 Liabilities € K Note Other interest- bearing liabilities Leasing liabilities Convertible bond Bonds As at 1.1.2019 959,620 0 187,505 796,269 Chan g es in cash flow from financin g activities Cash inflow from loans received 5.2. 135,183 0 0 0 Re p a y ment of bonds 5.2. 0 0 – 70 Dividend p a y ments to shareholders 5.1. 0 0 0 0 Payment/Repayment related to the acquisition of shares from non- controlling interests and dividends to non-controlling in terests 5.1. 0 0 0 0 Re p a y ment of loans incl. interest rate derivatives 5.2. – 26,836 – 2,725 0 0 Other interest p aid 5.2. – 13,807 – 1,325 – 1,523 – 12,055 Total chan g e in cash flow from financin g activities 94,540 –4,050 –1,523 –12,125 Effects of chan g es in exchan g e rates 5.2. 0 261 0 0 Chan g e in fair value 8.1. 0 0 0 0 Total Other chan g es related to liabilities 13,079 44,270 4,826 14,673 Total Other chan g es related to e q uit y 0 0 0 0 As at 31.12.2019 restated 1,067,239 40,480 190,807 798,817 Starting 2020, CA Immo Group presents the i tems “Interest paid (excluding interest for financing activities)” and “In- terest received (excluding interest from investing activities)” separately in the cash flow from operations because they result in interest to/from tax authorities. This also leads to a restatement of the comparative figures for 2019. Due to this adjustment, "Interest paid" in the amount of € –484 K is no longer disclosed in the cash flow from financing activities but in the cash flow from operating activities for 2019. Furthermore, due to this adjustment, "Interest received" in the amount of € 686 K is no longer disclosed in the cash flow from investing activities but in the cash flow from opera-ting activities for 2019. CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 1 92 Liabilities Derivatives Shareholders' e q uit y Total Other effects in cash flow from financing activities Derivatives assets Derivatives liabilities 0 –827 44,429 2,639,697 4,626,693 0 0 0 0 135,183 0 0 0 0 –70 0 0 0 – 83,725 –83,725 –129 0 0 1 –128 – 620 0 – 23 0 –30,203 0 0 – 5,143 0 –33,854 –749 0 –5,165 –83,724 –12,798 0 0 44 0 305 0 –321 59,486 0 59,165 749 0 5,165 0 82,761 0 0 0 411,996 411,996 0 –1,148 103,960 2,967,968 5,168,122 CONSOLIDATED FINANCIAL STATEMENTS 1 93 9.2. Other obligations and contingent liabilities Guarantees and other commitments As at 31.12.2020, CA Immo Germany Group is subject to guarantees and other commitments resulting from purchase agreements for decontamination costs and war damage costs amounting to € 106 K (31.12.2019: € 106 K). Furthermore, comfort letters and securities have been issued for one (31.12.2019: one) joint venture in Germany amounting to € 2,000 K (31.12.2019: € 2,000 K). As a security for the liabilities of two (31.12.2019: one) joint venture loans guaran- tees, letters of comfort and declarations were issued totalling € 6,500 K (31.12.2019: € 2,500 K) in Germany. Further- more, as security for warranty risks in Germany a guarantee was issued in an amount of € 17,605 K (31.12.2019: € 15,066 K). In connection with disposals, marketable guarantees exist between CA Immo Group and the buyer for coverage of possible warranty- and liability claims, which have been recognized in the statement of financial position accordingly. The actual claims may exceed the expected level. Furthermore, comfort letters and securities have been issued for two (31.12.2019: two) joint ventures in Austria amounting to € 11,443 K (31.12.2019: € 11,443 K) and for one (31.12.2019: one) joint venture in Eastern Europe amounting to € 15,699 K (31.12.2019: € 15,699 K). In connection with a development project in Eastern Europe a main contractor has filed an arbitration action at the Vienna International Arbitral Center on 15.2.2019. The claim contains alleged claims for the payment of additional costs and compensation for work performed in the amount of € 25.0 m CA Immo Group considers the chances of this action succeeding as minimal. The expected cash outflows in this respect have been recognized in the statement of financial position accordingly. Mortgages, pledges of rental receivables, bank accounts and share pledges as well as similar guarantees are used as market collateral for bank liabilities. For the purpose of recognising tax provisions, estimates have to be made. Uncertainties exist concerning the interpre- tation of complex tax regulations as well as calculation methods to determine the amount and timing of taxable income. Due to these uncertainties and the complexity estimates may vary from the real tax expense also in a material amount. This may include amended interpretations of tax authorities for previous periods. CA Immo Group recognises appropri- ate provisions for known and probable charges arising from ongoing tax audits. Uncertainty in the tax treatment of transactions require an assessment of whether the relevant tax authority is likely to accept the interpretation of the tax treatment of the transaction or not. Based on this assessment, the CA Immo Group recognizes tax liabilities at the amount considered most probable in the event of uncertainty. These uncertainties may result in future tax payments being significantly higher or lower than the obligations currently assessed as probable and recognized in the balance sheet. There are uncertainties regarding the possible retrospective application of subsequent tax changes with regard to com- pleted restructuring measures in Eastern Europe that have been agreed with the tax authorities. CA Immo Group esti- mates the probability of the actual burden due to the subsequent change in the tax consequences of restructuring measures carried out in the past as low. Other financial obligations In addition, there are other financial obligations of order commitments related to building site liabilities for work ca-rried out in the course of developing real estate in Austria in the amount of € 132 K (31.12.2019: € 296 K), in Germany in the amount of € 159,140 K (31.12.2019: € 208,195 K) and in Eastern Europe in the amount of € 24,008 K (31.12.2019: € 12,251 K). In addition as at 31.12.2020 CA Immo Group is subject to other financial commitments result- ing from construction costs from urban development contracts which can be capitalised in the future in an amount of € 13,124 K (31.12.2019: € 11,724 K). CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 1 94 The total obligations of the payments of equity in Joint Ventures for which no adequate provisions have been recog- nised amount in Germany to € 0 K (31.12.2019: € 0 K) as per 31.12.2020. Besides the disclosed obligations of equity- payments, no further obligations to joint ventures exist. If the amount of an obligation cannot be estimated reliably, the outflow of funds from the obligation is not likely, or the occurrence of the obligation depends on future events, it represents a contingent liability. In such cases, a provision is not recognised and an explanation of material facts is disclosed in the notes. 9.3. Leases CA Immo Group as lessor All lease contracts concluded by CA Immo Group, under which CA Immo Group is the lessor, are recorded as opera- ting leases in accordance with IFRS. These generally have the following essential contractual terms: – linkage to EUR – guarantee d value by linkage to international indices – medium- to long-term maturities and/or termination waivers . Future minimum rental income from existing term lease contracts or contracts with termination waivers as at the re- porting date are as follows: € K 2020 2019 In the following year 216,435 211,781 in the second year 182,747 175,966 in the third year 153,327 144,717 in the fourth year 119,837 119,974 in the fifth year 86,252 90,641 after more than five years 224,330 203,769 Total 982,928 946,847 All remaining rental agreemen ts may be terminated at short notice and are not included in the table above. The minimum rental income includes net rent amounts to be collected until the contractually agreed expiration of the contract or the earliest possible termination option by the lessee (tenant). According to IFRS 16, the allocation of a leased asset to the lessor or lessee is based on the criterion of accounta- bility of all significant risks and rewards associated with ownership of the leased asset. The characteristics of the CA Immo Group as lessor of investment properties corresponds to an operating lease because the economic ownership remains with CA Immo Group for the rented properties and thus the significant risks and rewards are not transferred. CA Immo Group classifies leases as operating lease when the underlying contract does not represent a finance lease. A finance lease exists when: – at the end of the lease term the ownership of the asset will be transferred to the lessee; – the lessee has the option to purchase the asset at a price which is expected to be sufficien tly lower than the fair value at the date the option beco mes exercisable so that at the inception of the lease it is reason ably certain that the option will be exercised; – the lease term is for the major part of the economic life of the asset, even if tit le is not transferred; – at the inception of the lease, the present val ue of the minimum lease paym ents amounts to at least substantially all of the fair value of the leased asset; and CONSOLIDATED FINANCIAL STATEMENTS 1 95 – the leased assets are of a specialized nature such that only the lessee can use them without major modifications being made. CA Immo Group as lessee The lease contracts concluded by CA Immo Group acting as lessee primarily relate to rented properties in Munich (until 2022) and in Frankfurt (until 2025), rented parking space, leases of cars, the rental of furniture and office equip- ment as well as usufruct of land. No purchase options have been agreed. The CA Immo Group presents the rights of use in the same balance sheet item in which the underlying assets would be shown if they were owned by the CA Immo Group. The lease liabilities are also included in the balance sheet item “Interest-bearing liabilities”. The users of the financial statements can find the detailed disclosures according to IFRS 16 in the relevant chapter of the notes to which the individual disclosure belongs: the rights of use which are measured according to IAS 40 are comprised in chapter “3.1. Long-term property assets”. The rights of use which are recognized according to the cost model can be found in the chapter “3.2. Own used properties” or “3.3. Office furniture and equipment and intangible assets” (e.g. cars). Lease liabilities are explained in greater detail in chapters “5.2. Inte- rest bearing liabilities”, respectively “8.1. Financial instruments” and “8.3. Risks from financial instruments”. The effects of leases on the profit or loss are contained in the following chapters: the depreciation of rights of use in chapter “2.10. Depreciation and impairment losses/reversal” and interest expenses related to lease liabilities in “2.12. Finance expenses”. The expense for short-term leases amounts to € 40 K (2019: € 35 K) and the expense for leases related to assets of low value amounts to € 45 K (2019: € 17 K). The total cash outflows for leases amount to € 5,016 K (2019: € 4,217 K). Extensions and termination options are taken into account when measuring lease liabilities, if using an option is highly probable. However, this measurement is discretionary, therefore the estimates can be changed in the future. In a first step the term of the underlying contract is used and only in case indicators are available (e.g. infor- mation from valuation reports, particularly favourable contract terms, changed operating requirements) a termination or an extension option will be considered in the cash outflows when measuring the lease liability. CA Immo Group determines whether an arrangement contains a lease based on the economic substance of the arrangement and evaluates whether the fulfilment of the arrangement is dependent on the use of a specific asset or assets and whether the arrangement conveyed a right to use the asset. This is the case only when the contract entitles CA Immo Group to control the use of a clearly identified asset in exchange for consideration for a certain period of time. In doing so, it is relevant that throughout the period of use, CA Immo Group can obtain substantially all the economic benefits from the identified asset and it has the right to direct the use of such an asset. However, an asset is only considered identified when the supplier does not have a substantive substitution right. If, based on the agreement, the supplier is actually able to exchange the asset for another during the period of use and if the exchange results in economic benefits, there is no identified asset and no recognition of a right of use takes place. When accounting for leases, assets in the form of right of use are capitalized and lease liabilities are recognized. CA Immo Group applies practical expedients and does not recognize any rights of use/lease liabilities for short-term leases (less than 1 year) as well as leases with underlying assets of low value (< € 5,000) and software. Retrospective adjustment of lease payments, for example based on index adjustments are considerered as variable leasing payments and recognized as profit or loss in the current period. An adjustment of a right of use asset/lease liability is only made on the base of future cash outflows. CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 1 96 9.4. Transactions with related parties The following companies and parties are deemed related parties to the CA Immo Group: – joint ventures, in which CA Immo G roup holds an interest – associated com panies, in which CA Immo Group holds an inte rest (until 12.8.2019) – the corporate bodies of CA Immobilien Anlagen Aktiengesell s chaft – Starwood Ca pital Group (”Starwood“) (from 27.9.2018) Transactions with joint ventures € K 31.12.2020 31.12.2019 Investments in joint ventures 57,629 67,755 Loans 8,926 3,025 Receivables 7,197 7,841 Liabilities 3,747 8,616 Provisions 7,128 8,345 2020 2019 Joint ventures result 1,809 3,808 Result from sale of joint ventures 90 –80 Result from joint ventures 1,898 3,729 Other income 268 690 Other expenses –1,228 –1,092 Interest income 1,020 902 Outstanding loans to joint ventures and the m ajority of the receivables from joint ventures as at the reporting date serve to finance the properties. The cumulative impairment loss on loans to joint ventures amounts to € 3,076 K (31.12.2019: € 2,304 K). Receivables from joint ventures comprise short-term loans in the amount of € 0 K (31.12.2019: € 3,630 K). Liabilities against joint ventures include long-term loans amounting to € 0 K (31.12.2019: € 0 K). All recei- vables have interest rates in line with those prevailing on the market. The remaining receivables are predominantly the result of services performed in Germany. No guarantees or other forms of security exist in connection with these recei- vables and liabilities. No additional impairments or other adjustments to the book values were recognised in profit or loss. Transactions with associated companies In the third quarter of 2019 the closing of the sale of shares in an associated company in Russia took place as well as loans granted to such company. CONSOLIDATED FINANCIAL STATEMENTS 1 97 Corporate bodies of CA Immobilien Anlagen Aktiengesellschaft, Vienna Management Board Andreas Quint (from 1.1.2018) Dr. Andreas Schillhofer (from 1.6.2019) Keegan Viscius (from 1.11.2018) Total salary payments (excluding salary-based deductions) to Management Board members active in business year 2020 amounted to € 2,763 K (€ 1,512 K in 2019). The salary-based deductions totaled € 172 K (2019: € 97 K). Fixed salary components totaling € 1,465 K (€ 1,290 K in 2019) were made up of the basic salary of € 1,410 K (2019: € 1,254 K) and other benefits (in particular remuneration in kind for cars, expense allowances and travel expenses) of € 55 K (2019: € 36 K). Variable compensation components amounted to € 1,175 K (2019: € 0 K). There were no special pay- ments (2019: € 106 K). In business year 2020, a total of € 123 K (2019: € 117 K) was paid out for Management Board members in the form of contributions to pension funds. As at the balance sheet date 31 December 2020, severance payment provisions for Management Board members totaled € 412 K (31.12.2019: € 238 K). There were no payment obligations to former members of the Management Board. No loans or advances were granted to members of the Management Board. Provisions of € 3,460 K (31.12.2019: € 2,773 K) had been formed for the Management Board under the variable remu- neration system as of 31.12.2020. Of this, immediate payments amounting to € 1,269 K are due for payment by 31.5.2021 at the latest. An amount of € 2,191 K is attributable to the LTIP (multi-year bonus). As of December 31, 2020, the conversion rate for the relevant annual bonus portion of phantom shares was € 27.54. CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 1 98 Supervisory Board Elected by the General Meeting: Torsten Hollstein, Chairman Jeffrey G. Dishner, Deputy Chairman (from 9.5.2019) Dr. Florian Koschat, Deputy Chairman Univ.-Prof. MMag. Dr. Klaus Hirschler Michael Stanton Dr. Monika Wildner (from 9.5.2019) John Nacos (until 9.5.2019) Richard Gregson (until 25.8.2020) Delegated by registered share: Sarah Broughton (from 28.9.2018) Laura Rubin (from 28.9.2018) Jeffrey G. Dishner (from 28.9.2018 to 9.5.2019) Delegated by works council: Georg Edinger, BA, REAM (IREBS) Nicole Kubista Sebastian Obermair Walter Sonnleitner (from 10.2.2020) Franz Reitermayer (until 10.2.2020) As at the balance sheet date, the Supervisory Board comprised six capital representatives elected by the Annual General Meeting, two capital representatives appointed by means of registered shares and four employee representatives. In business year 2020 (for 2019), total remuneration of € 309 K (2019: € 380 K) was paid out (including attendance fees of € 84 K; € 106 K in 2019). Moreover, expenditure of € 78 K was reported in connection with the Supervisory Board in business year 2020 (2019: € 205 K). Of this, cash outlays for travel expenses accounted for approximately € 9 K (2019: € 62 K) and other expenditure (including training costs and license costs) accounted for € 52 K (2019: € 39 K). Legal and other consultancy services accounted for € 17 K (2019: € 103 K). No other fees (particularly for con- sultancy or brokerage activities) and no loans or advances were paid to Supervisory Board members. Total Supervisory Board remuneration of € 328 K for business year 2020 will be proposed to the Annual General Meeting on the basis of the same criteria (fixed annual payment of € 30 K per Supervisory Board member plus attend- ance fee of € 1,000 per meeting), taking account of the waiver of remuneration for Supervisory Board members ap- pointed on the basis of registered shares or related to the Starwood Group respectively. The remuneration was taken into account in the consolidated financial statements as at 31.12.2020. All business transactions conducted between the company and members of the Supervisory Board which oblige such members to perform services for the CA Immo Group outside of their Supervisory Board activities in return for remu- neration of a not inconsiderable value must conform to industry standards and be approved by the Supervisory Board. The same applies to contracts with companies in which a Supervisory Board member has a significant business inter- est. Dr. Monika Wildner is also member of the Supervisory Board of Volksbank Wien AG. At the end of 2019, Volksbank Wien became a long-term tenant of around 14,000 sqm of office space in the CA Immo portfolio building at Erdberger Lände 26. The lease contract was concluded prior to the acceptance of the Supervisory Board mandate at CA Immo and corresponds to standard market conditions. No other fees (particularly for consultancy or brokerage activities) were paid to Supervisory Board members. No loans or advances were granted. CONSOLIDATED FINANCIAL STATEMENTS 1 99 Starwood Capital Group (Starwood) Since 27.9.2018, SOF-11 Klimt CAI S.à r.l. (former SOF-11 Starlight 10 EUR S.à r.l.) is the largest single shareholder of the company. In business year 2020, Starwood Capital Group (via its vehicle SOF-11 Klimt CAI S.à r.l.) increased its stake in CA Immo from around 26% of the share capital to around 28%, which is equivalent to just under 30% of the voting rights in the company. SOF-11 Klimt CAI S.à r.l. holds 27,908,386 bearer shares as well as four registered shares of CA Immo AG. SOF-11 Klimt CAI S.à r.l. is a controlled affiliate of Starwood Capital Group and an indirect wholly 100% owned subsidiary of SOF-11 International, SCSp. SOF-11 International, SCSp is part of a group of companies known as Starwood Global Opportunity Fund XI (“SOF-XI”), a discretionary fund. SOF-XI is controlled by related parties of Starwood Capital Group. Starwood Capital Group is a privately owned global alternative investment company and is an investor focusing on global real estate investments. 9.5. Employees In 2020, CA Immo Group had an average of 386 white-collar workers (2019: 363) of whom on average 70 (2019: 69) were employed in Austria, 230 (2019: 211) in Germany and 86 (2019: 83) in subsidiaries in Eastern Europe. 9.6. Costs for the auditors The expenses presented in the table below refer to fees from Ernst & Young Wirtschaftsprüfungsgesellschaft.m.b.H.. € K 2020 2019 Auditing costs 387 396 Other assurance services 311 486 Other consultancy services 0 14 Total 698 896 In the consolid ated income statement, the audit expenses, including review amount to € 1,359 K (2019: € 1,394 K). Out of this, the amount for Ernst & Young entities amounts to € 1,235 K (2019: € 1,293 K). CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 2 00 9.7. Events after balance sheet date On 8.1.2021, SOF-11 Klimt CAI S.à r.l. announced its intention to launch an anticipated mandatory takeover offer to the shareholders and convertible bondholders of CA Immo and to further increase its shareholding in the company from currently 29.999893% of the total outstanding voting rights. The offer document has been published on 22.2.2021. Starting from the same day, shareholders and convertible bondholders of CA Immo will be able to accept the offer and tender their shares and convertible bonds into the offer. The acceptance period will end at 5pm (CET) on 9.4.2021. The price initially offered to CA Immo shareholders of € 34.44 per CA Immo share was increased to € 36.00 on 26.2.2021 (“Share Offer Price”). The price offered to convertible bondholders is are being offered a price of approx. € 138,628.59 (initially € 132,621.35) for each convertible bond with nominal value of € 100,000 (“Convertible Bond Offer Price”). The Share Offer Price and the Convertible Bond Offer Price are on a cum dividend basis. The anticipated mandatory takeover offer is aimed at acquiring all outstanding CA Immo shares and convertible bonds that are not held by the Bidder or CA Immo, though there will be no minimum acceptance threshold. The com- pletion of the offer will be subject to merger control clearance in Austria, Germany and Poland. The statement of the Management and Supervisory Boards regarding this offer was published on 8.3.2021. In February 2021, CA Immo closed the sale of Bratislava BA Business Center. As at 31.12.2020 the assets and liabili- ties relating to disposal groups were classified as held for sale according to IFRS 5. In March 2021, CA Immo Group has signed a long-term lease agreement for 34,850 sqm of rental space in the land- mark office development Upbeat in Berlin’s urban district Europacity. The office development is fully leased to one tenant and thus 100% pre-leased before start of construction. 9.8. New and amended standards and interpretations a) Changes in presentation, which have a material effect on the consolidated financial statements The presentation and accounting policies remain unchanged compared to previous year . Present ation methods Starting 2020, CA Immo Group presents the i tems “Interest paid (excluding interest for financing activities)” and “Interest received (excluding interest from investing activities)” separately in the cash flow from operations because they result in interest to/ from tax authorities. This also leads to a restatement of the comparatives figures for 2019. Due to this adjustment, "Interest paid" in the amount of € –484 K is no longer disclosed in the cash flow from financing ac- tivities but in the cash flow from operating activities for 2019. Furthermore, due to this adjustment, "Interest received" in the amount of € 686 K is no longer disclosed in the cash flow from investing activities but in the cash flow from operating activities for 2019. b) First-time application of new and revised standards and interpretations not materially infl uencing the consolid ated financial statements The following standards and interpretations, already adopted by the EU, were applicable for the first time in the busi- ness year 2020: Standard / Interpretation Content Entry into force 1) Amendments to references to the conceptual framework in IFRS standards Revised conceptual framework of IFRS standards 1.1.2020 Amendments to IAS 1 and IAS 8 Definition of Materiality 1.1.2020 Amendments to IFRS 9, IAS 39 and IFRS 7 Interest Rate Benchmark Reform 1.1.2020 Amendments to IFRS 3 Amendments to IFRS 3 Business Combinations 1.1.2020 1) The standards and interpretations are to be applied to business years commencing on or after the effective date. CONSOLIDATED FINANCIAL STATEMENTS 2 01 c) New or revised standards and interpretations not yet in force Standard / Interpretation Content Entry into force 1) Amendments to IFRS 16 Covid-19-Related Rent Concessions 1.6.2020² ) Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 Interest Rate Benchmark Reform - Phase 2 1.1.2021² ) Amendments to IFRS 3 Reference to the Conceptual Framework 1.1.2022² ) Amendments to IAS 37 Cost of Fulfilling a Contract 1.1.2022² ) Amendments to IAS 16 Proceeds before Intended Use 1.1.2022² ) Annual Improvements (2018-2020) Miscellaneous 1.1.2022² ) Amendments to IAS 1 Classification of liabilities as current or non-current 1.1.2023² ) IFRS 17 Insurance Contracts 1.1.2023² ) Amendments to IAS 1 Disclosure of Accounting Policies 1.1.2023² ) Amendments to IAS 8 Definition of Accounting Estimates 1.1.2023² ) 1) The standards and interpretations are to be applied to business years commencing on or after the effective date. 2) Not yet adopted by the EU as of the reporting date. The effective date envisaged by an EU Regulation may differ from the date indicated by the IASB. The above listed revisions and interpretations are not being early adopted by CA Immo Group. The effects of the first time ap plication of IFRS 17 (Insurance contracts) have not been conclusively analysed . The first time adoption of the remaining new regulations is not expected to have a material impact. CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 2 02 9.9. List of group companies The following companies are included in the consolidated financial statements in addition to CA Immobilien Anlagen Aktiengesellschaft: Company Registered office Nominal capital Currency Interest in % Consoli- dation method 1) Foundation/ First time consolidation in 2020 2) CA Immo Holding B.V. Amsterdam 51,200,000 EUR 100 FC Europolis BV Amsterdam 2 EUR 100 FC CA Immo d.o.o. Belgrade 32,822,662 RSD 100 FC CA Immo Sava City d.o.o. Belgrade 4,273,618,689 RSD 100 FC TM Immo d.o.o. Belgrade 1,307,737,295 RSD 100 FC CA Immo Sechzehn Beteiligungs GmbH Berlin 25,000 EUR 100 FC CA Immo Sechzehn GmbH & Co. KG Berlin 25,000 EUR 100 FC CA Immo Spreebogen Betriebs GmbH Berlin 25,000 EUR 100 FC CA Immo Zehn GmbH Berlin 25,000 EUR 100 FC CA Immo Zwölf Verwaltungs GmbH Berlin 25,000 EUR 100 FC BA Business Center s.r.o. Bratislava 7,503,200 EUR 100 FC CA Holding Szolgáltató Kft. Budapest 13,000,000 HUF 100 FC CAImmo Real Estate Management HungaryKft. Budapest 54,510,000 HUF 100 FC Canada Square Kft. Budapest 12,510,000 HUF 100 FC COM PARK Ingatlanberuházási Kft. Budapest 3,040,000 HUF 100 FC Duna Business Hotel Ingatlanfejlesztö Kft. Budapest 452,844,530 HUF 100 FC Duna Irodaház Kft. Budapest 277,003,015 HUF 100 FC Duna Termál Hotel Ingatlanfejlesztö Kft. Budapest 390,906,655 HUF 100 FC EUROPOLIS CityGate IngatlanberuházásiKft. Budapest 13,010,000 HUF 100 FC EUROPOLIS IPW Ingatlanberuházási Kft. Budapest 54,380,000 HUF 100 FC Europolis Park Airport Kft. Budapest 19,900,000 HUF 100 FC Kapas Center Kft. Budapest 772,560,000 HUF 100 FC Kilb Kft. Budapest 30,000,000 HUF 100 FC Millennium Irodaház Kft. Budapest 997,244,944 HUF 100 FC R70 Invest Budapest Kft. Budapest 5,270,000 HUF 100 FC Vaci 76 Kft. Budapest 3,100,000 HUF 100 FC CA Immo Campus 6.1. S.R.L. Bucharest 114,000 RON 100 FC CAI REAL ESTATE M. ROMANIA SRL Bucharest 989,570 RON 100 FC EUROPOLIS ORHIDEEA B.C. SRL Bucharest 91,394,530 RON 100 FC EUROPOLIS SEMA PARK SRL Bucharest 139,180,000 RON 100 FC INTERMED CONSULTING & MANAGEMENT SRL Bucharest 31,500,330 RON 100 FC Opera Center One SRL Bucharest 27,326,150 RON 100 FC Opera Center Two SRL Bucharest 7,310,400 RON 100 FC S.C. BBP Leasing SRL Bucharest 14,637,711 RON 100 FC VICTORIA INTERNATIONAL PROPERTY SRL Bucharest 216 RON 100 FC 1) FC full consolidation, AEJV at equity consolidation joint ventures 2) F foundation, A acquisition CONSOLIDATED FINANCIAL STATEMENTS 2 03 Company Registered office Nominal capital Currency Interest in % Consolidation method 1) Foundation/ First time consolidation in 2020 2) Blitz F07 -neunhundert-sechzig-neun GmbH Frankfurt 25,000 EUR 100 FC Blitz F07-neunhundert-sechzig-acht GmbH Frankfurt 25,000 EUR 100 FC CA Immo Deutschland GmbH Frankfurt 5,000,000 EUR 99.7 FC CA Immo Elf GmbH Frankfurt 25,000 EUR 100 FC CA Immo GB Eins Verwaltungs GmbH Frankfurt 25,000 EUR 94.9 FC CA Immo Invest GmbH Frankfurt 50,000 EUR 100 FC CAI