annual financial statement 2011 - conwert Immobilien Invest SE

Annual Financial Report 2011
in the long term or even has to be ruled out. Such risks may result from changes in the
government’s subsidy or fiscal policy related to the establishment, purchase and sale of
properties or due to inflationary economic developments or negative developments in the
capital markets which are directly or indirectly influenced by overriding political interests. The
conwert Group currently has a widely diversified and balanced financing structure and
pursues a continuous improvement in the equity ratio. If borrowed or equity capital should
become dramatically more expensive, this could also lead to a significant negative impact on
the conwert Group.
Operations
Operating risks are those risks that result directly or indirectly from operating activities. The
conwert Group is represented primarily in the letting, sale and service segments in its core
markets. As the risk owners, the regional managements manage all identified risks in the
above mentioned business units. The risks result from the respective service provision
processes and, accordingly, are minimised through appropriate preventive measures
integrated in the processes and controls so that no damage that may endanger continued
operations can arise from today’s perspective. However, damage that jeopardises operations
cannot be ruled out completely as this risk category also includes risks that cannot be
influenced or fully covered by insurance. Such risks are, for example, natural hazards of all
kinds or unconventional criminal activities, which are carried out on a large scale over a
longer period of time.
Key property-related risks
Description of risk Effects Counter-measures
Property valuations
+ Fluctuations in property
prices caused by
alterations in economic
parameters
Sale of property
+ Demand for residential
and commercial
properties collapses
Lettings
+ Lettings of apartments
declines, or tenants fail
to pay
Development
+ Volatility of costs of
investing in project
development
+ Divergence in results
reported in financial accounts
+ Effects on credit rating
+ Fluctuation of earnings in
trading business
+ Costs of vacancies
+ Shortfall in rental incomes
due to tenants with low credit
ratings or due to falling
market prices
+ Cost overruns in project
development
+ Appraisals by independent experts
+ High-quality and price-stable
properties in top locations
+ Doing business in markets showing
fundamentally positive trends
+ Ongoing analyses of locations
+ No-delay responses to market
conditions and trends
+ Strategy of increasing value to tap
value potential in properties
+ Proactive asset management
reducing vacancies
+ Examination of creditworthiness
+ High degree of diversification of
property portfolio
+ High-quality and price-stable
properties in top locations
+ Adjusting rents to market levels
+ Strategy of increasing value and
leading to write-ups of properties
+ Spreading of cost-related risks
among suppliers, service providers
and others
+ Agreeing upon penalties
+ conwert Baudevelopment GmbH is
an in-group supplier
+ Supervision on an ongoing basis of
budgets and stage of construction
completion
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