semi-annual report 30 Sep 2010 - SEB Asset Management

ecause the property/equity interest acquired was still part
of the Fund assets and the amortisation period since acquisition
had not expired.
This item does not include transaction costs incurred by a real
estate company when it acquires a property or another equity
interest. Such transaction costs only have an indirect effect on
Fund assets via the value of the equity interest in the relevant
company.
Transaction costs include property purchase tax, costs of
legal advice, court costs and notary fees, property agent fees,
due diligence costs as well as expert fees and construction
and purchase fees. They are amortised in equal annual
amounts over ten years.
The other assets disclosed under the miscellaneous item
primarily represent receivables from advance payments
for operating costs due from property managers abroad in
the amount of EUR 59.7 million, value added tax receivables
from the fiscal authorities in Germany and abroad totalling
EUR 30.1 million, dividends receivable from real estate
companies in the amount of EUR 15.3 million and receivables
from counterparties to forward exchange transactions
amounting to EUR 13.2 million.
Where properties are acquired in foreign currencies, part of
the exchange rate risk is hedged by taking out loans in the
relevant local currency. The internal portion of the financing
is hedged against changes in exchange rates using forward
exchange transactions. An overview of open currency items
is given in the Statement of Assets, Part III.
In the first half of the financial year, 22 forward exchange
transactions with a volume of USD 661.4 million, nine forward
exchange transactions with a volume of SEK 419.3 million,
eight forward exchange transactions (non-deliverable
forwards) with a volume of RMB 1,573.5 million, 20 forward
exchange transactions with a volume of SGD 959.8 million,
15 forward exchange transactions with a volume of
JPY 22,449.0 million, eight forward exchange transactions
with a volume of GPB 17.3 million and eight forward exchange
transactions with a volume of PLN 51.3 million were entered
into to hedge exchange rate risks.
V. Liabilities
Liabilities from loans refer to EUR 1,524.8 million of loans
taken out to acquire properties and to EUR 290.4 million of
repayment obligations for securities sold under repurchase
agreements. Please see the overview of loans (page 14) for a
breakdown of the loan portfolio by currency and the duration
in each case. The breakdown of loan volumes per currency
by fixed interest rate period (page 14) gives the breakdown
of loan volumes by their fixed interest rate terms.
Liabilities from land purchases and construction
projects are the result of outstanding payment obligations
relating to the acquisition of properties and real estate
companies in the amount of EUR 23.4 million.
Liabilities from real estate management primarily
consist of EUR 83.1 million for prepaid allocable costs,
EUR 46.8 million for advance rental payments and
EUR 8.4 million in cash security bonds.
The miscellaneous liabilities item mainly includes
EUR 7.3 million in liabilities to counterparties from forward
exchange transactions, EUR 7.1 million in sales tax liabilities
to domestic and foreign fiscal authorities, EUR 5.1 million
in liabilities to creditors, EUR 3.9 million in loan liabilities
and EUR 3.7 million in liabilities from management and custodian
bank fees.
VI. Provisions
Provisions relate primarily to maintenance measures (EUR 14.8
million), construction costs (EUR 13.0 million), ongoing
operating costs (EUR 6.5 million) and taxes (EUR 74.8 million).
EUR 68.2 million of the latter figure relates to provisions
for deferred taxes on potential foreign capital gains,
while EUR 6.6 million relates to current taxes on income
abroad.
Capital gains tax
Provisions for taxes on capital gains are recognised for
properties and investment companies abroad where such
a tax is expected to be levied on disposal by the country in
which the directly or indirectly held property is located.
The difference between the current market values and the
carrying amounts for tax purposes of the properties, taking
generally applicable sales costs into consideration, was
taken as the basis for assessment when calculating the size
of the provisions for deferred taxes on foreign capital gains.
The provision was calculated on the basis of the countryspecific
tax rates. It was charged to Fund capital as it is not
classified as a distributable reserve.
The calculation also included US real estate companies with
the legal form of partnerships and the companies in Finland
and Italy, due to country-specific regulations. These are
treated as a direct acquisition for tax purposes, with the result
that any gain on the disposal of shares is subject to capital
gains tax. Capital gains tax was calculated in the same manner
as the method described above. The market value of the
property was merely replaced by the going concern value.
In the case of corporations, the carrying amounts of the equity
interests were discounted if it is likely that, when the shares
are sold, the purchaser will reduce the purchase price to take
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