TLG IMMOBILIEN AG J.P. Morgan UBS Investment Bank

Transcription

PROSPECTUS DATED October 14, 2014
Prospectus
for the public offering
of
9,302,326 newly issued bearer shares with no par value (Stückaktien) from a capital increase against contribution in cash to be
resolved by an extraordinary shareholders’ meeting of the Company
and
24,197,674 bearer shares with no par value (Stückaktien) from the holdings of the Existing Shareholders
and
3,350,000 bearer shares with no par value (Stückaktien) from the holdings of one of the Existing Shareholders in connection
with a possible over-allotment
and at the same time for the
admission to trading on the regulated market segment (regulierter Markt) of the stock exchange in Frankfurt am Main with
simultaneous admission to the sub-segment of the regulated market with additional post-admission obligations
(Prime Standard) of the Frankfurt Stock Exchange (Frankfurter Wertpapierbörse)
of
up to 9,302,326 newly issued bearer shares with no par value (Stückaktien) from a capital increase against contribution in cash
to be resolved by an extraordinary shareholders’ meeting of the Company
and
52,000,000 existing bearer shares with no par value (Stückaktien) (existing share capital),
each such share with a notional value of €1.00 and full dividend rights from January 1, 2014
of
TLG IMMOBILIEN AG
Price Range: €10.75 – €13.75
International Securities Identification Number (ISIN): DE000A12B8Z4
German Securities Code (Wertpapierkennnummer, WKN): A12B8Z
Common Code: 111597880
Ticker Symbol: TLG
Joint Global Coordinators and Joint Bookrunners
J.P. Morgan
UBS Investment Bank
Joint Bookrunners
COMMERZBANK
Kempen & Co
HSBC
CONTENTS
Section
Page
Summary of the Prospectus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
S-1
A—Introduction and Warnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
S-1
B—Issuer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
S-1
C—Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
S-13
D—Risks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
S-13
E—Offer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
S-16
German Translation of the Summary of the Prospectus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
S-23
A—Einleitung und Warnhinweise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
S-23
B—Emittent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
S-23
C—Wertpapiere . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
S-37
D—Risiken . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
S-37
E—Angebot . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
S-40
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1
Market and Business Risks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1
Financing Risks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8
Regulatory, Legal and Tax Risks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9
Risks related to the Offering and the Offered Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
12
General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
15
Responsibility Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
15
Purpose of this Prospectus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
15
Forward-looking Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
15
Appraiser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
16
Sources of Market Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
16
Documents Available for Inspection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
18
Currency Presentation and Presentation of Figures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
18
The Offering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
19
Subject Matter of the Offering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
19
Price Range, Offer Period, Offer Price and Allotment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
19
Expected Timetable for the Offering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
20
Information on the Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
21
Transferability of the Shares; Lock-up . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
21
Existing Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
22
Allotment Criteria . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
22
Stabilization Measures, Over-Allotments and Greenshoe Option . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
22
Lock-up Agreement, Limitations on Disposal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
22
Admission to the Frankfurt Stock Exchange and Commencement of Trading . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
23
Designated Sponsors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
23
Interests of Parties Participating in the Offering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
23
Proceeds of the Offering and Costs of the Offering and Listing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
25
Reasons for the Offering and Listing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
26
Dividend Policy; Results and Dividends per Share; Use of Profits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
27
General Provisions Relating to Profit Allocation and Dividend Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
27
Dividend Policy and Earnings per Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
27
Capitalization and Indebtedness; Statement on Working Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
29
Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
29
Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
29
Statement on Working Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
30
Dilution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
31
i
Section
Page
Selected Consolidated Financial Information and Company Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
32
Selected Consolidated Financial Data Prepared in Accordance with IFRS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
33
Additional Key Performance Indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
35
Selected Consolidated Financial Data Prepared in Accordance with German GAAP . . . . . . . . . . . . . . . . . . . . . . . .
38
Management’s Discussion and Analysis of Net Assets, Financial Condition and Results of Operations . . . . . . . . .
40
Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
40
Historical Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
41
Key Factors Influencing TLG’s Portfolio, Results of Operations and the Comparability of Financial
Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
42
Selected Consolidated Statement of Comprehensive Income Data Prepared in Accordance with IFRS . . . . . . . . . .
46
Selected Consolidated Statement of Financial Position Prepared in Accordance with German GAAP . . . . . . . . . . .
53
Investment Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
55
Liquidity and Capital Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
57
Other Financial Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
66
Additional Information from the Unconsolidated Financial Statements Prepared in Accordance with German
GAAP as of and for the Year Ended December 31, 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
66
Quantitative and Qualitative Disclosure about Market Risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
66
Significant Accounting Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
69
Reconciliation between German GAAP and IFRS for the Fiscal Year 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
71
Profit Forecast . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
74
Forecast of Funds from Operations Post Tax (Excluding Results of Disposals) for the Fiscal Year 2014 for TLG
IMMOBILIEN AG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
74
FFO Forecast for the Current Fiscal Year 2014 for the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
74
Auditor’s Report on the Funds from Operations Post Tax (Excluding Results of Disposals) (FFO Forecast) of
TLG IMMOBILIEN AG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
77
Markets and Competition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
78
Markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
78
Competition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
82
Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
84
Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
84
TLG’s Strengths . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
85
TLG’s Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
86
TLG’s Portfolio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
87
TLG’s Business Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
95
Regulatory Environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
101
Tenancy Law for Commercial Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
101
Land-use Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
101
Building Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
102
Protection of Existing Buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
102
Energy Saving Regulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
102
Monument Protection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
102
Regulation Relating to Environmental Damage, Contamination and Property Maintenance . . . . . . . . . . . . . . . . . . .
103
German Law on Property Purchases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
104
Capital Investments Act (Kapitalanlagegesetzbuch) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
104
Information on the Existing Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
106
Shareholder Structure (Before and After the Offering) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
106
General Information on the Company and the Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
108
Formation, Incorporation, Commercial Name, Fiscal Year and Registered Office . . . . . . . . . . . . . . . . . . . . . . . . . .
108
History and Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
108
ii
Section
Page
Duration of the Company and Corporate Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
109
Group Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
109
Significant Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
110
Statutory Auditor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
110
Notifications, Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
110
Description of Share Capital of TLG IMMOBILIEN AG and Applicable Regulations . . . . . . . . . . . . . . . . . . . . . . .
111
Current Share Capital; Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
111
Development of the Share Capital since the Company’s Foundation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
111
Authorized Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
111
Conditional Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
112
Purchase of Own Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
112
General Provisions Governing a Liquidation of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
112
General Provisions Governing a Change in the Share Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
112
General Provisions Governing Subscription Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
113
Exclusion of Minority Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
113
Shareholder Notification Requirements; Mandatory Takeover Bids; Directors’ Dealings . . . . . . . . . . . . . . . . . . . . .
114
EU Short Selling Regulation (Ban on Naked Short-Selling) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
115
Description of the Governing Bodies of TLG IMMOBILIEN AG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
116
Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
116
Management Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
117
Supervisory Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
120
Share Participation Plan and Employee Offering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
125
Certain Information Regarding the Members of the Management Board and Supervisory Board . . . . . . . . . . . . . . .
125
Shareholders’ Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
126
Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
126
Certain Relationships and Related-Party Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
128
Relationships with the Existing Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
128
Relationships with Members of the Management Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
129
Relationships with Members of the Supervisory Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
129
Underwriting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
130
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
130
Underwriting Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
130
Commission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
131
Greenshoe Option and Securities Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
131
Termination/Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
131
Selling Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
132
Taxation in the Federal Republic of Germany . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
133
Taxation of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
133
Taxation of Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
134
Taxation of Dividends of Shareholders with a Tax Domicile in Germany . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
135
Taxation of Dividends of Shareholders without a Tax Domicile in Germany . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
136
Taxation of Capital Gains . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
136
Special Treatment of Companies in the Financial and Insurance Sectors and Pension Funds . . . . . . . . . . . . . . . . . .
138
Inheritance and Gift Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
138
Other Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
139
Taxation in the Grand Duchy of Luxembourg . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
140
Luxembourg Taxation of Shares of a Non-Resident Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
140
iii
Section
Page
Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-1
Valuation Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
V-1
Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
G-1
Recent Developments and Outlook . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
O-1
Signature Page . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SIG-1
iv
SUMMARY OF THE PROSPECTUS
Summaries are made up of disclosure requirements known as elements (“Elements”). These Elements are
numbered in Sections A - E (A.1 - E.7). This summary contains all the Elements required to be included in a summary for this
type of security and issuer. Because some Elements are not required to be addressed, there may be gaps in the numbering
sequence of the Elements. Even though an Element may be required to be inserted in the summary because of the type of
security and issuer, it is possible that no relevant information can be given regarding the Element. In such cases, the summary
includes a short description of the Element with the words “not applicable”.
A—Introduction and Warnings
A.1
Warnings.
This summary should be read as an introduction to this prospectus (the
“Prospectus”). Any decision to invest in the securities should be
based on consideration of this Prospectus as a whole by the investor.
If any claims are asserted before a court of law based on the
information contained in this Prospectus, the investor appearing as
plaintiff may have to bear the costs of translating this Prospectus prior
to the commencement of the court proceedings pursuant to the national
legislation of the member states of the European Economic Area.
TLG IMMOBILIEN AG (the “Company”, and, together with its
consolidated subsidiaries, “TLG”), together with J.P. Morgan
Securities plc, London, United Kingdom (“J.P. Morgan”) and UBS
Limited, London, United Kingdom (“UBS” and, together with
J.P. Morgan the “Joint Global Coordinators”), and together with
COMMERZBANK Aktiengesellschaft, Frankfurt am Main, Germany
(“COMMERZBANK”), Kempen & Co N.V., Amsterdam, the
Netherlands (“Kempen & Co”) and HSBC Trinkaus & Burkhardt AG,
Dusseldorf, Germany (“HSBC” and, together with the Joint Global
Coordinators, COMMERZBANK and Kempen & Co, the “Joint
Bookrunners” or the “Underwriters”), have assumed responsibility
for the contents of this summary pursuant to Section 5 (2b) no. 4 of the
German Securities Prospectus Act (Wertpapierprospektgesetz). Those
persons who are responsible for the summary, including the translation
thereof, or for the issuing (Veranlassung), can be held liable but only
if this summary is misleading, inaccurate or inconsistent when read
together with the other parts of this Prospectus or it does not provide,
when read together with the other parts of this Prospectus, all
necessary key information.
A.2
Information regarding the
subsequent use of the prospectus.
Not applicable. Consent regarding the use of this Prospectus for a
subsequent resale or placement of the shares has not been granted.
B—Issuer
B.1
Legal and commercial name.
The Company’s legal name is TLG IMMOBILIEN AG.
The Company is TLG’s parent company; TLG primarily operates
under the commercial name “TLG IMMOBILIEN”.
B.2
Domicile, legal form, legislation
under which the issuer operates,
country of incorporation.
The Company has its registered office at Hausvogteiplatz 12,
10117 Berlin, Germany, and is registered with the commercial register
of the local court (Amtsgericht) of Charlottenburg, Germany, under the
docket number HRB 161314 B. The Company is a stock corporation
(Aktiengesellschaft) governed by German law.
B.3
Current operations and principal
business activities and principal
markets in which the issuer
competes.
TLG believes it is a leading commercial real estate company for Berlin
and eastern Germany. As of June 30, 2014, TLG’s portfolio comprised
a total of 509 properties with an aggregate fair value of €1,510 million.
With a remaining average contractual lease term for unexpired leases
with a contractually fixed maturity of 8.0 years and an EPRA Vacancy
Rate (as defined below in B.7) of just 4.0% (excluding non-core
properties), the Company believes that this portfolio is well positioned
S-1
to generate stable cash flows for the foreseeable future. TLG is
headquartered in Berlin and operates five local offices in Dresden,
Leipzig, Rostock, Erfurt and Chemnitz.
TLG’s core portfolio comprises 321 office, retail and hotel properties
with an aggregate fair value of €1,338.9 million, as of June 30, 2014,
which TLG intends to hold for the long term (the “Core Portfolio”).
TLG’s Core Portfolio accounts for approximately 89% of the overall
portfolio. Approximately 72% of this Core Portfolio is located within
the city limits of Berlin, Dresden, Leipzig and Rostock, with Berlin
accounting for the largest portion of these holdings (approximately
46% of the Core Portfolio). These cities and eastern Germany have
seen increased demand for commercial real estate. From 2009 to 2012,
investment volumes for commercial real estate in Berlin and eastern
Germany increased from €1.22 billion to €3.48 billion and from
€0.3 billion to €1.36 billion, respectively (Source: Commercial
Portfolio TLG). Given investment volumes of approximately
€1.3 billion in Berlin and €1.37 billion in eastern Germany during the
six-month period ended June 30, 2014 (Source: Commercial Portfolio
TLG), the Company believes that this trend will continue and that
rental income, letting and overall vacancies for the Core Portfolio
should be positively affected as a result.
Office properties, most of them situated in good or very good locations
of city centers in Berlin, Dresden, Leipzig and Rostock, accounted for
36% of TLG’s Core Portfolio (based on fair value as of June 30,
2014). The tenant base for this office portfolio includes “blue chip”
companies and their subsidiaries such as Daimler Real Estate GmbH
and SAP Deutschland AG & Co. KG, government related entities and
agencies such as Ostseesparkasse Rostock and the Federal Agency for
Real Estate (Bundesanstalt für Immobilienaufgaben) as well as small
and medium sized enterprises. TLG plans to grow its office portfolio
through additional acquisitions. The Company believes that this will
further improve its market position in what it considers to be the very
dynamic eastern German office market.
Retail properties, the majority of which are located in attractive microlocations in Berlin and eastern German growth regions, accounted for
approximately 50% of TLG’s Core Portfolio (based on fair value as of
June 30, 2014). The micro-locations in which TLG’s retail properties
are located are particularly attractive for food retailers and other sellers
of essential consumer goods because they are located in areas that
allow the tenant to be a significant, in some cases even the sole,
retailer of the relevant consumer goods in the catchment area. As of
June 30, 2014, approximately 35% of the annualized in-place rent
from TLG’s Core Portfolio related to lease agreements with major
supermarket and discounter chains, including large supermarket chains
“EDEKA”, “REWE” and “Kaiser’s” and discounters “Aldi”, “Lidl”,
“Netto” and “Penny” with which TLG maintains longstanding and
close business relationships. With a remaining average contractual
lease term for unexpired leases with a contractually fixed maturity of
7.3 years and an EPRA Vacancy Rate (as defined below in B.7) of just
1.0% (each as of June 30, 2014), TLG’s retail portfolio was virtually
fully-let and offers stable and secure rental income. This makes tenant
relationships with food retailers the backbone of TLG’s business. TLG
also intends to grow its retail portfolio through selected accretive
acquisitions.
Five hotel properties located in the city centers of Berlin, Dresden and
Rostock accounted for the remaining 15% of TLG’s Core Portfolio
(based on fair value as of June 30, 2014). The tenant base for these
properties includes the well-known hotel chains “Steigenberger”,
“Motel One” and “Ramada”. With an EPRA Vacancy Rate (as defined
below in B.7) of just 1.7%, these properties were virtually fully-let and
the long-term commitment of TLG’s tenants was evidenced by a
S-2
remaining average contractual lease term for unexpired leases with a
contractually fixed maturity of 16.7 years (both as of June 30, 2014).
Lease agreements for TLG’s hotel properties generally provide for
fixed lease payments, limiting TLG’s dependence on the performance
of hotel operators. Stable cash flows and a focus on dynamic markets
make TLG’s hotel portfolio a fitting complement for its office and
retail portfolio.
TLG has classified 188 properties with an aggregate fair value of
€171 million as of June 30, 2014 as non-core and plans to divest the
majority of this non-core portfolio in the medium term. As of June 30,
2014, the remaining average contractual lease term for unexpired
leases with a contractually fixed maturity for TLG’s non-core
properties was 5.5 years and the EPRA Vacancy Rate (as defined
below in B.7) amounted to 12.2%. Through September 15, 2014,
TLG sold, or signed agreements to sell, 48 non-core properties with an
aggregate fair value of €70.6 million. However, the buyer of one
property that TLG had agreed to sell for approximately €23.9 million
may have the right to withdraw from the purchase agreement or to
considerably reduce the purchase price, and in that case, TLG would
likely incur a significant non-cash loss.
The independent, external appraiser Savills Advisory Services GmbH,
Taunusanlage 19, 60325 Frankfurt am Main, Germany, (“Savills”)
prepared a valuation report for 469 properties in TLG’s portfolio and
has assessed the aggregate fair value of these properties with
€1,450 million as of June 30, 2014. The difference between the
number and the value of the properties appraised by Savills to TLG’s
total portfolio of 509 properties with an aggregate fair value of
€1,510 million relates to 40 properties with an aggregate fair value of
€60 million, which were not valued by Savills because for 27 of these
properties with an aggregate fair value of €58 million sale and
purchase agreements had already been signed as of June 30, 2014. Of
the remaining 13 properties, ten properties with an aggregate fair value
of €2 million were accounted for under inventories and TLG plans to
sell these properties. TLG did not attribute any value to the other three
properties.
The Company believes that the following competitive strengths have
been the primary drivers of TLG’s success in the past and will
continue to set it apart from its competitors in the future:
•
The Company believes that it has a market leading integrated
platform for commercial real estate in eastern Germany with a
focus on the growth markets Berlin, Dresden, Leipzig and
Rostock.
•
Based on fair value, close to 44% of TLG’s portfolio of
approximately €1.5 billion as of June 30, 2014, is located in
Berlin, which has seen particularly dynamic development in
recent years.
•
TLG considers its portfolio particularly attractive given the
significant share of newly built or recently modernized properties
and believes that this attractiveness is evidenced by low vacancy
rates.
•
The Company believes that its strong cash flow profile will
support its dividend capacity.
•
The Company has a solid balance sheet with a commitment to a
conservative financing approach and targets a long-term Net
LTV-Ratio (as defined under B.7. below) of 45-50%.
•
The Company believes that it has the ability to unlock tangible
future growth through active portfolio management and selected
accretive acquisitions.
S-3
requirements of German commercial law pursuant to Section 315a (1) of
the German Commercial Code (Handelsgesetzbuch (HGB)). The
consolidated financial statements of the Company as of and for the fiscal
years ended December 31, 2011 and 2012 have been prepared in
accordance with the German Commercial Code (Handelsgesetzbuch
(HGB)) (“German GAAP”). IFRS and German GAAP differ in material
ways and are thus not comparable (e.g., property held for generating
rental income or for capital appreciation is classified as investment
property in accordance with IAS 40 and measured at fair value under
IFRS while it is measured at cost less depreciation under German
GAAP). Until December 31, 2011, TLG’s portfolio consisted of
commercial and residential properties. With effect from January 1, 2012,
TLG’s residential portfolio was spun-off to TLG WOHNEN GmbH, a
new company specifically established for this purpose, whose sole
shareholder was the Federal Republic of Germany. Due to this spin-off,
the Company’s consolidated financial statements prepared for the fiscal
years ended December 31, 2011 and 2012 under German GAAP are not
fully comparable given that the residential portfolio represented a
significant share of TLG’s overall portfolio and business in 2011. The
unaudited condensed interim consolidated financial statements of the
Company as of and for the six-month period ended June 30, 2014 have
been prepared in accordance with IFRS on interim financial reporting
(IAS 34). Additional information included in this Prospectus has been
taken or derived from the audited unconsolidated financial statements of
the Company for the fiscal year ended December 31, 2013, which were
prepared in accordance with German GAAP. Due to the abovementioned
switch of the accounting principles for the consolidated financial
statements from German GAAP to IFRS, for purposes of the comparison
of consolidated financial data as of and for the fiscal years ended
December 31, 2011 and December 31, 2012, consolidated financial data
based on German GAAP are used, whereas for a comparison of
consolidated financial data as of and for the fiscal years ended
December 31, 2012 and December 31, 2013 as well as the six monthperiods ended June 30, 2013 and June 30, 2014, consolidated financial
data based on IFRS are used.
Ernst & Young Wirtschaftsprüfungsgesellschaft GmbH, Stuttgart,
office Berlin, Germany, has audited the Company’s consolidated
financial statements as of and for the fiscal years ended December 31,
2011, 2012 and 2013, and the unconsolidated financial statements for
the fiscal year ended December 31, 2013, and issued in each case an
unqualified auditor’s report thereon.
Where financial data in the following tables are labelled “audited”,
this means that it has been taken from the audited financial statements
mentioned above. The label “unaudited” is used in the following tables
to indicate financial data that have not been taken from the audited
financial statements mentioned above but were taken either from the
Company’s unaudited condensed interim consolidated financial
statements or the Company’s internal reporting system, or calculated
figures from the abovementioned sources.
All of the financial data presented in the text and tables below are
shown in millions of euro (in € million), except as otherwise stated.
Certain financial data (including percentages) in the following tables
have been rounded according to established commercial standards. As
a result, the aggregate amounts (sum totals or sub-totals or differences
or if numbers are put in relation) in the following tables may not
correspond in all cases to the aggregated amounts of the underlying
(unrounded) figures appearing elsewhere in this Prospectus.
Furthermore, in those tables, these rounded figures may not add up
exactly to the totals contained in those tables. Financial information
presented in parentheses denotes the negative of such number
presented. In respect of financial data set out in this Prospectus, a dash
(“—”) signifies that the relevant figure is not available, while a zero
(“0.0”) signifies that the relevant figure is available but has been
rounded to zero.
S-6
Selected Consolidated Financial Data Prepared in Accordance with IFRS
Consolidated Statement of Comprehensive Income Data
For the year ended
December 31,
2012
2013
(audited)
(in € million)
For the six-month
period ended
June 30,
2013
2014
(unaudited)
(in € million)
Net operating income from letting activities . . . . . . . . . . . . . . . . . . . . . . . .
Income from letting activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expenses related to letting activities . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Result from the remeasurement of investment property . . . . . . . . . . . . . . . . .
Result from the disposal of investment property . . . . . . . . . . . . . . . . . . . . . . .
Result from the disposal of real estate inventory . . . . . . . . . . . . . . . . . . . . . .
Proceeds from real estate inventory disposed . . . . . . . . . . . . . . . . . . . . .
Book value of real estate inventory disposed . . . . . . . . . . . . . . . . . . . . .
Other operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Personnel expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
97.1
138.8
(41.6)
53.1
(0.0)
27.4
77.5
(50.2)
9.7
(18.9)
(1.6)
(8.3)
106.3
141.3
(35.1)
72.2
0.5
7.8
21.4
(13.6)
18.7
(23.4)
(1.5)
(7.8)
52.7
69.6
(16.9)
34.4
0.2
5.5
14.3
(8.8)
3.9
(15.4)
(0.7)
(2.3)
50.0
66.9
(16.9)
51.3
0.5
2.3
5.9
(3.6)
3.6
(7.7)
(0.7)
(2.4)
Earnings before interest and taxes (EBIT) . . . . . . . . . . . . . . . . . . . . . . . . .
Income from joint ventures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Financial income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Financial expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gain/loss from the remeasurement of derivatives . . . . . . . . . . . . . . . . . . . . . .
158.4
12.9
0.9
(22.5)
(10.0)
172.8
2.1
0.7
(36.0)
6.9
78.3
2.1
0.4
(18.1)
5.4
96.9
0.0
0.4
(12.1)
(2.0)
Earnings before taxes (EBT) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
139.8
(63.5)
146.4
(47.3)
68.1
(22.0)
83.2
(25.8)
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other comprehensive income (OCI)
thereof non-recycling
Actuarial gains and losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
thereof recycling
Hedge accounting reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
76.3
99.1
46.1
57.4
(1.0)
(0.0)
—
—
—
(0.1)
—
(4.7)
Total comprehensive income for the period . . . . . . . . . . . . . . . . . . . . . . . .
75.3
99.0
46.1
52.7
Consolidated Statement of Financial Position Data
As of December 31,
2012
2013
(audited)
(in € million)
As of June 30,
2014
(unaudited)
(in € million)
Non-current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investment property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Advance payments on investment property . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investment in joint ventures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other non-current financial assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trade receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Receivables from income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Financial instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other current financial assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Receivables and other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Assets classified as held for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,615.2
1,511.7
3.0
18.4
1.5
69.1
0.1
6.9
4.5
104.2
22.3
9.6
0.2
0.0
10.0
1.6
60.5
0.0
1,448.1
1,414.7
2.7
17.8
0.9
0.0
0.1
8.4
3.5
187.6
13.4
11.6
0.2
0.0
5.0
0.7
138.9
17.8
1,456.6
1,423.0
2.5
16.4
0.7
0.0
0.1
8.4
5.4
99.3
13.3
13.7
0.3
0.0
3.2
2.9
24.5
41.6
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,719.4
1,635.7
1,555.9
S-7
As of December 31,
2012
2013
(audited)
(in € million)
As of June 30,
2014
(unaudited)
(in € million)
Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Subscribed capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Capital reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other comprehensive income (OCI) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,006.7
52.0
151.5
804.3
(1.0)
801.0
52.0
410.2
339.9
(1.2)
621.5
52.0
252.5
322.9
(5.9)
Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-current liabilities due to financial institutions . . . . . . . . . . . . . . . . . .
Pension provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-current financial instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other non-current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current liabilities due to financial institutions . . . . . . . . . . . . . . . . . . . . . .
Trade payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other current provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current financial instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
712.6
508.6
392.9
6.9
25.3
4.3
79.3
204.0
87.2
29.8
22.2
12.7
18.2
34.1
834.7
630.2
513.0
6.9
18.8
3.4
88.1
204.4
113.2
14.6
16.2
44.3
0.0
16.1
934.4
787.2
672.4
6.8
8.7
2.9
96.3
147.3
55.6
12.2
12.3
57.3
0.0
9.9
Total equity and liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,719.4
1,635.7
1,555.9
Consolidated Cash Flow Statement Data
For the year ended
December 31,
2012
2013
(audited)
(in € million)
For the six-month
period ended
June 30,
2013
2014
(unaudited)
(in € million)
Cash flow from operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest received . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income taxes paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash flow from operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash flow from investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash flow from financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
162.9
0.9
(21.7)
(7.7)
134.3
(79.0)
(28.4)
76.1
0.7
(57.0)
(5.9)
13.8
220.9
(156.3)
26.5
0.4
(33.9)
(0.6)
(7.6)
55.1
(37.1)
33.4
0.4
(35.6)
(4.5)
(6.3)
20.3
(128.4)
Change in cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
26.9
78.4
10.5
(114.4)
Additional Key Performance Indicators
The Company believes that the key performance indicators described in this section constitute the most important
indicators for measuring the operating and financial performance of TLG’s business.
TLG expects the key performance indicators rental income, net operating income from letting activities, EBITDA,
Adjusted EBITDA, FFO, AFFO, Equity-Ratio, Net LTV-Ratio, interest coverage ratio, EPRA NAV and EPRA Vacancy
Rate (the “Key Performance Indicators”) to be of use for potential investors. TLG believes that the Key Performance
Indicators are useful in evaluating TLG’s operating performance, the net value of TLG’s portfolio, the level of its
indebtedness and of cash flows generated by TLG’s business, because a number of companies, in particular companies in
the real estate sector, also publish these figures as key performance indicators.
However, the Key Performance Indicators are not recognized as measures under IFRS and should not be considered as
substitutes for figures on net assets, results before taxes, net earnings, cash flow from operating activities or other data from
the consolidated statement of comprehensive income, the consolidated cash flow statement or the consolidated statement of
financial position as determined in accordance with IFRS, or as measures of profitability or liquidity. The Key Performance
Indicators neither necessarily indicate whether cash flow will be sufficient or available for TLG’s cash requirements, nor
whether any such measure is indicative of TLG’s historical operating results. The Key Performance Indicators are not
meant to be indicative of future results. Because not all companies calculate these Key Performance Indicators in the same
way, TLG’s presentation of the Key Performance Indicators is not necessarily comparable with similarly-titled measures
used by other companies.
S-8
Performance and Profitability
The following table provides information on TLG’s key performance and profitability measures:
For the year ended
December 31,
2012
2013
(unaudited and in € million,
unless otherwise specified)
Rental income(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net operating income from letting activities(2) . . . . . . . . . .
EBITDA(3)(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjusted EBITDA(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
FFO(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
FFO (per share and in €)(5) . . . . . . . . . . . . . . . . . . . . . . . . .
AFFO(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
AFFO (per share and in €)(5) . . . . . . . . . . . . . . . . . . . . . . .
116.1
97.1
106.9
79.5
52.6
1.01
40.0
0.77
For the six-month
period ended
June 30,
2013
2014
118.3
106.3
102.0
90.4
46.1
0.89
40.4
0.78
59.2
52.7
44.6
45.8
24.4
0.47
22.5
0.43
57.0
50.0
46.3
42.0
26.0
0.50
23.8
0.46
(1)
Rental income refers to income from letting activities without income from recharged utilities and other operating costs and income
from other goods and services as reflected in the consolidated statement of comprehensive income for the respective period. Audited
for the years ended December 31, 2012 and 2013.
(2)
Net operating income from letting activities refers to income from letting activities less expenses related to letting activities, all as
reflected in the consolidated statement of comprehensive income for the respective period. Audited for the years ended December 31,
2012 and 2013.
(3)
Earnings before interest, taxes, depreciation and amortization (“EBITDA”) is defined as consolidated net income or loss for the
period before income taxes, interest result, income from joint ventures, gain/loss from the remeasurement of derivatives, depreciation
as well as before the result from the remeasurement of investment property, all as reflected in the Company’s respective consolidated
financial statements.
(4)
“Adjusted EBITDA” is defined as EBITDA adjusted for result from the disposal of investment property, result from the disposal of
real estate inventory and one-off items.
The following table shows the calculation of EBITDA and Adjusted EBITDA, each starting from EBIT:
Earnings before interest and taxes (EBIT) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Result from the remeasurement of investment property . . . . . . . . . . . . . . . . . . . . . .
EBITDA (unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Result from the disposal of investment property . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Result from the disposal of real estate inventory . . . . . . . . . . . . . . . . . . . . . . . . . . .
Severance Packages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reversal of a provision for real estate transfer taxes in connection with the spin-off
of TLG WOHNEN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reversal of liabilities and provisions from the pass-through of purchase prices and
accrued interest (unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reversal of a provision for subsidy payment risk . . . . . . . . . . . . . . . . . . . . . . . . . . .
Share based payment obligation (bonus agreements) . . . . . . . . . . . . . . . . . . . . . . . .
Adjusted EBITDA (unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(5)
For the year ended
December 31,
2012
2013
(audited, unless
otherwise specified)
(in € million)
158.4
172.8
1.6
1.5
(53.1)
(72.2)
106.9
102.0
0.0
(0.5)
(27.4)
(7.8)
—
6.9
For the six-month
period ended
June 30,
2013
2014
(unaudited)
(in € million)
78.3
96.9
0.7
0.7
(34.4)
(51.3)
44.6
46.3
(0.2)
(0.5)
(5.5)
(2.3)
6.9
—
—
(5.4)
—
—
—
—
—
(4.8)
—
—
—
—
—
—
(2.3)
0.8
79.5
90.4
45.8
42.0
Funds from operations post tax (excluding result from disposals) (“FFO”) is a measure of cash generation for real estate companies.
The Company defines FFO as net income/loss for the period adjusted for the result from the disposal of investment property, the
result from the disposal of real estate inventory, the result from the remeasurement of investment property, the gain/loss from the
remeasurement of derivatives and other effects, as well as deferred taxes and the tax effects from the result of the disposal of
investment property and the disposal of real estate inventory, as well as the tax effects from the settlement of interest rate swaps.
“AFFO” represents FFO less capex.
S-9
The following table shows the calculation of FFO and AFFO for the periods shown:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Result from the disposal of investment property . . . . . . . . . . . . . . . . . . . . . . . . . . .
Result from the disposal of real estate inventory . . . . . . . . . . . . . . . . . . . . . . . . . . .
Result from the remeasurement of investment property . . . . . . . . . . . . . . . . . . . . . .
Gain/loss from the remeasurement of derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other effects(a) (unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Correction of current income taxes due to lump sum calculation for interim
periods(b) (unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustment for tax effects from the result of the disposal of investment property
and the disposal of real estate inventory as well as tax effects from the
settlement of interest rate swaps(c) (unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . .
FFO (unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
FFO (per share(d) and in €) (unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
FFO (unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Capex(e) (unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
AFFO (unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
AFFO (per share(d) and in €) (unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(a)
For the year ended
December 31,
2012
2013
(audited, unless
(in € million)
76.3
99.1
0.0
(0.5)
(27.4)
(7.8)
(53.1)
(72.2)
10.0
(6.9)
(15.4)
(6.8)
59.0
9.8
For the six-month
period ended
June 30,
2013
2014
(unaudited)
(in € million)
46.1
57.4
(0.2)
(0.5)
(5.5)
(2.3)
(34.4)
(51.3)
(5.4)
2.0
4.2
(1.7)
5.5
8.3
N/A
N/A
0.6
9.5
3.2
52.6
1.01
52.6
(12.6)
40.0
0.77
31.4
46.1
0.89
46.1
(5.7)
40.4
0.78
13.6
24.4
0.47
24.4
(1.9)
22.5
0.43
4.6
26.0
0.50
26.0
(2.2)
23.8
0.46
Other effects include:
(i)
Depreciation of owner-occupied properties (IAS 16) of €0.3 million for the fiscal year ended December 31, 2012,
€0.3 million for the fiscal year ended December 31, 2013, €0.1 million for the six-month period ended June 30, 2013 and
€0.1 million for the six-month period ended June 30, 2014;
(ii)
Income from the service agreement with TAG Wohnen GmbH (formerly: TLG WOHNEN GmbH) that will expire on
December 31, 2014 of €2.9 million for the fiscal year ended December 31, 2012, €1.6 million for the fiscal year ended
December 31, 2013, €0.7 million for the six-month period ended June 30, 2013 and €0.3 million for the six-month period
ended June 30, 2014;
(iii) Income from the 33% interest in the joint venture Altmarkt-Galerie Dresden KG, sold in 2013, of €12.9 million for the
fiscal year ended December 31, 2012, €2.1 million for the fiscal year ended December 31, 2013 and €2.1 million for the
six-month period ended June 30, 2013;
(iv) Personnel expenses for severance packages in connection with TLG’s reorganization in the amount of €6.9 million for the
fiscal year ended December 31, 2013 and €6.9 million for the six-month period ended June 30, 2013 as well as share based
payment expenses of €0.8 million for the six-month period ended June 30, 2014;
(v)
Income from the reversal of provisions for real estate transfer tax, provided for in connection with the spin-off of TLG’s
residential properties to TLG WOHNEN GmbH in 2012, of €5.4 million for the fiscal year ended December 31, 2013; and
(vi) Income from the reversal of liabilities and provisions in connection with purchase price pass-through obligations and
accrued interest which resulted from TLG’s obligation to pass on parts of the purchase price received for the sale of
properties which were co-owned by TLG, BEDIG AG i.L. and the state of Berlin in the amount of €4.8 million for the
fiscal year ended December 31, 2013 and income from reversal of a provision for the subsidy repayment risk of
€2.3 million for the six-month period ended June 30, 2014.
(b)
The current income taxes shown in the six-month periods ended June 30, 2013 in the amount of €16.5 million and 2014 in the
amount of €17.5 million were calculated by using the integral method in accordance with IAS 34.30. Due to this calculation
method a correction in the amount of €0.6 million for the first half year of 2013 and in the amount of €9.5 million for the first
half year of 2014 is made to show the actually lower current tax expenses for the respective six-month period in an amount of
€15.9 million for 2013 and of €8.0 million for 2014.
(c)
Adjustments of the actual tax effect on current income taxes from the result of the disposal of investment property and real
estate inventory amounted to €3.2 million for the fiscal year ended December 31, 2012, €36.8 million for the fiscal year ended
ended June 30, 2014.
Adjustments of the reverse effect from the tax effective settlement of interest rate swaps (originally decreasing tax expense) amounted
to €5.5 million for the fiscal year ended December 31, 2013 and €6.4 million for the six-month period ended June 30, 2014.
(d)
Based on a total of 52,000,000 shares outstanding as of the date of this Prospectus.
(e)
Capex refers to capital expenditure excluding cost of acquisitions of properties, cost of project developments and maintenance
expenses.
S-10
Financing and Leverage
As of and
for the year
ended December 31,
2012
2013
(unaudited)
(in %, unless otherwise specified)
Equity Ratio(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net LTV-Ratio(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest coverage ratio (as multiple)(3) . . . . . . . . . . . . .
58.5
27.0
3.7x
As of and
for the six-month period
ended June 30,
2014
(unaudited)
49.0
33.3
2.6x
39.9
47.0
3.6x
(1)
The equity ratio is the ratio of total equity (attributable to shareholders) to total equity and liabilities (the “Equity Ratio”). As of
December 31, 2012 the Equity Ratio is derived from dividing equity in an amount of €1,006.7 million by the total equity and liabilities in an
amount of €1,719.4 million. As of December 31, 2013 the Equity Ratio is derived from dividing equity in an amount of €801.0 million by
the total equity and liabilities in an amount of €1,635.7 million. As of June 30, 2014 the Equity Ratio is derived from dividing equity in an
amount of €621.5 million by the total equity and liabilities in an amount of €1,555.9 million.
(2)
The net loan to value ratio is the ratio of net debt (sum of non-current and current liabilities due to financial institutions less cash and
cash equivalents), to real estate (sum of investment property, owner-occupied properties, prepayments for investment properties,
assets classified as held for sale and inventories) (the “Net LTV-Ratio”).
The following table shows the calculation of the Net LTV-Ratio as of the dates shown:
Non-current liabilities due to financial institutions . . . . . . . . . . . . . . . . . . . .
Current liabilities due to financial institutions . . . . . . . . . . . . . . . . . . . . . . .
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(3)
As of December 31,
2012
2013
(audited
and in € million, unless
392.9
513.0
87.2
113.2
(60.5)
(138.9)
As of June 30,
2014
(unaudited)
(in € million unless
672.4
55.6
(24.5)
Net debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
419.5
487.3
703.5
Investment property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Owner-occupied properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepayments for investment properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Assets classified as held for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,511.7
16.7
3.0
0.0
22.3
1,414.7
16.5
2.7
17.8
13.4
1,423.0
15.1
2.5
41.6
13.3
Real estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,553.7
1,465.1
1,495.5
Net loan to value (Net LTV) (in %) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
27.0
33.3
47.0
The interest coverage ratio is the ratio of Adjusted EBITDA to interest result for the respective period and may not correspond to
similar terms used for financial covenants in TLG’s credit agreements. The interest coverage ratio for the fiscal year ended
December 31, 2012 is derived from dividing the Adjusted EBITDA of €79.5 million by the interest result of €21.6 million. The
interest coverage ratio for the fiscal year ended December 31, 2013 is derived from dividing the Adjusted EBITDA of €90.4 million
by the interest result of €35.3 million. The interest coverage ratio for the six-month period ended June 30, 2014 is derived from
dividing the Adjusted EBITDA of €42.0 million by the interest result of €11.7 million.
EPRA Key Performance Indicators
Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fair value remeasurement of other non-current assets (IAS 16)(1) (unaudited) . . .
Fair value remeasurement of properties in inventories(2) (unaudited) . . . . . . . . . .
Fair values of financial derivatives (unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
EPRA NAV(3) (unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
EPRA NAV (per share and in €)(4) (unaudited) . . . . . . . . . . . . . . . . . . . . . . . .
EPRA Vacancy Rate (in %)(5) (unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1)
As of December 31,
2012
2013
(audited and in € million,
unless
1,006.7
801.0
2.1
3.8
4.6
5.3
43.4
18.8
(4.5)
(3.5)
79.3
88.1
1,131.7
913.5
21.76
17.57
8.7
5.1
As of June 30,
2014
(unaudited)
(in € million, unless
621.5
2.7
5.1
8.7
(5.4)
96.3
728.9
14.02
5.0
Fair value remeasurement of other non-current assets (IAS 16) means the surplus arising from the remeasurement at fair value of
owner-occupied properties, which are included in the consolidated statement of financial position at the lower of cost less any
accumulated depreciation and impairments and fair value.
S-11
(2)
Fair value remeasurement of properties in inventories means the surplus arising from the remeasurement at fair value of trading
properties, which are recognized under IFRS at the lower of cost and net realizable value and recognized under inventories as stated
in the consolidated statement of financial position.
(3)
EPRA NAV is calculated in accordance with the definition recommended by the European Public Real Estate Association (the
“EPRA”) and used as an indicator of TLG’s long-term equity and is calculated based on equity (i) plus fair value remeasurement of
other non-current assets (IAS 16) and fair value remeasurement of properties in inventories and (ii) excluding the fair values of
financial derivatives, deferred tax assets and deferred tax liabilities (the “EPRA NAV”).
(4)
(5)
The EPRA vacancy rate is the estimated rental value (ERV) of vacant space divided by the estimated rental value of the whole
portfolio (“EPRA Vacancy Rate”).
Selected Consolidated Financial Data Prepared in Accordance with German GAAP
For the
year ended
December 31,
2011
2012
(audited, unless otherwise
specified)
(in € million)
Consolidated Income Statement Data
Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Result from ordinary activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated net income for the financial year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
247.4
52.0
18.7
219.7
7.1
2.5
As of
December 31,
2011
2012
specified)
(in € million)
Consolidated Balance Sheet Data
Fixed assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current assets (unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,795.9
108.5
7.1
1,339.2
104.6
7.3
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,911.5
1,451.1
Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Negative consolidation difference . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Special reserve for investment grants and subsidies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
962.7
7.9
35.8
92.2
812.3
0.6
805.3
7.0
16.4
89.2
533.2
0.1
Total equity and liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,911.5
1,451.1
For the
year ended
December 31,
2011
2012
specified)
(in € million)
Cash flows from operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash flows from investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash flows from financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
124.3
(115.9)
19.2
142.5
(86.6)
(28.4)
B.8
Selected key pro forma financial
information.
