Interim / Quarterly Report • Aug 29, 2008
Interim / Quarterly Report
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Semi Annual report 2008
| Business model | Direct and indirect investments in commercial real estate First REIT to acquire interests in closed-end real estate funds against the issue of shares or payment of a purchase price |
|---|---|
| Sectors | Offices, retail, logistics |
| Region | Germany, focusing on regional locations |
| Portfolio | Direct investments and participations in closed-end real estate funds |
| Properties | 32 properties (directly held) |
| 49 properties (held indirectly via 13 closed-end real estate funds) |
|
| Market value | € 272.4 million *) |
| Rental revenues | € 21.5 million *) |
*) Fair Value's share; without Airport Office II, Düsseldorf
| H1 | Q2 | Q1 | ||
|---|---|---|---|---|
| € thousand | Jan. 1.– Jun. 30, 2008 |
Jan. 1.– Jun. 30, 2007 |
Apr. 1.– Jun. 30, 2008 |
Jan. 1.– Mar. 31, 2008 |
| Revenues and earnings | ||||
| Rental revenues | 6,126 | 0 | 3,179 | 2,947 |
| EBIT | 2,062 | 0 | 30 | 2,032 |
| EBT/consolidated net profit | 789 | 0 | 441 | 348 |
| Earnings per share (€) | 0.08 | 0 | 0.05 | 0.04 |
| Cash flow from operating activities | 4,006 | -7 | 411 | 3,595 |
| Funds from operations (FFO) | 1,297 | -138 | ||
| FFO /share (in €) | 0.14 | n/a |
| Jun. 30, 2008 | Dec. 31, 2007 | |
|---|---|---|
| Assets and capital | ||
| Non-current assets | 220,338 | 214,583 |
| Current assets | 11,197 | 15,776 |
| Equity | 95,452 | 94,663 |
| Total assets | 231,535 | 230,359 |
| Equity ratio (in %) | 41.2 | 41.1 |
| Net asset value | 95,452 | 94,663 |
| Shares (qty) | 9,406,882 | 9,406,882 |
| Net asset value/share (in €) | 10.15 | 10.06 |
| Number of employees | 5 | 5 |
| To our shareholders |
5 |
|---|---|
| Letter to shareholders | 6 |
| Fair Value's shares | 8 |
| Overview of real estate portfolio | 12 |
| Group interim management report | 17 |
| Business report | 18 |
| I. Business activities and underlying conditions |
18 |
| i. O verview of business activities |
18 |
| ii. U nderlying economic conditions and developments on the German real estate market |
18 |
| II. Discussion of business and information on the overall portfolio |
20 |
| III. Financial position and results of operations | 22 |
| i. E arnings |
22 |
| ii. Financial position |
22 |
| iii. Net assets | 23 |
| IV. Related parties | 23 |
| Report on events after the balance sheet date | 24 |
| Risk management report | 24 |
| Opportunities and forecast | 25 |
| Co nsolidated interim financial statements as of June 30, 2008 |
27 |
| Consolidated balance sheet | 28 |
| Consolidated income statement | 29 |
| Statement of changes in consolidated equity | 30 |
| Consolidated cash flow statement | 31 |
| Notes to the consolidated financial statements | 33 |
| Valuation method | 40 |
| Individual properties on portfolio of Fair Value REIT -AG |
42 |
| Imprint | 46 |
To our shareholders
Dear Shareholders, Ladies and Gentlemen,
We are glad to present you with positive results for the first six months. Fair Value REIT-AG enjoyed successful operations in the first half of 2008. We have achieved our business targets and were able to further improve our earnings. Our success in the first six months shows that our company, which is still young, is right on track.
This positive growth is based on our profitable, substantial portfolio of 81 commercial properties, which we hold both directly and indirectly. As of June 30, 2008 the rental level totaled 95,6% of the potential rent due proportionately to Fair Value.
The German real estate market is currently in a good state. This is shown by our successful rentals in our portfolio of existing properties, and also by our Airport Office II at Düsseldorf airport, which was still under construction on the balance sheet date. We have been able to report sound progress in renting this property since acquiring it in October 2007, and have increased the forecast rent by almost 9% to around € 970 thousand p.a. The property was 83% let on June 30, 2008. It has now been completed and transferred on schedule and is now let at 91% of the potential rent. For the remaining space, rental agreements are about to be concluded.
Despite the strong condition of the rental market in Germany, the investment market has cooled perceptibly. High-volume portfolio transactions with very low use of equity were still the rule through to the summer of 2007. Since then, the global crisis of trust and the crisis on the financial markets, as have never been seen before, have changed the underlying conditions substantially.
The refinancing costs increased perceptibly and the banks' equity requirements were elevated to a (healthy) minimum of 25% to 30% of the purchase price. As a result, opportunistic investors have retreated. In addition, the volume of investments has fallen significantly and high-volume portfolio transactions have been replaced by specific individual transactions. However, the corrections to property valuations in Germany are still modest, in contrast to the real estate markets in the United Kingdom or Spain. These markets have now come under substantial pressure after a real boom over the course of the past few years.
That offers opportunities for sustained real estate investors who are geared to the long term and who employ high levels of equity, like for instance insurance companies, pension funds or property management companies – such as Fair Value REIT-AG.
In this environment, the share prices of listed real estate companies, in Germany in particular, have decoupled themselves from their net asset values (NAV). This substantial discrepancy between value and price is currently putting a strong damper on the opportunities for growth via capital adjustments on the stock exchange or expanding the list of quotations with the addition of further German REITs.
statements To our shareholders Notes Individual property
We believe that the current insecurity on the capital markets is best combated with openess and transparency. Consequently, we are very pleased with the award from Feri Rating & Research AG. As a "new player" on the stock market we soared to second place in Feri's transparency rating of 29 listed real estate companies in the German-speaking region. This result has confirmed our strategy and has spurred us on to gain even better ratings in future.
In this spirit, we had the properties in our portfolio revalued by CB Richard Ellis GmbH, and we have further increased the depth of information for our portfolio compared to the 2007 annual report. In total, the market value of our existing portfolio on the balance sheet date totaled € 272 million based on Fair Value REIT-AG's share, down € 3.6 million or 1.3% compared to the value on December 31, 2007.
In the first half of the year, the valuation loss from the market valuation of the properties was offset by income from restructuring financial liabilities and from the valuation of derivative financial instruments. All in all, the consolidated net profits of € 0.8 million or € 0.08 per share were in line with our expectations. We are upholding our forecast for consolidated net profits of € 1.3 to € 1.5 million for 2008 as a whole.
Funds from operations (FFO) totaled € 1.3 million in the first half of 2008. This figure adjusts consolidated earnings for valuation changes and other non-cash items, and thus indicates a company's operating strength. The value of € 0.14 clearly shows that Fair Value is right on track!
We believe that the highly stable value of our portfolio of existing properties and participations as well as their sustained earnings power provide solid foundations for Fair Value's share price to recover again and to approach the net asset value (NAV), which totaled € 10.15 per share on June 30, 2008.
We would like to thank you for the trust you have shown in our company to date.
Munich, August 2008
The Managing Board
Frank Schaich Manfred Heiler
| Sector | Real estate (REIT ) |
|---|---|
| WKN (German Securities Code)/ISIN | A0MW97 / DE000A0MW975 |
| Stock exchange symbol | FVI |
| Share capital | 47,034,410.00 € |
| Number of shares ( non-par value shares) | 9,406,882 |
| Proportion per share in the share capital | 5,– € |
| Initial listing | November 16, 2007 |
| High/low 2008 | € 8.00 /€ 4.56 (XETR A) |
| Market capitalization on June 30, 2008 | € 59.3 million (XETR A) |
| Market segment | Prime Standard |
| Stock exchanges | Prime Standard: Frankfurt, XETR A |
| OTC: Stuttgart, Berlin-Bremen, Düsseldorf, Munich | |
| Designated sponsor | WestLB |
| Indices | RX REIT All Shares-Index |
| RX REIT -Index |
Our first general meeting as a listed company was held on June 9, 2008 in Munich. The high presence of our share capital attending (67.4%) and the approval of a good 90% to more than 99% of the votes cast on the individual agenda items prove that our work has a strong degree of support. The proposed authorization to buy back shares totaling up to 10% of the share capital is a shelf resolution which the Managing Board can use at any time after prior announcement and under certain conditions.
A fundamental characteristic of Fair Value reit-AG is its broad shareholder base. We were able to acquire more than 2,000 investors in closed-end real estate funds as investors in our company even before we went public on november 16, 2007. that is why the free fl oat is currently more than 42 %. in addition, a number of institutional and other retail investors have also invested in Fair Value. At present the company does not hold any treasury shares. Free Float 42.28 % IC Immobilien Holding AG 9.39 % H.F.S. Zweitmarkt Invest 2 GmbH & Co. KG 8.13 % H.F.S. Zweitmarkt Invest 5 GmbH & Co. KG 7.44 % H.F.S. Zweitmarkt Invest 4 GmbH & Co. KG 7.44 %
the nervous mood on the fi nancial markets as a result of the sub-prime crisis caused Fair Value reit-AG's shares to come under pressure at the start of the current fi scal year. Starting with a closing price of € 7.66 (XetrA) on the last day of trading in December 2007, the share price fell further to € 6.01 on march 31, 2008. Fair Value reit AG's share price initially recovered when the 2007 annual report was published. the shares closed at € 7.49 on may 30 of the current year. During the course of the second quarter, ongoing reports of international banks' Bayerische Beamten Lebensversicherung a.G. 3.76 % Free Float 42.28 % IC Fonds GmbH 2.34 %
needs to make write downs as a result of the US mortgage crisis led to a deterioration of the mood on the stock market yet again. This also impacted Fair Value's shares and caused the share price to fall again. At the end of the first half of 2008, the shares were listed at € 6.30 and thus around 38% below their net asset value (NAV) of € 10.15. At the end of the first half of the year 2008, the capital markets still had not settled. In parallel to the general developments on the market, Fair Value REIT-AG's shares also lost ground, however they were able to stabilize again.
During the first half of the year, 394,457 shares of Fair Value REIT-AG were traded on all of Germany's stock markets with a volume of € 2,638 thousand. Average daily turnover in the first half of the year totaled 3,131 shares or € 20.9 thousand.
