Quarterly Report • Nov 20, 2007
Quarterly Report
Open in ViewerOpens in native device viewer
| ISIN | DE000A0LD2U1 |
|---|---|
| Symbol | AOX |
| Prime Sector |
Financial Services |
| Industry Group |
Real Estate |
| Market Segment |
Prime Standard, Frankfurt |
| Indices | S-DAX, EPRA, |
| German REIT Index, |
|
| S&P/Citigroup Global REIT Index |
|
| Number of Shares |
56,000,000 |
| Share Capital |
EUR 56,000,000 |
| Market Capitalisation (28 Sep.) |
EUR 728,000,000 |
| Free Float |
46% |
| 01 Jan. – 30 Sep. 2007 |
20 Jan. – 30 Sep. 2006 |
Change | |
|---|---|---|---|
| (unaudited) | (unaudited) | ||
| Revenues | 60.8 | 16.6 | 44.2 |
| Adjusted EBITDA1 |
82.6 | 13.2 | 69.4 |
| EBT | 50.8 | -5.0 | 55.8 |
| Consolidated profit for the period |
55.5 | -2.6 | 58.1 |
| FFO | 22.1 | 0.6 | 21.5 |
| 30 Sep. 2007 (unaudited) |
30. Sep. 2006 (unaudited) |
Change | |
|---|---|---|---|
| Equity | 885.6 | 32.9 | 852.7 |
| Liabilities | 949.1 | 942.4 | 6.7 |
| Total assets |
1,834.7 | 975.4 | 859.3 |
| Equity ratio |
48.3% | 3.4% | 44.9 pp |
Dear Ladies and Gentlemen, Dear Shareholders, Business Partners and Tenants,
This achievement which was one of our key objectives for 2007 marks another important milestone in the successful development of alstria less than two years after its foundation. The conversion into a REIT will not change our strategy of taking a long term view on the German office market and focusing on internal and external growth with a strong emphasis on tenant relationships.
However, being a REIT means much more than a mere tax status to us: Indeed alstria will be fully transparent for corporate income tax and trade tax purposes effective from January 2007. This allows us to offer our shareholders direct access to cash flows from a pure German office portfolio. With our commitment to significant dividend payouts, this should further increase alstria´s attractiveness for its shareholders. Last but not least, being a REIT allows us to free our hands from any tax consideration, and will allow us to increase over time the liquidity of our assets.
We are proud of being the first German REIT and strongly feel this presents a very unique value proposition to our shareholders.
Although it is our clear strategy to further grow alstria´s portfolio through accretive acquisitions we took a step back from the direct acquisition market in the first half of 2007, which retrospectively seems to have been the peak in real estate values. Our last significant transaction was the Aurora portfolio that we acquired at the beginning of the year at a Gross Yield (Passing Rent/All in Cost) of 6.3 percent. Since then we participated in some auctions, looked at single assets and portfolios, but essentially refrained from buying in a market where we felt that anything could be sold regardless of its underlying real estate value. We thought it would be prudent to wait "for the dust to settle" rather than growing at any cost.
As negative as it may be, the financial crisis and credit crunch had in our view at least one positive outcome: The German property market is back to the real estate fundamentals. The growth of the economy is driving strong tenant demand, overall property prospects are improving and capital value is still at or below construction cost. According to the Market Indicators published by Jones Lang Lasalle, we do not see evidence in the markets that the yields would move from where they were in 2006 (as shown in the table below). What some of the market participants describe as a yield expansion is a correction which brings back the overheated yields of the first half to a more sustainable level, where they were in 2006. Given our careful investment approach, we do not expect as of today, this movement to have a negative impact on alstria.
As of lately we have seen more attractive investment opportunities for alstria and we are in the midst of evaluating them. Overall we believe that markets are settling down and that there will be ample opportunities to externally grow alstria´s property portfolio in an accretive manner, using the competitive advantage provided by the GREIT.
Last but not least the pursuit of internal growth via lease-up of vacancy or repositioning of our assets is equally important to us. Over the last months we initiated a number of refurbishment and repositioning projects that will allow us to capture the underlying value of the respective assets.
With kind regards,
Olivier Elamine Chief Executive Officer
Alexander Dexne Chief Financial Officer
| German cities |
Q3 2007 |
Q2 2007 |
Q1 2007 |
Q4 2006 |
Q3 2006 |
|---|---|---|---|---|---|
| Berlin | 4.85 % | 4.75 % | 4.75 % | 4.75 % | 5.00 % |
| Dusseldorf | 4.60 % | 4.50 % | 4.75 % | 5.00 % | 5.25 % |
| Frankfurt | 4.30 % | 4.20 % | 4.25 % | 4.50 % | 5.00 % |
| Hamburg | 4.60 % | 4.50 % | 4.75 % | 4.75 % | 5.00 % |
| Munich | 4.20 % | 4.10 % | 4.10 % | 4.25 % | 4.25 % |
The conditions on the equity capital markets remain to be rather unfavorable for real estate stocks. alstria's share price suffered from the turmoil on the financial markets almost as much as our peer group and is now trading at a significant discount to the Net Asset Value. In this context, on 6 November, alstria´s management board decided to execute a share buy-back program. This program uses the authorization provided by the shareholders of the company at the last annual general meeting.
Under this authorization alstria intends to acquire up to 2.5 percent of its share capital between now and September 2008 via the Frankfurt stock exchange (XETRA).
We see our own share as a unique investment opportunity and therefore decided to allocate part of our liquidity to this buyback program. For the time being it is intended to hold the acquired shares as treasury stock and eventually use them according to the authorization of the shareholders meeting. Potential uses may include using the shares in future acquisition projects.
On 7 November 2007, Deutsche Börse commenced the German REIT Index.
As a result of the exponential growth of the Company over the last 12 months, the figures related to the reporting period cannot be analyzed in light of the comparable data for Q3 2006, since the Company only then started its activities.
Poststrasse, Hamburg
There were no significant changes in the investment property portfolio in the course of the third quarter. For a detailed description of the alstria portfolio please refer to our Q2 interim report.
Our low vacancy rate (approximately 4 percent of the portfolio, or 30,000 sqm), remained stable since the beginning of the year. New vacancy coming up in the portfolio has been successfully compensated by new lease-up. That represents more than 70 new leases for a total lettable area of around 7,000 sqm.
Among those new leases 1,000 sqm relate to a lease contract with Siemens in an office building in Dresden, Washingtonstrasse. The original 5,500 sqm lease was extended by another 8 years and Siemens rented an additional space of app. 1,000 sqm. This successful lease negotiation that took place only a few months after the acquisition of the building in the Aurora portfolio, secures that Siemens remains to be one of our most important tenants for the next years.
As expected, revenues and operating efficiency were on the same strong level as in the prior quarter. Revenues for the quarter were EUR 21,698 k (basically on the same level as last quarter) with real estate operating expenses of around 7 percent of revenues at EUR 1,557 k. For the first nine months total revenues were at EUR 60,767 k with real estate operating expenses at 6.1 percent of revenues at EUR 3,715 k. Net rental income for the quarter was EUR 20,341 k and EUR 57,252 k for the first nine months of 2007.
For the first nine months a net gain from fair value adjustment of EUR 25,419 k was recorded. There was no revaluation of investment properties in the third quarter except for a minor adjustment of acquisition expenses.
Ludwig-Erhardt-Strasse, Leipzig
The REIT conversion has a number of impacts on the third quarter results which are mainly reflected in the operating expenses and the income tax line: Operating expenses are affected by app. EUR 5,500 k one time, non-recurring expenses out of which EUR 4,910 k are for real estate transfer tax due to the acquisition of 100 percent of Juna Beteiligungs GmbH. The remainder incurred for advisory services in relation to the REIT conversion.