Not applicable. No pro forma financial information has been prepared
by the Company.
B.9
Profit forecast and estimate.
Based on the trends of the fiscal year 2014, the Company’s
management anticipates FFO of €50 million for the fiscal year 2014.
B.10
Qualifications in the audit report on
the historical financial information.
Not applicable. The auditor’s reports on the historical financial
information included in this Prospectus have been issued without
qualification.
S-12
B.11
Insufficiency of the issuer’s working
capital for its present requirements.
Not applicable. The Company is of the opinion that TLG is in a
position to meet the payment obligations that become due within at
least the next twelve months.
C—Securities
C.1
Type and class of the securities being
admitted to trading.
Ordinary bearer shares with no par value (Stückaktien), each with a
notional value of €1.00 and full dividend rights from January 1, 2014.
Security identification number.
International Securities Identification Number (ISIN):
DE000A12B8Z4
German Securities Code (Wertpapierkennnummer, WKN): A12B8Z
Ticker Symbol: TLG
C.2
Currency.
Euro.
C.3
The number of shares issued and
fully paid.
52,000,000 bearer shares with no par value (Stückaktien). The share
capital has been fully paid up.
Notional value.
Each of the shares of the Company represents a notional share of
€1.00 in the Company’s share capital.
C.4
A description of the rights attached
to the securities.
Each share in the Company carries one vote at the Company’s
shareholders’ meeting. There are no restrictions on voting rights. The
shares carry full dividend rights as from January 1, 2014.
C.5
A description of any restrictions on
the free transferability of the
securities.
Not applicable. The Company’s shares are freely transferable in
accordance with the legal requirements for bearer shares. There are no
prohibitions or restrictions on disposals with respect to the
transferability of the Company’s shares.
C.6
Application for admission to trading
on a regulated market and identity of
regulated markets where the
securities are to be traded.
The Company expects to apply for admission of its shares to trading
on the regulated market segment (regulierter Markt) of the Frankfurt
Stock Exchange (Frankfurter Wertpapierbörse) and, simultaneously,
to the sub-segment thereof with additional post-admission obligations
(Prime Standard) on or about October 15, 2014. The listing approval is
expected to be announced on October 23, 2014. Trading on the
Frankfurt Stock Exchange (Frankfurter Wertpapierbörse) is currently
expected to commence on October 24, 2014.
C.7
Dividend policy.
The Company intends to pay dividends in the amount of 70-80% of its
annual FFO, provided that TLG’s business performance remains at
least stable. Given that the IPO is scheduled to be completed just two
months prior to the end of the current fiscal year, the Company
currently plans to pay a dividend in the total amount of €10-15 million
for the fiscal year 2014.
D—Risks
D.1
Key risks specific to the issuer and its
industry.
An investment in the shares of the Company is subject to risks.
Therefore, investors should carefully consider the following risks and
the other information contained in this Prospectus when deciding
whether to invest in the Company’s shares. The market price of the
Company’s shares could fall if any of these risks were to materialize,
in which case investors could lose some or all of their investment. The
following risks, alone or together with additional risks and
uncertainties not currently known to the Company, or that the
Company might currently deem immaterial, could materially adversely
affect TLG’s business, net assets, financial condition and results of
operations.
The order in which the risks are presented is not an indication of the
likelihood of the risks actually materializing, or the significance or
S-13
degree of the risks or the scope of any potential harm to TLG’s
business, net assets, financial condition or results of operations. The
risks mentioned herein may materialize individually or cumulatively.
Market and Business Risks
•
TLG could be adversely affected by negative developments in the
German economy and commercial real estate markets,
e.g., general deflation in the Eurozone or rising interest rates.
•
TLG could be adversely affected by a deterioration of economic
conditions and the business environment in Berlin and eastern
Germany, in particular negative demographic trends.
•
TLG may not be able to implement its strategy of growing
through acquisitions due to a lack of attractive properties or
portfolios available for purchase, competition for such
acquisitions or an inability to obtain the required acquisition
financing.
•
TLG may be unable to identify all risks associated with properties
or portfolios it acquires and may overestimate the value and/or
financial performance of such acquisition opportunities.
•
TLG may face risks related to (re-)development activities and
development activities intended in the future may not be possible.
•
TLG may be unable to sell properties from its non-core portfolio
on favorable terms or may be unable to do so at all and this may
limit the funds available for TLG’s growth strategy.
•
TLG could be subject to liability claims in connection with sold
properties.
•
TLG’s portfolio bears certain concentration risks and negative
developments affecting demand for office, retail and hotel
properties, TLG’s major tenants and its most valuable properties
could have a particularly adverse effect on TLG’s business.
•
TLG may be unable to find or retain suitable and solvent tenants
on acceptable terms and existing tenants may be unable to meet
their payment obligations.
•
Indexation clauses in TLG’s lease agreements could adversely
affect TLG’s rental income.
•
TLG may incur substantial unexpected maintenance, repair and
modernization costs and failure to undertake appropriate
maintenance measures could adversely affect its rental income.
•
The valuation report and financial information contained in this
Prospectus may incorrectly assess the value of TLG’s properties.
•
TLG may be required to adjust the current fair values of its
investment properties or record lower results from the
remeasurement of investment property and therefore recognize
significant losses.
•
TLG may be unable to replace the members of the Company’s
management board and key personnel or to hire additional
qualified personnel.
•
TLG’s IT-systems could malfunction or become impaired.
•
TLG’s IT-based portfolio management tools could fail to
correctly reflect and support the business decisions that are in
TLG’s best interest.
•
TLG could incur substantial losses from damage not covered by,
or exceeding the coverage limits of, its insurance policies.
S-14
•
The Company’s cash flows and possible future dividend
payments also depend on the profitability of its subsidiaries and it
may not be able to implement significant changes with regards to
such subsidiaries.
Financing Risks
•
TLG’s ability to repay existing and future debt could be limited
and TLG may be unable to obtain new sources of financing at
attractive terms, or at all.
•
If TLG breaches covenants under its financing agreements it
could be forced to sell properties irrespective of the prices it can
achieve and its creditors or security agents could seize or realize
significant collateral, which could ultimately lead to an
insolvency of the Company.
Regulatory, Legal and Tax Risks
D.3
Key risks specific to the securities.
•
TLG may be adversely affected by changes to the general
regulatory environment in Germany.
•
TLG may incur costs in connection with residual pollution
including wartime ordnance, soil contaminations and hazardous
materials.
•
Standard clauses used in TLG’s lease agreements may be invalid
and some of these agreements may not fulfill the strict written
form requirements under German law.
•
TLG’s compliance structure may not have been, or may not be,
sufficient to adequately protect TLG from all legal or financial
risks.
•
TLG is exposed to risks from potential future legal disputes.
•
TLG may be forced to repay certain subsidies.
•
TLG may be subject to restitution or compensation claims if its
properties have been unlawfully expropriated, and this could
delay or prevent the transfer of its properties.
•
TLG may be adversely affected by changes to the general tax
environment in Germany as such changes might result in an
increase of TLG’s tax burden.
Risks related to the Offering and the Offered Shares
•
The offering may not be completed if the Joint Bookrunners
terminate the Underwriting Agreement (as defined in E.3 below)
or the Company withdraws from the offering.
•
The Company’s consolidated financial statements from the fiscal
year 2013 onwards may be difficult to compare to those from
previous periods.
•
TLG’s FFO forecast for the fiscal year 2014 may differ materially
from TLG’s actual FFO for the fiscal year 2014 and the Company
may decide to reduce its divided payments.
•
The market price and trading volume of the Company’s shares
could fluctuate considerably.
•
Following the listing, East AcquiCo will still be in a position to
exert substantial influence on TLG. The interests of East
AcquiCo could differ from the interests of the other shareholders.
Any future sales of the Company’s shares by major shareholders
of the Company could depress the market price of the shares.
•
Future capital measures could lead to a substantial dilution of
existing shareholders’ interests in the Company.
S-15
•
The Company will face additional administrative requirements
and incur higher ongoing costs as a result of the initial public
offering.
E—Offer
E.1
The total net proceeds.
At the mid-point of the price range set for the offering of the Offer
Shares (the “Price Range”), gross proceeds from the offering are
expected to total approximately €451.4 million (assuming placement
of all Offer Shares (as defined below in E.3)). Assuming expenses
related to the offering and commissions payable to the Underwriters in
a total amount of approximately €20.9 million, the total net proceeds
from the offering would amount to approximately €430.5 million at
the mid-point of the Price Range.
The Company will receive only the proceeds of the offering resulting
from the sale of the New Shares (as defined below in E.3). The
Company will not receive any proceeds from the sale of the Existing
Shares (as defined below in E.3) from the holdings of the Existing
Shareholders. Assuming a placement of all Offer Shares (as defined in
E.3 below) at the mid-point of the Price Range, the Company will
receive gross proceeds of approximately €114.0 million
(corresponding to estimated net proceeds of approximately
€108.5 million). However, the Company reserves the right to only
allocate such number of New Shares (as defined below in E.3) as to
reach its minimum gross proceeds target of €100 million.
At the mid-point of the Price Range, gross proceeds to the Existing
Shareholders (assuming placement of the maximum number of
Existing Shares (as defined below in E.3) and assuming full exercise
of the Greenshoe Option (as defined below in E.3)) will amount to
approximately €337.4 million and estimated net proceeds of
approximately €322.0 million.
Estimate of the total expenses of the
offering and listing, including
estimated expenses charged to the
investor by the issuer.
Assuming an offer price at the mid-point of the Price Range, the
expenses related to the offering of the Offer Shares (as defined below
in E.3) and listing of the Company’s entire share capital are expected
to total approximately €20.9 million.
The expenses of the Company related to the offering of the Offer
Shares (as defined below in E.3) and listing of the Company’s entire
share capital are expected to total approximately €8.5 million
(excluding underwriting and placement commissions payable to the
Underwriters), thereof approximately €6.1 million will be borne by the
Existing Shareholders, which means that the Company will ultimately
bear approximately €2.4 million thereof. The Existing Shareholders
will bear the offering and listing related costs of the Company in the
ratio of Existing Shares (as defined below in E.3) to Base Shares (as
defined below in E.3).
Assuming an offer price at the mid-point of the Price Range, a
placement of all New Shares (as defined below in E.3) and a
placement of the maximum number of Existing Shares and OverAllotment Shares (as defined below in E.3) (and the Greenshoe
Option, as defined below in E.3, has been fully exercised) and
assuming further payment in full of the discretionary fee of up to
€5.6 million, at the mid-point of the Price Range, the commission
payable to the Underwriters will amount to €12.4 million. Thereof,
€3.1 million are attributable to the placement of the New Shares (as
defined below in E.3) and will be borne by the Company; of the
remaining €9.3 million, €8.2 million are attributable to the placement
of the Existing Shares (as defined below in E.3) and will directly be
borne by the Existing Shareholders and €1.1 million are attributable to
the placement of the Over-Allotment Shares (as defined below in E.3)
and will directly be borne by East AcquiCo.
S-16
Neither the Company nor the Existing Shareholders nor the
Underwriters will charge expenses to investors. Investors will have to
bear customary transaction and handling fees charged by their
account-keeping financial institution.
E.2a
Reasons for the offering.
The Company intends to list its shares on the regulated market
segment (regulierter Markt) of the Frankfurt Stock Exchange
(Frankfurter Wertpapierbörse) and, simultaneously, on the
sub-segment thereof with additional post-admission obligations (Prime
Standard) of the Frankfurt Stock Exchange (Frankfurter
Wertpapierbörse) to get access to the capital markets. The Company
also intends to pursue the offering to receive the proceeds from the
placement of the New Shares (as defined below in E.3).
The Existing Shareholders will offer their shares to partially divest
their stake in the Company and to ensure a sufficient freefloat and
trading liquidity in the Company’s shares.
E.3
Use of Proceeds, estimated net
amount of the proceeds.
The Company intends to use the net proceeds of the offering of the
New Shares (as defined below in E.3), together with additional debt
financing, to fund future acquisitions. Such acquisitions could include
a retail property in Berlin with a potential acquisition price (including
ancillary acquisition costs) of approximately €35 million, for which it
is in negotiations with the seller, an office property in Rostock with a
potential acquisition price (including ancillary acquisition costs) of
approximately €16 million, for which it is conducting due diligence,
and one or more of the other office and retail properties with an
aggregate fair value of €20 million and €140 million, respectively,
which it is currently reviewing in more detail, or other properties. The
balance of the proceeds, if any, will be used for general corporate
purposes. Assuming a placement of all Offer Shares (as defined below
in E.3) at the mid-point of the Price Range, the Company expects to
receive gross proceeds of approximately €114.0 million in the offering
and net proceeds of approximately €108.5 million.
Offer conditions.
The offering (including any potential Over-Allotment) relates to the
sale of 36,850,000 Offer Shares with no par value (Stückaktien), each
representing a notional value of €1.00 in the Company’s share capital
and with full dividend rights from January 1, 2014, consisting of:
•
9,302,326 newly issued bearer shares with no par value
(Stückaktien) from a capital increase against contribution in cash
to be resolved by an extraordinary shareholders’ meeting of the
Company (the “New Shares”);
•
24,197,674 existing bearer shares with no par value (Stückaktien)
from the holdings of the Existing Shareholders (the “Existing
Shares” and together with the New Shares, the “Base Shares”);
and
•
3,350,000 existing bearer shares with no par value (Stückaktien)
from the holdings of East AcquiCo in connection with a possible
Over-Allotment (the “Over-Allotment Shares” and, together
with the Base Shares, the “Offer Shares”).
The offering consists of a public offering of the Offer Shares in
Germany and Luxembourg and private placements of the Offer Shares
in certain jurisdictions outside Germany and Luxembourg. In the
United States, the Offer Shares will be offered for sale to qualified
institutional buyers in reliance on Rule 144A under the U.S. Securities
Act of 1933, as amended. Outside the United States, the Offer Shares
will be offered in reliance on Regulation S under the U.S. Securities
Act of 1933, as amended.
Offer Period.
The offer period, during which investors may submit purchase orders
for the Offer Shares, is expected to begin on October 15, 2014 and is
expected to end on October 23, 2014 at 12:00 noon CEST (Central
European Summer Time) for retail investors (natural persons) and at
S-17
16:00 CEST (Central European Summer Time) for institutional
investors. Purchase orders must be of at least 50 shares and limit steps
must be denominated in full euro amounts or euro cent figures of 25,
50, or 75 cents. Multiple purchase orders are permitted.
Price Range and Offer Price.
The Price Range within which purchase orders may be placed is
€10.75 to €13.75 per Offer Share.
Amendments to the Term of the
Offering.
The Company and the Existing Shareholders reserve the right, together
with the Joint Bookrunners, to increase or decrease the total number of
Offer Shares, to increase or decrease the upper limit and/or the lower
limit of the Price Range and/or to extend or shorten the offer period.
Changes in the number of Offer Shares, changes to the Price Range or
the extension or shortening of the offer period will not invalidate any
offers to purchase that have already been submitted. If such change
requires the publication of a supplement to this Prospectus, investors
who submitted purchase orders before the supplement is published
shall have the right, under the German Securities Prospectus Act
(Wertpapierprospektgesetz), to withdraw these offers to purchase
within two business days of the publication of the supplement. Instead
of withdrawing the offers to purchase placed prior to the publication of
the supplement, investors may change their orders or place new
limited or unlimited offers to purchase within two business days of the
publication of the supplement. To the extent that the terms of the
offering are changed, such change will be published by means of
electronic media (such as Thomson Reuters or Bloomberg) and, if
required
by
the
German
Securities
Trading
Act
(Wertpapierhandelsgesetz) or the German Securities Prospectus Act
(Wertpapierprospektgesetz), as an ad hoc release via an electronic
information system and on the Company’s website and as a
supplement to this Prospectus. Investors who have submitted offers to
purchase will not be notified individually. Under certain conditions,
the Joint Global Coordinators, on behalf of the Underwriters, may
terminate the underwriting agreement relating to the offering entered
into with the Company and the Existing Shareholders on October 14,
2014 (the “Underwriting Agreement”), even after commencement of
trading (Aufnahme des Handels) of the Company’s shares on the
regulated market segment (regulierter Markt) of the Frankfurt Stock
Exchange (Frankfurter Wertpapierbörse).
Placement Price.
The placement price and the final number of Offer Shares to be placed
in the offering have not yet been fixed as of the date of this
Prospectus.
The placement price and the final number of Offer Shares placed in
the offering will be set jointly by the Company, the Existing
Shareholders and the Underwriters. The price will be set on the basis
of the purchase orders submitted by investors that have been collated
in the order book prepared during a bookbuilding process.
Price-setting is expected to occur on or about October 23, 2014. The
placement price and the final number of Offer Shares placed in the
offering (i.e., the result of the offering) are expected to be published
by means of an ad hoc release, via an electronic information
dissemination system and on the Company’s website on or about
October 23, 2014.
Should the placement volume prove insufficient to satisfy all orders
placed at the placement price, the Underwriters reserve the right to
reject orders, or to accept them only in part.
Delivery and Payment.
The delivery of the Offer Shares against payment of the offer price is
expected to take place on October 28, 2014. The Offer Shares will be
made available to the shareholders as co-ownership interests in the
global share certificate.
S-18
Stabilization Measures, OverAllotments and Greenshoe Option.
In connection with the placement of the Offer Shares, J.P. Morgan or
its affiliates, acting for the account of the Underwriters, will act as the
stabilization manager and may, as stabilization manager and acting in
accordance with legal requirements (Section 20a (3) of the German
Securities Trading Act (Wertpapierhandelsgesetz) in conjunction with
Commission Regulation (EC) No. 2273/2003 of December 22, 2003),
make Over-Allotments and take stabilization measures to support the
market price of the Company’s shares and thereby counteract any
selling pressure.
The stabilization manager is under no obligation to take any
stabilization measures. Therefore, no assurance can be provided that
any stabilization measures will be taken. Where stabilization measures
are taken, these may be terminated at any time without notice. Such
measures may be taken from the date the shares of the Company are
listed on the regulated market of the Frankfurt Stock Exchange
(Frankfurter Wertpapierbörse) and must be terminated no later than
30 calendar days after this date (the “Stabilization Period”).
These measures may result in the market price of the Company’s
shares being higher than would otherwise have been the case.
Moreover, the market price may temporarily be at an unsustainable
level.
Under the possible stabilization measures, investors may, in addition
to the Base Shares, be allocated up to 3,350,000 Over-Allotment
Shares as part of the allocation of the shares to be placed (“OverAllotment”). For the purpose of a possible Over-Allotment, the
stabilization manager, for the account of the Underwriters, will be
provided with up to 3,350,000 Over-Allotment Shares from the
holdings of East AcquiCo in the form of a securities loan; this number
of shares will not exceed 10% of the Base Shares. In addition, East
AcquiCo will grant the Underwriters an option to acquire up to
3,350,000 shares of the Company at the offer price less agreed
commissions (the “Greenshoe Option”). This option will terminate
30 calendar days after the commencement of the stock exchange
trading of the Company’s shares.
The stabilization manager, for the account of the Underwriters, is
entitled to exercise the Greenshoe Option to the extent OverAllotments were initially made; the amount of shares is to be reduced
by the number of shares held by the stabilization manager as of the
date on which the Greenshoe Option is exercised and that were
acquired by the stabilization manager in the context of stabilization
measures.
Once the Stabilization Period has ended, an announcement will be
made within one week in various media outlets distributed across the
entire European Economic Area as to whether stabilization measures
were taken, when price stabilization started and finished, and the price
range within which stabilization measures were taken; the latter will
be made known for each occasion on which price stabilization
measures were taken. Exercise of the Greenshoe Option, the timing of
its exercise and the number and type of shares concerned will also be
announced promptly in the same manner.
E.4
Interests material to the listing.
In connection with the offering and the admission to trading of the
Company’s shares, the Underwriters have formed a contractual
relationship with the Company and the Existing Shareholders.
The Underwriters are acting for the Company and the Existing
Shareholders on the offering and coordinating the structuring and
execution of the offering. In addition, both J.P. Morgan and UBS have
been appointed to act as designated sponsors for the Company’s shares
and COMMERZBANK has been appointed to act as paying agent.
Upon successful implementation of the offering, the Underwriters will
receive a commission.
S-19
The Existing Shareholders will receive the proceeds of the Existing
Shares sold in the offering. East AcquiCo will receive the proceeds of
the shares from the exercise of the Greenshoe Option, if any.
Assuming full placement of all Existing Shares and Over-Allotment
Shares at the mid-point of the Price Range and full exercise of the
Greenshoe Option, and after deducting fees and expenses to be paid by
the Existing Shareholders in connection with the offering, the proceeds
to the Existing Shareholders from the offering would amount to
approximately €322.0 million, or 74.8% of the total net proceeds from
the offering. Of these proceeds to the Existing Shareholders,
approximately 90.4% would accrue to the benefit of East AcquiCo and
approximately 9.6% would accrue to the benefit of Delpheast.
Some of the Underwriters or their affiliates have, and may from time
to time in the future continue to have, business relations with TLG and
the Existing Shareholders (including lending activities) or may
perform services for TLG or the Existing Shareholders in the ordinary
course of business.
E.5
Conflicting interests.
Not applicable. There are no conflicting interests.
Name of the person or entity offering
to sell the security.
The shares are being offered for sale by J.P. Morgan, UBS,
COMMERZBANK, Kempen & Co and HSBC (as defined under A.1
above).
Lock-up agreement: the parties
involved; and indication of the period
of the lock up.
In the Underwriting Agreement, the Company agreed with each
Underwriter that, during the period commencing on October 14, 2014
and ending six months after the first day of trading of the Company’s
shares on the Frankfurt Stock Exchange (currently expected to take place
on October 24, 2014), to the extent legally permissible, without the prior
written consent of the Joint Global Coordinators, which may not be
unreasonably withheld or delayed, the Company, or its management
board or its supervisory board will not, and will not agree to:
•
cause or approve, directly or indirectly, the announcement,
execution or implementation of any increase in the share capital
of the Company or a direct or indirect placement of shares of the
Company; or
•
submit a proposal for a capital increase to any shareholders’
meeting for resolution; or
•
announce to issue, effect or submit a proposal for the issuance of
any securities convertible into shares of the Company, with
option rights for shares of the Company; or
•
enter into a transaction or perform any action economically
similar to those described above.
The Company may, however, (i) issue or sell any shares or other
securities to employees and members of executive bodies of the
Company or its subsidiaries under management participation plans and
(ii) pursue any corporate actions undertaken by the Company for
purposes of the entering into any joint venture or the acquisition of any
companies, provided that the parties to the joint venture or acquiring
entity to which such shares will be issued agree to comply with the
same restrictions on the disposal of the shares vis-à-vis the
Underwriters that apply to the Company.
For the period commencing on October 14, 2014 until the date which
falls six months after the first day of trading of the Company’s shares
on the Frankfurt Stock Exchange (currently expected to take place on
October 24, 2014), East AcquiCo undertook to the Joint Global
Coordinators, not to:
•
offer, pledge, allot, distribute, sell, contract to sell, sell any option
or contract to purchase, purchase any option to sell, grant any
option, right or warrant to purchase, transfer or otherwise dispose
S-20
of, directly or indirectly any shares of the Company other than the
shares of the Company held by it as of October 14, 2014 (the
“Restricted Shares”), including, but not limited to, the issuance
or sale of any securities exchangeable into shares of the Company;
•
execution or implementation of any increase in the share capital
of the Company or a direct or indirect placement of shares of the
Company (other than as already disclosed in this Prospectus);
•
propose, directly or indirectly, any increase in the share capital of
the Company to any shareholders’ meeting for resolution, or vote
in favor of such a proposed capital increase (other than as already
disclosed in this Prospectus);
•
execution or proposal of any issuance of financial instruments
constituting options or warrants convertible into shares of the
Company; or
•
enter into a transaction or perform any action economically
similar to those described above, in particular enter into any swap
or other arrangement that transfers to another, in whole or in part,
the economic risk of ownership of Restricted Shares, whether any
such transaction is to be settled by delivery of Restricted Shares,
in cash or otherwise,
in each case without the prior written consent of the Joint Global
Coordinators which consent may not be unreasonably withheld or
delayed. The foregoing shall not apply to (i) transfers to affiliates of
East AcquiCo (ii) future pledges granted to one or more of the Joint
Global Coordinators or their affiliates having been agreed by the Joint
Global Coordinators and (iii) any transfers of shares to one or more of
the Joint Global Coordinators or their affiliates pursuant to
enforcement of any pledge entered into in accordance with
(ii), provided in each case that such transferee(s) agree to be bound by
the same lock-up undertaking.
E.6
Amount and percentage of immediate
dilution resulting from the offering.
The offering involves the issuance of new shares. Equity attributable to
shareholders of the Company amounted to €621.5 million as of June 30,
2014, and would amount to €11.95 per share based on 52,000,000
outstanding shares of the Company immediately before the offering.
S-21
The dilutive effect of the offering is illustrated in the table below
demonstrating the amount by which the offer price at the low end,
mid-point and high end of the Price Range exceeds the equity
attributable to shareholders per share after completion of the offering
assuming the below-described steps of the offering had taken place on
June 30, 2014. In this respect, the equity attributable to shareholders as
of June 30, 2014 is adjusted for the effects of the offering, assuming
(i) the execution of the capital increase in the maximum number of
offered New Shares and (ii) an increase in the equity attributable to
shareholders at the low end, mid-point and high end of the Price
Range by €94.8 million, €108.5 million and €122.0 million,
respectively. The assumed increase is based on the expected net
proceeds not considering any tax effects. The adjusted equity
attributable to shareholders is expressed as a per share figure,
assuming 61,302,326 outstanding shares of the Company upon
completion of the offering (this per share figure being referred to as
the “Post-IPO Equity attributable to Shareholders per Share”).
As of June 30, 2014
Low End Mid-Point High End
Price per share (in €) . . . . . . . . . . . . . . .
Equity attributable to shareholders per
share (based on 52,000,000
outstanding shares of the Company
before the offering) (net book
value)(1) (in €) . . . . . . . . . . . . . . . . . .
Post-IPO Equity attributable to
Shareholders per Share (net book
value)(1) (in €) . . . . . . . . . . . . . . . . . .
Amount by which the price per share
exceeds the Post-IPO Equity
attributable to Shareholders per
Share (immediate dilution per share)
(in €) . . . . . . . . . . . . . . . . . . . . . . . . .
Immediate dilution (in %) . . . . . . . . . . .
(1)
10.75
12.25
13.75
11.95
11.95
11.95
11.68
11.91
12.13
(0.93)
(8.7)
0.34
2.8
1.62
11.8
Net book value refers to the sum of the Company’s total assets minus the
sum of its total liabilities and non-controlling interest.
Each of the New Shares will have the same voting rights as the
Company’s existing shares. Prior to the offering, the Existing
Shareholders held 100% of the voting rights. Upon completion of the
offering (including exercise of the Greenshoe Option in full), the
voting rights held by the Existing Shareholders would amount to
39.9%.
E.7
Estimated expenses charged to the
investor by the issuer.
Not applicable. Neither the Company nor the Existing Shareholders
nor the Underwriters will charge expenses to investors.
S-22
GERMAN TRANSLATION OF THE SUMMARY OF THE PROSPECTUS
ZUSAMMENFASSUNG DES PROSPEKTS
Zusammenfassungen bestehen aus geforderten Angaben, die als „Punkte“ bezeichnet sind. Diese Punkte sind in
den Abschnitten A - E (A.1 - E.7) fortlaufend nummeriert. Diese Zusammenfassung enthält alle Punkte, die für die vorliegende
Art von Wertpapieren und Emittenten in eine Zusammenfassung aufzunehmen sind. Da einige Punkte nicht behandelt werden
müssen, können in der Nummerierungsreihenfolge Lücken auftreten. Selbst wenn ein Punkt wegen der Art der Wertpapiere
und des Emittenten in die Zusammenfassung aufgenommen werden muss, ist es möglich, dass in Bezug auf diesen Punkt keine
relevanten Informationen gegeben werden können. In diesem Fall enthält die Zusammenfassung eine kurze Beschreibung des
Punkts mit dem Hinweis „Entfällt“.
A—Einleitung und Warnhinweise
A.1
Einleitung und Warnhinweise.
Diese Zusammenfassung sollte als Einleitung zu diesem Prospekt (der
„Prospekt“) verstanden werden. Bei jeder Anlageentscheidung sollte
sich der Anleger auf die Prüfung des gesamten Prospekts stützen.
Für den Fall, dass vor einem Gericht Ansprüche aufgrund der in
diesem Prospekt enthaltenen Informationen geltend gemacht werden,
könnte der als Kläger auftretende Anleger in Anwendung der
einzelstaatlichen Rechtsvorschriften der Staaten des Europäischen
Wirtschaftsraums die Kosten für die Übersetzung dieses Prospekts vor
Prozessbeginn zu tragen haben.
Die TLG IMMOBILIEN AG (die „Gesellschaft“ und gemeinsam mit
ihren konsolidierten Tochtergesellschaften, „TLG“) zusammen mit
J.P. Morgan Securities plc, London, Vereinigtes Königreich,
(„J.P. Morgan“) und UBS Limited, London, Vereinigtes Königreich
(„UBS“ und zusammen mit J.P. Morgan, die „Joint Global
Coordinators“) und zusammen mit der COMMERZBANK
Aktiengesellschaft,
Frankfurt
am
Main,
Deutschland
(„COMMERZBANK“) und Kempen & Co N.V., Amsterdam,
Niederlande („Kempen & Co“), HSBC Trinkaus & Burkhardt AG,
Düsseldorf, Deutschland („HSBC“ und zusammen mit den Joint
Global Coordinators, die „Joint Bookrunners“ oder die
„Konsortialbanken“), haben nach § 5 Abs. 2b Nr. 4
Wertpapierprospektgesetz die Verantwortung für den Inhalt dieser
Zusammenfassung übernommen. Diejenigen Personen, die für die
Zusammenfassung
einschließlich
ihrer
Übersetzung
die
Verantwortung übernommen haben oder von denen der Erlass ausgeht,
können haftbar gemacht werden, aber nur, wenn die
Zusammenfassung irreführend, unrichtig oder widersprüchlich ist,
sofern sie zusammen mit anderen Teilen dieses Prospekts gelesen wird
oder wenn sie nicht alle erforderlichen Schlüsselinformationen
vermittelt, sofern sie zusammen mit den anderen Teilen des Prospekts
gelesen wird.
A.2
Angabe über spätere Verwendung
des Prospekts.
Entfällt. Eine Zustimmung zur Verwendung des Prospekts für eine
spätere Weiterveräußerung oder Platzierung der Aktien wurde nicht
erteilt.
B—Emittent
B.1
B.2
Juristische und kommerzielle
Bezeichnung.
Die Firma der Gesellschaft lautet TLG IMMOBILIEN AG.
Sitz und Rechtsform des Emittenten,
geltendes Recht, Land der
Gründung.
Die Gesellschaft hat ihren Sitz am Hausvogteiplatz 12, 10117 Berlin,
Deutschland, und ist im Handelsregister des Amtsgerichts
Charlottenburg, Deutschland, unter HRB 161314 B eingetragen. Die
Gesellschaft ist eine Aktiengesellschaft, die deutschem Recht
unterliegt.
Die Gesellschaft ist die Muttergesellschaft von TLG, TLG betreibt
ihre
Geschäfte
hauptsächlich
unter
dem
Handelsnamen
„TLG IMMOBILIEN“.
S-23
B.3
Art der derzeitigen
Geschäftstätigkeit und
Haupttätigkeiten des Emittenten
samt der hierfür wesentlichen
Faktoren, wobei Hauptprodukt- und/
oder Dienstleistungskategorien sowie
die Hauptmärkte, auf denen der
Emittent vertreten ist, anzugeben
sind.
TLG glaubt, ein führendes Unternehmen für Gewerbeimmobilien in
Berlin und Ostdeutschland zu sein. Zum 30. Juni 2014 bestand das
Portfolio von TLG aus 509 Immobilien mit einem beizulegenden
Zeitwert von insgesamt €1.510 Millionen. Angesichts einer
gewichteten durchschnittlich verbleibenden Restmietlaufzeit von
bestehenden Verträgen mit fester Laufzeit von 8,0 Jahren und einer
EPRA Leerstandsquote (wie nachstehend unter B.7 definiert) von nur
4,0% (ohne Berücksichtigung von nicht-strategiekonformen
Immobilien) geht die Gesellschaft davon aus, dass dieses Portfolio gut
positioniert ist, um in absehbarer Zukunft stabile Cashflows zu
generieren. Der Firmensitz von TLG ist in Berlin und TLG betreibt
fünf örtliche Niederlassungen in Dresden, Leipzig, Rostock, Erfurt
und Chemnitz.
Zum 30. Juni 2014 umfasst das strategiekonforme Portfolio von
TLG 321 Büro- Einzelhandels- und Hotelimmobilien mit einem
beizulegenden Zeitwert von €1.338,9 Millionen, welche TLG
langfristig zu halten beabsichtigt (das „Strategiekonforme
Portfolio“). Das Strategiekonforme Portfolio macht ca. 89% des
Gesamtportfolios aus. Ca. 72% dieses Strategiekonformen Portfolios
liegen innerhalb der Stadtgrenzen von Berlin, Dresden, Leipzig und
Rostock, wobei Berlin den größten Anteil dieses Bestands ausmacht
(ca. 46% des Strategiekonformen Portfolios). Diese Städte und
Ostdeutschland
haben
eine
steigende
Nachfrage
nach
Gewerbeimmobilien verzeichnet. Von 2009 bis 2012 stiegen die
Investitionsvolumina für Gewerbeimmobilien in Berlin bzw.
Ostdeutschland von €1,22 Milliarden auf €3,48 Milliarden bzw. von
€0,3 Milliarden auf €1,36 Milliarden an (Quelle: Commercial
Portfolio TLG). Angesichts der Investitionsvolumina von
ca. €1,30 Milliarden in Berlin und €1,37 Milliarden in Ostdeutschland
im Laufe des Sechsmonatszeitraums, der am 30. Juni 2014 endete
(Quelle: Commercial Portfolio TLG), geht die Gesellschaft davon aus,
dass sich dieser Trend fortsetzen wird und dass die Mieteinnahmen,
die Vermietung und der Gesamtleerstand des Strategiekonformen
Portfolios in der Folge hiervon positiv beeinflusst werden dürften.
Mehrheitlich in guten oder sehr guten Lagen in den Stadtkernen von
Berlin, Dresden, Leipzig und Rostock gelegene Büroimmobilien
machten 36% des Strategiekonformen Portfolios von TLG aus
(ausgehend von dem beizulegenden Zeitwert zum 30. Juni 2014). Der
Mieterstamm für diese Büroimmobilien umfasst Großkonzerne bzw.
deren Tochtergesellschaften wie die Daimler Real Estate GmbH und
die SAP Deutschland AG & Co. KG, mit dem Staat verbundene
Gesellschaften und Anstalten wie die Ostseesparkasse Rostock und die
Bundesanstalt für Immobilienaufgaben sowie kleinere und
mittelständische Unternehmen. TLG plant ihr Portfolio an
Büroimmobilien durch zusätzliche Ankäufe zu vergrößern. Die
Gesellschaft nimmt an, dass dies ihre Marktstellung in dem aus ihrer
Sicht sehr dynamischen Markt für Büroimmobilien in Ostdeutschland
weiter verbessern wird.
Einzelhandelsimmobilien, die mehrheitlich in attraktiven Mikro-Lagen
in Berlin und den Wachstumsregionen Ostdeutschlands belegen sind,
machen ca. 50% des Strategiekonformen Portfolios von TLG aus
(ausgehend von dem beizulegenden Zeitwert zum 30. Juni 2014). Die
Mikro-Lagen, in denen TLG’s Einzelhandelsimmobilien belegen sind,
sind besonders attraktiv für Nahversorger und andere Verkäufer von
essentiellen Verbrauchsgütern, da sie in Gebieten gelegen sind, die es
dem Mieter ermöglichen, ein bedeutender und in einigen Fällen sogar
der einzige Händler der jeweiligen Verbrauchsgüter innerhalb des
Einzugsbereichs zu sein. Zum 30. Juni 2014 entfielen ca. 35% der
annualisierten Ist-Mieten aus dem Strategiekonformen Portfolio von
TLG auf Mietverträge mit großen Supermarkt- und Discounterketten,
einschließlich der großen Supermarktketten „EDEKA“, „REWE“ und
S-24
„Kaiser’s“ sowie der Discounter „Aldi“, „Lidl“, „Netto“ und „Penny“,
mit denen TLG langfristige und enge Geschäftsbeziehungen unterhält.
Mit einer gewichteten durchschnittlich verbleibenden Restmietlaufzeit
von bestehenden Verträgen mit fester Laufzeit von 7,3 Jahren und
einer EPRA Leerstandsquote (wie nachstehend unter B.7 definiert)
von nur 1,0% (beides zum 30. Juni 2014) war das
Einzelhandelsportfolio der TLG nahezu vollvermietet und bietet
stabile und sichere Mieteinnahmen. Dies macht die Mietbeziehungen
mit Nahversorgern zum Rückgrat des Geschäfts von TLG. TLG plant
auch ihr Portfolio am Einzelhandelsimmobilien durch ausgewählte
wertsteigernde Zukäufe zu vergrößern.
Auf fünf Hotelimmobilien, die in den Stadtkernen von Berlin, Dresden
und Rostock liegen, entfallen die verbleibenden 15% des
Strategiekonformen Portfolios von TLG (ausgehend vom
beizulegenden Zeitwert zum 30. Juni 2014). Der Mieterstamm dieser
Immobilien beinhaltet bekannte Hotelketten wie „Steigenberger“,
„Motel One“ und „Ramada“. Mit einer EPRA Leerstandsquote (wie
nachstehend unter B.7 definiert) von nur 1,7% sind diese Immobilien
nahezu vollvermietet und die langfristige Bindung der Mieter von
TLG wurde durch eine gewichtete durchschnittlich verbleibende
Restmietlaufzeit von bestehenden Verträgen mit fester Laufzeit von
16,7 Jahren belegt (beides zum 30. Juni 2014). Die Mietverträge für
die Hotelimmobilien von TLG sehen allgemein feste Mietzahlungen
vor, was die Abhängigkeit von TLG im Hinblick auf den Erfolg der
Hotelbetreiber beschränkt. Stabile Cashflows und ein Fokus auf
dynamische Märkte machen das Hotelportfolio von TLG zu einer
passenden Ergänzung ihres Büro- und Einzelhandelsportfolios.
TLG hat 188 Immobilien mit einem beizulegenden Zeitwert von
insgesamt €171 Millionen zum 30. Juni 2014 als nichtstrategiekonform klassifiziert und plant, mittelfristig die Mehrheit
dieses nicht-strategiekonformen Portfolios zu veräußern. Zum 30. Juni
2014 betrug die gewichtete durchschnittlich verbleibende
Restmietlaufzeit von bestehenden Verträgen mit fester Laufzeit für die
nicht-strategiekonformen Immobilien 5,5 Jahre und die EPRA
Leerstandsquote (wie nachstehend unter B.7 definiert) 12,2%.
Bis zum 15. September 2014 hat TLG bereits 48 nichtstrategiekonforme Immobilien mit einem beizulegenden Zeitwert von
insgesamt €70,6 Millionen verkauft oder hierfür Kaufverträge
unterschrieben. Allerdings könnte dem Käufer einer Immobilie, deren
Verkauf zu einem Preis von €23,9 Millionen TLG zugestimmt hat, das
Recht zustehen, vom Kaufvertrag zurückzutreten oder den Kaufpreis
erheblich zu reduzieren und als Konsequenz würde TLG
wahrscheinlich einen erheblichen nicht liquiditätswirksamen Verlust
erleiden.
Der unabhängige, externe Gutachter Savills Advisory Services GmbH,
Taunusanlage 19, 60325 Frankfurt am Main, Deutschland („Savills”)
hat ein Bewertungsgutachten für 469 Immobilien aus dem Portfolio
von TLG erstellt und den beizulegenden Zeitwert dieser Immobilien
zum 30. Juni 2014 mit insgesamt €1.450 Millionen bewertet. Die
Differenzen zwischen der Anzahl und dem Wert der von Savills
bewerteten Immobilien zum Gesamtportfolio von TLG aus
509 Immobilien mit einem beizulegenden Zeitwert von insgesamt
€1.510 Millionen ergeben sich aus 40 Immobilien mit einem
beizulegenden Zeitwert von insgesamt €60 Millionen, die Savills nicht
bewertet hat, da für 27 dieser Immobilien mit einem beizulegenden
Zeitwert von insgesamt €58 Millionen zum 30. Juni 2014 bereits
Kaufverträge unterschrieben waren. Von den restlichen 13 Immobilien
wurden zehn Immobilien mit einem beizulegenden Zeitwert von
insgesamt €2 Millionen unter Vorräten verbucht und TLG
beabsichtigt, diese Immobilien zu verkaufen. Den anderen drei
Immobilien hat TLG keinen Wert zugeschrieben.
S-25
Die Gesellschaft geht davon aus, dass die folgenden
Wettbewerbsstärken die wesentlichen Erfolgstreiber von TLG in der
Vergangenheit waren und sie auch in der Zukunft weiterhin von ihren
Wettbewerbern unterscheiden werden:
B.4a
Wichtigste jüngste Trends, die sich
auf den Emittenten und die
Branchen, in denen er tätig ist,
auswirken.
•
Die Gesellschaft ist der Auffassung, dass sie über eine
marktführende, integrierte Plattform für Gewerbeimmobilien in
Ostdeutschland verfügt, mit einem Fokus auf die
Wachstumsmärkte Berlin, Dresden, Leipzig und Rostock.
•
Ausgehend vom beizulegenden Zeitwert liegen beinahe 44% des
Portfolios von TLG, das sich zum 30. Juni 2014 auf ca.