GB Eins GmbH & Co. KG Frankfurt 25,000 EUR 100 FC CM Komplementär F07-888 GmbH & Co. KG Frankfurt 25,000 EUR 94.9 FC DRG Deutsche Realitäten GmbH Frankfurt 500,000 EUR 49 3) AEJV CAINE B.V. Hoofdorp 18,151 EUR 100 FC ALBERIQUE LIMITED Limassol 1,325 EUR 100 FC BEDELLAN PROPERTIES LIMITED i.L. Limassol 12,705 EUR 100 FC EPC KAPPA LIMITED i.L. Limassol 12,439 EUR 100 FC EPC LAMBDA LIMITED i.L. Limassol 458,451 EUR 100 FC EPC LEDUM LIMITED i.L. Limassol 14,053 EUR 100 FC EPC OMIKRON LIMITED i.L. Limassol 57,114 EUR 100 FC EPC PI LIMITED i.L. Limassol 2,310 EUR 100 FC EPC PLATINUM LIMITED i.L. Limassol 2,864 EUR 100 FC EPC RHO LIMITED i.L. Limassol 2,390 EUR 100 FC 1) FC full consolidation, AEJV at equity consolidaton joint ventures 2) F foundation, A acquisition 3) Common control CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 2 04 Company Registered office Nominal capital Currency Interest in % Consoli- dation method 1) Foundation/ First time consolidation in 2020 2) EPC THREE LIMITED i.L. Limassol 2,491,634 EUR 100 FC EPC TWO LIMITED i.L. Limassol 970,092 EUR 100 FC EREAM LIMITED Limassol 2,500 EUR 100 FC OPRAH ENTERPRISES LIMITED i.L. Limassol 3,411 EUR 100 FC HARILDO LIMITED i. L. Nicosia 1,500 EUR 50 AEJV VESESTO LIMITED i. L. Nicosia 1,700 EUR 50 AEJV 4P - Immo. Praha s.r.o. Prague 200,000 CZK 100 FC CAI Real Estate Managment Czech Rep. s.r.o. Prague 1,000,000 CZK 100 FC RCP Alfa, s.r.o. Prague 1,000,000 CZK 100 FC RCP Amazon, s.r.o. Prague 1,000,000 CZK 100 FC RCP Beta, s.r.o. Prague 73,804,000 CZK 100 FC RCP Delta, s.r.o. Prague 1,000,000 CZK 100 FC RCP Gama, s.r.o. Prague 96,931,000 CZK 100 FC RCP ISC, s.r.o. Prague 1,000,000 CZK 100 FC RCP Zeta, s.r.o. Prague 200,000 CZK 100 FC Visionary Prague, s.r.o. Prague 200,000 CZK 100 FC CA Immo Bitwy Warszawskiej Sp.z o.o. Warsaw 47,956,320 PLN 100 FC CA IMMO New City Sp.z.o.o. Warsaw 116,000 PLN 100 FC F CA IMMO P14 Sp.z.o.o. Warsaw 10,000 PLN 100 FC A CAI REAL ESTATE MANAGEMENT POLAND Sp.z.o.o. Warsaw 565,000 PLN 100 FC CA Immo Saski Crescent Sp.z o.o. Warsaw 140,921,250 PLN 100 FC CA Immo Saski Point Sp.z o.o. Warsaw 55,093,000 PLN 100 FC CA Immo Warsaw Spire B Sp. z o.o Warsaw 5,050,000 PLN 100 FC CA Immo Warsaw Spire C SP. z o.o. Warsaw 2,050,000 PLN 100 FC CA Immo Warsaw Towers Sp.z o.o. Warsaw 155,490,900 PLN 100 FC CA Immo Wspólna Sp. z o.o. Warsaw 46,497,000 PLN 100 FC CA Immo Sienna Center Sp.z o.o. Warsaw 116,912,640 PLN 100 FC 1) FC full consolidation, AEJV at equity consolidation joint ventures 2) F foundation, A acquisition CONSOLIDATED FINANCIAL STATEMENTS 2 05 Company Registered office Nominal capital Currenc y Interest in % Consolidation method 1) Foundation/ First time consolidation in 2020 2) BIL-S Superädifikatsverwaltungs GmbH Vienna 70,000 EUR 100 FC CA Immo BIP Liegenschaftsverwaltung GmbH Vienna 3,738,127 EUR 100 FC CA Immo Galleria Liegenschaftsverw. GmbH Vienna 35,000 EUR 100 FC CA Immo Germany Holding GmbH Vienna 35,000 EUR 100 FC CA Immo International Holding GmbH Vienna 35,000 EUR 100 FC CA Immo Konzernfinanzierungs GmbH Vienna 35,000 EUR 100 FC F CA Immo LP GmbH Vienna 146,000 EUR 100 FC CA Immo Rennweg 16 GmbH Vienna 35,000 EUR 100 FC CA Immobilien Anlagen Bet Fin KG Vienna 7,000 EUR 100 FC CA Immo-RI-Residential Prop Holding GmbH Vienna 35,000 EUR 100 FC EBL Nord 2 Immobilien Eins GmbH & Co KG Vienna 10,000 EUR 50 AEJV EBL Nord 2 Immobilien GmbH Vienna 35,000 EUR 50 AEJV EBL Nord 2 Immobilien Zwei GmbH & Co KG Vienna 10,000 EUR 50 AEJV Erdberger Lände 26 Projekt GmbH Vienna 35,000 EUR 100 FC EUROPOLIS CE Alpha Holding GmbH Vienna 36,336 EUR 100 FC EUROPOLIS CE Rho Holding GmbH Vienna 35,000 EUR 100 FC EUROPOLIS GmbH Vienna 5,000,000 EUR 100 FC omniCon Baumanagement GmbH Vienna 100,000 EUR 100 FC PHI Finanzbeteiligungs und Investment GmbH Vienna 35,000 EUR 100 FC 1) FC full consolidation, AEJV at equity consolidation joint ventures n 2) F foundation, A acquisition CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 2 06 As at 31.12.2020, CA Immo Group held 99.7% of shares in CA Immo Deutschand GmbH, Frankfurt am Main (or simply Frankfurt). The following subsidiaries, shares in joint ventures and associated companies of CA Immo Deutsch- land GmbH, Frankfurt, are therefor also included in the consolidated financial statements: Company Registered office Nominal capital Currency Interest in % Consoli- dation method 1) Foundation/ First time consolidation in 2020 2) Brandenburg Properties 7 B.V. Amsterdam 18,000 EUR 100 FC A CA Immo Berlin Am Karlsbad 11 Betriebs GmbH Berlin 25,000 EUR 100 FC F CA Immo Berlin Am Karlsbad 11 GmbH & Co. KG Berlin 5,000 EUR 100 FC CA Immo Berlin Am Karlsbad 11 Verwaltungs GmbH Berlin 25,000 EUR 100 FC CA Immo Berlin Europaplatz Verwaltungs GmbH Berlin 25,000 EUR 100 FC CA Immo Berlin Europaplatz 01 GmbH & Co. KG Berlin 5,000 EUR 100 FC CA Immo Berlin Europaplatz 01 Verwaltungs GmbH Berlin 25,000 EUR 100 FC CA Immo Berlin Europaplatz 03 GmbH & Co. KG Berlin 5,000 EUR 100 FC CA Immo Berlin Europaplatz 04 GmbH & Co. KG Berlin 5,000 EUR 100 FC CA Immo Berlin Hallesches Ufer GmbH Berlin 25,000 EUR 100 FC CA Immo Berlin Lehrter Stadtquartier 4 GmbH & Co. KG Berlin 5,000 EUR 100 FC CA Immo Berlin Lehrter Stadtquartier 7 GmbH & Co. KG Berlin 5,000 EUR 100 FC CA Immo Berlin Lehrter Stadtquartier 8 Verwaltungs GmbH Berlin 25,000 EUR 100 FC CA Immo Berlin Lehrter Stadtquartier 8 GmbH & Co. KG Berlin 5,000 EUR 100 FC CA Immo Berlin Lehrter Stadtquartier Verwaltungs GmbH Berlin 25,000 EUR 100 FC CA Immo Berlin Mitte 01 GmbH & Co. KG Berlin 5,000 EUR 100 FC CA Immo Berlin Mitte 01 Verwaltungs GmbH Berlin 25,000 EUR 100 FC CA Immo Berlin Mitte 02 GmbH & Co. KG Berlin 5,000 EUR 100 FC CA Immo Berlin Mitte 02 Verwaltungs GmbH Berlin 25,000 EUR 100 FC CA Immo Berlin Pohlstraße GmbH Berlin 25,000 EUR 100 FC CA Immo Berlin Schöneberger Ufer Beteiligungs GmbH Berlin 25,000 EUR 100 FC CA Immo Berlin Schöneberger Ufer GmbH & Co. KG Berlin 25,000 EUR 100 FC CA Immo Berlin Schöneberger Ufer Verwaltungs GmbH Berlin 25,000 EUR 100 FC CA Immo Berlin Upbeat GmbH & Co. KG Berlin 5,000 EUR 100 FC CA Immo Berlin Upbeat Verwaltungs GmbH Berlin 25,000 EUR 100 FC Stadthafenquartier Europacity Berlin GmbH & Co. KG Berlin 5,000 EUR 50 AEJV Stadthafenquartier Europacity Berlin Verwaltungs GmbH Berlin 25,000 EUR 50 AEJV CA Immo Düsseldorf BelsenPark MK 2.1 Projekt GmbH & Co. KG Frankfurt 5,000 EUR 100 FC CA Immo Düsseldorf BelsenPark MK 3 Projekt GmbH & Co. KG Frankfurt 5,000 EUR 100 FC CA Immo Düsseldorf BelsenPark Verwaltungs GmbH Frankfurt 25,000 EUR 100 FC CA Immo Frankfurt Alpha GmbH Frankfurt 25,100 EUR 100 FC CA Immo Frankfurt Karlsruher Straße GmbH & Co. KG Frankfurt 5,000 EUR 100 FC CA Immo Frankfurt Karlsruher Straße Verwaltungs GmbH Frankfurt 25000 EUR 100 FC CA Immo Frankfurt Nord 4 GmbH & Co. KG Frankfurt 5,000 EUR 100 FC CA Immo Frankfurt Nord 4 Verwaltungs GmbH Frankfurt 25,000 EUR 100 FC 1) FC full consolidation, AEJV at equity consolidation joint ventures 2) F foundation, A acquisition CONSOLIDATED FINANCIAL STATEMENTS 2 07 Company Registered office Nominal capital Currency Interest in % Consolidation method 1) Foundation / First time consolidation in 2020 2) CA Immo Frankfurt ONE Betriebs GmbH Frankfurt 25,000 EUR 100 FC CA Immo Frankfurt ONE GmbH Frankfurt 25,000 EUR 100 FC CA Immo München MK 6 - Arnulfpark Grundstücksverwertungs GmbH Frankfurt 25,000 EUR 100 FC omniCon Gesellschaft für innovatives Bauen mbH Frankfurt 100,000 EUR 100 FC Zollhafen Mainz Quartiergarage GmbH Frankfurt 25,000 EUR 100 FC Baumkirchen MI GmbH & Co. KG Grünwald 5,000 EUR 100 FC Baumkirchen MI Verwaltungs GmbH Grünwald 25,000 EUR 100 FC Baumkirchen MK GmbH & Co. KG Grünwald 10,000 EUR 100 FC Baumkirchen MK Verwaltungs GmbH Grünwald 25,000 EUR 100 FC Baumkirchen WA 1 GmbH & Co. KG Grünwald 10,000 EUR 50 AEJV Baumkirchen WA 1 Verwaltungs GmbH Grünwald 25,000 EUR 50 AEJV Baumkirchen WA 2 GmbH & Co. KG Grünwald 10,000 EUR 50 AEJV Baumkirchen WA 2 Verwaltungs GmbH Grünwald 25,000 EUR 50 AEJV Baumkirchen WA 3 GmbH & Co. KG Grünwald 10,000 EUR 50 AEJV Baumkirchen WA 3 Verwaltungs GmbH Grünwald 25,000 EUR 50 AEJV CA Immo Bayern Betriebs GmbH Grünwald 25,000 EUR 100 FC CA Immo München Ambigon Nymphenburg GmbH & Co. KG Grünwald 5,000 EUR 100 FC CA Immo München Ambigon Nymphenburg Verwaltungs GmbH Grünwald 25,000 EUR 100 FC CA Immo München Nymphenburg GmbH & Co. KG Grünwald 5,000 EUR 100 FC CA Immo München Nymphenburg Verwaltungs GmbH Grünwald 25,000 EUR 100 FC CA Immo Projektentwicklung Bayern GmbH & Co. KG Grünwald 255,646 EUR 100 FC CA Immo Projektentwicklung Bayern Verwaltungs GmbH Grünwald 25,565 EUR 100 FC CAMG Zollhafen HI IV V GmbH & Co. KG Grünwald 105,000 EUR 50 3) AEJV CAMG Zollhafen HI IV V Verwaltungs GmbH Grünwald 25,000 EUR 50 3) AEJV CPW Immobilien GmbH & Co. KG i.L. Grünwald 5,000 EUR 33.32 3) AEJV CPW Immobilien Verwaltungs GmbH Grünwald 25,000 EUR 33.34 3) AEJV Eggarten Projektentwicklung GmbH&Co.KG Grünwald 16,000 EUR 50 AEJV Eggarten Projektentwicklung Verwaltung GmbH Grünwald 25,000 EUR 50 AEJV Kontorhaus Arnulfpark Betriebs GmbH Grünwald 25,000 EUR 100 FC Kontorhaus Arnulfpark GmbH & Co. KG Grünwald 100,000 EUR 99.93 FC Kontorhaus Arnulfpark Verwaltungs GmbH Grünwald 25,000 EUR 100 FC SKYGARDEN Arnulfpark GmbH & Co. KG Grünwald 100,000 EUR 100 FC SKYGARDEN Arnulfpark Verwaltungs GmbH Grünwald 25,000 EUR 100 FC A 1) FC full consolidation, AEJV at equity consolidation joint ventures 2) F foundation, A acquisition 3) Common control CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 2 08 Com p any Registered office Nominal capital Currency Interest in % Consolidation method 1) Foundation/ First time consolidation in 2020 2) Congress Centrum Skyline Plaza Beteiligung GmbH Hamburg 25,000 EUR 50 AEJV Congress Centrum Skyline Plaza GmbH & Co. KG Hamburg 25,000 EUR 50 AEJV Congress Centrum Skyline Plaza Verwaltung GmbH Hamburg 25,000 EUR 50 AEJV CA Immo Mainz Hafenspitze GmbH Mainz 25,000 EUR 100 FC CA Immo Mainz Rheinallee III GmbH&Co. KG Mainz 5,000 EUR 100 FC CA Immo Mainz Rheinwiesen II GmbH & Co. KG Mainz 5,000 EUR 100 FC CA Immo Mainz Rheinwiesen III Verwaltung GmbH Mainz 25,000 EUR 100 FC Mainzer Hafen GmbH Mainz 25,000 EUR 50 AEJV Marina Zollhafen GmbH Mainz 25,000 EUR 37,5 3) AEJV Zollhafen Mainz GmbH & Co. KG Mainz 1,200,000 EUR 50,1 3) AEJV SEG Kontorhaus Arnulfpark Beteiligungsgesellschaft mbH München 25,000 EUR 99 FC Skyline Plaza Generalübernehmer GmbH & Co. KG Oststeinbek 25,000 EUR 50 AEJV Skyline Plaza Generalübernehmer Verwaltung GmbH Oststeinbek 25,000 EUR 50 AEJV Boulevard Süd 4 Verwaltungs-GmbH Ulm 25,000 EUR 100 FC A Boulevard Süd 4 GmbH & Co. KG Ulm 200,000 EUR 100 FC A 1) FC full consolidation, AEJV at equity consolidation joint ventures 2) F foundation, A acquisition 3) Common control CONSOLIDATED FINANCIAL STATEMENTS 209 The Management Board Andreas Quint (Chairman) Dr. Andreas Schillhofer (Member of the Management Board) Keegan Viscius (Member of the Management Board) Vienna, March 24, 2021 DECLARATION OF THE MANAGEMENT BOARD CONSOLIDATED FINANCIAL STATEMENTS 210 The management board confirms to the best of their knowledge that the consolidated financial statements of CA Im- mobilien Anlagen Aktiengesellschaft, which were prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU, give a true and fair view of the consolidated financial position of CA Immo Group and its consolidated financial performance and of its consolidated cash flows and that the group management report gives a true and fair view of the business development, the financial performance, and financial position of the Group, together with a description of the principal risks and uncertainties the CA Immo Group faces. The Ma nageme nt Board Andreas Quint (Chief Exec utiv e Officer) Dr. Andreas Schillhofer (Member of the Management Board) Keegan Viscius (Member oft he Management Board) DECLARATION OF THE MANAGEMENT BOARD PURSUANT TO SECTION 124 (1) OF THE AUSTRIAN STOCK EXCHANGE ACT Vienna, March 24, 2021 AUDITOR’S REPORT 211 Report on the Consolidated Financial Statements Audit Opinion We have audited the consolidated financial statements of CA Immobilien Anlagen Aktiengesellschaft, Vienna, and of its subsidiaries (the Group) comprising the consolidated statement of financial position as of December 31, 2020, the consolidated statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the fiscal year then ended and the notes to the con- solidated financial statements. Based on our audit the accompanying consolidated financial statements were prepared in accordance with the legal regulations and present fairly, in all material respects, the assets and the financial position of the Group as of December 31, 2020 and its financial performance for the year then ended in accordance with the International Financial Report- ings Standards (IFRS) as adopted by EU, and the additional requirements under Section 245a Austrian Company Code UGB. Basis for Opinion We conducted our audit in accordance with the regulation (EU) no. 537/2014 (in the following "EU regulation") and in accordance with Austrian Standards on Auditing. Those standards require that we comply with International Stand- ards on Auditing (ISA). Our responsibilities under those regulations and standards are further described in the "Audi- tor’s Responsibilities for the Audit of the Consolidated Financial Statements" section of our report. We are independent of the Group in accordance with the Austrian General Accepted Accounting Principles and professional requirements and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the au- dit evidence we have obtained until the date of this auditor’s report is sufficient and appropriate to provide a basis for our opinion by this date. Key Audit Matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the con- solidated financial statements of the fiscal year. These matters were addressed in the context of our audit of the consoli- dated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. The following are the key audit matters that we identified: Tit e l Valuation of Investment Property Risk CA Immobilien Anlagen Aktiengesellschaft reports investment properties in the amount of TEUR 4,723,068 and investment properties under development in the amount of AUDITOR’S REPORT ) AUDITOR’S REPORT AUDITORS REPORT 212 TEUR 791,136 in its consolidated financial statements as of December 31, 2020. The consoli- dated financial statements as of December 31, 2020 also include a result from revaluation amounting to TEUR 183,499. Investment properties are measured at fair value based on valuation reports from external, independent valuation experts. The valuation of investment properties is subject to material assumptions and estimates. The material risk for every individual property exists when determining assumptions and es- timates such as the discount-/capitalization rate and rental income and for investment prop- erties under development the construction and development costs to completion and the de- veloper’s profit. A minor change in these assumptions and estimates can have a material im- pact on the valuation of investment properties. The respective disclosures relating to significant judgements, assumptions and estimates are shown in Section “3.1 Long-term property assets” in the consolidated financial state- ments. Consideration in the audit To address this risk, we have critically assessed the assumptions and estimates made by management and the external valuation experts and performed, among others, the following audit procedures with involvement of our internal property valuation experts: – Assessment of concept and design of the underlying property valuation process – Assessment of the competence, capability and obj ectivity of the external valuation experts engaged by management – Assessment of the applied methods and the mathematical accuracy of selected valuation reports as well as assessment of the plausibility of the underlying assumptions (eg. Rental income, discount-/capitalization rate, usable space, vacancy rate) by means of comparison with market data if available – Check of certain input-data as included in the valuation reports with data in the accounting system or underlying agreements – Inquiry of project-management for selected properties under development regarding rea- sons for deviations between plan and actual costs and current estimation of cost to comple- tion; check of actual costs for those projects through review of project-documentation an d vouching on a sample basis as well as evaluation of the derived percentage of completion Other Information Managem ent is responsible for the other information. The other information comprises the information included in the annual report and the annual financial report, but does not include the consolidated financial statements, the Group’s management report and the auditor’s report thereon. We received the consolidated Corporate Governance Report until the date of this audit opinion; the rest of the annual report is estimated to be provided to us after the date of the auditor's report. Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the consolidated financial statements, our responsibility is to read the other infor- mation and, in doing so, to consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. AUDITOR’S REPORT 213 Responsibilities of Management and of the Audit Committee for the Consolidated Financial Statements Management is responsible for the preparation of the consolidated financial statements in accordance with IFRS as adopted by the EU, and the additional requirements under Section 245a Austrian Company Code UGB for them to pre- sent a true and fair view of the assets, the financial position and the financial performance of the Group and for such internal controls as management determines are necessary to enable the preparation of consolidated financial state- ments that are free from material misstatement, whether due to fraud or error. In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so. The Audit Committee is responsible for overseeing the Group’s financial reporting process. Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opin- ion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the EU regulation and in accordance with Austrian Standards on Auditing, which require the application of ISA, always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. As part of an audit in accordance with the EU regulation and in accordance with Austrian Standards on Auditing, which require the application of ISA, we exercise professional judgment and maintain professional scepticism through- out the audit. We also: – identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, mis- representations, or the override of internal control. – obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropri- ate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control. – evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related dis- closures made by management. – conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such disclo- sures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern. – evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation. – obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion. AUDITOR’S REPORT AUDITORS REPORT 214 We communicate with the Audit Committee regarding, among other matters, the planned scope and timing of the au- dit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide the Audit Committee with a statement that we have complied with relevant ethical requirements re- garding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with the Audit Committee, we determine those matters that were of most signifi- cance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the ad- verse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such commu- nication. Report on Other Legal and Regulatory Requirements Comments on the Management Report for the Group Pursuant to Austrian Generally Accepted Accounting Principles, the management report for the Group is to be au- dited as to whether it is consistent with the consolidated financial statements and as to whether the management report for the Group was prepared in accordance with the applicable legal regulations. Management is responsible for the preparation of the management report for the Group in accordance with Austrian Generally Accepted Accounting Principles. We conducted our audit in accordance with Austrian Standards on Auditing for the audit of the management report for the Group. Opinion In our opinion, the management report for the Group was prepared in accordance with the valid legal requirements, comprising the details in accordance with Section 243a Austrian Company Code UGB, and is consistent with the con- solidated financial statements. Statement Based on the findings during the audit of the consolidated financial statements and due to the thus obtained under- standing concerning the Group and its circumstances no material misstatements in the management report for the Group came to our attention. Additional information in accordance with article 10 EU regulation We were elected as auditor by the ordinary general meeting at August 25, 2020. We were appointed by the Supervi- sory Board on October 15, 2020. We are auditors since the financial year 2017. We confirm that the audit opinion in the Section "Report on the consolidated financial statements" is consistent with the additional report to the audit committee referred to in article 11 of the EU regulation. We declare that no prohibited non-audit services (article 5 par. 1 of the EU regulation) were provided by us and that we remained independent of the audited company in conducting the audit. AUDITOR’S REPORT 21 5 Responsible Austrian Certified Public Acc ountant The engagement partner is Alexander Wlasto, Certified Public Accountant. ) This report is a translation of the original report in German, which is solely valid. Publication or sharing with third parties of the consolidated financial statements together with our auditor's opinion is only allowed if the consolidated financial statements and the management report for the Group are identical with the German audited version. This audit opinion is only applicable to the German and complete consolidated financial statements with the management report for the Group. Section 281 paragraph 2 UGB (Austrian Company Code) applies to alternated versions. Vienna, March 24, 2021 Ernst & Young Wirtschaftsprüfungsgesellschaft m.b.H. Mag. Alexander Wlasto mp Mag. (FH) Isabelle Vollmer mp Wirtschaftsprüferin / Certified Public Accountant Wirtschaftsprüfer / Certified Public Accountant FINANCIAL STATEMENTS AND MANAGEMENT REPORT CA IMMOBILIEN ANLAGEN AKTIENGESELLSCHAFT, VIENNA 2 17 CA IMMOBILIEN ANLAGEN AKTIENGESELLSCHAFT, VIENNA ANNEX 1 218 FINANCIAL STATEMENTS AND MANAGEMENT REPORT ANNEX 1 Financial statements as at 31.12.2020 216 Balance Sheet as at 31.12.2020 219 Income Statement for the year ended 31.12.2020 221 Notes on the Financial Statement for the year ended 31.12.2020 222 Asset Analysis for the business year 2020 241 Information about Group companies 243 244 276 277 ANNEX 2 Management Report Declaration of the management board due to section 124 of the austrian stock exchange act (Börsegesetz) Auditor’s Report Contact/Disclaimer/Imprint CONTENT 282 CA IMMOBILIEN ANLAGEN AKTIENGESELLSCHAFT, VIENNA ANNEX 1 2 19 Assets 31.12.2020 31.12.2019 € € 1,000 A. Fixed assets I. Intan g ible fixed assets Software 542,481.16 427 542,481.16 427 II. Tan g ible fixed assets 1. Land and buildin g s 246,782,898.41 250,895 of which land value: € 43,562,646.81; 31.12.2019: € 47,251 K 2. Other assets, office furniture and e q ui p ment 1,293,942.93 1,475 248,076,841.34 252,370 III. Financial assets 1. Investments in affiliated com p anies 2,938,723,674.92 2,600,187 2. Loans to affiliated com p anies 538,239,806.52 680,530 3. Investments in associated com p anies 273,352.50 273 3,477,236,833.94 3,280,990 3,725,856,156.44 3,533,787 B. Current assets I. Receivables 1. Trade receivables 461,024.01 1,594 2. Receivables from affiliated com p anies 27,839,484.01 29,123 3. Receivables from associated com p anies 12,000.00 0 4. Other receivables 1,735,321.10 1,281 30,047,829.12 31,998 II. Cash and cash e q uivalents 694,417,938.63 60,285 724,465,767.75 92,283 C. Deferred char g es 9,929,510.12 3,837 D. Deferred tax asset 0.00 0 4,460,251,434.31 3,629,907 BALANCE SHEET AS AT 31.12.2020 CA IMMOBILIEN ANLAGEN AKTIENGESELLSCHAFT, VIENNA ANNEX 1 2 20 Liabilities and shareholders’ equity 31.12.2020 31.12.2019 € € 1,000 A. Shareholders' e q uit y I. Share ca p ital Share ca p ital drawn 718,336,602.72 718,337 Treasur y shares – 42,020,868.99 – 42,021 676,315,733.73 676,316 II. Tied ca p ital reserves 854,841,594.68 854,841 III. Tied reserves for treasur y shares 42,020,868.99 42,021 IV. Net p rofit 897,604,901.81 907,530 of which p rofit carried forward: € 814,501,632.53; 31.12.2019: € 860,827 K 2,470,783,099.21 2,480,708 B. Grants from p ublic funds 389,554.00 297 C. Provisions 1. Provision for severance p a y ment 504,984.00 336 2. Tax p rovisions 114,000.00 1,240 3. Provision for deferred taxes 161,502.73 352 4. Other p rovisions 42,658,967.29 17,932 43,439,454.02 19,860 D. Liabilities 1. Bonds 1,741,481,500.00 990,000 of which convertible: € 200,000,000.00; 31.12.2019: € 200,000 K thereof with a residual term of u p to one y ear: € 107,450,000.00; 31.12.2019: € 0 K thereof with a residual term of more than one y ear: € 1,634,031,500.00; 31.12.2019: € 990,000 K 2. Liabilities to banks 111,133,536.70 111,908 thereof with a residual term of u p to one y ear: € 1,847,500.00; 31.12.2019: € 29,571 K thereof with a residual term of more than one y ear: € 109,286,036.70; 31.12.2019: € 82,337 K 3. Trade p a y ables 946,555.43 636 thereof with a residual term of u p to one y ear: € 607,967.42 ; 31.12.2019: € 472 K thereof with a residual term of more than one y ear: € 338,588.01; 31.12.2019: € 164 K 4. Pa y ables to affiliated com p anies 67,135,728.87 5,047 thereof with a residual term of u p to one y ear: € 67,135,728.87; 31.12.2019: € 5,047 K 5. Other liabilities 18,969,038.56 15,288 of which from taxes: € 451,862.43; 31.12.2019: € 381 K o f which social securit y related: € 150,969.47; 31.12.2019: € 115 K thereof with a residual term of u p to one y ear: € 18,969,038.56; 31.12.2019: € 15,288 K 1,939,666,359.56 1,122,879 thereof with a residual term of u p to one y ear: € 196,010,234.85; 31.12.2019: € 50,378 K thereof with a residual term of more than one y ear: € 1,743,656,124.71; 31.12.2019: € 1,072,501 K E. Deferred income 5,972,967.52 6,163 4,460,251,434.31 3,629,907 CA IMMOBILIEN ANLAGEN AKTIENGESELLSCHAFT, VIENNA ANNEX 1 2 21 2020 2019 € € € 1,000 € 1,000 1. Gross revenues 30,228,013.76 28,883 2. Other operating income a) Income from the reversal of impairment losses of fixed assets except of financial assets 5,137,241.57 6,235 b) Income from the reversal of provisions 304,431.37 1,562 c) Other income 439,716.79 5,881,389.73 676 8,473 3. Staff expense a) Salaries – 12,901,612.89 – 11,643 b) Social expenses – 2,486,336.31 – 15,387,949.20 – 2,327 – 13,970 thereof expenses in connection with pensions: € 274,523.26; 2019: € 264 K thereof expenses for severance payments and payments into staff welfare funds: € 324,398.18; 2019: € 264 K thereof payments relating to statutory social security contributions as well as payments dependent on remuneration and compulsory contributions: € 1,743,166.33; 2019: € 1,658 K 4. Depreciation on intangible fixed assets and tangible fixed assets – 11,531,892.12 – 17,367 of which unscheduled depreciation in accordance with § 204 para. 2 Commercial Code: € 3,688,353.00; 2019: € 9,571 K 5. Other operating expenses a) Taxes – 26,296,987.43 – 549 b) Other expenses – 21,622,113.94 – 47,919,101.37 – 15,917 – 16,466 6. Subtotal from lines 1 to 5 (operating result) – 38,729,539.20 – 10,447 7. Income from investments 123,377,727.50 192,269 of which from affiliated companies: € 122,303,430.31; 2019: € 182,882 K 8. Income from loans from financial assets 19,796,015.83 21,803 of which from affiliated companies: € 19,796,015.83; 2019: € 21,528 K 9. Other interest and similar income 431,168.91 12 of which from affiliated companies: € 409,444.94; 2019: € 11 K 10. Income from the disposal and revaluation of financial assets 3,618,541.75 6,487 11. Expenses for financial assets and interest receivables in current assets, thereof – 3,501,531.28 – 138,603 a) Impairment: € 3,239,000,00; 2019: € 137,045 K b) Bad debt allowance of interest receivables € 0.00; 2019: € 380 K c) Expenses from affiliated companies: € 3,239,000.00; 2019: € 137,462 K 12. Interest and similar expenses – 34,633,718.56 – 29,188 of which relating to affiliated companies: € 766,426.25; 2019: € 1,962 K 13. Subtotal from lines 7 to 12 (financial result) 109,088,204.15 52,780 14. Result before taxes 70,358,664.95 42,333 15. Taxes on income 12,744,604.33 4,370 thereof deferred taxes: income € 190,749.79; expenses 2019: € 1,493 K 16. Net profit for the year 83,103,269.28 46,703 17. Profit carried forward from the previous year 814,501,632.53 860,827 18. Net profit 897,604,901.81 907,530 INCOME STATEMENT FOR THE YEAR ENDED 31.12.2020 CA IMMOBILIEN ANLAGEN AKTIENGESELLSCHAFT, VIENNA ANNEX 1 2 22 ACCOUNTING AND VALUATION PRINCIPLES AND GENERAL INFORMATION CA Immobilien Anlagen Aktiengesellschaft (“CA Immo AG”) is classified as public interest entity according to section 189a Austrian Commercial Code (UGB) and as a large company according to section 221 Austrian Commercial Code (UGB). The annual financial statements were prepared in accordance with Austrian Generally Accepted Accounting Princi- ples in the current version and with the principles of proper accounting and general standards, to present a true and fair view of assets, financial situation and profit and loss. Furthermore, going concern principle, prudence and com- pleteness as well as individual valuation of assets and liabilities were taken into account in the preparation of the fi- nancial statements. For profit and loss, classification by nature was used. Covid-19 pandemic - impact on CA Immo AG: Business year 2020 was significantly impacted by the Covid-19 pandemic effects as many countries imposed general lockdowns and travel restrictions. As a result, market activity was severely affected in many sectors starting in the second quarter of 2020. Hotels and retailers are increasingly requesting rent deferrals or rent reductions given the significant sales losses. The short- and long-term economic impact of the Covid-19 pandemic on real estate markets remains highly uncertain. The longer the crisis lasts, the more complex the issues become. The real estate markets have significantly declined transac- tion activity and liquidity. CA Immo AG did not make use of any state aid (neither short-time work, grants nor defer- rals). In order to ensure the safety of tenants and employees and to be able to react quickly if required, CA Immo AG has appointed a Health and Safety Taskforce, which starting March 2020, reacts on the developments and establishes hy- gienic measures to be taken at regional level in the respective office spaces. An action plan was set up and is updated whenever necessary, based on the actual infection numbers. These also include measures and internal rules of conduct for multiple scenarios and escalation levels to ensure a safe environment for all building users at all times. Due to the Covid-19 pandemic a Home-Office rule is in place for all employees. Offices of C A Immo AG are open with voluntary office attendance, maximum 50% attendance and mandatory mask wearing in all office spaces. Business trips and meetings are only to be made in exceptional cases. Going Concern The Covid-19 pandemic had no significant impact on the financial position, financial performance and cash flows of CA Immo AG as at 31.12.2020. However, due to further/ or lack of legal measures, it cannot be ruled out that the pandemic could have negative ef- fects on real estate properties or tenant groups (in particular offices, hotels, retail). Thus the effects of the Covid-19 pan- demic on the future financial position of CA Immo AG cannot be conclusively assessed and are continuously evalu- ated. Financial Covenants Bank financings in CA Immo AG and its subsidiaries are subject to so-called financial convenants. In case of invest- ment properties, these are usually LTV (Loan to Value), ISCR (Interest Service Coverage Ratio) and DSCR (Debt Service Coverage Ratio) or, in the case of project financing, LTC (Loan to Cost) and ISCR (Interest Service Coverage Ratio). NOTES ON THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31.12.2020 CA IMMOBILIEN ANLAGEN AKTIENGESELLSCHAFT, VIENNA ANNEX 1 2 23 Given the ongoing negative economic development, it cannot be ruled out that there will be a breach of contractual conditions (financial convenants, in particular DSCR) in the future due to tenant defaults. As at 31.12.2020 no financial convenants of the CA Immo AG and its subsidiaries were breached. The effects of the Covid-19 pandemic on possible future breaches of financial convenants of the CA Immo AG are continuously evaluated. The Covid-19 pandemic has no impact on the accounting policies applied. 