The following securities transactions by members of the Managing and Supervisory Boards and specific related parties were reported to Fair Value REIT-AG in the first half of 2008 within the meaning of Section 15 of the Wertpapierhandelsgesetz (WpHG – German Securities Trading Act):
| Reporting party: | Date of transaction | Transaction | Number | Price per share (€) |
|---|---|---|---|---|
| Frank Schaich | March 28, 2008 | Share purchase | 500 | 5.59 |
| Frank Schaich | March 28, 2008 | Share purchase | 500 | 5.69 |
| Dr. Oscar Kienzle | June 18, 2008 | Share purchase | 500 | 6.50 |
| Dr. Oscar Kienzle | June 23, 2008 | Share purchase | 500 | 6.80 |
| Dr. Oscar Kienzle | June 23, 2008 | Share purchase | 450 | 6.45 |
| Dr. Oscar Kienzle | June 23, 2008 | Share purchase | 500 | 6.44 |
| Dr. Oscar Kienzle | June 27, 2008 | Share purchase | 900 | 6.20 |
| Dr. Oscar Kienzle | June 30, 2008 | Share purchase | 2,350 | 6.42 |
Openness, transparency and credibility – those are the primary motives in Fair Value REIT-AG's contact with investors, analysts and the financial press. The Managing Board believes that it is crucial to maintain in-depth dialog with these parties. In order to make the widest possible audience aware of the company's business growth, the company attaches great importance to detailed reporting, publishing relevant company disclosures and regularly participating in investors' conferences. In the first half of 2008, communications focused on an enhanced international presence, in order to further increase the spread of Fair Value's international investors. This is to be reinforced still further in future. In addition, analyst coverage was also widened in the first six months of the current year. As a result, the financial community will be able to form a differentiated picture of the company and its potential for growth. Finally, the Managing Board constantly seeks dialog with the financial media in order to provide the general public, and also of course the company's private investors, with the most comprehensive picture possible of Fair Value's growth.
| August 29, 2008 | PFE's German Property Breakfast London |
|---|---|
| September 23 – 25, 2008 | Road Show, New York and Boston |
| October 7, 2008 | EXPO Real |
| October 20 – 21, 2008 | Presentation, 8th Conference of the Real Estate Share Initiative, Frankfurt |
| November 10 – 12, 2008 | Presentation, German Equity Forum, Frankfurt |
| November 19 – 21, 2008 | NAREIT Annual Convention, San Diego |
| November 28, 2008 | Q3 Report 2008 |
Fair Value's business activities are based on its highly diversified real estate portfolio, which makes it possible to generate sustained and calculable rental revenue. The company directly and indirectly holds 81 commercial properties throughout Germany, and it thus participates in rental space totaling 464,804 m². The portfolio has a total value of € 601.6 million, with € 272.4 million due to Fair Value REIT-AG on a pro rata basis.
Fair Value REIT-AG's real estate is thus generally divided in two segments: Direct investments in properties and participations in closed-end real estate funds. At present, the bulk of the rentable area is due to the participations in closed-end real estate funds, with total space of 421,864 m². Over the long term, the company plans to increase the proportion of properties it holds directly. On June 30, 2008, the properties held indirectly were valued in an independent survey, which resulted in a total market value of € 552.6 million. After taking Fair Values participations in the individual funds into account, the proportionate value of this portfolio due to Fair Value amounted to € 223.3 million and was thus mostly stable compared to the end of 2007 (€ 226 million). The portfolio of directly held properties includes 32 properties acquired in December 2007. These are commercial properties primarily used as bank branches ("Sparkasse portfolio"). The directly held portfolio has total rental space of 42,940 m². "Airport Office II" in Düsseldorf was completed and transferred after the balance sheet date, increasing the rental space in the portfolio of directly held properties by a further 4,730 m². The property will already help to enlarge rental revenues in the current fiscal year.
According to type of use, Fair Value REIT-AG's total portfolio has a high degree of diversification. Around 45% of potential rent are currently attributable to the office segment, with retail accounting for 42% of potential rent. A further 8% are contributed by logistics properties. The other properties, which are primarily used as hotels, account for the remaining 5% of the total potential rent. The portfolio is to be further optimized in future via targeted restructuring and acquisitions. These activities aim to ensure that,
Fair Value REIT-AG's share * without Airport Office II, Düsseldorf
* without Airport Office II, Düsseldorf
* according to potential rent
over the long term, around 50% of rental revenues is generated by office properties. Revenues in the retail segment and logistics properties each account for around 25%.
Besides the broad risk diversification, Fair Value's real estate portfolio is thus characterized by high earnings strength. Based on Fair Value's share of market value of properties held directly and indirectly, the company generates a potential rent return of 8.3% in total. This finding is further emphasized by the occupancy rate of 95.6% of the overall portfolio.
Fair Value REIT-AG acquired a portfolio of 32 commercial properties in December 2007. These properties are primarily used as bank branches and are mostly located in southern Schleswig-Holstein ("Sparkasse portfolio"). As a result of their direct proximity to the Hamburg area, these properties have a very favorable location in one of Germany's high-growth regions. The portfolio's main tenant is Sparkasse Südholstein. The properties are 96% let and the rental agreements have an average remaining term of 13.5 years. Consequently, the portfolio allows Fair Value to achieve long-term, secure rental revenues. The properties had a market value of € 49.0 million on June 30, 2008, and the company thus recorded a potential rent of around 6.6% p.a.
The office property at Düsseldorf Airport ("Airport Office II") was completed and handed over on July 15, 2008, after the balance sheet date. As of the balance sheet date, around 83% of this property were already let. Since then, a level of 91% of the total potential rental revenues could be achieved. Fair Value REIT-AG is in final stage negotiations for the remaining space. The successive start of the rental agreements means that the company will be able to further increase its rental revenues during the current fiscal year.
| June 30, 2008 |
|
|---|---|
| Sparkasse Südholstein | 12.7% |
| IDLG Immobiliendienstleistungen | 9.9% |
| EDEKA - Konzern | 8.9% |
| Metro AG | 8.4% |
| Kaufland Stiftung & Co. KG | 5.1% |
| BBV Holding AG | 5.1% |
| Schweizerhof Hotel GmbH & Co. KG | 4.2% |
| HPI Hotelbesitz GmbH | 2.7% |
| ABB Grundbesitz GmbH | 2.7% |
| REWE | 1.7% |
| Other | 38.6% |
| Sum | 100.0% |
Appen 1 Property Rental area 212 m² Market value 240 T€ Rental area 212 m² Market value 240 T€ Bad Bramstedt 2
12
1
2
3
4
7
8
Bad Bramstedt 1 Property Rental area 997 m² Market value 1.270 T€ Rental area 997 m² Market value 1.270 T€ Bad Segeberg 3
Bad Segeberg 1 Property Rental area 9.233 m² Market value 9.480 T€ Rental area 9.233 m² Market value 9.480 T€ Barmstedt 4
Barmstedt 1 Property Rental area 1.264 m² Market value 1.490 T€ Rental area 1.264 m² Market value 1.490 T€ Bönnigstedt 5
Bönnigstedt 1 Property Rental area 211 m² Market value 260 T€ 5 Rental area 211 m² Market value 260 T€ Boostedt 6
Boostedt 1 Property Rental area 114 m² Market value 140 T€ 6 Rental area 114 m² Market value 140 T€ Bornhöved 7
Bornhöved 1 Property Rental area 664 m² Market value 690 T€ Rental area 664 m² Market value 690 T€ Ellerau 8
14 Ellerau 1 Property Rental area 369 m² Market value 420 T€ Rental area 369 m² Market value 420 T€ Ellerbek 1 Property Rental area 356 m² Market value 370 T€ Rental area 356 m² Market value 370 T€ Geschendorf 10
9
Kaltenkirchen 1 Property Rental area 1.581 m² Market value 2.010 T€ 14 Rental area 1.581 m² Market value 2.010 T€ Kölln-Reisiek 15
1
25
24
27
15 22
4
20 21 9
23
11
Hamburg
5
2
15 22 25
20 21 9 11 5
8 13 14
19
Hamburg
18
6
Kölln-Reisiek 1 Property Rental area 168 m² Market value 190 T€ 15 Rental area 168 m² Market value 190 T€ Leezen 16
Leezen 1 Property Rental area 174 m² Market value 200 T€ 16 Rental area 174 m² Market value 200 T€ Nahe 17
Nahe 1 Property Rental area 734 m² Market value 730 T€ 17 Rental area 734 m² Market value 730 T€ Neumünster 18
Neumünster 3 Properties Rental area 12.688 m² Market value 16.660 T€ Rental area 12.688 m² Market value 16.660 T€
18
19 Norderstedt 2 Properties Rental area 2.212 m² Market value 2.080 T€ 20 Rental area 2.212 m² Market value 2.080 T€ Pinneberg
3
10
16
17
17
26
28 7
23 Rellingen 1 Property Rental area524 m² Market value 580 T€ Rental area524 m² Market value 580 T€ 24 Sparrieshoop 1 Property Rental area 237 m² Market value 200 T€ 25 Rental area 237 m² Market value 200 T€ Tornesch
25 Tornesch 1 Property Rental area 657 m² Market value 600 T€ 26 Rental area 657 m² Market value 600 T€ Trappenkamp
26 Trappenkamp 1 Property Rental area 787 m² Market value 680 T€ 27 Rental area 787 m² Market value 680 T€ Uetersen
27 Uetersen 1 Property Rental area 1.759 m² Market value 1.960 T€ 28 Rental area 1.759 m² Market value 1.960 T€ Wahlstedt
28 Wahlstedt 1 Property Rental area 1.346 m² Market value 1.160 T€ Rental area 1.346 m² Market value 1.160 T€
In addition to its portfolio of properties held directly, Fair Value REIT-AG also generates sustained rental revenues from its participations in closed-end real estate funds. At present, the company holds five majority and eight minority interests. In total, Fair Value thus participates in a real estate portfolio comprising 49 commercial properties. 117,479 m² of the rental area is due to the fully consolidated subsidiaries, whereas 304,385 m² is included in the funds held as minority interests (associated companies). As a result of the high amount of holding, asset management for the closed-end real estate funds can be actively driven with the company's support. This will allow both value and income to be increased.
| Fair Value - Participations* | |||||
|---|---|---|---|---|---|
| Subsidiaries | Associated companies | ||||
| IC Fonds & Co. Büropark Teltow KG (IC07) | 75.65% | 49.68% IC Fonds & Co. Gewerbeportfolio Deutschland 13. KG (IC13) |
|||
| IC Fonds & Co. Forum Neuss KG (IC03) | 71.58% | 45.02% BBV Immobilien-Fonds Nr. 14 GmbH & Co. KG (BBV14) |
|||
| IC Fonds & Co. München-Karlsfeld KG (IC01) | 55.81% | 40.22% IC Fonds & Co. SchmidtBank Passage KG (IC12) |
|||
| BBV Immobilien-Fonds Nr. 6 GmbH & Co. KG (BBV06) | 54.64% | 38.31% IC Fonds & Co. Gewerbeobjekte Deutschland 15. KG (IC15) |
|||
| BBV Immobilien-Fonds Nr. 3 GmbH & Co. KG (BBV03) | 53.64% | 38.30% BBV Immobilien-Fonds Nr. 10 GmbH & Co. KG (BBV10) |
|||
| 38.28% BBV Immobilien-Fonds Erlangen GbR (BBV02) |
|||||
| 26.14% IC Fonds & Co. Rabensteincenter KG (IC10) |
|||||
| 24.93% BBV Immobilien-Fonds Nr. 9 GmbH & Co. KG (BBV09) |
* Participation in % of capital (June 30, 2008)
Fair Value REIT-AG has a business model that is unique in Germany: Its dual pillar strategy means that it is able to unite a broad diversification and high earnings strength. In future, this particular advantage is to be used even more to continue the company's on-track growth. As a result, over the medium term Fair Value will drive the expansion of its business activities both via participations in specific closed-end real estate funds as well as via targeted direct investments.
Its investment activities will continue to focus on medium-sized cities and regions, as these allow attractive returns to be achieved, and are comparatively less volatile. In addition, Fair Value will also make selective investments in urban conurbations – such as the Airport Office II, Düsseldorf already acquired. In order to further optimize its portfolio structure, in future the company will increase the proportion of logistics and office properties in its portfolio. The primary aim is to acquire additional properties, thus enlarging successively the proportion accounted for by the direct portfolio to around 50%.
The German market for commercial real estate offers major opportunities, and Fair Value REIT-AG is excellently equipped to benefit from these opportunities over the long term. As a result, it plans to consistently and resolutely continue the course it has taken. Through to 2009, the company aims to double its non-current assets compared to the end of 2007 – subject to positive developments on the capital market.