€1,5 Milliarden belief, in Berlin, welches in den letzten Jahren
eine besonders dynamische Entwicklung erlebt hat.
•
TLG schätzt ihr Portfolio angesichts des hohen Anteils von neuen
oder kürzlich modernisierten Immobilien als besonders attraktiv
ein und glaubt, dass diese Attraktivität durch die niedrigen
Leerstandsquoten belegt wird.
•
Die Gesellschaft ist der Meinung, dass ihr starkes CashflowProfil ihre Dividendenkapazität unterstützen wird.
•
Die Gesellschaft verfügt über eine robuste Bilanz, verbunden mit
einer Festlegung auf einen konservativen Finanzierungsansatz
und strebt ein langfristiges Netto LTV-Verhältnis (wie
nachstehend unter B.7 definiert) von 45-50% an.
•
Die Gesellschaft glaubt, dass sie die Fähigkeit hat, konkretes,
zukünftiges Wachstum durch aktives Portfolio-Management und
ausgewählte wertsteigernde Ankäufe freizusetzen.
Die Geschäftstätigkeit von TLG wird von zahlreichen
demographischen, wirtschaftlichen und politischen Faktoren
beeinflusst. TLG ist am stärksten von Entwicklungen auf und im
Zusammenhang mit dem Gewerbeimmobilienmarkt in Deutschland,
insbesondere in Berlin und Ostdeutschland (Brandenburg,
Mecklenburg-Vorpommern, Sachsen, Sachsen-Anhalt und Thüringen)
betroffen, wo sich das gesamte Portfolio von TLG befindet. Das
Portfolio von TLG besteht hauptsächlich aus Büro-, Einzelhandelsund Hotelimmobilien. In Anbetracht dieses Fokusses ist
TLG allgemein von Entwicklungen bei makroökonomischen
Indikatoren wie Bevölkerungswachstum, Wirtschaftswachstum,
Beschäftigung, Kaufkraft und dem Verbraucherpreisindex betroffen.
Insbesondere ist TLG näher von Trends bei den mikroökonomischen
Indikatoren wie dem Mietpreisniveau und den Leerstandsquoten in
den Regionen und Branchen, in denen TLG tätig ist, betroffen.
S-26
werden, als Finanzinvestition gehaltene Immobilien im Sinne von
IAS 40 klassifiziert und gemäß IFRS mit dem beizulegenden Zeitwert
bewertet, während sie nach HGB zu Anschaffungskosten abzüglich
Abschreibungen bewertet werden). Bis zum 31. Dezember 2011
bestand das Portfolio von TLG aus Gewerbe- und Wohnimmobilien.
Mit
Wirkung
zum
1.
Januar
2012
wurde
das
Wohnimmobilienportfolio von TLG auf die TLG WOHNEN GmbH,
eine neue, eigens zu diesem Zweck gegründete Gesellschaft,
abgespalten, deren einzige Gesellschafterin die Bundesrepublik
Deutschland war. Aufgrund der Abspaltung sind die von TLG gemäß
HGB erstellten Konzernabschlüsse für die zum 31. Dezember 2011
und 2012 endenden Geschäftsjahre nicht vollständig vergleichbar, da
das Wohnimmobilienportfolio einen wesentlichen Teil des
Gesamtportfolios und -geschäfts von TLG ausmachte. Der ungeprüfte
verkürzte Konzernzwischenabschluss für den zum 30. Juni 2014
endenden Sechsmonatszeitraum wurde gemäß den IFRS für
Zwischenberichterstattung (IAS 34) erstellt. Zusätzliche Informationen
in diesem Prospekt wurden dem geprüften Jahresabschluss der
Gesellschaft für das am 31. Dezember 2013 endende Geschäftsjahr,
der gemäß den Vorschriften des HGBs erstellt wurde, entnommen
oder aus diesem abgeleitet. Aufgrund der zuvor genannten Umstellung
der Rechnungslegungsgrundsätze in den Konzernabschlüssen von
HGB auf IFRS wurden für Zwecke eines Vergleichs der
konsolidierten Finanzdaten für die zum 31. Dezember 2011 und
31. Dezember 2012 endenden Geschäftsjahre die konsolidierten
Finanzdaten auf Basis von HGB verwendet, während für einen
Vergleich der konsolidierten Finanzdaten für die zum 31. Dezember
2012 und 31. Dezember 2013 endenden Geschäftsjahre sowie für die
am 30. Juni 2013 und 30. Juni 2014 endenden Sechmonatsperioden die
konsolidierten Finanzdaten auf Basis von IFRS verwendet wurden.
Die Konzernabschlüsse der am und zum 31. Dezember 2011, 2012
und 2013 endenden Geschäftsjahre und der Jahresabschluss der
Gesellschaft für das am 31. Dezember 2013 endende Geschäftsjahr
wurden
durch
die
Ernst
&
Young
GmbH,
Wirtschaftsprüfungsgesellschaft, Stuttgart, Büro Berlin, Deutschland,
geprüft
und
jeweils
mit
einem
uneingeschränkten
Bestätigungsvermerk versehen.
Sofern Finanzdaten in den nachstehenden Tabellen als „geprüft“
gekennzeichnet sind, bedeutet dies, dass sie den oben genannten
geprüften Abschlüssen entnommen wurden. Die Kennzeichnung
„ungeprüft“ wird in den nachstehenden Tabellen zur
Kenntlichmachung von Finanzdaten verwendet, die nicht den oben
genannten geprüften Abschlüssen entnommen wurden, sondern
entweder dem ungeprüften verkürzten Konzernzwischenabschluss der
Gesellschaft oder dem internen Berichtssystem der Gesellschaft
entnommen wurden oder auf Berechnungen beruhen, bei denen Zahlen
aus den ebenerwähnten Quellen zugrunde gelegt wurden.
Sämtliche Finanzdaten, die im Text und den nachfolgenden Tabellen
dargestellt sind, sind in Millionen Euro angegeben (€ Mio.), sofern
nicht anders angegeben. Bestimmte Finanzdaten (einschließlich von
Prozentsätzen) in den nachfolgenden Tabellen wurden entsprechend
anerkannter kaufmännischer Standards gerundet. Daher kann es sein,
dass
die
zusammengerechneten
Werte
(Gesamtoder
Zwischensummen oder Differenzen oder Zahlenverhältnisse) in den
nachfolgenden Tabellen nicht in allen Fällen mit den addierten
(ungerundeten) Werten übereinstimmen, die an anderer Stelle in
diesem Prospekt erscheinen. Des Weiteren kann es sein, dass diese
gerundeten Werte sich nicht auf die Gesamtwerte in diesen Tabellen
aufaddieren lassen. In Klammern dargestellte Finanzdaten stehen für
einen negativen Wert der entsprechenden Zahl. Im Hinblick auf die in
diesem Prospekt enthaltenen Finanzdaten bedeutet ein Bindestrich
S-29
(„—“), dass die entsprechende Zahl nicht verfügbar ist, während eine
Null („0,0“) bedeutet, dass die entsprechende Zahl verfügbar, aber auf
Null gerundet worden ist.
Ausgewählte konsolidierte Finanzdaten gemäß IFRS
Daten aus der Konzern-Gesamtergebnisrechnung
Für das
Geschäftsjahr
endend zum 31. Dezember
2012
2013
(geprüft)
(in € Millionen)
Für den
Sechsmonatszeitraum
endend zum 30. Juni
2013
2014
(ungeprüft)
(in € Millionen)
Ergebnis aus Vermietung und Verpachtung . . . . . . . . . . . . . . . . . .
Erlöse aus der Objektbewirtschaftung . . . . . . . . . . . . . . . . . . . . .
Aufwendungen aus der Objektbewirtschaftung . . . . . . . . . . . . . .
Ergebnis aus der Bewertung der als Finanzinvestition gehaltenen
Immobilien . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Ergebnis aus der Veräußerung von als Finanzinvestition gehaltenen
Immobilien . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Ergebnis aus der Veräußerung von Vorratsimmobilien . . . . . . . . . . . .
Erlöse aus dem Verkauf von Vorratsimmobilien . . . . . . . . . . . . .
Aufwand Buchwertabgang . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sonstige betriebliche Erträge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Personalaufwand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Planmäßige Abschreibungen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sonstige betriebliche Aufwendungen . . . . . . . . . . . . . . . . . . . . . . . . .
97,1
138,8
(41,6)
106,3
141,3
(35,1)
52,7
69,6
(16,9)
50,0
66,9
(16,9)
53,1
72,2
34,4
51,3
(0,0)
27,4
77,5
(50,2)
9,7
(18,9)
(1,6)
(8,3)
0,5
7,8
21,4
(13,6)
18,7
(23,4)
(1,5)
(7,8)
0,2
5,5
14,3
(8,8)
3,9
(15,4)
(0,7)
(2,3)
0,5
2,3
5,9
(3,6)
3,6
(7,7)
(0,7)
(2,4)
Ergebnis vor Zinsen und Steuern (EBIT) . . . . . . . . . . . . . . . . . . . .
Ergebnis aus Anteilen an Gemeinschaftsunternehmen . . . . . . . . . . . .
Finanzerträge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Finanzaufwendungen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Ertrag/Aufwand aus der Bewertung derivativer
Finanzinstrumente . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
158,4
12,9
0,9
(22,5)
172,8
2,1
0,7
(36,0)
78,3
2,1
0,4
(18,1)
96,9
0,0
0,4
(12,1)
5,4
(2,0)
Ergebnis vor Steuern (EBT) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Steuern vom Einkommen und vom Ertrag . . . . . . . . . . . . . . . . . . . . . .
139,8
(63,5)
146,4
(47,3)
68,1
(22,0)
83,2
(25,8)
Konzernperiodenergebnis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Kumuliertes sonstiges Ergebnis (OCI)
davon in Folgejahren nicht in den Gewinn/Verlust
umzugliedern
Versicherungsmathematische Gewinne/Verluste . . . . . . . .
davon in Folgejahren in den Gewinn/Verlust umzugliedern
Rücklage Hedge Accounting . . . . . . . . . . . . . . . . . . . . . . . .
76,3
99,1
46,1
57,4
(1,0)
(0,0)
—
—
Gesamtergebnis für die Periode . . . . . . . . . . . . . . . . . . . . . . . . . . . .
75,3
S-30
(10,0)
—
6,9
(0,1)
99,0
—
46,1
(4,7)
52,7
Daten aus der Konzern-Bilanz
Zum 31. Dezember
2012
2013
(geprüft)
(in € Millionen)
Zum 30. Juni
2014
(ungeprüft)
(in € Millionen)
Langfristige Vermögenswerte . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Als Finanzinvestition gehaltene Immobilien . . . . . . . . . . . . . . . . . . . . . . . . . .
Anzahlungen auf als Finanzinvestition gehaltene Immobilien . . . . . . . . . . . .
Sachanlagen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Immaterielle Vermögenswerte . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Anteile an Gemeinschaftsunternehmen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sonstige langfristige finanzielle Vermögenswerte . . . . . . . . . . . . . . . . . . . . .
Sonstige Vermögenswerte . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Aktive latente Steuern . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Kurzfristige Vermögenswerte . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Vorräte . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forderungen aus Lieferungen und Leistungen . . . . . . . . . . . . . . . . . . . . . . . .
Forderungen aus Ertragsteuern . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Derivative Finanzinstrumente . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sonstige kurzfristige finanzielle Vermögenswerte . . . . . . . . . . . . . . . . . . . . .
Sonstige Forderungen und Vermögenswerte . . . . . . . . . . . . . . . . . . . . . . . . .
Zahlungsmittel und Zahlungsmitteläquivalente . . . . . . . . . . . . . . . . . . . . . . .
Zur Veräußerung gehaltene Vermögenswerte . . . . . . . . . . . . . . . . . . . . . . . . .
1.615,2
1.511,7
3,0
18,4
1,5
69,1
0,1
6,9
4,5
104,2
22,3
9,6
0,2
0,0
10,0
1,6
60,5
0,0
1.448,1
1.414,7
2,7
17,8
0,9
0,0
0,1
8,4
3,5
187,6
13,4
11,6
0,2
0,0
5,0
0,7
138,9
17,8
1.456,6
1.423,0
2,5
16,4
0,7
0,0
0,1
8,4
5,4
99,3
13,3
13,7
0,3
0,0
3,2
2,9
24,5
41,6
Summe Aktiva . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1.719,4
1.635,7
1.555,9
Eigenkapital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gezeichnetes Kapital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Kapitalrücklage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gewinnrücklagen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Kumulierte sonstige Rücklagen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fremdkapital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Langfristige Verbindlichkeiten . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Langfristige Verbindlichkeiten ggü. Kreditinstituten . . . . . . . . . . . . . . .
Pensionsverpflichtungen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Langfristige derivative Finanzinstrumente . . . . . . . . . . . . . . . . . . . . . . .
Sonstige langfristige Verbindlichkeiten . . . . . . . . . . . . . . . . . . . . . . . . .
Passive latente Steuern . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Kurzfristige Verbindlichkeiten . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Kurzfristige Verbindlichkeiten ggü. Kreditinstituten . . . . . . . . . . . . . . .
Verbindlichkeiten aus Lieferungen und Leistungen . . . . . . . . . . . . . . . .
Sonstige kurzfristige Rückstellungen . . . . . . . . . . . . . . . . . . . . . . . . . . .
Steuerschulden . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Kurzfristige derivative Finanzinstrumente . . . . . . . . . . . . . . . . . . . . . . .
Sonstige kurzfristige Verbindlichkeiten . . . . . . . . . . . . . . . . . . . . . . . . .
1.006,7
52,0
151,5
804,3
(1,0)
712,6
508,6
392,9
6,9
25,3
4,3
79,3
204,0
87,2
29,8
22,2
12,7
18,2
34,1
Summe Passiva . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1.719,4
S-31
801,0
52,0
410,2
339,9
(1,2)
834,7
630,2
513,0
6,9
18,8
3,4
88,1
204,4
113,2
14,6
16,2
44,3
0,0
16,1
1.635,7
621,5
52,0
252,5
322,9
(5,9)
934,4
787,2
672,4
6,8
8,7
2,9
96,3
147,3
55,6
12,2
12,3
57,3
0,0
9,9
1.555,9
Daten aus der Konzern-Kapitalflussrechnung
Für das Geschäftsjahr endend
zum 31. Dezember
2012
2013
(geprüft)
(in € Millionen)
Cashflow aus laufender Geschäftstätigkeit . . . . .
Erhaltene Zinsen . . . . . . . . . . . . . . . . . . . . . .
Gezahlte Zinsen . . . . . . . . . . . . . . . . . . . . . .
Gezahlte Ertragsteuern . . . . . . . . . . . . . . . . .
Netto Cashflow aus laufender
Geschäftstätigkeit . . . . . . . . . . . . . . . . . . . . . . .
Netto Cashflow aus der Investitionstätigkeit . . . .
Netto Cashflow aus der
Finanzierungstätigkeit . . . . . . . . . . . . . . . . . . .
Zahlungswirksame Veränderung des
Finanzmittelbestands . . . . . . . . . . . . . . . . . . .
Für den Sechsmonatszeitraum
endend zum 30. Juni
2013
2014
(ungeprüft)
(in € Millionen)
162,9
0,9
(21,7)
(7,7)
76,1
0,7
(57,0)
(5,9)
26,5
0,4
(33,9)
(0,6)
33,4
0,4
(35,6)
(4,5)
134,3
(79,0)
13,8
220,9
(7,6)
55,1
(6,3)
20,3
(28,4)
(156,3)
(37,1)
(128,4)
26,9
78,4
10,5
(114,4)
Zusätzliche Leistungskennzahlen
Die Gesellschaft ist der Auffassung, dass die in diesem Abschnitt beschriebenen Leistungskennzahlen die wichtigsten
Indikatoren zur Messung der operativen und finanziellen Leistung des Geschäfts von TLG darstellen.
TLG nimmt an, dass die Leistungskennzahlen Mieterlöse, Ergebnis aus Vermietung und Verpachtung, EBITDA,
Bereinigtes EBITDA, FFO, AFFO, die Eigenkapitalquote, das Netto LTV-Verhältnis, der Zinsdeckungsgrad, EPRA NAV
und die EPRA Leerstandsquote (die „Leistungskennzahlen“) für potenzielle Investoren von Nutzen sind. TLG nimmt an,
dass die Leistungskennzahlen zur Bewertung der operativen Leistung von TLG, des Nettowerts von TLG’s Portfolio, des
Verschuldungsgrades von TLG und der von TLG’s Geschäftstätigkeit generierten Cashflows nützlich sind, weil eine
Vielzahl von Unternehmen, insbesondere Unternehmen aus der Immobilienbranche, diese Zahlen ebenfalls als
Leistungskennzahlen veröffentlichen.
Ungeachtet dessen sind die Leistungskennzahlen nicht als Messgrößen unter IFRS anerkannt und sollten nicht als Ersatz
für gemäß IFRS ermittelte Angaben zu den Nettovermögenswerten, dem Ergebnis vor Steuern, dem Periodenergebnis, dem
Cashflow aus laufender Geschäftstätigkeit oder anderen Daten aus der Konzern-Gesamtergebnisrechnung, KonzernKapitalflussrechnung oder Konzern-Bilanz oder als Messgrößen für die Profitabilität oder Liquidität betrachtet werden. Die
Leistungskennzahlen geben weder notwendigerweise Aufschluss darüber, ob der Cashflow ausreichend oder verfügbar für
den Liquiditätbedarf von TLG sein wird, noch ob irgendeine solche Messgröße Aufschluss über vergangene
Betriebsergebnisse von TLG geben kann. Die Leistungskennzahlen sind nicht als Indikatoren für zukünftige Ergebnisse
aufzufassen. Da nicht alle Unternehmen die Leistungskennzahlen in derselben Art und Weise berechnen, ist die
Darstellung der Leistungskennzahlen von TLG nicht notwendigerweise vergleichbar mit ähnlich bezeichneten Messgrößen,
die andere Unternehmen verwenden.
Leistung und Profitabilität
Die folgende Tabelle beinhaltet Informationen zu den wichtigsten Leistungs- und Profitabilitätskennzahlen von
TLG:
Für das Geschäftsjahr
endend zum 31. Dezember
2012
2013
(ungeprüft und in € Millionen,
sofern nicht anders angegeben)
Mieterlöse(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Ergebnis aus Vermietung und Verpachtung(2) . . .
EBITDA(3)(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bereinigtes EBITDA(4) . . . . . . . . . . . . . . . . . . . . .
FFO(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
FFO (pro Aktie und in €)(5) . . . . . . . . . . . . . . . . .
AFFO(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
AFFO (pro Aktie und in €)(5) . . . . . . . . . . . . . . . .
116,1
97,1
106,9
79,5
52,6
1,01
40,0
0,77
118,3
106,3
102,0
90,4
46,1
0,89
40,4
0,78
Für den Sechsmonatszeitraum
endend zum 30. Juni
2013
2014
(ungeprüft und in € Millionen,
sofern nicht anders angegeben)
59,2
52,7
44,6
45,8
24,4
0,47
22,5
0,43
57,0
50,0
46,3
42,0
26,0
0,50
23,8
0,46
(1)
Die Mieterlöse beziehen sich auf die Erlöse aus der Objektbewirtschaftung ohne Erlöse aus der Weiterberechnung von
Betriebskosten und Erlöse aus anderen Lieferungen und Leistungen, wie in der Konzern-Gesamtergebnisrechnung für den jeweiligen
Zeitraum angegeben. Geprüft für die zum 31. Dezember 2012 und 2013 endenden Geschäftsjahre.
(2)
Das Ergebnis aus Vermietung und Verpachtung bezieht sich auf die Erlöse aus der Objektbewirtschaftung abzüglich der
Aufwendungen aus der Objektbewirtschaftung, wie in der Konzern-Gesamtergebnisrechnung für den jeweiligen Zeitraum
angegeben. Geprüft für die zum 31. Dezember 2012 und 2013 endenden Geschäftsjahre.
S-32
(3)
Das Ergebnis vor Zinsen, Steuern, Abschreibungen und Wertberichtigungen („EBITDA“) ist definiert als der Konzerngewinn-/
verlust für die Periode vor Steuern vom Einkommen und vom Ertrag, Finanzergebnis, Ergebnis aus Anteilen an
Gemeinschaftsunternehmen, Ertrag/Aufwand aus der Bewertung derivativer Finanzinstrumente, planmäßigen Abschreibungen sowie
vor dem Ergebnis aus der Bewertung der als Finanzinvestition gehaltenen Immobilien, wie sie in den entsprechenden
Konzernabschlüssen der Gesellschaft wiedergegeben sind.
(4)
„Bereinigtes EBITDA“ ist definiert als EBITDA angepasst um das Ergebnis aus der Veräußerung von als Finanzinvestition
gehaltenen Immobilien, das Ergebnis aus der Veräußerung von Vorratsimmobilien und Einmaleffekte.
Die folgende Tabelle zeigt die Berechnung des EBITDA und des Bereinigten EBITDA für die angegebenen Zeiträume, jeweils beim
EBIT beginnend:
Für das
Für den
Geschäftsjahr endend
Sechsmonatszeitraum
zum 31. Dezember
endend zum 30. Juni
2012
2013
2013
2014
(geprüft, sofern nicht
(ungeprüft)
anders angegeben)
(in € Millionen)
(in € Millionen)
Ergebnis vor Zinsen und Steuern (EBIT) . . . . . . . . . . . . . . . . . . . . . . . . . . .
158,4
172,8
78,3
96,9
Planmäßige Abschreibungen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,6
1,5
0,7
0,7
Ergebnis aus der Bewertung der als Finanzinvestition gehaltenen
Immobilien . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(53,1)
(72,2)
(34,4)
(51,3)
EBITDA (ungeprüft) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
106,9
102,0
44,6
46,3
Immobilien . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
0,0
(0,5)
(0,2)
(0,5)
Ergebnis aus der Veräußerung von Vorratsimmobilien . . . . . . . . . . . . . . . . . . .
(27,4)
(7,8)
(5,5)
(2,3)
Abfindungen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
6,9
6,9
—
Auflösung einer Rückstellung für Grunderwerbsteuern in Zusammenhang mit
der Abspaltung von TLG WOHNEN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
(5,4)
—
—
Auflösung von Verbindlichkeiten und Rückstellungen aus der Weiterreichung
von Kaufpreisen und aufgelaufenen Zinsen (ungeprüft) . . . . . . . . . . . . . . . .
—
(4,8)
—
—
Auflösung einer Rückstellung für das Rückzahlungsrisiko von
Subventionen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
—
—
(2,3)
Verpflichtung aus aktienbasierter Vergütung (Bonusvereinbarung) . . . . . . . . .
—
—
—
0,8
(5)
Bereinigtes EBITDA (ungeprüft) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
79,5
90,4
45,8
42,0
Der Mittelzufluss aus der operativen Tätigkeit nach Steuern (ohne das Veräußerungsergebnis) („FFO“) ist eine Messgröße für den
Liquiditätszufluss von Immobilienunternehmen. Die Gesellschaft definiert FFO als den Konzerngewinn/-verlust für die Periode
angepasst um das Ergebnis aus der Veräußerung von als Finanzinvestition gehaltenen Immobilien, das Ergebnis aus der Veräußerung
von Vorratsimmobilien, das Ergebnis aus der Bewertung der als Finanzinvestition gehaltenen Immobilien, des Ertrags/Aufwands aus
der Bewertung derivativer Finanzinstrumente und sonstigen Effekten sowie latente Steuern und Steuereffekte aus dem Ergebnis aus
der Veräußerung von als Finanzinvestition gehaltenen Immobilien und dem Ergebnis aus der Veräußerung von Vorratsimmobilien
sowie der Steuereffekte aus der Abwicklung von Zinssicherungsgeschäften.
„AFFO“ stellt FFO angepasst um Investitionsausgaben (Capex) dar.
Die folgende Tabelle zeigt die Berechnung von FFO und AFFO für die angegebenen Zeiträume:
Für das
zum 31. Dezember
2012
2013
(geprüft, sofern nicht
anders angegeben in)
(in € Millionen)
Konzernperiodenergebnis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
76,3
99,1
Immobilien . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
0,0
(0,5)
Ergebnis aus der Veräußerung von Vorratsimmobilien . . . . . . . . . . . . . . . . . . . . . .
(27,4)
(7,8)
Ergebnis aus der Bewertung der als Finanzinvestition gehaltenen Immobilien . . . .
(53,1)
(72,2)
Ertrag/Aufwand aus der Bewertung derivativer Finanzinstrumente . . . . . . . . . . . . .
10,0
(6,9)
Sonstige Effekte(a) (ungeprüft) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
15,4
6,8
Latente Steuern . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
59,0
9,8
Korrektur aktueller Steuern vom Einkommen und vom Ertrag aufgrund einer
pauschalen Berechnung für Zwischenperioden(b) (ungeprüft) . . . . . . . . . . . . . . .
N/A
N/A
Bereinigung von Steuereffekten aus der Veräußerung der als Finanzinvestition
gehaltenen Immobilien und den Vorratsimmobilien sowie Steuereffekten aus
der Ablösung von Zinssicherungsgeschäften(c) (ungeprüft) . . . . . . . . . . . . . . . . .
3,2
31,4
FFO (ungeprüft) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
52,6
46,1
FFO (je Aktie(d) und in €) (ungeprüft) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,01
0,89
FFO (ungeprüft) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
52,6
46,1
Capex(e) (ungeprüft) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(12,6)
(5,7)
AFFO (ungeprüft) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
40,0
40,4
AFFO (je Aktie(d) und in €) (ungeprüft) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
0,77
0,78
S-33
Für den
Sechsmonatszeitraum
endend zum 30. Juni
2013
2014
(ungeprüft)
(in € Millionen)
46,1
57,4
(0,2)
(5,5)
(34,4)
(5,4)
4,2
5,5
(0,5)
(2,3)
(51,3)
2,0
1,7
8,3
0,6
9,5
13,6
24,4
0,47
24,4
(1,9)
22,5
0,43
4,6
26,0
0,50
26,0
(2,2)
23,8
0,46
(a)
Sonstige Effekte beeinhalten:
(i)
Abschreibung von selbstgenutzten Immobilien (IAS 16) von €0,3 Millionen für das Geschäftsjahr, das am 31 Dezember
2012 endete, €0,3 Millionen für das Geschäftsjahr, das am 31. Dezember 2013 endete, €0,1 Millionen für den
Sechsmonatszeitraum, der am 30. Juni 2013 endete, und €0,1 Millionen für den Sechsmonatszeitraum, der am 30. Juni
2014 endete;
(ii)
Erträge aus dem zum 31. Dezember 2014 auslaufenden Dienstleistungsvertrag mit der TAG Wohnen GmbH (vormals:
TLG WOHNEN GmbH) in Höhe von €2,9 Millionen für das Geschäftsjahr, das am 31. Dezember 2012 endete, €1,6
Millionen für das Geschäftsjahr, das am 31. Dezember 2013 endete, €0,7 Millionen für den Sechsmonatszeitraum, der am
30. Juni 2013 endete und €0,3 Millionen für den Sechsmonatszeitraum, der am 30. Juni 2014 endete;
(iii) Ergebnis aus dem 33%igen Anteil an dem Gemeinschaftsunternehmen Altmarkt-Galerie Dresden KG, verkauft in 2013,
von €12,9 Millionen für das Geschäftsjahr, das am 31. Dezember 2012 endete, €2,1 Millionen für das Geschäftsjahr, das
am 31. Dezember 2013 endete und €2,1 Millionen für den Sechsmonatszeitraum, der am 30. Juni 2013 endete;
(iv) Personalaufwand für Abfindungen in Verbindung mit der Reorganisation von TLG in Höhe von €6,9 Millionen für das
Geschäftsjahr, das am 31. Dezember 2013 endete, €6,9 Millionen für den Sechsmonatszeitraum, der am 30. Juni 2013
endete, sowie Aufwendungen für aktienbasierte Vergütung in Höhe von €0,8 Millionen für den Sechsmonatszeitraum, der
am 30. Juni 2014 endete;
(v)
Erträge aus der Auflösung von Rückstellungen für die Grunderwerbsteuer, die in Verbindung mit der Abspaltung von
TLGs Wohnimmobilien auf die TLG WOHNEN GmbH in 2012 gebildet wurden, in Höhe von €5,4 Millionen für das
Geschäftsjahr, das am 31. Dezember 2013 endete; und
(vi) Erträge aus der Auflösung von Verbindlichkeiten und Rückstellungen für die Weiterreichung von Kaufpreisen und
aufgelaufenen Zinsen durch TLG, die aus TLGs Verpflichtung resultierten, Teile der Kaufpreise weiterzuleiten, welche
durch den Verkauf von Immobilien, die im Miteigentum der TLG, BEDIG AG i.L. und des Landes Berlin standen, erzielt
wurden in Höhe von €4,8 Millionen für das Geschäftsjahr, das am 31. Dezember 2013 endete, und die Auflösung einer
Rückstellung für das Rückzahlungsrisiko von Subventionen in Höhe von €2,3 Millionen für den Sechsmonatszeitraum,
der am 30. Juni 2014 endete.
(b)
Die aktuellen Steuern vom Einkommen und vom Ertrag in Höhe von €16,5 Millionen und in Höhe von €17,5 Millionen für die
Sechsmonatszeiträume, die am 30. Juni 2013 und 2014 endeten, wurden mithilfe des Integralverfahrens in Übereinstimmung
mit IAS 34.30 errechnet. Aufgrund dieser Berechnungsmethode ist eine Korrektur in Höhe von €0,6 Millionen für das erste
Halbjahr 2013 und in Höhe von €9,5 Millionen für das erste Halbjahr 2014 vorzunehmen, um die niedrigeren tatsächlichen
Steueraufwendungen für den entsprechenden Sechsmonatszeitraum in Höhe von €15,9 Millionen in 2013 und in Höhe von €8,0
Millionen in 2014 zu zeigen.
(c)
Bereinigungen des tatsächlichen Steueraufwands um die laufenden Steuern vom Einkommen und vom Ertrag aus dem
Verkaufsergebnis der als Finanzinvestition gehaltenen Immobilien sowie der Vorratsimmobilien beliefen sich auf
€3,2 Millionen für das Geschäftsjahr, das am 31. Dezember 2012 endete, €36,8 Millionen für das Geschäftsjahr, das am 31.
Dezember 2013 endete, €13,6 Millionen für den Sechsmonatszeitraum, der am 30. Juni 2013 endete und €10, 9 Millionen für
den Sechsmonatszeitraum, der am 30. Juni 2014 endete.
Die Bereinigung des gegenläufigen (ursprünglich den laufenden Steueraufwand mindernden) Effekts aus der steuernwirksamen
Ablösung von Zinssicherungsgeschäften betrug €5,5 Millionen für das Geschäftsjahr, das am 31. Dezember 2013 endete, und
€6,4 Millionen für den Sechsmonatszeitraum, der am 30. Juni 2014 endete.
(d)
Basierend auf insgesamt 52.000.000 ausstehenden Aktien zum Zeitpunkt dieses Prospekts.
(e)
Capex bezieht sich auf die Investitionsaufwendungen ohne Kosten für Zukäufe von Immobilien, Kosten für
Projektentwicklungen und ohne den laufenden Instandhaltungsaufwand.
Finanzierung und Verschuldung
Für das Geschäftsjahr und
zum 31. Dezember
2012
2013
(ungeprüft)
(in %, sofern nicht anders angegeben)
Eigenkapitalquote(1) . . . . . . . . . . . . . . . . . . . .
Netto LTV-Verhältnis(2) . . . . . . . . . . . . . . . . .
Zinsdeckungsgrad (als Vielfaches)(3) . . . . . . .
58,5
27,0
3,7x
49,0
33,3
2,6x
Für den Sechsmonatszeitraum und
zum 30. Juni
2014
(ungeprüft)
(in %, sofern nicht anders angegeben)
39,9
47,0
3,6x
(1)
Die Eigenkapitalquote ist das Verhältnis des (den Gesellschaftern zustehenden) Eigenkapitals zu Eigen- und Fremdkapital (die
„Eigenkapitalquote“). Zum 31. Dezember 2012 berechnet sich die Eigenkapitalquote durch Division des Eigenkapitals in Höhe von
€1.006,7 Millionen durch das gesamte Eigen- und Fremdkapital in Höhe von €1.719,4 Millionen. Zum 31. Dezember 2013 berechnet
sich die Eigenkapitalquote durch Division des Eigenkapitals in Höhe von €801,0 Millionen durch das gesamte Eigen- und
Fremdkapital in Höhe von €1.635,7 Millionen. Zum 31. Juni 2014 berechnet sich die Eigenkapitalquote durch Division des
Eigenkapitals in Höhe von €621,5 Millionen durch das gesamte Eigen- und Fremdkapital in Höhe von €1.555,9 Millionen.
(2)
Das Netto-“Loan-to-Value”-Verhältnis ist das Verhältnis von Nettofremdkapital (Summe aus langfristigen und kurzfristigen
Verbindlichkeiten ggü. Kreditinstituten abzüglich der Zahlungsmittel und Zahlungsmitteläquivalente), zum Immobilienvermögen
(Summe aus als Finanzinvestition gehaltenen Immobilien, eigengenutzten Immobilien, Anzahlungen auf als Finanzinvestition
gehaltene Immobilien, zur Veräußerung gehaltenen Vermögenswerten und Vorräten (das „Netto LTV-Verhältnis“).
S-34
Die folgende Tabelle zeigt die Berechnung des Netto LTV-Verhältnisses zu den angegebenen Zeitpunkten:
Zum 31. Dezember
2012
2013
(geprüft und in
€ Millionen, sofern
nicht anders
angegeben)
Langfristige Verbindlichkeiten ggü. Kreditinstituten . . . . . . . . . . . . . . . . .
392,9
513,0
Kurzfristige Verbindlichkeiten ggü. Kreditinstituten . . . . . . . . . . . . . . . . .
87,2
113,2
Zahlungsmittel und Zahlungsmitteläquivalente . . . . . . . . . . . . . . . . . . . . . .
(60,5)
(138,9)
(3)
Zum 30. Juni
2014
(ungeprüft)
(in € Millionen, sofern
nicht anders
angegeben)
672,4
55,6
(24,5)
Nettofremdkapital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
419,5
487,3
703,5
Als Finanzinvestition gehaltene Immobilien . . . . . . . . . . . . . . . . . . . . . . . .
Eigengenutzte Immobilien . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Anzahlungen auf als Finanzinvestition gehaltene Immobilien . . . . . . . . . .
Zur Veräußerung gehaltene Vermögenswerte . . . . . . . . . . . . . . . . . . . . . . .
Vorräte . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1.511,7
16,7
3,0
0,0
22,3
1.414,7
16,5
2,7
17,8
13,4
1.423,0
15,1
2,5
41,6
13,3
Immobilienvermögen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1.553,7
1.465,1
1.495,5
Netto-Loan-to-Value (Net LTV) (in %) . . . . . . . . . . . . . . . . . . . . . . . . . .
27,0
33,3
47,0
Der Zinsdeckungsgrad ist das Verhältnis zwischen dem Bereinigten EBITDA und dem Finanzergebnis für den jeweiligen Zeitraum
und stimmt möglicherweise nicht mit ähnlichen Begriffen überein, die für Finanzkennzahlen in den Kreditverträgen von TLG
verwandt werden. Der Zinsdeckungsgrad für das Geschäftsjahr, das am 31. Dezember 2012 endete, berechnet sich durch Division
des Bereinigten EBITDA von €79,5 Millionen durch das Finanzergebnis von €21,6 Millionen. Der Zinsdeckungsgrad für das
Geschäftsjahr, das am 31. Dezember 2013 endete, berrechnet sich durch Division des Bereinigten EBITDA von €90,4 Millionen
durch das Finanzergebnis von €35,3 Millionen. Der Zinsdeckungsgrad für den Sechsmonatszeitraum, der am 30. Juni 2014 endete,
berechnet sich durch die Division des Bereinigten EBITDA von €42,0 Millionen durch das Finanzergebnis von €11,7 Millionen.
EPRA Leistungskennzahlen
Zum 31. Dezember
2012
2013
(geprüft und in
€ Millionen, sofern
nicht anders
angegeben)
Eigenkapital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Marktwertanpassung anderer Vermögensgegenstände des
Anlagevermögens (IAS 16)(1) (ungeprüft) . . . . . . . . . . . . . . . . . . . . .
Marktwertanpassung auf Vorratsimmobilien(2) (ungeprüft) . . . . . . . . . .
Marktwerte derivativer Finanzinstrumente (ungeprüft) . . . . . . . . . . . . .
Aktive latente Steueren . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Passive latente Steuern . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
EPRA NAV(3) (ungeprüft) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
EPRA NAV (je Aktie und in €)(4) (ungeprüft) . . . . . . . . . . . . . . . . . .
EPRA Leerstandsquote (in %)(5) (ungeprüft) . . . . . . . . . . . . . . . . . .
Zum 30. Juni
2014
(ungeprüft)
(in € Millionen, sofern
nicht anders
angegeben)
1.006,7
801,0
621,5
2,1
4,6
43,4
(4,5)
79,3
1.131,7
21,76
8,7
3,8
5,3
18,8
(3,5)
88,1
913,5
17,57
5,1
2,7
5,1
8,7
(5,4)
96,3
728,9
14,02
5,0
(1)
Die Marktwertanpassung anderer Vermögensgegenstände des Anlagevermögens (IAS 16) bezeichnet den Überschuss aus der
Neubewertung zum beizulegenden Zeitwert der selbstgenutzten Immobilien, welche in der Konzernbilanz mit dem niedrigeren Wert
aus Anschaffungskosten abzüglich kumulierter Abschreibungen und Wertminderungen und beizulegendem Zeitwert enthalten sind.
(2)
Die Marktwertanpassung auf Vorratsimmobilien bezeichnet den Überschuss aus der Neubewertung zum beizulegenden Zeitwert von
zu veräußernden Immobilien, die gemäß IFRS mit dem niedrigeren Wert aus Anschaffungskosten oder Nettoveräußerungswert unter
den Vorräten in der Konzernbilanz enthalten sind.
(3)
Das EPRA NAV berechnet sich anhand der Definition der European Public Real Estate Association (die „EPRA“) und findet
Verwendung als Indikator für das langfristige Eigenkapital von TLG und wird berechnet anhand des Eigenkapitals (i) einschließlich
der Marktwertanpassung anderer Vermögensgegenstände des Anlagevermögens (IAS 16) sowie der Marktwertanpassung auf
Vorratsimmobilien, (ii) ausschließlich des Marktwerts derivativer Finanzinstrumente, aktiver latenter Steuern und passiver latenter
Steuern (das „EPRA NAV“).
(4)
Basierend auf einer Gesamtzahl von 52.000.000 ausstehenden Aktien zum Datum dieses Propekts.
(5)
Die EPRA Leerstandsquote entspricht dem geschätzten Mietwert von leerstehenden Räumlichkeiten geteilt durch den geschätzten
Mietwert des Gesamtportfolios („EPRA Leerstandsquote“).
S-35
Ausgewählte konsolidierte Finanzdaten gemäß HGB
Für das
zum 31. Dezember
2011
2012
(geprüft, sofern
nicht anders
angegeben)
(in € Millionen)
Daten aus der Konzern-Gewinn- und Verlustrechnung
Umsatzerlöse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Ergebnis der gewöhnlichen Geschäftstätigkeit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Konzernjahresüberschuss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
247,4
52,0
18,7
219,7
7,1
2,5
Zum 31. Dezember
2011
2012
(geprüft, sofern
nicht anders
angegeben)
(in € Millionen)
Daten aus der Konzernbilanz
Anlagevermögen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Umlaufvermögen (ungeprüft) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rechnungsabgrenzungsposten . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1.795,9
108,5
7,1
1.339,2
104,6
7,3
Aktiva . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1.911,5
1.451,1
Eigenkapital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unterschiedsbetrag aus der Kapitalkonsolidierung . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sonderposten für Investitionszulagen und Investitionszuschüsse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rückstellungen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Verbindlichkeiten . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rechnungsabgrenzungsposten . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
962,7
7,9
35,8
92,2
812,3
0,6
805,3
7,0
16,4
89,2
533,2
0,1
Passiva . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1.911,5
1.451,1
Für das
zum 31. Dezember
2011
2012
(geprüft, sofern
nicht anders
angegeben)
(in € Millionen)
Daten aus der Konzern-Kapitalflussrechnung
Cashflow aus laufender Geschäftstätigkeit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cashflow aus der Investitionstätigkeit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cashflow aus der Finanzierungstätigkeit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
124,3
(115,9)
19,2
142,5
(86,6)
(28,4)
B.8
Ausgewählte wesentliche Proforma-Finanzinformationen.
Entfällt. Die Gesellschaft hat keine Pro-Forma-Finanzinformationen
erstellt.
B.9
Gewinnprognosen oder -schätzungen.
Basierend auf dem Trend des Geschäftsjahrs 2014 rechnet das
Management der Gesellschaft mit einem FFO von €50 Millionen für
das Geschäftsjahr 2014.
B.10
Beschränkungen im
Bestätigungsvermerk zu den
historischen Finanzinformationen.
Entfällt. Die in diesem Prospekt enthaltenen historischen
Finanzinformationen wurden jeweils mit einem uneingeschränkten
Bestätigungsvermerk versehen.
B.11
Nicht Ausreichen des
Geschäftskapitals des Emittenten zur
Erfüllung bestehender
Anforderungen.
Entfällt. Die Gesellschaft ist der Ansicht, dass TLG in der Lage ist, die
Zahlungsverpflichtungen zu erfüllen, die mindestens in den nächsten
zwölf Monaten fällig werden.
S-36
C—Wertpapiere
C.1
Beschreibung von Art und Gattung
der angebotenen und/oder zum
Handel zuzulassenden Wertpapiere,
einschließlich jeder
Wertpapierkennung.
