annual report 2009 - bei der Hamborner REIT AG

to our sHareHolders management report Financial statements supplementary inFormation
52 Hamborner reit ag | annual report 2009
Valuation risk
The retention of value of our properties is checked annually using the generally recognised
DCF process. We had the valuation for our commercial property portfolio carried out by an
independent third party again at the end of 2009. Detailed information on the valuation of
our property portfolio can be found in the section "Performance of the portfolio". A need for
extraordinary depreciations to the extent of €0.7 million ensued in the financial statements
in accordance with IFRS for the 2009 financial year on the basis of the valuations carried
out. On the other hand, a reversal of impairment adjustment amounting to €1.3 million was
made for a total of nine properties subjected to non-scheduled depreciation in previous
years. Influences may arise on the valuation of properties in the future as well by the application
of different discount interest rates as a result of changes in the general risk assessment,
the interest rate level or property-specific risks.
Financial Risks
The asset and financial structure of our company is still extremely sound. Financial liabilities
and derivative financial instruments amounted to €113.7 million at the end of the reporting
year. The balance sheet equity ratio of the company in individual financial statements in
accordance with IFRS amounts to 52 % at the end of the year under review. For the financing
of our growth, additional borrowed funds will also be raised in the future to an appropriate
extent. Therefore, the development of the interest rate level is of corresponding importance
for the company. In order not to be subject to short-term interest rate risks, we have financed
our investments at terms fixed for the long term, via interest rate hedges in some cases. You
will find further details on the interest rate hedging transactions in the notes to the financial
statements under the section "Financial liabilities and derivative financial instruments".
The risks resulting from the financial instruments relate to credit, liquidity and market risks.
Credit risks exist in the form of risks of default for financial assets. This risk subsists to the
extent of the book values of the financial assets as a maximum. For derivatives, this is the sum
of all the positive market values and, for primary financial instruments, the sum of the book
values. If risks of default exist, they are taken into account by means of value adjustments.
Liquidity risks constitute refinancing risks and thus risks of a fulfilment of existing obligations
to pay when due. The strategy and the results of the planning process are taken as
a basis for the early identification of the future liquidity situation. The expected liquidity
requirements are scheduled in the medium-term plan, which covers a period of five years.
With registration of the new Articles of Association, HAMBORNER is retroactively a REIT
public limited company as of January 1, 2010. As such, it is exempt from German corporation
and trade tax. Under the REIT status, therefore, the tax risks quoted in the past due to
the "interest barrier" or the claiming of the "prerogative of extended trade tax reduction"
do not apply for the company.
In order to maintain the REIT status over a long period, the company has to comply with
precisely laid down criteria. This includes above all the fact that the free float must be at
least 15 %, no investor may directly hold more than 10 % of the shares, at least 75 % of the
assets must rank among the immovables, 90 % of the year-end result in accordance with
the German Commercial Code is to be distributed and the equity capital may not fall below
45 % of the fair value of the immovables. We counteract the risk of losing the REIT status by
means of our internal monitoring and controlling system. We monitor the development of
the decisive ratios for the classification as a REIT company, particularly the development of
the REIT equity ratio in accordance with Section 15 of the German REIT Act [REITG], which
at 67.2 % on the reporting date of December 31, 2009 is considerably above the required
minimum equity ratio of 45 %.