Fair Value REIT-AG (hereinafter also referred to as Fair Value or the Fair Value Group) focuses on acquiring and managing commercial properties in Germany. Its investment activities currently focus on office, retail and logistics premises in urban regional centers. In so doing, Fair Value both invests directly in real estate as well as indirectly via the acquisition of participating interests in closed-end real estate funds. The business model is reflected in Fair Value's segment reporting, which is broken down into the segments "Direct investments" and "Participations".
Participations comprise subsidiaries and associated companies. Fair Value holds a majority interest in its subsidiaries, whereas it holds interests of between 20% and 50% in its associated companies. The subsidiaries are fully consolidated in the group. In contrast, the proportionate earnings from the associated companies are included in the financial result.
On June 30, Fair Value REIT-AG had a total of five employees including the Managing Board. No new employees were hired in the period under review, and there was also no employee fluctuation.
The dynamism seen in the overall economic growth weakened in the second quarter. Gross domestic product (GDP) increased in the second quarter of 2008 by 3.1% compared to Q2 2007, however it fell by 0.5% compared to the previous quarter, even though this was rather a technical reaction to the extraordinarily strong growth in the first quarter of 1.3% compared to the previous quarter.
Leading economic research institutes are forecasting a stable economy and positive economic growth for 2008 as a whole, even though the expectations have clouded compared to the start of the year.
Inflation totaled 3.3% in July 2008 compared to the previous year. At least two thirds of this inflation was due to the increase in consumer prices, mostly for food and energy products.
According to information from the Federal Labor Agency, the labor market continues to be strong; employment increased still further in the second quarter. As a result, unemployment fell in July 2008 compared to the previous year by more than 505,000, which corresponds to a reduction in the unemployment rate from 8.9% to 7.7%.
In view of the coming consumer reluctance, whether or not private consumption will stabilize over the remainder of the year is questionable, despite the currently robust labor market. The current ifo business climate index has worsened again, and is clouding the general economic expectations.
Sources: Monthly report (July) from the Federal Agency for Labor; Destatis – German Federal Statistics Office, ifo Institute, Deutsches Institut für Wirtschaftsforschung.
The positive growth in employment has had a perceptible impact on the market for office rentals and has led to the dynamism of the first quarter continuing.
The excellent demand situation has also caused the vacancy rates in each of the six main real estate locations (Berlin, Düsseldorf, Frankfurt, Hamburg, Munich and Stuttgart) to fall on both a year-on-year comparison as well as within the last three months according to Jones Lang LaSalle. The vacancy rate in urban centers is now just 8.9% on average and has thus fallen by 80 basis points during the first half of 2008.
Vacancy rates in top locations are expected to fall still further by the end of the year. However, an increase in new construction and a comparatively high level of pre-rentals will put pressure on vacancy rates as soon as the new space is occupied – to the detriment of existing properties.
Top rents have increased slightly in the key office locations and have thus reached the best levels for the past five years.
In the logistics sector, earnings in the first quarter differed strongly by region. Although rentals at most locations were at the same level as the previous year, it was only possible to generate a significant increase in the rental volume in Munich.
The transaction volume on the investment market fell by 57% in the first half of 2008 compared to the same period of the previous year. However, compared to the six-month average for the past four years, the current developments on the market only point towards the investment market normalizing.
The downturn in the volume of transactions is put down to a credit financing becoming scarce and also a divergence between buyers' and sellers' price expectations.
According to a survey of institutional investors performed by Feri Rating & Research AG in June 2008, 46% want to increase the proportion of properties in their overall portfolio, and in particular the proportion of indirect investments is to be increased to 52%.
Source: Jones Lang LaSalle, Office market overview Q2 2008, Capital Markets Newsletter H1 2008 and Storage Space Market Overview Q2 2008, Feri Rating & Research Quarterly 3rd Quarter 2008.
The first six months were positive for Fair Value REIT-AG. The direct investments and participations segments recorded net rental revenue as scheduled, and also achieved their economic objectives including the properties' market valuation as of June 30, 2008.
Rents for the Sparkasse portfolio accrued to the company for the first time over the entire period under review, and were paid in full and on time in each case. The purchase price refund for a property in Bad Segeberg (preemptive right on the part of the property's neighbor) and the refund of the land transfer tax totaling around € 2.4 million were used to repay the bank loan in the amount of € 1.8 million, reducing this from € 35.5 million to € 33.7 million. Rentals in the sub-portfolio have increased slightly to 96.4%.
Ownership, risks and rewards for the office property being built in direct proximity to the Düsseldorf Airport terminal building were transferred on January 15, 2008. The property with a total rental area of 4,730 m² was completed as scheduled after the balance sheet date on July 15, 2008. As a result, in the financial statements as of June 30, 2008 the property is thus still carried forward at acquisition cost totaling € 12.2 million as a property under construction.
The property was let in parallel to the construction progress. As a result of the excellent demand, when the property is fully let the annual rent will total around € 970 thousand, around 9% higher than our original expectations. This increases the initial rental return to 7.7% of the purchase price and underscores the attractiveness of this location at Düsseldorf Airport. 83% of the rental area had been let by June 30, 2008, and this increased still further after the balance sheet date.
Airport Office II, Düsseldorf is 36% equity financed, with 64% financed via a master credit agreement with a term of 20 years of up to € 8.1 million with Deutsche Genossenschafts-Hypothekenbank AG (DG-Hyp). Around € 1.4 million still had to be paid on the balance sheet date; the credit agreement had already been disbursed to 87% (approximately € 7 million).
Around one third of the 22,000 m² of logistics space in Cologne that had been vacant since January 1, 2008 had been let again by June 30, 2008. Fair Value believes that it will be possible to fully let this property by the end of 2008. In June 2008, the financing bank and BBV 6, including Fair Value REIT-AG and the fund's management, agreed a package of activities including reduced interest charges, a temporary interruption to repayments, a reduced bank margin for a limited term, the deferral of service fees and granting shareholder loans in order to ease the temporary liquidity bottleneck this company is experiencing. Further information in this regard can be found in the notes to the consolidated financial statements note 10.
The following table aligns the total rental space for the subsidiaries and the associated companies, respectively. In total, the proportionate market values of the portfolio of existing properties due to Fair Value total € 272.4 million. Airport Office II, Düsseldorf, which was still under construction on the balance sheet date, is carried forward at the acquisition costs of € 12.2 million incurred by that date, with the result that the proportionate total portfolio attributable to Fair Value totaled around € 284.6 million as of June 30, 2008.
As of the balance sheet date, the portfolio of existing properties features a proportionate occupancy rate of 95.6%. The weighted remaining period of the rental agreements averages 7.1 years.
| Stake of Fair Value REIT | -AG | |||||||
|---|---|---|---|---|---|---|---|---|
| Abbr. | Investment | Plot size 0) |
Total rental space 0) |
Market value 0), 1) |
Equity interest |
Market value 0), 1) |
Item let 3), 5) |
Ø Average remaining term of rental agree ments 4), 5) |
| [m²] | [m²] | [€ thousand] | [%] | [€ thousand] | [%] | [years] | ||
| Direct investments | ||||||||
| Sparkasse Portfolio | 58,624 | 42,940 | 49,022 | 100.00 | 49,022 | 96.4 | 13.5 | |
| Total direct investments | 58,624 | 42,940 | 49,022 | 100.00 | 49,022 | 96.4 | 13.5 | |
| Subsidiaries | ||||||||
| IC07 | IC Fonds & Co. Büropark Teltow KG | 5,324 | 13,382 | 24,800 | 75.65 | 18,761 | 100.0 | 7.0 |
| IC03 IC01 |
IC Fonds & Co. Forum Neuss KG IC Fonds & Co. München-Karlsfeld KG |
19,428 7,019 |
12,063 3,375 |
8,380 4,700 |
71.58 55.81 |
5,998 2,623 |
84.9 97.8 |
1.3 7.1 |
| BBV06 BBV Immobilien-Fonds Nr. 6 GmbH & Co. KG | 97,232 | 73,857 | 57,360 | 54.64 | 31,344 | 88.8 | 4.8 | |
| BBV03 BBV Immobilien-Fonds Nr. 3 GmbH & Co. KG | 26,210 | 14,802 | 9,510 | 53.64 | 5,101 | 97.0 | 2.7 | |
| Total subsidiaries | 155,213 | 117,479 | 104,750 | 60.99 | 63,827 | 93.3 | 5.3 | |
| Associated companies | ||||||||
| IC13 | IC Fonds & Co. Gewerbeportfolio Deutschland 13. KG |
22,357 | 22,034 | 24,350 | 49.68 | 12,098 | 92.0 | 6.1 |
| BBV14 BBV Immobilien-Fonds Nr. 14 GmbH & Co. KG |
16,196 | 38,522 | 86,410 | 45.02 | 38,903 | 94.5 | 5.1 | |
| IC12 | IC Fonds & Co. SchmidtBank-Passage KG | 4,226 | 8,380 | 8,120 | 40.22 | 3,266 | 89.6 | 2.9 |
| IC15 | IC Fonds & Co. Gewerbeobjekte Deutschland 15. KG |
24,689 | 35,413 | 42,780 | 38.31 | 15,921 | 97.8 | 5.4 |
| BBV10 BBV Immobilien-Fonds Nr. 10 GmbH & Co. KG |
177,231 | 96,567 | 131,980 | 38.30 | 50,553 | 96.9 | 5.8 | |
| BBV02 BBV Immobilien-Fonds Erlangen GbR | 6,350 | 2,770 | 1,890 | 38.28 | 723 | 100.0 | 4.0 | |
| IC10 | IC Fonds & Co. Rabensteincenter KG | 11,203 | 9,970 | 9,690 | 26.14 | 2,533 | 92.9 | 2.6 |
| BBV09 BBV Immobilien-Fonds Nr. 9 GmbH & Co. KG | 114,912 | 90,728 | 142,600 | 24.93 | 35,550 | 100.0 | 9.5 | |
| Total associated companies | 377,164 | 304,385 | 447,820 | 37.41 | 159,548 | 96.5 | 6.4 | |
| Total properties portfolio | 591,001 | 464,804 | 601,592 | 272,397 | 95.6 | 7.1 | ||
| Properties under construction | ||||||||
| Airport Office II, Düsseldorf | 4,729 | 4,730 | 12,177 | 100.00 | 12,177 | 83.1 | n/ a | |
| Total properties under construction | 4,729 | 4,730 | 12,177 | 100.00 | 12,177 | 83.1 | n/a | |
| Grand Total | 595,730 | 469,534 | 613,769 | 284,574 | ||||
Explanations
0) Does not consider the respective participations in percent
1) According to a market value survey by CB Richard Ellis GmbH, Berlin as of June 30, 2008; amortized cost of properties under construction
2) Proportionate market values attributable to Fair Value based on percentage participations; in the case of IC15 the two-tier fund structure for the
properties in Dresden and Chemnitz has been taken into account.
3) contractual rent/potential rent (= contractual rent + vacancy rates at standard market rent)
4) Income-weighted
5) (Sub) totals for rental level and average remaining term taking the respective percentage participations into account
As business operations were only commenced in the third quarter of 2007 it is not meaningful to compare figures with the same period of the previous year.
In the first half of 2008, Fair Value REIT-AG recorded rental revenues totaling € 6,126 thousand from its direct investments and from its fully consolidated subsidiaries.
After taking income from operating and incidental costs (€ 596 thousand) and the deduction of leasehold payments (€ 117 thousand) and propertyrelated operating expenses (€ 1,282 thousand) into account, net rental revenues totaled € 5,323 thousand.
Rental revenues enjoyed positive growth in the first half of 2008. In addition to the five subsidiaries, the Sparkasse portfolio in the "direct investments" segment contributed to earnings for the first time for the entire period under review.
