Financial position

Selected operational figures of the consolidated balance sheet:

  2009   2008  
  EUR m % EUR m %
Investment properties 2,835.5 92 2,900.7 93
Other non-current assets 120.8 4 115.6 4
  2,956.3 96 3,016.3 97
Current assets 66.0 2 68.4 2
Cash and cash equivalents 57.1 2 42.0 1
  123.1 4 110.4 3
  3,079.3 100 3,126.7 100
Equity 862.0 28 649.3 21
Financial liabilities 1,802.7 59 2,089.2 67
Tax liabilities 84.1 3 82.3 3
Liabilities to fund limited partners 49.1 2 48.0 2
Pensions 41.5 1 39.3 1
Other liabilities 239.9 8 218.7 7
  2,217.3 72 2,477.4 79
  3,079.3 100 3,126.7 100

The investment properties (EUR 2,835.5 million) represent the essential asset item of Deutsche Wohnen with 92 % and include all non-current investment properties with exception of those that are used by the Group. The valuation has been confirmed by CB Richard Ellis.

In the following, we show the results of the valuation as of 12/31/2009 based on the portfolio of the residential and commercial property as well as the essential operational figures:

  Fair value Fair value Multiplier  
  EUR m per m2 ACTUAL TARGET
Core portfolio 2,187.8 943.1 14.6 14.1
Disposal 391.7 690.1 12.5 11.5
DB 14 170.3 912.9 13.6 12.9
  2,749.8 894.7 14.2 13.5

The fair value amounting to EUR 2,749.8 million is reported under the investment properties (EUR 2,724.7 million) and the current assets (EUR 25.1 million). The senior residences (EUR 78.4 million) and land without buildings, as well as facilities under construction (EUR 32.4 million) are also reported under the investment properties.

In addition to the cash and cash equivalents reported as of the reporting date, the Group has additional current callable credit lines amounting to EUR 134.0 million.

The equity ratio of 28 % has significantly improved as a result of the capital increase in 2009. The same applies to the Net Net Asset Value (NNAV), which increased from EUR 646.6 million as of 31 December 2008 to EUR 870.3 million. Based on the issued shares, a NNAV of EUR 10.63 per share results as of 31 December 2009.

We were able to significantly lower the financial liabilities from EUR 2,089.0 million to EUR 1,803.0 million.

  2009 2008
  EUR m EUR m
Financial liabilities 1,802.7 2,089.2
Convertible bonds 26.6 25.4
  1,829.3 2,114.6
Cash and cash equivalents – 57.1 – 42.0
Net financial liabilities 1,772.2 2,072.6
Investment properties 2,835.5 2,900.7
Non-current assets held for sale 25.1 17.7
Land and buildings held for sale 18.4 19.4
  2,879.0 2,937.7
Loan-to-value ratio 61.5 % 70.6 %

As a consequence, the ratio of the net financial liabilities to the real property (loan-to-value ratio) improved from 70.6 % to 61.5 %.

Loans / Loan-to-value ratio
Loans / Loan-to-value ratio (Bar chart) enlargeenlarge

In the context of the reorganisation of the financial liabilities, overall loans with a volume of ca. EUR 900,0 million were restructured. The goal of the restructuring was the harmonisation of credit agreements and key financial figures as well as the optimisation of the repayment structures. The borrowing arrangements include only key financial figures that refer to the capacity to meet capital service (DSCR/ISCR) as well as to the debt-to-equity ratio depending on the rental income (multiplier). We were able to eliminate operational figures depending on valuations, such as LTV and loan to mortgage bank values, from the credit agreements. Through the new credit agreements, the scheduled repayment is reduced by EUR 7.8 million to EUR 34.8 million, thus strengthening the current liquidity situation of Deutsche Wohnen.

In the coming two business years, the volume of extensions amounts to only EUR 37.5 million. This corresponds to ca. 2 % of the total liabilities and emphasises the solid financing structure of the Group. The extension structure of the subsequent years is as follows:

  2010 2011 2012 2013 ≥ 2014
  EUR m EUR m EUR m EUR m EUR m
Extensions 32.2 5.3 426.8 26.7 1,311.7

The average interest rate of the credit portfolio amounts to ca. 4.24 % p.a.

The tax liabilities affect essentially obligations from the flat-rate taxation of EK 02 holdings. We have initiated legal action against the taxation.

Cash Flow Statement

The following is a short overview of the cash flows in the previous financial year.

  2009 2008
  EUR m EUR m
Cash flow from operating activities 3.3 – 10.4
Cash flow from investment activities 74.3 88.8
Cash flow from financing activities – 62.5 – 84.3
Net changes in cash 15.1 – 5.9

The improved operating cash flow is the result of an optimised return and cost structure and significantly lower interest payments.

The cash flow from investment activities essentially includes earnings from disposals (EUR 88.9 million) and money spent on investments in the owned property portfolio (EUR – 13.2 million).

The repayment of loan liabilities in the amount of EUR 295.3 million and the net deposit of EUR 237.8 million from the capital increase resulted essentially in a cash outflow in the cash flow due to the financing activity of EUR 62.5 million.

Funds from Operations (FFO)

The very good operative performance, the cost savings as well as the reduction of the current interest expenses also led to an improved FFO:

  12/31/2009 12/31/2008
  EUR m EUR m
Net result for the period – 13.3 – 255.9
Depreciation, amortisation and impairment losses 2.8 1.8
Value adjustment of investment properties 0.0 276.5
Result from discontinued business divisions 0.0 – 16.4
Value adjustment of derivatives 1.2 32.2
Financial expenses not affecting liquidity 15.3 14.3
Prepayment penalty 6.2 0.0
Special distribution DB 14 0.0 5.7
Deferred taxes 11.1 – 56.2
Tax benefit from capital increase costs 3.7 0.0
Restructuring costs 7.8 24.1
FFO 34.8 26.1
FFO per share    
Previous number of shares (26.40 million) 1.32 0.99
New number of shares (81.84 million) 0.43 0.32

My Annual Report

Fair value in the amount of EUR 2,749.8 million

Improvement of the equity ratio by 28 %

Liquidity situation of Deutsche Wohnen strengthened

Improved operating cash flow