1. Fixed assets Intangible and tangible fixed assets Intangible and tangible assets are stated at acquisition or production cost reduced by scheduled depreciation, if depre- ciable, and unscheduled depreciation, where required. Years from to Software 3 4 Fit-outs 5 10 Buildings 33 50 Other assets, office furniture and equipment 2 20 Scheduled depreciation is performed on a linear basis, with th e depreciation period corresponding to useful life ex- pectancy. Additions in the first half of the business year are subject to full annual depreciation, while additions in the second half are subject to half of the annual depreciation. Unscheduled depreciation is only carried out where it is anticipated that permanent value impairments will occur. Reversal of impairments recognised in prior periods are recorded if the fair value is higher than the book value at the balance sheet date, but below amortised costs. Financial assets Shares in affiliated companies and investments are stated at acquisition costs less unscheduled depreciation. Loans to affiliated companies are stated at acquisition costs less repayments made and unscheduled depreciation. Unscheduled depreciation is only recorded if permanent impairment losses are expected to occur. A reversal of im- pairment losses recognised in prior periods is recorded if the fair value is considerably higher than the book value at the balance sheet date. The valuation is done by a simplified subsidiary valuation model based on the fair value of the respective property for IFRS purposes adjusted for other assets or liabilities of the subsidiary. 2. Current assets Receivables are stated at nominal value. Identifiable default risks are considered by carrying out individual value ad- justments. Income from investments is recognised on the basis of shareholders’ resolutions. Reversal of short-term assets impairments or the release of allowances are made when the underlying reasons for such decreases are no longer valid. The basis for determining the fair values of interest receivables is the market value of the properties of the respective subsidiaries (based on market value appraisals used for the IFRS consolidated financial statements purposes). CA IMMOBILIEN ANLAGEN AKTIENGESELLSCHAFT, VIENNA ANNEX 1 2 24 3. Deferred charges and deferred income Prepayments are recorded under deferred charges. Additionally the disagio of the bond is capitalised under this item and released over the redemption period, according to the effective interest rate method. Rent prepayments and investment allowances from tenants are shown under deferred income and will be released over the minimum lease term. 4. Grants from public funds These grants will be released over the remaining useful life of the building. 5. Deferred taxes Provisions for deferred taxes are made using the 25% rate of corporate income tax, according to Art 198 par 9 and 10 in Austrian Commercial Code, using the liability method, i.e. on the temporary differences arising between tax basis of assets and liabilities and their accounting values and without discounting. Deferred taxes with a tax rate of 3% were also applied to deferred taxes of tax members, which themselves account for only 22% of group tax (instead of 25% corporate income tax). CA Immo AG records tax losses amounting to the maximum of netted deferred tax assets and deferred tax liabilities, taking into account the 75% threshold. As the tax planning does not provide sufficient evidence of future taxable profits, as at 31.12.2020 it was not possible to exercise the option to capitalize carried forward losses. 6. Provisions Provisions for severance payments amount to 700 % (31.12.2019: 490%) of the imputed statutory notional severance payment obligations at the balance sheet date. The calculation is performed using the PUC method, which is recognised in international accounting, based on an interest rate of -0.34% (31.12.2019: -0.25%) and future salary increases (in- cluding inflation rate) of 3% (31.12.2019: 4%). For the computation of severance payments provisions, AVÖ 2018-P was used as actuarial basis. The period for build-up is until retirement, i.e. for a maximum of 25 years. Interest as well as effects from the change in interest rate were recorded in “personnel expenses”. Tax and other provisions are made on a prudent basis, in accordance with anticipated requirements. They take intoac- count all identifiable risks and not yet finally assessed liabilities. 7. Liabilities Liabilities are stated at the amount to be paid. 8. Tax group In business year 2005 a group and tax compensation agreement was concluded for the formation of a tax group within the meaning of section 9 of the Austrian Corporation Tax Act (KStG) effective from business year 2005. In the subse- quent years this was expanded to include additional group members. The group is headed by CA Immo AG. In business year 2020 the tax group comprised 15 Austrian group companies (2019: 14), in addition to the group head entity. The allocation method used by the CA Immo tax group is the distribution method where tax profits of a group member are offset against pre-group tax losses carried forward and the remaining profit of the group member taxed at a rate of 22%, respectively up to a tax rate of 25% if the tax group has a profit. Losses carried forward of a group member are retained. In case of termination of the tax group or the withdrawal of a tax group member, CA Immo AG, as group head entity, is obliged to pay a final compensation payment for unused tax losses that have been allocated to the head of the group. These compensation payments are based on the fair value of all (notional) prospective tax reductions, which the CA IMMOBILIEN ANLAGEN AKTIENGESELLSCHAFT, VIENNA ANNEX 1 2 25 group member would have potentially realized, if it had not joined the tax group. Upon withdrawal of a tax group member or termination of the tax group, the final compensation payment will be determined through the professional opinion of a mutually appointed chartered accountant. As at 31.12.2020 the possible obligations against group companies resulting from a possible termination of the group, were estimated at € 23,028 K (31.12.2019: € 28,698 K). As at 31.12.2020 no group companies left tax group, so no provision for termination settlement was made. Tax expenses in the profit and loss are reduced by the tax compensation of tax group members. 9. Note on currency translation Foreign exchange receivables are valued at the purchase price or the lower exchange rate as at the balance sheet date. Foreign exchange liabilities are valued at the purchase price or the higher exchange rate as at the balance sheet date. EXPLANATORY NOTES ON THE BALANCE SHEET AND INCOME STATEMENT 10. Explanatory notes on the balance sheet a) Fixed assets The breakdown and development of fixed assets can be seen in the assets an alysis in Appendix 1. Tangible assets Additions to property and buildings mainly relate to investments in Erdberger Lände. As at the balance sheet date, the tangible assets comprise 8 properties (31.12.2019: 8 properties). In 2020 unscheduled depreciation on tangible assets amounted to € 3,688 K (2019: € 9,571 K) and reversals of impair- ment losses amounting to € 5,137 K (2019: € 6,235 K) were recorded. Financial assets The notes on affiliated companies can be found in Appendix 2. Impairment losses on financial assets in the amount of € 3,239 K (2019: € 137,045 K) and reversals of impairment losses in the amount of € 3,397 K (2019: € 5,767 K) were recognized in 2020. Book value of investments in affiliated companies amounts to € 2,938,724 K (31.12.2019: € 2,600,187 K). Current addi- tions are mainly the result of various shareholders’ contributions and of an acquisition of the company CA Immo P14 Sp.z.o.o., Warsaw. CA IMMOBILIEN ANLAGEN AKTIENGESELLSCHAFT, VIENNA ANNEX 1 2 26 Loans to affiliated companies are made up as follows: € 1,000 31.12.2020 31.12.2019 CA Immo Holding B.V., Amsterdam 130,758 240,787 EUROPOLIS ORHIDEEA B.C. S.R.L., Bucharest 54,424 59,703 4P - Immo. Praha s.r.o., Prague 39,589 41,389 RCP Amazon, s.r.o., Prague 33,488 33,888 Europolis Holding B.V., Amsterdam 31,690 31,690 Vaci 76 Kft, Budapest 28,976 30,876 INTERMED CONSULTING & MANAGEMENT S.R.L., Bucharest 28,200 37,200 BA Business Center s.r.o., Bratislava 25,000 28,000 EUROPOLIS City Gate Ingatlanberuházási Kft, Budapest 22,700 23,400 CA Immo Invest GmbH, Frankfurt 22,000 25,500 Duna Irodaház Kft., Budapest 20,239 20,239 Other up to € 20 m 101,176 107,858 538,240 680,530 Loans to affiliated companies to the value of € 25,000 K (31.12.2019: € 18,010 K) have a remaining term of up to one year. Impaired other loans were disposed in 2020 due to uncollectibility. b) Current assets All receivables – as in the previous year – have a due date of less than one year. There is no exchangeable securitiza- tion issued in connection with receivables. Trade receivables amounting to € 461 K (31.12.2019: € 1,594 K) include outstanding rent and reinvoiced operating costs. Receivables from affiliated companies are made up as follows: € 1,000 31.12.2020 31.12.2019 Trade receivable (current reinvoicings to affiliated companies) 987 944 Receivables from tax compensation 12,716 7,203 Receivables from interest 11,636 20,976 Receivables from loans 2,500 0 27,839 29,123 Other receivables amounting to € 1,735 K (31.12.2019: € 1,281 K) mainly include receivables from the seller of CA Immo P14 Sp.z.o.o., Warsaw, due to a subsequent purchase price adjustment. CA IMMOBILIEN ANLAGEN AKTIENGESELLSCHAFT, VIENNA ANNEX 1 2 27 c) Deferred charges € 1,000 31.12.2020 31.12.2019 Disagio bonds 9,339 3,680 Other 591 157 9,930 3,837 d) Share holders' equity Share capital is equivalent to the fully paid in nominal capital of € 718,336,602.72 (31.12.20 19: € 718,336.602.72). It is divided into 98,808,332 (31.12.2019: 98,808,332) bearer shares and four registered shares of no par value. Out of nominal capital 5,780,037 treasury shares (31.12.2019: 5,780,037), each amounting to € 7.27, thus totaling € 42,020,868.99 (31.12.2019: € 42,020,868.99), were deducted from shareholders’ equity. The registered shares are held by SOF-11 Klimt CAI S.à r.l., Luxemburg, an entity managed by Starwood Capital Group, each granting the right to nominate one member of the Supervisory Board. The Supervisory Board currently consists of six members elected by the Annual General Meeting as well as two members elected by the registered shares and four delegated by the works council. As at 31.12.2020, CA Immobilien Anlagen AG held 5,780,037 treasury shares in total (31.12.2019: 5,780,037 treasury shares). Given the total number of voting shares issued (98,808,336), this is equivalent to around 5.8% (31.12.2019: 5.8%) of the voting shares. In 2020 a dividend of € 1.00 (2019: € 0.90) for each entitled share, in total € 93,028 K (2019: € 83,725 K) was distrib- uted to the shareholders. The total net profit as at 31.12.2020 amounting to € 897,605 K (31.12.2019: € 907,530 K) is not subject to dividend payment constraints. As at 31.12.2020 there is unused authorised capital amounting to € 359,168,301.36 that may be drawn on or before 18.9.2023, as well as conditional capital in the total amount of € 47,565,458.08 earmarked for the specified purpose of servicing 0.75% convertible bonds 2017-2025 (conditional capital 2013) as well as conditional capital in the amount of € 143,667,319.09 earmarked for the specified purpose of servicing convertible bonds which are issued prospectively based on the authorization from the Ordinary General Meeting as of 9.5.2018 (conditional capital 2018). CA Immo AG has an outstanding non-subordinated unsecured convertible bond in an amount of € 200 m and a term until April 2025. The coupon payable semi-annually amounts to 0.75% p.a. and the initial conversion price has been set at € 30.5684 per share. This equaled a conversion premium of 27.50% above the volume weighted average price (VWAP) of the CA Immo shares amounting to € 23.9752 on the launch date. Following the dividend payment amount- ing to € 1.00 per share on 27.08.2020, the conversion price has most recently changed to € 29.7675 in accordance with section 11 (d) (ii) in issuance terms. The convertible bond was issued at 100% of its nominal value of € 100 K per bond and will be redeemed at 100% of the nominal value, if not previously repaid or converted. At the company’s choice, the redemption may be effected by the provision of shares, cash or a combination of the two. The declared revenues reserves are tied and the book value corresponds to the nominal value of the treasury shares deducted from the share capital. CA IMMOBILIEN ANLAGEN AKTIENGESELLSCHAFT, VIENNA ANNEX 1 2 28 € 1,000 31.12.2020 31.12.2019 Other additional expenses for treasury shares – 53,663 – 53,663 Nominal treasury shares in share capital 42,021 42,021 Reserves for other acquisition costs for treasury shares 53,663 53,663 Tied revenue reserves for treasury shares 42,021 42,021 The req uirement of the legal reserve up to 10% of the share capital is fulfilled. The revenue reserves have not changed compared to the previous year. e) Grants from public funds Grants from public funds include an environmental grant (new building in energy efficient construction) fr om BMK awarded in 20 20 for the construction of the office building VIE in the amount of € 103 K. The grants are expensed over the remaining useful life of the respective asset. f) Provisions for deferred taxes Deferred taxes comprise the offsetting of deferred tax liabilities and deferred tax assets and are based on the differ- ences between tax and corporate value approaches for the following (+ deferred tax liabilities / - deferred tax assets): € 1,000 31.12.2020 31.12.2019 Land and buildings 12,426 10,987 Partnership 4,352 3,423 Other assets, office furniture and equipment 0 – 2 Ancillary bond expenses – 7,882 – 3,565 Bank loans ancillary expenses – 471 – 630 Provisions for severance payments – 49 – 57 Deferred income – 5,391 – 4,587 Base for tax rate 25 % 2,985 5,569 Differences in tax group members (basis for 3 % tax rate) 0 559 Out of which resulted provision for deferred taxes 746 1,409 less: offsetting with tax losses carried forward – 585 – 1,057 As at 31.12. 161 352 Movements in deferred tax liabilities are presented below: € 1,000 2020 2019 As at 1.1. provison for deferred taxes / deferred tax asset 352 – 1,141 Changes affecting profit and loss for deferred tax asset 0 1,141 Changes affecting profit and loss provisions for deferred taxes – 191 352 As at 31.12. provision for deferred taxes 161 352 CA IMMOBILIEN ANLAGEN AKTIENGESELLSCHAFT, VIENNA ANNEX 1 2 29 g) Provisions Provisions for severance payment amount to € 505 K (31.12.2019: € 336 K) and include severance payment entitle- ments of company employees and Management Board members. Tax provisions in the amount of € 114 K (31.12.2019: € 1,240 K) mainly relate to provisions for corporate tax for the current year. Other provisions are made up as follows: € 1,000 31.12.2020 31.12.2019 Court fees 25,475 0 Premiums 6,730 5,469 Derivative transactions 6,657 5,289 Construction services 1,001 3,440 Staff (vacation and overtime) 926 827 Legal, auditing and consultancy fees 460 1,173 Provision for land register 420 420 Other 990 1,314 42,659 17,932 The pro vision for court fees includes the provision for a claim for damages filed in the 2020 financial year against the Republic of Austria and the state of Carinthia in the amount of approximately € 1.9 billion in connection with the pri- vatisation of the Bundeswohnbaugesellschaften in 2004. Long Term Incentive (LTI) Programm: In order to promote a high level of identification with the company’s objectives, all employees are entitled to variable remuneration in addition to their fixed salary, thus enabling them to participate in the company’s success. In line with the compensation system of the Management Board, the prerequisite for this is the attainment of the budgeted quantita- tive and qualitative annual targets as well as a positive consolidated result. Furthermore, selected executives have the opportunity to participate in a share price-based compensation program. In contrast to the model for the Management Board (phantom shares), participation in the LTI programs started before the 2020 financial year was voluntary. The revolving programme had a term (retention period) of three years per tranche and required a personal investment (max- imum of 35% of the fixed annual salary). The personal investment was valued at the average share price of the first quarter of the year the tranche started. The number of underlying shares is determined on the basis of this valuation. At the end of the respective three-year performance period, target achievement was defined by means of a target/actual comparison. Performance was measured by the following key figures: NAV growth, TSR (total shareholder return) and FFO (funds from operations) growth. The weighting for NAV and FFO growth was 30% each, and for TSR 40%. Pay- ments were made in cash. The LTI program was subject to a comprehensive revision (adjustment to market standards) in 2019; the new program provides for changes with regard to the group of participants, the conditions of participation, and the performance indi- cators and was applied for the first time in fiscal year 2020. The new LTI program is revolving and does not provide for any personal investment. The plan grants performance-related remuneration in the form of virtual shares in CA Immo. The final number of virtual shares is determined on the basis of performance criteria linked to the medium-term strat- egy and share performance. The target amount of the LTI is divided by the volume-weighted average CA Immo share price (= closing price on the Vienna Stock Exchange) over the 3-month period prior to 31.12. of the respective bonus year. This method is used to calculate the preliminary number of virtual shares. Based on the performance criteria measured at the end of the four-year performance period, the final number of virtual shares is determined. The LTI is CA IMMOBILIEN ANLAGEN AKTIENGESELLSCHAFT, VIENNA ANNEX 1 2 30 generally determined as of 31.12. of the last year of the four-year performance period. Equal-weighted performance cri- teria for the LTI are Funds From Operations ("FFO") I and Relative Total Shareholder Return ("TSR") against the EPRA Nareit Developed Europe ex UK Index. Each tranche starts with a target value based on the executive's respective func- tion, which would be received at the end of the term of the respective tranche if 100% of the targets were achieved. The amount allocated to a performance criterion is determined by comparing agreed targets with values actually achieved and expressed as a percentage. Allocation between the performance thresholds is linear. The final number of virtual shares is capped at 200% of the preliminary number of virtual shares. For the payout, the final number of virtual shares is multiplied by the volume-weighted average price of the last three months of the performance period. The resulting amount is paid out in cash, subject to a cap of 250% of the LTI target amount. The bonus payment for the Management Board is linked to long-term operational and quality-based targets and also takes account of non-financial performance criteria. It is limited to 200% of the annual salary. Of the variable remuner- ation, half is linked to the attainment of short-term targets defined annually by the remuneration committee (annual bonus). The other half is based on outperformance of the following indicators defined annually by the remuneration committee: return on equity (ROE), funds from operations (FFO) and NAV growth. The level of the bonus actually paid depends on the degree of target attainment: the values agreed and actually achieved at the end of each business year are determined by the Remuneration Committee. Half of performance-related remuneration takes the form of immediate payments (short term incentive); the remaining 50% is converted into phantom shares on the basis of the average rate for the last quarter of the business year relevant to target attainment. The payment of phantom shares is made in cash in three equal parts after 12 months, 24 months (mid term incentive) and 36 months (long term incentive) at the average rate for the last quarter of the year preceding the payment year. For this kind of share-based remuneration, which is settled in cash, the liability incurred is recognised over the vest- ing period as a provision in the amount of the attributable fair value. Until the debt is settled, the attributable fair value is determined afresh on every closing date and settlement date. All changes are recognised in the income statement in the relevant business year. h) Liabilities 31.12.2020 Maturity Maturity Maturity Total € 1,000 up to 1 year 1 - 5 years more than 5 years Bonds 107,450 984,032 650,000 1,741,482 Liabilities to banks 1,848 51,116 58,170 111,134 Trade payables 608 339 0 947 Payables to affiliated companies 67,136 0 0 67,136 Other liabilities 18,969 0 0 18,969 Total 196,011 1,035,487 708,170 1,939,668 31.12.2019 Maturity Maturity Maturity Total € 1,000 up to 1 year 1 - 5 years more than 5 years Bonds 0 640,000 350,000 990,000 Liabilities to banks 29,571 48,433 33,904 111,908 Trade payables 472 164 0 636 Payables to affiliated companies 5,047 0 0 5,047 Other liabilities 15,288 0 0 15,288 Total 50,378 688,597 383,904 1,122,879 CA IMMOBILIEN ANLAGEN AKTIENGESELLSCHAFT, VIENNA ANNEX 1 2 31 In bonds, the convertible bond with its related maturity is also included. The bonds item for 31.12.2020 comprises the following liabilities: Nominal value Nominal interest rate Issue Repayment € 1,000 Convertible bond 2017-2025 200,000 0.75% 04.10.2017 04.04.2025 Bond 2016-2021 107,450 1.88% 12.07.2016 12.07.2021 Bond 2015-2022 142,411 2.75% 17.02.2015 17.02.2022 Bond 2016-2023 116,621 2.75% 17.02.2016 17.02.2023 Bonds 2017-2024 175,000 1.88% 22.02.2017 22.02.2024 Bonds 2020-2025 350,000 1.00% 27.10.2020 27.10.2025 Bonds 2018-2026 150,000 1.88% 26.09.2018 26.03.2026 Bonds 2020-2027 500,000 0.88% 05.02.2020 05.02.2027 1,741,482 In 2020, three corporate bonds with a total nominal value of € 98,519 K were partly repurchased and redeemed. This results in a loss of € 4,862 K, which is reported under interest and similar expenses. Liabilities to banks comprise investment loans amounting to € 111,134 K (31.12.2019: € 111,908 K), which are mainly secured by filed claims to entry in the land register and by pledge of bank credits as well as rental receivables as well claims from derivative transactions. Trade payables item essentially comprises liabilities for construction services and liability guarantees as well as gen- eral administrative costs. The liabilities shown under payables to affiliated companies relate to intra-group loans amounting to € 42,400 K (31.12.2019: € 4,870 K), grants to an affiliated company not paid but already granted amounting € 24,535 K and trade payables amounting to € 201 K (31.12.2019: € 177 K). Other liabilities are essentially made up of accrued interest for bonds amounting to € 16,985 K (31.12.2019: € 14,265 K), unpaid liabilities to the property management company, liabilities to the tenants and liabilities arising from payroll-accounting and tax charges. i) Deferred income € 1,000 31.12.2020 31.12.2019 Investment grants from tenants 5,391 5,686 Rent prepayments received 582 477 5,973 6,163 CA IMMOBILIEN ANLAGEN AKTIENGESELLSCHAFT, VIENNA ANNEX 1 2 32 j) Contingent liabilities Maximum amount as at Outstanding on reporting date Outstanding on reporting date 31.12.2020 31.12.2020 31.12.2019 1,000 € 1,000 € 1,000 Guarantees and letters of comfort in connection with sales made by affiliated companies 78,076 € 60,746 38,503 Guarantees for loans granted to affiliated companies 15,531 € 15,531 673 Guarantees in connection with sales made by other group companies 26,442 € 26,442 26,442 Guarantees for loans granted to other group companies 700 € 700 700 Letter of comfort in connection with acquisitions made by affiliated companies 0 € 0 286 Other guarantees in connection with affiliated companies 0 € 0 3,100 120,749 103,419 69,704 The shares of CA Immo AG on V isionary Prague s.r.o., Prague, are secured by a pledge in favour of the bank financing the subsidiary. In connection with the disposals, marketable guarantees for coverage of possible warranty and liability claims exist and - where necessary - financial provisions were made. k) Liabilities from the utilisation of tangible assets The lease-related liability from the utilisation of tangible assets not reported in the balance sheet is € 803 K (31.12.2019: € 819 K) for the subseq uent business year and € 3,817 K (31.12.2019: € 3,798 K) for the subsequent five business years. Out of this, € 722 K (31.12.2019: € 707 K) is attributable to affiliated companies for the subsequent business year and € 3,609 K (31.12.2019: € 3,536 K) for the subsequent five business years. The above mentioned amounts refers to the Rennweg office/ Mechelgasse 1. The rental agreement was concluded for an unlimited period, whereas a waiver of ter- mination right until 31.12.2026 was agreed. l) Details of derivative financial instruments - swaps € 1,000 Nominal value Fixed interest rate as at Interest reference rate Fair value thereof considered as provisions Start End 31.12.2020 31.12.2020 31.12.2020 31.12.2020 12/2016 12/2024 9,135 0.44% 3M-EURIBOR – 308 – 308 06/2017 06/2027 10,908 0.79% 3M-EURIBOR – 832 – 832 06/2017 06/2027 27,776 0.76% 3M-EURIBOR – 1,992 – 1,992 08/2017 12/2029 28,796 1.12% 3M-EURIBOR – 3,524 – 3,524 76,615 – 6,657 – 6,657 CA IMMOBILIEN ANLAGEN AKTIENGESELLSCHAFT, VIENNA ANNEX 1 2 33 € 1,000 Nominal value Fixed interest rate as at Interest reference rate Fair value thereof considered as provisions Start End 31.12.2019 31.12.2019 31.12.2019 31.12.2019 12/2016 12/2024 9,788 0.44% 3M-EURIBOR – 270 – 270 06/2017 06/2027 11,148 0.79% 3M-EURIBOR – 643 – 643 06/2017 06/2027 28,731 0.76% 3M-EURIBOR – 1,549 – 1,549 08/2017 12/2029 30,200 1.12% 3M-EURIBOR – 2,828 – 2,828 79,867 – 5,289 – 5,289 The fair value c orresponds to the value CA Immo AG would receive upon termination of the contract at the balance sheet date. The value would be received from the financial institution, with which the contract was signed. The quoted value is a cash value. Future cash flows from variable payments as well as discount rates will be calculated based on generally accepted financial models. For the valuation, inter-bank middle rates are used. Specific bid/ ask rates as well as other termination expenses are not included in the valuation. 