In the first half of 2008, Fair Value REIT-AG's general administrative costs totaled € 1,470 thousand, of which around 70% were due to the parent company's overheads. The subsidiaries incurred around 30% of the general administrative costs.
The market valuation of the real estate portfolio as of June 30, 2008 clearly shows that the broad base of 81 properties has a stabilizing effect. For example, the value of the overall portfolio proportionately due to Fair Value only fell by approx. 1.3% or by € 3,551 thousand compared to December 31, 2007 despite the difficult market. Further information can be found in Note 3 to the consolidated financial statements and in the individual property information on pages 42 to 45.
The proportionate valuation result for the properties held by associated companies is included in the income from equity-accounted investments, which contributed € 1.5 million to the financial result. In addition, the valuation of derivative financial instruments (swaps: € 286 thousand; see Note 12 to the consolidated financial statements) and income from restructuring financial liabilities at BBV 06 in the amount of € 1,469 thousand (see Notes 10 and 12 to the consolidated financial statements). After taking minority interests into account (€ 949 thousand), the financial result totals € -675 thousand.
Fair Value REIT-AG thus recorded consolidated net income of € 789 thousand in the first half of 2008. This corresponds to undiluted earnings per share of € 0.08.
In the first half of 2008, the cash flow from operating activities (so-called funds from operations or FFO) totaled € 1,297 thousand or € 0.14 per share. In order to calculate this indicator, the non-cash bookings were added to or deducted from the consolidated net income (see the consolidated cash flow statement).
The cash flow from operating activities totaled € 4,006 thousand, of which € 3,039 thousand stemmed from the reduction in other receivables, mostly from the purchase price refund for the property in the Sparkasse portfolio affected by the preemptive right.
The net cash used in investing activities totaled € 7,277 thousand in the first six months of 2008. This results from investments in Airport Office II, Düsseldorf in the amount of € 11,972 thousand, which was financed in the amount of € 4,705 thousand by the sale of the interest in BBV 08 and by bank loans as well as from cash and cash equivalents.
To our shareholders Consolidated financial
information Notes Group management
As part of the financing activities, two bank loans totaling € 27,367 thousand and € 5,139 thousand at a subsidiary were refinanced. In addition, the amortized acquisition costs for Airport Office II, Düsseldorf were financed by bank loans in the amount of € 7,040 thousand. In addition to the scheduled repayment, part of the loan for Fair Value's fund portfolio with Westdeutsche ImmobilienBank was repaid in the amount of € 1,890 thousand, taking the total to € 14,243 thousand. In total, the net cash provided by financing activities totaled € 2,204 thousand.
The group had cash and cash equivalents totaling € 4,314 thousand on the balance sheet date. This is a slight reduction in cash and cash equivalents compared to December 31, 2007 (€ 5,381 thousand) in particular as a result of the investment activities in the first half of 2008.
Fair Value's total assets increased to € 231,535 thousand as of June 30, 2008 (December 31, 2007: € 230,359 thousand), with non-current assets accounting for around 95% of total assets. Non-current assets increased by the amortized acquisition costs for the office property Airport Office II, Düsseldorf to € 220,338 thousand (+2.7%) compared to December 31, 2007. Around 69% of total assets are due to directly held properties and the subsidiaries' properties, with a further 26% stemming from the associated companies' net assets (equity-accounted investments).
Compared to December 31, 2007 (€ 15,776 thousand), current assets fell to € 11,197 thousand. This is primarily due to a reduction in other receivables and assets of € 3,021 thousand. Around 50% of the current assets are due to two properties held for sale by subsidiaries.
The company's equity or the net asset value (NAV) totaled € 95,452 thousand on the balance sheet date, or € 10.15 per share (December 31, 2007: € 94,663 thousand). This increase is primarily due to the positive earnings in the first half of 2008, which resulted in retained earnings increasing to € 2,251 thousand.
There were only minor changes in liabilities compared to the end of 2007. Non-current liabilities as of June 30, 2008 totaled € 75,496 thousand (December 31, 2007: € 76,097 thousand). In contrast, current liabilities during the period under review only increased slightly from € 59,599 thousand to € 60,587 thousand. Non-current and current financial liabilities thus only increased slightly from € 112,134 thousand to € 112,869 thousand in the first six months.
Companies belonging to IC Immobilien Group, which holds an 18.09% interest in Fair Value REIT-AG, provide the following services for the Group and its associated companies: Asset management and corporate services as well as property management for Fair Value. There are other service agreements at a subsidiary and associated company level. For further details on this and other related parties, please refer to Fair Value's 2007 annual report on pages 91 to 97. For the status of receivables and liabilities, please refer to the Note 14 to the consolidated financial statements.
No transactions were concluded with the Supervisory Board, Managing Board and their close relatives in the first half of 2008.
Airport Office II, Düsseldorf was accepted after completion on July 15, 2008. As a result, the last purchase price installment of € 1.4 million became due and was also paid, with the exception of a small reduction for building defects. In this connection, the portion of the master loan still outstanding in the amount of around € 1.1 million was paid out. The deduction for defects still totaled € 83 thousand on the date this report was prepared. In addition, after the balance sheet date, the rental level increased to 91% of the potential rent; a rental agreement is about to be concluded for the last remaining space in the building.
As of June 30, 2008, long-term financing with a term through to June 30, 2018 totaling € 33,690 thousand was concluded for the Sparkasse portfolio. Variable interest was agreed, based on the 3-month EURIBOR plus a 1.06% margin. The conclusion of an interestrate swap with the same maturity has allowed the ongoing interest charged over the entire term to be limited to 4.94% plus margin against a payment due on December 30, 2008 in the amount of € 140 thousand. A staggered, pro-rata repayment has been agreed for the loan, which effectively corresponds to a 2% annuity repayment.
The loan for the interests in closed-end real estate funds acquired against payment of a purchase price totaling € 14,243 thousand was extended through to July 31, 2008 based on the reference interest rate of either the 1 or 2 month EURIBOR plus a margin of 1.65%. Sale-related disbursements from the fund interests are to be used proportionately at either 50% or 30% depending on the loan status, or according to a minimum key per fund company for the repayment of this loan.
As a result, the proportion of non-current liabilities to banks increased from 50% to 87% after the balance sheet date. The interest rate swap for the long-term financing of the Sparkasse portfolio means that, in future, changes to the interest rate only impact 13% of the liabilities to banks.
Fair Value is exposed to various business and economic risks as a result of its business activities. These are mostly rental risks, risks of rental default, interest rate risks and liquidity risks. For information on the general risks and the company's risk management, please refer to the detailed information in Fair Value's 2007 annual report on pages 41 to 44.
No further risks resulted in the second quarter. The intended bridging of the liquidity bottleneck at the subsidiary BBV 6 has been achieved and put in place. The loans which will expire over the short term were extended after the balance sheet date.
The risk of changes to interest rates thus only affect the short-term financing for participations. A 100 basis point increase in interest rates compared to the current level would result in increased interest expenses of around € 142 thousand annually, given the same level of loans.
Payments are expected to be received from the sale of properties and fund disbursements in the second half of the year.
The Managing Board is certain that these conditions will occur, and as a result the cash and cash equivalents and the cash flow from operating activities are sufficient for its current requirements.
Fair Value REIT-AG has been pursuing a doublepronged strategy since its formation: Investments in directly-held real estate and indirect investments in real estate via closed-end real estate funds. Our highly diverse portfolio of existing properties with an income-related rental level of 95.6% means that the Fair Value Group has stable foundations.
The company thus has solid foundations to be able to consistently use the opportunities offered by the German market for commercial real estate. Based on Fair Value's balanced business model, there are thus opportunities for the company to grow in both of its segments: Increasing the portfolio of participations and also the directly held portfolio will drive the company's future growth. In addition, the stable economic environment offers opportunities for Fair Value's existing portfolio to grow in value.
In addition, the company is also benefiting from its status as a REIT given the current situation on the market. Fair Value can thus use the exit tax privilege when acquiring properties, and thus enjoys a true competitive advantage. In addition, as a G-REIT, the company has a strong equity base, improving its ability to procure loans and its borrowing conditions when acquiring real estate in the future.
The Managing Board is forecasting positive business growth for 2008, and is holding to the forecast in the 2007 annual report with a bandwidth of € 1.3 to € 1.5 million.