The most significant impact relates to the reversal of all deferred taxes in the balance sheet which creates a P&L income effect of EUR 20,905 k. At the same time an accrual for a conversion tax charge of EUR 5,067 k was recoreded. A summary of the REIT conversion related P&L effects is provided in the following table:
| (in EUR k) |
Expense effects |
Income effects |
|---|---|---|
| Real estate transfer tax |
4,910 | |
| Advisory services |
480 | |
| Reversal of deferred tax assets |
20,449 | |
| Reversal of deferred tax liabilities |
41,354 | |
| Conversion tax expense |
5,109 | |
| Total | 30,948 | 41,354 |
Administrative expenses, personnel expenses and other operating expenses are at EUR 8,536 k for the quarter and at EUR 14,831 k for the nine months result. Other operating expenses contain EUR 4,910 k real estate transfer tax expenses as described above. Accordingly, total recurring operating expenses (disregarding RETT and conversion related expenses) are at 16.7 percent of total revenues for the third quarter and at 16.3 percent for the first nine months of the year.
Net operating result is EUR 12,250 k for the third quarter and EUR 68,383 k for the first nine months of 2007.
Funds from operations (FFO) were EUR 22,085 k for nine months and EUR 9,298 k for the third quarter. That is essentially on the same level as last quarter. As a result, FFO per share was at EUR 0.39 in the first nine months of 2007
The net loss from fair value adjustments on the financial derivatives is driven by the flattening of the interest rate curve in the third quarter. On the other hand, the fact that our debt exposure is fully hedged fixes the current overall cost of debt for the existing portfolio at 4.2 percent. An overview of the composition of the fair values is given in the following table:
Hedging Instruments Breakdown
| 30 Sep. 07 |
30 Jun. 07 |
Change | |
|---|---|---|---|
| in EUR k |
(unaudited) | (unaudited) | |
| Alstria Office - Swap - 3,6165 % |
19,240 | 25,503 | -6,263 |
| Alstria Office - Swap - 3,1925 % |
3,874 | 4,751 | -877 |
| Alstria Office - Cap - 4,0000 % |
1,794 | 2,303 | -509 |
| Alstria Office - Cap - 3,8000 % |
980 | 1,251 | -271 |
| Alstria Office - Cap - 3,8000 % |
615 | 785 | -170 |
| Alstria Office - Cap - 4,9000 % |
1,228 | 0 | 1,228 |
| Total | 27,732 | 34,593 | -6,861 |
alstria has a EUR 1.139 billion syndicated loan facility in place that was arranged by J.P. Morgan, Natixis and HSH Nordbank. The utilization of this facility is presently at EUR 815 million. The facility is used by alstria to partially finance the current investment property base as well as future acquisitions. The interest rate on this syndicated loan is based on the three months EURIBOR floating rate plus a spread dependent on the average lease length of the property portfolio and the loan to value ratio. For economic as well as for G-REIT compliance reasons alstria is committed to maintain a GREIT- equity ratio of 45 percent or above.
Financial Result Breakdown
| 01 Jan. - 30 Jun. 2007 |
|
|---|---|
| in EUR k |
(unaudited) |
| Syndicated Loan - Interest and similar costs |
-30,094 |
| Shareholder Loan - Interests and similar costs |
-1,314 |
| Interest income |
4,750 |
| Registration of land charges |
-234 |
| Other | 51 |
| Total | -26,841 |
The resulting earnings before tax are at negative EUR 5,686 k for the quarter and EUR 50,831 k for the first nine months. Consolidated net profit is at EUR 11,402 k and EUR 55,510 k respectively.
Earnings per share are EUR 0.99 for the first nine months.
Gaensemarkt, Hamburg
Cash flow from operating activities for the nine months period was at EUR 32,145 k mainly driven by the strong operating performance and by an increase in accounts payables.
Cash flow from investing activities was impacted by the payment for an office property in Munich and payments for real estate transfer tax. The first two installments of the purchase price for the Aurora portfolio in the amount of EUR 110,500 k have the most significant impact on the cash flow from investing activities.
Cash flow from financing activities reflects the substantial capital restructuring that was undertaken during the period and includes the gross proceeds from the IPO of EUR 256,000 k (net proceeds were at EUR 244,000 k).
As a result, alstria closes the first nine months of 2007 with a cash position of EUR 157,264 k.
Considering payment obligations for the fourth quarter which mainly consist of the last installment for the Aurora acquisition to be refinanced via the syndicated loan facility this cash provides alstria with room for further acquisitions in the amount of EUR 200 - 300 million.
The total investment property value is at EUR 1,639,145 k as compared to EUR 1,289,536 k at the beginning of the year:
Change in Investment property (in EUR m)
| 1,289.54 |
|---|
| 328.30 |
| -3.53 |
| 24.84 |
| 1,639.15 |
Mecumstrasse, Dusseldorf
The Equity and Liability side of the balance sheet reflects a total equity position of EUR 885.600 k with an equity ratio of 48 percent which is up 19 percentage points from 29 percent at the beginning of the year. The G-REIT Equity ratio which is defined as Total Equity divided by Investment Properties is at 54 percent versus a minimum requirement for G-REIT compliance of 45 percent.
The long term loan position is at EUR 811,190 k down from EUR 813,466 k. The main changes in the long term loan position over the last nine months were firstly, the repayment of the loan for Juna Property GmbH & Co. KG of EUR 162 million. The debt portion of EUR 109 million was drawn down from the syndicated loan facility and the remainder was contributed by the shareholders into capital reserves. Secondly, the refinancing of the "Alte Post" and "Grosse Bleichen" properties lead to an increased utilization of the syndicated loan facility by EUR 52,250 k which is reflected in the balance sheet by a shift from short term to long term liabilities.
Current liabilities are at EUR 7,771 k which is mainly related to accrued interest that will become due under the syndicated loan agreement within one year.
The risks and opportunities alstria is exposed to are described in detail in the report for the second quarter. No changes to the status described occurred in the reporting period.
alstria has taken a cautious approach on acquisitions over the last months but as markets stabilize we are confident to see more acquisition opportunities that will be accretive to our existing portfolio. The economic fundamentals continue to improve with significant GDP growth expected to continue into next year. That should have a solid growth impact on the commercial property market in Germany. Major German real estate markets still benefit from an increase in rents, and within thoses markets Hamburg is one of the fastest growing areas.
On 11 October alstria registered with the commercial register as a REIT-stock corporation and changed its corporate name into alstria office REIT-AG. On 7 November alstria was included in the new REITs segment of Deutsche Börse called "Deutsche Börse REITs". The new REITs Segment will allow alstria to offer high visibility to investors and differentiate itself as a REIT on the capital market. The REITs shares will be traded on the floor of the Frankfurt Stock Exchange and leave the regulations regarding the admission of securities to the regulated market (Prime Standard) unaffected. In order to qualify for being a G-REIT, certain requirements have to be met. The most
Ernst-Merck-Strasse, Hamburg
relevant of those are the following: The G-REIT must be a stock corporation listed on an organized market and its statutory seat and management must be in Germany. The registered share capital must be at least 15 million Euro with all shares being voting shares of the same class. The free float must be at least 15 percent and no investor may directly hold 10 percent or more of the shares, or shares that represent 10 percent or more of the voting rights. Furthermore, at least 75 percent of the assets must consist of real estate and at least 75 percent of the gross income must be generated from real estate. At least 90 percent of the annual profits under German GAAP must be distributed to the shareholders and the G-REIT´s equity may not fall short of 45 percent of the fair value of its real estate assets as booked under IFRS rules. REIT-stock corporations are fully exempted from German corporate income tax and German trade tax. This tax exemption will apply to alstria retroactively with effect as of 1 January 2007. Sellers who offer real estate to alstria may, subject to certain conditions, benefit from the so called "Exit Tax": A 50 percent relief on income and corporate income tax respectively as well as the trade tax payable on capital gains.
On 6 November alstria´s management board decided to execute a share buy-back program. This program will use the authorization provided by the shareholders of the company at the last annual general meeting. For a detailed description of the program please refer to the Share Price Development section of this Interim Report.
The Supervisory Board of alstria office REIT-AG has accepted the resignation of Dr. Michael Börner-Kleindienst as COO of the company with effect of 31 October 2007. As Dr. Börner-Kleindienst wishes to take on other challenging responsibilities, the company and Dr. Börner-Kleindienst mutually agreed to prematurely end his service contract.