11. Explanatory notes on the income statement Gross revenues By type € 1,000 2020 2019 Rental income from real estate 15,430 14,039 Operating costs passed on to tenants 4,912 4,631 Income from management services 9,139 9,012 Other revenues 747 1,201 30,228 28,883 In 2020 redu ctions in rental income in Austria due to Covid-19 amounted to € 232 K. By region € 1,000 2020 2019 Austria 23,266 21,335 Germany 961 201 Eastern Europe 6,001 7,347 30,228 28,883 Other operatin g income The revenues from the release of provisions mainly refers to provisions for additional expenses of issuing a bond and expenses of remuneration supervisory board. Other operating income of € 440 K (2019: € 676 K) results from expenses reinvoicings, insurance revenues and the re- lease of the deferrals for government grants. CA IMMOBILIEN ANLAGEN AKTIENGESELLSCHAFT, VIENNA ANNEX 1 2 34 Staff expense This item, totalling € 15,388 K (2019: € 13,970 K), includes expenses for the 70 staff members (2019: 69) employed by the company on average. The expenses for retirement benefits are as follows: 2020 2019 Pension fund contributions for Management Board members and senior executives 183 191 Pension fund contributions for other employees 92 73 275 264 Expenses for se verance payments dependent on remuneration and compulsory contributions are made up as follows: € 1,000 2020 2019 Change in provision for severance payments to Management Board members and senior executives 174 159 Change in provision for severance payments to other employees – 6 – 5 Pension fund contributions for Management Board members and senior executives 92 78 Pension fund contributions for other employees 64 32 324 264 Depreciation € 1,000 2020 2019 Depreciation of intangible fixed assets 200 149 Scheduled depreciation of buildings 7,303 7,315 Unscheduled depreciation of real estate 3,688 9,571 Depreciation of other assets, office furniture and equipment 313 276 Low-value assets 28 56 11,532 17,367 Other operating expens es Where they do not fall under taxes on income, the taxes in the amount of € 26,297 K (2019: € 549 K) mainly comprise court fees provisions amounting to € 25,475 K for a claim for damages filed against the Republic of Austria and the state of Carinthia in the amount of approximately € 1.9 billion in connection with the privatisation of the Bundes- wohnbaugesellschaften in 2004. In addition this position comprise real estate charges passed on to tenants in the amount of € 208 K (2019: € 207 K) and the non-deductible input VAT € 615 K (2019: € 341 K). CA IMMOBILIEN ANLAGEN AKTIENGESELLSCHAFT, VIENNA ANNEX 1 2 35 Other expenses are made up as follows: € 1,000 2020 2019 Expenses directly related to properties Operating costs passed on to tenants 4,707 4,431 Maintenance costs 2,377 1,513 Own operating costs (vacancy costs) 1,170 1,043 Administration and agency fees 156 265 Other 263 304 Subtotal 8,673 7,556 General administrative costs Bond issue related expenses 5,668 747 Legal, auditing and consultancy fees 3,533 2,992 Office rent including operating costs 735 652 Administrative and management costs 449 388 Advertising and representation expenses 382 890 Supervisory Board remuneration 357 435 Other fees and bank charges 248 252 Costs charged to group companies 215 238 Travel expenses 123 512 Other 1,239 1,255 Subtotal 12,949 8,361 Total other operating expenses 21,622 15,917 Income from investments This item comprises dividends paid from companies in Austria in the amount of € 123,201 K (2019: € 191,517 K) as well as companies in Germany and Eastern Europe in the amount of € 177 K (2019: € 752 K). Income from loans from financial assets This item comprises interest income from loans. Other interest and similar income The interest income mainly refers to interest amounts from a intercompany loan granted to a subsidiary. Income from the disposal and revaluation of financial assets and short-term securities € 1,000 2020 2019 Release of impairment due to increase in value 3,397 5,767 Repayment of loans above book value 204 0 Sale of financial assets 17 720 3,618 6,487 CA IMMOBILIEN ANLAGEN AKTIENGESELLSCHAFT, VIENNA ANNEX 1 2 36 Expenses for financial assets and interest receivables in current assets € 1,000 2020 2019 Depreciation of financial assets 3,239 137,045 Bad debt allowance for interest receivables 0 380 Loss from disposal 263 1,178 3,502 138,603 of which due to dividends payments 1,026 136,736 Interest and similar expense s € 1,000 2020 2019 Interest costs for bonds 23,095 19,964 Expenses repurchase of bonds 4,862 0 Interest for bank liabilities for the financing of real estate assets 2,427 2,499 Expenses for derivative transactions 2,588 4,408 Interest costs in respect of affiliated companies 766 1,962 Other 896 355 34,634 29,188 Taxes o n income € 1,000 2020 2019 Tax compensation tax group members 12,741 7,251 Corporate income tax – 187 – 1,388 Deferred taxes 191 – 1,493 Tax revenues 12,745 4,370 CA IMMOBILIEN ANLAGEN AKTIENGESELLSCHAFT, VIENNA ANNEX 1 2 37 OTHER INFORMATION 12. Affiliated companies CA Immobilien Anlagen AG, Vienna, is the main parent company of CA Immo Group. The consolidated financial statements are drawn up pursuant to International Financial Reporting Standards (IFRS) and the supplementary provi- sions of section 245a of the Austrian Commercial Code (UGB) and filed at the Vienna Commercial Court. 13. Corpor ate bodies of CA Immobilien Anlagen Aktiengesellschaft, Vi enna Manag ement Board Andreas Quint (from 1.1.2018) Dr. Andreas Schillhofer (from 1.6.2019) Keegan Viscius (from 1.11.2018) Total salary payments (excluding salary-based deductions) to Management Board members active in business year 2020 amounted to € 2,763 K (€ 1,512 K in 2019). The salary-based deductions totaled € 172 K (2019: € 97 K). Fixed sal- ary components totaling € 1,465 K (€ 1,290 K in 2019) were made up of the basic salary of € 1,410 K (2019: € 1,254 K) and other benefits (in particular remuneration in kind for cars, expense allowances and travel expenses) of € 55 K (2019: € 36 K). Variable compensation components amounted to € 1,175 K (2019: € 0 K). There were no special pay- ments (2019: € 106 K). In business year 2020, a total of € 123 K (2019: € 117 K) was paid out for Management Board members in the form of contributions to pension funds. As at the balance sheet date 31 December 2020, severance payment provisions for Man- agement Board members totaled € 412 K (31.12.2019: € 238 K). There were no payment obligations to former members of the Management Board. No loans or advances were granted to members of the Management Board. Provisions of € 3,460 K (31.12.2019: € 2,773 K) had been formed for the Management Board under the variable remu- neration system as of 31.12.2020. Of this, immediate payments amounting to € 1,269 K are due for payment by 31.5.2021 at the latest. An amount of € 2,191 K is attributable to the LTIP (multi-year bonus). As of December 31, 2020, the conversion rate for the relevant annual bonus portion of phantom shares was € 27.54. Supervisory Board Elected by the General Meeting: Torsten Hollstein, Chairman Jeffrey G. Dishner, Deputy Chairman (from 9.5.2019) Dr. Florian Koschat, Deputy Chairman Univ.-Prof. MMag. Dr. Klaus Hirschler Michael Stanton Dr. Monika Wildner (from 9.5.2019) John Nacos (until 9.5.2019) Richard Gregson (until 9.5.2020) Delegated by registered share: Sarah Broughton (from 28.9.2018) Laura Rubin (from 28.9.2018) Jeffrey G. Dishner (from 28.9.2018 to 9.5.2019) Delegated by works council: Georg Edinger, BA, REAM (IREBS) Nicole Kubista CA IMMOBILIEN ANLAGEN AKTIENGESELLSCHAFT, VIENNA ANNEX 1 2 38 Sebastian Obermair Walter Sonnleitner (from 10.2.2020) Franz Reitermayer (until 10.2.2020) As at the balance sheet date, the Supervisory Board comprised six capital representatives elected by the Annual Gen- eral Meeting, two capital representatives appointed by means of registered shares and four employee representatives. In business year 2020 (for 2019), total remuneration of € 309 K (2019: € 380 K) was paid out (including attendance fees of € 84 K ( € 106 K in 2019). Moreover, expenditure of € 78 K was reported in connection with the Supervisory Board in business year 2020 (2019: € 205 K). Of this, cash outlays for travel expenses accounted for approximately € 9 K (2019: € 62 K) and other expenditure (including training costs and license costs) accounted for € 52 K (2019: € 39 K). Legal and other consultancy services accounted for € 17 K (2019: € 103 K). No other fees (particularly for con- sultancy or brokerage activities) and no loans or advances were paid to Supervisory Board members. Total Supervisory Board remuneration of € 328 K for business year 2020 will be proposed to the Annual General Meeting on the basis of the same criteria (fixed annual payment of € 30 K per Supervisory Board member plus attend- ance fee of € 1,000 per meeting), taking account of the waiver of remuneration for Supervisory Board members ap- pointed on the basis of registered shares or related to the Starwood Group respectively. The remuneration was taken into account in the financial statements as at 31.12.2020. All business transactions conducted between the company and members of the Supervisory Board which oblige such members to perform services for the CA Immo AG outside of their Supervisory Board activities in return for remunera- tion of a not inconsiderable value must conform to industry standards and be approved by the Supervisory Board. The same applies to contracts with companies in which a Supervisory Board member has a significant business interest. Dr. Monika Wildner is also member of the Supervisory Board of Volksbank Wien AG. At the end of 2019, Volksbank Wien became a long-term tenant of around 14,000 sqm of office space in the CA Immo portfolio building at Erdberger Lände 26. The lease contract was concluded prior to the acceptance of the Supervisory Board mandate at CA Immo and corre- sponds to standard market conditions. No other fees (particularly for consultancy or brokerage activities) we re paid to Supervisory Board members. No loans or advances were granted. Starwood Capital Group (Starwood) Since 27.9.2018, SOF-11 Klimt CAI S.à r.l. (former SOF-11 Starlight 10 EUR S.à r.l.) is the largest single shareholder of the company. In business year 2020, Starwood Capital Group (via its vehicle SOF-11 Klimt CAI S.à r.l.) increased its stake in CA Immo AG from around 26% of the share capital to around 28%, which is equivalent to just under 30% of the vot- ing rights in the company. As of 31.12.2020, SOF-11 Klimt CAI S.à r.l. holds 27,908,386 bearer shares and four regis- tered shares of CA Immo AG. SOF-11 Klimt CAI S.à r.l. is a controlled affiliate of Starwood Capital Group and an indi- rect 100% owned subsidiary of SOF-11 International, SCSp. Starwood Capital Group is a privately owned global alter- native investment company and is an investor focusing on global real estate investments. CA IMMOBILIEN ANLAGEN AKTIENGESELLSCHAFT, VIENNA ANNEX 1 23 9 14. Employees The average number of staff employed by the company during the business year was 70 (2019: 69). 15. Auditor's remuneration There is no indication of the auditor's remunera tion for the business year pursuant to section 237 para 14 of the Austrian Com- mercial Code (UGB), as this information is contained in the consolidated financial statements of CA Immo AG. 16. Events after the balance sheet date On 8.1.2021, SOF-11 Klimt CAI S.à r.l. announced its intention to launch an anticipated mandatory takeover offer to the share- holders and convertible bondholders of CA Immo and to further increase its shareholding in the company from currently 29.999893% of the total outstanding voting rights. The offer document has been published on 22.2.2021. Starting from the same day, shareholders and convertible bondholders of CA Immo will be able to accept the offer and tender their shares and convertible bonds into the offer. The acceptance period will end at 5pm (CET) on 9.4.2021. The price initially offered to CA Immo shareholders of € 34.44 per CA Immo share was increased to € 36.00 on 26.2.2021 (“Share Offer Price”). The price offered to convertible bondholders is are being offered a price of approx. € 138,628.59 (initially € 132,621.35) for each convertible bond with nominal value of € 100,000 (“Convertible Bond Offer Price”). The Share Offer Price and the Convertible Bond Offer Price are on a cum dividend basis. The anticipated mandatory takeover offer is aimed at acquiring all outstanding CA Immo AG shares and convertible bonds that are not held by the Bidder or CA Immo AG, though there will be no minimum acceptance threshold. The completion of the offer will be subject to merger control clearance in Austria, Germany and Poland. The statement of the Management and Supervisory Boards regarding this offer was published on 8.3.2021 and is available – along with the offer document – on the company's website at Take over offer Starwood 2021 (caimmo.com). 17. Proposal for the appropriation of net earnings It is proposed to use part of the net retained earnings of € 897,604,901.81 to pay a dividend of € 1.00 per share, i.e. a total of € 93,028,299.00, to the shareholders. The remainder of the net retained earnings in the amount of € 804,576,602.81 is intended to be carried forward. The Management Board Andreas Quint (Chief Exec utive Officer) Dr. Andreas Schillhofer (Member of the Management Board) Keegan Viscius (Member oft he Management Board) Vienna, March 24, 2021 CA IMMOBILIEN ANLAGEN AKTIENGESELLSCHAFT, VIENNA ANNEX 1 24 0 CA IMMOBILIEN ANLAGEN AKTIENGESELLSCHAFT, VIENNA APPENDIX 1 2 41 Acquisition and production costs as at 1.1.2020 Addition Disposal Acquisition and production costs as at 31.12.2020 € € € € I. Intangible fixed assets Software 2,858,192.74 327,497.64 12,218.75 3,173,471.63 2,858,192.74 327,497.64 12,218.75 3,173,471.63 II. Tangible fixed assets 1. Land and buildings a) Land value 50,658,941.08 0.00 0.00 50,658,941.08 b) Building value 308,735,274.87 1,741,248.42 0.00 310,476,523.29 359,394,215.95 1,741,248.42 0.00 361,135,464.37 2. Other assets, office furniture and equipment 3,874,482.14 160,561.02 28,431.61 4,006,611.55 363,268,698.09 1,901,809.44 28,431.61 365,142,075.92 III. Financial assets 1. Investments in affiliated companies 2,783,542,427.93 338,378,977.30 17,500.00 3,121,903,905.23 2. Loans to related companies 686,679,046.53 321,260.09 148,760,500.10 538,239,806.52 3. Investments in associated companies 274,251.50 0.00 0.00 274,251.50 4. Other loans 22,870,000.00 0.00 22,870,000.00 0.00 3,493,365,725.96 338,700,237.39 171,648,000.10 3,660,417,963.25 3,859,492,616.79 340,929,544.47 171,688,650.46 4,028,733,510.80 ASSET ANALYSIS FOR THE BUSINESS YEAR 2020 CA IMMOBILIEN ANLAGEN AKTIENGESELLSCHAFT, VIENNA APPENDIX 1 2 42 Accumulated depreciation as at 1.1.2020 Depreciation and amortisation in 2020 Reversal of impairment losses in 2020 Accumulated depreciation disposal Accumulated depreciation as at 31.12.2020 Book value as of 31.12.2020 Book value as at 31.12.2019 € € € € € € € 2,430,869.17 200,121.30 0.00 0.00 2,630,990.47 542,481.16 427,323.57 2,430,869.17 200,121.30 0.00 0.00 2,630,990.47 542,481.16 427,323.57 3,407,941.27 3,688,353.00 0.00 0.00 7,096,294.27 43,562,646.81 47,250,999.81 105,091,166.22 7,302,347.04 5,137,241.57 0.00 107,256,271.69 203,220,251.60 203,644,108.65 108,499,107.49 10,990,700.04 5,137,241.57 0.00 114,352,565.96 246,782,898.41 250,895,108.46 2,400,029.45 341,070.78 0.00 28,431.61 2,712,668.62 1,293,942.93 1,474,452.69 110,899,136.94 11,331,770.82 5,137,241.57 28,431.61 117,065,234.58 248,076,841.34 252,369,561.15 183,356,060.34 3,239,000.00 3,397,331.03 17,499.00 183,180,230.31 2,938,723,674.92 2,600,186,367.59 6,148,992.00 0.00 0.00 6,148,992.00 0.00 538,239,806.52 680,530,054.53 899.00 0.00 0.00 0.00 899.00 273,352.50 273,352.50 22,869,999.00 0.00 0.00 22,869,999.00 0.00 0.00 1.00 212,375,950.34 3,239,000.00 3,397,331.03 29,036,490.00 183,181,129.31 3,477,236,833.94 3,280,989,775.62 325,705,956.45 14,770,892.12 8,534,572.60 29,064,921.61 302,877,354.36 3,725,856,156.44 3,533,786,660.34 243 CA IMMOBILIEN ANLAGEN AKTIENGESELLSCHAFT, VIENNA APPENDIX 2 Direct investments Company Registered office Share capital Interest in % Profit/loss 31.12.2020 Shareholders' equity as at 31.12.2020 Profit/loss 31.12.2019 Shareholders' equity as at 31.12.2019 in 1,000 in 1,000 in 1,000 in 1,000 CA Immo Holding B.V. Amsterdam 51,200,000 EUR 100 – 11,627 EUR 292,591 EUR 15,537 EUR 204,218 EUR CA Immo d.o.o. Belgrad 32,822,662 RSD 100 2,660 RSD 3,561 RSD 1,733 RSD 601 RSD CA Holding Szolgáltató Kft Budapest 13,000,000 HUF 100 74,314 HUF 795,006 HUF 28,577 HUF 720,692 HUF Canada Square Kft. Budapest 12,510,000 HUF 100 – 172,636 HUF 885,228 HUF – 31,856 HUF 1,057,864 HUF Duna Irodaház Kft., Budapest Budapest 277,003,015 HUF 100 – 682,339 HUF 13,099,924 HUF – 83 EUR 32,274 EUR Duna Termál Hotel Ingatlanfejlesztö Kft. Budapest 390,906,655 HUF 100 – 388,493 HUF 14,505,387 HUF 331 EUR 38,676 EUR Duna Business Hotel Ingatlanfejlesztö Kft. Budapest 452,844,530 HUF 100 – 196,421 HUF 16,994,538 HUF 783 EUR 42,131 EUR Kapas Center Kft. Budapest 772,560,000 HUF 50 38,017 HUF 1,832,221 HUF 175,038 HUF 1,794,203 HUF Kilb Kft. Budapest 30,000,000 HUF 100 381,707 HUF 3,523,106 HUF 360,628 HUF 3,141,399 HUF Millennium Irodaház Kft. Budapest 997,244,944 HUF 100 – 290,336 HUF 9,736,453 HUF 48 EUR 26,509 EUR R 70 Invest Budapest Kft. Budapest 5,270,000 HUF 100 – 311,388 HUF 1,463,107 HUF – 139,426 HUF 1,774,495 HUF Váci 76 Kft. Budapest 3,100,000 HUF 100 – 259,925 HUF 5,385,683 HUF 225,432 HUF 5,645,607 HUF CA Immo Invest GmbH Frankfurt 50,000 EUR 51 – 23 EUR 17,522 EUR 869 EUR 17,545 EUR DRG Deutsche Realitäten GmbH Frankfurt 500,000 EUR 49 455 EUR 955 EUR 303 EUR 856 EUR CAINE B.V. Hoofddorp 18,151 EUR 100 – 465 EUR 48,769 EUR – 3,926 EUR 49,234 EUR Visionary Prague, s.r.o. Prague 200,000 CZK 100 – 46,624 CZK 267,286 CZK – 47,213 CZK 313,909 CZK CA Immo New City Sp.z.o.o Warsaw 116,000 PLN 100 – 34 PLN 82 PLN established 2020 established 2020 CA Immo P14 Sp.z.o.o Warsaw 10,000 PLN 100 3,677 PLN 153,690 PLN Acquisition 2020 Acquisition 2020 CA Immobilien Anlagen Beteiligungs GmbH & Co Finanzierungs KG Vienna 7,000 EUR 100 234 EUR 8,051 EUR 1,262 EUR 9,079 EUR CA Immo BIP Liegenschaftsverwaltung GmbH Vienna 3,738,127 EUR 39 1,042 EUR 10,985 EUR 6,168 EUR 9,943 EUR CA Immo International Holding GmbH Vienna 35,000 EUR 100 30,504 EUR 1,971,285 EUR 51,848 EUR 2,061,781 EUR CA Immo Konzernfinanzierungs GmbH Vienna 35,000 EUR 100 271 EUR 203,406 EUR established 2020 established 2020 CA Immo Rennweg 16 GmbH Vienna 35,000 EUR 100 – 409 EUR 455 EUR 2,110 EUR 863 EUR EBL Nord 2 Immobilien GmbH Vienna 35,000 EUR 50 7 EUR 49 EUR 7 EUR 42 EUR EBL Nord 2 Immobilien Eins GmbH & Co KG Vienna 10,000 EUR 50 – 47 EUR 519 EUR 732 EUR 2,467 EUR EBL Nord 2 Immobilien Zwei GmbH & Co KG Vienna 10,000 EUR 50 – 12 EUR 7 EUR 2 EUR 53 EUR omniCon Baumanagement GmbH Vienna 100,000 EUR 100 0 EUR 100 EUR 9 EUR 140 EUR Information on participations for 2020 is based on preliminary figures in financial statements prepared according to local accounting standards. INFORMATION ABOUT GROUP COMPANIES MANAGEMENT REPORT CA IMMOBILIEN ANLAGEN AKTIENGESELLSCHAFT, VIENNA ANNEX 2 2 45 CA Immo is a real estate company with its headquarters in Vienna and branch offices in Germany, Poland, Romania, Serbia, Czech Republic and Hungary. The parent company of the G roup is CA Immobilien Anlagen Aktiengesellschaft, a listed company based in Vienna whose main activity is the strategic and operational management of subsidiary compa- nies at home and abroad. The various branch offices act as largely decentralised profit centres. Other subsidiaries (with- out separate local teams) are present in the Netherlands, Slo- vakia and Cyprus. With the sale of the Zagrebtower office building in the 3rd quarter of 2020, the exit from Croatia took place. As at key date 31 December 2020, the Group com- prised 184 companies (31.12.2019: 185) with 437 employees (414 on 31.12.2019). The core business of the CA Immo Group is the letting, management and development of high quality commercial real estate with a clear focus on office properties. The com- pany, which has a high degree of in-house construction ex- pertise, covers the entire value chain in the field of commer- cial real estate. The objective is to build up a focused portfo- lio of high quality, high earning investment properties within the core markets of Germany, Austria, the Czech Re- public, Poland, Hungary and Romania. Additional earnings will be generated through the preparation and utilisation of land reserves in the development area. CA Immo either transfers completed projects to its portfolio or sells them to investors. The Group currently controls property assets of around € 5.6 bn in Germany, Austria and Eastern Europe. Austria The company’s domestic properties are overseen in subsid- iary companies of CA Immobilien Anlagen AG. As at 31 De- cember 2020, the parent company also directly held property assets of approximately € 322.9 m (€ 317.3 m on 31.12.2019). As at 31 December 2020, the total Austrian portfolio com- prised solely investment properties with a market value of € 530.0 m (€ 572.9 m on 31.12.2019). COMPANIES BY REGION Number of companies 1) 31.12.2020 31.12.2019 Austria 19 19 - Of which joint ventures 3 3 Germany 2) 98 98 - Of which joint ventures 23 27 Central and Eastern Europe 3) 67 68 - Of which joint ventures 2 2 Group-wide 184 185 - Of which joint ventures 28 32 1) Joint ventures involving consolidated companies. 2) Includes one company in Switzerland. 3) Includes holding companies in Cyprus and the Netherlands established in connection with Eastern European investments. Germany The operational platform for all Group activities in Ger- many is CA Immo Deutschland GmbH, which has branches in Berlin, Frankfurt and Munich. Aside from in- vestment properties, the company’s property assets mainly comprise properties under construction and unde- veloped plots alongside a portfolio of properties intended for trading or sale. Investment properties are largely held in direct holdings and let and managed by DRG Deutsche Realitäten GmbH, a joint venture set up with the Aus- trian estate agent and property management firm ÖRAG. A number of development projects (in Munich and Mainz, for example) are being realised through joint ven- tures. Construction management is carried out by CA Immo subsidiary omniCon, which also performs these services for third parties. Eastern Europe (CEE) In the CEE region, the strategic focus is also on commercial class A buildings in the respective capitals. The portfolio of investment properties in CEE and one development project are directly held via CA Immo participating interests. All Eastern European properties are managed by regional subsid- iaries under the name CA Immo Real Estate Management. GROUP STRUCTURE CA IMMOBILIEN ANLAGEN AKTIENGESELLSCHAFT, VIENNA ANNEX 2 2 46 THE ECOMONIC TREND 1) Following the outbreak of the Covid-19 pandemic and the severe recession in 2020, the International Monetary Fund (IMF) illustrated a positive picture of the global economy in its World Economic Outlook Update pub- lished in January 2021. Although recent vaccine approv- als have raised hopes of a turnaround in the fight against the pandemic this year, renewed waves and new variants of the virus are a cause for concern. Amid this extraordi- nary uncertainty, the global economy is projected to grow by 5.5% in 2021 and 4.2% in 2022. The forecast for 2021 has been revised upwards by 0.3 percentage points from the previous forecast, reflecting expectations of a vac- cine-triggered pick-up in economic activity later in the year and additional political support in some major econ- omies. The projected growth rebound this year follows a severe collapse in 2020 that had an acute negative impact on the global economy. The decline in global growth for 2020 is estimated at -3.5%, 0.9 percentage points above the previous forecast, reflecting stronger-than-expected momentum in the second half of 2020. According to an initial estimate of the annual growth rate for 2020, based on seasonally and calendar-adjusted quarterly data, GDP fell by 7.2% in the euro area and by 6.8% in the EU. As suggested by the current forecast, GDP in the EU will rise by about 4% in 2021, which is less than previously projected, and by about 3% in 2022. This means that the output of the European economy in 2022 would be roughly back at pre-crisis levels. The depth of the recession seen in 2020 and the speed of re- covery in 2021 and 2022 are expected to vary widely across member states. CORE MARKETS OF CA IMMO IN 2020 2) Compared with the previous quarter, seasonally ad- justed GDP fell by 0.7% in the euro area and by 0.5% in the EU in the fourth quarter of 2020. This is according to a preliminary flash estimate published by Eurostat. These declines follow a strong recovery in the third quarter of 2020 (+12.4% in the euro area and +11.5% in the EU) and the sharpest falls since the start of the time series in 1995 in the second quarter (–11.7% in the euro area and –11.4% in the EU). 1) Sources: International Monetary Fund, European Commission, Oxford Economics In December 2020, the seasonally adjusted unemploy- ment rate in the euro area was 8.3%, unchanged from No- vember 2020 and an increase of 90 basis points from De- cember 2019. The unemployment rate in the EU came to 7.5% in December 2020, also unchanged compared with November 2020 and an increase of 100 basis points from December 2019. At the end of the third quarter of 2020, with the impact of government action in response to the Covid-19 con- tainment measures still reflected in increased financing needs, the public debt-to-GDP ratio stood at 97.3% in the euro area, compared with 95.0% at the end of the second quarter of 2020. In the EU, the ratio increased from 87.7% to 89.8%. Compared with the third quarter of 2019, the public debt-to-GDP ratio increased in both the euro area (from 85.8% to 97.3%) and the EU (from 79.2% to 89.8%). The increases are due to two factors – signifi- cant rises in public debt and falling GDP. Annual inflation of –0.3% in the euro area in December 2020 was well below the ECB's target of below, but close to 2.0% (December 2019: 1.3%). This compares to 0.3% in the European Union (December 2019: 1.6%). The low- est annual rates were recorded in Greece (–2.4%), Slove- nia (–1.2%) and Ireland (–1.0%). The highest annual rates were recorded in Poland (3.4%), Hungary (2.8%) and the Czech Republic (2.4%). The economy in Austria contracted in 2020, with real GDP falling by 7.5%. The inflation rate stood at 0.3% in December 2020, with the unemployment rate at 7.5%. Gross public debt as % of GDP climbed to 79.1%. The negative economic growth in Germany was re- flected in a GDP decline of 5.5%. In pan-European com- parison, Germany is thus below the corresponding aver- ages of the EU or the euro area. The unemployment rate in Germany increased from 3.2% to 4.6% in the course of the year. The inflation rate for Germany was reported at –0.7% in December 2020. The positive economic trend of previous years on CA Immo's core markets in Central and Eastern Europe did not remain intact throughout 2020. The effects of the Covid-19 pandemic led to negative growth rates, as in Germany and Austria. 2) Sources: Eurostat, European Commission, Bloomberg, Financial Times ECONOMIC ENVIRONMENT CA IMMOBILIEN ANLAGEN AKTIENGESELLSCHAFT, VIENNA ANNEX 2 2 47 Within the Central and Eastern European core markets, Poland and Romania showed the smallest decline in 2020 at –3.0% and –5.3% respectively. GDP in Hungary dropped by 5.6% in 2020, in the Czech Republic by 6.8%. The unemployment rate in the Central and Eastern European countries remains significantly lower than in the EU-27 and the euro area average. It stands at 3.1% in the Czech Republic, 3.3% in Poland, 4.3% in Hungary and 4.9% in Romania. The inflation rate was robust in 2020 and also above the euro area average in all core Central and Eastern Euro- pean countries. Romania reported an inflation rate of 1.8% for December 2020, while the 2020 annual rate in the Czech Republic was 2.4%. The annual inflation rate in Hungary arrived at 2.8%, in Poland at 3.4%. The strong employment growth of previous years slowed down in the Czech Republic and Hungary and de- clined slightly in Poland and Romania. ECONOMIC DATA FOR CA IMMO CORE MARKETS Growth rate of real GDP 1) Annual inflation rates 2) Unemploy- ment rate 3) Public budget balance Gross public debt Growth rate of employment 2020 2019 in % in % as % of GDP 3Q 2020 as % of GDP 3Q 2020 as % of GDP 3Q 2020 EU – 27 -6.8 1.6 0.3 7.5 -5.6 89.6 0.1 Eurozone – 19 -7.2 1.3 -0.3 8.3 -5.8 97.3 0.1 Austria -7.5 1.4 1.0 5.8 -6.8 79.1 0.5 Germany -5.5 0.6 -0.7 4.6 -4.6 70.0 0.1 Poland -3.0 4.6 3.4 3.3 -4.6 56.7 - 0.1 Czech Republic -6.8 2.3 2.4 3.1 -4.4 38.4 0.3 Hungary -5.6 4.6 2.8 4.3 -3.8 74.3 0.0 Romania -5.3 4.2 1.8 4.9 -10.0 43.1 - 0.3 Source: Oxford Economics, Eurostat 1) Change on the previous year (%); 2) Change on the previous year as at December 2020; 3) As at December 2020, except Hungary: November 2020 THE MONEY MARKET AND INTEREST ENVIRONMENT 1) At its most recent meeting on 21 January 2021, the Gov- erning Council of the ECB decided to leave the interest rate for main refinancing operations and the interest rates for the marginal lending facility and the deposit facility unchanged at 0.00%, 0.25% and -0.50% respectively. "The Governing Council expects the key ECB interest rates to remain at their present or lower levels until it has seen the inflation outlook robustly converge to a level sufficiently close to, but below, 2% within its projection horizon, and such convergence has been consistently re- flected in underlying inflation dynamics.