* until the change of form, recorded at the commercial register on July 12, 2007 : IC Grundbesitz GmbH & Co. Fair Value KG
| Note | June 30, | December 31, | |
|---|---|---|---|
| in € thousand | No. | 2008 | 2007 |
| Assets | |||
| Non-current assets | |||
| Intangible assets | 2 | 2 | |
| Property, plant and equipment | 26 | 31 | |
| Investment property | 3 | 148,062 | 150,070 |
| Properties under construction | 4 | 12,177 | 566 |
| Equity-accounted investments | 5 | 59,728 | 58,909 |
| Financial assets | 6 | 343 | 5,005 |
| Total non-current assets | 220,338 | 214,583 | |
| Current assets | |||
| Non-current assets available for sale | 7 | 5,610 | 5,700 |
| Trade receivables | 468 | 869 | |
| Other receivables and assets | 8 | 805 | 3,826 |
| Cash and cash equivalents | 4,314 | 5,381 | |
| Total current assets | 11,197 | 15,776 | |
| Total assets | 231,535 | 230,359 | |
| Equity and liabilities | |||
| Equity | |||
| Subscribed capital | 47,034 | 47,034 | |
| Share premium | 46,167 | 46,167 | |
| Retained earnings | 2,251 | 1,462 | |
| Total equity | 95,452 | 94,663 | |
| Non-current liabilities | |||
| Minority interests | 19,095 | 18,487 | |
| Financial liabilities | 9/10 | 56,082 | 57,116 |
| Other liabilities | 319 | 494 | |
| Total non-current liabilities | 75,496 | 76,097 | |
| Current liabilities | |||
| Provisions | 217 | 255 | |
| Financial liabilities | 9/10 | 56,787 | 55,018 |
| Trade accounts payable | 2,283 | 2,617 | |
| Other liabilities | 1,300 | 1,709 | |
| Total current liabilities | 60,587 | 59,599 | |
| Total equity and liabilities | 231,535 | 230,359 |
| Note | January 1 to June 30 | April 1 to June 30 | January 1 to March 31 | ||||
|---|---|---|---|---|---|---|---|
| in € thousand | No. | 2008 | 2007 | 2008 | 2007 | 2008 | 2007 |
| Rental revenues | 6,126 | 0 | 3,179 | 0 | 2,947 | 0 | |
| Income from operating and incidental costs | 596 | 0 | 216 | 0 | 380 | 0 | |
| Leasehold payments | (117) | 0 | (60) | 0 | (57) | 0 | |
| Real-estate related operating expenses | (1,282) | 0 | (772) | 0 | (510) | 0 | |
| Net rental result | 5,323 | 0 | 2,563 | 0 | 2,760 | 0 | |
| General administrative expenses | 11 | (1,470) | (244) | (856) | (244) | (614) | 0 |
| Other operating income | 103 | 103 | 89 | 103 | 14 | 0 | |
| Other operating expenses | (33) | 0 | (31) | 0 | (2) | 0 | |
| Other operating income and expenses | 70 | 103 | 58 | 103 | 12 | 0 | |
| Valuation gains | 790 | 0 | 790 | 0 | 0 | 0 | |
| Valuation losses | (3,249) | 0 | (2,954) | 0 | (295) | 0 | |
| Valuation result | 3/7 | (2,459) | 0 | (2,164) | 0 | (295) | 0 |
| Operating income | 1,464 | (141) | (399) | (141) | 1,863 | 0 | |
| Income from equity-accounted investments | 5 | 1,547 | 0 | 1,128 | 0 | 419 | 0 |
| Other result from participations | 0 | 180 | 0 | 180 | 0 | 0 | |
| Minority interests | (949) | 0 | (699) | 0 | (250) | 0 | |
| Net interest expense | 12 | (1,273) | 3 | 411 | 3 | (1,684) | 0 |
| Financial result | (675) | 183 | 840 | 183 | (1,515) | 0 | |
| Consolidated net income (loss) | 789 | 42 | 441 | 42 | 348 | 0 | |
| Earnings per share in € (basic/diluted) | 0.08 | 0.00 | 0.05 | 0.00 | 0.04 |
| in € thousand | Shares in circulation |
Subscribed Capital |
Share premium |
Retained earnings |
Net assets due to share holders |
Total |
|---|---|---|---|---|---|---|
| Balance at January 1, 2007 | 0 | 0 | 0 | 0 | (94) | (94) |
| Contributions | 821 | 821 | ||||
| Financial result | 0 | 0 | 0 | 0 | 42 | 42 |
| Balance at June 30, 2007 | 0 | 0 | 0 | 0 | 769 | 769 |
| Balance at January 1, 2008 | 9,406,882 | 47,034 | 46,167 | 1,462 | 0 | 94,663 |
| Consolidated net income | 0 | 0 | 0 | 789 | 789 | |
| Balance at June 30, 2008 | 9,406,882 | 47,034 | 46,167 | 2,251 | 0 | 95,452 |
| January 1 to June 30 | ||
|---|---|---|
| in € thousand | 2008 | 2007 |
| Consolidated net income (economic result) | 789 | 42 |
| Amortization of intangible assets and depreciation of property, plant and equipment | 5 | 0 |
| Income from the disposal of participating interests | 0 | (180) |
| Valuation result | 2,459 | 0 |
| Income from equity-accounted investments | (1,547) | 0 |
| Withdrawals from equity-accounted investments | 738 | 0 |
| Minority interests | 949 | 0 |
| Distributions to minority interests | (341) | 0 |
| Income from restructuring financial liabilities | (1,469) | 0 |
| Result from the valuation of derivative financial instruments | (286) | 0 |
| Cash flow from operating activities (funds from operations) | 1,297 | (138) |
| Changes in assets, equity and liabilities | ||
| (Increase)/decrease in trade receivables | 401 | 0 |
| (Increase)/decrease in other liabilities | 3,039 | (319) |
| (Decrease)/increase in provisions | (38) | 0 |
| (Decrease)/increase in trade payables | (284) | 450 |
| (Decrease)/increase in other liabilities | (409) | 0 |
| Net cash provided by /used in operating activities | 4,006 | (7) |
| Payments for the purchase of interests in associated companies | (10) | 0 |
| Income from the sale of subsidiaries (BBV 08) | 4,705 | 0 |
| Investments in investment property /property under conustruction | (11,972) | 0 |
| Net cash used in investing activities | (7,277) | 0 |
| Contributions from shareholders | 0 | 821 |
| Drawing down bank borrowing | 39,546 | 0 |
| Repayment of bank borrowing | (37,342) | 0 |
| Net cash provided by financing activities | 2,204 | 821 |
| Net change in cash and cash equivalents | (1,067) | 814 |
| Cash and cash equivalents – start of period | 5,381 | 13 |
| Cash and cash equivalents – end of period | 4,314 | 827 |
Notes to the consolidated financial statements
After registration as an Aktiengesellschaft on July 12, 2007, Fair Value REIT-AG has been listed on the stock exchange since November 16, 2007. It became a REIT on December 6, 2007.
As a result of its participation in thirteen closedend real estate funds, the company must prepare consolidated financial statements. These financial statements are the first consolidated six-month financial statements to include the Sparkasse portfolio for the entire period in the "Direct Investments" segment.
Principles of preparation – The consolidated interim financial statements have been prepared based on International Financial Reporting Standards (IFRSs), taking IAS 34 "Interim Financial Reporting" into account. Investment properties and financial derivatives are measured at their fair values, participations in associated companies are equity-accounted. All other measurements are based on cost.
Consolidation – The consolidated financial statements include all subsidiaries. The group of consolidated companies has not changed compared to December 31, 2007.
Accounting and valuation methods – the same accounting and valuation methods were applied as in the consolidated financial statements for fiscal year 2007.
Comparable figures – the comparable figures in the income statement and the cash flow statement are for the period from January 1 to June 30, 2007. This company was still a partnership during this period and did not have any subsidiaries.
| € thousand | Direct investments |
Subsidiary | Total |
|---|---|---|---|
| Acquisition costs | |||
| Balance at January 1, 2008 | 51,615 | 98,880 | 150,495 |
| Additions (subsequent acquisition costs) | 217 | 144 | 361 |
| Balance at June 30, 2008 | 51,832 | 99,024 | 150,856 |
| Changes in value | |||
| Balance at January 1, 2008 | (1,655) | 1,230 | (425) |
| Write-ups | 0 | 790 | 790 |
| Write-downs | (1,155) | (2,004) | (3,159) |
| Balance at June 30, 2008 | (2,810) | 16 | (2,794) |
| Fair values | |||
| Balance at Dec. 31, 2007 | 49,960 | 100,110 | 150,070 |
| Balance at June 30, 2008 | 49,022 | 99,040 | 148,062 |
CB Richard Ellis GmbH, Berlin, has evaluated the investment properties' fair value using the DCF method as of June 30, 2008. The cash flows for a tenyear period were forecast in detail; sustained rental income was assumed for the period thereafter. The value of this capital was identified based on propertyrelated capitalization rates of between 5.2% and 7.5% and taking into account estimated selling costs incurred after ten years. The surplus income for the ten-year period and the capital value resulting after this period has expired were discounted using discount rates of between 5.9% and 8.1% depending on the specific property as of the valuation date, less the estimated incidental acquisition costs for a potential purchaser. The financial mathematical assumptions were raised compared to December 31, 2007 as a result of the current situation on the real estate market and higher financing costs by an average of 0.09% from 5.92% to 6.01% (capitalization rates) or by 0.11% from 6.35% to 6.46% (discount rates).
The value of five of the properties increased by a total of € 790 thousand. The write-downs for the properties were due to the above adjustment to the capitalization and discount rates and the reversal of the advantage from some of the existing rental agreements that were concluded with rent which is above the current market level (overrents). In addition, subsequent incidental acquisition costs for the Sparkasse portfolio and conversion costs arising as a result of the follow-on rental of the property in Alzey (IC 01) totaling € 361 thousand were written off immediately as these items are not covered by the market values as of June 30, 2008. Write-downs thus totaled € 3,159 thousand.
The increase relates to the property Airport Office II, Düsseldorf. Economic ownership of this property was transferred to the Group in January 2008. It is measured at carried forward acquisition cost. The carrying amount of € 12,177 thousand includes construction interest totaling € 126 thousand. It was 83% let as of June 30, 2008.
| € thousand | IC 10 | IC 12 | IC 13 | IC 15 | BBV 02 | BBV 09 | BBV 10 | BBV 14 | Total |
|---|---|---|---|---|---|---|---|---|---|
| Balance as at January 1, 2008 | 25 | 2,453 | 1,421 | 6,051 | 99 | 15,170 | 20,111 | 13,579 | 58,909 |
| Additions (acquisition costs) | 0 | 10 | 0 | 0 | 0 | 0 | 0 | 0 | 10 |
| Withdrawals | 0 | (84) | (145) | (144) | (1) | 0 | (364) | 0 | (738) |
| Proportion of earnings | (20) | 1 | (125) | (306) | 14 | 1,212 | 834 | (63) | 1,547 |
| Balance at June 30, 2008 | 5 | 2,380 | 1,151 | 5,601 | 112 | 16,382 | 20,581 | 13,516 | 59,728 |
This relates to participations where a participation of between 20% and 50% is held in each case. The increase in this item compared to December 31, 2007 by € 819 thousand comprises the acquisition of interests totaling € 10 thousand and the proportionate earnings due to Fair Value for these companies for the period under review in the amount of € 1,547 thousand less the disbursements / withdrawals in the first half of the year totaling € 738 thousand including retained capital gains tax and solidarity surcharge.
The income situation for the equity-accounted investments for the period under review was as follows:
| € thousand | IC 10 | IC 12 | IC 13 | IC 15 | BBV 02 | BBV 09 | BBV 10 | BBV 14 | Total |
|---|---|---|---|---|---|---|---|---|---|
| Rental revenues | 347 | 298 | 1,490 | 1,704 | 36 | 5,849 | 5,155 | 3,021 | 17,900 |
| Income from operating and incidental costs |
156 | 160 | 145 | 246 | 13 | 115 | 324 | 694 | 1,853 |
| Real-estate related operating expenses | (222) | (217) | (274) | (278) | (48) | (398) | (818) | (1,690) | (3,945) |
| Net rental result | 281 | 241 | 1,361 | 1,672 | 1 | 5,566 | 4,661 | 2,025 | 15,808 |
| General administrative expenses | (14) | (19) | (61) | (72) | (11) | (230) | (225) | (239) | (871) |
| Other operating income and expenses | 0 | 0 | 0 | (5) | 1 | 1 | (9) | (2) | (14) |
| Valuation gains | 0 | 0 | 110 | 80 | 78 | 800 | 206 | 0 | 1,274 |
| Valuation losses | (110) | (181) | (1,060) | (1,764) | 0 | (1,100) | (1,510) | (590) | (6,315) |
| Valuation result (net) | (110) | (181) | (950) | (1,684) | 78 | (300) | (1,304) | (590) | (5,041) |
| Operating result | 157 | 41 | 350 | (89) | 69 | 5,037 | 3,123 | 1,194 | 9,882 |
| Other interest expenses | (227) | (55) | (663) | (873) | (36) | (435) | (967) | (1,526) | (4,782) |
| Change in market value for the loans | (8) | 2 | 50 | 163 | 3 | 258 | 27 | 192 | 687 |
| Net interest expense | (235) | (53) | (613) | (710) | (33) | (177) | (940) | (1,334) | (4,095) |
| Financial result | (78) | (12) | (263) | (799) | 36 | 4,860 | 2,183 | (140) | 5,787 |
| Fair Value's share after consolidation | (20) | 1 | (125) | (306) | 14 | 1,212 | 834 | (63) | 1,547 |
These mostly comprise the remaining purchase price receivables for the variable purchase price component of € 300 thousand from IC Immobilien Holding AG as a result of the sale of the interest in BBV 08. During the period under review, € 4,705 thousand was paid by the purchaser.
The non-current assets available for sale relate to two properties from IC01 and BBV06. The write-down for both properties (€ 90 thousand) is included in the valuation result.
The downturn is based on the settlement of a receivable from the seller of the Sparkasse portfolio for the repayment of the purchase price paid, as it was not possible to transfer one of the properties to the Group due to preemptive rights being exercised.
Non-current and current financial liabilities totaling € 112,869 thousand increased by € 735 thousand compared to December 31, 2007. This amount comprises scheduled redemption as well as drawing down the loan granted to finance the Airport Office II in Düsseldorf totaling € 7,040 thousand.
A package of activities including reduced interest payments, temporarily discontinued loan repayments, limited-term reduction of bank margin, deferral of service fees and the granting of shareholder loans was agreed for the subsidiary BBV 06 in June 2008 in order to compensate for the company's temporary liquidity bottleneck.