The responsibilities of Dr. Börner-Kleindienst were transferred to the CEO of the company, Olivier Elamine.
For the full year of 2007, the management of alstria expects revenues of around EUR 80 million which are expected to translate into Funds From Operations (FFO) of around EUR 30 million.
For a full disclosure of related party transactions in the reporting period we would like to refer to section 13 in the notes to the financial statements of this report.
| ASSETS (in EUR k) |
30 Sep. 2007 |
31 Dec. 2006 |
|---|---|---|
| Non-Current Assets |
||
| Investment property |
1,639,145 | 1,289,536 |
| Property, plant and equipment |
1,566 | 0 |
| Intangible assets |
399 | 0 |
| Deffered tax asset |
0 | 12,513 |
| Total Non-Current Assets |
1,641,110 | 1,302,049 |
| Current Assets |
||
| Trade receivables |
2,053 | 99 |
| Accounts receivable from affiliates |
1,266 | 0 |
| Financial derivatives |
27,732 | 14,563 |
| Other receivables |
5,235 | 3,661 |
| Cash and cash equivalents |
157,264 | 24,304 |
| Total Current Assets |
193,550 | 42,627 |
| Total Assets |
1,834,660 | 1,344,676 |
| EQUITY AND LIABILITIES (in EUR k) |
30 Sep. 2007 |
31 Dec. 2006 |
|---|---|---|
| Equity | ||
| Share capital |
56,000 | 8,000 |
| Capital surplus |
759,557 | 375,066 |
| Retained earnings |
70,043 | 14,533 |
| Total Equity |
885,600 | 397,599 |
| Non-Current Liabilities |
||
| Long-term loans, net of current portion |
811,190 | 813,466 |
| Deferred tax liabilities |
0 | 19,869 |
| Other liabilities |
56 | 56 |
| Total Non-Current Liabilities |
811,246 | 833,391 |
| Current Liabilities |
||
| Short-term loans |
7,771 | 1,712 |
| Trade payables |
114,705 | 5,363 |
| Payables to affiliates |
15 | 82,471 |
| Other current liabilities |
15,323 | 24,140 |
| Total Current Liabilities |
137,814 | 113,686 |
| Total Liabilities |
949,060 | 947,077 |
| Total Equity and Liabilities |
1,834,660 | 1,344,676 |
| (in EUR k) |
01 Jul. - 30 Sep. 07 |
01 Jul. - 30 Sep. 06 |
Change | 01 Jan. - 30 Sep. 07 |
20 Jan. - 30 Sep. 06 |
Change |
|---|---|---|---|---|---|---|
| Revenues | 21,698 | 12,481 | 74 % | 60,767 | 16,642 | 265 % |
| Income less expenses from passed on operating expenses |
200 | -194 | 203 % | 200 | -277 | 172 % |
| Real estate operating costs |
-1,557 | -570 | -173 % | -3,715 | -938 | -296 % |
| Net Rental Income |
20,341 | 11,717 | 174 % | 57,252 | 15,427 | 271 % |
| Net gain from fair value adjustments on investment property |
94 | -14 | >300 % | 25,419 | 3,280 | >300 % |
| Administrative expenses |
-2,819 | -1,017 | -177 % | -7,627 | -2,547 | -199 % |
| Personnel expenses |
-870 | 0 | n/a | -2,294 | 0 | n/a |
| Other operating income |
351 | 6 | >300 % | 543 | 6,026 | -91 % |
| Other operating expenses |
-4,847 | -64 | >-300 % | -4,910 | -80 | >-300 % |
| Net Operating Result |
12,250 | 10,628 | 15% | 68,383 | 22,106 | 209 % |
| Net gain/loss from fair value adjustments on financial derivatives |
-9,116 | -12,440 | 27 % | 9,289 | -8,896 | 204 % |
| Financial result |
-8,820 | -13,425 | 34 % | -26,841 | -18,217 | 47 % |
| Pre-tax income (EBT) |
-5,686 | -15,237 | 63% | 50,831 | -5,007 | >300 % |
| Income tax expenses |
17,088 | 3,633 | >300 % | 4,679 | 2,386 | 96 % |
| Consolidated profit |
11,402 | -11,604 | 198 % | 55,510 | -2,621 | >300 % |
| Earnings per share: basic, for profit for the period (in EUR per share) |
0.20 | n/a | 0.99 | n/a | ||
| diluted, for profit for the period |
||||||
| (in EUR per share) |
0.20 | n/a | 0.99 | n/a |
| (in EUR k) |
Share Captital |
Captital Surplus |
Retained Earnings |
Total Equity |
|---|---|---|---|---|
| As at 1 January 2007 |
8,000 | 375,066 | 14,533 | 397,599 |
| Changes in the period from 1 January to 30 September |
2007 | |||
| Consolidated profit |
- | - | 55,510 | 55,510 |
| Changes in the consolidated group |
- | -586 | - | -586 |
| Valuation shareholder loan/other IFRS adjustments |
- | 646 | - | 646 |
| Share-based payments (IFRS) |
- | 710 | - | 710 |
| Contributions to Share Capital |
48,000 | - | - | 48,000 |
| Contributions to Capital Surplus (IPO) |
- | 240,000 | - | 240,000 |
| Expenses in connection with IPO |
- | -10,969 | - | -10,969 |
| Other contributions to Capital Surplus |
- | 154,690 | - | 154,690 |
| As at 30 September 2007 |
56,000 | 759,557 | 70,043 | 885,600 |
| As at 20 January 2006 |
25 | 0 | 0 | 25 |
| Changes in the period from 20 January to 30 September |
2006 | |||
| Consolidated profit |
- | - | -2,621 | -2,621 |
| Changes in the consolidated group |
- | 8,747 | - | 8,747 |
| Valuation shareholder loan |
- | 1,769 | - | 1,769 |
| Contributions to Share Capital |
- | - | - | 0 |
| Contributions to Capital Surplus |
- | 25,025 | - | 25,025 |
| As at 30 September 2006 |
25 | 35,541 | -2,621 | 32,945 |
| (in EUR k) |
01 Jan. - 30 Sep. 2007 |
20 Jan. - 30 Sep. 2006 |
|---|---|---|
| 1. Cash flows from operating activities |
||
| Consolidated profit |
55,510 | -2,621 |
| Unrealized net gain from fair value adjustments |
-34,708 | 5,616 |
| Result from deferred taxes |
-9,788 | -2,389 |
| Depreciation and impaiment of property, plant and equipment |
230 | 0 |
| Increase in trade receivables and other assets that are not attributed to investing |
||
| or financing activities |
-5,849 | -278 |
| Increase in trade payables and other liabilities that are not attributed to investing |
||
| or financing activities |
26,750 | 17,072 |
| Cash flows from operating activities |
32,145 | 17,400 |
| 2. Cash flows from investing activities |
||
| Cash paid (-) for investment property |
-145,865 | -741,365 |
| Cash paid (-) for Property, plant and equipment |
-45 | 0 |
| Cash paid (-) for the acquisition of consolidated companies |
-16,385 | -17,415 |
| Cash flows used in investing activities |
-162,295 | -758,780 |
| 3. Cash flows from financing activities |
||
| Cash received (+) from equity contributions |
304,983 | 26,150 |
| Cash received (+) from borrowings |
215,577 | 753,382 |
| Cash paid (-) for the acquisition of derivative financial instruments |
-1,804 | -11,632 |
| Cash paid (-) for the redemption of borrowings |
-243,262 | -120 |
| Cash paid (-) for transaction costs |
-355 | -7,031 |
| Cash paid (-) for IPO costs |
-12,029 | 0 |
| Cash flows from financing activities |
263,110 | 760,749 |
| 4. Cash and cash equivalents at the end of the period |
||
| Change in cash and cash equivalents (subtotal of 1 to 3) |
132,960 | 19,369 |
| Effect of changes in exchange rates, |
||
| consolidated group and valuation on cash and cash equivalents |
0 | 0 |
| Cash and cash equivalents at the beginning of the period |
24,304 | 0 |
| Cash and cash equivalents at the end of the period |
157,264 | 19,369 |
| 5. Composition of cash and cash equivalents |
||
| Cash | 157,264 | 19,369 |
| Securities | 0 | 0 |
| Cash and cash equivalents at the end of the period |
157,264 | 19,369 |
Funds from operations (FFO) were EUR 22,085 k for nine months and EUR 9,298 k for the third quarter. That is essentially on the same level as last quarter. As a result, FFO per share was at EUR 0.39 in the first nine months of 2007.