Auf den Inhaber lautende Stammaktien ohne Nennbetrag
(Stückaktien), jeweils mit einem anteiligen Betrag am Grundkapital
von €1,00 und mit voller Dividendenberechtigung ab dem 1. Januar
2014.
International
Securities
DE000A12B8Z4
Identification
Number
(ISIN):
Wertpapierkennnummer (WKN): A12B8Z
Ticker Symbol: TLG
C.2
Währung der Wertpapieremission.
Euro.
C.3
Zahl der ausgegebenen und voll
eingezahlten Aktien und der
ausgegebenen, aber nicht voll
eingezahlten Aktien.
52,000,000 auf den Inhaber lautende Stammaktien ohne Nennbetrag
(Stückaktien). Das Grundkapital wurde vollständig eingezahlt.
Nennwert pro Aktie bzw. Angabe,
dass die Aktien keinen Nennwert
haben.
Jede Aktie der Gesellschaft repräsentiert einen anteiligen Betrag des
Grundkapitals der Gesellschaft von €1,00.
C.4
Beschreibung der mit den
Wertpapieren verbundenen Rechte.
Jede Aktie der Gesellschaft berechtigt zu einer Stimme in der
Hauptversammlung der Gesellschaft. Es bestehen keine
Stimmrechtsbeschränkungen. Die Aktien sind mit voller
Dividendenberechtigung ab dem 1. Januar 2014 ausgestattet.
C.5
Beschreibung aller etwaigen
Beschränkungen für die freie
Übertragbarkeit der Wertpapiere.
Entfällt. Die Aktien der Gesellschaft sind in Übereinstimmung mit den
gesetzlichen Bestimmungen für auf den Inhaber lautende Stammaktien
frei übertragbar. Es bestehen keine Verfügungsverbote oder
-beschränkungen hinsichtlich der Übertragbarkeit der Aktien der
Gesellschaft.
C.6
Angabe, ob für die angebotenen
Wertpapiere die Zulassung zum
Handel an einem geregelten Markt
beantragt wurde bzw. werden soll,
und Nennung aller geregelten
Märkte, an denen die Wertpapiere
gehandelt werden oder werden
sollen.
Die Gesellschaft erwartet, dass sie die Zulassung der Aktien der
Gesellschaft zum regulierten Markt mit gleichzeitiger Zulassung zum
Teilbereich
des
regulierten
Marktes
mit
weiteren
Zulassungsfolgepflichten (Prime Standard) an der Frankfurter
Wertpapierbörse voraussichtlich am oder um den 15. Oktober 2014
beantragen wird. Der Zulassungsbeschluss wird voraussichtlich am
23. Oktober 2014 bekannt gegeben werden. Der Handel an der
Frankfurter Wertpapierbörse wird voraussichtlich am 24. Oktober
2014 beginnen.
C.7
Beschreibung der Dividendenpolitik.
Die Gesellschaft beabsichtigt, eine Dividende in Höhe von 70-80%
ihres jährlichen FFO auszuschütten, sofern die Geschäftsentwicklung
von TLG zumindest stabil bleibt. Da vorgesehen ist, dass der
Börsengang nur zwei Monate vor dem Ende des laufenden
Geschäftsjahres abgeschlossen ist, plant die Gesellschaft derzeit, eine
Dividende in Höhe von insgesamt €10-15 Millionen für das
Geschäftsjahr 2014 auszuschütten.
D—Risiken
D.1
Zentrale Angaben zu den zentralen
Risiken, die dem Emittenten oder
seiner Branche eigen sind.
Der Erwerb von Aktien der Gesellschaft ist mit Risiken verbunden.
Daher sollten Investoren bei der Entscheidung über eine Investition in
Aktien der Gesellschaft die nachfolgend beschriebenen Risiken und
die sonstigen in diesem Prospekt enthaltenen Informationen sorgfältig
prüfen. Der Marktpreis der Aktien der Gesellschaft könnte bei
Verwirklichung jedes einzelnen dieser Risiken fallen; in diesem Fall
könnten die Anleger ihre Einlage ganz oder teilweise verlieren. Die
S-37
folgenden Risiken könnten allein oder zusammen mit weiteren Risiken
und Unwägbarkeiten, die der Gesellschaft derzeit nicht bekannt sind
oder die sie derzeit als unwesentlich erachtet, die Geschäfts-,
Vermögens-, Finanz- und Ertragslage der TLG erheblich nachteilig
beeinträchtigen.
Die Reihenfolge, in welcher die Risikofaktoren dargestellt sind, stellt
weder eine Aussage über die Eintrittswahrscheinlichkeit noch über die
Bedeutung und Höhe der Risiken oder das Ausmaß eines möglichen
Schadens der Geschäfts-, Vermögens-, Finanz- und Ertragslage der
TLG dar. Die hier genannten Risiken können sich einzeln oder
kumulativ verwirklichen.
Markt- und Geschäftsrisiken
•
Nachteilige Entwicklungen der Konjunktur und der
Gewerbeimmobilienmärkte in Deutschland, wie z. B. allgemeine
Deflation in der Eurozone oder steigende Zinsen, könnten sich
nachteilig auf TLG auswirken.
•
Eine Verschlechterung der wirtschaftlichen Bedingungen und des
Geschäftsumfeldes in Berlin und Ostdeutschland, insbesondere
nachteilige demografische Entwicklungen, könnten sich
nachteilig auf TLG auswirken.
•
TLG ist möglicherweise nicht in der Lage, ihre Strategie des
Wachstums durch Akquisitionen aufgrund eines Mangels an
interessanten, zum Verkauf angebotenen Liegenschaften oder
Immobilienportfolios, des Wettbewerbs um solche Ankäufe oder
das Unvermögen die erforderliche Akquisitionsfinanzierung zu
beschaffen, umzusetzen.
•
TLG ist möglicherweise nicht in der Lage, sämtliche mit den
erworbenen Immobilien bzw. Portfolios verbundenen Risiken zu
erkennen und überschätzt möglicherweise den Wert und/oder die
finanzielle Leistungsfähigkeit derartiger Akquisitionsgelegenheiten.
•
TLG könnte sich mit Risiken bei Sanierungs- und
Entwicklungsmaßnahmen konfrontiert sehen und für die Zukunft
geplante Maßnahmen könnten sich als undurchführbar
herausstellen.
•
TLG kann möglicherweise Immobilien aus ihrem nichtstrategiekonformen Portfolio nicht oder nicht zu günstigen
Bedingungen veräußern und dies kann die für TLGs
Wachstumsstrategie
zur
Verfügung
stehenden
Mittel
beschränken.
•
Gegen TLG könnten Haftpflichtansprüche im Zusammenhang
mit veräußerten Immobilien geltend gemacht werden.
•
Das Portfolio der TLG betreffen gewisse Konzentrationsrisiken,
und nachteilige Entwicklungen bei der Nachfrage nach Büro-,
Einzelhandels- und Hotelimmobilien, bei den Hauptmietern der
TLG und ihren wertvollsten Immobilien könnten sich besonders
nachteilig auf das Geschäft der TLG auswirken.
•
TLG kann möglicherweise außerstande sein, geeignete und
zahlungsfähige Mieter zu annehmbaren Bedingungen zu finden
oder zu halten, und bestehende Mieter könnten nicht in der Lage
sein, ihren Zahlungsverpflichtungen nachzukommen.
•
Indexierungsklauseln in den Mietverträgen von TLG könnten
sich nachteilig auf die Mieteinnahmen der TLG auswirken.
•
Auf TLG könnten erhebliche unerwartete Instandhaltungs-,
Reparatur- und Modernisierungskosten zukommen und das
Unterlassen angemessener Instandhaltungsmaßnahmen könnte
die Mieteinnahmen von TLG beeinträchtigen.
S-38
•
Das Sachverständigengutachten und die Finanzinformationen, die
in diesem Prospekt enthalten sind, geben möglicherweise eine
unzutreffende Einschätzung des Wertes der Immobilien von TLG
wieder.
•
TLG könnte verpflichtet sein, die gegenwärtigen beizulegenden
Zeitwerte ihrer als Finanzinvestition gehaltenen Immobilien
anzupassen oder ein niedrigeres Ergebnis aus der Neubewertung
der als Finanzinvestitionen gehaltenen Immobilien zu verbuchen
und daher erhebliche Verluste zu erfassen.
•
TLG ist möglicherweise nicht in der Lage, Mitglieder des
Vorstands sowie Personal in Schlüsselpositionen zu ersetzen bzw.
zusätzliches qualifiziertes Personal einzustellen.
•
Die IT-Systeme von TLG könnten nicht richtig funktionieren
oder beschädigt werden.
•
Die IT-gestützten Instrumente der Portfolioverwaltung könnten
Geschäftsentscheidungen, die im wohlverstandenen Interesse von
TLG liegen, fehlerhaft wiedergeben und unsachgemäß
unterstützen.
•
TLG könnte erhebliche Verluste aufgrund von Schäden erleiden,
die von den Versicherungspolicen nicht gedeckt sind oder welche
die Deckungsgrenzen der Versicherungspolicen überschreiten.
•
Die
Kapitalflüsse
und
die
möglichen
zukünftigen
Dividendenzahlungen der Gesellschaft hängen auch von der
Profitabilität ihrer Tochtergesellschaften ab, und die Gesellschaft
ist möglicherweise nicht in der Lage, bedeutende Veränderungen
bei diesen Tochtergesellschaften umzusetzen.
Finanzierungsrisiken
•
Die Fähigkeit von TLG, bestehende und zukünftige Schulden zu
tilgen, könnte begrenzt sein, und TLG kann möglicherweise neue
Finanzierungsquellen nicht oder nicht zu attraktiven Bedingungen
erschließen.
•
Sollte TLG Verpflichtungen aus ihren Finanzierungsvereinbarungen
verletzen, könnte sie gezwungen sein, Immobilien ohne Rücksicht
auf den Preis, den sie erzielen kann, zu veräußern, und ihre
Gläubiger oder Sicherheitentreuhänder könnten bedeutende
Sicherheiten pfänden und verwerten, was letztendlich zur Insolvenz
der Gesellschaft führen könnte.
Regulatorische, rechtliche und steuerliche Risiken
•
Änderungen der allgemeinen regulatorischen Rahmenbedingungen
in Deutschland können sich nachteilig auf TLG auswirken.
•
TLG können Kosten im Zusammenhang mit Altlasten
einschließlich Kriegsmunition, Bodenverschmutzungen und
Gefahrstoffen entstehen.
•
In den Mietverträgen von TLG verwendete Standardklauseln sind
möglicherweise unwirksam, und einige dieser Verträge erfüllen
möglicherweise nicht die strengen Schriftformerfordernisse nach
deutschem Recht.
•
Die Struktur von TLG zur Einhaltung gesetzlicher Vorschriften
(Compliance-Struktur) ist oder war möglicherweise nicht
ausreichend, um TLG angemessen vor sämtlichen rechtlichen
oder finanziellen Risiken zu schützen.
•
TLG
ist
Risiken
aufgrund
Rechtsstreitigkeiten ausgesetzt.
•
TLG könnte verpflichtet
zurückzuzahlen.
S-39
sein,
möglicher
bestimmte
zukünftiger
Subventionen
D.3
Zentrale Angaben zu den
zentralen Risiken, die den
Wertpapieren eigen sind.
•
TLG kann möglicherweise Gegenstand von Rückerstattungs- und
Schadenersatzansprüchen werden, wenn ihre Immobilien
unrechtmäßig enteignet wurden, und dies könnte die Übereignung
ihrer Grundstücke verzögern oder verhindern.
•
Änderungen der allgemeinen steuerlichen Rahmenbedingungen
in Deutschland können sich nachteilig auf TLG auswirken, da
solche Änderungen einen Anstieg der Steuerlast von TLG nach
sich ziehen könnten.
Risiken in Bezug auf das Angebot und die Angebotsaktien
•
Das Angebot kann möglicherweise nicht zum Abschluss gebracht
werden, wenn die Joint Bookrunners den Übernahmevertrag (wie
nachfolgend unter E.3 definiert) kündigen oder sich die
Gesellschaft aus dem Angebot zurückzieht.
•
Es könnte schwierig sein, die Konzernabschlüsse von der
Gesellschaft aus den Geschäftsjahren ab 2013 mit denen aus
vorangegangenen Zeiträumen zu vergleichen.
•
Die prognostizierten Mittel aus der operativen Tätigkeit (FFO)
von TLG für das Geschäftsjahr 2014 könnten erheblich von dem
tatsächlichen FFO für das Geschäftsjahr 2014 abweichen und die
Gesellschaft
könnte
sich
dazu
entscheiden,
ihre
Dividendenzahlung zu verringern.
•
Der Aktienkurs und das Handelsvolumen der Aktien der
Gesellschaft könnten erheblich schwanken.
•
Nach der Börsennotierung wird East AcquiCo weiterhin in der
Lage sein, wesentlichen Einfluss auf TLG auszuüben. Dabei
könnten die Interessen der East AcquiCo von den Interessen der
übrigen Aktionäre abweichen. Zukünftige Verkäufe der
Gesellschaftsaktien durch Großaktionäre der Gesellschaft
könnten zu einem Rückgang des Aktienkurses führen.
•
Zukünftige Kapitalmaßnahmen könnten eine erhebliche
Verwässerung der Anteile der bestehenden Aktionäre der
Gesellschaft zur Folge haben.
•
Die Gesellschaft wird mit zusätzlichen Verwaltungsanforderungen
und höheren laufenden Kosten als Folge der Börsennotierung
konfrontiert werden.
E—Angebot
E.1
Gesamtnettoerlöse und geschätzte
Gesamtkosten der Emission/des
Angebots, einschließlich der
geschätzten Kosten, die dem Anleger
vom Emittenten oder Anbieter in
Rechnung gestellt werden.
In der Mitte der für die Emission der Angebotsaktien vorgesehenen
Preisspanne (die „Preisspanne“) wird als Bruttoerlös aus dem
Angebot ein Gesamtbetrag von ca. €451,4 Millionen erwartet (unter
Annahme der Platzierung sämtlicher Angebotsaktien (wie nachstehend
unter E.3 beschrieben)). Unter Annahme von angebotsbezogenen
Kosten und an die Konsortialbanken zu zahlenden Provisionen in
Höhe von insgesamt ca. €20,9 Millionen würde sich der Nettoerlös aus
dem Angebot in der Mitte der Preisspanne auf ca. €430.5 Millionen
belaufen.
Die Gesellschaft erhält nur den Erlös aus der Emission, der aus dem
Verkauf von Neuen Aktien (wie nachstehend unter E.3 definiert)
stammt. Die Gesellschaft erhält keinen Erlös aus dem Verkauf der
Bestehenden Aktien (wie nachstehend unter E.3 definiert) aus dem
Aktienbesitz der Bestehenden Aktionäre. Bei Platzierung sämtlicher
Angebotsaktien (wie nachstehend unter E.3 beschrieben) in der Mitte
der Preisspanne würde die Gesellschaft einen Bruttoertrag von
ungefähr €114,0 Millionen (entspricht einem geschätzten Nettoertrag
von ungefähr €108,5 Millionen) erhalten. Die Gesellschaft behält sich
jedoch das Recht vor, nur eine solche Anzahl von Neuen Aktien (wie
unter E.3 beschrieben) zuzuteilen, wie dies zum Erreichen ihres
Mindestbruttoerlösziels von €100 Millionen notwendig ist.
S-40
In der Mitte der Preisspanne wird sich der den Bestehenden
Aktionären zukommende Bruttoertrag (unter der Annahme der
Platzierung der größten Anzahl Bestehender Aktien (wie nachstehend
unter E.3 definiert) und unter der Annahme vollständiger Ausübung
der Greenshoe Option (wie nachstehend unter E.3 definiert)) auf
ungefähr €337,4 Millionen und der geschätzte Nettoertrag auf
ungefähr €322,0 Millionen belaufen.
Unter der Annahme eines Angebotspreises in der Mitte der
Preisspanne, werden sich die durch die Emission der Angebotsaktien
(wie nachstehend unter E.3 beschrieben) und die Börsennotierung des
gesamten Aktienbestandes der Gesellschaft entstehenden Kosten
erwartungsgemäß auf insgesamt ungefähr €20,9 Millionen belaufen.
Die der Gesellschaft durch die Emission der Angebotsaktien (wie
nachstehend unter E.3 beschrieben) und die Börsennotierung des
gesamten Aktienbestandes der Gesellschaft entstehenden Kosten
werden sich erwartungsgemäß auf insgesamt ungefähr €8,5 Millionen
(ausgenommen den Konsortialbanken zu zahlende Konsortial- und
Platzierungsprovisionen) belaufen. Hiervon werden ungefähr
€6,1 Millionen von den Bestehenden Aktionären übernommen, was
bedeutet, dass die Gesellschaft letztendlich ungefähr €2,4 Millionen
der Kosten zu tragen hat. Die Bestehenden Aktionäre werden die
Kosten der Emission und der Börsennotierung der Gesellschaft im
Verhältnis der Bestehenden Aktien (wie nachstehend unter
E.3 beschrieben) zu den Basisaktien (wie nachstehend unter
E.3 beschrieben) übernehmen.
Unter der Annahme eines Angebotspreises in der Mitte der
Preisspanne, einer Platzierung sämtlicher Neuer Aktien (wie
nachstehend unter E.3 beschrieben) sowie einer Platzierung der
größten Anzahl Bestehender Aktien und Mehrzuteilungsaktien (wie
nachstehend unter E.3 beschrieben) (und der vollständigen Ausübung
der Greenshoe Option, wie nachstehend unter E.3 beschrieben) sowie
unter der Annahme der weiteren vollständigen Zahlung der
Ermessensgebühr von bis zu €5,6 Millionen in der Mitte der
Preisspanne wird sich die an die Konsortialbanken zu zahlende
Provision auf €12,4 Millionen belaufen. Hiervon entfallen
€3,1 Millionen auf die Platzierung der Neuen Aktien (wie nachstehend
unter E.3 beschrieben) und werden von der Gesellschaft gezahlt. Von
den verbleibenden €9,3 Millionen entfallen €8,2 Millionen auf die
Platzierung der Bestehenden Aktien (wie nachstehend unter
E.3 beschrieben) und werden unmittelbar von den Bestehenden
Aktionären übernommen, €1,1 Millionen entfallen auf die Platzierung
der Mehrzuteilungsaktien (wie nachstehend unter E.3 beschrieben)
und werden unmittelbar von East AcquiCo gezahlt.
Weder die Gesellschaft, noch die Bestehenden Aktionäre, noch die
Konsortialbanken werden den Anlegern Kosten in Rechnung stellen.
Investoren
werden
die
üblichen
Transaktionsund
Abwicklungskosten, welche ihr kontoverwaltendes Finanzinstitut in
Rechnung stellt, tragen müssen.
E.2a
Gründe für das Angebot.
Die Gesellschaft beabsichtigt die Zulassung ihrer Aktien zum
regulierten Markt der Frankfurter Wertpapierbörse mit gleichzeitiger
Zulassung zum Teilbereich des regulierten Marktes mit weiteren
Zulassungsfolgepflichten (Prime Standard) an der Frankfurter
Wertpapierbörse, um einen Zugang zum Kapitalmarkt zu erhalten. Die
Gesellschaft beabsichtigt mit der Emission ebenfalls, den Erlös aus der
Platzierung der Neuen Aktien (wie nachstehend unter E.3 beschrieben)
zu erzielen.
Die Bestehenden Aktionäre bieten ihre Aktien an, um ihre Beteiligung
an der Gesellschaft teilweise zu desinvestieren und für ausreichenden
Streubesitz und ausreichende Handelsliquidität zu sorgen.
S-41
E.3
Zweckbestimmung der Erlöse,
geschätzte Nettoerlöse.
Die Gesellschaft beabsichtigt, den Nettoerlös aus der Emission der
Neuen Aktien (wie nachstehend unter E.3 beschrieben), zusammen mit
zusätzlicher Fremdfinanzierung, zu verwenden, um zukünftige
Akquisitionen zu finanzieren. Diese zukünftigen Akquisitionen
können eine Einzelhandelsimmobilie in Berlin mit einem möglichen
Kaufpreis
von
circa
€35
Millionen
(einschließlich
Erwerbsnebenkosten), über die sie derzeit mit dem Verkäufer
verhandelt, eine Büroimmobilie in Rostock mit einem möglichen
Kaufpreis
von
circa
€16
Millionen
(einschließlich
Erwerbsnebenkosten), für die sie derzeit die Due Diligence durchführt
und
eine
oder
mehrere
der
anderen
Büround
Einzelhandelsimmobilien mit einem beizulegenden Zeitwert von
insgesamt €20 Millionen bzw. insgesamt €140 Millionen, die sie
derzeit detaillierter prüft, oder anderen Objekte, beinhalten. Ein
etwaiger
Restbetrag
der
Erlöse
wird
für
allgemeine
Unternehmenszwecke verwandt. Bei angenommener Platzierung
sämtlicher Angebotsaktien (wie nachstehend unter E.3 beschrieben) in
der Mitte der Preisspanne geht die Gesellschaft davon aus, dass sie
einen Bruttoerlös von ungefähr €114,0 Millionen und einen Nettoerlös
von ungefähr €108,5 Millionen aus der Emission erhält.
Beschreibung der
Angebotskonditionen.
Das Angebot (einschließlich eventueller Mehrzuteilungen) bezieht
sich auf den Verkauf von 36.850.000 auf den Inhaber lautender
Stammaktien ohne Nennbetrag (Stückaktien) mit einem anteiligen
Betrag am Grundkapital von jeweils €1,00 und mit voller
Dividendenberechtigung ab dem 1. Januar 2014 und setzt sich
zusammen aus:
•
9.302.326 neu emittierten auf den Inhaber lautenden
Stammaktien ohne Nennbetrag (Stückaktien) aus einer
Kapitalerhöhung
gegen
Bareinlage,
die
durch
eine
außerordentliche Hauptversammlung der Gesellschaft zu
beschließen ist („Neue Aktien“);
•
24.197.674 bestehenden auf den Inhaber lautenden Stammaktien
ohne Nennbetrag (Stückaktien) aus dem Bestand der Bestehenden
Aktionäre („Bestehende Aktien“ und zusammen mit den Neuen
Aktien, die „Basisaktien“); und
•
3.350.000 bestehenden auf den Inhaber lautenden Stammaktien
ohne Nennbetrag (Stückaktien) aus dem Bestand von East
AcquiCo in Verbindung mit einer möglichen Mehrzuteilung
(„Mehrzuteilungsaktien“ und zusammen mit den Basisaktien,
die „Angebotsaktien“).
Das Angebot besteht aus einem öffentlichen Angebot der
Angebotsaktien
in
Deutschland
und
Luxemburg
sowie
Privatplatzierungen der Angebotsaktien in einigen anderen
Rechtsordnungen außerhalb Deutschlands und Luxemburgs. In den
Vereinigten Staaten von Amerika werden die Aktien qualifizierten
institutionellen Anlegern zum Verkauf gemäß Rule 144A nach dem
U.S. Securities Act von 1933 in der derzeit gültigen Fassung
angeboten. Außerhalb der Vereinigten Staaten von Amerika werden
die Aktien gemäß der Regulation S nach dem Securities Act von 1933
in der derzeit gültigen Fassung angeboten.
Angebotszeitraum.
Der Angebotszeitraum, innerhalb dessen Anleger ihre Kaufangebote
für die Aktien abgeben können, beginnt voraussichtlich am
15. Oktober 2014 und endet voraussichtlich am 23. Oktober 2014 um
12:00 MESZ (Mitteleuropäische Sommerzeit) für Privatanleger
(natürliche Personen) und um 16:00 MESZ (Mitteleuropäische
Sommerzeit) für institutionelle Anleger. Kaufangebote müssen für
mindestens 50 Angebotsaktien und Limitstufen in vollen Eurobeträgen
oder Eurocentbeträgen von 25, 50 oder 75 Eurocent abgegeben
werden. Mehrfachzeichnungen sind zulässig.
Preisspanne und Angebotspreis.
Die Preisspanne, innerhalb derer Verkaufsangebote abgegeben werden
dürfen, liegt bei €10,75 bis €13,75 je Angebotsaktie.
S-42
Änderung der Angebotsbedingungen.
Die Gesellschaft und die Bestehenden Aktionäre behalten sich das
Recht vor, zusammen mit den Joint Bookrunners die Gesamtzahl der
Angebotsaktien zu erhöhen oder zu vermindern, die Ober- und/oder
Untergrenze der Preisspanne zu erhöhen oder zu senken und/oder den
Angebotszeitraum zu verlängern oder zu verkürzen. Durch
Änderungen der Anzahl der Angebotsaktien, Änderungen bei der
Preisspanne oder durch die Verlängerung bzw. Verkürzung des
Angebotszeitraums werden bereits unterbreitete Kaufangebote nicht
unwirksam. Sollte solch eine Änderung die Veröffentlichung eines
Prospektnachtrags erfordern, steht Anlegern, die ihre Kaufaufträge vor
Veröffentlichung des Prospektnachtrags unterbreiteten, gemäß dem
Wertpapierprospektgesetz des Recht zu, diese Kaufaufträge innerhalb
von zwei Tagen nach Veröffentlichung des Nachtrags zu widerrufen.
Anstelle des Widerrufs der vor der Veröffentlichung des Nachtrags
unterbreiteten Kaufaufträge können die Anleger ihre Aufträge ändern
oder neue begrenzte oder unbegrenzte Kaufangebote innerhalb von
zwei Tagen nach Veröffentlichung des Nachtrags platzieren. Bei einer
Änderung der Angebotsbedingungen wird diese Änderung im Wege
der elektronischen Medien (wie Thomson Reuters oder Bloomberg)
und, sofern nach dem Wertpapierhandelsgesetz oder dem
Wertpapierprospektgesetz erforderlich, als Ad-hoc-Mitteilung über ein
elektronisches Informationssystem, auf dem Internetportal der
Gesellschaft und als Nachtrag zu diesem Prospekt veröffentlicht.
Anleger, die Kaufangebote unterbreitet haben, werden nicht einzeln
benachrichtigt. Unter bestimmten Bedingungen können die Joint
Global Coordinators den Übernahmevertrag betreffend das Angebot,
den sie mit der Gesellschaft und den Bestehenden Aktionären
eingegangen sind, im Auftrag der Konsortialbanken am 14. Oktober
2014 (der „Übernahmevertrag“) selbst nach Aufnahme des Handels
der Aktien der Gesellschaft am regulierten Markt der Frankfurter
Wertpapierbörse kündigen.
Platzierungspreis.
Der Platzierungspreis und die endgültige Anzahl an in dem Angebot
zu platzierenden Angebotsaktien standen zum Datum des vorliegenden
Prospektes noch nicht fest.
Der Platzierungspreis sowie die endgültige Anzahl der in dem
Angebot zu platzierenden Angebotsaktien werden von der
Gesellschaft, den Bestehenden Aktionären und den Konsortialbanken
gemeinsam festgelegt. Der Preis wird auf Grundlage der von den
Anlegern erteilten Kaufaufträge festgelegt, die in dem Auftragsbuch,
das während des Bookbuilding-Verfahrens vorbereitet wurde, erfasst
wurden.
Die Preisfestsetzung wird voraussichtlich am oder um den 23. Oktober
2014 stattfinden. Der Platzierungspreis sowie die endgültige Anzahl
an in dem Angebot platzierten Angebotsaktien (d.h. das Ergebnis des
Angebots) werden voraussichtlich am oder um den 23. Oktober 2014
mittels
Ad-hoc-Mitteilung,
über
ein
elektronisches
Informationsverbreitungssystem und auf der Webseite der Gesellschaft
veröffentlicht.
Sollte sich das Platzierungsvolumen als unzureichend zur Erfüllung
sämtlicher Kaufaufträge zum Platzierungspreis herausstellen, behalten
sich die Konsortialbanken das Recht zur Ablehnung oder zur nur
teilweisen Annahme von Kaufaufträgen vor.
Lieferung und Abrechnung.
Die Angebotsaktien werden voraussichtlich am 28. Oktober 2014
gegen Zahlung des Angebotspreises geliefert. Die Angebotsaktien
werden den Aktionären als Miteigentumsanteile an der Globalurkunde
zur Verfügung gestellt
Stabilisierung, Mehrzuteilung und
Greenshoe-Option.
Im Zusammenhang mit der Platzierung der Angebotsaktien handelt
J.P. Morgan oder mit ihr verbundene Unternehmen, die sämtlich für
Rechnung der Konsortialbanken handeln, als Stabilisierungsmanager
S-43
und kann in Übereinstimmung mit den rechtlichen Bestimmungen
(§ 20a Abs. 3 Wertpapierhandelsgesetz in Verbindung mit der
Verordnung (EG) Nr. 2273/2003 vom 22. Dezember 2003)
Mehrzuteilungen
vornehmen
und
Stabilisierungsmaßnahmen
ergreifen, um den Marktpreis der Aktien der Gesellschaft zu stützen
und um dadurch einem etwaigen Verkaufsdruck entgegenzuwirken.
Der Stabilisierungsmanager ist nicht zu Stabilisierungsmaßnahmen
verpflichtet. Es kann daher nicht zugesichert werden, dass
Stabilisierungsmaßnahmen
ergriffen
werden.
Sollten
Stabilisierungsmaßnahmen ergriffen werden, können diese jederzeit
ohne Vorankündigung beendet werden. Solche Maßnahmen können ab
dem Zeitpunkt der Aufnahme des Börsenhandels der Aktien der
Gesellschaft am Regulierten Markt der Frankfurter Wertpapierbörse
vorgenommen werden und müssen spätestens am dreißigsten
Kalendertag nach diesem Zeitpunkt („Stabilisierungszeitraum“)
beendet sein.
Diese Maßnahmen können dazu führen, dass der Börsenkurs der
Aktien der Gesellschaft höher ist, als es ohne solche Maßnahmen der
Fall gewesen wäre. Des Weiteren kann sich vorübergehend ein
Börsenkurs auf einem Niveau ergeben, das nicht von Dauer ist.
Bei möglichen Stabilisierungsmaßnahmen können Anlegern zusätzlich
zu den Basisaktien der Gesellschaft bis zu 3.350.000
Mehrzuteilungsaktien als Teil der Zuteilung der zu platzierenden
Aktien zugeteilt werden („Mehrzuteilung“). Zum Zwecke einer
möglichen Mehrzuteilung werden dem Stabilisierungsmanager bis zu
3.350.000 Mehrzuteilungsaktien für Rechnung der Konsortialbanken
aus dem Aktienbesitz von East AcquiCo in Form eines
Wertpapierdarlehens zur Verfügung gestellt. Dabei wird die Anzahl
der Aktien 10% der Basisaktien nicht übersteigen. Zudem wird East
AcquiCo den Konsortialbanken eine Option zum Erwerb von bis zu
3.350.000 Aktien der Gesellschaft zum Angebotspreis abzüglich der
vereinbarten Provisionen gewähren („Greenshoe Option“). Diese
Option endet 30 Kalendertage nach dem Beginn des Börsenhandels
der Aktien der Gesellschaft.
Der Stabilisierungsmanager ist berechtigt, die Greenshoe Option in
dem Maß der ursprünglichen Mehrzuteilung für Rechnung der
Konsortialbanken auszuüben. Dabei ist der Aktienbetrag um die
Anzahl
der
Aktien
zu
vermindern,
die
von
dem
Stabilisierungsmanager am Tag der Ausübung der Greenshoe Option
gehalten wurden und die von diesem im Zusammenhang mit
Stabilisierungsmaßnahmen erworben wurden.
Bei Beendigung des Stabilisierungszeitraums wird innerhalb einer
Woche in verschiedenen Presseerzeugnissen, die im gesamten
Europäischen Wirtschaftsraum vertrieben werden, eine Mitteilung
veröffentlicht, ob es Stabilisierungsmaßnahmen gab, wann diese
Maßnahmen begannen und endeten und in welcher Preisspanne sie
sich bewegten. Letzteres wird jedes Mal mitgeteilt, sobald
Preisstabilisierungsmaßnahmen getroffen wurden. Die Ausübung der
Greenshoe Option, der zeitliche Ablauf der Ausübung und die Anzahl
und Art der betroffenen Aktien werden unverzüglich in derselben
Weise angekündigt werden.
E.4
Beschreibung aller für die
Emission/das Angebot wesentlichen,
Interessen.
Im Zusammenhang mit dem Angebot und der Aufnahme des Handels
der Aktien der Gesellschaft sind die Konsortialbanken eine
Vertragsbeziehung mit der Gesellschaft und den Bestehenden
Aktionären eingegangen.
Die Konsortialbanken handeln bei dem Angebot für die Gesellschaft
und die Bestehenden Aktionäre und koordinieren die Strukturierung
und die Durchführung des Angebots. Zudem wurden J.P. Morgan und
S-44
UBS als designierte Börsenhändler für die Aktien der Gesellschaft
ernannt und die COMMERZBANK wurde als Zahlstelle ernannt.
Nach erfolgreicher Umsetzung des Angebots erhalten die
Konsortialbanken eine Provision.
Die Bestehenden Aktionäre erhalten den Erlös aus den bei dem
Angebot verkauften Bestehenden Aktien. East AcquiCo wird den
Erlös der Aktien aus der Ausübung einer etwaigen Greenshoe Option
erhalten. Unter der Annahme vollständiger Platzierung sämtlicher
Bestehender Aktien sowie Mehrzuteilungsaktien in der Mitte der
Preisspanne und vollständiger Ausübung der Greenshoe Option sowie
nach Abzug von Gebühren und Aufwendungen, die von den
Bestehenden Aktionären im Zusammenhang mit dem Angebot zu
zahlen sind, würde sich der den Bestehenden Aktionären aus dem
Angebot zukommende Erlös auf ungefähr €322,0 Mio. bzw. 74,8%
des Nettogesamterlöses aus dem Angebot belaufen. Von diesem den
Bestehenden Aktionären zukommendem Erlös würden ungefähr
90,4% East AcquiCo zugute kommen und ungefähr 9,6% Delpheast.
Einige der Konsortialbanken oder ihrer Tochtergesellschaften
unterhalten Geschäftsbeziehungen mit TLG und den Bestehenden
Aktionären (einschließlich Darlehensgeschäften) und werden diese in
Zukunft voraussichtlich weiterhin unterhalten oder erbringen für TLG
oder die Bestehenden Aktionäre im gewöhnlichen Geschäftsbetrieb
möglicherweise Dienstleistungen.
E.5
Beschreibung kollidierender
Interesen.
Entfällt. Es bestehen keine kollidierenden Interessen.
Name der Person/des Unternehmens,
die/welches das Wertpapier zum
Verkauf anbietet.
Die Aktien werden von J.P. Morgan, UBS, COMMERZBANK,
Kempen & Co und HSBC (wie obenstehend unter A.1 definiert) zum
Verkauf angeboten.
Lock-up Vereinbarungen: Die
beteiligten Parteien und die Lock-up
Frist.
In dem Übernahmevertrag hat sich die Gesellschaft gegenüber jeder
Konsortialbank verpflichtet, soweit dies gesetzlich zulässig ist, dass
die Gesellschaft, ihr Vorstand oder ihr Aufsichtsrat ohne vorherige
schriftliche Zustimmung der Joint Global Coordinators, die nicht ohne
vernünftigen Grund verweigert oder verzögert werden darf, innerhalb
eines am 14. Oktober 2014 beginnenden Zeitraums von sechs Monaten
nach dem ersten Handelstag der Aktien der Gesellschaft an der
Frankfurter Wertpapierbörse (derzeit voraussichtlich am 24. Oktober
2014) weder Folgendes zu unternehmen noch Folgendem
zuzustimmen:
•
die Ankündigung, Durchführung oder Umsetzung einer Erhöhung
des Kapitals der Gesellschaft oder einer mittelbaren oder
unmittelbaren Platzierung der Aktien der Gesellschaft mittelbar
oder unmittelbar zu veranlassen oder zu genehmigen,
•
einen Vorschlag für eine Kapitalerhöhung mittelbar oder
unmittelbar zur Beschlussfassung in einer Hauptversammlung
vorzulegen,
•
die Vorlage, Herbeiführung oder Unterbreitung eines Vorschlags
zur Begebung von in Aktien der Gesellschaft wandelbare
Finanzinstrumente mit Optionsrechten auf Aktien der
Gesellschaft anzukündigen oder
•
Geschäfte mit wirtschaftlich vergleichbarer Wirkung zu den oben
genannten einzugehen oder eine sonstige derartige Handlung
vorzunehmen.
Die Gesellschaft kann jedoch (i) Arbeitnehmern und Mitgliedern der
Geschäftsführungsorgane
der
Gesellschaft
bzw.
ihrer
Tochtergesellschaften
in
Übereinstimmung
mit
Unternehmensbeteiligungsplänen für Führungkräfte, Aktien oder
S-45
sonstige
Wertpapiere
begeben
oder
verkaufen
und
(ii) gesellschaftsrechtliche Maßnahmen ergreifen, die von der
Gesellschaft
zum
Zweck
der
Teilnahme
an
Gemeinschaftsunternehmen oder eines Unternehmenserwerbs
durchgeführt werden, vorausgesetzt, dass die Parteien des
Gemeinschaftsunternehmens oder der übernehmende Rechtsträger, für
den
diese
Aktien
begeben
werden,
dieselben
Veräußerungsbeschränkungen gegenüber den Konsortialbanken
akzeptieren, die für die Gesellschaft gelten.
Die East AcquiCo verpflichtet sich hiermit gegenüber jedem der Joint
Global Coordinators innerhalb eines am 14. Oktober 2014
beginnenden Zeitraums von sechs Monaten nach dem ersten
Handelstag der Aktien der Gesellschaft an der Frankfurter
Wertpapierbörse (derzeit voraussichtlich am 24. Oktober 2014), dass
sie nicht
•
Aktien der Gesellschaft mit Ausnahme der Aktien, die von ihr am
14. Oktober 2014 gehalten werden (die „Gesperrten Aktien“),
anbietet, verpfändet, zuteilt, vertreibt, verkauft oder sich zum
Verkauf verpflichtet, Kaufoptionen oder Kaufkontrakte
veräußert, Verkaufsoptionen erwirbt, Kaufoptionen, Kaufrechte
oder Bezugsscheine gewährt, oder die genannten Aktien überträgt
oder auf andere Weise unmittelbar oder mittelbar über sie
verfügt, wobei dies insbesondere für die Begebung oder den
Verkauf von in Aktien der Gesellschaft wandelbare Wertpapiere
gilt,
•
die Ankündigung, Durchführung oder Umsetzung einer Erhöhung
des Kapitals der Gesellschaft oder einer mittelbaren oder
unmittelbaren Platzierung der Aktien der Gesellschaft mittelbar
oder unmittelbar veranlasst oder genehmigt (unbeschadet anderer
Darlegungen in diesem Prospekt),
•
eine Erhöhung des Grundkapitals der Gesellschaft mittelbar oder
unmittelbar zur Beschlussfassung in einer Hauptversammlung
vorschlägt oder für eine solche vorgeschlagene Kapitalerhöhung
stimmt (andere als die bereits in diesem Prospekt offengelegt
sind),
•
die Ankündigung, Durchführung oder den Vorschlag einer
Begebung von in Aktien der Gesellschaft wandelbare
Finanzinstrumente, die Optionen oder Optionsscheine darstellen,
die in Aktien der Gesellschaft wandelbar sind, mittelbar oder
unmittelbar veranlasst oder genehmigt, oder
•
Geschäfte mit wirtschaftlich vergleichbarer Wirkung zu den oben
genannten eingeht oder eine sonstige derartige Handlung
vornimmt. Dies gilt insbesondere für Swapgeschäfte oder andere
Abmachungen, durch die das wirtschaftliche Risiko der
Inhaberschaft von Gesperrten Aktien ganz oder zum Teil auf
Dritte übertragen wird, unabhängig davon, ob ein solches
Geschäft durch Lieferung von Gesperrten Aktien in bar oder auf
sonstige Weise beglichen werden soll;
in jedem dieser Fälle ohne die vorherige schriftliche Zustimmung der
Joint Global Coordinators, die nicht ohne vernünftigen Grund
verweigert oder verzögert werden darf. Sofern sich der betreffende
Erwerber
verpflichtet,
dieselben
Lock-Up-Verpflichtungen
einzuhalten, gilt das Vorgenannte nicht für (i) Übertragungen an mit
East AcquiCo verbundene Unternehmen, (ii) zukünftige
Verpfändungen an einen oder mehrere der Joint Global Coordinators
oder an mit diesen verbundene Unternehmen vorbehaltlich der
Zustimmung der Joint Global Coordinators und (iii) sämtliche
Übertragungen von Aktien an einen oder mehrere der Joint Global
S-46
Coordinators oder an mit diesen verbundene Unternehmen im
Zusammenhang mit der Vollstreckung jeglicher Verpfändungen die im
Einklang mit (ii) vereinbart wurden.
E.6
Betrag und Prozentsatz der aus dem
Angebot resultierenden
unmittelbaren Verwässerung. Im
Falle eines Zeichnungsangebots an
die existierenden Anteilseigner
Betrag und Prozentsatz der
unmittelbaren Verwässerung, für den
Fall, dass sie das neue Angebot nicht
zeichnen.
Das Angebot schließt die Emission neuer Aktien mit ein. Das auf die
Aktionäre der Gesellschaft entfallende Eigenkapital belief sich
zum 30. Juni 2014 auf €621,5 Millionen und würde sich auf €11,95 je
Aktie auf der Grundlage von 52.000.000 ausstehenden Aktien der
Gesellschaft, die unmittelbar vor dem Angebot ausgegeben wurden,
belaufen.
Die verwässernde Wirkung des Angebots ist in der untenstehenden
Tabelle dargestellt, aus welcher der Betrag ersichtlich ist, um den der
Angebotspreis am unteren Ende, in der Mitte und am oberen Ende der
Preisspanne das auf die Aktionäre entfallende Gesamtkapital je Aktie
nach Abschluss des Angebots übersteigt, angenommen die unten
beschriebenen Schritte wären am 30. Juni 2014 vorgenommen worden.