For example, a fixed-interest loan of around € 27.4 million was converted to a variable-interest loan as of July 1, 2008 against payment of an early repayment penalty totaling € 218 thousand. In view of the intended sale of properties, an interest rate hedge was concluded in this connection for a partial amount of € 15 million (cap) through to June 2012. This restricts a possible increase in the 1-month EURIBOR to a maximum of € 5.25% p.a. against payment of an annual premium of € 62 thousand.
In addition, the main financing creditor HVB has reversed the only two other loans from another bank and concluded a compound loan in an identical amount. The interest hedge for this loan has already been with HVB for several years.
HVB has agreed to a reduced margin of 0.95% for the period from July 1, 2008 for one year for the overall loan. In compensation, the business provider IC Immobilien Service GmbH has deferred its ongoing remuneration from July 2008 up to a maximum amount of € 200 thousand. In addition, as a majority shareholder, Fair Value REIT-AG grants a shareholder loan to bridge any gaps in liquidity of up to € 600 thousand for a period of 12 months.
The repayment agreement includes a repayment holiday until April 2009, respectively July 2009. For the time after, proportionate repayment installments of intitally 2.6%, respectively 2.9%, of the loan value have been concluded.
The fixed-interest loan was originally included in Fair Value's consolidated financial statements at its market value as of September 30, 2007. Termination of the fixed-interest loan and the transition to a variableinterest loan resulted in income from the restructuring of financial liabilities totaling € 1,469 thousand.
| January 1 to June 30 | ||
|---|---|---|
| € thousand | 2008 | 2007 |
| Fund administration and trustee fees |
308 | 0 |
| Allowances (Members of Super visory Board, Advisory Board, General and limited partners) |
37 | 0 |
| Consulting and auditing costs | 291 | 23 |
| Conception and change of legal | ||
| form | 0 | 181 |
| Reviewer (Valuation) | 147 | 0 |
| Expenses being public | 32 | 0 |
| Costs annual reports | 32 | 0 |
| General Annual Meeting | 63 | 0 |
| Advertisement, events, insertions | 23 | 0 |
| Personnel expenses | 387 | 0 |
| Office costs | 45 | 0 |
| Travel and vehicle expenses | 41 | 0 |
| Depreciation and amortization | 5 | 0 |
| Non-deductible VAT | 42 | 39 |
| Other | 17 | 1 |
| 1,470 | 244 |
Of the general administrative costs, € 438 thousand (29.8%) are due to subsidiaries and € 1,032 thousand (70.2%) are due to Fair Value REIT-AG.
| January 1 to June 30 | ||
|---|---|---|
| € thousand | 2008 | 2007 |
| Interest income | 452 | 3 |
| Income from refinancing of | ||
| BBV 06 | 1,469 | 0 |
| Valuation of derivative financial | ||
| instruments | 286 | 0 |
| Other interest expense | (3,480) | 0 |
| (1,273) | 3 |
Net interest includes income from the change in the fair value of derivative financial instruments (interest rate hedges) totaling € 286 thousand. Of this total, € 130 thousand is due to minority interests in subsidiaries.
The loans were originally included in the consolidated financial statements on September 30, 2007 at their market values. The refinancing of the subsidiary BBV 06 resulted in income from the reversal of this adjustment totaling € 1,469 thousand. Of this total, € 666 thousand is due to minority interests in subsidiaries (see 10)).
| January 1 to June 30 | April 1 to June 30 | |||
|---|---|---|---|---|
| € thousand | 2008 | 2007 | 2008 | 2007 |
| Segment revenues | ||||
| Direct investments | 1,747 | 0 | 873 | 0 |
| Participations | 4,975 | 0 | 2,522 | 0 |
| 6,722 | 0 | 3,395 | 0 | |
| Segment results | ||||
| Direct investments | 273 | 0 | (267) | 0 |
| Participations | 2,048 | 0 | 323 | 0 |
| 2,321 | 0 | 56 | 0 | |
| Income from equity-accounted investments | 1,547 | 0 | 1,128 | 0 |
| General administrative expenses | (857) | (141) | (455) | (141) |
| Other result from participating interests | 0 | 180 | 0 | 180 |
| Minority interests | (949) | 0 | (699) | 0 |
| Net interest expenses | (1,273) | 3 | 411 | 3 |
| Consolidated earnings | 789 | 42 | 441 | 42 |
| June 30, | December 31, | |
|---|---|---|
| € thousand | 2008 | 2007 |
| Receivables | ||
| Purchase price receivable BBV 08 | 300 | 5,145 |
| Other | 240 | 68 |
| Liabilities | ||
| Liabilities from loans | (255) | (145) |
| Liabilities from services | (1,061) | (1,021) |
| Other | (3) | 0 |
| (779) | 4,047 |
This semi-annual financial report of has not been audited or reviewed according to Section 317 of the HGB and thus does not contain an auditor's opinion.
To the best of our knowledge, we declare that, according to the principles of proper consolidated reporting applied, the consolidated financial statements provide a true and fair view of the Group's net assets, financial position and results of operations, that the group management report presents the Group's business including the results and the Group's position such as to provide a true and fair view and that the major opportunities and risks of the Group's anticipated growth for the remaining fiscal year are described.
Munich, August 2008
Fair Value REIT-AG
Frank Schaich Manfred Heiler
Fair Value engaged Frankfurt-based CB Richard Ellis GmbH (CBRE) to value its directly and indirectly held properties as of June 30, 2008. CBRE had already valued all of the properties as of June 30, 2007 and December 31, 2007.
CBRE is not a company regulated by a supervisory body, however it does employ publicly appointed, sworn experts, members of the Royal Institution of Chartered Surveyors (RICS) and real estate experts certified by HypZert GmbH in its Valuation division. According to the Practical Statement (PS) 3.2 of the RICS Valuation Standards (6th edition) from the Royal Institution of Chartered Surveyors (RICS), London, CBRE identified the properties' market values as defined below:
"The estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arm's-length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion."*
In terms of concept and content, "market value" according to the definition by the Royal Institution of Chartered Surveyors (RICS) and "fair value" according to IFRS and IAS 40 are comparable.
The market value was identified in each case taking into account incidental acquisition costs (land transfer tax, estate agents' fees and notary's and attorneys' fees) and was presented as the net capital value.
The market values of the individual properties was determined using the internationally recognized discounted cash flow method. The discounted cash flow method forms the basis for dynamic calculations and is used to calculate the value of cash flows anticipated in future on various dates and in differing amounts.
In so doing, after identifying all of the factors relevant for the valuation, the future cash flows, some of which are linked to forecasts, are aggregated on an accrual basis. The balance of the receipts and payments recorded is then discounted to a fixed point in time (valuation date) using the discount rate. In contrast to the German Ertragswertverfahren (income-based approach) according to the Wertermittlungsverordnung (WertV – German Value Calculation Directive), the cash flows are explicitly quantified during the observed period and are not shown as annuity payments.
As the impact of future cash flows falls as a result of the discounting, and as the forecasting insecurity increases over the observed period, as a rule in the case of real estate investments the stabilized net investment income is capitalized over a ten-year period (detailed observation period) using a growthimplicit minimum interest rate (capitalization rate) and discounted to the valuation date.
The assumptions used in the valuation model reflect the average assumptions of the dominant investors on the market on the respective valuation date. These valuation parameters reflect the standard market expectations and the extrapolation of the analyzed past figures for the property to be valued or for one or several comparable properties.
* Translation by RICS Germany, Valuation Faculty Board, 2. edition, September 2003