| 01 Jan. - 30 Sep. 2007 |
20 Jan. - 30 Sep. 2006 |
Change | |
|---|---|---|---|
| (in EUR k) |
(unaudited) | (unaudited) | |
| Pre-tax income (EBT) |
50,831 | -5,007 | 55,838 |
| less adjusted financial result1 |
-25,789 | -18,217 | -7,572 |
| EBITDA | 76,620 | 13,210 | 63,410 |
| adjusted EBITDA2 |
82,582 | 13,210 | 69,372 |
| less Net gain from fair value adjustments |
|||
| on investment property |
25,419 | 3,280 | 22,139 |
| less Net gain from fair value adjustments |
|||
| on financial derivatives |
9,289 | -8,896 | 18,185 |
| plus adjusted financial result1 |
-25,789 | -18,217 | -7,572 |
| Funds From Operations (FFO) |
22,085 | 609 | 15,514 |
1 Adjusted fiancial results disregards non cash write-offs required under IFRS
2 Adjusted EBITDA disregards transfer tax of EUR 4.910 k that arose from the acquisition of Juna Beteiligungs GmbH which has not been funded from operations. Also this line is adjusted for non cash write-offs of transaction costs related to the arrangement of certain loan agreements
alstria office REIT-AG, Hamburg, (hereinafter referred to as the "Company" or "alstria office REIT-AG" and together with its subsidiaries the "Group"), is a German stock corporation and has its domicile in Hamburg. The Group's principal activities are described in detail in section 1 of the notes to the consolidated financial statements for the fiscal year ended 31 December 2006. A detailed description of the registration as a REIT-stock corporation is provided in section 14.
The Condensed Interim Consolidated Financial Statements for the period from 1 January 2007 to 30 September 2007 (hereinafter referred to as the "Condensed Interim Consolidated Financial Statements") were authorized for issue by resolution of the Company's management board on 20 November 2007.
These Condensed Interim Consolidated Financial Statements have been prepared in accordance with IAS 34 "Interim Financial Reporting". They do not contain all the disclosures and explanations required in annual financial statements and should therefore be read in conjunction with the consolidated financial statements as at 31 December 2006.
The Condensed Interim Consolidated Financial Statements as at 30 September 2007 contain all the disclosures the Company's management board considers to be required for the Condensed Interim Consolidated Financial Statements to give a true and fair view of the net assets, financial position and results of operations.
These Condensed Interim Consolidated Financial Statements have not been audited.
The accounting policies applied in these Condensed Interim Consolidated Financial Statements are consistent with those applied in the consolidated financial statements as at 31 December 2006. The interim financial statements of the Company's subsidiaries are prepared for the same reporting period as for the Company, using consistent accounting policies. A detailed description can be found in section 3 of the notes to the consolidated financial statements as at 31 December 2006.
The following changes to the consolidated group occurred since the consolidated financial statements as at 31 December 2006.
• During the reporting period, alstria office REIT-AG acquired a 94 percent interest in Verwaltung Alstria Vierte Hamburgische Grundbesitz GmbH, Hamburg, and Verwaltung Alstria Siebte Hamburgische Grundbesitz GmbH, Hamburg.
• alstria office REIT-AG acquired 100 percent of JUNA Beteiligungs GmbH from Captiva 2 JUNA Holding S.à r.l. The transaction was notarized on 30 July 2007. JUNA Beteiligungs GmbH holds a 5.1 percent share in JUNA Property GmbH & Co. KG, the company holding the West (Barmer Ersatzkasse) Portfolio. The purchase price was EUR 1,848 k. With the pay off of the minority shareholders alstria office REIT-AG now, directly and indirectly, owns 100 percent of JUNA Property GmbH & Co. KG.
Regardless of their legal structure, the transactions are disclosed in accordance with their economic substance in the Condensed Interim Consolidated Financial Statements as at 30 September 2007.
The acquisition of a 94 percent interest in Verwaltung Alstria IV. and VII. Hamburgische Grundbesitz GmbH & Co. KG (former Alstria Vierte and Siebte Hamburgische Grundbesitz GmbH) as at 31 March 2007 as well as the acquisition of 6 percent of the shares in Alstria IV. Hamburgische Grundbesitz GmbH & Co. KG and Alstria VII. Hamburgische Grundbesitz GmbH & Co. KG as at 30 June 2007 were stated as a business combination involving entities under common control since the seller of the shares, Alstria Hanseatische Grundbesitz Holding S.à r.l., was also a subsidiary of Captiva Capital Partners II SCA, Luxembourg.
The same applies for the acquisition of a 100 percent interest in JUNA Beteiligungs GmbH. The seller of the shares, Captiva 2 JUNA Holding S.à. r.l., Luxembourg, was also a subsidiary of the Captiva Capital Partners II SCA, Luxembourg and the transaction is therefore stated as a business combination involving entities under common control as of 30 July 2007.
IFRS 3 does not apply to these business combinations. As a consequence of the gap in legislation after the introduction of IFRS 3, the transactions were stated using the purchase method (in line with IFRS 3).
A contribution or withdrawal in kind in the amount of the differences between the purchase prices of the interests and the pro-rated fair values of the net assets acquired as at 31 March 2007, 1 April 2007, 30 June 2007 and 30 July 2007, respectively, are assumed. Accordingly, the respective remaining debit or credit difference from capital consolidation resulted in a decrease or increase in the capital surplus of the consolidated financial statements of alstria office REIT-AG without effect on income.
The main business objective of Alstria IV. Hamburgische Grundbesitz GmbH & Co. KG (formerly Verwaltung Alstria Vierte Hamburgische Grundbesitz GmbH) is the leasing of office property throughout Germany.
The key figures of the acquisition of 94 percent of the shares as at 31 March 2007 are as follows:
| (in EUR k) |
|
|---|---|
| Cost of the investment |
2,070 |
| Carrying amount of the acquired assets |
|
| (excluding cash and cash equivalents) |
52,079 |
| Purchased cash and cash equivalents |
597 |
| Liabilities acquired |
-49,528 |
| Carrying amount of the acquired net assets |
3,148 |
| thereof 94 % |
-2,959 -2,959 |
| Remaining credit difference |
-889 |
The remaining credit difference has been contributed in full to the capital surplus of alstria office REIT-AG.
Altogether, the following assets and liabilities accrued to the Group in the course of the first-time consolidation of the Company:
| ASSETS (in EUR k) |
|
|---|---|
| Investment property |
50,000 |
| Receivables | 679 |
| Other assets |
650 |
| Cash and cash equivalents |
597 |
| Prepaid expenses |
18 |
| Deferred tax assets |
732 |
| Total assets |
52,676 |
| EQUITY AND LIABILITIES (in EUR k) |
|
|---|---|
| Equity and reserves |
3,148 |
| Deferred tax liabilities |
263 |
| Other provisions |
149 |
| Current liabilities |
49,116 |
| Total equity and liabilities |
52,676 |
No adjustments had to be made for differences between the carrying amounts determined by the Company in its separate financial statements in accordance with IFRS and the fair values of the acquired assets and liabilities.
