CG malls europe - Commerz Real

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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 103
104 Commerz Real Estate Master FCP – SIF NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT DECEMBER 31, 2009 25. Events after the balance sheet date As described in Note 19 Espacio León breached one of the covenants agreed upon in the loan agreement with Eurohypo AG. In order to remediate this covenant breach the existing shareholder loan (SHL) between CGM Lux 3 S.à r.l. and Espacio León Propco S.L. has been converted into a profit participation loan (PPL) and the amount of the loan has been increased by € 4 Mio which ensures that the required equity ratio of 25% is restored. Management has informed the lender about this conversion and has obtained written approval as at April 9, 2010 for the actions taken and confirmation that the covenant breach is regarded as solved. The conversion of the SHL into a PPL, which classifies as equity according to Spanish law, was initiated in light of the fact that the coverage of Royal Decree Law 10/2008 was meant to expire on December 31, 2010 and the restorage of 50% equity would have been mandatory. As mentioned in Note 19 by virtue of the Decree Law 5/2010 of March 31, 2010 (published on April 1, 2010) the stipulations of Sole Additional Provision of Royal Decree 10/2008 are also applicable to fiscal years 2010 and 2011. However Management has decided to still perform the conversion in order to stabilize the overall economic situation of Espacio León. The SHL has been converted into a PPL based on an amendment agreement dated April 7, 2010.
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Annual Report 2009 as at 31 Decembe
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2 General Information Fund name: CG
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Almada Forum
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6 Financials Balance Sheet by Fund
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Almada Forum
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10 Manager‘s Report on the Fund O
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12 For 2010, the Economist Intellig
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14 Larger shopping centres of more
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16 Shopping Centre Prime Initial Yi
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18 As the figure above shows, many
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20 All three Luxembourg companies a
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22 5.2 Forum Montijo The acquisitio
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24 The following list shows the per
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26 6.2.1 Service and Management Cha
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28 Property Report 1. Portfolio Ove
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30 Tenancy information Almada Forum
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32 The following table shows the to
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34 Almada Forum As at 31 December 2
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36 Shops by group of activity - lev
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38 Almada Forum these malls are loc
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40 Located next to the main entranc
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42 Shops by group of activity - Gro
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44 Forum Montijo Forum Montijo Catc
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46 4. Espacio León The city of Le
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48 Parking Parking Espacio León fl
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50 Espacio León streets in the inn
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Page 56 and 57: 2.1 Internal Loan Portfolio The tab
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