“ The European Central Bank's expansionary monetary market policy of previous years culminated in 2020 with the outbreak of the Covid-19 pandemic and the accompa- nying recession. In addition to the asset purchase pro- gramme (APP) of € 20 bn per month, the Governing Council has approved purchases under the Pandemic 1) Sources: European Central Bank., Eurostat, Bloomberg, Moody’s Analytics 2) Sources: European Commission, European Central Bank, Financial Times Emergency Purchase Programme (PEPP) with a total en- velope of € 1.85 bn. "The Governing Council will con- tinue the purchases under the pandemic emergency pur- chase programme (PEPP) until at least the end of March 2022 and, in any case, until it judges that the coronavirus crisis phase is over." The purchases under the PEPP will be conducted to preserve favourable financing conditions over the pandemic period. If favourable financing condi- tions can be maintained with asset purchase flows that do not exhaust the envelope over the net purchase time horizon of the PEPP, the envelope need not be used in full. Equally, the envelope can be recalibrated if required to maintain favourable financing conditions to help counter the negative pandemic shock to the path of infla- tion. The ECB Governing Council will continue to reinvest the redemption amounts from maturing securities pur- chased under the PEPP until at least the end of 2023. In any case, the future roll-off of the PEPP portfolio will be CA IMMOBILIEN ANLAGEN AKTIENGESELLSCHAFT, VIENNA ANNEX 2 2 48 managed to avoid interference with the appropriate mon- etary policy stance. In addition, the Governing Council will continue to provide ample liquidity through its refi- nancing operations. In particular, the third series of tar- geted longer-term refinancing operations (TLTRO III) re- mains an attractive source of funding for banks, support- ing bank lendings to firms and households. The 3-month Euribor rate remained in negative terri- tory, fluctuating between –0.16% and –0.55% in the pe- riod under review. After hitting historic lows at the be- ginning of 2020, yields on 10-year government bonds is- sued by euro area members jumped in March, due to the global outbreak of the Covid-19 pandemic and the accom- panying economic crisis, trading at around mid-2019 lev- els. In the following months, prices fell again due to the economic recovery and a more positive outlook, ending the year at around pre-crisis levels. Both the supportive development of government bonds and the expansive monetary policy of central banks had a strong impact on the corporate bond market. As a result, a record amount of more than USD 2.9 tn of investment- grade corporate bonds were issued globally in 2020 (+20% year-on-year). Nevertheless, the percentage changes in the global offer differed significantly over the four quarters of 2020. Following annual increases of 14% in the first quarter and 69% in the second quarter (to an unrivalled US$ 1.1 tn), the world's largest estimate of in- vestment-grade corporate bond issuance saw annual de- clines of 6% in the third quarter and 3% in the fourth quarter. CA Immo also took advantage of the excellent conditions to issue two large-volume bonds in February and October 2020. OUTLOOK 2) The fundamental challenge of the current year will re- main the fight against the Covid-19 pandemic. Despite in- itial progress in the global vaccination campaigns, the in- cidence of infection is likely to remain dynamic. Above all, the various mutations represent a factor of uncer- tainty that will make substantial easing of restrictive measures in Europe, for example, much more difficult in the first quarter. In spring, more favourable weather con- ditions could lead to a decline in new infections. In addi- tion, vaccine availability should improve from the sum- mer onwards, making infection protection accessible to the wider population. With a potential improvement in the pandemic situation from spring onwards, a recovery in economic growth could then be felt across the board. The European Commission expects global containment measures to remain in place during 2021 before being in- creasingly relaxed later on. As a result, the global econ- omy should grow strongly again in 2021. Furthermore, in its most recent growth forecast from au- tumn 2020, the European Commission expects the Euro- pean economy to grow by about 4% in 2021 and by about 3% in 2022, thus returning to pre-crisis levels in the course of 2022. However, the speed of recovery in 2021 and 2022 is believed to vary considerably across member states. This reflects not only differences in the severity of the pandemic and the stringency of containment measures, but also differences in economic structures and domestic policy responses. Christine Lagarde, President of the ECB, recently warned governments and central banks against reacting to the first signs of economic recovery from the coronavirus crisis in the coming months by reducing incentives too quickly, even as inflation begins to rise. Tightening policy measures too hastily could lead to "very serious risks". CA IMMOBILIEN ANLAGEN AKTIENGESELLSCHAFT, VIENNA ANNEX 2 2 49 THE REAL ESTATE MARKET IN AUSTRIA 1) The investment market Owing to the Covid-19 pandemic and the consequent economic slump, the total amount invested in real estate in Austria plummeted by almost 50% to approximately € 3.3 bn in 2020; Vienna accounted for around 72% of this figure. Residential properties represented the largest pro- portion of the total investment volume (37%) followed by office investments (around 33%); industrial and logistical properties accounted for approximately 14%. International investors, especially from Germany, were notably active in 2020 and responsible for more than two thirds of the investment volume. Five large-volume ac- quisitions (transactions with a value in excess of € 100 m) in the office and residential sectors were the main reason for this high proportion. Based on expected transactions, an investment volume of roughly € 4.0 bn is forecasted for 2021. In 2020, the pandemic had a partly significant impact on the development of yields in Europe. Austria proved rela- tively stable, although even here considerable write-ups and write-downs were reported at times. As in the previ- ous year, prime yields for office properties declined mod- erately and now stand at the historic low level of 3.35% for properties in Vienna’s central business district (CBD). The office property market The total office stock in Vienna amounted to approxi- mately 11.4 million sqm at year end. The completion vol- ume for office premises totalled approximately 94,500 sqm in 2020, an increase of around 130% com- pared to the previous year. However, the completion vol- ume for 2020 was some 30% below the average value for the last five years. Compared to the previous year, lettings performance was stable in 2020 at approximately 203,300 sqm. Alt- hough the pandemic-induced economic crisis was al- ready impacting the office market in 2020, the worst of the effects are expected to be seen during 2021. For this reason, CBRE Research is working on the assumption that lettings performance will decline, partly in view of the persistently fraught situation as regards the levels of new construction in the next two years. 1) Sources: CBRE; Data supplied by CBRE Research Austria Real Estate Mar- ket Outlook 2021 In the course of 2020, the vacancy rate fell by around 20 basis points to 4.6%. Given the low levels of new con- struction and the high level of pre-letting, CBRE Research expects the vacancy rate to fall further in 2021 in spite of suppressed demand. Monthly peak rents in Vienna remained steady at € 25.00/sqm. Throughout the crisis, demand has remained high for prime quality offices in attractive locations, whereas lower-standard properties in less favourable loca- tions will have to contend with lower demand in future. OFFICE MA RKET DEVELOPMENT VIENNA 2020 2019 Chan g e in %/bps Take up in sqm 203,300 218,100 -6.80 Vacancy rate in % 4.60 4.75 -15 bps Peak rent in €/sqm net exclusive 25.00 25.00 0.00 Prime yield in % 3.35 3.55 -10 bps Sources: Data provided by CBRE Research Note: floor space take-up includes owner-occupied transactions THE REAL ESTATE MARKET IN GERMANY 2) The investment market Approximately € 79 bn was invested on the German real estate investment market in 2020. This represented a fall of 5.5% on the all-time high of the previous year – yet still constituted the second best result since records began. Thanks to a rally towards the end of the year, some € 23 bn was invested in the final quarter. The transaction vol- ume for commercial real estate in Germany totalled ap- proximately € 59 bn (12% below the previous year’s value). Office properties remained the asset class in high- est demand, accounting for a proportion of just under 47%. In contrast to the overall market, the top seven markets reported sharp declines. Seven large-volume transactions of € 500 m or more were registered in 2019, with just two transactions of that size reported in 2020. Moreover, far fewer hotels and shopping centres were traded. With the exception of Stuttgart and Munich, the transaction vol- ume reported for 2020 exceeded the respective 10-year 2) Sources: CBRE; Data supplied by CBRE Research, Germany Real Estate Market Outlook 2021, Berlin, Munich, Frankfurt Office MarketView Q4 2020; Oxford Economics PROPERTY MARKETS CA IMMOBILIEN ANLAGEN AKTIENGESELLSCHAFT, VIENNA ANNEX 2 2 50 average, significantly in some instances. This underlined the attractiveness of these investment destinations for both national and international investors. The high de- gree of pressure to invest has meant prime yields on of- fice properties have remained at an all-time low. On Germany’s commercial real estate investment mar- ket, CBRE Research expects a transaction volume well in excess of € 50 bn in 2021. This will be driven by success in the fight against the Covid-19 pandemic and, above all, product availability. From an investor’s viewpoint, the focus is still on office properties. Given the exceptional circumstances that currently prevail, there is a growing trend towards core and core-plus properties in estab- lished locations within the big office markets. In the pre- sent climate, defensive investment products with reliable tenants are experiencing a surge in demand. Since it will not be possible to meet this demand on the supply side, however, CBRE Research is expecting yields on these products to compress further. Although the investment market for commercial real es- tate in Berlin reported a 34% drop on the previous year’s record value, the result of € 7.6 bn exactly matched the level for the last five years. Despite the decline in com- parison with the prior year, Berlin remains one of the most attractive markets in the Federal Republic or indeed Europe. In view of the high demand, the prime yield for office properties has fallen marginally to 2.65%. An investment volume of € 7.2 bn was reported on the commercial property market in Frankfurt, which achieved 3% growth on the previous year – its third highest result after 2007 and 2018. The final quarter of the year accounted for just under half of the volume. As in the previous year, office properties accounted for roughly 80% of the transaction volume. Even during the pandemic, the prime yield for centrally located office properties held stable at 2.90%. The commercial investment market in Munich, mean- while, was 54% down on the previous (record) year with a 1) Sources: CBRE: Data supplied by CBRE Research, Munich, Frankfurt, Ber- lin Office MarketView Q4 2020; Oxford Economics volume of € 4.9 bn. Office properties contributed almost two thirds of the total volume (€ 3.1 bn, or 63%). Owing to continually high demand for real estate locations offering stable value, the prime yield declined marginally to 2.55%. The office property market 1) In 2020, the outbreak of the Covid-19 pandemic led to a severe global recession. In common with many other coun- tries, Germany introduced general lockdowns and travel restrictions in the spring and again in the winter. As a re- sult, market activity was severely impaired across many sectors – as reflected in the total GDP decline of 5.3% (against +0.6% in 2019 and +1.3% in 2018). The challeng- ing conditions presented by the pandemic and the eco- nomic consequences thereof served to suppress demand for office space in comparison with the previous year. Given the shortage of floor space in many inner city areas, though, this did not lead to lower rental rates (even if the pace of rental rate rises seen in recent years has slowed). Floor space take-up in Munich totalled 558,500 sqm in 2020. This was equivalent to a 27% decrease on the prior year, and the lowest annual result since 2009. Following on from the historic low of 2019 (2.9%), the office va- cancy rate had reached 3.8% by year end. This was partly due to the larger number of vacated premises, and partly due to a rise in unlet premises owing to completions. Of- fice rents have been unaffected by the pandemic to date. The attainable peak monthly rent remained unchanged year-on-year at € 39.50/sqm. The weighted average rent was approximately € 21.41 per month, 7% above the pre- vious year’s figure. Given the persistent shortage of high quality, modern premises, tenants are still showing a willingness to pay appropriate rates for superior quality in good locations. The completion volume of approximately 338,500 sqm in 2020 (new buildings and core refurbishments) was more than 30% above the value for the previous year. Twelve percent of floorspace was unlet when it came onto the market. The stock of office space was approxi- mately 22.0 million sqm at year end. CA IMMOBILIEN ANLAGEN AKTIENGESELLSCHAFT, VIENNA ANNEX 2 2 51 OFFICE MARKET DEVELOPMENT IN CA IMMO CORE MARKETS IN GERMANY 2020 2019 Chan g e in %/bps Berlin Take u p in s q m 660,500 998,900 -33.90 Vacanc y rate in % 2.60 1.20 140 b p s Peak rent in €/s q m net exclusive 38.50 37.50 2.70 Prime y ield in % 2.65 2.70 -5 b p s Frankfurt am Main Take u p in s q m 330,200 552,500 -40.20 Vacanc y rate in % 7.00 6.90 10 b p s Peak rent in €/s q m net exclusive 44.00 44.00 0.00 Prime y ield in % 2.90 2.90 0 b p s Munich Take u p in s q m 558,500 763.500 -26.90 Vacanc y rate in % 3.80 2.90 90 b p s Peak rent in €/s q m net exclusive 39.50 39.50 0.00 Prime y ield in % 2.55 2.60 -5 b p s Sources: Data provided by CBRE Research Note: floor space take-up includes owner-occupied transactions Office space take-up in Frankfurt stood at 330,200 sqm in 2020, equivalent to a decline of 40% on the previous year. This was mainly due to poor performance in the first half, with users reluctant to commit to leases during the first lockdown. High quality office premises with first class fit-out were the focus of lettings activity, accounting for 65% of floor space take-up. The vacancy rate stood at 7.0%, only slightly above the previous years’ level. The peak monthly rent was also unchanged at € 44.00/sqm per month. Compared to the previous year, the weighted average market rent increased by 7% to € 23.13 per sqm owing to the higher number of rental agreements con- cluded in the higher-priced segment. The completion vol- ume exceeded the prior year’s figure of 158,700 sqm at 185,800 sqm. According to the information currently available, the completion pipeline contains an approximate total of 587,000 sqm to the end of 2023, of which 40% has al- ready been absorbed by the market in the form of leasing and owner-occupancy. The pre-letting rate for 2021 alone stands at 68%. Completion of the high-rise office/hotel building ONE in Frankfurt, CA Immo’s largest develop- ment project at present, is scheduled for 2022. The stock of office space was approximately 11.5 million sqm at the end of the year. Berlin confirmed office space take-up of 660,500 sqm in 2020, down 34% on the previous year’s figure. The va- cancy rate rose to 2.6% in the course of the year (2019: 1.2%). On the lettings market, many leasing decisions were deferred in 2020. Although the result fell well short of the very strong performance of previous years, this was pandemic-related and does not point to a structural cri- sis. Despite the decline in floor space take-up and the ris- ing vacancy rate caused by the Covid-19 pandemic, the peak monthly rent level rose by € 1.00 per sqm to stand at € 38.50 per sqm. The weighted average rent also main- tained its strong upward trend, rising 8.1% to € 28.02/sqm per month. Approximately 296,700 sqm of new floor space was completed during 2020. According to CBRE Research, more than 50% of the one million sqm of floor space expected to come to the market in 2021 has already been pre-let. The stock of office space was ap- proximately 18.4 million sqm at year end. CA IMMOBILIEN ANLAGEN AKTIENGESELLSCHAFT, VIENNA ANNEX 2 2 52 THE REAL ESTATE MARKET IN CENTRAL AND EASTERN EUROPE 1) The investment market The impact of the Covid-19 pandemic and the economic implications for real estate markets are also being felt in Central and Eastern Europe. In 2020, a year defined by economic recession, it was not possible to maintain the rapid pace of recent years. This was also the case in CA Immo’s core cities of Warsaw, Prague, Budapest and Bu- charest. The volume of commercial real estate transactions registered in these cities (€ 5.7 bn) was a little more than 30% short of the previous year’s value. Compared to 2019, the office investment volume in the aforementioned cities declined by just over 40% to € 2.9 bn. By city, Warsaw ac- counted for the largest volume (43%), followed by Buda- pest (21%), Prague (20%) and Bucharest (16%). An investment volume of € 1.5 bn was reported in War- saw, with the office sector accounting for over 85%. The prime yield was approximately 4.50% (4.25% in 2019). Despite the decline in the investment volume in Prague (from € 3.1 bn in 2019 to € 2.7 bn), demand from national and international investors for high quality, sustainable real estate in good locations remained high. A shortage of suitable products was responsible for the downturn. As in the previous year, the prime yield stood at 4.25%. In 2020, the investment volume in Budapest fell by 41% to € 1.0 bn (€ 1.7 bn in 2019). Yields on prime office properties experienced a widening to 5.75%. Bucharest reported an approximate investment volume of € 550 m (down 15% on the previous year), with the of- fice sector accounting for some 85%. The prime yield re- mains at 7.00%. The office property markets 2) In all core cities of CA Immo (Warsaw, Prague, Budapest and Bucharest), it was not possible to sustain the positive development of lettings seen over recent years due to the impact of the Covid-19 pandemic. Vacancy rates were seen to increase on all core markets. While prime yields remained unchanged in Prague and Bucharest, they ex- panded by 25 and 50 basis points respectively in Warsaw 1) Sources: Data supplied by CBRE Research and Budapest. By contrast, peak rents remained largely stable. At the end of 2020, total office space in Warsaw was ap- proximately 5.9 million sqm, with some 314,000 sqm completed in the course of the year. With 576,800 sqm currently under construction, total floor space is ex- pected to exceed six million sqm in the course of 2021. The office pipeline is heavily focused on the CBD of the Polish capital. Office space take-up amounted to 383,000 sqm in 2020, below the prior year’s level. The vacancy rate increased by 210 basis points on the previous year’s value to stand at 9.9% at year end. The peak monthly rent level in central locations was approximately € 25.00 per sqm. The office property market in Prague experienced a subdued 2020. By the end of 2020, the stock of office space had increased by roughly 149,600 sqm to some 3.7 million sqm. Lettings performance only accounted for around 65% of the previous year’s value at approxi- mately 178,800 sqm. The vacancy rate had risen 150 ba- sis points to 7.0% by the end of the year. For this reason, peak rents in central locations declined only marginally to € 22.50/sqm per month. Floor space take-up for the year in Budapest was ap- proximately 190,000 sqm in 2020, around 47% below the previous year’s level. Total office space was around 3.9 million sqm by the end of the year. As expected, the completion volume for 2020 comfortably exceeded the prior year’s figure with 231,900 sqm, just above the previ- ous record figure attained in 2018 (approximately 230,000 sqm). The vacancy rate rose by 350 basis points to 9.1%, reversing the downward trend seen since 2012. Compared to the previous year’s figure, the peak monthly rent fell slightly to € 25.00/sqm. Around 141,200 sqm of office space was let in Bucha- rest by the end of 2020, down 52% on the previous year. The stock of office space totalled 3.0 million sqm by year end thanks to a completion volume of approximately 155,200 sqm. The vacancy rate increased by 130 percent- age points to stand at 12.4% at year end. Despite this, the peak monthly rent in Bucharest rose marginally to € 18.75 per sqm. 2) Sources: Data supplied by CBRE Research CA IMMOBILIEN ANLAGEN AKTIENGESELLSCHAFT, VIENNA ANNEX 2 2 53 OFFICE MARKET DEVELOPMENT IN THE CA IMMO CORE MARKETS IN CENTRAL AND EASTERN EUROPE 2020 2019 Chan g e in %/bps Budapest Take up in sqm 190,000 362,000 -47.50 Vacancy rate in % 9.10 5.60 350 bps Peak rent in €/sqm net exclusive 25.00 26.00 -3.80 Prime yield in % 5.75 5.25 50 bps Bucharest Take up in sqm 141,200 291,300 -51.50 Vacancy rate in % 12.40 11.10 130 bps Peak rent in €/sqm net exclusive 18.75 18.50 1.40 Prime yield in % 7.00 7.00 0 bps Prague Take up in sqm 178,800 276,100 –35.20 Vacancy rate in % 7.00 5.50 150 bps Peak rent in €/sqm net exclusive 22.50 23.00 -2.20 Prime yield in % 4.25 4.25 0 bps Warsaw Take up in sqm 383,000 584,000 -34.4 Vacancy rate in % 9.90 7.80 210 bps Peak rent in €/sqm net exclusive 25.00 25.00 0.00 Prime yield in % 4.50 4.25 25 bps Sources: Data provided by CBRE Research. Note: floor space take-up includes owner-occupied transactions CA IMMOBILIEN ANLAGEN AKTIENGESELLSCHAFT, VIENNA ANNEX 2 2 54 The CA Immo Group divides its core activity into the business areas of letting investment properties and develop- ing real estate. In both of these business areas, CA Immo specialises in commercial real estate with a clear focus on office properties in capital cities in the centre of Europe. The objective is to expand the focused portfolio of high quality and profitable investment properties within the core markets of Germany, Austria, the Czech Republic, Poland, Hungary and Romania. Additional earnings will be gener- ated through the development, construction and utilisation of land reserves in the development area. CA IMMO GROUP'S PROPERTY ASSETS As a result of the transfer of own project completions into the investment portfolio as well as a positive valua- tion result, CA Immo has increased the value of its prop- erty assets in 2020 by 8% up to € 5.6 bn (2019: € 5.2 bn). Of this figure, investment properties account for € 4.7 bn (85% of the total portfolio), property assets under devel- opment represent € 0.8 bn (14%) and short-term proper- ties 9) € 69 m (1%). With a proportion of 54% of total prop- erty assets, Germany is the biggest regional segment. PORTFOLIO OF CA IMMOBILIEN ANLAGEN AG Property assets directly held by CA Immobilien Anla- gen AG represent a rentable effective area of 142,751 sqm (2019: 142,567 sqm). As at the balance sheet date, these assets comprised eight investment properties in Austria with a market value (including prepayments made and construction in progress) of € 246,783 K (eight investment properties; € 250,895 K on 31.12.2019). This portfolio generated rental income of € 15,430 K in 2020 (€ 14,039 K in 2019). Lettings An approximate of 21,800 sqm of floor space was newly let or extended in 2020 (33,600 sqm in 2019). ÖGK - Öster- reichische Gesundheitskassa moved into around 5,300 m² in Erdberger Lände. A further lease agreement for around 1,740 m² was concluded in the ViE office building. The economic occupancy rate in the investment portfolio re- mained unchanged at around 88% (2019: 88%). Investments In 2020, the company invested € 1,741 K in its asset portfolio (€ 19,198 K in 2019). Investments were made in particular in tenant fit-outs in the ViE office building. Disposals No property disposals occurred in business year 2020. 9) Incl. properties intended for trading or sale PROPERTY ASSETS CA IMMOBILIEN ANLAGEN AKTIENGESELLSCHAFT, VIENNA ANNEX 2 2 55 KEY FIGURES FROM THE INCOME STATEMENT CA Immo recorded a 10% increase in rental income to € 15,430 K in 2020 (2019: € 14,039 K). Operating ex- penses passed on to tenants increased by 6% from € 4,631 K in 2019 to € 4,912 K in 2020. Management reve- nue for services provided to subsidiaries increased by 1% year-on-year to € 9,139 K (2019: € 9,012 K). As a result, this led to a 5% increase in gross revenues to € 30,228 K (€ 28,883 K in 2019), distributed as follows: Austria 77%, Germany 3% and 20% in Eastern Europe. Other operating income decreased by 31% to € 5,881 K (€ 8,473 K in 2019). Write-ups to tangible assets amounted to € 5,137 K (€ 6,235 K in 2019). In 2020, provisions were released in the amount of € 304 K (€ 1,562 K in 2019). Personnel expenses increased by 10% from € 13,970 K in 2019 to € 15,388 K in 2020. In 2020, the company em- ployed 70 staff members on average (69 in 2019). Depreciation charged to tangible assets totalled € –11,532 K (€ –17,367 K in 2019). Of this amount, € –3,688 K relates to impairment losses on real estate. Other operating expenditures totalled € –47,919 K (€ –16,466 K in 2019). Of this, an amount of € –26,297 K was attributable to tax expense (previous year: € –549 K), which includes in particular court fees of € 25,475 K for the damages proceedings of € 1.9 bn initiated in 2020 in connection with the privatisation of Federal Residential Property companies in 2004 (‘BUWOG’) and for the un- lawful failure to win the best bidder procedure. Other ex- penses directly related to properties stood at € –8,673 K (€ 7,556 K in 2019). An amount of € –12,949 K (€ –8,361 K in 2019) was spent on general administrative costs such as project-related legal, auditing and consulting fees, ad- vertising and marketing or administrative management costs; the increase in this item is mainly related to costs in connection with the issue of two corporate bonds. The above developments led to a negative operating re- sult of € –38,730 K compared with € –10,447 K in the pre- vious year. The company received income from investments total- ling € 123,378 K (€ 192,269 K in 2019) via subsidiary divi- dend distributions. This item was offset by expenses linked to financial assets and interest receivables on cur- rent assets of € –3,502 K compared to € –138,603 K in 2019. Income of € 19,796 K (€ 21,803 K in 2019) was generated from loans granted mainly to subsidiaries. The item other interest and similar income stood at € 431 K (compared to € 12 K in 2019). Income from financial investments amounted to € 3,619 K (€ 6,487 K in 2019) and include write-ups on investments in affiliated companies amounting to € 3,397 K (€ 5,767 K in 2019). This item was offset by write-downs on equity holdings of € –3,239 K (€ –137,045 K in 2019), of which € –1,026 K due to divi- dend distributions (€ –136,736 K in 2019). Interest expense rose in total by 19% to € –34,634 K (€ –29,188 K in 2019). Interest for bank loans or real es- tate financing decreased by 3% to € –2,427 K (€ –2,499 K in 2019). Expenses for derivative transactions fell to € –2,588 K (€ –4,408 K in 2019). Interest costs in respect of affiliated companies declined from € –1,962 K in 2019 to € 766 K in 2020. The largest amount, totalling € –27,957 K, concern interest costs for bonds; last year, this figure stood at € –19,964 K. As at the balance sheet date, seven CA Immo corporate bonds were trading on the unlisted securities market of the Vienna Stock Ex- change and partly on the regulated market of the Luxem- bourg Stock Exchange (Bourse de Luxembourg). The con- vertible bonds issued in the fourth quarter of 2017 were included in trading on the unregulated third market (multilateral trade system) of the Vienna Stock Exchange. The bonds provide unsecured financing at Group parent company level; they are on equal footing to one another and to all other unsecured financing of CA Immo- bilien Anlagen AG. Except for the 2015-2022 corporate bond and the convertible, bond conditions contain a loan-to-value (LTV) covenant. Early in 2020, CA Immo entered the Eurobond market for the first time, issuing a € 500 m fixed-rate, non-subor- dinate and unsecured benchmark bond with a term of seven years and an annual coupon of 0.875%. The inter- national rating agency Moody’s Investors Service Ltd. gave the bond, which is registered for official trading on the Vienna Stock Exchange, an investment grade rating of Baa2. Net proceeds will mainly be used to (re)finance properties, future acquisitions and future development projects, and to optimize the loan capital structure (e.g. financing of the following cash buyback offers on out- standing bonds); it will also serve other, more general corporate goals. RESULTS CA IMMOBILIEN ANLAGEN AKTIENGESELLSCHAFT, VIENNA ANNEX 2 2 56 At the same time, the company decided to invite hold- ers of the bonds shown in the table below to submit of- fers for cash buyback. Issue title Repurchase rate in % Total nominal value offered in € 1,875% CA Immo Bonds 2016-2021 ISIN: AT0000A1LJH1 102.55 32,550,000 2,75% CA Immo Bonds 2015- 2022 ISIN: AT0000A1CB33 105.10 32,589,500 2,75% CA Immo Bonds 2016- 2023 ISIN: AT0000A1JVU3 107.10 33,379,000 The invita tion to submit buyback offers was originally subject to a maximum volume of € 60 m. However, CA Immo decided not to proceed on a pro rata basis and to accept the total nominal amounts offered in full. The repur- chase of the outstanding corporate bonds with a total nomi- nal value of € 98,518 K resulted in a negative one-off effect on financial results amounting to € –4.862 K, which is rec- ognized in the item other financial result. In October 2020, CA Immo took advantage of the