The cost of the investment in terms of actual acquisition costs and incidental acquisition costs break down as follows:
| Acquisition costs pursuant to the purchase agreement dated 15 March 2007 |
2,006 |
|---|---|
| Provision for expert fees |
9 |
| Legal advice |
51 |
| Non-deductible input VAT on legal advice |
4 |
| Total | 2,070 |
The additional consolidated net profit for a theoretical acquisition as at 1 January 2007 was calculated as follows (pro forma figures only):
| (in EUR k) |
|
|---|---|
| Revenues | 520 |
| Other operating income |
5 |
| Cost of materials |
-70 |
| Other operating expenses |
-43 |
| Deferred income tax |
554 |
| Other interest and similar income |
1 |
| Interest and similar expenses |
-685 |
| Extraordinary expenses |
-3,613 |
| Other taxes |
-21 |
Additional consolidated loss for the period for a theoretical acquisition as at 1 January 2007 -3,352
The acquisition costs of the remaining minority interest of 6 percent of Alstria IV. Hamburgische Grundbesitz GmbH & Co. KG amount to EUR 136 k. In consideration of 6 percent of the equity taken over amounting to EUR 189 k a credit difference of EUR 53 k remains, which was contributed in full to the capital surplus of alstria office REIT-AG.
The cost of the investment in terms of actual acquisition costs and incidental acquisition costs break down as follows:
| Total | 136 |
|---|---|
| Non-deductible input VAT on legal advice |
1 |
| Legal advice |
8 |
| agreement dated 29 June 2007 |
127 |
| Acquisition costs pursuant to the purchase |
|
| (in EUR k) |
|
The main business objective of Alstria VII. Hamburgische Grundbesitz GmbH & Co. KG (formerly Verwaltung Alstria Siebte Hamburgische Grundbesitz GmbH) is the leasing of office property throughout Germany.
The key figures of the acquisition of 94 percent of the shares as at 31 March 2007 are as follows:
| 1,319 |
|---|
| -11,598 |
| 12,917 |
The remaining debit difference has been attributed in full to the capital surplus of alstria office REIT-AG.
Altogether, the following assets and liabilities accrued to the Group in the course of the first-time consolidation of the Company:
| Total assets |
46,066 |
|---|---|
| Deferred tax assets |
26 |
| Prepaid expenses |
11 |
| Cash and cash equivalents |
575 |
| Other assets |
422 |
| Receivables | 32 |
| Investment property |
45,000 |
| ASSETS (in EUR k) |
| EQUITY AND LIABILITIES (in EUR k) |
|
|---|---|
| Equity and reserves |
12,338 |
| Other provisions |
104 |
| Current liabilities |
30,496 |
| Deferred tax liabilities |
3,128 |
| Total equity and liabilities |
46,066 |
No adjustments had to be made for differences between the carrying amounts determined by the Company in its separate financial statements in accordance with IFRS and the fair values of the acquired assets and liabilities.
The cost of the investment in terms of actual acquisition costs and incidental acquisition costs break down as follows:
| Total | 12,917 |
|---|---|
| Non-deductible input VAT on legal advice |
4 |
| Legal advice |
51 |
| Provision for expert fees |
9 |
| agreement dated 15 March 2007 |
12,853 |
| Acquisition costs pursuant to the purchase |
|
| (in EUR k) |
|
The additional consolidated net profit for a theoretical acquisition as at 1 January 2007 was calculated as follows (pro forma figures only):
| (in EUR k) |
|
|---|---|
| Revenues | 313 |
| Other operating income |
9 |
| Cost of materials |
-3 |
| Other operating expenses |
-97 |
| Deferred income tax |
-3,219 |
| Other interest and similar income |
1 |
| Interest and similar expenses |
-436 |
| Extraordinary Income |
10,750 |
| Extraordinary expenses |
-10 |
| Other taxes |
-13 |
Additional consolidated profit for the period for a theoretical acquisition as at 1 January 2007 7,295
The acquisition costs of the remaining minority interest of 6 percent of Alstria VII. Hamburgische Grundbesitz GmbH & Co. KG amount to EUR 843 k. In consideration of 6 percent of the equity taken over amounting to EUR 740 k a debit difference of EUR 103 k as of 30 June 2007 remained, which was attributed in full to the capital surplus of alstria office REIT-AG.
The cost of the investment in terms of actual acquisition costs and incidental acquisition costs break down as follows:
| Total | 843 |
|---|---|
| Non-deductible input VAT on legal advice |
1 |
| Legal advice |
8 |
| agreement dated 29 June 2007 |
834 |
| Acquisition costs pursuant to the purchase |
|
| (in EUR k) |
|
The acquisition of a 51 percent interest in Alstria Sechste Hamburgische Grundbesitz GmbH & Co. KG was stated as a transaction under common control as at 1 April 2007 since the seller of the shares, Verwaltung Alstria Sechste Hamburgische Grundbesitz GmbH, was also a subsidiary of Captiva Capital Partners II SCA, Luxembourg. IFRS 3 does not apply to these business combinations.
As a consequence of the lack of IFRS guidance after the introduction of IFRS 3, the transaction was stated using the purchase method (in line with IFRS 3).
The business objective of Alstria Sechste Hamburgische Grundbesitz GmbH & Co. KG is the leasing of mainly office property throughout Germany.
Regarding the transfer of the interest no purchase price was concluded and no incidental acquisition costs had to be considered. As the company did not have material equity, no difference from capital consolidation had to be recognized in the capital surplus of alstria office REIT-AG.
The consolidated financial statements include the expenses and income of Alstria Sechste Hamburgische Grundbesitz GmbH & Co. KG for the period since the acquisition as at 1 April 2007. Minority interests represent the portion of profit or loss and net assets in Alstria Sechste Hamburgische Grundbesitz GmbH & Co. KG not held by the Group. In accordance with IAS 32, minority interests in partnerships are disclosed under liabilities.
The additional consolidated net loss for the period for a theoretical acquisition as at 1 January 2007 was amounting to EUR 312.
The acquisition costs of the sole interest of JUNA Beteiligungs GmbH amount to EUR 1.854 k. The cost of investment in terms of actual acquisition costs and incidental acquisition costs breaks down as follows:
| (in EUR k) |
|
|---|---|
| Acquisition costs pursuant to the purchase |
|
| agreement dated 30 July 2007 |
1,848 |
| Legal advice |
6 |
| Non-deductible input VAT on legal advice |
0 |
| Total | 1,854 |
The main business objective of JUNA Beteiligungs GmbH is the holding of 5,1 percent interests in JUNA Property GmbH & Co. KG. The key figures of the acquisition of the interests are as follows:
| (in EUR k) |
|
|---|---|
| Cost of the investment |
1,854 |
| Omission of the liability against the minority shareholder 1,790 |
|
| Carrying amount of the acquired assets |
|
| (excluding cash and cash equivalents) 1 |
|
| Purchased cash and cash equivalents 254 |
|
| Liabilities acquired -249 |
|
| Carrying amount of the acquired net assets 1,796 |
|
| thereof 100 % -1,796 |
-1,796 |
The remaining debit difference was attributed in full to the capital surplus of alstria office REIT-AG.
Altogether, the following assets and liabilities accrued to the Group in the course of first-time consolidation of the Company:
| ASSETS (in EUR k) |
|
|---|---|
| Cash and cash equivalents |
254 |
| Prepaid expenses |
1 |
| Total assets |
255 |
| EQUITY AND LIABILITIES (in EUR k) |
|
|---|---|
| Equity and reserves |
6 |
| Tax accruals |
223 |
| Other provisions |
12 |
| Current liabilities |
14 |
| Total equity and liabilities |
255 |
No adjustments had to be made for differences between the carrying amounts determined by the Company in its separate financial statements in accordance with IFRS and the fair values of the acquired assets and liabilities.
The preparation in accordance with IFRS requires assumptions and estimates for various items which have an effect on the amount and disclosure of the assets and liabilities as well as income and expenses. Actual amounts may differ from these estimates.
Estimates are required in particular in order to:
In particular, in determining the fair values of the investment property, alstria office REIT-AG must apply and take account of numerous factors. If the future development of these properties differs from the estimate, large-scale impairment losses may incur. This can have a negative impact on future results of operations.
A fair value measurement of the derivative financial instruments was performed by an independent third party and the market data compiled thereof were included in the standard measurement models. Thus, the usual estimation uncertainties exist regarding possible deviations from the market data used. Depending on the parameterization of the models, alstria office REIT-AG put the maximum range for these deviations at between -EUR 10,000 and EUR 10,000. We consider the models used to be adequate and believe that they do not engender any uncertainty as to their applicability.
