CG malls europe - Commerz Real

Commerz Real Estate Master FCP – SIF
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS AT DECEMBER 31, 2009
23. Reconciliation to trading NAV per share (continued)
As part of the purchases of Almada Forum and Forum Montijo, the Fund acquired four entities - Almada Cda, Al-
mada Lda, Brafero S.A. and Montijo Lda. The purchase price for all four entities was generally based on the balance
sheets of the entities according to Portuguese GAAP with several adjustments to reflect additional pricing compo-
nents. One of the adjustments to Portuguese GAAP related to the deferred key money positions in the balance sheet
of Almada Lda and Montijo Lda. So called key money is paid by a tenant at the moment the tenant enters the center
or renews a leasing agreement. The amount is paid according to the leasing agreement in order to compensate the
owner for all investments made for the business. According to Portuguese GAAP, the respective key money payment
must be deferred in the balance of the recipient over the term of the leasing agreement. However, as it is not refunda-
ble if the tenant terminates the leasing agreement prior to its expiration, the deferred income positions in the balan-
ces do not have a real liability character. To reflect the issue of the deferred key monies properly, the Fund compen-
sated the seller for the deferred income position relating to the deferred key money by discounting the future net of
tax income to the closing date. The amounts paid as compensation to the entity’s equity were EUR 1,858,855.52 for
Almada Lda and EUR 658,649.67 for Montijo Lda. These payments were then to be activated in the balance sheets of
the acquiring entities as goodwill to be amortized according to the term of the underlying deferred income positions.
However the Fund’s auditor decided that such an approach is not possible under IFRS, because these payments do
not fulfill the requirements necessary for goodwill under IFRS. As a result, the total amount of EUR 2,517,505.19
had to be written off. Such treatment of the compensation paid from the Management Company’s point of view does
not lead to a fair-value trading NAV of the Fund. Furthermore, such treatment may result in dissimilar treatment of
investors as future investors would pay too little for purchased units. As a result the Management Company issued
Declaration of Consent letters to all of its current investors to amend the terms of the Fund in order to reflect the
situation addressed above properly. All investors agreed to the adjustments proposed by the Management Company
and starting from March 2008 the adjustments were implemented with immediate effect.
24. Contingencies
The Fund, through its direct and indirect subsidiaries, is contingently liable with respect to lawsuits and matters that
arise in the normal course of business. Management is of the opinion that while it is impossible to ascertain the ultimate
legal and financial liability with respect to these contingencies, the ultimate outcome of these contingencies is not anti-
cipated to have a material effect on the Fund’s financial position and operations.
Financial Statements
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