In dieser Hinsicht wurde das auf die Aktionäre am 30. Juni 2014
entfallende Eigenkapital um die Auswirkungen des Angebots unter der
Annahme bereinigt, dass (i) die Kapitalerhöhung mit der Höchstzahl
der angebotenen Neuen Aktien durchgeführt wird und (ii) dass das auf
die Aktionäre entfallende Eigenkapital am unteren Ende, in der Mitte
und am oberen Ende der Preisspanne um jeweils €94,8 Millionen,
€108,5 Millionen und €122,0 Millionen erhöht wird. Die
angenommene Erhöhung beruht auf dem erwarteten Nettoerlös ohne
Berücksichtigung von Steuereffekten. Das bereinigte, auf die Aktionäre
entfallende Eigenkapital ist als eine Kennzahl je Aktie unter der
Annahme von 61.302.326 außenstehenden Aktien der Gesellschaft
nach Abschluss des Angebots dargestellt (diese Kennzahl je Aktie wird
als „auf die Aktionäre entfallendes Eigenkapital je Aktie nach dem
Angebot“ bezeichnet).
Zum 30. Juni 2014
Unteres Mittel- Oberes
Ende
wert
Ende
Preis pro Aktie (in €) . . . . . . . . . . . . . . . . . . . .
Auf die Aktionäre entfallendes Eigenkapital
(Nettobuchwert)(1) je Aktie zum 30. Juni
2014 (auf Grundlage von 52.000.000
außenstehenden Aktien der Gesellschaft vor
dem Angebot) (in €) . . . . . . . . . . . . . . . . . . .
Auf die Aktionäre entfallendes Eigenkapital je
Aktie nach dem Angebot (Nettobuchwert)(1)
(in €) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Betrag, um den der Preis pro Aktie das auf die
Aktionäre entfallende Eigenkapital je Aktie
nach dem Angebot übersteigt (unmittelbare
Verwässerung pro Aktie) (in €) . . . . . . . . . .
Unmittelbare Verwässerung (in %) . . . . . . . . .
(1)
10,75
12,25
13,75
11,95
11,95
11,95
11,68
11,91
12,13
(0,93)
(8,7)
0,34
2,8
1,62
11,8
Der Nettobuchwert bezieht sich auf die Summe des Gesamtvermögens der
Gesellschaft abzüglich des Betrags ihrer gesamten Verbindlichkeiten sowie
nicht beherrschender Anteile.
Jede der Neuen Aktien ist mit denselben Stimmrechten wie die
bestehenden Aktien der Gesellschaft ausgestattet. Vor dem Angebot
hielten die Bestehenden Aktionäre 100% der Stimmrechte. Nach
Durchführung des Angebots (einschließlich der vollständigen Ausübung
der Greenshoe Option) würden sich die Stimmrechte der Bestehenden
Aktionäre auf 39,9% belaufen.
E.7
Schätzung der Ausgaben, die dem
Anleger vom Emittenten oder
Anbieter in Rechnung gestellt
werden.
Entfällt. Weder die Gesellschaft, noch die Bestehenden Aktionäre, noch
die Konsortialbanken werden den Anlegern Kosten in Rechnung stellen.
S-47
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RISK FACTORS
Before deciding to invest in shares of TLG IMMOBILIEN AG, with its registered office at
Hausvogteiplatz 12, 10117 Berlin, Germany, and registered with the commercial register of the local court (Amtsgericht) of
Charlottenburg, Germany, under the docket number HRB 161314 B (the “Company”, and, together with its consolidated
subsidiaries, “TLG”), prospective investors should carefully review and consider the following risks and other information
contained in this prospectus (the “Prospectus”). The market price of the Company’s shares could fall if any of these risks
were to materialize, in which case investors could lose some or all of their investment. The following risks, alone or together
with additional risks and uncertainties not currently known to the Company, or that the Company might currently deem
immaterial, could materially adversely affect TLG’s business, net assets, financial condition, cash flow and results of
operations.
The order in which the risks are presented is not an indication of the likelihood of the risks actually materializing or
the significance or degree of the risks or the scope of any potential harm to TLG’s business, net assets, financial condition,
cash flow, or results of operations. The risks mentioned herein may materialize individually or cumulatively.
Market and Business Risks
TLG could be adversely affected by negative developments in the German economy and commercial real estate markets,
e.g., general deflation in the Eurozone or rising interest rates.
TLG is active in the German commercial real estate markets. Commercial real estate markets are generally
susceptible to changes in the overall economy, and therefore volatile in themselves. Thus, factors that directly or indirectly
affect the overall economy also impact supply and demand for commercial real estate and thereby influence market prices of
commercial real estate, rent levels and vacancy rates.
TLG’s business is therefore highly dependent on macroeconomic and political developments, including changes in
legislation, as well as other general trends affecting Germany. As an export driven economy, Germany itself is affected by the
development of the world economy in general and the Eurozone in particular. Since the financial crisis, high levels of
sovereign debt and unemployment in many developed countries, particularly in the Eurozone and the United States, have
persisted. Economic volatility, instability in the credit and financial markets and weak consumer confidence in general may
continue to put pressure on the global economy. In addition, the current geopolitical crises in the Middle East and the Ukraine
as well as the economic sanctions being imposed on and by the Russian Federation may have negative repercussions for the
European economy.
For the Eurozone, the European Central Bank (the “ECB”) aims for a long-term inflation rate of below but close to
2%, which it considers beneficial for the European economy. As a result of weak growth in the aftermath of the financial
crisis, actual inflation has been considerably lower than the rate of inflation targeted by the ECB. Therefore, the ECB has been
making an effort to increase inflation through looser monetary policy, recently taking the unprecedented step of introducing
negative deposit rates for banks depositing funds with the ECB (i.e., such banks have to pay interest for depositing funds).
Notwithstanding these steps, however, to date these efforts to increase inflation have not resulted in any upward pressure on
consumer prices and in some Eurozone countries prices have actually declined. If economic weakness in the Eurozone and
declining consumer confidence were to result in prices decreasing over time as part of a general deflationary trend, the
economy in the Eurozone might enter a prolonged recession. While the German economy has so far been relatively resilient
despite these negative developments, persisting instabilities and the resulting market volatility pose contagion risks even for
economically strong countries like Germany. A general economic downturn could spread to the German economy and
particularly affect German commercial real estate markets. TLG has no influence over any of these macroeconomic and
political developments or other general trends, but may be severely adversely affected by them.
Although low interest rates have yet to lead to any increase in inflation, they have had a stabilizing effect on the
Eurozone economies and supported demand for real estate, including commercial real estate, particularly as a result of the
availability of inexpensive financing. The benign interest rate environment has also had a positive impact on real estate
valuations as it tends to result in an increase of the value of future cash flows. Should the overall economy begin to grow
again, particularly if this growth leads to tightening in the labor market, the ECB could become more vigilant with regard to
inflationary pressures and begin a cycle of monetary tightening, including through progressive increases in base interest rates.
In the event that interest rates were to increase significantly in future periods, the value of commercial real estate could be
adversely affected due to increases in the discount rate and a reduction in the availability of attractive financing options. Any
such decline in the value of, or demand for, commercial real estate generally would also have an adverse effect on TLG.
Although the long-term nature of many of TLG’s lease agreements provides some protection against a general decline in
rental levels, if rents begin to rise in the context of an improving economy, TLG may not be able to increase its rental income
in line with rental growth in the overall commercial real estate market.
As a result of the geographic concentration of TLG’s commercial real estate portfolio in Germany, macroeconomic
and political developments and other general trends in Germany could have a material adverse effect on TLG’s business, net
assets, financial condition, cash flows or results of operations.
1
TLG could be adversely affected by a deterioration of economic conditions and the business environment in Berlin and
eastern Germany, in particular negative demographic trends.
TLG’s entire real estate portfolio is located in Berlin (approximately 44%) and eastern Germany, in particular in and
around Leipzig, Dresden (approximately 19%) and Rostock (approximately 9%). Regional economic and political
developments as well as other trends in Berlin and eastern Germany therefore have a significant impact on the demand for
TLG’s commercial real estate properties and the rents that it is, and will be, able to achieve, as well as on the valuation of its
properties.
Such local developments may differ considerably from overall developments in Germany. In the past, eastern
Germany’s regional centers lagged behind western Germany’s in terms of absolute economic performance and consumer
purchasing power. While some cities and regions in eastern Germany have seen decreasing unemployment rates and growing
purchasing power in recent years, there is no guarantee that this trend will continue. Moreover, since reunification, eastern
Germany’s overall population has in fact shrunk by 11.4%, meaning a reduction of more than two million inhabitants.
Until 2030, eastern Germany’s population is expected to decrease by another 11.7% (approximately 1.9 million inhabitants)
(Source: Commercial Portfolio TLG). Such negative demographic trends could lead to a decline in population levels in Berlin
and other eastern German cities and regions, particularly among younger segments of the active working population, which
could reduce demand for commercial real estate, and thereby adversely affect rent levels and rental income for TLG’s
properties.
Negative regional economic and political developments as well as other trends in Berlin and eastern Germany could
have a material adverse effect on TLG’s business, net assets, financial condition, cash flows or results of operations.
TLG may not be able to implement its strategy of growing through acquisitions due to a lack of attractive properties or
portfolios available for purchase, competition for such acquisitions or an inability to obtain the required acquisition
financing.
As of June 30, 2014, TLG’s core portfolio consisted of 321 office, retail and hotel properties located in Berlin and
eastern Germany which TLG plans to hold long term (the “Core Portfolio”). As part of its business strategy, TLG seeks to
capture external growth opportunities by acquiring new properties and portfolios that complement this Core Portfolio. In
particular, it intends to use some of the proceeds from the offering in order to finance such future acquisitions. TLG aims to
increase the fair value of its Core Portfolio to approximately €2.0 billion in the medium term.
Such acquisitions can, however, only be implemented if attractive properties or portfolios are available for purchase
and if the prices for such properties and portfolios are reasonable. Given its clear focus on office, retail and, to a lesser extent,
hotel properties in Berlin and eastern Germany, a large number of the available commercial real estate properties does not
meet TLG’s Core Portfolio criteria. In addition, a number of factors beyond TLG’s control, such as the overall development
of commercial real estate markets, building activity and planning laws, influence the availability of office, retail and hotel
properties in Berlin and eastern Germany. A lack of attractive acquisition opportunities could drive up prices for the type of
properties and portfolios TLG seeks to acquire. Thus, TLG might also be unable to deploy the proceeds from the offering in a
timely manner, or at all, and might therefore be unable to achieve a sufficient return on these proceeds.
Furthermore, given the current strong demand for commercial real estate in Germany, there may be fierce
competition for such properties and portfolios and attractive acquisition opportunities may be unavailable or available only on
unfavorable terms. Competitors with acquisition strategies similar to TLG’s may possess greater financial resources and lower
costs of capital than TLG and may therefore be able to offer higher prices.
Also, TLG intends to finance such acquisitions at least partially through additional debt while aiming to maintain a
long-term net loan to value ratio of 45-50%. The availability and terms of debt financing available to TLG depends on a
number of factors, in particular interest rate levels and the overall state of the financial markets. Rising interest rate levels or a
market crisis could therefore limit TLG’s ability to obtain acquisition financing at acceptable terms or any financing at all.
This could limit the prices that TLG is able to offer when acquiring additional properties and portfolios or prevent such
acquisitions. In order to maintain its net loan to value ratio, TLG may also seek to raise additional capital. There is no
guarantee that there will be sufficient demand for the Company’s shares and thus sufficient equity capital required to finance
contemplated acquisitions may not be available.
Any inability to acquire properties or portfolios could impair TLG’s strategy to capture external growth
opportunities by increasing its Core Portfolio and to capitalize on economies of scale, and could thus have a material adverse
effect on TLG’s business, net assets, financial condition, cash flows or results of operations.
2
TLG may be unable to identify all risks associated with properties or portfolios it acquires and may overestimate the value
and/or financial performance of such acquisition opportunities.
TLG generally conducts a thorough due diligence investigation of properties and portfolios it intends to acquire.
Due to a need for quick reaction to attractive opportunities and constraints imposed by the sellers, TLG may, however, in
some cases only be able to conduct a limited due diligence investigation. Accordingly, TLG may not always be in a position
to examine all risks associated with acquisitions. For example, TLG may not be able to assess whether the original owners of
the properties (and potential successors) have obtained, maintained or renewed all required permits, satisfied all permit
conditions, received all necessary licenses and fire and safety certificates or satisfied all other requirements. In addition, the
properties may suffer from hidden defects or damages. Moreover, TLG may not be in a position to carry out all follow-up
investigations, inspections and appraisals (or to obtain the results of such inquiries). Accordingly, in the course of the
acquisition of properties or portfolios, specific risks may not be, or might not have been, recognized, evaluated and addressed
correctly. Legal and/or economic liabilities may be, or might have been, overlooked or misjudged.
Although sellers typically make various warranties in the purchase agreements that TLG enters into in connection
with such acquisitions, it is possible that these warranties do not cover all risks or that they fail to cover such risks sufficiently.
Additionally, warranties may be unenforceable due to a seller’s insolvency or for other reasons. In some cases, a seller may
make no representation or warranty as to the sufficiency and correctness of the information made available in the context of a
due diligence investigation, or as to whether such information remains correct during the period between the conclusion of the
due diligence investigation and the closing of the respective acquisition.
Furthermore, TLG could overestimate the earnings potential and potential synergies from acquisitions, in particular
in the case of acquisitions of portfolios, underestimate the rental and cost risks, including expected demand from tenants for
the respective property or portfolio, and consequently pay a purchase price that exceeds a property’s or portfolio’s actual
value. In addition, properties and portfolios could be inaccurately appraised for other reasons, even if they were acquired on
the basis of valuation reports and due diligence investigations. Therefore, neither a particular cash flow from rentals, nor, if
applicable, a certain price upon resale can be guaranteed with respect to acquired properties and portfolios.
Any failure to assess the value and risks associated with properties or portfolios it acquires could have a material
adverse effect on TLG’s business, net assets, financial condition, cash flows or results of operations.
TLG may face risks related to (re-)development activities and development activities intended in the future may not be
possible.
While TLG does not currently engage in any significant development activities, it has retained the experience and
capacity for value-enhancing (re-)developments and may choose to do so selectively if it can identify suitably attractive
opportunities within the current portfolio. Such developments, which are typically long-term in nature, are associated with
numerous risks, including cost overruns, which may result in projects becoming unprofitable, and changes in the economic
environment, which may lead to insolvencies among the subcontractors on which TLG depends for such projects or may
make it difficult or impossible to fully lease projects upon completion.
Furthermore, the ability to (re-)develop certain properties depends on the land-use regulation applicable to the
respective property, in particular local development plans (Bebauungspläne). For example, the master plan for the office
property located on Alexanderstraße 1, 3, 5 in Berlin (the “1alex Property”) currently allows for an increase of the overall
size of the property from 9,226 sqm to 12,540 sqm and an increase of the building size from approximately 57,000 sqm to up
to approximately 150,000 sqm. Local legislative bodies might, however, consider changes to the master plan for the area
around Alexanderplatz, Berlin, and such changes could prevent TLG from further developing the 1alex Property. In this case,
TLG may be unable to realize the expected levels of rental income relating to the 1alex Property.
Any unplanned costs associated with developments and inability to seize attractive development opportunities could
have a material adverse effect on TLG’s business, net assets, financial condition, cash flows or results of operations.
TLG may be unable to sell properties from its non-core portfolio on favorable terms or may be unable to do so at all and
this may limit the funds available for TLG’s growth strategy.
As part of its business strategy TLG plans to sell a total of 188 properties with an aggregate fair value of
€171 million as of June 30, 2014 in the medium term in order to further streamline its portfolio and to use the proceeds for
additional acquisitions of properties complementing its Core Portfolio. In the future, TLG may also decide to sell properties
that it has currently classified as belonging to its Core Portfolio if it believes that these properties no longer fit its strategic
positioning. However, TLG will only implement this strategy to the extent that it is able to receive sufficiently attractive
offers for its properties. An overall decline in demand for commercial real estate properties, e.g., due to rising interest rate
levels, could adversely affect demand for TLG’s properties.
Given the geographic focus of TLG’s portfolio on Berlin and eastern Germany, there is only a limited number of
potential buyers interested in acquiring such properties. Furthermore, many of the properties in TLG’s non-core portfolio are
3
located in parts of eastern Germany that could be considered less attractive. This could further limit the number of prospective
buyers. From time to time, auctions of properties from TLG’s non-core portfolio have failed due to a lack of bids and such
efforts may prove to be futile in the future as well and result in additional costs. TLG may also chose to sell properties at less
than their fair value in order to reduce the size of its non-core portfolio so as to increase the efficiency of its portfolio
management.
Any failure to dispose of properties at adequate prices or at all would limit the funds available for TLG’s growth
strategy and could therefore have a material adverse effect on TLG’s business, net assets, financial condition, cash flows or
results of operations.
TLG could be subject to liability claims in connection with sold properties.
TLG has sold a large number of properties in recent years and plans to continue to sell properties from its non-core
portfolio. In connection with property sales, the seller usually makes or has to make representations, warranties and negative
declarations of knowledge to the purchaser with respect to characteristics of the sold property. The potential liability resulting
therefrom usually continues to exist for a period of several years after the sale. TLG could be subject to claims for damages
from purchasers, who could assert that TLG has failed to meet its obligations, or that its representations were incorrect.
Furthermore, TLG could become involved in legal disputes or litigation over such claims. If TLG as the seller has provided
warranties to a purchaser of properties in connection with maintenance and modernization measures, and claims are asserted
against TLG because of defects, TLG may not have recourse against the companies that performed the work.
As a seller of properties, TLG may be liable to tenants for breaches of lease agreements by the purchaser, even
where TLG no longer has any control over the respective property. When selling properties, TLG typically informs all tenants
in writing of the change in landlord either alone or together with the purchaser in order to be released from persisting
obligations. A release from liability does not apply to security deposits (Mietsicherheiten) provided by the tenants. If a tenant
is unable to receive its security deposit from the purchaser of a property, the liability to repay such security deposit remains
with TLG as the seller.
Liabilities for properties that TLG has sold in the past or may sell in the future could have a material adverse effect
on TLG’s business, net assets, financial condition, cash flows or results of operations.
TLG’s portfolio bears certain concentration risks and negative developments affecting demand for office, retail and hotel
properties, TLG’s major tenants and its most valuable properties could have a particularly adverse effect on TLG’s
business.
TLG faces concentration risks due to its focus on certain types of commercial properties and its dependency on a
limited number of main tenants and individual properties with particularly high fair value.
TLG’s Core Portfolio only comprises office, retail and hotel properties. For retail properties, TLG further focuses
on food retail properties suitable for supermarkets and discounters, which predominantly account for rental income from retail
properties in TLG’s Core Portfolio. Demand for retail, office and hotel properties is not only affected by the overall
development of commercial real estate markets but also by business developments affecting existing and potential tenants for
these types of properties. Such developments include:
•
an increase of food purchases via internet and trends towards smaller, high-quality food retailers for TLG’s
food retail properties,
•
trends towards working from home offices or from tax friendly headquarters located away from city centers for
TLG’s office properties, and
•
the development of city tourism and hotel taxes for TLG’s hotel properties.
If the businesses of TLG’s tenants suffer, demand for TLG’s office, retail and hotel properties could decline.
Furthermore, TLG generates a significant portion of its annualized in-place rent (i.e., contracted rents as of June 30,
2014, without deduction for any applicable rent free periods, multiplied by twelve (the “Annualized In-Place Rent”) from
only a limited number of main tenants; approximately 65% of Annualized In-Place Rent derives from retail properties in the
Core Portfolio from the top seven tenants (namely discounters, supermarkets and do-it-yourself stores operating under the
“Netto”, “REWE”, “Hellweg”, “Penny”, “EDEKA”, “Kaisers” and “Lidl” brands), and 51% of Annualized In-Place Rent
from office properties in the Core Portfolio derives from the top ten tenants (among others, Daimler Real Estate GmbH and
Ostseesparkasse Rostock). If such major tenants were to face financial difficulties or default on their lease obligations, reduce
or abandon their operations in Berlin and eastern Germany, attempt to renegotiate lease agreements to TLG’s disadvantage,
fail to extend their lease agreements or terminate them prematurely, TLG could lose a substantial amount of its Annualized
In-Place Rent.
4
Also, certain properties in TLG’s Core Portfolio represent a particularly large portion of its holdings. Based on fair
value as of June 30, 2014, the top five office properties represented 55% of the total office properties in TLG’s Core Portfolio
(with the top fifteen representing 84%). For example, the 1alex Property is TLG’s second most valuable property,
(representing 13% of the total office properties in the Core Portfolio based on fair value as of June 30, 2014). Likewise, the
Ramada hotel, also located near the Alexanderplatz in Berlin, accounts for 47% of TLG’s hotel properties, based on fair value
as of June 30, 2014. Negative developments such as the loss of major tenants and persisting vacancies, restrictive government
orders limiting the use of a property, construction work allowing for rent reductions, fire and other catastrophes could have a
material adverse effect on any single property. If one of TLG’s most valuable properties were to be affected by such
developments, this could have a material adverse effect on TLG’s overall portfolio. For example, the vacancy rate for the
1alex Property increased to approximately 67% in 2011 following the loss of two major tenants. While TLG has been able to
subsequently reduce vacancies for the 1alex Property, its vacancy rate still amounted to 37% as of June 30, 2014.
As a result of such concentrations, negative developments affecting demand for office, retail and hotel properties,
TLG’s major tenants and its most valuable properties could have a material adverse effect on TLG’s business, financial
condition, cash flows or results of operations.
TLG may be unable to find or retain suitable and solvent tenants on acceptable terms and existing tenants may be unable
to meet their payment obligations.
The letting of properties in its Core Portfolio is the most important aspect of TLG’s daily operations. TLG’s rental
income depends on its ability to let large parts of its portfolio at attractive rental levels. Such efforts are influenced by a
number of factors, including the remaining term of existing lease agreements, the solvency of current tenants and the
attractiveness of properties for suitable tenants. TLG may be unable to renew expiring lease agreements on acceptable terms
or to find suitable, solvent tenants willing to enter into long-term lease agreements. Also, there is no guarantee that TLG will
be able to successfully face competition for suitable tenants from other landlords. In particular, other landlords may be able to
offer more attractive properties or lower rent levels or both. Failure to find and retain suitable tenants may prevent TLG from
maintaining its current vacancy rate or renting vacant space or force TLG to reduce the rent levels it demands from current
and future tenants.
In addition, a tenant’s creditworthiness may deteriorate, entailing the risk that the tenant becomes unable to meet its
obligations under its lease agreement and fails to render payments in time, or at all. This could force TLG to reduce rent levels
for the respective property and the rental income could be significantly lower than originally estimated, while TLG’s
operating costs might remain largely fixed or might even increase.
Failure to let its portfolio to suitable tenants willing and able to meet their payment obligations could therefore have
a material adverse effect on TLG’s business, net assets, financial condition, cash flows or results of operations.
Indexation clauses in TLG’s lease agreements could adversely affect TLG’s rental income.
Some of TLG’s lease agreements, especially those for retail properties, include clauses providing for full or partial
indexation of the applicable rent in line with a reference index, such as the German consumer price index. These clauses
provide not only for upward adjustments, but also for downward adjustments tied to changes in the relevant index. Thus,
rental income may decrease if consumer prices decline, e.g., as part of a general deflation. If a lease agreement contains no
indexation or equivalent adjustment clause, the applicable rent may remain constant for the term of the lease agreement, while
TLG’s costs of maintaining the respective property may increase due to inflation. This risk is compounded by the fact that
many of TLG’s lease agreements provide for long-term leases.
Rent reductions due to indexation clauses or inability to adapt rents to improving market developments could have a
material adverse effect on TLG’s business, net assets, financial condition, cash flows or results of operations.
TLG may incur substantial unexpected maintenance, repair and modernization costs and failure to undertake appropriate
maintenance measures could adversely affect its rental income.
While the Company believes that there are currently no capex backlogs (i.e., modernizations and refurbishments
required to maintain the operability and attractiveness of the respective property) in its portfolio, it aims to continue to invest
in its Core Portfolio to ensure that its properties meet technical requirements and market demand. Maintenance and
modernization measures may also be required to meet changing legal, environmental or market requirements (e.g., with regard
to health and safety requirements and fire protection). Failure to maintain the properties could pose a risk to the health and
safety of TLG’s tenants as well as their employees and customers. Typically, the costs associated with keeping properties up
to market demand are borne primarily by the property owner and thus TLG may be burdened with substantial expenses. TLG
could incur additional costs if the actual costs of maintaining or modernizing its properties exceed TLG’s estimates, if it is not
permitted to raise rents in connection with maintenance and modernization measures, or if hidden defects not covered by
insurance or contractual warranties are discovered during the maintenance or modernization process or if additional spending
is required. Any failure to undertake appropriate maintenance and modernization measures could adversely affect TLG’s
rental income and entitle tenants to withhold or reduce rental payments or even to terminate existing lease agreements.
5
If TLG incurs substantial unplanned maintenance, repair and modernization costs or fails to undertake appropriate
maintenance measures, this could have a material adverse effect on TLG’s business, net assets, financial condition, cash flows
or results of operations.
The Valuation Report and financial information contained in this Prospectus may incorrectly assess the value of TLG’s
properties.
The report on the fair value of TLG’s real estate portfolio as of June 30, 2014 pursuant to IAS 40 in conjunction
with IFRS 13 (the “Valuation Report”) included in this Prospectus was prepared by the independent, external appraiser
Savills Advisory Services GmbH, Taunusanlage 19, 60325 Frankfurt am Main, Germany (“Savills”), and in accordance with
the standards of the Royal Institution of Chartered Surveyors (RICS). The Valuation Report is based on standard valuation
principles and represents the opinion of Savills. The Valuation Report is based on assumptions, some of them of a general
nature and some of them of a more specific nature, that could subsequently turn out to have been incorrect. The valuation of
real estate is based on a multitude of internal factors such as the current contractual letting status and the physical condition of
the portfolio and external factors such as general market environment, tourism business, interest rates, the creditworthiness of
tenants, conditions in the rental market and the development of individual locations as well as Savills’ subjective judgment.
The valuation of real estate contained in the Valuation Report is therefore subject to numerous uncertainties. The past or
future assumptions underlying the property valuations may later be determined to have been erroneous.
The values assigned to the appraised properties in the Valuation Report and in TLG’s existing or future published
annual or interim financial reports may exceed the proceeds that TLG can generate from the sale of the appraised properties,
particularly those properties located in markets with only limited transparency (e.g., TLG’s non-core portfolio which it plans
to sell in the medium term). This could also be the case for sales that occur on, or shortly after, the respective valuation date.
Accordingly, the Valuation Report does not necessarily represent sales prices realistically achievable in the future.
Erroneous valuations of TLG’s portfolio could have a material adverse effect on TLG’s business, net assets,
financial condition, cash flows or results of operations.
TLG may be required to adjust the current fair values of its investment properties or record lower results from the
remeasurement of investment property and therefore recognize significant losses.
TLG accounts for its investment properties (i.e., properties that are held for the purpose of earning rental income,
for capital appreciation or both) at fair value in accordance with IAS 40 in conjunction with IFRS 13. The fair value of a
property held to generate rental income or for capital appreciation or both is measured with the discounted cash flow method
(the “DCF Method”). According to the DCF Method, the fair value of a property is the sum of the discounted cash flows for
a planning period (e.g., ten years) plus the residual value of the property at the end of the planning period discounted to the
valuation date. The applied discount rate reflects the market situation, location, condition and letting situation of the property,
the yield expectations of a potential investor and the level of uncertainty and the inherent risk of the forecasted future cash
flows, while the applicable exit capitalization rate is derived from the applied discount rate. Properties generating no
sustainable operating cash flows are valued using their liquidation value. TLG recognizes any changes in the fair value of
such investment properties in profit or loss presented in a separate line “result from the remeasurement of investment
property” in the consolidated statement of comprehensive income. If TLG’s cash flows from investment properties decrease
or discount rates used in the DCF Method valuation rise (e.g., due to increased interest rates), TLG would have to revise the
value of its portfolio on the consolidated statement of financial position downwards.
With respect to properties classified as investment property, TLG applies the following accounting treatment in the
case of the sale of a property: With the notarization of the sale and purchase agreement, the property is generally reclassified
as an asset held for sale, unless the payment of the purchase price commences during the same period (i.e., signing and
closing occur within the same reporting period). The difference between the carrying amount of the property and the purchase
price, if any, is recognized under result from the remeasurement of investment property. Thus, if the purchase price exceeds
the carrying amount, the Company is able to record a gain in the excess amount. However, if a sale fails to close or if the
purchase price is reduced between signing and closing of the transaction (e.g., due to an agreed purchase price adjustment
mechanism or TLG’s failure to fulfill representations and warranties included in the purchase agreement), the Company may
be forced to record a loss in subsequent reporting periods in which the transaction closes. For example, TLG recently signed
an agreement to sell a property with a fair value of approximately €4.7 million as of December 31, 2013 (as appraised by
Savills), for approximately €23.9 million. However, due to the fact that the outline building permit (Bauvorbescheid) for this
property will likely only allow for a more limited development than previously expected, the buyer may have the right to
withdraw from the purchase agreement or to considerably reduce the purchase price. While the Company believes that it will
still be able to sell this property, TLG would likely be forced to incur a significant non-cash loss.
Any deterioration of the fair value of TLG’s investment properties or any failure to close disposals at the agreed
purchase price or at all could force TLG to recognize a loss and could have a material adverse effect on TLG’s business, net
6
TLG may be unable to replace the members of the Management Board and key personnel or to hire additional qualified
personnel.
TLG only employs a small number of employees in central functions responsible for managing its business. Its
success greatly depends on the performance of the members of the Company’s management board (the “Management
Board”) and other qualified employees in key positions, particularly those with substantial sector expertise, who are
responsible for the management of TLG’s portfolio and corporate functions. Furthermore, TLG may need to hire additional
qualified employees if its future growth exceeds its current platform or if TLG is forced to replace qualified employees. Due
to the intense competition for qualified personnel in the commercial real estate sector, there is no guarantee that TLG will be
able to hire sufficiently qualified key employees at acceptable terms in the future.
The loss of any of the members of the Management Board or any other key employees or failure to attract new
qualified employees, could impair TLG’s growth and make it difficult to maintain its business activities at current levels and
therefore could have a material adverse effect on TLG’s business, net assets, financial condition, cash flows or results of
operations.
TLG’s IT-systems could malfunction or become impaired.
IT-systems are essential for the daily running of TLG’s business operations. Any interruptions in, failures of or
damage to its IT-systems could lead to delays or interruptions in TLG’s business processes. In particular, TLG’s IT-systems
may be vulnerable to security breaches and cyber-attacks from unauthorized persons outside and within TLG. Despite taking
what it considers to be sufficient precautions, TLG cannot guarantee that anticipated and/or recognized malfunctions or
security deficits can be avoided by appropriate preventive security measures in every case.
Delays and interruptions to TLG’s IT-systems could lead to increased costs and may result in lost rental income and
could therefore have a material adverse effect on TLG’s business, net assets, financial condition, cash flows or results of
operations.
TLG’s IT-based portfolio management tools could fail to correctly reflect and support the business decisions that are in
TLG’s best interest.
The administration and management of TLG’s portfolio is conducted, inter alia, with IT-based portfolio
management tools (i.e., the real estate value creator, Wodis Sigma, and the property database (Liegenschaftsdatenbank)) that
analyze data of individual properties and the respective tenant basis and help monitor the compliance of individual properties
with TLG’s current business plan. These management tools allow TLG to constantly check, monitor and compare individual
properties for a number of relevant key performance indicators. The reliance on such management tools could lead to
decisions that are not in TLG’s best interest, for instance, if essential data cannot be collected or has to be estimated for the
future, if model assumptions turn out to be wrong, or if the used key performance indicators are not relevant for TLG’s
long-term success.
Failure to make the correct business decisions could have a material adverse effect on TLG’s business, net assets,
TLG could incur substantial losses from damage not covered by, or exceeding the coverage limits of, its insurance policies.
Insurance policies taken out by TLG, including against fire, natural disasters, operational interruptions and
third-party liability, are subject to exclusions and limitations of liability both in amount and with respect to the insured events.
There can be no assurance that TLG’s assessment that it is sufficiently insured against contingencies is accurate. Floods, fires,
storms and similar natural disasters as well as acts of terrorism or other events may cause damage to a property in excess of
insurance coverage and may thus lead to significant costs that must be borne by TLG in connection with remediation and
repair work. In addition, significant costs could ensue if tenants terminated their lease agreements or withheld part or all of the
agreed rent payments as a consequence of any of the foregoing events. Even in cases where TLG has obtained sufficient
insurance coverage, its insurance providers could become insolvent, forcing TLG to bear any liabilities and losses itself.
If TLG suffers a loss or incurs a liability against which it is uninsured or insufficiently insured, this could have a
material adverse effect on TLG’s business, net assets, financial condition, cash flows, or results of operations.
The Company’s cash flows and possible future dividend payments also depend on the profitability of its subsidiaries and it
may not be able to implement significant changes with regards to such subsidiaries.
The Company itself holds and administers real estate, but is also a holding company for subsidiaries that hold
individual properties. As a result, in order to cover its operating costs and to make distributions, the Company relies on
distributions it receives from its subsidiaries and other investment interests or, as the case may be, repayments of loans
granted to its subsidiaries. Any distributions by the subsidiaries depend, in turn, on the subsidiaries’ operating results and their
ability to make those distributions under applicable law. There can be no assurance that such funds will be sufficient in the
future to satisfy all of its payment obligations.
7
The Company currently does not own all of the shares in every one of its consolidated subsidiaries. It also holds
50% interests in two entities and may in the future acquire interests in entities with majority shareholders, participate in joint
ventures or sell minority interests in its existing subsidiaries. Minority shareholders in such entities may be protected by
German laws, including provisions requiring unanimous consent to structural changes. Thus, the management of subsidiaries
with minority shareholders may prove difficult for the Company.
The materialization of one or more of these risks could have a material adverse effect on TLG’s business, net assets,
Financing Risks
TLG’s ability to repay existing and future debt could be limited and TLG may be unable to obtain new sources of financing
at attractive terms, or at all.
TLG uses debt financing to fund its existing portfolio, ongoing operations and future acquisitions and therefore
depends on the availability of such financing. General conditions for real estate financing are subject to constant change and
the attractiveness of different financing options depends on a variety of factors beyond TLG’s control, including overall
monetary policy, interest rates, general tax conditions and the value of commercial real estate to be used as collateral. In the
past, financial difficulties in the capital markets in general and the Eurozone in particular have adversely impacted the
availability of debt financing. Furthermore, regulatory changes could restrict the lending activities of banks.
TLG’s current and non-current liabilities due to financial institutions measured in accordance with International
Financial Reporting Standards as adopted by the European Union (“IFRS”) amounted to €727.9 million as of June 30, 2014,
resulting in a net loan to value ratio of approximately 47.0%. TLG’s ability to repay existing debt could be limited if it were
unable to obtain new debt financing or extend existing credit facilities and its level of debt could lead banks to not to make
new loans available to TLG, or to only make them available on less favorable terms, or to refuse to extend existing credit
lines, or to grant an extension of existing credit lines only on less favorable terms (e.g., demanding additional collateral,
increasing interest rates etc.). Further, some loans depend on the participation structure and provide for termination rights of
the respective lender if the control over the Company changes; in case of the exercise of such termination rights a refinancing
under changed conditions is required. Rising interest rates could increase TLG’s financing costs and prevent it from achieving
an adequate spread between cash flows from rental income and disposals on the one hand and interest payments on the other
hand, or any positive cash flow at all. While TLG may try to substitute debt financing through equity financing, TLG may be
unable to raise capital at attractive terms, or at all.
Furthermore, TLG’s acquisition of additional properties and portfolios may also be financed by taking on additional
debt or by issuing and offering new shares or equity-linked instruments, or a combination thereof. If TLG is unable to obtain
the necessary capital on reasonable terms, it may be unable to make acquisitions, or may be able to do so only to a limited
extent. If TLG is no longer able to obtain the debt or equity financing needed to acquire additional properties and portfolios,
or if it is able to do so only on less favorable terms, its further business development and competitiveness could be severely
constrained. Even if debt financing is available, any additional debt could have a significant negative impact on TLG’s
performance indicators and could result in higher interest expenses.
In addition, TLG has hedged the majority of financial debt with floating interest rates and plans to continue to hedge
against interest rate changes. When extending existing debt or taking on new debt, TLG may, however, be unable to enter into
hedging instruments or may only be able to do so at significant costs when trying to limit its exposure to such developments.
Any failure to obtain the required financing could have a material adverse effect on TLG’s business, net assets,
If TLG breaches covenants under its financing agreements it could be forced to sell properties irrespective of the prices it
can achieve and its creditors or security agents could seize or realize significant collateral, which could ultimately lead to
an insolvency of the Company.
TLG’s financing agreements require TLG to comply with certain general and financial covenants such as maximum
net loan to value ratios, minimum interest or debt-service cover ratios as well as leverage or equity ratios. A failure to comply
with such covenants could have severe consequences, including:
•
creditors may have the right to terminate the loan agreement, and outstanding loan amounts could be declared
immediately due and payable;
•
other creditors could also be entitled to terminate their loan agreements with TLG as a result of cross-default
provisions;
•
creditors may be entitled to extraordinary prepayments or higher interest rates; and
•
creditors may have the right to request the granting of additional security interest.
To secure the repayment of its loans, TLG has granted land charges over its properties and has assigned as security
rental income, potential insurance claims and other claims; it has also pledged to its creditors rental income and other
8
accounts as well as the shares of one subsidiary. If TLG is unable to perform obligations under its financing agreements, its
creditors could seize and realize this collateral without further negotiations. This could result in a loss of part or all of TLG’s
real estate or a forced sale of properties on economically unfavorable terms. If the proceeds from such forced sales are
insufficient for the repayment of TLG’s liabilities, this could ultimately lead to an insolvency of the Company.
A breach of covenants under TLG’s financing agreements could have a material adverse effect on TLG’s business,
net assets, financial condition, cash flows or results of operations.
Regulatory, Legal and Tax Risks
TLG may be adversely affected by changes to the general regulatory environment in Germany.
TLG’s business is subject to the general regulatory framework that applies to commercial properties and lease
agreements for such properties as well as special provisions of other laws, such as construction and construction planning
laws, the building code, environmental laws and safety regulations, including fire protection. If German federal or state laws
or the interpretation or application thereof change, this could force TLG to significantly change the way it conducts its
business and therefore affect the value of its portfolio. TLG could incur additional expenses in trying to comply with more
restrictive laws. Furthermore, European and German legislators or regulators could subject TLG’s business to additional
regulatory obligations and restrictions, in particular investment fund regulations.
Any changes to the general regulatory environment could have a material adverse effect on TLG’s business, net
TLG may incur costs in connection with residual pollution including wartime ordnance, soil contaminations and
hazardous materials.
Some of TLG’s properties do, and some of the properties TLG acquires may, contain soil contaminations,
hazardous materials (including asbestos), other residual pollution or wartime ordnance. As of June 30, 2014, 103 properties
from TLG’s portfolio (including 53 properties from its Core Portfolio) were affected by soil contaminations. The Company
estimates that the total exposure from soil contaminations amounted to €9.4 million as of June 30, 2014. TLG has received
declarations of indemnification (Freistellungserklärungen) relating to these contaminations and it may be, and has on past
occasions been, otherwise released and indemnified, pursuant to the Environmental Framework Act (Umweltrahmengesetz)
and administrative agreements, from certain responsibilities for sites contaminated and polluted prior to July 1, 1990. The
Company believes that these indemnifications cover €5.8 million, or approximately 62%, of TLG’s exposure from soil
contaminations as of June 30, 2014. Thus, TLG’s uncovered exposure (e.g., for additional costs associated with remediation)
for soil contaminations amounts to €3.6 million, or approximately 38%, as of June 30, 2014. However, declarations of
indemnification only cover periods prior to July 1, 1990. Other periods could be relevant for contamination and pollution.
Also, such declarations of indemnification may not cover all costs associated with remediation measures (e.g., loss of rent
etc.). The existence or even suspected existence of soil contaminations or wartime ordinance may negatively affect TLG’s
ability to lease or sell such properties.
As of June 30, 2014, TLG was already engaged in remediating soil contaminations with an aggregate exposure of
€7.5 million relating to 18 properties. The Company expects that the costs associated with remediation for these properties not
covered by declarations of indemnification will amount to approximately €1.7 million, or approximately 23% of the aggregate
exposure. However, any remediation or removal of any pollution and related measures may involve considerable additional
costs that may not be covered for by declarations of indemnification.
TLG could also be responsible for remediation of properties that it has sold in the past. In the case of soil
contaminations, the Federal Soil Protection Act (Bundesbodenschutzgesetz) provides for an ongoing responsibility of previous
property owners if the property has been sold or transferred after March 1, 1999 and the contamination was, or should have
been, known to the previous owner. TLG sold a large number of properties in the past and plans to sell further properties in
the future. It could thus be held liable as a previous owner, but also as the entity having caused the contamination.
For example, TLG is or was the owner of several properties in Apolda, Thuringia that had soil contaminations.