The fair value of stock options granted to the management board has been determined as at the granting date and has been valued based on the expected volatility, life of option and labor turn rate using current discount rates applicable for items with similar terms and risk characteristics. This valuation requires the Company to make estimates about these parameters, and hence they are subject to uncertainty. The fair value of the stock options granted as at 27 March 2007 is allocated to the vesting period according to the determinations in the underlying stock option program. The resulting personnel expenses caused an addition to capital surplus of EUR 710 k (31 December 2006: EUR 0 k) in the Condensed Interim Consolidated Financial Statements as at 30 September 2007.
The assets, liabilities and equity instruments stated above, which are particularly exposed to estimation uncertainty, had the following impact on the consolidated balance sheet as at the balance sheet date:
| 30 Sep. 2007 |
31 Dec. 2006 |
|
|---|---|---|
| (in EUR k) |
(unaudited) | (audited) |
| Investment property |
1,639,145 | 1,289,536 |
| Deferred tax assets |
0 | 12,513 |
| thereof loss carryforwards |
0 | 7,605 |
| Positive fair values of derivatives |
27,732 | 14,563 |
| Additions to capital surplus |
710 | 0 |
The activities of alstria office REIT-AG (primarily the generation of revenues from investment properties) are not generally affected by seasonal factors. However, the sale of one or more large properties may have a significant impact on revenues and operating expenses.
From experience, the real estate market tends to fluctuate as a result of factors such as the net income of consumers or GDP, changes in interest rates, consumer confidence, and demographic and other factors inherent to the market. A change of the interest rate leads to a lower valuation of the derivatives.
alstria office REIT-AG uses the fair value model pursuant to IAS 40.33 et seq. for subsequent measurement. External appraisals were obtained for measurement in 2006. Management's review of the fair values as at the date of the Condensed Consolidated Interim Financial Statements for 30 September 2007 did not result in the revaluation of certain assets. For a detailed description of the valuation of assets, please see section 8 of the consolidated financial statements as at 31 December 2006.
Under the purchase agreement dated 18 December 2006, Alstria Vierzehnte to Einundzwanzigste Hamburgische Grundbesitz GmbH & Co. KGs, Hamburg, – subsidiaries of alstria office REIT-AG and represented by their general partner, Verwaltung Alstria Dreizehnte Hamburgische Grundbesitz GmbH, Hamburg, – concluded a purchase agreement on the acquisition of further property with a purchase price value of EUR 221,000 k, with the properties being transferred to the buyers with effect from 1 April 2007 (AURORA portfolio).
Under the purchase agreement dated 10 May 2007, alstria office REIT-AG concluded a purchase agreement on the acquisition of one further property with a purchase price of EUR 10,700 k, with the property being transferred to the buyer with effect from 6 June 2007 (SIGMA portfolio).
Under the purchase agreement dated 9 September 2007, alstria office REIT-AG, Hamburg, concluded a purchase agreement on the acquisition of another property with a purchase price of EUR 2,851 k. The property has been transferred to the buyer effective from 1 October 2007 (Bäckerbreitergang 73).
Two residential assets held for sale were economically transferred at the beginning of July. In March 2007 Alstria had agreed to dispose these two residential assets for total net proceeds of EUR 3,700 k versus an IFRS fair value of EUR 3,525 k as at 31 December 2006.
Expenses/income disclosed in the income statement pursuant to IAS 40.75(f):
The following overview breaks down the other receivables into those due within the next twelve months and those due in more than one year.
| Due | Total | Total | ||
|---|---|---|---|---|
| up to |
in more than |
30 Sep. |
31 Dec. |
|
| one year |
one year |
2007 | 2006 | |
| (in EUR k) |
(audited) | |||
| Capitalized transaction costs |
0 | 1,676 | 1,676 | 2,491 |
| Prepayments | 857 | 0 | 857 | 97 |
| IPO costs |
0 | 0 | 0 | 399 |
| Other assets |
2,702 | 0 | 2,702 | 674 |
| Other Receivables |
3,559 | 1,676 | 5,235 | 3,661 |
Please refer to the Consolidated Statement of Changes in Equity.
By resolution of the extraordinary general meeting of shareholders held on 21 December 2006, the nominal share capital was increased against contribution in kind by EUR 32,000 k from EUR 8,000 k to EUR 40,000 k. The capital increase has been registered in the commercial register on 9 March 2007.
By resolution of the annual general meeting of shareholders held on 15 March 2007, the Company was authorized to further increase the nominal share capital by up to EUR 20,000 k from EUR 40,000 k to EUR 60,000 k. On the basis of this resolution, the share capital was increased against contribution in cash in the amount of EUR 16,000 k. This capital increase has been registered in the commercial register on 30 March 2007. The nominal amount was paid-in on 30 March 2007.
In the balance sheet of the Condensed Interim Consolidated Financial Statements as at 30 September 2007, the share capital of alstria office REIT-AG amounted to EUR 56,000 k. Captiva 2 Alstria Holding S.à r.l., Luxembourg, held, directly and indirectly, 53.97 percent of the shares in the Company, the remaining 46.03 percent of the shares were free float.
The capital surplus increased during the period from 1 January to 30 September 2007 by EUR 384,491 k to EUR 759,557 k.
By shareholder resolution of 22 January 2007, EUR 49,008 k was paid in the capital surplus.
By a loan agreement dated 23 November 2006, Captiva 2 Alstria Holding S.à r.l. granted to alstria office REIT-AG a shareholder loan. On 3 April 2007, the said shareholder loan amounting to EUR 104,500 k plus accrued interests of EUR 1,182 k was contributed to capital surplus as agreed on 15 March 2007. The valuation of this shareholder loan resulted in a further increase of the capital surplus of EUR 446 k.
The capital surplus was additionally increased by EUR 200 k due to the deferred taxes.
Furthermore, the first consolidation of Alstria IV. and VII. Hamburgische Grundbesitz GmbH & Co. KG (former Alstria Vierte and Siebte Hamburgische Grundbesitz GmbH) resulted in a decrease of EUR 430 k and the first consolidation of the remaining minority interest of 6 percent of Alstria IV. and VII. Hamburgische Grundbesitz GmbH & Co. KG resulted in a decrease of EUR 50 k of the capital surplus. Additional acquisition costs arose in the third quarter for these acquisitions (EUR 49 k in total). These additional acquisition costs decrease the capital surplus.
Additionally, the first consolidation of JUNA Beteiligungs GmbH resulted in a decrease of EUR 57 k.
Since 3 April 2007, the shares of alstria office REIT-AG have been listed on the Regulated Market of the Frankfurt Stock Exchange. In the initial public offering of the Company's shares, a total of 25,778 k shares were placed at a price of EUR 16 per share, of which 16 million shares resulted from a capital increase, 9,778,324 shares were sold by the selling shareholder (including 378,324 shares from the exercise of the Greenshoe option). The initial public offering of the Company's shares resulted in an increase of the capital surplus of EUR 229,031 k, thereof contributions amounting to EUR 240,000 k and expenses of EUR 10,969 k.
Additionally, a stock option program was resolved on 27 March 2007 by the supervisory board of the Company and accordingly stock options with a fair value of EUR 1,784 k were issued to members of the management board of the Company on 3 April 2007. As at 30 September 2007, this resulted in a further increase of the capital surplus of EUR 710 k from the allocation of the fair values of the granted stock options over the vesting period.
Under IAS 32.16 and IAS 32.19, a financial instrument is an equity instrument if, and only if, an entity has no conditional or unconditional obligation to deliver cash or another asset. In addition, IAS 32.18(b) states that the right of a partner to return his investment to the partnership for compensation at any time must be disclosed as a liability, even when, in legal terms, the partner is an investor. Specifically, equity must be reclassified as liabilities when the shareholders have a right of termination and the exercise of that right justifies a settlement claim against the Company.
As at the balance sheet date of these Condensed Interim Consolidated Financial Statements, no dividends were paid or proposed to be paid nor equity securities or bonds issued, bought back or repaid.