CBRE estimated the valuation parameters as best possible using its best judgment, and these can be broken down into two groups. The property-specific valuation parameters include, for example, rent for initial and follow-on lets, the probability of existing rental agreements being extended, vacancy periods and vacancy costs, no-allocable incidental costs and capital expenditure expected by the owner, fitting and rental costs for initial and follow-on lets as well as property and lease-specific overall interest on the capital tied up in the investment. The general economic factors include, in particular, changes to market prices and rent during the detailed observation period and the inflation assumed in the calculation model.
| Primary | Year of construc |
Last rennovation/ |
Market value December |
Market value June |
Discount | |||||
|---|---|---|---|---|---|---|---|---|---|---|
| Street | Town | Funds | use | tion | modernization | Plot size | 31, 2007 | 30, 2008 | interest rate | |
| [m²] | [€ thousand] | [€ thousand] | [%] | |||||||
| Direct holdings | ||||||||||
| Hauptstraße 56e / 56 d | Appen | n/a | Offices | 1975 | 1995 | 4,320 | 250 | 240 | 6.80 | |
| Bleeck 1 | Bad Bramstedt | n/a | Offices | 1973 | 2006 | 3,873 | 1,300 | 1,270 | 6.40 | |
| Oldesloer Straße 24 | Bad Segeberg | n/a | Offices | 1982 | 2007 | 5,152 | 9,700 | 9,480 | 6.30 | |
| Königstr. 19-21 | Barmstedt | n/a | Offices | 1911 | ongoing | 2,842 | 1,520 | 1,490 | 6.40 | |
| Bahnhofstraße 9 | Bönnigstedt | n/a | Offices | 1992 | 2003 | 1,131 | 260 | 260 | 7.00 | |
| Bahnhofstraße 14 | Boostedt | n/a | Offices | 1989 | 2005 | 1,006 | 140 | 140 | 6.50 | |
| Am alten Markt 9a | Bornhöved | n/a | Offices | 1991 | 2005 | 873 | 710 | 690 | 6.60 | |
| Berliner Damm 6 | Ellerau | n/a | Offices | 1990 | 2000 | 1,177 | 430 | 420 | 6.90 | |
| Pinneberger Straße 155 | Ellerbek | n/a | Offices | 1985 | 2001 | 1,708 | 390 | 370 | 6.70 | |
| Dorfstraße 29 | Geschendorf | n/a | Offices | 1985 | 2006 | 1,154 | 260 | 250 | 6.90 | |
| Hauptstraße 33 | Halstenbek | n/a | Offices | 1969 | 2001 | 1,195 | 910 | 880 | 7.30 | |
| Seestraße 232 | Halstenbek | n/a | Offices | 1976 | 2002 | 549 | 100 | 92 | 7.20 | |
| Friesenstraße 59 | Helgoland | n/a | Offices | 1986 | 2000 | 194 | 620 | 610 | 6.20 | |
| Hamburger Straße 83 | Henstedt-Ulzburg | n/a | Offices | 1989 | 2004 | 1,219 | 1,160 | 1,120 | 6.30 | |
| Holstenstraße 32 | Kaltenkirchen | n/a | Offices | 1978 | 2005 | 1,893 | 2,050 | 2,010 | 6.30 | |
| Köllner Chaussee 27 | Kölln-Reisiek | n/a | Offices | 1990 | 2001 | 1,004 | 200 | 190 | 7.00 | |
| Hamburger Straße 40 | Leezen | n/a | Offices | 1989 | 2005 | 886 | 200 | 200 | 7.00 | |
| Segeberger Straße 21 | Nahe | n/a | Offices | 1971 | 2004 | 1,698 | 750 | 730 | 7.00 | |
| Ehndorfer Straße 153 | Neumünster | n/a | Offices | 1971 | 2003 | 1,685 | 270 | 260 | 7.40 | |
| Kuhberg 11-13 | Neumünster | n/a | Offices | 1956 | 2005 | 5,286 | 16,300 | 16,100 | 6.30 | |
| Röntgenstraße | Neumünster | n/a | Offices | 1972 | 1998 | 2,481 | 310 | 300 | 7.20 | |
| Ulzburger Str. 363 d / e | Norderstedt | n/a | Offices | 1994 | 2004 | 2,762 | 1,570 | 1,560 | 6.20 | |
| Ulzburger Str. 545 / 547 | Norderstedt | n/a | Offices | 1960 | 1,313 | 520 | 520 | 8.10 | ||
| Damm 49 | Pinneberg | n/a | Offices | 1996 | 2007 | 1,383 | 2,500 | 2,450 | 7.00 | |
| Oeltingsallee 30 | Pinneberg-Quellental n/a | Offices | 1970 | 2002 | 2,047 | 680 | 670 | 6.70 | ||
| Kieler Straße 100 | Quickborn | n/a | Offices | 1980 | 2002 | 1,625 | 1,560 | 1,540 | 6.30 | |
| Hauptstraße 49 | Rellingen | n/a | Offices | 1983 | 2001 | 828 | 600 | 580 | 7.30 | |
| Rosenstraße 15 | Sparrieshoop | n/a | Offices | 1961 | 1999 | 984 | 210 | 200 | 7.30 | |
| Willy-Meyer-Straße 3–5 | Tornesch | n/a | Offices | 1977 | 2003 | 970 | 620 | 600 | 6.70 | |
| Am Markt 1 | Trappenkamp | n/a | Offices | 1985 | 2005 | 1,190 | 690 | 680 | 6.80 | |
| Wassermühlenstraße 5 | Uetersen | n/a | Offices | 2001 | 2,348 | 2,000 | 1,960 | 6.10 | ||
| Markt 1 | Wahlstedt | n/a | Offices | 1975 | 2005 | 1,848 | 1,180 | 1,160 | 6.50 | |
| Sub-total direct | ||||||||||
| investments | 58,624 | 49,960 | 49,022 | |||||||
| Subsidiaries | ||||||||||
| Rheinstr. 8 | Teltow | IC07 | Offices | 1995 | 5,324 | 25,200 | 24,800 | 6.30 | ||
| Im Taubental 9–17 | Neuss | IC03 | Logistics | 1990 | 19,428 | 8,600 | 8,380 | 7.00 | ||
| Heidhauser Straße 94 | Essen-Heidhausen | IC01 | Retail | 1990 | 4,776 | 2,900 | 2,850 | 6.40 | ||
| Hospitalstraße 17 –19 / | ||||||||||
| Judengasse 21 | Alzey | IC01 | Retail | 1990 | 2007 | 2,243 | 1,800 | 1,850 | 6.60 | |
| Andreasstr. 1 | Ahaus-Wüllen | BBV06 | Retail | 1990 | 5,513 | 1,300 | 1,170 | 7.40 | ||
| Andreasstr. 3– 7 | Ahaus-Wüllen | BBV06 | Retail | 1973 | 13,036 | 4,800 | 4,750 | 7.10 | ||
| Marktplatz 3 | Altenberge | BBV06 | Retail | 1986 | 1,756 | 1,200 | 1,230 | 6.50 | ||
| Heerenbergerstr. 51 | Emmerich | BBV06 | Retail | 1987 | 4,314 | 1,200 | 1,080 | 6.60 | ||
| Hubert-Prott-Str. 117 | Frechen | BBV06 | Retail | 1988 | 4,282 | 1,300 | 1,230 | 6.90 | ||
| Schwarzer Weg 21 –24 | Hamm | BBV06 | Retail | 1990 | 2,665 | 1,400 | 1,410 | 7.10 | ||
| Hinüberstr. 6 | Hanover | BBV06 | Other | 1970, 1987, 1991 |
2006 | 3,204 | 20,200 | 20,200 | 6.50 | |
1) Annualized potential rent based on market values as of June 30, 2008
| Stake of Fair Value REIT | -AG | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| Annualized | Annualized | Proportionate | Market | Remaining term of |
Rental level | Annualized | Annualized | ||
| Total space |
Vacan contractual cies rent |
potential rent |
participating interest |
value June 30, 2008 |
rental ag reements |
by rental reve nues |
contractual rent |
potential rent |
Ongoing return 1) |
| [m²] | [m²] [€ thousand] |
[€ thousand] | [%] | [€ thousand] | [years] | [%] | [€ thousand] | [€ thousand] | [%] |
| 212 | 0 19 |
19 | 100.00 | 240 | 9.5 | 100.0 | 19 | 19 | 8.0 |
| 997 | 0 77 |
77 | 100.00 | 1,270 | 16.1 | 100.0 | 77 | 77 | 6.1 |
| 9,233 | 467 588 |
614 | 100.00 | 9,480 | 14.5 | 95.7 | 588 | 614 | 6.5 |
| 1,264 | 0 92 |
92 | 100.00 | 1,490 | 15.2 | 100.0 | 92 | 92 | 6.2 |
| 211 | 0 19 |
19 | 100.00 | 260 | 9.5 | 100.0 | 19 | 19 | 7.3 |
| 114 | 0 10 |
10 | 100.00 | 140 | 9.5 | 100.0 | 10 | 10 | 7.3 |
| 664 | 0 51 |
51 | 100.00 | 690 | 8.5 | 100.0 | 51 | 51 | 7.4 |
| 369 | 0 31 |
31 | 100.00 | 420 | 9.5 | 100.0 | 31 | 31 | 7.3 |
| 356 | 0 28 |
28 | 100.00 | 370 | 6.6 | 100.0 | 28 | 28 | 7.5 |
| 316 | 0 20 |
20 | 100.00 | 250 | 7.1 | 100.0 | 20 | 20 | 8.0 7.3 |
| 791 188 |
0 64 0 8 |
64 8 |
100.00 100.00 |
880 92 |
9.5 9.5 |
100.0 100.0 |
64 8 |
64 8 |
8.8 |
| 490 | 0 38 |
38 | 100.00 | 610 | 12.7 | 100.0 | 38 | 38 | |
| 1,005 | 0 71 |
71 | 100.00 | 1,120 | 17.5 | 100.0 | 71 | 71 | |
| 1,581 | 0 121 |
121 | 100.00 | 2,010 | 17.3 | 100.0 | 121 | 121 | 6.3 6.0 |
| 168 | 0 15 |
15 | 100.00 | 190 | 9.5 | 100.0 | 15 | 15 | 8.0 |
| 174 | 0 16 |
16 | 100.00 | 200 | 9.5 | 100.0 | 16 | 16 | |
| 734 | 0 59 |
59 | 100.00 | 730 | 9.5 | 100.0 | 59 | 59 | |
| 346 | 0 23 |
23 | 100.00 | 260 | 7.2 | 100.0 | 23 | 23 | |
| 11,808 | 102 940 |
949 | 100.00 | 16,100 | 16.8 | 99.1 | 940 | 949 | |
| 534 | 0 28 |
28 | 100.00 | 300 | 8.5 | 100.0 | 28 | 28 | |
| 1,340 | 43 102 |
104 | 100.00 | 1,560 | 14.4 | 98.7 | 102 | 104 | |
| 872 | 702 16 |
67 | 100.00 | 520 | 3.8 | 23.4 | 16 | 67 | |
| 1,930 624 |
0 174 0 50 |
174 50 |
100.00 100.00 |
2,450 670 |
4.5 5.4 |
100.0 100.0 |
174 50 |
174 50 |
|
| 1,309 | 0 98 |
98 | 100.00 | 1,540 | 17.5 | 100.0 | 98 | 98 | |
| 524 | 0 42 |
42 | 100.00 | 580 | 9.5 | 100.0 | 42 | 42 | |
| 237 | 0 17 |
17 | 100.00 | 200 | 6.0 | 100.0 | 17 | 17 | |
| 657 | 0 55 |
55 | 100.00 | 600 | 5.6 | 100.0 | 55 | 55 | |
| 787 | 106 47 |
53 | 100.00 | 680 | 8.6 | 88.6 | 47 | 53 | |
| 1,759 | 0 122 |
122 | 100.00 | 1,960 | 14.4 | 100.0 | 122 | 122 | |
| 1,346 | 198 70 |
92 | 100.00 | 1,160 | 8.5 | 76.7 | 70 | 92 | |
| 42,940 | 1,617 3,109 |
3,224 | 49,022 | 13.5 | 96.4 | 3,109 | 3,224 | ||
| 13,382 | 0 2,823 |
2,823 | 75.65 | 18,761 | 7.0 | 100.0 | 2,136 | 2,136 | |
| 12,063 | 1,014 544 |
641 | 71.58 | 5,998 | 1.3 | 84.9 | 389 | 459 | |
| 1,386 | 0 216 |
216 | 55.81 | 1,590 | 7.3 | 100.0 | 121 | 121 | |
| 1,989 | 18 132 |
140 | 55.81 | 1,032 | 6.7 | 94.3 | 74 | 78 | |
| 1,496 | 0 108 |
108 | 54.64 | 639 | 2.5 | 100.0 | 59 | 59 | |
| 3,915 | 0 473 |
473 | 54.64 | 2,596 | 0.8 | 100.0 | 259 | 259 | |
| 1,285 | 0 106 |
106 | 54.64 | 672 | 3.1 | 100.0 | 58 | 58 | |
| 1,415 | 92 120 |
123 | 54.64 | 590 | 5.3 | 97.8 | 66 | 67 | |
| 1,225 1,349 |
0 144 0 144 |
144 144 |
54.64 54.64 |
672 770 |
0.3 1.5 |
100.0 100.0 |
79 79 |
79 79 |
|
| 19,460 | 0 1,636 |
1,636 | 54.64 | 11,038 | 6.5 | 100.0 | 894 | 894 |
| Primary | Year of construc |
Last rennovation/ |
Market value December |
Market value June |
Discount | |||
|---|---|---|---|---|---|---|---|---|
| Street | Town | Funds use |