good market conditions once again and issued a € 350 m fixed- rate non-subordinated unsecured Green Bond with a ma- turity of five years and an annual coupon of 1.00%. The issue was more than 5 times oversubscribed, with strong demand from more than 150 investors. The international rating agency Moody's Investors Service Ltd. assigned an investment grade rating of Baa2 to the bond, which was admitted to official trading on the Vienna Stock Exchange. The net proceeds are earmarked for the full or partial fi- nancing and refinancing of sustainable buildings in ac- cordance with the Sustainability Bond Framework. This includes the financing and refinancing of commercial real estate that either has sustainability certificates (including LEED or DGNB Gold Standard) or whose primary energy requirements are at least 25% below nationally defined standards such as the Energy Saving Ordinance (EnEV) in Germany or the PENB in the Czech Republic. Due to the factors outlined above, the financial result rose by 107% to € 109,088 K (€ 52,780 K in 2019). Earn- ings before taxes stood at € 70,359 K (against € 42,333 K in 2019). After taking account of tax revenue of € 12,745 K (€ 4,370 K in 2019), the annual net profit as at 31 December 2020 stands at € 83,103 K, compared to € 46,703 K on 31 December 2019. After taking into ac- count a profit carried forward from the previous year in the amount of € 814,502 K (€ 860,827 K in the previous year), the annual financial statements of CA Immo- bilien Anlagen AG show net retained earnings of € 897,605 K (€ 907,530 K in 2019). Proposed dividend for 2020 For business year 2020, the Management Board again proposes a dividend of € 1.00 per share with dividend entitlement. In relation to the closing rate as at 31 Decem- ber 2020 (€ 31.35), the dividend yield was approximately 3%. The dividend payment date is 12 May 2021 (ex-divi- dend date and record date for the dividend are 10 or 11 May 2021, respectively). Cash-flow In the year under review, cash-flow from operating ac- tivities (operating cash-flow plus changes in net working capital) stood at € 139,521 K (€ 197,163 K in 2019). Cash- flow from investment activities was € –195,735 K (€ 39,611 K in 2019) and cash-flow from financing activi- ties was € 690,347 K (€ –271,555 K in 2019). BALANCE SHEET ANALYSES Assets CA Immobilien Anlagen AG's total assets increased year- on-year from € 3,629,907 K as at 31 December 2019 to € 4,460,251 K as at 31 December 2020. Fixed assets increased from € 3,533,787 K as at 31 De- cember 2019 to € 3,725,856 K on 31 December 2020. Fixed assets accounted for 84% of total assets on 31 De- cember 2020 (97% on 31.12.2019). Intangible assets, which solely comprise EDP software, increased to € 542 K (€ 427 K on 31.12.2019). As at the balance sheet date, the company's property assets comprised eight properties in Austria with a market value of € 246,783 K (€ 250,895 K on 31.12.2019). Tangible fixed assets to- talled € 248,077 K (€ 252,370 K on 31.12.2019). In 2020, impairment losses of € 3,688 K (€ 9,571 K in 2019) and impairment reversals of € 5,137 K (€ 6,235 K) were rec- ognized on property, plant and equipment. Financial assets rose by 6% to € 3,477,237 K (€ 3,280,990 K on 31.12.2019). As of the balance sheet date, the book value of investments in affiliated companies stood at € 2,938,724 K (€ 2,600,187 K on 31.12.2019). The change mainly results from shareholder contributions and CA IMMOBILIEN ANLAGEN AKTIENGESELLSCHAFT, VIENNA ANNEX 2 25 7 the purchase of CA Immo P14 Sp. z o.o., which holds the office building Postepu 14 in Warsaw. In addition, a sub- sidiary in Austria was liquidated in 2020. Current assets recorded an increase from € 92,283 K as at 31 December 2019 to € 724,466 K on 31 December 2020. The increase is a result of the issuance of the bonds mentioned above. Receivables recorded a decrease of –6% to € 30,048 K (€ 31,998 K on 31.12.2019). On 31 De- cember 2020, the company has cash and cash equiva- lents of € 694,418 K (€ 60,285 K on 31.12.2019). Liabilities Shareholders' equity decreased slightly to € 2,470,783 K as at the balance sheet date (€ 2,480,708 K on 31.12.2019). The equity ratio on the key date was approximately 55% (68% on 31.12.2019). Equity covered 66% of fixed assets (70% on 31.12.2019). Provisions amounted to € 43,439 K (€ 19,860 K on 31.12.2019). With an amount of € 25,475 K (€ 0 K on 31.12.2019), the provision for court fees for the damages proceedings initiated in 2020 in connection with the pri- vatisation of Federal Residential Property companies in 2004 (‘BUWOG’) represents the largest item. The court fees were recognised in other tax expense. An amount of € 6,730 thousand was recognized for bonuses (€ 5,469 K on 31.12.2019). Provisions for derivative transactions amount to € 6,657 K (€ 5.289 K on 31.12.2019). Liabilities increased from € 1,122,879 K at the end of 2019 to € 1,939,666 K as at 31 December 2020, including in particular liabilities from bonds amounting to € 1,741,482 K (€ 990,000 K on 31.12.2019). Liabilities to banks comprise only investment loans amounting to € 111,134 K (€ 111,908 K on 31.12.2019). DEVELOPMENT OF SHAREHOLDERS' EQUITY € 1,000 31.12.2019 Change treasury share reserve Dividend payments Annual result Addition to reserves 31.12.2020 Share capital 676,316 0 0 0 0 676,316 Tied capital reserves 854,841 0 0 0 0 854,841 Retained Earnings 42,021 0 0 0 0 42,021 Net profit 907,530 0 –93,028 83,103 0 897,605 Total equity 2,480,708 0 –93,028 83,103 0 2,470,783 CA IMMOBILIEN ANLAGEN AKTIENGESELLSCHAFT, VIENNA ANNEX 2 2 58 FINANCIAL PERFORMANCE INDICATORS The strategic focus of business activity at CA Immo is the long-term increase in the value of the company. This is supported by key financial performance indicators which are important tools to identify the factors that contribute to the sustained increase in enterprise value and quantifying those factors for the purposes of value management. Performance indicators of the CA Immo Group The primary financial performance indicator is the net income generated on the Company’s average equity (re- turn on equity or RoE). The aim is to produce a figure higher than the calculated cost of capital (assuming a medium-term rate of around 7.0%), thus generating shareholder value. The other quantitative factors used to measure and manage our shareholders' long-term return include the change in NAV per share, operating cash flow per share, and Funds from Operations (FFO I and FFO II) per share. FFO I, a key indicator of the Group’s long-term earning power, is reported before taxes and adjusted for the sales result and other non-permanent effects. FFO II, which in- cludes the sales result and applicable taxes, is an indica- tor of the overall profitability of the Group. NON-FINANCIAL PERFORMANCE INDICATORS Since the key financial indicators ultimately demon- strate the operational success of the property business, they are preceded by a series of other non-financial per- formance indicators which are key to measuring and managing the operational business. The key non-financial performance indicators of opera- tional property business are among others as follows: – The occupancy rate indicates the quality of the portfo- lio and the success in managing it. The economic occu- pancy rate of CA Immoblien Anlagen AG in its invest- ment property portfolio remained unchanged year-on- year at around 88%. – The vacancy rate shows the ratio of unlet space to the total space in the real estate portfolio and therefore plays an important role in terms of the return to be gen- erated. The higher the vacancy rate, the lower the rental income. The real estate portfolio of CA Immoblien An- lagen AG has a vacancy rate of around 12% as of 31 De- cember 2020 (around 13% on 31 December 2 019). – WAULT – Weighted Average (Unexpired) Lease Term is a key indicator in the commercial real estate sector. It provides information on the average remaining lease term of the real estate portfolio and amounts to 3.9 years at CA Immoblien Anlagen AG as of 31 December 2020 (3.9 years on 31 December 2019). – The quality of a location and its infrastructure are critical to the marketability of properties. The majority of CA Immo office properties are situated in CBD- or central business locations of Central- and Eastern European cities. – Sustainability Certificate: Sustainable in-house project development for its own stock to enhance the quality of the investment portfolio has been an important compo- nent of CA Immo's sustainability strategy for many years. In order to provide transparent, internationally comparable and objective proof of building quality across the entire portfolio, CA Immo also has strategic core investment properties certified. – Local presence and market knowledge: CA Immo has branch offices on its core markets to ensure efficient management and tenant retention. CA IMMOBILIEN ANLAGEN AKTIENGESELLSCHAFT, VIENNA ANNEX 2 25 9 ENVIRONMENT AND SOCIAL ASPECTS CA Immo is an investor, developer and long-term holder of high-quality office buildings. Our strategic busi- ness model is geared towards sustainable value creation, taking into account ecological, economic, social and legal dimensions. This goes hand in hand with our claim to meet the diverse interests and needs of CA Immo stake- holders in a targeted and responsible manner, thereby se- curing competitiveness in the long term. With this in mind, we evaluate and manage the requirements of our stakeholders as well as the impact of our business activi- ties on our ecological and social environment. CA Immo wants to make a contribution to keeping global warming below 2° Celsius and protecting the envi- ronment. We have therefore set ourselves the goal of re- ducing the carbon footprint of our buildings, increasing the resilience of our portfolio to climate risks and evalu- ating and, if necessary, intensifying the measures we have taken to date to protect the environment. Social, environmental and economic impacts, risks and opportunities arising from CA Immo business activities A key step in identifying and weighting the sustainabil- ity issues relevant to CA Immo was to evaluate the im- pact of our business activity on the environment, society and the economy across the entire value chain. This in- cluded the following direct (own activities) and indirect (supply chain) material impacts, risks and opportunities. Environment: – Environmental standards in project development (en- ergy efficiency and CO 2 emissions in the construction process as well as product definition, material selec- tion, resource consumption and circular economy) – Brownfield vs. greenfield development (biodiversity) – Management of energy efficiency and CO 2 emissions, waste generation and water consumption in building operations Society and economy: – Social standards in urban district and project develop- ment (product definition, e.g. social infrastructure, af- fordable housing), response to social change – Health and safety for tenants, contractors and own em- ployees in building operations and on construc tion sites, dealing with pandemic risks – Working conditions and income effects of own and ex- ternal employees (contractors), employee rights, staff development and retention – Independent and responsible corporate governance, compliance with social and environmental require- ments, observa nce of human rights, avoidance of cor- ruption and bribery, reputational risk CA Immo climate risks and opportunities The analysis of specific climate risks for our business is extremely complex and involves a number of unknown variables. In 2020, we reviewed our general risk catalog for completeness in this regard and partially supple- mented and evaluated the climate risks relevant to our business as well as general sustainability risks. In future, these risks will be re-evaluated and assessed annually and approved by the Management Board. If the assess- ments reveal the need for additional measures or changes in strategy, these are subsequently implemented accord- ingly by the responsible departments. CA Immo pursues a proactive approach to ensure that any risks are mini- mised through early countermeasures and that the com- pany can react to any changes in good time. Social engagement CA Immo also takes measures in the social sphere to set positive impulses and responsible standards within its sphere of influence. Our strategy focuses in particular on health & safety, employment & working conditions and the social aspects of a sustainable supply chain and ur- ban district development. Further information on the topic of "Environment and Social Responsibility" can be found in the Group Man- agement Report ('ESG Report' chapter). Employees Our employees are our most valuable resource; their ex- pertise and commitment are crucial to our success. CA Immo values a corporate culture that is characterized by pride, trust and self-determined work. As an employer, we want to create the best possible conditions for our em- ployees to develop their potential, strengths and compe- tencies to the full. We offer safe and attractive working environments, a wide range of international development opportunities and careful, forward-looking personnel de- velopment with the aim of offering our employees what our office properties stand for: a "place where people love to work". CA IMMOBILIEN ANLAGEN AKTIENGESELLSCHAFT, VIENNA ANNEX 2 2 60 As an employer, CA Immo has been locally anchored in its markets for many years and employs almost exclu- sively local staff in its international branches. In princi- ple, CA Immo employs staff on full-time, permanent con- tracts. CA Immo supports the work-life-balance and com- patibility of career and family at different stages of em- ployees' lives by offering flexible working hours and part- time models, home office arrangements, individual pa- rental leave models and paternity leave. Employees on leave are integrated into the internal information network and have the opportunity to participate in annual team meetings and company events. In addition, a large num- ber of employee-related regulations were defined in co- operation with the Austrian Works Council within the framework of company agreements. For information on diversity, equality, inclusion and employee rights, please refer to the Corporate Govern- ance Report. PERSONNEL DISTRIBUTION WITHIN THE CA IMMO GROUP 1) Headcount Number of employees Share of women Joining / Leaving New hires 2) Turnover 3) 31.12.2019 31.12.2020 Change 2020 Ø 31.12.2020 2020 2020 2020 in % in % in % in % Austria 80 80 0 80 63 12/11 15 14 Germany/Switzerland 4) 233 252 8 244 38 45/23 18 9 CEE 101 105 4 102 72 11/5 11 8 Total 414 437 6 426 51 68/39 16 9 1) Headcounts. Thereof around 11% part-time staff, incl. 26 employees on unpaid leave; excl. 22 employees of joint venture companies. 2) New hires: Joiners 2020 / average number of employees in 2020 (Headcount) 3) Turnover: Leavers 2020 / average number of employees in 2020 (Headcount); 4) At the end of 2020, 25 local employees were employed at the Basel branch of CA Immo's wholly owned construction subsidiary omniCon, which was established in 2014. CA IMMOBILIEN ANLAGEN AKTIENGESELLSCHAFT, VIENNA ANNEX 2 2 61 SHAREHOLDER STRUCTURE The company’s capital stock amounted to € 718,336,602.72 on the balance sheet date. This was di- vided into four registered shares and 98,808,332 bearer shares each with a proportionate amount of the capital stock of € 7.27. The bearer shares trade on the prime market segment of the Vienna Stock Exchange (ISIN: AT0000641352). With a shareholding of around 28% as at 31 December 2020 (27,908,386 bearer shares and four registered shares), SOF-11 Klimt CAI S.à r.l., Luxembourg, a com- pany managed by Starwood Capital Group, is the largest shareholder of CA Immo. Starwood is a global financial investor focusing on real estate investments. The remain- ing shares of CA Immo are in free float held by both insti- tutional and private investors. S IMMO Group and BlackRock Inc. count to the larger shareholders of CA Immo with stakes of about 6% and 4% respectively. No other shareholders with a stake of more than 4% are identified. For more information on the organisation of the shares and the rights of shareholders, please refer to the Corporate Governance Report (Corporate Governance (caimmo.com)). CAPITAL DISCLOSURES At the 31st Annual General Meeting of 9 May 2018, the Management Board was authorized, with the consent of the Supervisory Board, to increase the capital stock by up to € 359,168,301.36 (approx. 50% of the current capital stock) by issuance of up to 49,404,168 new ordinary bearer shares in return for contributions in cash or in kind (also in several tranches and by exclusion of share- holders’ subscription rights if required). The authorisa- tion is valid until 18 September 2023. In the same annual general meeting, the ‘contingent capital 2013’ was reduced from € 100,006,120 to € 47,565,458.08 in order to serve the 0.75% convertible bonds 2017-2025. Further, the Management Board was au- thorized, with the consent of the Supervisory Board, until 8 May 2023 to issue convertible bonds up to a total nomi- nal amount of € 750 m with conversion and/or subscrip- tion rights in respect of up to 19,761,667 ordinary bearer shares of the company representing a pro-rata amount of the share capital of the company of up to € 143,667,319.09 (‘contingent capital 2018’), also in sev- eral tranches and to determine all other terms of the con- vertible bonds as well as in respect of the issuance and the conversion procedure. Under this authorisation, con- vertible bonds may only be issued, if the total number of new shares for which conversion and/or subscription rights are granted by such convertible bonds shall not ex- ceed 20% of the share capital at the time this authorisa- tion is resolved upon. The shareholders’ subscription rights were excluded (article 174 para 4 in connection with article 153 Austrian Stock Corporation Act (AktG)). At the 32nd Annual General Meeting held on 9 May 2019, the Management Board was authorised in accord- ance with article 65 para 1 no 8 and para 1a and para 1b Austrian Stock Corporation Act (AktG) for a period of 30 months from the date of the adopted resolution (until 8 November 2021), with the consent of the Supervisory Board, to repurchase treasury shares in the company, whereas the company’s stock of treasury shares must not exceed 10% of its share capital. The consideration shall not be lower than 30% and shall not exceed 10% of the average unweighted market price at the close of the mar- ket on the ten trading days preceding the repurchase. The Management Board is further authorised to determine the respective other terms and conditions of the repurchase, whereby the treasury shares may be acquired at the dis- cretion of the Management Board via the stock exchange, by way of a public offer, or by any other lawful and ap- propriate way, in particular off market, and/or from indi- vidual shareholders and under exclusion of the share- holders’ pro rata rights (reverse subscription right). The authorisation may be exercised in full or in part or in multiple partial amounts and in pursuit of one or more purposes by the company, subsidiaries (article 189a no 8 Commercial Code (UGB)) or by third parties for their ac- count. The authorisation may be repeatedly exercised. In addition, the Management Board was authorised, with the consent of the Supervisory Board, to transfer the ac- quired treasury shares by all legally permissible means and to determine the terms and conditions of the transfer of shares or to cancel the treasury shares without an addi- tional resolution by the General Meeting. No use has been made of the share buyback programme in the year under review. As at 31 December 2020, CA Immobilien Anlagen AG held 5,780,037 treasury shares in total; given the total number of voting shares is- sued (98,808,336), this is equivalent to around 6% of the voting shares. INFORMATION ACC. SECTION 243A UGB (AUSTRIAN COMMERCIAL CODE) CA IMMOBILIEN ANLAGEN AKTIENGESELLSCHAFT, VIENNA ANNEX 2 2 62 INFORMATION ON THE MANAGEMENT AND SUPERVISORY BOARDS According to the articles of association, the Manage- ment Board of CA Immo comprises one, two or three per- sons. The age limit for Management Board members is defined as 65 in the Articles of Association. The final term of office for Management Board members concludes at the end of the Annual General Meeting that follows the 65th birthday of a Board member. The Supervisory Board comprises no less than three and no more than twelve members. At any time, Supervisory Board members ap- pointed through registered shares may be asked to step down by the person entitled to nominate and replaced by another. The provisions of the Articles of Association re- garding terms of office and elections to appoint replace- ments do not apply to them. The other Supervisory Board members are elected by the Annual General Meeting. The age limit for Supervisory Board members is defined as 70 in the Articles of Association. Supervisory Board mem- bers must step down from the Board at the end of the An- nual General Meeting that follows their 70th birthday. The Shareholder’s Meeting resolves on the dismissal of members of the Supervisory Board on the basis of a ma- jority of at least 75% of the capital stock represented (ar- ticle 21 of the Articles of Association of CA Immo). CHANGE-OF-CONTROL CLAUSES All Management Board contracts contain a change of con- trol clause assuring payments in the event of premature ter- mination of Management Board duties following a change of control. A change of control occurs either where a share- holder or group of shareholders attains 25% of voting rights in the Annual General Meeting, or they are obliged to make a mandatory takeover bid where the investment threshold of 30% is exceeded. Corporate mergers always constitute a change of control. The contractual regulations provide for extraordinary termination rights as well as continued remu- neration (including variable remuneration) for the remain- ing term of the employment contract. According to the cal- culation basis, compensation for fixed remuneration may not exceed two years’ fixed salary. Moreover, the company has to grant the Management Board member a contractually agreed percentage part payment to compensate for the loss of variable remuneration not exceeding 80% of two years’ fixed salary, depending on the specific sphere of activity and the position of the Management Board member in ques- tion. The exercising of a special right of termination in the event of a change of control in the sphere of Starwood Capi- tal, the major shareholder, has been contractually excluded for all Management Board members. COMMITTED TO OBSERVING THE AUSTRIAN CORPORATE GOVERNANCE CODE Compliance with legal provisions applicable in the CA Immo Group’s target markets is a high priority for the company. The Management Board and Supervisory te- Board are committed to observing the Austrian Corporate Governance Code 10) and thus to transparency and princi- ples of good corporate management. The rules and rec- ommendations of the version of the Corporate Govern- ance Code applicable in business year 2020 (January 2020 amendment) are implemented almost in full. Dis- crepancies are noted in respect of C Rules no. 2 (right of appointment to the Supervisory Board) and no. 45 (exec- utive positions with competitor companies). The evalua- tion carried out by Ernst & Young Wirtschaftsprüfungs- gesellschaft m.b.H. concerning compliance with rules 1 to 76 of the Austrian Corporate Governance Code for business year 2020 found that declarations of conformity submitted by CA Immo with regard to compliance with the C and R Rules of the Code were correct. The corpo- rate governance report is also available on the company’s web site at Corporate Governance (caimmo.com). 10) The Austrian Corporate Governance Code may be viewed on the web site of the Austrian Working Group for Corporate Governance at www.corporate-governance.at. CA IMMOBILIEN ANLAGEN AKTIENGESELLSCHAFT, VIENNA ANNEX 2 2 63 ANTICIPATED DEVELOPMENTS AND MAIN OPPORTUNITIES AND THREATS The fundamental challenge of the current year will re- main the fight against the Covid-19 pandemic. Despite in- itial progress in the global vaccination campaigns, the in- cidence of infection is likely to remain dynamic. With a potential improvement in the pandemic situation from spring onwards, a recovery in economic growth could then be felt across the board. It can be expected that global containment measures re- main in place d u ring 2021 before being increasingly re- laxed later on. As a result, the global economy should grow strongly again in 2021. Current economic growth forecasts expect the European economy to grow by about 4% in 2021 and by about 3% in 2022, thus returning to pre-crisis levels in the course of 2022. The long-term impact of the pandemic and its economic consequences cannot be conclusively assessed given the dynamic situation, and is subject to ongoing evaluation. Temporary restrictions on current operations (also caused by exit restrictions, curfews, border closings, school/busi- ness shutdowns and other constraints) may affect the CA Immo Group, tenants, customers and suppliers as well as authorities. The consequences in terms of finance, gen- eral business and real estate in particular cannot be fully gauged (e.g. payments by tenants which are not in ac- cordance with contracts, delays in construction activities, effects on real estate markets, development of covenants for current financings, effects on planned real estate transactions). The CA Immo Group applies a wide range of possible measures to minimise the impact. Strategy Thanks to the successfully implemented strategy pro- grams of recent years, CA Immo enjoys an excellent mar- ket position in its core markets. Despite the challenging economic conditions resulting from the Covid-19 pan- demic, the core segment of investment properties is ex- pected to continue to perform robustly. Furthermore, in addition to the continuation of organic growth through profitable project development activities, selective acquisitions of investment properties with value creation potential in the core markets are to be realised. The expected increase in annual rental income, com- bined with an optimized financing structure, should fur- ther enhance the sustainable profitability of CA Immo. The company's portfolio strategy continues to be based on a high-quality portfolio in terms of both location and building quality and a clear focus on attractive metropoli- tan areas in Central and Eastern Europe. In this context, strategic capital rotation will be implemented on an on- going basis. Following the exit from the non-strategic markets of Zagreb (September 2020), Graz (December 2020) and Bratislava (March 2021), a sale of the two of- fice buildings in Belgrade is also planned. Sales within the office portfolios in the strategic core markets and re- investment of the sales proceeds in acquisitions of strate- gic investment properties or in the company's develop- ment pipeline are aimed at optimizing the quality of the portfolio in terms of location, physical and sustainable building quality, and management efficiency. Financing CA Immo has an extremely robust balance sheet and fi- nancing structure with a very solid liquidity position. The inaugural issuance of a benchmark bond and a green bond in 2020 represents a milestone in the implementa- tion of the growth strategy, which has significantly accel- erated the diversification of the financing structure and its optimization. Moody’s confirmed both the Baa2 rating and the stable outlook in a credit opinion on 18 January 2021. When the core shareholder Starwood Capital made an anticipatory mandatory offer to the shareholders and owners of con- vertible bonds of CA Immo, the rating agency placed the rating ‘under review for downgrade’ as well as the out- look to under review. According to an announcement by Moody’s, this change reflects uncertainty over whether Starwood will “acquire control of CA Immo and whether this will mean changes to the business, finance and li- quidity profile of CA Immo”. Key factors that may influence our business plans for 2021 include: – Economic developments in the regions in which CA Immo is active and the effects of these on demand for rental premises and rental prices (core indicators in- clude GDP growth, employment and inflation). – The developm ent of general interest rate levels. – The financing environment as regards the availability and cost of long-term financing with outside capital (both secured financing from banks on property level and unsecured capital market financing on group level), and accordingly the development of the market for real OUTLOOK CA IMMOBILIEN ANLAGEN AKTIENGESELLSCHAFT, VIENNA ANNEX 2 2 64 estate investment, price trends and their impact on the valuation of the CA Immo portfolio. – The speed at which planned development proj ects are realised will also depend on the market factors outlined above and the availability of necessary debt and equity. – Political, fiscal, legal and economic risks, transparency and the development level on our real estate markets. Divide nd and annual earnings target 2021 For business year 2020, the Management Board plans to propose a dividend of € 1.00 per share with dividend entitlement. The annual target for FFO I, a key indicator of the Group's recurring earnings power, will be announced in the context of the presentation of the first quarter in May 2021. RESEARCH AND DEVELOPMENT Technological and social change continues to transform the office environment and the knowledge-based econ- omy. In order to develop and revitalize office properties today in such a way that they can be efficiently and prof- itably managed in future, CA Immo monitors changes to working processes and corporate requirements in terms of premises; at the same time, it trials