As at 30 September 2007, the loans used by the Company are repayable with EUR 814,869 k (31 December 2006: EUR 819,275 k). The carrying amount takes into account interest liabilities and transaction costs to be allocated under the effective interest method upon raising the liabilities.
The biggest portion of liabilities relate to a syndicated loan arranged by J.P. Morgan Plc., Natixis and HSH Nordbank AG for a nominal amount of EUR 1,139,800 k. EUR 814,869 k (31 December 2006: EUR 655,743 k) of this nominal amount had been drawn as at the balance sheet date. To secure these liabilities, receivables from rental and property purchase agreements as well as insurance receivables and derivative financial instruments were assigned to the lenders, liens were granted on bank accounts and the registration of land charges was agreed.
Furthermore, a loan totaling EUR 79,492 k existed between Alstria IV. and VII. Hamburgische Grundbesitz GmbH & Co. KG (former Alstria Vierte and Siebte Hamburgische Grundbesitz GmbH) respectively and HSH Nordbank AG, Hamburg, Germany, until 28 September 2007. Within the refinancing of IV. and VII. Hamburgische Grundbesitz GmbH & Co. KG this loan has been repaid. The repayment was funded by additional borrowings from the syndicated loan amounting to EUR 52,250 k and by operating cash.
All loans are floating-rate liabilities and are regularly repriced. The repricing schedule is mainly based on 3-month Euribor plus loan margin and borrowing costs.
Due to the variable interest rate, there are no significant differences between the carrying amounts and fair values.
As at 30 September 2007, loans were reduced by transaction costs of EUR 3,680 (31 December 2006: EUR 4,097 k).
The carrying amounts of the loans are all denominated in EUR.
The liabilities exposed to an interest rate risk are due as follows:
| 30 Sep. 2007 |
31 Dec. 2006 |
|
|---|---|---|
| (in EUR k) |
(unaudited) | (audited) |
| Up to 1 year |
0 | 0 |
| More than 1 year |
811,190 | 813,466 |
| Total | 811,190 | 813,466 |
The expenses for salaries shown in the profit and loss account in the amount of EUR 2,294 k (30 September 2006: EUR 128 k; included in the administration costs) include bonuses in the amount of EUR 370 k (30 September 2006: EUR 10 k). Furthermore, personnel expenses of EUR 710 k (30 September 2006: EUR 0 k) relating to stock options granted to the management are included.
By registration in the commercial register on 11 October 2007 alstria office REIT-AG was transferred into a G-REIT. The transaction is economically retroactively effective as from 1 January 2007. Therefore alstria office REIT-AG is exempted from income tax as by 1 January 2007 and the following tax issues arise due to the transfer into a G-REIT:
The payments for investing activities (EUR 162,295 k) were funded by additional borrowings from the shareholder Captiva 2 Alstria Holding S.à r.l. (EUR 54,500 k) and by operating cash (EUR 32,145 k). The residual amount was financed by using the cash and cash equivalents especially received from the IPO.
The repayments of borrowings (EUR 263,110 k) were financed by additional borrowings (EUR 161,077 k), by an equity contribution (EUR 49,008 k) and by using the cash and cash equivalents especially received from the IPO.
The type of services offered by alstria office REIT-AG exclusively comprises lessor activities. There is also no differentiation by tenant group since alstria office REIT-AG's portfolio consists almost entirely of commercial properties, with only a very few exceptions. When selecting tenants, alstria office REIT-AG places high demands on tenants' credit ratings, such that no different risks and returns pursuant to IAS 14.9 can be derived from this criterion. For the valuation of the properties, a differentiation is made between properties with anchor lease terms of less than five years and more than five years; however, this allocation is made on a rolling basis and therefore depends on the date. Furthermore, this differentiation does not result in any structurally different cash flows for the fiscal year. Different risks are only snapshots and change immediately when new anchor leases are concluded. However, it is not possible to identify a segment from these criteria.
From a geographical perspective, alstria office REIT-AG operates exclusively in the German market and is present all over Germany. As there are therefore no reportable segments within the meaning of IAS 14.9, the criteria for segment reporting pursuant to IAS 14 are not met.
During the period from 1 January 2007 to 30 September 2007, on an average fourteen people (20 January 2006 to 31 December 2006: on an average four people) were employed at the Company. The average was calculated by the ninth part of the total of employed people at the end of each month. On 30 September 2007, twentyone people (31 December 2006: four people) were employed at alstria office REIT-AG, excluding the management board.
On 27 March 2007, the supervisory board of the Company resolved on the establishment of a stock option program for the members of the management board. With its resolution, the supervisory board fixed the details of the stock option program in accordance with an authorization granted by the general meeting of shareholders of 15 March 2007, and granted a first tranche of stock options to the management board.
The main terms of the stock option program resolved by the supervisory board can be summarized as follows:
Under the stock option program, up to 2,000,000 options entitling to the subscription of a maximum of 2,000,000 shares of the Company with a total notional value of EUR 2,000,000 may be granted to members of the management board. The stock options will be granted in annual tranches. The first tranche was granted by the supervisory board, subject to the above said conditions, with resolution from 27 March 2007. Under this tranche 281,250 stock options were granted to each of Olivier Elamine and Dr. Michael Börner-Kleindienst. With resolution from 5 September 2007, the supervisory board granted 93,750 stock options to Alexander Dexne. The exercise price for the stock options granted is EUR 16. The term of each stock option is seven years beginning with the respective issue date.
The stock options may only be exercised if the current stock exchange price of the Company's shares exceeds the stock exchange price of the Company's shares on the issue date by 20 percent or more for at least seven non subsequent trading days of the Frankfurt Stock Exchange prior to the commencement of the respective exercise period.
The stock options may only be exercised after the expiration of a vesting period of two years and then during the four exercise periods each year. Each exercise period lasts 30 days, commencing with the day of announcement of the results for the first, second and third quarter, and the day of the Company's annual general meeting, respectively. There are no cash settlement alternatives.
The fair values of the options were estimated at the respective grant dates using a black-scholesmodel and partial-time barrier options, taking into account the terms and conditions upon which the instruments were granted.
The following table lists the inputs to the model used for the determination of the fair value of the stock options granted on 27 March 2007:
| Dividend yield (%) |
3.60 |
|---|---|
| Risk-free interest rate (%) |
4.21 |
| Expected volatility (%) |
30.00 |
| Expected life of option (years) |
4.50 |
| Exercise share price (EUR) |
16.00 |
| Labor turnover rate (%) |
0.00 |
| Stock price as at valuation date (EUR) |
16.00 |
The estimated fair value of one stock option at the granted date was EUR 3.20.
The following table lists the inputs to the model used for the determination of the fair values of the stock options granted on 5 September 2007:
| Dividend yield (%) |
3.60 |
|---|---|
| Risk-free interest rate (%) |
4.29 |
| Expected volatility (%) |
30.00 |
| Expected life of option (years) |
4.50 |
| Exercise share price (EUR) |
16.00 |
| Labor turnover rate (%) |
0.00 |
| Stock price as at valuation date (EUR) |
13.93 |
The estimated fair value of one stock option at the granted date was EUR 2.30.
On 5 September 2007 the supervisory board of the Company resolved the issuance of Convertible Profit Participation Certificates ("certificates") to employees of the Company and to employees of companies in which alstria office REIT-AG, directly or indirectly, holds a majority interest. Members of alstria office REIT-AG's management board are not considered
employees of the Company in terms of this convertible profit participation rights program. With its resolution, the supervisory board fixed the details of the convertible profit participation rights program in accordance with an authorization granted by the general meeting of shareholders of 15 March 2007.
The main terms of the program resolved by the supervisory board can be summarized as follows: The nominal amount of each certificate is EUR 1.00 and is payable upon issuance. Under the program, a maximum of 500,000.00 certificates in an aggregate nominal amount of up to EUR 500,000.00 may be issued. 3,600 certificates were issued until 30 September 2007.
The certificates are issued as non transferable rights. The certificates are neither sellable nor pledgeable or otherwise chargeable.
The maximum term of each certificate is five years.
