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ePaper created 2012-04-27, 18:36:07 | version 1.23.1
About valuation:Which centers stood out – both positively and negatively? Olaf Borkers: Our center in Pécs, Hun- gary, was devalued by about 7.4%. That came as no surprise to us due to the economic developments in Hungary. It’s also the first center in our portfolio with vacant stores, at present some 7% of the retail space without a tenant. In light of that, the devaluation is justified. But we also think that the center will stabilise. Main-Taunus-Zentrum, City-Galerie Wolfs- burg and Galeria Baltycka stood out posi- tively with each having increased in value by around €10 million. Taxes – a complicated topic. Could you explain briefly which changes were made with regard to trade tax? Claus-Matthias Böge: A practice that has been in use for decades and was recog- nised by the tax authorities was suddenly, and to the great surprise of most experts, declared inadmissible in a ruling by the German Fed- eral Fiscal Court (BFH). As an asset management holding company, we’re now afraid that we will no longer be able to avail ourselves of the “extended trade tax deduction”. In a case concerning a lim- ited company involved in a general part- nership, the BFH ruled that the company was not entitled to apply the extended trade tax deduction in connection with its participation in an asset-managing real estate partnership. Consequently, there’s a chance that all of our domestic earnings could also be subject to trade tax. And this concerns past financial years as well as the hidden reserves of non-current domestic assets. We corrected the 2010 consolidated financial statements and adjusted our forecasts taking the worst case scenario into account. While the whole thing is extremely aggravating, only €2.4 million in tax payments had an impact on cash in 2011. Our dividend is not at risk. This amount will increase over time, however, so we’re therefore working hard to find a long-term solution for the problem. That will take some time, though. How does Deutsche EuroShop look on the financing side? Olaf Borkers: Very good. Our debt finance terms are fixed at 4.59% for an aver- age period of 6.6 years. Based on the previ- ous year’s average of 5.03%, we succeeded in considerably reducing the average interest rate while also improving the maturity and interest rate structure of our bank loans and overdrafts. Existing loans had a significant impact on this with a total residual volume of €304.7 million which we prematurely extended or replaced with new loans. The new loans have an average residual term of 8.6 years at an average interest rate of 4.07%. Previously the figures were a 2.4-year residual term and an average interest rate of 5.42%. That alone reduces our interest expense by nearly €4 million a year. What can shareholders expect from Deutsche EuroShop in 2012? Claus-Matthias Böge: Further improve- ments in performance, a reliable dividend and untroubled sleep. We’ll continue to opti- mise our portfolio and try to bring about profitable growth. Thank you for talking to us. Interview: Patrick Kiss Some figures have popped up in the annual report that Deutsche EuroShop has never used before. What’s up with EPRA earnings, EPRA NAV and NNNAV? Claus-Matthias Böge: We always strive for transparency and like to be compared against our European competitors. These fig- ures will help with that comparison. EPRA stands for European Public Real Estate Asso- ciation, the association of listed real estate companies in Europe. EPRA has made rec- ommendations on how real estate companies and REITs should calculate and adjust their results so that they can be compared without special items and one-off effects. EPRA earnings is the real estate-specific result per share. The net asset value or EPRA NAV is equity adjusted for deferred taxes and the present value of swaps. To determine NNNAV on the other hand, also called a triple-net-NAV, the NAV is adjusted for deferred taxes, the present value of swaps and additionally for the difference between the market value of bank loans and overdrafts and their carrying amounts. The result is supposed to approximate the company’s liq- uidation value. I’m pleased to say that we were able to boost all of the figures: EPRA earnings by 21%, NAV by 4.9% and triple-net NAV by 1.2%. 10 DES Annual Report 2011 STRATEGY interview with the executive board