new technical solu- tions along with space and building concepts on selected development projects. The current focus is on new re- quirements relating to energy efficiency, environmental protection and protective measures in relation to viral in- fections (pandemic protection). In the course of theoretical and practical research activ- ity, CA Immo maintains partnerships with institutions involved in real estate related research. For example, CA Immo is a partner to the Office 21 joint research pro- ject of the Fraunhofer IAO Institute (www.office21.de) and the Innovation platform RE!N (Real Estate Innova- tion Network), with the objective of pilot testing external and own innovation approaches at an early stage. CA Immo is also an active member of relevant platforms in the real estate industry. CA IMMOBILIEN ANLAGEN AKTIENGESELLSCHAFT, VIENNA ANNEX 2 2 65 RISK REPORT CA IMMOBILIEN ANLAGEN AKTIENGESELLSCHAFT, VIENNA ANNEX 2 2 66 RISK MANAGEMENT AT CA IMMO To ensure the success of CA Immo as a business in the long term and enable the company to meet its strategic objectives, effective management of new and existing risks is essential. A commensurate measure of risk must be accepted if we are to utilise market opportunities and exploit the potential for success they hold. For this rea- son, risk management and the internal monitoring system (IMS) deliver an important contribution to the Group’s corporate governance (defined as the principle of respon- sible management). CA Immo's risk management system is based on the fol- lowing elements: – Risk culture: CA Immo's reput ation is central to our identity and business success. Therefore, compliance with established principles of corporate governance and value management is a matter of course. For CA Immo, risk culture implies the raising of risk awareness and the establishment of a conscious approach to risk in day-to- day business –for managers and individual employees alike. – Risk strategy: The risk strategy describes how risks stemming from business strategy are managed and iden- tifies the risks in terms of their impact on the company’s economic situation and the relevant guidelines on man- aging risks. Strategic alignment and tolerance of risk With the approval of the Corporate Development com- mittee established in 2019 and the Supervisory Board, the Management Board defines the strategic direction of the CA Immo Group as well as the nature and extent of risks the Group is prepared to accept in pursuit of its strategic objectives. The Risk Management department supports the Management Board in assessing the risk environment and developing potential strategies to raise long-term stakeholder value. An internal risk committee comprising representatives from all business areas and the CFO has also been set up; this convenes quarterly or, if necessary, in special sessions (in response to the Covid-19 situation, for example). The purpose of the committee is to provide additional assurance in regularly assessing the Group's risk situation across departmental boundaries and intro- ducing measures as necessary. The aim of this is to en- sure the company adopts the best possible direction from the alternatives available. Identification of risks and assessment CA Immo evaluates the opportunity/threat situation through quarterly reporting. Risk is assessed in relation to specific properties and projects as well as (sub)portfolios. The company incorporates early warning indicators such as rent forecasts, vacancy analyses, continual monitoring of lease agreement periods and the possibility of termina- tions; construction costs are also tracked throughout pro- ject implementation. Scenarios are envisaged regarding the value trend for the real estate portfolio, exit strategies and liquidity planning; these supplement risk reporting and promote reliable planning. CA Immo observes the precautionary principle by applying the full investment horizon to long-term planning and investment decisions. The company also evaluates specific risks at regular inter- valsevery three years, focusing on content, effect and like- lihood of occurrence. An annual update is also carried out with regard to the estimated impact on the result, as- sets or liquidity of CA Immo (‘extent of damage’) and the probability of occurrence within a period of one year. Measures and controls already implemented are taken into account to determine the net risk. The Management Board uses this data as the basis for determining the se- verity and type of risks that it regards as acceptable in pursuing its strategic objectives. Strategies adopted by the Management Board are incorporated into the Group’s three-year planning; this assists the Group in communi- cating its willingness to take risks and its expectations, both internally and externally. The risk policy of CA Immo is defined by a range of guidelines, observance of which is continually monitored and documented by controlling processes. Risk manage- ment is obligatory at all levels of the company. The Man- agement Board is involved in all risk-relevant decisions and bears overall responsibility for such decisions. At all levels, decisions are subject to the dual verification prin- ciple. Internal Auditing, an independent division, re- views operational and business processes, appointing ex- perts from outside as necessary; it acts independently in reporting and evaluating audit results. Evaluating the functionality of risk management The proper functioning of the risk management system is evaluated annually by the Group auditor in line with the requirements of C Rule no. 83 of the Austrian Corpo- rate Governance Code. The results are reported to the Management Board and the audit committee. CA IMMOBILIEN ANLAGEN AKTIENGESELLSCHAFT, VIENNA ANNEX 2 2 67 KEY FEATURES OF THE INTERNAL MONITORING SYSTEM (IMS) CA Immo’s internal monitoring system covers all princi- ples, procedures and measures designed to ensure the ef- fectiveness, cost-effectiveness and accuracy of accounting as well as compliance with relevant legal regulations and company guidelines. The IMS is integrated into individ- ual business processes, taking account of management processes. The objectives of the IMS are to preclude and expose errors in accounting and financial reporting, thus enabling amendments to be introduced in good time. Transparent documentation makes it possible to depict accounting, financial reporting and auditing processes. All operational areas are incorporated into the financial reporting process. Competent local management teams are responsible for implementing and monitoring the IMS; the managing directors of subsidiaries are required to perform their own checks in order to assess and docu- ment compliance with monitoring measures. The effec- tiveness of the IMS is regularly assessed by the Group Au- diting department while the cost-effectiveness of business processes is continually evaluated. The results of these assessments are reported to the responsible executive boards, the full CA Immo Management Board and (at least once a year) the audit committee. STRATEGIC RISKS CA Immo defines strategic risk as the danger of unex- pected deviations from company plans or the losses that can result from management policy decisions on the di- rection taken by the company. These risks generally arise from unexpected changes in the macroeconomic market environment. Many of the risks mentioned here are not actively manageable. Amongst other things, the economic success of CA Immo depends on the development of real estate markets of relevance to the Group. Key factors influenc- ing the economic trend include the general situation of the global economy, the trend in rental prices, the infla- tion rate, levels of national debt and interest rates. In the office properties segment, factors such as economic growth, industrial activity, the unemployment rate and consumer confidence play a major role alongside other factors critical to the economic trend. These circum- stances – all of which are beyond the company’s control – may have a negative impact on the broad economic pic- ture in Europe and thus adversely affect economically powerful countries like Germany and Austria; they may also impair the finance and real estate sector generally. Any downturn in the economic situation has the poten- tial to reduce demand for real estate, which in turn can adversely affect occupancy rates, property values and even the liquidity of real estate. Although the economic environment remains character- ised by low interest rates and relatively high property portfolio valuations, the possibility of an interest rate rise negatively affecting the real estate market – and thus property valuations and the divestment plans of CA Immo – cannot be discounted. Acquiring equity and loan capital could become significantly more difficult, making expansion plans almost or completely impossible. The possible reintroduction of national currencies by in- dividual eurozone members would also have grave conse- quences for the economies and financial markets of Eu- rope. Finally, the departure of individual nations from European currency union could lead to a complete col- lapse of the monetary system. Geopolitical risks such as political instability, lack of basic legislation and arbitrary government practices offset the economic opportunities offered by enterprises in other countries. Consequently, enterprises operating in unstable regions must allow for significant impacts on their business activities, such as tax increases, customs duties, export bans, expropriations and asset seizures. Where properties are concentrated too strongly in a single region, these factors can also have a considerable influ- ence on the profitability of the CA Immo Group. Impact of the Covid-19 pandemic Across the board, business year 2020 was impacted by the global Covid-19 pandemic as many countries imposed general lockdowns and travel restrictions. As a result, market activity was severely affected in many sectors as of the second quarter of 2020. The pandemic continues to have Europe firmly in its grip. As infection figures skyrocketed practically every- where from the third quarter of 2020 onwards, countries once again responded with far-reaching restrictions. Re- newed lockdowns are likely to cause the European econ- omy to contract even more sharply than had been ex- pected in mid-2020 (see also "Economic environment" chapter). The real estate sector is also experiencing the conse- quences of the pandemic already, with some real estate markets reporting significantly lower levels of transaction CA IMMOBILIEN ANLAGEN AKTIENGESELLSCHAFT, VIENNA ANNEX 2 2 68 activity and liquidity. Hotels are closing due to low occu- pancy rates and retailers are increasingly requesting rent deferrals or rent reductions in the face of significant sales losses. Some construction sites cannot operate as planned. The short- and long-term economic impact of the Covid-19 pandemic on real estate markets remains highly uncertain. The longer the crisis lasts, the more complex and severe the effects become. Due to the pandemic and the associated economic slump, the real estate transaction market has declined sharply, with the exception of Germany. The volume of commercial property transactions registered in CA Immo's core markets was between 30% (Eastern Europe) and 50% (Austria) down on the previous year. In Germany, the de- cline amounted to less than 6% in comparison with the record result of the previous year. Transactions were paused or even cancelled due to difficulties in pricing and financing. With the exception of Vienna, where letting performance has remained steady so far and the effects are only ex- pected in 2021, all of CA Immo's core cities have seen a decline in demand for office space and/or an increase in vacancy rates due to the challenging conditions caused by the pandemic and its economic impact. Now that both transaction and letting activities have declined signifi- cantly, extended marketing and vacancy periods for unlet units are also likely in the future. As demand for office space is primarily dependent on macroeconomic develop- ments, it remains to be seen how the significant decline in office space take-up in 2020 will actually develop in fiscal year 2021. It also remains unclear how the expansion of digital working processes linked to the crisis and the rise of the home office will affect demand for office space in the medium term. The possibility of the office market be- ing more strongly influenced in future by the trends to- wards flexible office space leases and co-working cannot be ruled out. Across its tenant base (office, hotel, retail), the Group is confronted with requests for waivers, reductions or defer- rals of rental payments. The legal framework varies from country to country. In the event of Covid-19-related offi- cial shut-downs or restrictions of operations, Austrian law provides for a special statutory right to reduce rent, whereas in other countries, in the absence of specific stat- utory provisions, there is generally an obligation to pay rent; a right to reduce rent can only be established by way of exception and in individual cases via general legal pro- visions (such as the lapse of the contractual basis). How- ever, deviating contractual provisions can also justify a tenant's right to reduce rents. The extent to which the measures taken to contain the Covid-19 pandemic will lead to insolvencies of individual tenants and thus to an increase in vacancy rates cannot yet be estimated and will largely depend on the duration of the crisis. In particular the hotel, restaurant and non-systematically relevant re- tail sectors are suffering disproportionately from the pre- vailing situation. Depending on the asset class, further rent waivers, rent reductions and rent deferrals are likely. CA Immo responds to this risk by analysing the property portfolio, tenant structure and cash flow, among other things, and performs various scenarios to assess the risks. Case-by-case assessment is generally necessary. In view of the uncertain future impact of the Covid-19 pandemic and the related current and future measures on the property markets, plus the fact that it is difficult to distinguish between short-term effects and longer-term structural market changes, CA Immo regularly reviews its property valuations. Following a near-complete external valuation of the Group's portfolio in the fourth quarter of 2020, values for the property assets as at the reporting date of 31 December 2020 were updated or adjusted on the basis of binding purchase agreements or external val- uations. Taking into account the current exceptional cir- cumstances and low levels of transactions, property valu- ations must continue to be handled with greater caution than is normally necessary, especially in the core markets of Austria and Eastern Europe. Given the current market conditions – with rising con- struction costs, supply and timing problems, fluctuating financing rates, uncertain marketing periods and a lack of comparative values – it is inevitable that a higher uncer- tainty factor will apply to project developments. Land values could therefore fluctuate much more than would be the case under normal circumstances. The long-term effects of the outbreak of the Covid-19 pandemic remain to be seen, although volatility and un- certainty on stock markets, corporate profit warnings and negative economic forecasts underline the potential dan- gers to the European and global economies. The effects cannot be conclusively assessed given the fast-moving sit- uation, and are subject to ongoing evaluation. Temporary restrictions on current operations (also caused by exit re- strictions, curfews, border closings, school/business shut- downs and other constraints) may affect the CA Immo CA IMMOBILIEN ANLAGEN AKTIENGESELLSCHAFT, VIENNA ANNEX 2 2 69 Group, tenants, customers and suppliers as well as au- thorities. The consequences in terms of finance, general business and real estate in particular cannot be fully gauged (e.g. payments by tenants which are not in accord- ance with contracts, delays in construction activities, ef- fects on real estate markets, development of covenants for current financings, effects on planned real estate transac- tions). The CA Immo Group applies a wide range of possi- ble measures to minimise the impact. PROPERTY-SPECIFIC RISKS Risks linked to the market environment and composition of the portfolio The real estate market is determined by macroeconomic development and demand for properties. Economic insta- bility and restricted access to loan capital and equity- based financing can lead to business partners opting out. Where the liquidity of the real estate investment market is insufficient, there is a risk that sales of individual proper- ties with a view to strategic adjustment of the real estate portfolio may prove impossible or only possible under unacceptable conditions. Many factors that can lead to unfavourable developments are outside of CA Immo’s control. These include changes to available income, eco- nomic output, interest rates and tax policy. Economic growth, unemployment rates and consumer confidence also influence supply and demand levels for real estate at a local level. This can affect prices of properties, market rents and occupancy rates while adversely affecting the value of properties and associated income. For this rea- son, strongly negative effects on earning power and prop- erty valuations cannot be ruled out. Property values depend not only on the development of rental rates, but also on real estate starting yields. Given the general market environment, there is still a risk that starting yields for commercial real estate will be adjusted upwards. The historically high price of property invest- ment is combining with low real estate yields to create risks to the value of properties in the CA Immo portfolio. Due to sustained pressure from investors, there is also the risk that properties are only available to purchase at in- flated prices. The possibility of an increase in general in- terest rates that forces property yields up and subse- quently property values down cannot be ruled out. CA Immo counters market risk by spreading its portfo- lio across various countries. CA Immo counters country- specific risk by concentrating on strategic core regions through local subsidiaries with their own on-site staff, and through appropriate regional allocation within those core markets. The focus here is on markets that exhibit the long-term structural trends of increasing urbanisation, positive demographic change, and structural supply shortages as well as high investment liquidity. Market knowledge, continual evaluation of strategy, monitoring of the portfolio and purposeful portfolio management in the context of strategic decision-making (e.g. defining exit strategies, medium-term planning of sales) enable the company to respond quickly to economic and political events. CA Immo negates transfer risk by repatriating liq- uid assets from investment markets with a low credit standing. Active portfolio management aims to prevent concentration risk and maintain a balanced portfolio structure. CA Immo is currently active in Germany, Aus- tria and selected CEE markets. Germany is currently the largest single market of CA Immo, accounting for a share of 55% of the total portfolio, although regional portfolio target distribution envisages a medium-term increase in the German share to 60-65%. CA Immo is part of the EPRA Developed Europe Index, which supports the capi- tal market positioning and the overall rating. To this end, an aggregate EBITDA contribution of Germany, Austria and Poland of more than 50% is targeted. In order to maintain critical market relevance, real estate assets of approximately € 500 m are to be held in each core city. In terms of asset classes, CA Immo concentrates on modern, high-quality office properties, with a focus on prime in- ner-city locations. The development business segment also realises property developments and construction projects with other usage types (e.g. residential, hotel), which are generally sold after successful development or completion. For single investments, CA Immo currently defines con- centration risk as a limit value of 5% of the total portfo- lio. The only property in this category as at the balance sheet date was the Skygarden office building in Munich. The portfolio as a whole is highly diversified: the top ten Group assets represent less than 30% of the total portfo- lio. The concentration risk in respect of single tenants is also manageable. As at 31 December 2020, the top ten ten- ants were generating some 21% of rental revenue. With an approximate share of 3% of total rental income, Price- waterhouseCoopers followed by Intercity Hotel GmbH are currently the biggest individual tenants in the portfolio. In general, single tenants should not account for more than 5% of total annual rental income over an extended period, although tenants with excellent credit ratings (AAA/AA) may be an exception. For single-tenant build- ings, such scenarios should be avoided unless the tenant's CA IMMOBILIEN ANLAGEN AKTIENGESELLSCHAFT, VIENNA ANNEX 2 2 70 credit rating is considered excellent (AAA/AA). A single- tenant scenario is defined as a case where more than 75% of the annual rental income (single property level) is at- tributable to a single tenant. Generally, rental income from single-tenant buildings should not exceed 20% of total annual rental income. In addition, the average lease term for single-tenant properties should exceed 10 years. CA Immo creates sustainable value through a compre- hensive value chain, from leasing and management to the construction, planning and development of investment properties with highly developed in-house expertise. This reduces functional (performance) risks while maximizing opportunities along the value chain (developer profit). Although, land reserves and land development projects present specific risks owing to the high capital commit- ment and absence of steady cash inflows, they also offer considerable potential for value increases through the se- curing or enhancement of building rights. Risks are regu- larly reduced via the sale of non-strategic land reserves. The acquisition of building rights on remaining land will be accelerated through the company's own capacity. Overall, CA Immo is aiming for a balanced portfolio; on the basis of balance sheet values, this means around 85% profitable properties and 15% development projects un- der construction, including land bank reserves. Other concentration risks arising from factors such as the existence of several properties with a market value of more than € 100 m in the same city, the sector mix of ten- ants, the identity of contractual partners, suppliers or lenders, etc., which cannot be effectively measured or limited in quantitative terms, are subject to regular re- view. Political and economic trends in the countries in which CA Immo is active also have a significant impact on occu- pancy rates and rent losses. The earning power and mar- ket value of a property is adversely affected where the Group is unable to extend a rental agreement due to ex- pire under favourable conditions or find (and retain for the long term) suitably solvent tenants. The creditworthi- ness of a tenant, especially during an economic down- turn, may diminish over the short or medium term, which can affect rental revenue in turn. In critical situations, the Group can cut rents to maintain an acceptable occupancy rate. Through careful monitoring and proactive measures (such as demanding securities and screening the credit- worthiness and reputation of tenants), the Group’s rent default risk has remained at the low level, despite the negative impact of the Covid-19 pandemic on individual tenants. Subject to the unpredictable economic impact of the pandemic, a decline in rental income cannot be ex- cluded. All outstanding receivables are evaluated quar- terly and adjusted according to the level of risk. The risk of lost rent is taken into account to a sufficient degree in the estimation of property values. Many of the Group’s lease agreements contain stable value clauses, often tak- ing account of consumer price indices for particular countries. The level of revenue from such rental contracts and new lettings depends heavily on the inflation trend (sustainable value risk). Competition for reputable tenants is intense on the let- tings market; rent levels are under pressure in many mar- kets. To remain attractive to tenants, CA Immo could be forced to accept lower rental rates. Moreover, incorrect as- sessments of the attractiveness of locations or potential usages can make lettings more difficult or significantly impair desired lease conditions. To a lesser extent, the Group’s portfolio also includes special asset classes such as shopping malls and hotels whose operation involves certain risks. Poor running of a centre, inadequate corporate management of tenants, de- clining footfall and increasing competition can force rental rates down and lead to the loss of key tenants, which in turn leads to rent losses and problems with new lettings. Although CA Immo does not operate any hotels itself, the Group’s earnings situation also depends on the quality of external hotel management and the develop- ment of hotel markets. As mentioned earlier, the negative effects of the Covid-19 pandemic-related lockdowns im- posed by the authorities have had a particularly severe impact on hotel operators and the retail sector. Risks associated with the project development area Costs are generally sustained at the early stages of real estate development projects; revenue is not generated un- til the latter phases of a project. Many development pro- jects may be associated with cost overruns and delays in completion that are frequently beyond the control of CA Immo. This can adversely affect the economic viabil- ity of individual projects and lead to contractual penal- ties and compensation claims. If no suitable tenants are found, this can lead to vacancy after completion. CA Immo takes steps such as cost monitoring, variance analyses and long-term liquidity planning to manage such risks to a large extent. With few exceptions, projects are only started subject to appropriate pre-letting that can cover future debt service through rental income. Excep- CA IMMOBILIEN ANLAGEN AKTIENGESELLSCHAFT, VIENNA ANNEX 2 2 71 tions are only made in special project and/or market situ- ations (e.g. extreme regional shortage of leasable space with foreseeable rising rents and low letting risk during the project phase) and require explicit reviews when ob- taining project approval. Saturation of the construction industry presents risk to CA Immo as regards the (on time) availability of construc- tion services and the level of building costs. This is now noticeable not only in Germany – the core market for the company's development projects – but in all CA Immo's core regions. Despite making provision for rising costs within project reserves, the fact that further rises in con- struction costs could present a risk to budget compliance and the overall success of a project cannot be ruled out. Another risk is that current property yields might change, thereby reducing target developer profits, even though projects have been calculated defensively. For this reason, CA Immo is increasingly reliant on appropriate market and cost analyses in the development area as well. Pro- jects currently in progress are generally on time and within approved budgets; they are continually monitored as regards cost risk. Risks from sales transactions Sales transactions can produce risks linked to contrac- tual agreements and assurances. These might relate to guaranteed income from rental payments and can subse- quently reduce purchase sums agreed or received. Suffi- cient financial provision has been made to counter recog- nised risks to revenue from transacted sales, and liquidity risk is considered in liquidity planning. Contractual obli- gations in the form of follow-on costs (e.g. residual con- struction work) form part of relevant project cost esti- mates. Environmental and climate risks Environmental and safety regulations include active and latent obligations to remediate contaminated sites. Com- plying with these provisions can entail considerable in- vestment expenses and other costs. These obligations may apply to real estate currently or formerly owned by CA Immo, or currently or formerly managed or developed by the company. In particular, the provisions cover con- tamination with undiscovered harmful materials or nox- ious substances, munitions and other environmental risks such as soil pollution, etc. Several regulations impose sanctions on the discharge of emissions into air, soil and water: this can render CA Immo liable to third parties, significantly impact the sale and letting of affected prop- erties and adversely affect the generation of rental reve- nue from such properties. Natural disasters and extreme weather conditions can also cause considerable damage to real estate. In principle, insurable risks are insured to the usual extent (e.g. all-risk insurance for development projects). Unless sufficient insurance is in place to cover such damage, this can have an adverse impact. To mini- mise the risk, CA Immo incorporates these considerations into its due diligence audit prior to every purchase; ap- propriate guarantees are required from sellers. Wherever possible, the CA Immo Group makes use of environmen- tally sustainable materials and energy-saving technolo- gies. CA Immo observes the ecological precautionary principle by ensuring all (re)development projects qualify for certification. As a responsible player in the European real estate sector, CA Immo fully supports the United Nations' climate goals and the associated transition to a