During its term, each certificate entitles to a preferred disbursement from the Company's annual net profit. The profit share corresponds to the dividend per share of the Company for a full business year of the Company. For certificates held by a beneficiary for less than a full business year of the Company, the profit share is reduced pro rata temporis.
Each certificate shall be mandatorily converted into one non-par value bearer share of the Company on the second, third, fourth or fifth anniversary date of the issue date if the then current stock exchange price of the Company' shares has exceeded the stock exchange price of the Company's shares on the issue date by 5 percent or more for seven non subsequent trading days.
Upon conversion of a certificate, the beneficiary shall pay an additional conversion price to the Company for each certificate to be converted. The conversion price shall be the aggregate proportionate amount in the Company's share capital of the shares each certificate entitles to subscribe for and shall be payable in addition to the offer price.
The management board, subject to the approval of the supervisory board, shall be entitled to amend the program at any time. This also applies to the administration of certificates which have already been issued provided that such amendment does not affect the commercial value of the certificates and/or a respective compensation is paid.
The following table provides the total amount of transactions which have been entered into with related parties during the nine months ended 30 September 2007:
| (in EUR k) |
30 Sep. 2007 |
|---|---|
| Acquisition of shares in Alstria IV. and VII. |
|
| Hamburgische Grundbesitz GmbH & Co. KG |
|
| (former Alstria Vierte and Siebte Hamburgische Grundbesitz GmbH) |
16,016 |
| Shareholder loan (including accrued interests) |
0 |
| Interest expense shareholder loan alstria office REIT-AG |
1,182 |
| Interest expense shareholder loan Alstria Vierte |
|
| Hamburgische Grundbesitz S.a.r.l. & Co. KG |
64 |
| Interest expense shareholder loan Alstria Siebte |
|
| Hamburgische Grundbesitz S.a.r.l. & Co. KG |
45 |
| Service Agreement with Natixis Capital Partner GmbH |
270 |
| Management fees in line with the asset management agreement |
|
| of 1 June 2006 (Natixis Capital Partner GmbH). |
|
| The agreement was terminated with effect from 1 March 2007 |
27 |
| Additional allocation cost for personnel expenses |
|
| for 2006 (Natixis Capital Partner Ltd.) |
104 |
| Compensation for liability coverage of |
|
| Juna Property GmbH & Co. KG Liability |
2 |
| Asset Management fees expensed for Alstria IV. and VII. |
|
| Hamburgische Grundbesitz GmbH & Co. KG |
|
| (former Alstria Vierte and Siebte Hamburgische Grundbesitz GmbH) |
32 |
| Compensation for liability coverage of Alstria Vierte |
|
| and Siebte Hamburgische Grundbesitz S.a.r.l. & Co. KG |
1 |
| Acquisition of shares in Juna Beteiligungs-GmbH, Frankfurt a.M. |
1,854 |
| Acquisition of shares in Verwaltung Alstria Sechste GmbH, Hamburg |
15 |
Under the merger agreements dated 21 August 2007 the sole general partners
• Verwaltung Alstria Erste Hamburgische Mobilien GmbH, Hamburg
• Verwaltung Alstria Dreizehnte Hamburgische Grundbesitz GmbH, Hamburg
merged into alstria office REIT-AG. The transaction was registered in the commercial register on 1 October 2007 and is economically retroactively effective as from 1 January 2007. Due to the merger of their sole general partners
ceased to exist and the assets and liabilities were automatically transferred to alstria office REIT-AG by virtue of law according to Sec. 738 BGB (Anwachsung).
On 11 October 2007 alstria registered with the commercial register as a REIT-stock corporation (Real Estate Investment Trust) and changed its corporate name into alstria office REIT-AG. Since 7 November 2007, the shares of alstria are included in the REITs segment of the Deutsche Börse AG.
REIT-stock corporations are exempt from corporate income and trade tax. The tax exemption of alstria office REIT-AG takes effect retroactively on 1 January 2007. Sellers transferring real estate assets to a REIT-stock corporation may under certain conditions benefit from the so called "exit tax". This is a 50 percent reduction of the tax base for income respectively trade tax as well as for corporate income tax regarding capital gains from such transfer.
The supervisory board of alstria office REIT-AG accepted the resignation of Dr. Michael Börner-Kleindienst as COO of the company with effect from 31 October 2007. The responsibilities of Dr. Michael Börner-Kleindienst were transferred to the CEO of the company, Olivier Elamine.
On 6 November 2007 the Management Board of alstria office REIT-AG announced its intention, to buy-back up to 2.5 percent of the issued shares. Under the assumption of the current market price of the alstria share, this corresponds to a total amount of up to approximately EUR 15,000 k. The share buy-back commenced on 7 November 2007 and will end in accordance with the authorization granted by the shareholders' meeting on 15 March 2007, no later than 14 September 2008.
As at 30 September 2007, the members of the Company's management board were:
Mr. Olivier Elamine (CEO) Dr. Michael Börner-Kleindienst (COO) Mr. Alexander Dexne (CFO)
With letter dated 1 February 2007, Dr. Robert Hannemann resigned as a member of the management board with immediate effect.
By resolution of 28 December 2006, the supervisory board appointed Dr. Michael Börner-Kleindienst as a member of the management board; his term of office as Chief Operating Officer commenced on 1 March 2007.
With resolution dated 8 May 2007, the supervisory board of the Company appointed with effect from 1 June 2007 Mr. Alexander Dexne as new member of the management board in the position of a chief financial officer (CFO).
Pursuant to the Company's articles of association (Section 9), the supervisory board consists of six members, which are elected by the general meeting of shareholders. With resolution of the extraordinary general meeting of shareholders of 16 January 2007, having become effective on 15 February 2007, the number of members of the supervisory board was increased from three to six. The expiration of the term of office is identical for all members, i.e., the close of the annual general meeting of shareholders in the year 2010.
As at 30 September 2007, the members of the supervisory board are:
Mr. Alexander Stuhlmann (Chairman) Mr. John van Oost (Vice-Chairman) Dr. Christian Olearius Dr. Johannes Conradi Mr. Richard Mully Mr. Daniel Quai
With effect from 1 April 2007, the supervisory board elected Alexander Stuhlmann as Chairman and John van Oost as Vice-Chairman.
Richard Mully replaced on 16 January 2007 Stephan Fritsch who served as member of the Supervisory Board from 17 November 2006 until his resignation as per the close of the extraordinary general meeting of shareholders on 16 January 2007.
Hamburg, Germany, 20 November 2007
Olivier Elamine Chief Executive Officer
Alexander Dexne Chief Financial Officer
| 2 April 2008 |
Publication of the full year 2007 financial results |
|---|---|
| Analyst and Press Conference, Frankfurt, Germany |
|
| 20 May 2008 |
Publication of the first quarter 2008 financial results |
| Analyst and Press Conference Call |
|
| June 2008 |
Annual General Meeting |
| 19 August 2008 |
Publication of the second quarter 2008 financial results |
| Analyst and Press Conference Call |
|
| 19 November 2008 |
Publication of the third quarter 2008 financial results |
| Analyst and Press Conference Call |
alstria's current financial calendar can be found on our website and is updated frequently. Please visit http://investor-relations.alstria.com
Fuhlentwiete 12 20355 Hamburg Germany
Phone +49-40-22 63 41-300 www.alstria.com
Public & Investor Relations Dr. Charlotte Brigitte Loos Phone: +49-40-22 63 41-329 E-Mail: [email protected]
The statements contained herein may include statements of future expectations and other forward-looking statements that are based on management's current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. Actual results, performance or events may differ materially from those in such statements due to, without limitation, general economic conditions, including in particular economic conditions in the alstria's core business and core markets, general competitive factors, the impact of acquisitions, including related integration issues, and reorganization measures. Furthermore, the development of financial markets, interest rate levels, currency exchange rates, as well as national and international changes in laws and regulations, in particular regarding tax matters, can have a corresponding impact. Many of these factors may be more likely to occur, or more pronounced, as a result of terrorist activities and their consequences.
The company assumes no obligation to update any information contained herein.
Building tools?
Free accounts include 100 API calls/year for testing.
Have a question? We'll get back to you promptly.