Furthermore, contaminated soil from TLG’s properties was moved to a neighboring property owned by GESA Gesellschaft
zur Entwicklung und Sanierung von Altstandorten mbH (“GESA”). In 2011, GESA estimated that costs for a full remediation
of contaminated properties in Apolda owned by TLG and GESA would amount to between €20 million to €44 million. The
Company believes that removal of the contaminated soil on the property owned by GESA would amount to €1.7 million. TLG
voluntarily agreed to pay 6% of the costs associated with the investigation of soil contaminations on the contaminated
properties in Apolda owned by TLG and for the preparation of a remediation plan. It received a declaration of indemnification
in the amount of €20.2 million by the state of Thuringia and TLG could request additional indemnifications if this amount
would prove to be insufficient. However, there is no guarantee that such indemnification will be granted or that the
indemnification granted will prove sufficient. Furthermore, TLG also obtained indemnifications from purchasers of those
Apolda properties that it sold. However, there is no guarantee that all costs incurred by TLG will ultimately be covered by
declarations of indemnification or purchase agreements, or that the buyers of TLG’s properties will be able to fulfill their
indemnification obligations.
9
As of June 30, 2014, a total of 24 buildings located on TLG’s properties (including 11 buildings located on
properties from TLG’s Core Portfolio) contained hazardous materials. While remediation of such hazardous materials would
only be required if TLG were to engage in building activities with respect to the affected buildings, the Company estimates
that the total exposure from such hazardous materials amounted to €1.8 million as of June 30, 2014. Furthermore, even if TLG
itself is not responsible for existing contamination or pollution of the soil or buildings, it might be legally or practically
difficult or impossible to force the responsible parties to remedy or remove the damage or have recourse against such parties.
The existence or even suspected existence of hazardous materials or other residual pollution may negatively affect TLG’s
ability to lease or sell such properties.
The incurrence of unforeseen costs to remove or dispose of substances or hazardous materials or to remediate
environmental contamination or other environmental liabilities could have a material adverse effect on TLG’s business, net
Standard clauses used in TLG’s lease agreements may be invalid and some of these agreements may not fulfill the strict
written form requirements under German law.
TLG uses standardized contracts in its contractual relationships with a large number of parties, in particular with its
tenants. Any invalid provisions or ambiguities in standardized contracts can therefore affect a multitude of contractual
relationships. Standardized terms under German law are required to comply with the statutory law on general terms and
conditions (Allgemeine Geschäftsbedingungen), which means that they are subject to fairness control by the courts regarding
their content and the way they are presented to the other contractual party by TLG. As a general rule, standardized terms are
invalid if they are not transparent, unclearly worded, unbalanced or discriminatory. Any standardized clauses in TLG’s
contracts being invalid could lead to a substantial number of claims being brought against TLG or TLG being forced to bear
costs which it had previously considered to be allocable to its contractual counterparties.
Real estate owned by TLG is leased predominantly long term. Pursuant to German law, fixed-term lease agreements
with a term exceeding one year can be terminated prior to their contractually agreed expiration date if certain formal
requirements are not complied with. These include the requirement that there be a document that contains all the material
terms of the lease agreement, including all attachments and amendments and the signatures of all parties thereto. While the
details of the applicable formal requirements are assessed differently by various German courts, most courts agree that such
requirements are, in principle, strict. Some lease agreements regarding real estate owned by TLG may not satisfy the strictest
interpretations of these requirements. In this case, the respective lease agreement would be deemed to have been concluded
for an indefinite term and could therefore be terminated one year after handover of the respective property to the tenant at the
earliest, provided that the statutory notice period is complied with (i.e., notice of termination is admissible at the latest on the
third working day of a calendar quarter towards the end of the next calendar quarter). Consequently, some of TLG’s tenants
might attempt to invoke alleged non-compliance with these formal requirements in order to procure an early termination of
their lease agreements or a renegotiation of the terms of these lease agreements to TLG’s disadvantage.
The occurrence of any one or more of the aforementioned risks could have a material adverse effect on TLG’s
business, net assets, financial condition, cash flows or results of operations.
TLG’s compliance structure may not have been, or may not be, sufficient to adequately protect TLG from all legal or
financial risks.
TLG appointed an anti-corruption officer and a data protection officer and a group-wide code of conduct was
implemented to protect TLG against legal risks and other potential harm. These binding policies address law-abiding conduct,
including corruption prevention, insider information, conflicts of interest, information and data protection, and protection of
company property and apply to all employees, the members of the Management Board and the Company’s supervisory board.
While the Company believes that the aforementioned compliance policies will offer a degree of protection, they may not be
sufficient to completely rule out all unauthorized practices, legal infringements or corruption by employees of TLG.
Any failure in compliance could have a material adverse effect on TLG’s business, net assets, financial condition,
cash flows, results of operations and reputation.
TLG is exposed to risks from potential future legal disputes.
TLG may become the subject of legal disputes, administrative proceedings and government investigations. Such
legal disputes, proceedings and investigations may, in particular, arise from its relationships with investors, tenants,
employees, third-party facility managers, building contractors and other contractual counterparties, neighbors and public
authorities alleging breaches of contract, tort or the failure to comply with applicable laws and regulations. TLG may be
required to pay damages or fines and to take, or to refrain from taking, certain actions. There may also be investigations by
governmental authorities into circumstances of which TLG is currently not aware of or which will arise in the future,
including possible regulatory and environmental laws, licensing requirements or criminal proceedings.
If TLG were to be found liable under any such claims or even if complaints, law suits or investigations brought
against TLG are unsuccessful, they could have a material adverse effect on TLG’s business, net assets, financial condition,
cash flows, results of operations and reputation.
10
TLG may be forced to repay certain subsidies.
As of June 30, 2014, TLG had received investment supplements (Investitionszulagen), investment subsidies
(Investitionszuschüsse) and other public grants with unexpired commitment periods (Bindungsfristen) in an aggregate amount
of approximately €34 million relating to properties in its portfolio as of that date. Certain subsidies were directly paid out to
TLG and set-off against the lease obligations of the respective tenants. The administrative decisions, based on which these
subsidies were granted, impose certain obligations on such tenants. Failure to comply with these obligations or an insolvency
of the tenant or other factors could lead to a revocation of subsidies and force TLG to repay amounts paid out to TLG, even
where it may not have recourse against its tenants. As a result, TLG has been involved in litigation with government
authorities over the revocation of grants and is still involved in several such proceedings.
In addition, as of June 30, 2014, TLG had received subsidies in an aggregate amount of approximately €96 million
relating to properties in its portfolio as of that date, where there are no commitment periods or where commitment periods
have already expired. While TLG was rarely forced to repay subsidies for which there were no commitment periods or for
which commitment periods had already expired in the past, the authorities granting such subsidies could nevertheless demand
repayment of such subsidies if they were to decide that TLG or its tenants have violated certain obligations or due to other
reasons.
Furthermore, TLG has sold a number of properties for which it had received subsidies in the past. It could be forced
to repay these subsidies if the buyer of the respective property does not qualify for such subsidies or violated obligations
under the administrative decisions granting these subsidies. While TLG may have obtained contractual indemnities against the
respective buyer, it may be unable to actually take recourse (e.g., due to an insolvency of the respective buyer).
In addition, TLG has received subsidies for development measures, which also impose certain obligations on TLG.
It may be forced to repay these subsidies if TLG were in breach of the obligations thereunder.
An obligation to repay certain subsidies could have a material adverse effect on TLG’s business, net assets,
financial condition, cash flows and results of operations.
TLG may be subject to restitution or compensation claims if its properties have been unlawfully expropriated, and this
could delay or prevent the transfer of its properties.
TLG has been and may in the future be subject to third-party claims in connection with restitution and compensation
claims. Under German law, former owners of assets that were dispossessed either by the national socialist government
between January 30, 1933 and May 8, 1945 or by the former German Democratic Republic (Deutsche Demokratische
Republik) can demand the restitution of such assets. TLG has obtained contractual indemnity claims against the Federal
Institute for Special Tasks Arising from Unification (Bundesanstalt für vereinigungsbedingte Sonderaufgaben) if restitution or
compensation is successfully claimed because of unlawful expropriation during certain historical periods.
Furthermore, when disposing of properties TLG has to comply with the German Real Estate Transfer Ordinance
(Grundstücksverkehrsordnung (GVO)), pursuant to which TLG needs to obtain approval from the competent authorities prior
to disposing of any properties it has not purchased itself. If any restitution claims have been filed for a property that TLG
intends to sell, such approval will not be granted before the claim has been settled. Therefore, restitution claims may adversely
impact TLG’s ability to dispose of properties, in particular properties from its non-core portfolio.
Inability to transfer properties due to restitution claims could have a material adverse effect on TLG’s business, net
assets, financial condition, cash flows, results of operations and reputation.
TLG may be adversely affected by changes to the general tax environment in Germany as such changes might result in an
increase of TLG’s tax burden.
TLG is dependent on the general tax environment in Germany. TLG’s tax burden depends on various tax laws, as
well as their application and interpretation; for instance, increases in the real estate transfer tax rate, as recently experienced in
most German states, could make the acquisition and sale of properties more expensive and adversely affect TLG’s business.
Its tax planning and optimization depends on the current and expected tax environment. Amendments to tax laws may have a
retroactive effect and their application or interpretation by tax authorities or courts may change more or less unexpectedly.
Furthermore, court decisions are occasionally limited to their specific facts by tax authorities by way of non-application
decrees. This may also increase TLG’s tax burden.
No tax assessments have been received by the Company or any of its consolidated subsidiaries for several years.
The unavailability of more recent tax assessments increases the uncertainty regarding the tax authorities’ interpretations of
applicable tax laws for periods for which no assessment has been received and increases the possibility that these
interpretations may differ from the TLG’s interpretations. Any tax assessments that deviate from TLG’s expectations could
lead to an increase in its tax obligations and, additionally, could give rise to interest payable on the additional amount of taxes.
11
TLG is regularly subject to tax audits in Germany. The competent tax authorities are currently conducting a tax
audit covering the fiscal years from 2007 up to and including the year 2011. The Company believes that this tax audit will
lead to payments by TLG in the amount of approximately €9.4 million for which the Company has already created provisions
in an amount of €9.0 million. The tax authorities informed the Company that the tax audit for the fiscal year 2012 regarding
investment supplements (Investitionszulagen) is expected to commence on October 17, 2014. Future tax audits and other
investigations conducted by the competent tax authorities could result in the assessment of additional taxes. In particular, this
may be the case with respect to changes in TLG’s shareholding structure, other reorganization measures or impairment on
properties with regard to which tax authorities could take the view that they ought to be disregarded for tax purposes.
Furthermore, expenses could be treated as non-deductible or real estate transfer tax could be assessed. Any of these findings
could lead to an increase in TLG’s tax obligations and could result in the assessment of penalties. TLG has established, and
will continue to establish, provisions for risks associated with audits based on its past experience. These provisions, however,
may prove to be insufficient and when paid may negatively impact TLG’s cash flow.
TLG may become party to tax proceedings. The outcome of such tax proceedings may not be predictable and may
turn out to be detrimental to TLG.
The materialization of any of these risks could have a material adverse effect on TLG’s business, net assets,
Risks related to the Offering and the Offered Shares
The offering may not be completed if the Joint Bookrunners terminate the Underwriting Agreement or the Company
withdraws from the offering.
On October 14, 2014, J.P. Morgan Securities plc, London, United Kingdom and UBS Limited, London,
United Kingdom, COMMERZBANK Aktiengesellschaft, Frankfurt am Main, Germany, Kempen & Co N.V., Amsterdam, the
Netherlands and HSBC Trinkaus & Burkhardt AG, Dusseldorf, Germany, (the “Joint Bookrunners”) as well as the
Company, LSREF II East AcquiCo S.à r.l., Luxemburg, a limited liability company (société à responsibilité limitée),
registered with the commercial and company register of Luxembourg (Registre de Commerce et des Socieétés Luxembourg)
under the company number B 173323, having its registered office at 33, rue du Puits Romain, L-8070 Bertrange,
Luxembourg, (“East AcquiCo”) and Delpheast Beteiligungs GmbH & Co. KG, a limited partnership with a limited liability
company as general partner, registered with the commercial register of the local court (Amtsgericht) of Frankfurt am Main,
Germany, under the docket number HRA 47217, having its registered office at Hamburger Allee 14, 60486 Frankfurt am
Main, Germany, entered into an agreement for the underwriting of 36,850,000 of the Company’s shares in connection with the
offering with a view to offering these shares to investors (the “Underwriting Agreement”). The Underwriting Agreement
can be terminated by the Joint Global Coordinators under certain circumstances. If the Underwriting Agreement is terminated
because the Joint Bookrunners withdraw before the publication of the offering in the German Federal Gazette
(Bundesanzeiger), because the Company withdraws from the offering, or because the implementation of the capital increase
for the creation of new shares in connection with the offering is not registered in the commercial register in a timely manner,
the offering will lapse or the offering will not take place, in which case any allotments already made to investors will be
invalidated and investors will have no claim for delivery. Claims with respect to subscription fees already paid and costs
incurred by an investor in connection with the subscription will be governed solely by the legal relationship between the
investor and the financial intermediary to which the investor submitted its purchase order. Investors who engage in shortselling bear the risk of being unable to satisfy their delivery obligations. The Company would receive no proceeds from the
offering in the event of a termination of the Underwriting Agreement.
Furthermore, even if the offering is completed, the Company may not be able to place all of its shares which may
result in substantially lower proceeds from the offering.
The Company’s consolidated financial statements from the fiscal year 2013 onwards may be difficult to compare to those
from previous periods.
The Company’s consolidated financial statements are based on IFRS and the additional requirements of German
commercial law pursuant to Section 315a (1) of the German Commercial Code (Handelsgesetzbuch (HGB)), which it has
applied since January 1, 2013. Thus, the consolidated financial statements for the fiscal year 2013, including comparative
figures for 2012, were the Company’s first consolidated financial statements prepared in accordance with IFRS and the
additional requirements of German commercial law pursuant to Section 315a (1) of the German Commercial Code
(Handelsgesetzbuch (HGB)). The consolidated financial statements for prior years were prepared in accordance with the
German Commercial Code (Handelsgesetzbuch (HGB)) (“German GAAP”). IFRS differs from German GAAP in material
ways (e.g., property held for generating rental income or for capital appreciation is classified as investment property in
accordance with IAS 40 and measured at fair value under IFRS while it is measured at cost less depreciation under German
GAAP). Therefore the Company’s consolidated financial statements prepared in accordance with IFRS and the additional
requirements of German commercial law pursuant to Section 315a (1) of the German Commercial Code (Handelsgesetzbuch
(HGB)) are not directly comparable with its consolidated financial statements prepared in accordance with German GAAP for
previous periods.
12
Furthermore, the consolidated financial statements for the fiscal year 2011 are also not directly comparable to those
for the fiscal years 2012 and 2013 given that the consolidated financial statements for the fiscal year 2011 still include the
residential real estate portfolio that was split-off into a separate company, TLG WOHNEN GmbH, with effect as of January 1,
2012, whose sole shareholder was the Federal Republic of Germany.
These factors affect the comparability of the Company’s consolidated financial statements and could make it
difficult to assess TLG’s performance for any period prior to 2012.
TLG’s FFO forecast for the fiscal year 2014 may differ materially from TLG’s actual FFO for the fiscal year 2014 and the
Company may decide to reduce its dividend payments.
This Prospectus contains forecasts and other forward-looking information, including a forecast of TLG’s funds from
operations (“FFO” post tax and excluding result from disposals) for the fiscal year 2014 (the “FFO Forecast”).
In arriving at a forecast for FFO, the Management Board makes certain assumptions regarding the development of
TLG’s portfolio, several key performance indicators (income from letting activities and other operating income), expenses
(expenses related to letting activities, administration, the current income tax and other effects) and financing costs. Such
assumptions are based on and influenced by overall trends and developments, including the general economic developments
and the state of the commercial real estate markets, interest rate levels and the absence of any unforeseen events or material
changes to the regulatory environment. TLG has no influence over such overall trends and developments. While the
Management Board believes that its assumptions are reasonable in the current environment, they may vary, prove to be
incorrect, or turn out to be inaccurate compared to actual future developments.
Should one or more of the assumptions on which the FFO Forecast is based prove to be incorrect or inaccurate,
TLG’s actual FFO for the fiscal year 2014 may differ materially from the FFO Forecast contained in this Prospectus and the
Company may decide to reduce its dividend payments.
The market price and trading volume of the Company’s shares could fluctuate considerably.
Prior to the offering, there has been no public market for the shares of the Company. There is no certainty that a
liquid market will develop for these shares.
Securities markets in general and shares of companies in the commercial real estate sector in particular have been
volatile in the past. The trading volume and price of the Company’s shares may fluctuate considerably. If the Company’s
share price declines, investors may be unable to resell the Company’s shares at or above their respective purchase price. Some
of the factors that could negatively affect the share price of the Company’s shares or result in fluctuations in the price or
trading volume of the Company’s shares include, for example, changes in the Company’s actual or projected results of
operations or those of its competitors, changes in earnings projections or failure to meet investors’ and analysts’ earnings
expectations, investors’ evaluations of the success and effects of the strategy described in this Prospectus, as well as the
evaluation of the related risks, changes in general economic conditions and changes in the Company’s shareholder base and
liquidity as well as an exclusion from indexes. Additionally, general fluctuations in share prices, particularly of shares of
companies in the commercial real estate sector, could put pricing pressure on the Company’s shares, even where there may
not necessarily be a reason for this in TLG’s business or earnings outlook.
Following the listing, East AcquiCo will still be in a position to exert substantial influence on TLG. The interests of East
AcquiCo could differ from the interests of the other shareholders. Any future sales of the Company’s shares by major
shareholders of the Company could depress the market price of the shares.
Upon completion of the offering, East AcquiCo, the largest shareholder of the Company, will hold approximately
45.4% of the issued shares (assuming the placement of 21,545,674 shares of the Company from the holdings of East AcquiCo
and excluding any exercise of the greenshoe option). Due to its large shareholdings, East AcquiCo will be in a position to
exert substantial influence at the Company’s shareholders’ meeting and, consequently, on matters decided by the
shareholders’ meeting, including the appointment of the members of the Company’s supervisory board, the distribution of
dividends, and any proposed capital increase. East AcquiCo’s future stake in the Company would endow it with the ability to
block certain corporate measures that require the approval of the Company’s shareholders’ meeting.
Moreover, if any large shareholders of the shares of the Company were to sell substantial amounts of their
shareholdings on the public exchange or if market participants were to become convinced that such sales might occur, this
could have a material adverse effect on the market price of the shares of the Company.
Future capital measures could lead to a substantial dilution of existing shareholders’ interests in the Company.
TLG may require additional capital in the future to finance acquisitions and business operations or to repay its
debts. The raising of additional equity through the issuance of new shares and the (potential) exercise of conversion or option
rights by holders of convertible bonds or bonds with warrants, which may be issued in the future, may dilute existing
shareholders’ interests. The Company’s articles of association currently provide for the authorization to issue up to
26,000,000 additional shares and up to 26,000,000 additional shares as conditional capital. The Company may issue these
13
shares without any additional approval by the shareholders and under certain conditions, for example, in the event of a capital
increase against contributions in kind, without reserving any pre-emptive subscription rights to the existing shareholders.
Because the Company’s decision to issue securities in any future offering will also depend on market conditions and other
factors beyond its control, the Company cannot predict or estimate the amount, timing or nature of future offerings. Thus,
holders of shares bear the risk of the Company’s future offerings reducing the market price of the shares and diluting their
shareholdings in the Company.
The Company will face additional administrative requirements and incur higher ongoing costs as a result of the initial
public offering.
After the offering, the Company will be subject to the legal requirements for German stock corporations listed on a
public exchange for the first time. These requirements include periodic financial reporting and other public disclosures of
information (including those required by the stock exchange listing authorities), regular calls with securities and industry
analysts and other required disclosures. There is no guarantee that TLG’s accounting, controlling and legal or other corporate
functions will be capable of responding to these additional requirements without difficulties and inefficiencies that cause TLG
to incur significant additional costs and/or expose it to regulatory or civil litigation or penalties. Furthermore, the preparing
for, and convening of, general shareholders’ meetings and the Company’s regular communications with shareholders and
potential investors will entail substantially greater expenses and risks. The members of the Management Board will need to
devote time to these additional requirements that they could have otherwise devoted to other aspects of managing TLG’s
operations, and these additional requirements could also entail substantially increased time commitments and costs for the
accounting, controlling and legal departments and other administrative functions.
14
GENERAL INFORMATION
Responsibility Statement
TLG IMMOBILIEN AG, with its registered office at Hausvogteiplatz 12, 10117 Berlin, Germany, and registered
with the commercial register of the local court (Amtsgericht) of Charlottenburg, Germany, under the docket number
HRB 161314 B (the “Company”, and, together with its consolidated subsidiaries, “TLG”), together with J.P. Morgan
Securities plc, London, United Kingdom (“J.P. Morgan”) and UBS Limited, London, United Kingdom (“UBS” and, together
with J.P. Morgan the “Joint Global Coordinators”), and together with COMMERZBANK Aktiengesellschaft, Frankfurt am
Main, Germany (“COMMERZBANK”), Kempen & Co N.V., Amsterdam, the Netherlands (“Kempen & Co”) and
HSBC Trinkaus & Burkhardt AG, Dusseldorf, Germany (“HSBC” and, together with the Joint Global Coordinators,
COMMERZBANK and Kempen & Co, the “Joint Bookrunners” or the “Underwriters”), have assumed responsibility for
the contents of this prospectus (the “Prospectus”) pursuant to Section 5 (4) of the German Securities Prospectus Act
(Wertpapierprospektgesetz) and declare that the information contained in this Prospectus is, to the best of their knowledge,
correct and contains no material omissions.
If any claims are asserted before a court of law based on the information contained in this Prospectus, the investor
appearing as plaintiff may have to bear the costs of translating this Prospectus prior to the commencement of the court
proceedings pursuant to the national legislation of the member states of the European Economic Area.
The information in this Prospectus will not be updated subsequent to the date hereof except for any significant new
event or significant error or inaccuracy relating to the information contained in this Prospectus that may affect an assessment
of the securities and occurs or comes to light following the approval of this Prospectus but before the completion of the public
offering or admission of the securities to trading, whichever is later. These updates must be disclosed in a prospectus
supplement in accordance with Section 16 (1) sentence 1 of the German Securities Prospectus Act
(Wertpapierprospektgesetz).
Purpose of this Prospectus
For the purpose of the public offering of securities, this Prospectus relates to 9,302,326 of the Company’s New
Shares (as defined below) and to 27,547,674 of the Company’s existing bearer shares with no par value, each representing a
notional value of €1.00 and with full dividend rights from January 1, 2014, consisting of:
•
9,302,326 newly issued bearer shares with no par value (Stückaktien) from a capital increase against
contribution in cash to be resolved by an extraordinary shareholders’ meeting of the Company (the “New
Shares”);
•
24,197,674 existing bearer shares with no par value (Stückaktien) from the holdings of the Existing
Shareholders (of which 21,545,674 existing bearer shares with no par value (Stückaktien) are offered by East
AcquiCo and 2,652,000 existing bearer shares with no par value (Stückaktien) are offered by Delpheast) (the
“Existing Shares” and, together with the New Shares, the “Base Shares”); and
•
3,350,000 existing bearer shares with no par value (Stückaktien) from the holdings of East AcquiCo in
connection with a possible over-allotment (the “Over-Allotment Shares” and, together with the Base Shares,
the “Offer Shares”).
For the purpose of admission to trading on the regulated market of the Frankfurt Stock Exchange (Frankfurter
Wertpapierbörse) and the simultaneous admission to the sub-segment of the regulated market with additional post-admission
obligations (Prime Standard) of the Frankfurt Stock Exchange (Frankfurter Wertpapierbörse), this Prospectus relates to up to
9,302,326 New Shares and 52,000,000 of the Company’s existing bearer shares (being the entire share capital of the Company
following the registration of the capital increase) with no par value, each with a notional value of €1.00 and with full dividend
rights from January 1, 2014.
Forward-looking Statements
This Prospectus contains forward-looking statements. A forward-looking statement is any statement that does not
relate to historical facts or events or to facts or events as of the date of this Prospectus. This applies, in particular, to
statements in this Prospectus containing information on TLG’s future earnings capacity, plans and expectations regarding its
business growth and profitability, and the general economic conditions to which TLG is exposed. Statements made using
words such as “predicts”, “forecasts”, “plans”, “endeavors” or “expects” may be an indication of forward-looking statements.
The forward-looking statements in this Prospectus are subject to risks and uncertainties, as they relate to future
events, and are based on estimates and assessments made to the best of the Company’s present knowledge. These
forward-looking statements are based on assumptions, uncertainties and other factors, the occurrence or non-occurrence of
which could cause the Company’s actual results, including the financial condition and profitability of TLG, to differ
materially from or fail to meet the expectations expressed or implied in the forward-looking statements. These expressions can
15
be found in several sections in this Prospectus, particularly in the sections entitled “Risk Factors”, “Profit Forecast”,
“Markets and Competition”, “Business” and “Recent Developments and Outlook”, and wherever information is contained in
this Prospectus regarding TLG’s intentions, beliefs, or current expectations relating to its future financial condition and results
of operations, plans, liquidity, business outlook, growth, strategy and profitability, as well as the economic and regulatory
environment to which TLG is subject.
In light of these uncertainties and assumptions, it is also possible that the future events mentioned in this Prospectus
might not occur. In addition, the forward-looking estimates and forecasts reproduced in this Prospectus from third-party
reports could prove to be inaccurate (for more information on the third-party sources used in this Prospectus, see “—Sources
of Market Data”). Actual results, performance or events may differ materially from those in such statements due to, among
other reasons:
•
changes in general economic conditions in Germany, including changes in the unemployment rate, the level of
consumer prices, wage levels etc.;
•
demographic changes, in particular with respect to Germany;
•
changes affecting interest rate levels;
•
changes in the competitive environment, including changes in the level of construction activity relating to
commercial real estate;
•
changes in demand for office, retail and hotel properties;
•
political changes;
•
changes to the taxation of corporations and particularly tax rates for RETT; and
•
changes in laws and regulations, in particular tenancy and environmental laws and regulations.
Moreover, it should be noted that neither the Company nor any of the Underwriters assumes any obligation, except
as required by law, to update any forward-looking statement or to conform any such statement to actual events or
developments. Nevertheless, the Company has the obligation to disclose any significant new event or significant error or
inaccuracy relating to the information contained in this Prospectus that may affect an assessment of the securities and occurs
or comes to light following the approval of this Prospectus, but before the completion of the public offering or the admission
of the securities to trading, whichever is later. These updates must be disclosed in a prospectus supplement in accordance with
Section 16 (1) sentence 1 of the German Securities Prospectus Act (Wertpapierprospektgesetz).
See “Risk Factors” for a further description of some of the factors that could influence the Company’s forwardlooking statements.
Appraiser
The independent, external appraiser Savills Advisory Services GmbH, Taunusanlage 19, 60325 Frankfurt am Main,
Germany (“Savills”), has prepared a condensed evaluation report on the fair value of TLG’s real estate portfolios as of
June 30, 2014 pursuant to IAS 40 in conjunction with IFRS 13 (the “Valuation Report”) and in accordance with the
standards of the Royal Institution of Chartered Surveyors (RICS), which is reprinted in this Prospectus on pages V-1 et seq.
For more information on Savills’s independence, see “Declaration of Independence” on page V-10 of the Valuation Report.
Savills employs certified valuation experts according to DIN EN ISO/EC 17024 and members of the Royal Institution of
Chartered Surveyors (RICS). Savills has consented to the inclusion of the Valuation Report in this Prospectus in the
unmodified form authorized by them and has approved the context in which it is presented. For the avoidance of doubt,
Savills only accepts responsibility for the Valuation Report and for no other part or parts of this Prospectus. The Company
affirms that, as of the date of this Prospectus, no material change in the value of the properties appraised in the Valuation
Report has occurred since the valuation date of June 30, 2014.
Sources of Market Data
To the extent not otherwise indicated, the information contained in this Prospectus on the market environment,
market developments, growth rates, market trends and competition in the markets in which TLG operates are based on the
Company’s assessments. These assessments, in turn, are based in part on internal observations of the markets and on various
market studies.
The following sources were used in the preparation of this Prospectus:
•
Bloomberg as of September 2, 2014, Database, “10 year bond yields”, compiled July 28, 2014, (“Bloomberg
as of September 2, 2014”);
16
•
Bulwiengesa, Research Publication, “Food Retail Properties in Germany 2014: Market Trends and Investment
Opportunities”, copyrighted June 2014, (“Bulwiengesa, Food Retail Properties in Germany 2014”);
•
CBRE Global Research and Consulting, Research Publication, “Hotel Market Germany: Market View”,
published 2013, (“CBRE”);
•
DG Hyp, Research Publication, “Main Regional Real Estate Markets in Germany 2014: Office and Retail
Properties Continue to Show Solid Performance in the Main Regions”, released March 2014, (“DG Hyp”);
•
Economist Intelligence Unit, Database, GDP Historicals, compiled July 29, 2014, (“Economist Intelligence
Unit, GDP Historicals”);
•
Economist Intelligence Unit, Database, Government Debt Historicals, compiled September 2, 2014,
(“Economist Intelligence Unit, Government Debt”);
•
Eurostat, Unemployment Rate 2002-2013 (%), http://epp.eurostat.ec.europa.eu/statistics_explained/index.php/
Unemployment_statistics, published May 8, 2014, (“Eurostat, Unemployment Rate”);
•
Federal and State Statistical Offices (Statistische Ämter des Bundes und der Länder), National Accounts GDP
(Volkswirtschaftliche Gesamtrechnungen Bruttoinlandsprodukt), published March 28, 2014, (“Federal and
State Statistical Offices, GDP”);
•
Federal Foreign Office (Auswärtiges Amt), Übersicht: “Deutschland”, Website, http://www.auswaertigesamt.de/DE/Aussenpolitik/Laender/Laenderinfos/01-Nodes_Uebersichtsseiten/Deutschland_node.html,
(“Federal Foreign Office”);
•
German Federal Statistical Office (Statistisches Bundesamt), Genesis Online Datenbank, https://wwwgenesis.destatis.de/genesis/online;jsessionid=976EB558678A1783
A416D09E5547A638.tomcat_GO_1_2?Menu=Impressum, updated August 19, 2014, (“Federal Unemployment
Agency”);
•
German Federal Statistical Office (Statistisches Bundesamt), Publication, Consumer Price Index 2013 vs 2012
(Verbraucherpreisstatistik 2013 gegenüber dem Vorjahr, 2012), accessed January 17, 2014, (“Federal
Statistical Office, Consumer Price Index”);
•
German Federal Statistical Office (Statistisches Bundesamt), Publication, Statistics of the Federal Employment
Agency (Statistik der Bundesagentur für Arbeit), Table, Employment Market: Unemployment Rate, Germany
(Arbeitsmarkt: Arbeitslosenquote, Deutschland), published 2014, (“Federal Statistical Office,
Unemployment Rate”);
•
Hahn Group, in cooperation with Gfk GeoMarketing and CBRE, Retail Real Estate Report Germany,
8th Edition, 2013/2014, (“Hahn Group, Retail Real Estate Report Germany 8th Edition”);
•
Handelsblatt, Article, “Diese deutschen Städte sind Touristen-Magneten”, http://www.handelsblatt.com/
panorama/aus-aller-welt/ranking-diese-deutschen-staedte-sind-touristen-magneten/
9642972.html?slp=false&p=10&a=false#image, published March 21, 2014, (“Handelsblatt”);
•
Savills on behalf of TLG IMMOBILIEN GmbH, Berlin, Germany, Valuation Report: Commercial Portfolio
“TLG”, updated as at June 30, 2014, (“Commercial Portfolio TLG”);
•
Immobilienscout24 und WirtschaftsWoche, Graphic, Die Besten Städte 2013: Ergebnis Dynamikranking,
http://www.wiwo.de/staedteranking/, published 2013, (“Immobilienscout24 and WirtschaftsWoche”);
•
TLG Immobilien GmbH, “Property Markets in Berlin and Eastern Germany 2013: Market Data for Urban
Districts and the City of Berlin”, published October 2013, (“TLG Real Estate in Berlin and Eastern
Germany”).
It should be noted in particular that reference has been made in this Prospectus to information concerning markets
and market trends. Such information was obtained from the abovementioned sources. The Company has accurately
reproduced such information and, as far as it is aware and able to ascertain from information published by such third parties,
no facts have been omitted that would render the reproduced information inaccurate or misleading. Nevertheless, prospective
investors are advised to consider this data with caution. For example, market studies are often based on information or
assumptions that may not be accurate or appropriate, and their methodology is inherently predictive and speculative.
17
Irrespective of the assumption of responsibility for the content of this Prospectus by the Company and the
Underwriters (see “—Responsibility Statement”), neither the Company nor the Underwriters have independently verified the
figures, market data or other information on which third parties have based their studies. Accordingly, the Company and the
Underwriters make no representation or warranty as to the accuracy of any such information from third-party studies included
in this Prospectus. Prospective investors should note that the Company’s own estimates and statements of opinion and belief
are not always based on studies of third parties.
Documents Available for Inspection
For the period during which this Prospectus is valid, the following documents will be available for inspection during
regular business hours at the Company’s offices at Hausvogteiplatz 12, Berlin, Germany (tel. +49 (0) 30-2470-50):
•
the Company’s articles of association (the “Articles of Association”);
•
the Company’s unaudited condensed interim consolidated financial statements prepared in accordance with
International Financial Reporting Standards as adopted by the European Union (“IFRS”) as of and for the
•
the Company’s audited consolidated financial statements prepared in accordance with IFRS and the additional
requirements of German commercial law pursuant to Section 315a (1) of the German Commercial Code
(Handelsgesetzbuch (HGB)) for the fiscal year ended December 31, 2013;
•
the Company’s audited consolidated financial statements prepared in accordance with the German Commercial
Code (Handelsgesetzbuch (HGB)) (“German GAAP”) for the fiscal years ended December 31, 2012 and
2011; and
•
the Company’s audited unconsolidated financial statements prepared in accordance with German GAAP for
the fiscal year ended December 31, 2013.
The above documents are also available on the Company’s website. The unconsolidated financial statements
referred to above are also published in the German Federal Gazette (Bundesanzeiger).
In addition, the Valuation Report prepared by Savills and dated September 29, 2014, relating to the fair value,
pursuant to IAS 40 in conjunction with IFRS 13, of TLG’s real estate portfolio as of June 30, 2014 is available for inspection
at the Company’s offices.
The Company’s future consolidated financial statements, unconsolidated financial statements and condensed
consolidated interim financial statements will be available from the Company on its website and from the paying agent
designated in this Prospectus (see “General Information on the Company and the Group—Notifications, Paying Agent”).
Currency Presentation and Presentation of Figures
In this Prospectus, “euro” and “€” refer to the single European currency adopted by certain participating member
states of the European Union, including the Federal Republic of Germany (“Germany”).
Where financial data in this Prospectus is labelled “audited”, this means that such data has been taken from the
audited financial statements included elsewhere in this Prospectus. The label “unaudited” is used in tables in this Prospectus
to indicate financial data that have not been taken from the audited financial statements included elsewhere in this Prospectus
but was taken either from the Company’s unaudited condensed interim consolidated financial statements or the Company’s
internal reporting system, or is based on calculations of figures from the abovementioned sources. All of the financial data
presented in the text and tables in this Prospectus are shown in millions of euro (in € million), except as otherwise stated.
Certain financial data (including percentages) in this Prospectus have been rounded according to established commercial
standards. As a result, the aggregate amounts (sum totals or sub-totals or differences or if numbers are put in relation) in tables
in this Prospectus may not correspond in all cases to the aggregated amounts of the underlying (unrounded) figures appearing
elsewhere in this Prospectus. Furthermore, in those tables, these rounded figures may not add up exactly to the totals
contained in those tables. Financial information presented in parentheses denotes the negative of such number presented. In
respect of financial data set out in this Prospectus, a dash (“—”) signifies that the relevant figure is not available, while a zero
(“0.0”) signifies that the relevant figure is available but has been rounded to zero.
18
THE OFFERING
Subject Matter of the Offering
The offering (including any potential Over-Allotment) relates to the sale of 36,850,000 Offer Shares with no par
value (Stückaktien), each representing a notional value of €1.00 and with full dividend rights from January 1, 2014, consisting
of:
•
9,302,326 newly issued bearer shares with no par value (Stückaktien) from a capital increase against
contribution in cash to be resolved by an extraordinary shareholders’ meeting of the Company (the New
Shares);
•
24,197,674 existing bearer shares with no par value (Stückaktien) from the holdings of the Existing
Shareholders (of which 21,545,674 existing bearer shares with no par value (Stückaktien) are offered by East
AcquiCo and 2,652,000 existing bearer shares with no par value (Stückaktien) are offered by Delpheast) (the
Existing Shares and together with the New Shares, the Base Shares); and
•
3,350,000 existing bearer shares with no par value (Stückaktien) from the holdings of East AcquiCo in
connection with a possible Over-Allotment (the Over-Allotment Shares and, together with the Base Shares, the
Offer Shares).
The offering consists of a public offering of the Offer Shares in Germany and the Grand Duchy of Luxembourg
(“Luxembourg”) and private placements of the Offer Shares in certain jurisdictions outside Germany and Luxembourg. In
the United States, the Offer Shares will be offered for sale to qualified institutional buyers in reliance on Rule 144A
(“Rule 144A”) under the U.S. Securities Act of 1933, as amended (the “Securities Act”). Outside the United States, the Offer
Shares will be offered in reliance on Regulation S under the Securities Act (“Regulation S”).
The IPO Capital Increase to create the New Shares, which is expected to be approved by the extraordinary
shareholders’ meeting of the Company expected to be held on October 22, 2014 and is expected to be registered with the
commercial register on October 23, 2014, would result in a capital increase of the Company’s share capital of up to
€9,302,326. Upon registration of the IPO Capital Increase with the commercial register, the New Shares are issued. Assuming
the IPO Capital Increase is approved by the extraordinary shareholders’ meeting of the Company and registered with the
commercial register of the Company in the maximum amount, the share capital of the Company will amount to €61,302,326.
The share capital of the Company represented by the Offer Shares that are the subject of the offering including potential OverAllotments will total €36,850,000 million. Thus, approximately 60.1% of the Company’s shares (after effectuation of the
issuance of all New Shares) will be offered (approximately 54.6% without the Over-Allotment Shares).
Immediately prior to the offering, all of the Company’s share capital was held by the Existing Shareholders (see
“Information on the Existing Shareholders”). Following completion of the offering and assuming full placement of the Offer
Shares, issuance of all New Shares and full exercise of the Greenshoe Option (“—Stabilization Measures, Over-Allotments
and Greenshoe Option”), the Existing Shareholders will hold approximately 39.9% of the Company’s share capital. The
Existing Shareholders will receive consideration for the sale of the Existing Shares and the shares from the exercise of the
Greenshoe Option, if any (after deduction of fees and commissions). The Company will receive the proceeds from the sale of
the New Shares (after deduction of fees and commissions), but will not receive any of the proceeds from the sale of the
Existing Shares or the shares from the exercise of the Greenshoe Option, if any.
The Underwriters are acting in the following capacities: J.P. Morgan and UBS are acting as the Joint Global
Coordinators and COMMERZBANK, Kempen & Co and HSBC, together with J.P. Morgan and UBS, are acting as the Joint
Bookrunners.
Price Range, Offer Period, Offer Price and Allotment
The price range within which purchase orders may be placed is €10.75 to €13.75 per Offer Share (the “Price
Range”).
The offer period, during which investors may submit purchase orders for the Offer Shares, is expected to begin on
October 15, 2014 and is expected to end on October 23, 2014 at 12:00 noon CEST (Central European Summer Time) for
retail investors (natural persons) and at 16:00 CEST (Central European Summer Time) for institutional investors (the “Offer
Period”). Retail investors (natural persons) may submit purchase orders for the public offering in Germany and Luxembourg
during the Offer Period at the branch offices of the Underwriters. Purchase orders must be of at least 50 Offer Shares and limit
steps must be denominated in full euro amounts or euro cent figures of 25, 50, or 75 cents. Multiple purchase orders are
permitted.
The Company and the Existing Shareholders reserve the right, together with the Joint Bookrunners, to increase or
decrease the total number of Offer Shares, to increase or decrease the upper limit and/or the lower limit of the Price Range
and/or to extend or shorten the Offer Period. Changes in the number of Offer Shares, changes to the Price Range or the
extension or shortening of the Offer Period will not invalidate any offers to purchase that have already been submitted. If such
change requires the publication of a supplement to this Prospectus, investors who submitted purchase orders before the
19
supplement is published shall have the right, under the German Securities Prospectus Act (Wertpapierprospektgesetz), to
withdraw these offers to purchase within two business days of the publication of the supplement. Instead of withdrawing the
offers to purchase placed prior to the publication of the supplement, investors may change their orders or place new limited or
unlimited offers to purchase within two business days of the publication of the supplement. To the extent that the terms of the
offering are changed, such change will be published by means of electronic media (such as Thomson Reuters or Bloomberg)
and, if required by the German Securities Trading Act (Wertpapierhandelsgesetz) or the German Securities Prospectus Act
(Wertpapierprospektgesetz), as an ad hoc release via an electronic information system and on the Company’s website and as a
supplement to this Prospectus. Investors who have submitted offers to purchase will not be notified individually. Under
certain conditions, the Joint Global Coordinators, on behalf of the Underwriters, may terminate the underwriting agreement
relating to the offering entered into with the Company and the Existing Shareholders on October 14, 2014 (the
“Underwriting Agreement”), even after commencement of trading (Aufnahme des Handels) of the Company’s shares on the
regulated market segment (regulierter Markt) of the Frankfurt Stock Exchange (Frankfurter Wertpapierbörse), see
“Underwriting—Termination/Indemnification”.