tion | modernization | Plot size | 31, 2007 | 30, 2008 | interest rate |
| [m²] | [€ thousand] | [€ thousand] | [%] | |||||
| Köhlstr. 8 | Cologne | BBV06 Logistics |
1972, 1988, 1989 |
40,591 | 9,300 | 9,990 | 7.40 | |
| Gutenbergstr. 152 / St. Töniser Str. 12 |
Krefeld | BBV06 Retail |
1990 | 8,417 | 4,800 | 4,650 | 6.80 | |
| Lippestr. 2 | Lippetal-Herzfeld | BBV06 Retail |
1990 | 3,155 | 1,700 | 1,680 | 6.80 | |
| Zeughausstr. 13 | Meschede | BBV06 Retail |
1989 | 1,673 | 610 | 560 | 6.90 | |
| Äußere Spitalhofstr. 15–17 Passau | BBV06 Retail |
1982 | 2007 | 2,884 | 4,900 | 4,610 | 6.90 | |
| Steinheimer Str. 64 | Seligenstadt | BBV06 Retail |
1983 | 4,000 | 1,900 | 1,940 | 6.50 | |
| Bahnhofstraße 20 a-e | Waltrop | BBV06 Retail |
1989 | 1,742 | 2,900 | 2,860 | 7.00 | |
| Adalbertsteinweg 32-36 | Aachen | BBV03 Offices |
1990 | 1,038 | 2,300 | 2,010 | 6.70 | |
| Marconistr. 4-8 | Cologne | BBV03 Logistics |
1990 | 13,924 | 3,700 | 3,580 | 6.80 | |
| Hauptstr. 51 –55 | Weyhe-Leeste | BBV03 Retail |
1989 | 2005 | 11,248 | 3,900 | 3,920 | 6.90 |
| Total subsidiaries | 155,213 | 105,910 | 104,750 | |||||
| Associated companies | ||||||||
| Max-Planck-Ring 26/28 | Langenfeld | IC13 Logistics |
1996 | 14,727 | 11,100 | 11,000 | 7.00 | |
| Friedrich-Engels-Ring 52 | Neubrandenburg | IC13 Offices |
1995-1997 | 4,705 | 10,900 | 9,940 | 6.50 | |
| Großbeerenstr. 231 | Potsdam | IC13 Offices |
1995 | 2,925 | 3,300 | 3,410 | 6.70 | |
| Carnotstr. 5 - 7 | Berlin | BBV14 Offices |
1995 | 4,583 | 15,900 | 15,500 | 6.30 | |
| Nossener Brücke 8 - 12 | Dresden | BBV14 Offices |
1997 | 4,134 | 8,300 | 8,110 | 6.90 | |
| Kröpeliner Str. 26-28 | Rostock | BBV14 Retail |
1995 | 7,479 | 62,800 | 62,800 | 6.10 | |
| Hartmannstr. 3 a - 7 | Chemnitz | IC12 Offices |
1997 | 4,226 | 8,300 | 8,120 | 6.40 | |
| Heinrich-Lorenz-Str. 35 | Chemnitz | IC15 Offices |
1998 | 4,718 | 4,400 | 4,270 | 7.00 | |
| Am alten Bad 1 - 7, | ||||||||
| Theaterstr. 34a | Chemnitz | IC15 Offices |
1997 | 3,246 | 6,000 | 5,930 | 6.20 | |
| Königsbrücker Str. 121 a | Dresden | IC15 Other |
1997 | 4,242 | 12,300 | 12,300 | 6.60 | |
| Rheinallee 9 | Düsseldorf | IC15 Offices |
1967 | 2002 | 3,354 | 6,300 | 6,380 | 5.90 |
| Pascalkehre 15 / 15a | Quickborn | IC15 Offices |
1997 | 9,129 | 15,100 | 13,900 | 6.50 | |
| Zum Rotering 5-7 | Ahaus | BBV10 Retail |
1989 | 3,884 | 2,600 | 2,510 | 7.20 | |
| Vor den Fuhren 2 | Celle | BBV10 Retail |
1992 | 21,076 | 13,700 | 13,800 | 6.70 | |
| Nordpassage 1 | Eisenhüttenstadt | BBV10 Retail |
1993 | 20,482 | 57,800 | 56,900 | 6.40 | |
| Altmärker Str. 5 | Genthin | BBV10 Retail |
1998 | 3,153 | 730 | 790 | 7.50 | |
| Robert-Bosch-Str. 11 | Langen | BBV10 Offices |
1994 | 6,003 | 18,500 | 18,600 | 6.70 | |
| Hammer Str. 455-459 | Münster | BBV10 Retail |
1991 | 15,854 | 9,600 | 9,520 | 6.50 | |
| Hannoversche Str. 39 | Osnabrück | BBV10 Retail |
1989 | 7,502 | 3,300 | 3,270 | 6.70 | |
| Klingelbrink 10 | Rheda-Wiedenbrück | BBV10 Retail |
1991 | 2,455 | 2,200 | 2,190 | 6.90 | |
| Lerchenbergstr. 112 / 113, | ||||||||
| Annendorfer Str. 15 / 16 | Wittenberg | BBV10 Retail |
1994 | 96,822 | 24,800 | 24,400 | 6.10 | |
| Henkestr. 5 | Erlangen | BBV02 Retail |
1984 | 6,350 | 1,800 | 1,890 | 6.70 | |
| Oberfrohnaer Str. 62 - 74 | Chemnitz | IC10 Retail |
1997 | 11,203 | 9,800 | 9,690 | 6.60 | |
| Leimbacher Straße | Bad Salzungen | BBV09 Retail |
1992 | 22,979 | 15,000 | 15,100 | 6.60 | |
| Mühlhäuser Str. 100 | Eisenach | BBV09 Retail |
1994 | 44,175 | 52,400 | 52,300 | 6.20 | |
| Putzbrunner Str. 71 / 73, | ||||||||
| Fritz-Erler-Str. 3 | Munich-Neuperlach | BBV09 Offices |
1986 | 10,030 | 43,100 | 42,300 | 6.30 | |
| Weißenfelser Str. 70 | Naumburg | BBV09 Retail |
1993 | 20,517 | 21,600 | 22,300 | 6.60 | |
| An der Backstania 1 | Weilburg | BBV09 Retail |
1994 | 17,211 | 10,800 | 10,600 | 6.80 | |
| Total associated companies | 377,164 | 452,430 | 447,820 | |||||
| Total portfolio properties | 591,001 | 608,300 | 601,592 | |||||
| Properties under | ||||||||
| construction | ||||||||
| Peter-Müller-Straße 16 / 16a Düsseldorf | 12,177 2) | |||||||
| n/a Offices |
July 15, 2008 | completion | 4,729 |
1) Annualized potential rent based on market values as of June 30, 2008
2) Acquisition costs carried forward
To our shareholders Group management
| Stake of Fair Value REIT | -AG | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Total | Vacan | Annualized contractual |
Annualized potential |
Proportionate participating |
Market value June |
Remaining term of rental ag |
Rental level by rental reve |
Annualized contractual |
Annualized potential |
Ongoing |
| space [m²] |
cies [m²] |
rent [€ thousand] |
rent [€ thousand] |
interest [%] |
30, 2008 [€ thousand] |
reements [years] |
nues [%] |
rent [€ thousand] |
rent [€ thousand] |
return 1) [%] |
| 24,476 | 15,514 | 436 | 1,041 | 54.64 | 5,459 | 5.8 | 41.9 | 238 | 569 | 10.4 |
| 9.7 | ||||||||||
| 4,683 1,452 |
0 0 |
451 144 |
451 144 |
54.64 54.64 |
2,541 918 |
2.2 2.4 |
100.0 100.0 |
246 78 |
246 78 |
8.5 |
| 1,095 | 0 | 42 | 42 | 54.64 | 306 | 4.9 | 100.0 | 23 | 23 | 7.5 |
| 8,492 | 0 | 600 | 600 | 54.64 | 2,519 | 8.9 | 100.0 | 328 | 328 | 13.0 |
| 1,390 | 0 | 166 | 166 | 54.64 | 1,060 | 5.2 | 100.0 | 90 | 90 | |
| 2,124 2,021 |
0 530 |
255 192 |
255 219 |
54.64 53.64 |
1,563 1,078 |
1.9 2.5 |
100.0 87.6 |
139 103 |
139 117 |
10.9 |
| 9,640 | 0 | 330 | 330 | 53.64 | 1,920 | 3.8 | 100.0 | 177 | 177 | |
| 3,141 | 45 | 378 | 379 | 53.64 | 2,103 | 1.9 | 99.8 | 203 | 203 | |
| 117,479 | 17,212 | 9,441 | 10,181 | 63,827 | 5.3 | 93.3 | 5,839 | 6,260 | ||
| 10,453 | 0 | 1,170 | 1,170 | 49.68 | 5,465 | 7.3 | 100.0 | 581 | 581 | |
| 7,557 | 1,313 | 1,103 | 1,217 | 49.68 | 4,939 | 5.5 | 90.6 | 548 | 605 | |
| 4,024 | 1,489 | 197 | 297 | 49.68 | 1,694 | 2.4 | 66.4 | 98 | 148 | |
| 10,049 | 2,117 | 1,020 | 1,254 | 45.02 | 6,978 | 0.7 | 81.3 | 459 | 565 | |
| 9,167 | 359 | 760 | 780 | 45.02 | 3,651 | 1.1 | 97.4 | 342 | 351 | |
| 19,306 | 777 | 4,245 | 4,337 | 45.02 | 28,274 | 6.9 | 97.9 | 1,911 | 1,953 | |
| 8,380 5,845 |
762 0 |
597 533 |
666 533 |
40.22 38.31 |
3,266 1,636 |
2.9 1.0 |
89.6 100.0 |
240 204 |
268 204 |
|
| 5,118 | 935 | 350 | 427 | 36.07 | 2,139 | 1.9 | 82.0 | 126 | 154 | |
| 11,554 | 0 | 869 | 869 | 35.59 | 4,378 | 9.4 | 100.0 | 309 | 309 | |
| 2,325 | 0 | 402 | 402 | 38.31 | 2,444 | 10.0 | 100.0 | 154 | 154 | |
| 10,570 2,054 |
0 164 |
1,264 227 |
1,265 235 |
38.31 38.30 |
5,325 961 |
3.9 1.5 |
99.9 96.6 |
484 87 |
485 90 |
|
| 10,611 | 0 | 1,129 | 1,129 | 38.30 | 5,286 | 4.5 | 100.0 | 432 | 432 | |
| 40,101 | 0 | 4,697 | 4,697 | 38.30 | 21,795 | 5.3 | 100.0 | 1,799 | 1,799 | |
| 1,275 | 256 | 65 | 81 | 38.30 | 303 | 4.8 | 80.1 | 25 | 31 | |
| 14,021 | 3,157 | 1,208 | 1,451 | 38.30 | 7,124 | 3.0 | 83.3 | 463 | 556 | |
| 7,353 | 0 | 674 | 674 | 38.30 | 3,647 | 10.6 | 100.0 | 258 | 258 | |
| 4,207 2,235 |
0 238 |
305 168 |
305 186 |
38.30 38.30 |
1,253 839 |
1.3 2.2 |
100.0 90.8 |
117 65 |
117 71 |
|
| 14,710 | 708 | 1,845 | 1,892 | 38.30 | 9,346 | 9.6 | 97.5 | 707 | 725 | |
| 2,770 9,970 |
0 342 |
231 693 |
231 746 |
38.28 26.14 |
723 2,533 |
4.0 2.6 |
100.0 92.9 |
88 181 |
88 195 |
|
| 10,985 | 0 | 1,260 | 1,260 | 24.93 | 3,764 | 4.0 | 100.0 | 314 | 314 | |
| 37,400 | 0 | 3,483 | 3,483 | 24.93 | 13,038 | 16.1 | 100.0 | 868 | 868 | |
| 19,018 15,180 |
0 0 |
4,391 1,743 |
4,391 1,743 |
24.93 24.93 |
10,545 5,559 |
5.5 10.2 |
100.0 100.0 |
1,095 435 |
1,095 435 |
|
| 8,145 | 0 | 785 | 785 | 24.93 | 2,643 | 9.8 | 100.0 | 196 | 196 | |
| 304,385 | 12,617 | 35,410 | 36,503 | 159,548 | 6.4 | 96.5 | 12,585 | 13,045 | ||
| 464,804 | 31,447 | 47,959 | 49,908 | 272,397 | 7.1 | 95.6 | 21,533 | 22,528 |
| 12,177 2) completion 4,729 4,730 833 809 974 100.00 809 July 15, 2008 |
||||
|---|---|---|---|---|
Fair Value REIT-AG Leopoldstraße 244 80807 Munich Germany
Tel. + 49 (0) 89 / 92 92 8 15 - 01 Fax + 49 (0) 89 / 92 92 8 15 - 15
[email protected] www.fvreit.de
Frank Schaich Manfred Heiler
Prof. Heinz Rehkugler, Chairman of the Supervisory Board Christian Hopfer, Deputy Chairman of the Supervisory Board Dr. Oscar Kienzle
Registered office: Munich Commercial register at Munich Local Court No. HRB 168 882
Date of publication: August 29, 2008
Fair Value REIT-AG: Airport Office II, Düsseldorf Different views of the office building
Fair Value REIT-AG Leopoldstraße 244 80807 Munich Germany
Tel. + 49 (0) 89 / 92 92 8 15 - 01 Fax + 49 (0) 89 / 92 92 8 15 - 15
[email protected] www.fvreit.de
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