low-car- bon, sustainable economy. In order to meet the associated requirements in the best possible way and to secure long- term competitiveness, CA Immo has anchored corre- sponding measures, processes and goals in its strategic approach (including sustainability certification, sustaina- bility reporting, ESG reporting and green financing). GENERAL BUSINESS RISKS Operational and organisational risks Weaknesses in the CA Immo Group’s structural and process organisation can lead to unexpected losses or ad- ditional expenditure. This risk can arise from shortcom- ings in EDP and other information systems as well as hu- man error and inadequate internal inspection procedures. Flawed program sequences as well as automated EDP and information systems pose a significant operational risk where their type and scope fail to take account of busi- ness volumes or prove vulnerable to cybercrime. Human risk factors include an insufficient understanding of cor- porate strategy, inadequate internal risk monitoring (and especially business process controls) and excessive deci- sion-making authority at individual level, which can lead to unconsidered actions or a proliferation of decision- making bodies that hinder flexible responses to changes in the market. Some real estate management tasks and other administrative duties are outsourced to external third parties. In the process of transferring administrative tasks, it is possible that knowledge of managed properties and administrative processes can be lost, and that CA IMMOBILIEN ANLAGEN AKTIENGESELLSCHAFT, VIENNA ANNEX 2 2 72 CA Immo could prove incapable of identifying and con- tractually committing suitable service providers within the necessary timeframe. Nonetheless, the expertise possessed by a company and its workforce constitutes a significant competitive factor and a unique point of distinction over competitors. When key members of staff leave, therefore, the company is ex- posed to the risk of loss of expertise, which generally re- quires a significant commitment of corporate resources (money, time, recruitment of new employees) to redress the balance. CA Immo takes various measures to counter these risk factors. In the case of corporate mergers, struc- tured processes of organisational integration are observed. Process organisation (i.e. system/process integration) is firmly established; activities to ensure the long-term im- plementation of operational processes are ongoing. The Group structure is regularly scrutinised and examined to ensure predefined structures take account of the size of the company. CA Immo counters risks linked to personal expertise (which can arise with the resignation of key knowledge holders) through regular transfers of knowledge (via training courses) and by documenting know-how (in manuals, etc.); far-sighted staff planning also plays a part. Legal risks In the course of normal business activity, the companies of the Group can become involved in legal disputes, both as plaintiffs and as defendants. Such cases are heard in various jurisdictions. In each case, different procedural law means that competent courts are not always equally efficient; moreover, in certain cases the complexity of is- sues in dispute can make for protracted proceedings or lead to other delays. CA Immo believes it has made suffi- cient financial provisions for legal disputes. At present, no lawsuits or arbitration proceedings that could threaten the company’s survival are imminent or pending. In the spring of 2020, CA Immo filed a claim for damages against the Republic of Austria and the state of Carinthia for unlawful and culpably biased influence on the best bidder procedure in the context of privatisation of Fed- eral Residential Property companies in 2004 (‘BUWOG’) and for the unlawful failure to win the best bidder proce- dure. The first-instance (though not yet final) criminal verdicts against the defendants (ex-Federal Minister of Fi- nance Grasser et al.), announced in early December 2020, confirmed that actions taken in connection with the BUWOG privatisation proceedings were unlawful and bi- ased. The criminal court referred CA Immo to the civil courts with the asserted private party claims against the defendants for damages of € 1.9 bn. A more detailed as- sessment of the specific effects of the criminal proceed- ings on the pending proceedings for damages will only be possible after written judgment has been issued and, sub- sequently, appeal proceedings have been concluded with a final criminal judgment. A criminal judgment has no procedural binding effect on civil claims for damages as- serted against the Republic of Austria and the state of Carinthia. As a precautionary measure, a provision of ap- proximately € 25 m has been formed for court fees in con- nection with the damages proceedings. It is not possible to predict changes to legal provisions, case law and administrative practice, or the impact of these on business results; such changes may adversely af- fect real estate values or the cost structure of the CA Immo Group. CA Immo proactively manages such le- gal risks by taking numerous measures. These include the regular assessment of historical and existing legal risks, continual monitoring of legislative changes and changes in case law, the incorporation of lessons learned into business processes and continuous informative and train- ing measures. Organised crime, and particularly fraud and extortion, is a general risk to commercial activity. Many countries con- tinue to perform very poorly in combating corruption. Such illegal activity can lead to considerable financial re- percussions and negative publicity. The risk of corruption is addressed by the code of conduct (‘zero tolerance’) and the related gifts and donations policy. Employees are re- quired to report any suspicions internally. Employees and external third parties can also report suspected miscon- duct anonymously via the electronic whistleblower sys- tem set up by CA Immo (Whistleblower System (caimmo.com)). The Supervisory Board is informed at least once a year about measures taken to combat corrup- tion. Corruption-related matters are audited on the basis of the audit plan approved by the audit committee or on the basis of special audit assignments issued by the Man- agement Board, audit committee or full Supervisory Board. All operating Group companies are reviewed for corruption risks on a regular basis. Taxation risk For all companies, current income and capital gains is subject to income tax in the respective country. Important discretionary decisions must be taken regarding the level of tax provisions that need to be formed. The extent to which active deferred taxes are recognised must also be determined. CA IMMOBILIEN ANLAGEN AKTIENGESELLSCHAFT, VIENNA ANNEX 2 2 73 Subject to compliance with certain requirements, reve- nue from the sale of participating interests is fully or par- tially exempted from income tax. Even where a company intends to meet the requirements, passive deferred taxes are fully applied to property assets according to IAS 12. Key assumptions must also be made regarding the ex- tent to which deductible temporary differences and loss carry forwards are set off against future taxable profits, and thus the extent to which active deferred taxes can be recognised. Uncertainty arises regarding the amount and timing of future income and the interpretation of complex tax regulations. Where there is uncertainty over the appli- cation of income tax to business transactions, an assess- ment will be required as to whether or not the responsible tax authority is likely to accept the interpretation of the tax treatment of such transactions. In case of doubt, the CA Immo Group enters the tax obligation as the most likely amount on the basis of that assessment. Such doubt and complexity can mean that future tax payments turn out to be significantly higher or lower than the obliga- tions currently assessed as probable and recognised in the balance sheet. The CA Immo Group holds a large part of its real estate portfolio in Germany, where many complex tax regulations must be observed. In particular, these in- clude (i) provisions on the transfer of hidden reserves to other assets, (ii) legal regulations on real estate transfer tax charges and the possible accrual of real estate transfer tax in connection with direct or indirect changes of con- trol in German partnerships and corporations and (iii) the deduction of input taxes on construction costs in the case of development projects. The CA Immo Group makes every effort to ensure full compliance with all tax regula- tions. Nonetheless, there are circumstances (some of which are outside the CA Immo Group’s control) such as changes to the shareholding structure, changes in legisla- tion or changes in interpretation on the part of tax author- ities and courts which could lead to the aforementioned taxation cases being treated differently, which in turn would influence the assessment of tax in the consolidated financial statements. Partner risks Since CA Immo undertakes a number of development projects as joint ventures, the company depends on the solvency and performance capability of partners to some extent; moreover, the Group is exposed to credit risk in respect of its counterparties. Depending on the agreement in question, CA Immo could also bear joint liability for costs, taxes and other third-party claims with its co-inves- tors and, where a co-investor opts out, be forced to accept liability for their credit risk or their share of costs, taxes or other liabilities. FINANCIAL RISKS Liquidity, investment and refinancing risk (Re)financing on the financial and capital markets is one of the most important considerations for a real estate company. In particular, CA Immo requires loan capital to refinance existing loans and to finance development pro- jects and acquisitions. In effect, therefore, the company is dependent on the readiness of banks and capital markets to provide additional loan capital and extend existing fi- nancing agreements under acceptable terms. Market con- ditions for real estate financing are constantly changing. The attractiveness of financing alternatives depends on a range of factors, not all of which can be influenced by the Group (market interest rates, required securities and so on). This can significantly impair the ability of the Group to raise the completion level of its development portfolio, invest in suitable acquisition projects or meet its obliga- tions in connection with financing agreements. Although the CA Immo Group has a sufficient level of liquidity as things stand, we must take account of re- strictions at individual subsidiary level; access to cash and cash equivalents is limited owing to obligations to current projects and a liquidity requirement to stabilise loans exists in certain instances. There is also a risk that planned sales will be prevented, delayed or transacted at prices lower than expected. Other risks arise from unfore- seen additional funding obligations in relation to project financing and breaches of covenant in the property fi- nancing area or corporate bonds and convertible bonds is- sued by CA Immo. Where these requirements are violated or default occurs, the relevant contractual partners are en- titled to accelerate financing and demand immediate re- payment. This could impel the Group to sell real estate or arrange refinancing under unfavourable terms. CA Immo has fluctuating stocks of cash and cash equiv- alents which the company invests according to its partic- ular operational and strategic needs and objectives. Suffi- cient equity capitalisation will be required for the com- pany to retain its Baa2 investment grade (long-term is- suer) rating as granted by Moody’s in December 2015. CA Immo counters risk of this kind by continually mon- itoring covenant agreements and effectively planning and CA IMMOBILIEN ANLAGEN AKTIENGESELLSCHAFT, VIENNA ANNEX 2 2 74 securing liquidity. The financial consequences of strate- gic aims are also taken into account. To control liquidity peaks, the Group has secured a revolving overdraft facil- ity at parent company level. This also ensures the Group can meet unexpected cash flow requirements. In line with the investment horizon for real estate, loans are invaria- bly agreed on a long-term basis. In principle, appropriate financing (e.g. loan or bond) must be guaranteed before binding contracts are concluded in connection with real estate acquisitions. As an alternative and supplement to established means of (equity) capital procurement, the company has also entered into equity partnerships (joint ventures) at project level in the past. Even with meticulous planning, it is not possible to eliminate liquidity risk, particularly where capital re- quests linked to joint venture partners are not viable. CA Immo Deutschland has a high capital commitment, which is typical of development projects. Financing has been secured for all projects under construction; addi- tional financing is required for new project launches. Interest rate risk Market-led fluctuations in interest rates affect both the level of financing costs and the fair value of interest hedg- ing transactions concluded. For financing purposes, CA Immo uses banks at home and abroad and issues cor- porate bonds, thereby opting for a mix of long-term fixed- rate and floating-rate loans. To hedge against impending interest rate changes and associated fluctuations in fi- nancing costs, greater use is made of derivative financial instruments (interest rate caps, swaps and floors) in the case of floating-rate loans. However, hedging transactions of this kind may prove to be inefficient or unsuitable for achieving targets; they may also result in losses that affect earnings. Moreover, the valuation of derivatives can im- pact negatively on profits and shareholders’ equity. The extent to which the Group utilises derivative instruments is guided by assumptions and market expectations in re- spect of the future interest level, and especially the 3- month Euribor rate. Should these assumptions prove in- correct, the result can be a significant rise in interest ex- penditure. Continual monitoring of the interest rate risk is therefore essential. No risks constituting a serious and permanent threat to the company exist at the present time. Moreover, CA Immo is increasingly obtaining fi- nance from the capital market. Fixed-interest loans (in the form of corporate bonds, for example) and loans hedged through derivatives currently account for 94% of the total financing volume. Continual optimisation of the financ- ing structure in recent years has served to improve the maturity profile and raise the quota of hedged financial li- abilities while reducing average borrowing costs. The pool of unencumbered assets – a key factor in the com- pany’s investment grade rating – was also raised, and the rating of CA Immo was consolidated. The financing pro- file has thus become more robust. Currency risk Since CA Immo is active on a number of markets out- side the eurozone, the company is subject to various cur- rency risks. Where rents are payable in currencies other than the euro on these markets and cannot be fully ad- justed to current exchange rates in time, incoming pay- ments may be reduced by means of exchange rate changes. Where expenses and investments are not trans- acted in euros, exchange rate fluctuations can impair the payment capacity of Group companies and adversely af- fect the Group’s profits and earnings situation. CA Immo generally counters such risk in that foreign currency inflows are secured by pegging rents to the euro; no significant and direct currency risk exists at present. The pegging of rents affects the creditworthiness of ten- ants and thus produces an indirect currency risk that can result in payment bottlenecks and loss of rent. Since in- coming payments are mainly received in local currency, however, free liquidity (rental revenue less operating costs) is converted into euros upon receipt. This process is continually overseen by the responsible country managers. There is no currency risk on the liabilities side. Currency risks linked to construction projects are hedged according to need on a case-by-case basis, taking account of the cur- rency underlying the order and lease agreement, likely ex- change rate development and the calculation rate. CA IMMOBILIEN ANLAGEN AKTIENGESELLSCHAFT, VIENNA ANNEX 2 2 75 The Management Board Andreas Quint (Chief Executive Officer) Dr. Andreas Schillhofer (Member of the Management Board) Keegan Viscius (Member oft he Management Board) Vienna, March 24, 2021 CA IMMOBILIEN ANLAGEN AKTIENGESELLSCHAFT, VIENNA 276 The Management Board confirms to the best of their knowledge that the financial statements of CA Immobilien Anla- gen Aktiengesellschaft, which were prepared in accordance with the applicable accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the CA Immobilien Anlagen Aktiengesellschaft and that the management report gives a true and fair view of the development and performance of the business and po- sition of the company, together with a description of the principal risks and uncertainties the CA Immobilien Anlagen Aktiengesellschaft faces. DECLARATION OF THE MANAGEMENT BOARD DUE TO SECTION 124 OF THE AUSTRIAN STOCK EXCHANGE ACT (BÖRSEGESETZ) The Management Board Andreas Quint (Chief Executive Officer) Dr. Andreas Schillhofer (Member of the Management Board) Keegan Viscius (Member oft he Management Board) Vienna, March 24, 2021 AUDITOR’S REPORT 27 7 Report on the Financial Statements Audit Opinion We have audited the financial statements of CA Immobilien Anlagen Aktiengesellschaft, Vienna, These financial statements comprise the balance sheet as of December 31, 2020, the income statement for the fiscal year then ended and the notes. Based on our audit the accompanying financial statements were prepared in accordance with the legal regulations and present fairly, in all material respects, the assets and the financial position of the Company as of December 31, 2020 and its financial performance for the year then ended in accordance with Austrian Generally Accepted Accounting Principles. Basis for Opinion We conducted our audit in accordance with the regulation (EU) no. 537/2014 (in the following "EU regulation") and in accordance with Austrian Standards on Auditing. Those standards require that we comply with International Stand- ards on Auditing (ISA). Our responsibilities under those regulations and standards are further described in the "Auditor’s Responsibilities for the Audit of the Financial Statements" section of our report. We are independent of the Company in accordance with the Austrian General Accepted Accounting Principles and professional requirements and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained until the date of this auditor’s report is sufficient and appropriate to provide a basis for our opinion by this date. Key Audit Matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the fiscal year. These matters were addressed in the context of our audit of the financial state- ments as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. The following are the key audit matters that we identified: Titel Valuation of investments in and loans to affiliated companies Risk The financial statements of CA Immobilien Anlagen Aktie ngesellschaft as of December 31, 2020 show material investments in affiliated companies (TEUR 2,938,724) as well as material loans to affiliated companies (TEUR 538,240). Furthermore, the financial statements show impairments of investments in and loans to affiliated companies of TEUR 3,239 and income from revaluation of such of TEUR 3,397. All investments in and loans to affiliated companies are tested for impairment. These im- pairment assessments require significant assumptions and estimates. Due to the fact that most of the affiliated companies are real estate companies the impair- ment test is based on a simplified entity value which is mainly influenced by the property AUDITOR’S REPORT ) 2 78 valuation reports by external, independent valuation experts or contractually agreed pur- chase prices. The material risk within the valuation reports exists when determining assump- tions and estimates such as the discount-/capitalization rate and rental income and for prop- erties under development the construction and development costs to completion and the de- veloper’s profit. A minor change in these assumptions and estimates can have a material im- pact on the valuation of investments in and loans to affiliated companies. The respective disclosures relating to investments in and loans to affiliated companies are shown in Section “1 – Financial assets”, in Section “10 a) – Financial assets” and in appen- dix 2 – Information about group companies in the financial statements as of December 31, 2020. Consideration in the audit To address this risk, we have critically assessed the assumptions and estimates made by management and the external valuation experts and performed, among others, the following audit procedures with involvement of our internal property valuation experts: – Assessment of concept and design of the underlying business process – Assessment of the applied methods and the mathematical accuracy of the calculations an d supporting documentation – Assessment of the competence, capability and objectivity of the external valuation experts engaged by management – Assessment of the applied methods and the mathematical accuracy of selected property- valuation reports as well as assessment of the plausibility of the un derlying assumptions (eg. Rental income, discount-/capitalization rate, usable space, vacancy rate) by means of comparison with market data if available – Check of certain input-data as included in the valuation reports with data in the accounting system or underlying agreemen ts – Inquiry of project-management for selected properties under development regarding rea- sons for deviations between plan and actual costs and current estimation of cost to comple- tion; review of actual costs for those project s through review of project-documentation and vouching on a sample basis as well as evaluation of the derived percentage of completion Other Information Managem ent is responsible for the other information. The other information comprises the information included in the annual report and the annual financial report, but does not include the financial statements, the management report and the auditor’s report thereon. We received the consolidated Corporate Governance Report until the date of this audit opinion; the rest of the annual report is estimated to be provided to us after the date of the auditor's report. Our opinion on the financial statements does not cover the other information and we do not express any form of as- surance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, to consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. AUDITOR’S REPORT AUDITOR’S REPORT 2 79 Responsibilities of Management and of the Audit Committee for the Financial Statements Management is responsible for the preparation of the financial statements in accordance with Austrian Generally Ac- cepted Accounting Principles, for them to present a true and fair view of the assets, the financial position and the financial performance of the Company and for such internal controls as management determines are necessary to ena- ble the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, management is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of account- ing unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so. The Audit Committee is responsible for overseeing the Company's financial reporting process. Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from ma- terial misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasona- ble assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the EU reg- ulation and in accordance with Austrian Standards on Auditing, which require the application of ISA, always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, indi- vidually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. As part of an audit in accordance with the EU regulation and in accordance with Austrian Standards on Auditing, which require the application of ISA, we exercise professional judgment and maintain professional scepticism through- out the audit. We also: – identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error , as fraud may involve collusion, forgery, intentional omissions, misrepresentatio ns, or the override of internal control. – obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropri- ate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s inter- nal control. – evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates an d related disclosures made by management. – conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the au- dit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern. – evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. 2 80 We communicate with the Audit Committee regarding, among other matters, the planned scope and timing of the au- dit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide the Audit Committee with a statement that we have complied with relevant ethical requirements re- garding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with the Audit Committee, we determine those matters that were of most signifi- cance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the ad- verse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such commu- nication. Report on Other Legal and Regulatory Requirements Comments on the Management Report Pursuant to Austrian Generally Accepted Accounting Principles, the management report is to be audited as to whether it is consistent with the financial statements and as to whether the management report was prepared in accord- ance with the applicable legal regulations. Management is responsible for the preparation of the management report in accordance with Austrian Generally Ac- cepted Accounting Principles. We conducted our audit in accordance with Austrian Standards on Auditing for the audit of the management report. Opinion In our opinion, the management report for the Company was prepared in accordance with the valid legal require- ments, comprising the details in accordance with Section 243a Austrian Company Code UGB, and is consistent with the financial statements. Statement Based on the findings during the audit of the financial statements and due to the thus obtained understanding con- cerning the Company and its circumstances no material misstatements in the management report came to our attention. Additional information in accordance with Article 10 EU regulation We were elected as auditor by the ordinary general meeting at August 25, 2020. We were appointed by the Supervi- sory Board on October 15, 2020. We are auditors since the financial year 2017. We confirm that the audit opinion in the Section "Report on the financial statements" is consistent with the additional report to the audit committee referred to in Article 11 of the EU regulation. We declare that no prohibited non-audit services (article 5 par. 1 of the EU regulation) were provided by us and that we remained independent of the audited company in conducting the audit. AUDITOR’S REPORT AUDITOR’S REPORT 2 81 Responsible Austrian Certified Public Accountant The engagement partner is Alexander Wlasto, Certified Public Accountant. Vienna, March 24, 2021 Ernst & Young Wirtschaftsprüfungsgesellschaft m.b.H. Mag. (FH) Isabelle Vollmer mp Mag. Alexander Wlasto mp Wirtschaftsprüferin / Certified Public Accountant Wirtschaftsprüfer / Certified Public Accountant ____ *) This report is a translation of the original report in German, which is solely valid. Publication or sharing with third parties of the financial statements together with our auditor's opinion is only allowed if the financial statements and the manage- ment report are identical with the German audited version. This audit opinion is only applicable to the German and com- plete financial statements with the management report. Section 281 paragraph 2 UGB (Austrian Company Code) applies to alternated versions. CONTACT/DISCLAIMER/IMPRINT 282 CONTACT CA Immobilien Anlagen AG Mechelgasse 1 1030 Wien Tel +43 1 532 59 07- 0 Fax +43 1 532 59 07- 510 office@caimmo.com www.caimmo.com Investor Relations Free info hotline in Austria: 0800 01 01 50 Christoph Thurnberger Claudia Höbart Tel. +43 1 532 59 07- 0 Fax +43 1 532 59 07- 595 ir@caimmo.com Corporate Communications Susanne Steinböck Jasmin Eichtinger Tel. +43 1 532 59 07- 0 Fax +43 1 532 59 07- 595 presse@caimmo.com DISCLAIMER This report contains statements and forecasts which refer to the future development of CA Immobilien Anlagen AG and their companies. The forecasts represent assessments and targets which the Company has formulated on the basis of any and all information available to the Company at present. Should the assumptions on which the forecasts have been based fail to occur, the targets not be met or risks materialise, then the actual results may deviate from the results currently anticipated. This report does not constitute an invitation to buy or sell the shares of CA Immobilien Anlagen AG. IMPRINT Published by: CA Immobilien Anlagen AG 1030 Vienna, Mechelgasse 1 Text: Claudia Höbart, Christoph Thurnberger, Susa nne Steinböck, Julian Wöhrle Layout: Jasmin Eichtinger Graphic design and setting: WIEN NORD Werbeagentur Photographs: CA Immo, Markus Diekow, Andreas Hofer, Klaus Helbig, Andreas Muhs, Michael Schmitt Production: 08/16 This report has been produced inhouse with firesys We ask for your understanding that gender-conscious notation in the texts of this report largely had to be abandoned for the sake of undisturbed readability of complex economic matters. This report is printed on environmentally friendly and chlorine-free bleached paper.