After the expiration of the Offer Period, the offer price and the final number of the Offer Shares placed in the
offering will be set jointly by the Company, the Existing Shareholders and the Joint Bookrunners. The price will be set on the
basis of the purchase orders submitted by investors that have been collated in the order book prepared during the bookbuilding
process. Price-setting is expected to take place on or about October 23, 2014. These orders will be evaluated according to the
prices offered and the investment horizons of the respective investors. This method of setting the number of shares that will be
placed at the offer price is, in principle, aimed at maximizing proceeds. Consideration will also be given to whether the offer
price and the number of shares to be placed allow for the reasonable expectation that the share price will demonstrate steady
performance in the secondary market given the demand for the Company’s shares noted in the order book. Attention will be
paid not only to the prices offered by investors and the number of investors wanting shares at a particular price, but also to the
composition of the group of shareholders in the Company that would result at a given price, and expected investor behavior.
For further information regarding allotment criteria, see “—Allotment Criteria”. Neither the Company nor the Existing
Shareholders nor the Underwriters will charge expenses to investors. Investors will have to bear customary transaction and
handling fees charged by their account-keeping financial institution.
After the offer price has been set, the Offer Shares will be allotted to investors on the basis of the offers to purchase
then available. The offer price and the final number of Offer Shares and the final number of New Shares placed in the offering
(that is, the result of the offering) are expected to be published on or about October 23, 2014 by means of an ad hoc release
and via an electronic information system and on the Company’s website.
Investors who have placed orders to purchase Offer Shares with one of the Underwriters can obtain information
from that Underwriter about the offer price and the number of Offer Shares allotted to them on the business day following the
setting of the offer price. As commencement of trading (Aufnahme des Handels) of the Company’s shares on the regulated
market segment (regulierter Markt) of the Frankfurt Stock Exchange (Frankfurter Wertpapierbörse) is expected to take place
not earlier than on the second business day following the setting of the offer price, investors may not have obtained
information about the number of Offer Shares allotted to them at the time of commencement of trading. Book-entry delivery
of the allotted Offer Shares against payment of the offer price is expected to take place one business day after commencement
of stock exchange trading. Should the placement volume prove insufficient to satisfy all orders placed at the offer price, the
Underwriters reserve the right to reject orders, or to accept them only in part.
Expected Timetable for the Offering
The following is the expected timetable of the offering, which may be extended or shortened:
October 14, 2014 . . . . . . . . . . . .
Approval of this Prospectus by the German Federal Financial Supervisory Authority
(Bundesanstalt für Finanzdienstleistungsaufsicht, the “BaFin”) and publication of the
approved Prospectus on the Company’s website.
Notification of the approved Prospectus to the Luxembourg Commission for the
Supervision of the Financial Sector (Commission de Surveillance du Secteur Financier).
October 15, 2014 . . . . . . . . . . . .
Commencement of the Offer Period.
Application for listing filed with the Frankfurt Stock Exchange (Frankfurter
Wertpapierbörse).
October 22, 2014 . . . . . . . . . . . .
Resolution on the IPO Capital Increase for the issuance of the New Shares.
October 23, 2014 . . . . . . . . . . . .
Registration of the IPO Capital Increase with the commercial register.
Listing approval issued by the Frankfurt Stock Exchange (Frankfurter Wertpapierbörse).
Close of the Offer Period for retail investors (natural persons) at 12:00 noon (Central
European Summer Time) and for institutional investors at 16:00 (Central European
Summer Time).
20
Determination of the offer price and allotment; publication of the offer price in the form
of an ad hoc release, on an electronic information system and subsequently on the
company’s website.
October 24, 2014 . . . . . . . . . . . .
First day of trading.
October 28, 2014 . . . . . . . . . . . .
Book-entry delivery of the Offer Shares against payment of the offer price (closing).
This Prospectus will be published on the Company’s website at www.tlg.de after approval by the BaFin on
October 14, 2014. In addition, free copies of the printed Prospectus will be available during regular business hours at the
Company’s offices at Hausvogteiplatz 12, 10117 Berlin, Germany (tel. +49 (0) 30-2470-50), at the offices of J.P. Morgan in
Frankfurt, Junghofstraße 14, 60311 Frankfurt am Main, Germany and at the offices of UBS, Frankfurt, Bockenheimer
Landstraße 2-4, 60306 Frankfurt, Germany.
Information on the Shares
Voting Rights
Each share in the Company carries one vote at the Company’s shareholders’ meeting. There are no restrictions on
voting rights.
Dividend and Liquidation Rights
The Offer Shares carry full dividend rights from January 1, 2014. In the event of the Company’s liquidation, any
proceeds will be distributed to the holders of the Company’s shares in proportion to their interest in the Company’s share
capital.
Form and Certification of the Shares
All of the Company’s shares are bearer shares with no par value. The Company’s current share capital in the amount
of €52,000,000.00 is represented by one global share certificate, which will be deposited with Clearstream Banking
Aktiengesellschaft, Mergenthalerallee 61, 65760 Eschborn, Germany (“Clearstream”). The New Shares will be represented
by a second global share certificate, which will also be deposited with Clearstream.
Section 5 (2) of the Articles of Association excludes the shareholders’ right to receive individual share certificates
to the extent permitted by law and unless mandated by the rules of a stock exchange to which the shares are admitted. The
Company’s management board (the “Management Board”), in consultation with the Company’s supervisory board (the
“Supervisory Board”), determines pursuant to Section 5 (3) of the Articles of Association the form of the share certificates.
The Offer Shares provide holders thereof with the same rights as all of the other shares of the Company and do not provide
any additional rights or advantages.
Delivery and Settlement
The delivery of the Offer Shares against payment of the offer price is expected to take place on October 28, 2014.
The Offer Shares will be made available to the shareholders as co-ownership interests in the global share certificate.
At the shareholder’s option, the Offer Shares purchased in the offering will be credited either to a securities deposit
account maintained by a German bank with Clearstream or to a securities account of a participant in Euroclear Bank
S.A./N.V., 1, Boulevard Roi Albert II, 1120, Brussels, Belgium, as the operator of the Euroclear system, or to Clearstream
Banking S.A., 42 Avenue JF Kennedy, 1855 Luxembourg, Luxembourg, for the account of such shareholder.
ISIN/WKN/Common Code/Ticker Symbol
International Securities Identification Number (ISIN) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
German Securities Code (Wertpapierkennnummer, WKN) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Common Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Ticker Symbol . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
DE000A12B8Z4
A12B8Z
111597880
TLG
Transferability of the Shares; Lock-up
The Company’s shares are freely transferable in accordance with the legal requirements for bearer shares. Except
for the restrictions set forth in “—Lock-up Agreement, Limitations on Disposal” and “Underwriting—Selling Restrictions”,
there are no prohibitions on disposals or restrictions with respect to the transferability of the Company’s shares.
21
Existing Shareholders
Immediately prior to the offering, East AcquiCo, holds 94.9% of the Company’s outstanding share capital and
Delpheast holds 5.1% of the Company’s outstanding share capital. For a discussion of the ownership structure of the Existing
Shareholders, see “Information on the Existing Shareholders—Shareholder Structure (Before and After the Offering)”.
Allotment Criteria
The allotment of Offer Shares to retail investors (natural persons) and institutional investors will be decided after
consultation with the Joint Bookrunners. The decision ultimately rests with the Company and the Existing Shareholders.
Allotments will be made on the basis of the quality of the individual investors and individual orders and other important
allotment criteria to be determined after consultation with the Joint Bookrunners. The allocation to retail investors (natural
persons) will be compatible with the “Principles for the Allotment of Share Issues to Private Investors” published by the
Commission of Stock Exchange Experts (Börsensachverständigenkommission). “Qualified investors” (qualifizierte Anleger)
under the German Securities Prospectus Act (Wertpapierprospektgesetz), as well as “professional clients” (professionelle
Kunden) and “suitable counterparties” (geeignete Gegenparteien) as defined under the German Securities Trading Act
(Wertpapierhandelsgesetz), are not viewed as “private investors” (Privatanleger) within the meaning of the allocation rules.
Stabilization Measures, Over-Allotments and Greenshoe Option
In connection with the placement of the Offer Shares, J.P. Morgan or its affiliates, acting for the account of the
Underwriters, will act as the stabilization manager and may, as stabilization manager, and acting in accordance with legal
requirements (Section 20a (3) of the German Securities Trading Act (Wertpapierhandelsgesetz) in conjunction with
Commission Regulation (EC) No. 2273/2003 of December 22, 2003), make Over-Allotments and take stabilization measures
to support the market price of the Company’s shares and thereby counteract any selling pressure.
The stabilization manager is under no obligation to take any stabilization measures. Therefore, no assurance can be
provided that any stabilization measures will be taken. Where stabilization measures are taken, these may be terminated at any
time without notice. Such measures may be taken from the date the shares of the Company are listed on the regulated market
of the Frankfurt Stock Exchange (Frankfurter Wertpapierbörse) and must be terminated no later than 30 calendar days after
this date (the “Stabilization Period”).
These measures may result in the market price of the Company’s shares being higher than would otherwise have
been the case. Moreover, the market price may temporarily be at an unsustainable level.
Under the possible stabilization measures, investors may, in addition to the Base Shares, be allocated up to
3,350,000 Over-Allotment Shares as part of the allocation of the shares to be placed (“Over-Allotment”). For the purpose of
a possible Over-Allotment, the stabilization manager, for the account of the Underwriters, will be provided with up to
3,350,000 Over-Allotment Shares in the form of a securities loan; this number of Over-Allotment Shares will not exceed 10%
of the Base Shares. In addition, East AcquiCo will grant the Underwriters an option to acquire up to shares 3,350,000 of the
Company at the offer price less agreed commissions (the “Greenshoe Option”). This option will terminate 30 calendar days
after the commencement of the stock exchange trading of the Company’s shares.
The stabilization manager, for the account of the Underwriters, is entitled to exercise the Greenshoe Option to the
extent Over-Allotments were initially made; the amount of shares is to be reduced by the number of shares held by the
stabilization manager as of the date on which the Greenshoe Option is exercised and that were acquired by the stabilization
manager in the context of stabilization measures.
Once the Stabilization Period has ended, an announcement will be made within one week in various media outlets
distributed across the entire European Economic Area as to whether stabilization measures were taken, when price
stabilization started and finished, and the price range within which stabilization measures were taken; the latter will be made
known for each occasion on which price stabilization measures were taken. Exercise of the Greenshoe Option, the timing of
its exercise and the number and type of shares concerned will also be announced promptly in the same manner.
Lock-up Agreement, Limitations on Disposal
In the Underwriting Agreement, the Company agreed with each Underwriter that, during the period commencing on
October 14, 2014 and ending six months after the first day of trading of the Company’s shares on the Frankfurt Stock
Exchange (currently expected to take place on October 24, 2014), to the extent legally permissible, without the prior written
consent of the Joint Global Coordinators, which may not be unreasonably withheld or delayed, the Company, or its
management board or its supervisory board will not, and will not agree to:
•
cause or approve, directly or indirectly, the announcement, execution or implementation of any increase in the
share capital of the Company or a direct or indirect placement of shares of the Company; or
22
•
submit a proposal for a capital increase to any shareholders’ meeting for resolution; or
•
announce to issue, effect or submit a proposal for the issuance of any securities convertible into shares of the
Company, with option rights for shares of the Company; or
•
enter into a transaction or perform any action economically similar to those described in the bullet points
above.
The Company may, however, (i) issue or sell any Shares or other securities to employees and members of executive
bodies of the Company or its Subsidiaries under management participation plans and (ii) pursue any corporate actions
undertaken by the Company for purposes of the entering into any joint venture or the acquisition of any companies, provided
that the parties to the joint venture or acquiring entity to which such shares will be issued agree to comply with the same
restrictions on the disposal of the shares vis-à-vis the Underwriters that apply to the Company.
For the period commencing on October 14, 2014 until the date which falls six months after the first day of trading of
the Company’s shares on the Frankfurt Stock Exchange (currently expected to take place on October 24, 2014), East AcquiCo
undertook to the Joint Global Coordinators, not to:
•
offer, pledge, allot, distribute, sell, contract to sell, sell any option or contract to purchase, purchase any option
to sell, grant any option, right or warrant to purchase, transfer or otherwise dispose of, directly or indirectly any
shares of the Company other than the shares of the Company held by it as of October 14, 2014 (the
“Restricted Shares”), including, but not limited to, the issuance or sale of any securities exchangeable into
shares of the Company;
•
cause or approve, directly or indirectly, the announcement, execution or implementation of any increase in the
share capital of the Company or a direct or indirect placement of shares of the Company (other than as already
disclosed in this Prospectus);
•
propose, directly or indirectly, any increase in the share capital of the Company to any shareholders’ meeting
for resolution, or vote in favor of such a proposed capital increase (other than as already disclosed in this
Prospectus);
•
cause or approve, directly or indirectly, the announcement, execution or proposal of any issuance of financial
instruments constituting options or warrants convertible into shares of the Company; or
•
enter into a transaction or perform any action economically similar to those described above, in particular enter
into any swap or other arrangement that transfers to another, in whole or in part, the economic risk of
ownership of Restricted Shares, whether any such transaction is to be settled by delivery of Restricted Shares,
in cash or otherwise,
in each case without the prior written consent of the Joint Global Coordinators which consent may not be
unreasonably withheld or delayed. The foregoing shall not apply to (i) transfers to affiliates of East AcquiCo (ii) future
pledges granted to one or more of the Joint Global Coordinators or their affiliates having been agreed by the Joint Global
Coordinators and (iii) any transfers of shares to one or more of the Joint Global Coordinators or their affiliates pursuant to
enforcement of any pledge entered into in accordance with (ii), provided in each case that such transferee(s) agree to be bound
by the same lock-up undertaking.
Admission to the Frankfurt Stock Exchange and Commencement of Trading
The Company expects to apply for admission of its shares to trading on the regulated market segment (regulierter
Markt) of the Frankfurt Stock Exchange (Frankfurter Wertpapierbörse) and, simultaneously, to the sub-segment thereof with
additional post-admission obligations (Prime Standard) on or about October 15, 2014. The listing approval is expected to be
announced on October 23, 2014. Trading on the Frankfurt Stock Exchange (Frankfurter Wertpapierbörse) is currently
expected to commence on October 24, 2014.
Designated Sponsors
Both J.P. Morgan and UBS have agreed to assume the function of a designated sponsor of the Company’s shares
traded on the Frankfurt Stock Exchange (Frankfurter Wertpapierbörse) for a period of at least two years. Pursuant to the
designated sponsor agreement expected to be concluded among each of the designated sponsors and the Company, the
designated sponsors will, among other things, place limited buy and sell orders for the Company’s shares in the electronic
trading system of the Frankfurt Stock Exchange (Frankfurter Wertpapierbörse) during regular trading hours. This is intended
to achieve greater liquidity in the market for the Company’s shares.
Interests of Parties Participating in the Offering
In connection with the offering and the admission to trading of the Company’s shares, the Underwriters have
formed a contractual relationship with the Company and the Existing Shareholders.
23
The Underwriters are acting for the Company and the Existing Shareholders on the offering and coordinating the
structuring and execution of the offering. In addition, both J.P. Morgan and UBS have been appointed to act as designated
sponsors for the Company’s shares and COMMERZBANK has been appointed to act as paying agent. Upon successful
implementation of the offering, the Underwriters will receive a commission.
The Existing Shareholders will receive the proceeds of the Existing Shares sold in the offering. East AcquiCo will
receive the proceeds of the shares from the exercise of the Greenshoe Option, if any. Assuming full placement of all Existing
Shares and Over-Allotment Shares at the mid-point of the Price Range and full exercise of the Greenshoe Option, and after
deducting fees and expenses to be paid by the Existing Shareholders in connection with the offering, the proceeds to the
Existing Shareholders from the offering would amount to approximately €322.0 million, or 74.8% of the total net proceeds
from the offering (see “Proceeds of the Offering and Costs of the Offering and Listing”). Of these proceeds to the Existing
Shareholders, approximately 90.4% would accrue to the benefit of East AcquiCo and approximately 9.6% would accrue to the
benefit of Delpheast (see “Information on the Existing Shareholders”).
Some of the Underwriters or their affiliates have, and may from time to time in the future continue to have, business
relations with TLG and the Existing Shareholders (including lending activities) or may perform services for TLG or the
Existing Shareholders in the ordinary course of business.
24
PROCEEDS OF THE OFFERING AND COSTS OF THE OFFERING AND LISTING
At the mid-point of the Price Range, gross proceeds from the offering are expected to total approximately
€451.4 million (assuming placement of all Offer Shares). Assuming expenses related to the offering and commissions payable
to the Underwriters in a total amount of approximately €20.9 million, the total net proceeds from the offering would amount
to approximately €430.5 million at the mid-point of the Price Range.
The Company will receive only the proceeds of the offering resulting from the sale of New Shares. The Company
will not receive any proceeds from the sale of Existing Shares and the shares from the exercise of the Greenshoe Option, if
any.
Assuming that the maximum number of New Shares (9,302,326 shares) is placed, the Company will, at the low end,
mid-point and high end of the Price Range, receive gross proceeds of approximately €100.0 million, €114.0 million and
€127.9 million, respectively, and estimated net proceeds of approximately €94.8 million, €108.5 million and €122.0 million,
respectively. However, the Company reserves the right to only allocate such number of New Shares as to reach its minimum
gross proceeds target of €100 million.
At the low end, mid-point and high end of the Price Range, gross proceeds to the Existing Shareholders (assuming
placement of the maximum number of Existing Shares and assuming full exercise of the Greenshoe Option, i.e. in total
27,547,674 shares) will amount to approximately €296.1 million, €337.4 million and €378.8 million, respectively, and
estimated net proceeds of approximately €281.9 million, €322.0 million and €362.3 million, respectively.
The costs of the Company related to the offering of the Offer Shares and listing of the Company’s entire share
capital are expected to total approximately €8.5 million (excluding underwriting and placement commissions payable to the
Underwriters); thereof approximately €6.1 million will be borne by the Existing Shareholders, which means that the Company
will ultimately bear approximately €2.4 million thereof. The Existing Shareholders will bear the offering and listing related
costs of the Company in the ratio of Existing Shares to Base Shares.
Assuming an offer price at the low end, mid-point and high end of the Price Range and that the maximum number
of Offer Shares is placed (and the Greenshoe Option has been fully exercised) and assuming further payment in full of the
discretionary fee of up to €5.0 million, €5.6 million and €6.3 million, at the low end, mid-point and high end of the Price
Range, respectively; the commission payable to the Underwriters will amount to €10.9 million, €12.4 million and
€13.9 million, respectively. Thereof, €2.8 million, €3.1 million and €3.5 million are attributable to the placement of the New
Shares and will be borne by the Company; of the remaining €8.1 million, €9.3 million and €10.4 million, respectively,
€7.2 million, €8.2 million and €9.1 million, respectively, are attributable to the placement of the Existing Shares and will
directly be borne by the Existing Shareholders and €1.0 million, €1.1 million and €1.3 million, respectively, are attributable to
the placement of the Over-Allotment Shares and will directly be borne by East AcquiCo.
Neither the Company nor the Existing Shareholders nor the Underwriters will charge expenses to investors.
Investors will have to bear customary transaction and handling fees charged by their account-keeping financial institution.
25
REASONS FOR THE OFFERING AND LISTING
The Company intends to list its shares on the regulated market segment (regulierter Markt) of the Frankfurt Stock
Exchange (Frankfurter Wertpapierbörse) and, simultaneously, on the sub-segment thereof with additional post-admission
obligations (Prime Standard) of the Frankfurt Stock Exchange (Frankfurter Wertpapierbörse) to get access to the capital
markets. The Company also intends to pursue the offering to receive the proceeds from the placement of the New Shares.
The Company intends to use the net proceeds of the offering of the New Shares, together with additional debt
financing, to fund future acquisitions. Such acquisitions could include a retail property in Berlin with a potential acquisition
price (including ancillary acquisition costs) of approximately €35 million, for which it is in negotiations with the seller, an
office property in Rostock with a potential acquisition price (including ancillary acquisition costs) of approximately
€16 million, for which it is conducting due diligence, and one or more of the other office and retail properties with an
aggregate fair value of €20 million and €140 million, respectively, which it is currently reviewing in more detail, or other
properties. The balance of the proceeds, if any, will be used for general corporate purposes. For more information on the
Company’s planned acquisitions, see “Management’s Discussion and Analysis of Net Assets, Financial Condition and Results
of Operations—Investments—Investments since June 30, 2014 and Future Investments”.
Assuming that the maximum number of New Shares (9,302,326 shares) is placed, the net proceeds to the Company
are expected to amount to €94.8 million at the low end of the Price Range, to €108.5 million at the mid-point of the Price
Range and to €122.0 million at the high end of the Price Range.
Assuming that the maximum number of Existing Shares is placed and the Greenshoe Option is exercised in full
(which means 27,547,674 shares from the holdings of the Existing Shareholders will be placed), net proceeds to the Existing
Shareholders at the low end of the Price Range are expected to amount to €281.9 million, at the mid-point of the Price Range
are expected to amount to €322.0 million and at the high end of the Price Range are expected to amount to €362.3 million.
The Existing Shareholders will offer their shares to partially divest their stake in the Company and to ensure a sufficient
freefloat and trading liquidity in the Company’s shares.
26
DIVIDEND POLICY; RESULTS AND DIVIDENDS PER SHARE; USE OF PROFITS
General Provisions Relating to Profit Allocation and Dividend Payments
The shareholders’ share of the Company’s profits is determined based on their respective interests in the Company’s
share capital. Being a German stock corporation (Aktiengesellschaft), the distribution of dividends for a given fiscal year, and
the amount and payment date thereof, are resolved by the shareholders’ meeting of the subsequent fiscal year either upon a
joint proposal by the Management Board and the Supervisory Board or upon the Management Board’s or the Supervisory
Board’s proposal. The shareholders’ meeting must be held within the first eight months of each fiscal year.
Dividends may only be distributed from the distributable profit (Bilanzgewinn) of the Company. The distributable
profit is calculated based on the Company’s unconsolidated financial statements prepared in accordance with the accounting
principles of German GAAP. Accounting principles set forth in German GAAP differ from IFRS in material respects.
When determining the distributable profit, the net income or loss for the fiscal year (Jahresüberschuss/-fehlbetrag)
must be adjusted for profit/loss carry forwards (Gewinn-/Verlustvorträge) from the prior fiscal year and releases of or
allocations to reserves. Certain reserves are required to be set up by law, and amounts mandatorily allocated to these reserves
in the given fiscal year must be deducted when calculating the distributable profit. The Management Board must prepare
unconsolidated financial statements (balance sheet, income statement and notes to the financial statements) and a management
report for the previous fiscal year by the statutory deadline and present these to the Supervisory Board and the Company’s
auditors immediately after preparation. At the same time, the Management Board must present to the Supervisory Board a
proposal for the allocation of the Company’s distributable profit pursuant to Section 170 of the German Stock Corporation
Act (Aktiengesetz). According to Section 171 of the German Stock Corporation Act (Aktiengesetz), the Supervisory Board
must review the unconsolidated financial statements, the Management Board’s management report and the proposal for the
allocation of the distributable profit and report to the shareholders’ meeting in writing on the results.
The shareholders’ meeting’s resolution on the allocation of the distributable profit requires a simple majority of
votes to be passed. The shareholders’ meeting may also resolve that the dividends be distributed partially or entirely in kind,
for example as a distribution of treasury shares if held by the Company at that time. Dividends resolved by the shareholders’
meeting are due and payable immediately after the relevant shareholders’ meeting, unless provided otherwise in the dividend
resolution, in compliance with the rules of the respective clearing system. Any dividends not claimed within the past three
years become time-barred. Once the statute of limitations applies, the dividend payment claim passes to the Company. Since
all of the Company’s dividend entitlements are evidenced by one global dividend coupon deposited with Clearstream,
Clearstream transfers the dividends to the shareholders’ custodian banks for crediting to their accounts. German custodian
banks are under the same obligation to distribute the funds to their customers. Shareholders using a custodian bank located
outside Germany must inquire at their respective bank regarding the terms and conditions applicable in their case.
Notifications of any distribution of dividends resolved upon are published in the German Federal Gazette (Bundesanzeiger)
immediately after the shareholders’ meeting. To the extent dividends can be distributed by the Company in accordance with
German GAAP and corresponding decisions are taken, there are no restrictions on shareholder rights to receive dividends.
Generally, withholding tax (Kapitalertragsteuer) is withheld from dividends paid. For more information on the taxation of
dividends, see “Taxation in the Federal Republic of Germany—Taxation of Shareholders—Taxation of Dividend Income” and
“Taxation in the Grand Duchy of Luxembourg—Luxembourg Taxation of Shares of a Non-Resident Company—Withholding
Taxes”.
Dividend Policy and Earnings per Share
The Company intends to pay dividends in the amount of 70-80% of its annual FFO, provided that TLG’s business
performance remains at least stable. Given that the IPO is scheduled to be completed just two months prior to the end of the
current fiscal year, the Company currently plans to pay a dividend in the total amount of €10-15 million for the fiscal year
2014.
On January 2, 2013, the Company as the controlled entity and East AcquiCo as the controlling entity entered into a
domination agreement (Beherrschungsvertrag) effective as of January 1, 2013 (the “Domination Agreement”). Under the
Domination Agreement, the Company was required to carry out its business at the direction of East AcquiCo in accordance
with Section 308 of the German Stock Corporation Act (Aktiengesetz). East AcquiCo was required to cover all losses incurred
by the Company and not covered by retained income during the duration of the Domination Agreement in accordance with
Section 302 of the German Stock Corporation Act (Aktiengesetz). Following the transformation of the Company into a stock
corporation (Aktiengesellschaft) the Domination Agreement was terminated on September 18, 2014.
27
The following table shows the total and per share net income for the fiscal years 2013, 2012 and 2011 attributable to
the Company’s shareholders, as shown in the Company’s audited consolidated financial statements prepared in accordance
with IFRS and the additional requirements of German commercial law pursuant to Section 315a (1) of the German
Commercial Code (Handelsgesetzbuch (HGB)) for the fiscal years 2013 and 2012 and in accordance with German GAAP for
the fiscal year 2011:
2013 2012
IFRS
Consolidated net income for the period attributable to the shareholders of the Company
(audited and in € million) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated net income for the period attributable to the shareholders of the Company per
share (unaudited and in €)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1)
2011
German GAAP
99.1
76.3
18.7
1.91
1.47
0.36
The per share figures are calculated assuming that 52,000,000 shares – the number of shares issued and outstanding as of the date of this
Prospectus but prior to the issuance of the New Shares – were issued and outstanding during the entire fiscal years 2013, 2012 and 2011.
The following distributions of profits or reserves were made to shareholders of the Company during the fiscal years
ended December 31, 2011, 2012 and 2013 and the six-month period ended June 30, 2014:
•
during the fiscal year ended December 31, 2011, a profit distribution in the amount of approximately
€73.7 million was recognized (cash payments to shareholders of €20.0 million were made during the fiscal year
2011 and of approximately €53.7 million were made during the fiscal year 2012);
•
during the fiscal year ended December 31, 2012, a profit distribution in the amount of approximately
€18.4 million from current net income and distributions from capital reserves in the amount of approximately
€11.6 million were made leading to total profit distributions in the amount of €30 million;
•
during the fiscal year ended December 31, 2013, the Company made distributions in the amount of
approximately €325.2 million by assuming the Acquisition Loan (€199.8 million from capital reserves,
€96.4 million from revenue reserves and €29.0 million by way of a distribution of retained earnings and current
net income); and
•
during the six-month period ended June 30, 2014, retained earnings in the amount of approximately
€73.6 million and withdrawals from capital reserves (approximately €158.5 million) and retained earnings
(approximately €0.8 million) were distributed, leading to total distributions to the Existing Shareholders in the
amount of €233.0 million.
28
CAPITALIZATION AND INDEBTEDNESS; STATEMENT ON WORKING CAPITAL
The following tables set forth the consolidated capitalization and indebtedness of TLG as of July 31, 2014 and as
adjusted for the completion of the offering as if the offering had taken place as of July 31, 2014 and not considering any tax
effects. Investors should read these tables in conjunction with “Selected Consolidated Financial Information and Company
Information,” “Management’s Discussion and Analysis of Net Assets, Financial Condition and Results of Operations” and the
condensed interim consolidated financial statements as of and for the six-month period ended June 30, 2014, including the
notes thereto, which are included in this Prospectus beginning on page F-1.
Capitalization
As of July 31,
2014
(in € million)
(unaudited)
As adjusted for
the completion of
the offering*
(in € million)
(unaudited)
Total current debt(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
of which secured(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
of which guaranteed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
of which unguaranteed/unsecured . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total non-current debt(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
of which secured(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
of which guaranteed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
of which unguaranteed/unsecured . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Shareholder’s equity(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Share capital(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Legal reserves(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other reserves(7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
139.6
35.9
—
103.7
805.4
689.6
—
115.8
623.3
52.0
252.8
318.5
139.6
35.9
—
103.7
805.4
689.6
—
115.8
731.8
61.3
352.0
318.5
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,568.3
1,676.8
*
(1)
(2)
(3)
(4)
(5)
(6)
(7)
It is assumed that all New Shares are fully placed at the mid-point of the Price Range and generate net proceeds of €108.5 million as of
July 31, 2014.
However, the Company reserves the right to only allocate such number of New Shares as to reach its minimum gross proceeds target of
€100 million, in which case the net proceeds of the Company would be €13.7 million lower than in case of placing all New Shares at the
mid-point of the Price Range. In this case, total equity attributable to the Company’s would be correspondingly lower.
Referred to as current liabilities in the Company’s IFRS consolidated financial statements.
Security mainly comprises land charges and shares in affiliates.
Referred to as non-current liabilities in the Company’s IFRS consolidated financial statements.
Referred to as equity in the Company’s IFRS consolidated financial statements.
Referred to as subscribed capital in the Company’s IFRS consolidated financial statements. As adjusted as of July 31, 2014 results from
the issuance of 9,302,326 New Shares at a nominal amount of €1.00 per share.
Referred to as capital reserves in the Company’s IFRS consolidated financial statements. As adjusted as of July 31, 2014 results from the
receipt of net proceeds amounting to €108.5 million less €9.3 million included in subscribed capital.
Other reserves include retained earnings and other comprehensive income (OCI).
Indebtedness
As of July 31,
2014
(in € million)
(unaudited)
As adjusted for
the completion of
the offering*
(in € million)
(unaudited)
A. Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
B. Cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
C. Trading securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
0.1
54.0
—
0.1
162.5
—
D. Liquidity (A)+(B)+(C) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
E. Current financial receivables(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
54.1
10.0
162.6
10.0
F. Current Bank debt(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
G. Current portion of non-current debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
H. Other current financial debt(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
37.9
—
12.6
37.9
—
12.6
I. Current financial debt (F)+(G)+(H) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
50.5
50.5
J. Net current financial indebtedness (I)-(E)-(D) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
K. Non-current Bank loans(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
L. Bonds issued . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
M. Other non-current loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(13.6)
689.6
—
—
(122.1)
689.6
—
—
N. Non-current financial indebtedness (K)+(L)+(M) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
689.6
689.6
O. Net financial indebtedness (J)+(N) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
676.0
567.5
29
*
It is assumed that all New Shares are fully placed at the mid-point of the Price Range and generated net proceeds of €108.5 million as of
July 31, 2014, resulting in a respective increase in cash equivalents on an adjusted basis.
However, the Company reserves the right to only allocate such number of New Shares as to reach its minimum gross proceeds target of
€100 million, in which case the net proceeds of the Company would be €13.7 million lower than in case of placing all New Shares at the
mid-point of the Price Range. In this case, the amount initially held as cash equivalents would be correspondingly lower.
(1)
Current financial receivables are comprised of trade receivables as referred to in the Company’s IFRS consolidated financial statements.
(2)
Referred to as current liabilities due to financial institutions in the Company’s IFRS consolidated financial statements.
(3)
Other current financial debt is referred to as trade payables in the Company’s IFRS consolidated financial statements.
(4)
Referred to as non-current liabilities due to financial institutions in the Company’s IFRS consolidated financial statements.
As of July 31, 2014, TLG’s obligations from land charges amounted to €837.2 million. As of the same date, there
were no contingent liabilities under IFRS.
Statement on Working Capital
The Company is of the opinion that TLG is in a position to meet the payment obligations that become due within at
least the next twelve months from the date of this Prospectus.
30
DILUTION
Equity attributable to shareholders of the Company amounted to €621.5 million as of June 30, 2014, and would
amount to €11.95 per share based on 52,000,000 outstanding shares of the Company immediately before the offering.
The dilutive effect of the offering is illustrated in the table below demonstrating the amount by which the offer price
at the low end, mid-point and high end of the Price Range exceeds the equity attributable to shareholders per share after
completion of the offering assuming the below-described steps of the offering had taken place on June 30, 2014. In this
respect, the equity attributable to shareholders as of June 30, 2014 is adjusted for the effects of the offering, assuming (i) the
execution of the IPO Capital Increase in the maximum number of offered New Shares and (ii) an increase in the equity
attributable to shareholders at the low end, mid-point and high end of the Price Range by €94.8 million, €108.5 million and
€122.0 million, respectively. The assumed increase is based on the expected net proceeds not considering any tax effects. The
adjusted equity attributable to shareholders is expressed as a per share figure, assuming 61,302,326 outstanding shares of the
Company upon completion of the offering (this per share figure being referred to as the “Post-IPO Equity attributable to
Shareholders per Share”).
As of June 30, 2014
Low End Mid-Point High End
Price per share (in €) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity attributable to shareholders per share (based on 52,000,000 outstanding shares of
the Company before the offering) (net book value)(1) (in €) . . . . . . . . . . . . . . . . . . . . . . .
Post-IPO Equity attributable to Shareholders per Share (net book value)(1) (in €) . . . . . . . .
Amount by which the price per share exceeds the Post-IPO Equity attributable to
Shareholders per Share (immediate dilution per share) (in €) . . . . . . . . . . . . . . . . . . . . . .
Immediate dilution (in %) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1)
10.75
12.25
13.75
11.95
11.68
11.95
11.91
11.95
12.13
(0.93)
(8.7)
0.34
2.8
1.62
11.8
Net book value refers to the sum of the Company’s total assets minus the sum of its total liabilities and non-controlling interest.
Each of the New Shares will have the same voting rights as the Company’s existing shares. Prior to the offering, the
Existing Shareholders held 100% of the voting rights. Upon completion of the offering (including exercise of the Greenshoe
Option in full), the voting rights held by the Existing Shareholders would amount to 39.9%.
31
SELECTED CONSOLIDATED FINANCIAL INFORMATION AND COMPANY INFORMATION
The financial information contained in the following tables is taken or derived from the audited consolidated
financial statements of the Company as of and for the fiscal years ended December 31, 2011, 2012 and 2013, the unaudited
condensed interim consolidated financial statements of the Company as of and for the six-month period ended June 30, 2014
and the Company’s internal reporting system. The consolidated financial statements of the Company as of and for the fiscal
year ended December 31, 2013 were the Company’s first financial statements prepared in accordance with IFRS and the
additional requirements of German commercial law pursuant to Section 315a (1) of the German Commercial Code
(Handelsgesetzbuch (HGB)). The consolidated financial statements of the Company as of and for the fiscal years ended
December 31, 2011 and 2012 have been prepared in accordance with German GAAP. IFRS and German GAAP differ in
material ways and are thus not comparable (e.g., property held for generating rental income or for capital appreciation is
classified as investment property in accordance with IAS 40 and measured at fair value under IFRS while it is measured at
cost less depreciation under German GAAP). Until December 31, 2011, TLG’s portfolio consisted of commercial and
residential properties. With effect from January 1, 2012, TLG’s residential portfolio was spun-off to TLG WOHNEN GmbH, a
new company specifically established for this purpose, whose sole shareholder was the Federal Republic of Germany. Due to
this spin-off, the Company’s consolidated financial statements prepared for the fiscal years ended December 31, 2011 and
2012 under German GAAP are not fully comparable given that the residential portfolio represented a significant share of
TLG’s overall portfolio and business in 2011. The unaudited condensed interim consolidated financial statements of the
Company as of and for the six-month period ended June 30, 2014 have been prepared in accordance with IFRS on interim
financial reporting (IAS 34). Additional information included in this Prospectus has been taken or derived from the audited
unconsolidated financial statements of the Company for the fiscal year ended December 31, 2013, which were prepared in
accordance with German GAAP. Due to the abovementioned switch of the accounting principles for the consolidated
financial statements from German GAAP to IFRS, for purposes of the comparison of consolidated financial data as of and for
the fiscal years ended December 31, 2011 and December 31, 2012, consolidated financial data based on German GAAP are
used, whereas for a comparison of consolidated financial data as of and for the fiscal years ended December 31, 2012 and
December 31, 2013 as well as the six month-periods ended June 30, 2013 and June 30, 2014, consolidated financial data
based on IFRS are used.
E&Y has audited the Company’s consolidated financial statements as of and for the fiscal years ended
December 31, 2011, 2012 and 2013, and the unconsolidated financial statements for the fiscal year ended December 31,
2013, and issued in each case an unqualified auditor’s report thereon.
Where financial data in the following tables are labelled “audited”, this means that it has been taken from the
audited financial statements mentioned above. The label “unaudited” is used in the following tables to indicate financial data
that have not been taken from the audited financial statements mentioned above but were taken either from the Company’s
unaudited condensed interim consolidated financial statements or the Company’s internal reporting system, or calculated
figures from the abovementioned sources.
All of the financial data presented in the text and tables below are shown in millions of euro (in € million), except as
otherwise stated. Certain financial data (including percentages) in the following tables have been rounded according to
established commercial standards. As a result, the aggregate amounts (sum totals or sub-totals or differences or if numbers
are put in relation) in the following tables may not correspond in all cases to the aggregated amounts of the underlying
(unrounded) figures appearing elsewhere in this Prospectus. Furthermore, in those tables, these rounded figures may not add
up exactly to the totals contained in those tables. Financial information presented in parentheses denotes the negative of such
number presented. In respect of financial data set out in this Prospectus, a dash (“—”) signifies that the relevant figure is not
available, while a zero (“0.0”) signifies that the relevant figure is available but has been rounded to zero.
The following selected financial information should be read together with the section “Management’s Discussion
and Analysis of Net Assets, Financial Condition and Results of Operations”, the consolidated financial statements including
the related notes contained in this Prospectus and additional financial information contained elsewhere in this Prospectus.
32
Selected Consolidated Financial Data Prepared in Accordance with IFRS
Consolidated Statement of Comprehensive Income Data
For the year ended
December 31,
2012
2013
(audited)
(in € million)
For the six-month
period ended
June 30,
2013
2014
(unaudited)
(in € million)
Net operating income from letting activities . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income from letting activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expenses related to letting activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Result from the remeasurement of investment property . . . . . . . . . . . . . . . . . . . .
Result from the disposal of investment property . . . . . . . . . . . . . . . . . . . . . . . . . .
Result from the disposal of real estate inventory . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from real estate inventory disposed . . . . . . . . . . . . . . . . . . . . . . . .
Book value of real estate inventory disposed . . . . . . . . . . . . . . . . . . . . . . . . .
Other operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Personnel expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
97.1
138.8
(41.6)
53.1
(0.0)
27.4
77.5
(50.2)
9.7
(18.9)
(1.6)
(8.3)
106.3
141.3
(35.1)
72.2
0.5
7.8
21.4
(13.6)
18.7
(23.4)
(1.5)
(7.8)
52.7
69.6
(16.9)
34.4
0.2
5.5
14.3
(8.8)
3.9
(15.4)
(0.7)
(2.3)
50.0
66.9
(16.9)
51.3
0.5
2.3
5.9
(3.6)
3.6
(7.7)
(0.7)
(2.4)
Earnings before interest and taxes (EBIT) . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income from joint ventures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Financial income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Financial expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gain/loss from the remeasurement of derivatives . . . . . . . . . . . . . . . . . . . . . . . . .
158.4
12.9
0.9
(22.5)
(10.0)
172.8
2.1
0.7
(36.0)
6.9
78.3
2.1
0.4
(18.1)
5.4
96.9
0.0
0.4
(12.1)
(2.0)
Earnings before taxes (EBT) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
139.8
(63.5)
146.4
(47.3)
68.1
(22.0)
83.2
(25.8)
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Actuarial gains and losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
thereof recycling
Hedge accounting reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
76.3
99.1
46.1
57.4
(1.0)
(0.0)
—
—
—
(0.1)
—
(4.7)
Total comprehensive income for the period . . . . . . . . . . . . . . . . . . . . . . . . . . .
75.3
33
99.0
46.1
52.7
Consolidated Statement of Financial Position Data
As of
December 31,
2012
2013
(audited)
(in € million)
As of June 30,
2014
(unaudited)
(in € million)
Non-current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investment property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Advance payments on investment property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investment in joint ventures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other non-current financial assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trade receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Receivables from income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Financial instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other current financial assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Receivables and other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Assets classified as held for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,615.2
1,511.7
3.0
18.4
1.5
69.1
0.1
6.9
4.5
104.2
22.3
9.6
0.2
0.0
10.0
1.6
60.5
0.0
1,448.1
1,414.7
2.7
17.8
0.9
0.0
0.1
8.4
3.5
187.6
13.4
11.6
0.2
0.0
5.0
0.7
138.9
17.8
1,456.6
1,423.0
2.5
16.4
0.7
0.0
0.1
8.4
5.4
99.3
13.3
13.7
0.3
0.0
3.2
2.9
24.5
41.6
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,719.4
1,635.7
1,555.9
Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Subscribed capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Capital reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other comprehensive income (OCI) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-current liabilities due to financial institutions . . . . . . . . . . . . . . . . . . . . . . .
Pension provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-current financial instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other non-current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current liabilities due to financial institutions . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trade payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other current provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current financial instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,006.7
52.0
151.5
804.3
(1.0)
712.6
508.6
392.9
6.9
25.3
4.3
79.3
204.0
87.2
29.8
22.2
12.7
18.2
34.1
Total equity and liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,719.4
801.0
52.0
410.2
339.9
(1.2)
834.7
630.2
513.0
6.9
18.8
3.4
88.1
204.4
113.2
14.6
16.2
44.3
0.0
16.1
1,635.7
621.5
52.0
252.5
322.9
(5.9)
934.4
787.2
672.4
6.8
8.7
2.9
96.3
147.3
55.6
12.2
12.3
57.3
0.0
9.9
1,555.9
For the year ended
December 31,
2012
2013
(audited)
(in € million)
For the six-month
period ended
June 30,
2013
2014
(unaudited)
(in € million)
Cash flow from operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest received . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income taxes paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash flow from operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash flow from investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash flow from financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
162.9
0.9
(21.7)
(7.7)
134.3
(79.0)
(28.4)
76.1
0.7
(57.0)
(5.9)
13.8
220.9
(156.3)
26.5
0.4
(33.9)
(0.6)
(7.6)
55.1
(37.1)
33.4
0.4
(35.6)
(4.5)
(6.3)
20.3
(128.4)
Change in cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
26.9
78.4
10.5
(114.4)
34
Additional Key Performance Indicators
The Company believes that the key performance indicators described in this section constitute the most important
indicators for measuring the operating and financial performance of TLG’s business.
TLG expects the key performance indicators rental income, net operating income from letting activities, EBITDA,
Adjusted EBITDA, FFO, AFFO, Equity-Ratio, Net LTV-Ratio, interest coverage ratio, EPRA NAV and EPRA Vacancy Rate
(the “Key Performance Indicators”) to be of use for potential investors. TLG believes that the Key Performance Indicators
are useful in evaluating TLG’s operating performance, the net value of TLG’s portfolio, the level of its indebtedness and of
cash flows generated by TLG’s business, because a number of companies, in particular companies in the real estate sector,
also publish these figures as key performance indicators.
However, the Key Performance Indicators are not recognized as measures under IFRS and should not be considered
as substitutes for figures on net assets, results before taxes, net earnings, cash flow from operating activities or other data from
the consolidated statement of comprehensive income, the consolidated cash flow statement or the consolidated statement of
financial position, as determined in accordance with IFRS, or as measures of profitability or liquidity. The Key Performance
Indicators neither necessarily indicate whether cash flow will be sufficient or available for TLG’s cash requirements, nor
whether any such measure is indicative of TLG’s historical operating results. The Key Performance Indicators are not meant
to be indicative of future results. Because not all companies calculate these Key Performance Indicators in the same way,
TLG’s presentation of the Key Performance Indicators is not necessarily comparable with similarly-titled measures used by
other companies.
Performance and Profitability
The following table provides information on TLG’s key performance and profitability measures:
For the year ended
December 31,
2012
2013
Rental income(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net operating income from letting activities(2) . . . . . . . . . . . .
EBITDA(3)(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjusted EBITDA(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
FFO(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
FFO (per share and in €)(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . .
AFFO(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
AFFO (per share and in €)(5) . . . . . . . . . . . . . . . . . . . . . . . . . .
116.1
97.1
106.9
79.5
52.6
1.01
40.0
0.77
118.3
106.3
102.0
90.4
46.1
0.89
40.4
0.78
For the six-month
period ended
June 30,
2013
2014
59.2
52.7
44.6
45.8
24.4
0.47
22.5
0.43
57.0
50.0
46.3
42.0
26.0
0.50
23.8
0.46
(1)
Rental income refers to income from letting activities without income from recharged utilities and other operating costs and income
from other goods and services as reflected in the consolidated statement of comprehensive income for the respective period. Audited for
the years ended December 31, 2012 and 2013.
(2)
Net operating income from letting activities refers to income from letting activities less expenses related to letting activities, all as
reflected in the consolidated statement of comprehensive income for the respective period. Audited for the years ended December 31,
2012 and 2013.
(3)
Earnings before interest, taxes, depreciation and amortization (“EBITDA”) is defined as consolidated net income or loss for the period
before income taxes, interest result, income from joint ventures, gain/loss from the remeasurement of derivatives, depreciation as well as
before the result from the remeasurement of investment property, all as reflected in the Company’s respective consolidated financial
statements.
(4)
“Adjusted EBITDA” is defined as EBITDA adjusted for result from the disposal of investment property, result from the disposal of real
estate inventory and one-off items.
35
The following table shows the calculation of EBITDA and Adjusted EBITDA, each starting from EBIT:
For the year ended
December 31,
2012
2013
(audited, unless
(in € million)
158.4
172.8
1.6
1.5
(53.1)
(72.2)
106.9
102.0
0.0
(0.5)
(27.4)
(7.8)
Earnings before interest and taxes (EBIT) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Result from the remeasurement of investment property . . . . . . . . . . . . . . . . . . . . . . . . .
EBITDA (unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Result from the disposal of investment property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Result from the disposal of real estate inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(5)
For the six-month
period ended
June 30,
2013
2014
(unaudited)
(in € million)
78.3
0.7
(34.4)
44.6
(0.2)
(5.5)
96.9
0.7
(51.3)
46.3
(0.5)
(2.3)
Severance Packages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reversal of a provision for real estate transfer taxes in connection with the spin-off of
TLG WOHNEN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reversal of liabilities and provisions from the pass-through of purchase prices and
accrued interest (unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reversal of a provision for subsidy repayment risk . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Share based payment obligation (bonus agreements) . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
6.9
6.9
—
—
(5.4)
—
—
—
—
—
(4.8)
—
—
—
—
—
—
(2.3)
0.8
Adjusted EBITDA (unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
79.5
90.4
45.8
42.0
Funds from operations post tax (excluding result from disposals) (“FFO”) is a measure of cash generation for real estate companies. The
Company defines FFO as net income/loss for the period adjusted for the result from the disposal of investment property, the result from
the disposal of real estate inventory, the result from the remeasurement of investment property, the gain/loss from the remeasurement of
derivatives and other effects, as well as deferred taxes and the tax effects from the result of the disposal of investment property and the
disposal of real estate inventory, as well as the tax effects from the settlement of interest rate swaps.
“AFFO” represents FFO less capex.
The following table shows the calculation of FFO and AFFO for the periods shown:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Result from the disposal of investment property . . . . . . . . . . . . . . . . . . . . . . . .
Result from the disposal of real estate inventory . . . . . . . . . . . . . . . . . . . . . . . .
Result from the remeasurement of investment property . . . . . . . . . . . . . . . . . .
Gain/loss from the remeasurement of derivatives . . . . . . . . . . . . . . . . . . . . . . .
Other effects(a) (unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
periods(b) (unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustment for tax effects from the result of the disposal of investment
property and the disposal of real estate inventory as well as tax effects from
the settlement of interest rate swaps(c) (unaudited) . . . . . . . . . . . . . . . . . . . .
FFO (unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
FFO (per share(d) and in €) (unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
FFO (unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Capex(e) (unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
AFFO (unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
AFFO (per share(d) and in €) (unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . .
(a)
For the year ended
December 31,
2012
2013
specified)
(in € million)
76.3
99.1
0.0
(0.5)
(27.4)
(7.8)
(53.1)
(72.2)
10.0
(6.9)
(15.4)
(6.8)
59.0
9.8
For the six-month
period ended
June 30,
2013
2014
(unaudited)
(in € million)
46.1
(0.2)
(5.5)
(34.4)
(5.4)
4.2
5.5
57.4
(0.5)
(2.3)
(51.3)
2.0
(1.7)
8.3
N/A
N/A
0.6
9.5
3.2
52.6
1.01
52.6
(12.6)
40.0
0.77
31.4
46.1
0.89
46.1
(5.7)
40.4
0.78
13.6
24.4
0.47
24.4
(1.9)
22.5
0.43
4.6
26.0
0.50
26.0
(2.2)
23.8
0.46
(i)
Depreciation of owner-occupied properties (IAS 16) of €0.3 million for the fiscal year ended December 31, 2012,
€0.3 million for the fiscal year ended December 31, 2013, €0.1 million for the six-month period ended June 30, 2013 and
€0.1 million for the six-month period ended June 30, 2014;
(ii)
ended June 30, 2014;
(iii) Income from the 33% interest in the joint venture Altmarkt-Galerie Dresden KG (“AGD”), sold in 2013, of €12.9 million for
the fiscal year ended December 31, 2012, €2.1 million for the fiscal year ended December 31, 2013 and €2.1 million for the
36
(iv) Personnel expenses for severance packages in connection with TLG’s reorganization in the amount of €6.9 million for the
fiscal year ended December 31, 2013 and €6.9 million for the six-month period ended June 30, 2013 as well as share based
payment expenses of €0.8 million for the six-month period ended June 30, 2014;
(v)
Income from the reversal of provisions for real estate transfer tax, provided for in connection with the spin-off of TLG’s
residential properties to TLG WOHNEN GmbH in 2012, of €5.4 million for the fiscal year ended December 31, 2013; and
(vi) Income from the reversal of liabilities and provisions in connection with purchase price pass-through obligations and accrued
interest which resulted from TLG’s obligation to pass on parts of the purchase price received for the sale of properties which
were co-owned by TLG, BEDIG AG i.L. and the state of Berlin in the amount of €4.8 million for the fiscal year ended
December 31, 2013 and income from reversal of a provision for the subsidy repayment risk of €2.3 million for the six-month
period ended June 30, 2014.
(b)
The current income taxes shown in the six-month periods ended June 30, 2013 in the amount of €16.5 million and 2014 in the
amount of €17.5 million were calculated by using the integral method in accordance with IAS 34.30. Due to this calculation
method a correction in the amount of €0.6 million for the first half year of 2013 and in the amount of €9.5 million for the first half
year of 2014 is made to show the actually lower current tax expenses for the respective six-month period in the amount of €15.9
million for 2013 and of €8.0 million for 2014.
(c)
Adjustments of the actual tax effect on current income taxes from the result of the disposal of investment property and real estate
inventory amounted to €3.2 million for the fiscal year ended December 31, 2012, €36.8 million for the fiscal year ended
December 31, 2013, €13.6 million for the six-month period ended June 30, 2013 and €10.9 million for the six-month period ended
June 30, 2014.
Adjustments of the reverse effect from the tax effective settlement of interest rate swaps (originally decreasing tax expense)
amounted to €5.5 million for the fiscal year ended December 31, 2013 and €6.4 million for the six-month period ended June 30,
2014.
(d)
(e)
Capex refers to capital expenditure excluding cost of acquisitions of properties, cost of project developments and maintenance
expenses.
Financing and Leverage
As of and for the year ended
December 31,
2012
2013
(unaudited)
Equity Ratio(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net LTV-Ratio(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest coverage ratio (as multiple)(3) . . . . . . . . . . . . . . .
58.5
27.0
3.7x
As of and for the six-month
period ended June 30,
2014
(unaudited)
49.0
33.3
2.6x
39.9
47.0
3.6x
(1)
The equity ratio is the ratio of total equity (attributable to shareholders) to total equity and liabilities (the “Equity Ratio”). As of
December 31, 2012 the Equity Ratio is derived from dividing equity in an amount of €1,006.7 million by the total equity and liabilities
in an amount of €1,719.4 million. As of December 31, 2013 the Equity Ratio is derived from dividing equity in an amount of
€801.0 million by the total equity and liabilities in an amount of €1,635.7 million. As of June 30, 2014 the Equity Ratio is derived from
dividing equity in an amount of €621.5 million by the total equity and liabilities in an amount of €1,555.9 million.
(2)
The net loan to value ratio is the ratio of net debt (sum of non-current and current liabilities due to financial institutions less cash and
cash equivalents), to real estate (sum of investment property, owner-occupied properties, prepayments for investment properties, assets
classified as held for sale and inventories) (the “Net LTV-Ratio”).
The following table shows the calculation of the Net LTV-Ratio as of the dates shown:
Non-current liabilities due to financial institutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current liabilities due to financial institutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(3)
As of December 31,
2012
2013
(audited and in
€ million, unless
392.9
513.0
87.2
113.2
(60.5)
(138.9)
As of June 30,
2014
(unaudited)
672.4
55.6
(24.5)
Net debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
419.5
487.3
703.5
Investment property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Owner-occupied properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepayments for investment properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Assets classified as held for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,511.7
16.7
3.0
0.0
22.3
1,414.7
16.5
2.7
17.8
13.4
1,423.0
15.1
2.5
41.6
13.3
Real estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,553.7
1,465.1
1,495.5
Net loan to value (Net LTV) (in %) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
27.0
33.3
47.0
The interest coverage ratio is the ratio of Adjusted EBITDA to interest result for the respective period and may not correspond to
similiar terms used for financial covenants in TLG’s credit agreements. The interest coverage ratio for the fiscal year ended
December 31, 2012 is derived from dividing the Adjusted EBITDA of €79.5 million by the interest result of €21.6 million. The interest
coverage ratio for the fiscal year ended December 31, 2013 is derived from dividing the Adjusted EBITDA of €90.4 million by the
interest result of €35.3 million. The interest coverage ratio for the six-month period ended June 30, 2014 is derived from dividing the
Adjusted EBITDA of €42.0 million by the interest result of €11.7 million.
37
EPRA Key Performance Indicators
As of December 31,
2012
2013
(audited and in
€ million, unless
Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fair value remeasurement of other non-current assets (IAS 16)(1)
(unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fair value remeasurement of properties in inventories(2) (unaudited) . . . .
Fair values of financial derivatives (unaudited) . . . . . . . . . . . . . . . . . . . . .
Deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
EPRA NAV(3) (unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
EPRA NAV (per share and in €)(4) (unaudited) . . . . . . . . . . . . . . . . . . .
EPRA Vacancy Rate (in %)(5) (unaudited) . . . . . . . . . . . . . . . . . . . . . . .
As of June 30,
2014
(unaudited)
1,006.7
801.0
621.5
2.1
4.6
43.4
(4.5)
79.3
1,131.7
21.76
8.7
3.8
5.3
18.8
(3.5)
88.1
913.5
17.57
5.1
2.7
5.1
8.7
(5.4)
96.3
728.9
14.02
5.0
(1)
Fair value remeasurement of other non-current assets (IAS 16) means the surplus arising from the remeasurement at fair value of
owner-occupied properties, which are included in the consolidated statement of financial position at the lower of cost less any
accumulated depreciation and impairments and fair value.
(2)
Fair value remeasurement of properties in inventories means the surplus arising from the remeasurement at fair value of trading
properties, which are recognized under IFRS at the lower of cost and net realizable value and recognized under inventories as stated in
the consolidated statement of financial position.
(3)
EPRA NAV is calculated in accordance with the definition recommended by the European Public Real Estate Association (the
“EPRA”) and used as an indicator of TLG’s long-term equity and is calculated based on equity (i) plus fair value remeasurement of
other non-current assets (IAS 16) and fair value remeasurement of properties in inventories and (ii) excluding the fair values of financial
derivatives, deferred tax assets and deferred tax liabilities (the “EPRA NAV”).
(4)
(5)
The EPRA vacancy rate is the estimated rental value (ERV) of vacant space divided by the estimated rental value of the whole portfolio
(“EPRA Vacancy Rate”).
Selected Consolidated Financial Data Prepared in Accordance with German GAAP
For the
year ended
December 31,
2011
2012
(audited, unless
(in € million)
Consolidated Income Statement Data
Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Result from ordinary activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated net income for the financial year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
247.4
52.0
18.7
219.7
7.1
2.5
As of
December 31,
2011
2012
(audited, unless
(in € million)
Consolidated Balance Sheet Data
Fixed assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current assets (unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,795.9
108.5
7.1
1,339.2
104.6
7.3
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,911.5
1,451.1
Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Negative consolidation difference . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Special reserve for investment grants and subsidies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
962.7
7.9
35.8
92.2
812.3
0.6
805.3
7.0
16.4
89.2
533.2
0.1
Total equity and liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,911.5
1,451.1
38
For the
year ended
December 31,
2011
2012
(audited, unless
(in € million)
Cash flows from operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash flows from investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash flows from financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
39
124.3 142.5
(115.9) (86.6)
19.2 (28.4)
MANAGEMENT’S DISCUSSION AND ANALYSIS OF NET ASSETS, FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Overview
TLG believes it is a leading commercial real estate company for Berlin and eastern Germany. As of June 30, 2014,
TLG’s portfolio comprised a total of 509 properties with an aggregate fair value of €1,510 million. The following table
provides information about TLG’s overall portfolio which it classifies into two categories, core and non-core:
Core
Fair value (in € million)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
IFRS carrying amount (in € million)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Annualized in-place rent (in € million)(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Number of properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total lettable area (in thousand sqm)(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
EPRA Vacancy Rate (in %)(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
WALT (in years)(7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
In-place rent yield (in %)(8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
As of June 30, 2014
Non-core(1)
Total
(unaudited)
1,338.9
1,327.4
99.4
321
900.1
4.0
8.0
7.5
170.8
165.4
14.5
188
439.2
12.2
5.5
8.6
1,509.7
1,492.8
113.9
509
1,339.3
5.0
7.7
7.6
Note: Presentation Core Portfolio and non-core portfolio based on classification as of June 30, 2014.
(1)
Between June 30, 2014 and September 15, 2014, TLG sold 28 properties with an aggregate fair value of €36.9 million. Furthermore, as
of September 15, 2014, it has signed agreements to sell 20 additional properties with an aggregate fair value of €33.7 million. However,
the buyer of one property that TLG had agreed to sell for approximately €23.9 million may have the right to withdraw from the purchase
agreement or to considerably reduce the purchase price, and in that case TLG would likely incur a significant non-cash loss.
(2)
The difference between fair value of the portfolio and carrying amount under IFRS of €16.9 million is primarily due to rent incentives
which are separately presented according to SIC-15 (€8.8 million) and the lower carrying amount of owner-occupied properties
(€2.7 million) and inventories (€5.1 million), neither of which is reported at fair value on the consolidated statement of financial
position.
Savills prepared the Valuation Report for 469 properties in TLG’s portfolio and has assessed the aggregate fair value of these properties
with €1,450 million as of June 30, 2014. The difference between the number and the value of the properties appraised by Savills to
TLG’s total portfolio of 509 properties with an aggregate fair value of €1,510 million related to 40 properties with an aggregate fair
value of €60 million, which were not valued by Savills because for 27 of these properties with an aggregate fair value of €58 million sale
and purchase agreements had already been signed as of June 30, 2014. Of the remaining 13 properties, ten properties with an aggregate
fair value of €2 million were accounted for under inventories and TLG plans to sell these properties. TLG did not attribute any value to
the other three properties.
(3)
Of the IFRS carrying amount, €1,423.0 million are attributable to investment property, €15.1 million to owner-occupied properties,
€41.6 million to assets classified as held for sale, €13.3 million to inventories and negative €0.3 million to provisions.
(4)
Annualized in-place rent is calculated based on contracted rents as of June 30, 2014, without deduction for any applicable rent free
periods, multiplied by twelve. In-place rent is not an IFRS measure. Since June 30, 2014, TLG’s contracted rents have been decreased
by terminations and expirations of lease agreements as well as the closing of disposals and increased by new lease agreements and the
closing of acquisitions.
Adjusting for the net effect of these changes as well as for acquisitions and disposals not yet closed, TLG’s annualized in-place rent as
of September 15, 2014 amounted to €117.8 million.
(5)
Excluding parking space and open space.
(6)
The EPRA Vacancy Rate is the estimated market rental value of vacant space divided by the estimated market rental value of the whole
portfolio.
(7)
WALT refers to the weighted average lease term, i.e., the remaining average contractual lease term for unexpired leases with a
contractually fixed maturity.
(8)
In-place rent yield is calculated by dividing annualized in-place rent (including €1.2 million rent from owner-occupied office properties)
by fair value.
40
TLG’s Core Portfolio which consists of properties it intends to hold for the long term, comprises of 321 office, retail
and hotel properties with an aggregate fair value of €1,338.9 million (as of June 30, 2014) located in Berlin and eastern
Germany (the “Core Portfolio”). The Company believes that these office, retail and hotel properties are located in
particularly attractive macro- and/or micro-locations and will provide attractive returns. With a weighted average lease term
for leases with a contractually fixed maturity (“WALT”) of 8.0 years and an EPRA Vacancy Rate of just 4.0% (both as of
June 30, 2014), TLG believes that its Core Portfolio is positioned to deliver stable cash flows in the foreseeable future. The
following table provides information about TLG’s Core Portfolio, which is further classified into office, retail and hotel
properties as follows:
As of June 30, 2014
Office Retail Hotel
(unaudited)
Fair value (in € million)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
IFRS carrying amount (in € million) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Annualized in-place rent (in € million)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Number of properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total lettable area (in thousand sqm)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
EPRA Vacancy Rate (in %)(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
WALT (in years)(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
In-place rent yield (in %)(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
476.5
473.5
32.2
45
338.9
9.2
5.7
7.0
667.0
666.7
54.9
271
485.3
1.0
7.3
8.2
195.4
187.2
12.4
5
75.9
1.7
16.7
6.3
(1)
The difference between fair value of the Core Portfolio and carrying amount under IFRS of €11.5 million is primarily due to rent
incentives which are separately presented according to SIC-15 (€8.8 million) and the lower carrying amount of owner-occupied
properties (€2.7 million), neither of which is reported at fair value on the consolidated statement of financial position.
(2)
by terminations and expirations of lease agreements as well as the closing of disposals and increased by new lease agreements and the
closing of acquisitions.
(3)
(4)
The EPRA Vacancy Rate is the estimated market rental value of vacant space divided by the estimated market rental value of the whole
portfolio.
(5)
(6)
In-place rent yield is calculated by dividing annualized in-place rent (including €1.2 million rent from owner-occupied office properties)
by fair value.
During the six-month period ended June 30, 2014, TLG generated rental income of €57.0 million and net operating
income from letting activities of €50.0 million, resulting in a net operating income margin from letting activities (net
operating income from letting activities as a percentage of rental income) of 87.7% and for the fiscal year ended
December 31, 2013, rental income of €118.3 million and net operating income from letting activities of €106.3 million,
resulting in a net operating income margin (net operating income from letting activities as a percentage of rental income) from
letting activities of 89.9%. With a Net LTV-Ratio of 47.0% (as of June 30, 2014), TLG considers its financing structure to be
particularly sound and in line with its targeted long-term Net LTV-Ratio of approximately 45-50%.
Historical Background
Disposal of TLG WOHNEN GmbH and Focus on Core Portfolio
Until December 31, 2011, TLG’s portfolio consisted of commercial and residential properties. With effect from
January 1, 2012, TLG’s residential portfolio was spun-off to TLG WOHNEN GmbH, a new company specifically established
for this purpose, whose sole shareholder was the Federal Republic of Germany. Due to this spin-off, the Company’s
consolidated financial statements prepared for the fiscal years ended December 31, 2011 and 2012 under German GAAP are
not directly comparable given that the residential portfolio represented a significant share of TLG’s overall portfolio and
business in 2011.
In connection with the spin-off of TLG’s residential property portfolio, TLG reviewed the strategic scope of its
commercial real estate portfolio, which consisted of office, retail, hotel, service and business properties as well as
undeveloped land for project developments. As a result, TLG identified office, retail and hotel properties located in attractive
macro- and/or micro-locations in Berlin and eastern Germany as strategically “core”. The properties that did not strategically
fit due to their use or due to their macro-/micro-location, were classified as “non-core”. TLG also classified undeveloped land
as non-core. The Company included non-core properties with an aggregate book value of €72.7 million in inventories in its
opening balance sheet prepared in accordance with IFRS as of January 1, 2012. Except for the properties recognized in
inventories and those used by TLG itself which are recognized under property, plant and equipment, all other properties were
41
included in investment property. Since then, TLG has continuously reviewed its portfolio and has from time to time classified
additional properties as non-core, which the Company continues to carry at fair value on its balance sheet. TLG has disposed
of most of the properties accounted for in inventories as well as additional properties from its investment portfolio that it
classified as non-core. TLG intends to dispose of its remaining non-core properties in the medium term.
Key Factors Influencing TLG’s Portfolio, Results of Operations and the Comparability of Financial Information
TLG believes that the operating and accounting factors discussed below have contributed to the development of its
portfolio and results of operations and/or have affected the comparability of the financial information for the periods covered
by the financial information presented in this Prospectus.
Operating Factors
Rental Income
Rental income is affected by rent levels, total lettable area and the vacancy rate.
Local Rent Levels
Local rent levels are influenced by numerous demographic, economic and other factors. Given TLG’s portfolio mix
of mainly office, retail and hotel properties, the rent levels relevant for TLG are generally affected by the demand for office,
retail and hotel space in the respective real estate markets in Berlin and eastern Germany, where TLG’s entire portfolio is
located. The demand for office, retail and hotel space in these regional markets is, among other things, affected by population
growth, economic growth, employment, purchasing power, development of tourism and inflation. For more information, see
“Markets and Competition”. Other factors that can influence rent levels and demand for office, retail and hotel space in the
regional markets relevant for TLG’s business include the micro-location, quality, age of the property and mix of tenants of the
particular properties. General legal and tax conditions as well as the availability and conditions of equity and/or debt financing
also affect local rent levels. Lease agreements usually have longer terms so that changes in local rent levels affect only those
lease agreements, which are up for renewal or are newly concluded.
The table below provides information on the average monthly rent per sqm for TLG’s portfolio excluding imputed
rent (kalkulatorische Miete) for space used by TLG.
As of December 31,
2011(1)
2012 2013
(unaudited)
(in €)
Core Portfolio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Retail . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Hotel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-core portfolio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9.48
8.78
9.34
14.78
4.45
Total(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7.28
9.55 9.71
8.93 8.95
9.38 9.54
14.93 13.74
4.50 3.69
7.61
7.92
As of
June 30,
2014
(unaudited)
(in €)
9.76
9.05
9.56
13.86
3.64
8.04
(1)
As of January 1, 2012.
(2)
Average rent per sqm is calculated as in-place rent divided by space rented as of the respective date, future contracts are not considered.
The relatively stable average monthly rent per sqm for TLG’s Core Portfolio reflects the limited exposure of its
portfolio to fluctuations in rent levels due to the long-term nature of the lease agreements relating to the properties in TLG’s
Core Portfolio. TLG’s office portfolio shows the largest increase in average rent per sqm between 2011 and the first half of
2014, primarily due to the in-place rents and newly negotiated rents with tenants of three properties, which were added to the
portfolio over the period. The year-on-year average rent increases in the retail portfolio for the last three-and-a-half years
amount to less than 1% and are based on indexation of the in-place rent. The hotel properties have lease agreements with the
longest terms. The average monthly rent per sqm in TLG’s hotel portfolio decreased from €14.78 as of December 31, 2011 to
€13.86 as of June 30, 2014 due to the lower in-place rent for the three hotel properties developed by TLG, which were added
to the portfolio over the course of this period. The average monthly rent per sqm for the two hotel properties which were
already included in the hotel portfolio in 2011 increased slightly from €14.78 as of December 31, 2011 to €15.07 as of
June 30, 2014.
Total Lettable Area
The total lettable area is primarily influenced by acquisitions and disposals of properties. It may also be affected by
expansions of the lettable area of existing properties and changes in legal conditions regulating the use of properties.
42
The table below provides information on the total lettable area of TLG’s portfolio excluding areas of project
developments that were not operative as of the respective cut-off date.
As of December 31,
2011(1)
2012
2013
(unaudited)
(in thousand sqm)
Core Portfolio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Retail . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Hotel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-core portfolio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
806.2
317.5
441.2
47.4
719.0
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,525.1
830.5
322.5
460.7
47.4
640.1
As of
June 30,
2014
(unaudited)
(in thousand sqm)
887.7
322.4
489.3
76.0
477.5
900.1
338.9
485.3
75.9
439.2
1,470.6 1,365.2
1,339.3
(1)
The total lettable area of the Core Portfolio increased by 93.9 thousand sqm from 806.2 thousand sqm as of
December 31, 2011 to 900.1 thousand sqm as of June 30, 2014 while the total lettable area of the non-core portfolio decreased
by 279.8 thousand sqm from 719.0 thousand sqm as of December 31, 2011 to 439.2 thousand sqm as of June 30, 2014 due to
disposals of non-core properties. In the six-month period ended June 30, 2014, the total lettable area of the office portfolio
increased by 16.5 thousand sqm due to the acquisition of one new office property. The total lettable area of the retail portfolio
increased by 19.5 thousand sqm in 2012 and by 28.6 thousand sqm in 2013 due to acquisitions and completions of project
developments. In 2013, project developments regarding three hotel properties were completed and increased the total lettable
area in the hotel portfolio by 28.6 thousand sqm.
EPRA Vacancy Rate
EPRA Vacancy Rate is defined as the estimated market rental value of vacant space divided by the estimated market
rental value of the whole portfolio. The estimated rental value of the whole portfolio depends on the estimated rent per sqm
and the total lettable area of the portfolio. Vacancy rates are primarily influenced by demand for the properties that are offered
for leasing. Demand for the properties in turn is affected, among other things, by the use, macro- and micro-locations, age,
quality and size of the properties. The term of the lease agreements, the ability of the asset manager to market its properties
and the maintenance and refurbishment work required before a new lease agreement for a property can be concluded also
influence the vacancy rate of a portfolio. The vacancy rate may also be affected if large leases with single tenants are not
renewed or terminated, e.g. due to the tenant’s insolvency or as a result of acquisitions or disposals.
The table below provides information on the EPRA Vacancy Rate of TLG’s portfolio.
As of December 31,
2011(1)
2012 2013
(unaudited)
(in %)
As of
June 30,
2014
(unaudited)
(in %)
Core Portfolio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Retail . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Hotel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-core portfolio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6.5
14.9
0.9
5.0
18.2
4.7
10.4
0.9
3.6
20.3
4.4
8.8
1.5
4.5
9.7
4.0
9.2
1.0
1.7
12.2
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9.9
8.7
5.1
5.0
(1)
The decrease in the EPRA Vacancy Rate of the Core Portfolio between December 31, 2011 and June 30, 2014
primarily relates to the reduction of the EPRA Vacancy Rate in the office portfolio. At 14.9% TLG’s EPRA Vacancy Rate for
its office portfolio as of December 31, 2011 was relatively high because in 2010 and 2011 two major tenants of the property
located on Alexanderstraße 1,3,5 in Berlin (the “1alex Property”) did not renew their respective leases. The EPRA Vacancy
Rate for TLG’s office portfolio decreased to 10.4% as of December 31, 2012 and to 8.8% as of December 31, 2013, partially
as a result of finding new tenants for the 1alex Property. As of June 30, 2014, the EPRA Vacancy Rate of TLG’s office
portfolio amounted to 9.2% (excluding the 1alex Property to 3.7%). The slight increase resulted from the acquisition of the
“Kaiserin-Augusta-Allee 104-106” property. TLG’s office EPRA Vacancy Rate may increase in the future as a result of its
acquisition strategy regarding office properties. TLG specifically targets office properties with EPRA Vacancy Rates of up to
30%, as TLG believes that it can acquire such properties at a discount and unlock additional value through modernizations,
43
refurbishments and active letting management. Retail EPRA Vacancy Rate remained stable at a low level despite the increases
in lettable area reflecting the stable tenant base and policy of acquiring properties that are almost fully let or developing only
projects which are let to tenants in advance. The EPRA Vacancy Rate for the hotel portfolio declined by more than 62% from
4.5% as of December 31, 2013 to a low 1.7% at the end of the first six months of 2014 despite the significant increase in total
lettable area in 2013.
Maintenance and Refurbishment
Driven by TLG’s active asset management and significant investments in its Core Portfolio over the last three-anda-half years, 84% of TLG’s Core Portfolio has been newly built or fully refurbished since 2000. As a result, the Company
believes that maintenance and refurbishment expenses are currently overall less significant for TLG than for other commercial
real estate companies with more mature portfolios. However, following TLG’s acquisition strategy, maintenance and
refurbishment expenses can be expected to increase in the future.
Reorganization of TLG
Since the beginning of 2013, TLG has continued to streamline its organizational structure in connection with its
portfolio optimization by transferring further administrative functions such as portfolio management, valuation, coordination
with the land register, legal and controlling from the regional offices to the Berlin headquarters and, as a result, reduced its
workforce. As of December 31, 2012, TLG employed 241 employees (including 17 temporary employees), as of
December 31, 2013, 197 employees (including twelve temporary employees) and as of June 30, 2014, 168 employees
(including ten temporary employees). This corresponds to a 30.3% reduction in TLG’s workforce from December 31, 2012 to
June 30, 2014. Due to this headcount reduction, TLG has reduced its personnel expenses from December 31, 2012 to
December 31, 2013 by €2.4 million from €18.9 million to €16.5 million excluding expenses for severance packages in an
amount of €6.9 million in 2013. For the six-month period ended June 30, 2014 personnel expenses amounted to €7.7 million
compared to €8.5 million excluding severance packages in an amount of €6.9 million in the first six months of 2013 for the
six-month period ended June 30, 2013, reflecting the additional headcount reductions. TLG plans to complete the majority of
its reorganization by the end of 2014 and to employ 127 employees as of January 1, 2015 (including seven temporary
employees). The severance package in an amount of €6.9 million recognized in TLG’s personnel expenses for the fiscal year
ended December 31, 2013 included estimated severance payments for the headcount reductions in 2013 and 2014. For
severance payments due after December 31, 2013, a provision has been built in an amount of €5.2 million as of December 31,
2013.
Financing Conditions
TLG finances the acquisitions of properties by means of debt and equity instruments. At the time of a new
acquisition and of the maturity of a loan, TLG depends to a considerable extent on the availability of financing on reasonable
terms and conditions as well as the condition of the capital markets. Financing conditions, in particular interest rates, are
subject to fluctuations and are influenced by a variety of factors, including general economic conditions and market
developments, over which TLG has no control. Adverse changes in financing conditions, and in particular increases in interest
rates, could increase TLG’s financing and refinancing costs and thus affect its results of operations.
TLG is currently benefitting from favorable financing conditions, in particular from low interest rates, which may
increase in the future. TLG was able to reduce its average interest rate to 2.99% as of June 30, 2014 while the average debt
maturity increased to 5.9 years as of June 30, 2014. As of March 31, 2014, TLG settled interest rate swaps resulting in a cash
outflow of €20.6 million. In line with TLG’s strategy, new interest rate hedges were concluded in March and April 2014 for
all long-term financial liabilities. Approximately 94% of TLG’s interest rates (based on the value weighted interest rates on
the liabilities due to financial institutions in an amount of €727.9 million as of June 30, 2014) are either fixed or hedged,
limiting TLG’s risk from increasing interest reference rates in the future. For more details on the recent refinancing of TLG’s
financial liabilities see “—Selected Consolidated Statement of Comprehensive Income Data Prepared in Accordance with
IFRS—Financial Income and Total Interest and Similar Expenses (Total Interest and Similar Result)—Comparison of the SixMonth Periods Ended June 30, 2013 and June 30, 2014”.
Change in General Tax Conditions
TLG is subject to German corporate and trade taxation. Currently, TLG’s rental income is subject to corporate and
trade tax (Körperschaft- und Gewerbesteuer). Changes to TLG’s taxable income for corporate and/or trade tax law purposes
can influence TLG’s results from operations and its cash flow. For example, TLG’s rental income is currently subject to trade
tax. If rental income is solely generated from the administration of real estate owned, such rental income can be exempted
from trade tax (so-called extended trade tax reduction). For more information on TLG’s tax structure, see “Business—TLG’s
Strategy—Further improve its financial and tax structure”.
44
Accounting Factors
First Time Adoption of IFRS
Starting with the fiscal year 2013, the Company has prepared its consolidated financial statements in accordance
with IFRS and the additional requirements of German commercial law pursuant to Section 315a (1) of the German
Commercial Code (Handelsgesetzbuch (HGB)). The consolidated financial statements for prior years were prepared in
accordance with German GAAP, which differs from IFRS in material ways. To enhance comparability, a reconciliation of the
2012 consolidated net profit, equity and cash flow, as recognized in accordance with German GAAP, with the corresponding
IFRS figures is provided in the relevant section in “—Reconciliation between German GAAP and IFRS for the Fiscal Year
2012” and F-22 et seq.
The transition to IFRS required the Company to prepare an IFRS-compliant opening balance sheet as of January 1,
2012. In connection with the preparation of this opening balance sheet, TLG recorded inventories in a total amount of
€72.7 million as of January 1, 2012, consisting of 355 properties from its non-core portfolio, including service properties and
undeveloped land because it intended to sell those properties in the ordinary course of its business. The remaining properties
of its non-core portfolio were recorded under investment property together with the properties from the Core Portfolio, except
for the residential real estate portfolio and other properties that qualified as assets held for sale in accordance with IFRS 5,
which were also presented separately as assets held for sale.
Valuation of Portfolio Properties
In accounting for the value of its real estate portfolio, included in investment property, TLG applies the fair value
method pursuant to IAS 40. According to the fair value method, upon its purchase the investment property is initially
measured at cost, including ancillary purchase costs. In subsequent reporting periods, investment property is measured at fair
value. The fair value of property held to earn rentals or for capital appreciation or both is determined using a discounted cash
flow method (“DCF”). According to the DCF, the fair value of a property is the sum of the discounted cash flows for a
planning period (e.g., ten years) plus the terminal value of the property at the end of the planning period discounted to the
valuation date. Properties generating no sustainable operating cash flows are valued using their liquidation value. For more
information on the valuation method, see “—Significant Accounting Policies—Investment Property (IAS 40)”.
Valuations were conducted by Savills at the end of 2013/beginning of 2014 for the preparation of the opening
balance sheet prepared in accordance with IFRS as of January 1, 2012, the preparation of the audited consolidated financial
statements prepared in accordance with IFRS and the additional requirements of German commercial law pursuant to
Section 315a (1) of the German Commercial Code (Handelsgesetzbuch (HGB)) for the fiscal year ended December 31, 2013
including 2012 real estate fair values as prior year comparative information and in July/August 2014 for the unaudited
condensed consolidated interim financial statements prepared in accordance with IFRS on interim financial reporting for the
six-month period ended June 30, 2014. TLG will revalue its properties recorded under investment property according to IAS
40 on a regular basis. Valuation losses or gains resulting from such valuations are recognized in result from the
remeasurement of investment property and affect TLG’s results of operations but have no impact on TLG’s cash flow.
Accounting for Property Disposals
Between January 1, 2012 and June 30, 2014, TLG has sold properties accounted for under investment property and
inventories in an aggregate book value of €307.0 million. Differences between the book value of a property and the purchase
price for which a property has been sold affect TLG’s results from operations if such difference was not previously
recognized under result from the remeasurement of investment property.
In respect to properties recognized as investment property, the following accounting treatment applies in the case of
the sale of a property. With the notarization of the sale and purchase agreement, the respective property is generally
reclassified as an asset held for sale, unless the payment of the purchase price commences in the same period. If the property
is reclassified as an asset held for sale, the difference between the carrying amount of the property (equaling the fair value
under IAS 40 as it is recorded) and the purchase price is recognized under result from the remeasurement of investment
property. If the payment has been already made, such difference is recognized under result from the disposal of investment
property in the relevant period.
In case of the disposal of properties held in inventories, which are carried at cost and have not been subsequently
fair value adjusted, the difference between the book value of the properties and their purchase price is recognized in result
from the disposal of real estate inventory.
Valuation of Financial Derivatives
Financial derivatives are measured at fair value in accordance with IAS 39. TLG revalues its financial derivatives
on a regular basis. TLG uses financial derivatives primarily to hedge itself against risks resulting from floating interest rates
on its debt. Deviations compared to previous valuations do not have an impact on its cash flow but may lead to a revaluation
of loss or profit and thus affect TLG’s gain/loss from the fair value remeasurement of derivatives if no hedge accounting is
applied or the hedge is partially ineffective (for more information, see “—Significant Accounting Policies—Financial
Instruments (IAS 39)”).
45
Selected Consolidated Statement of Comprehensive Income Data Prepared in Accordance with IFRS
The following table provides an overview of TLG’s results of operations for the periods shown in accordance with
IFRS:
For the year ended
December 31,
2012(1)
2013
(audited)
(in € million)
For the six-month
period ended
June 30,
2013
2014
(unaudited)
(in € million)
Net operating income from letting activities . . . . . . . . . . . . . . . . . . . . . . . . .
Income from letting activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expenses related to letting activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Result from the remeasurement of investment property . . . . . . . . . . . . . . . . . . .
Result from the disposal of investment property . . . . . . . . . . . . . . . . . . . . . . . .
Result from the disposal of real estate inventory . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from real estate inventory disposed . . . . . . . . . . . . . . . . . . . . . . .
Book value of real estate inventory disposed . . . . . . . . . . . . . . . . . . . . . . .
Other operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Personnel expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
97.1
138.8
(41.6)
53.1
(0.0)
27.4
77.5
(50.2)
9.7
(18.9)
(1.6)
(8.3)
106.3
141.3
(35.1)
72.2
0.5
7.8
21.4
(13.6)
18.7
(23.4)
(1.5)
(7.8)
52.7
69.6
(16.9)
34.4
0.2
5.5
14.3
(8.8)
3.9
(15.4)
(0.7)
(2.3)
50.0
66.9
(16.9)
51.3
0.5
2.3
5.9
(3.6)
3.6
(7.7)
(0.7)
(2.4)
Earnings before interest and taxes (EBIT) . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income from joint ventures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Financial income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Financial expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gain/loss from the remeasurement of derivatives . . . . . . . . . . . . . . . . . . . . . . .
158.4
12.9
0.9
(22.5)
(10.0)
172.8
2.1
0.7
(36.0)
6.9
78.3
2.1
0.4
(18.1)
5.4
96.9
0.0
0.4
(12.1)
(2.0)
Earnings before taxes (EBT) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
139.8
(63.5)
76.3
146.4
(47.3)
99.1
68.1
(22.0)
46.1
83.2
(25.8)
57.4
Actuarial gains and losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
thereof recycling
Hedge accounting reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1.0)
(0.0)
—
—
—
(0.1)
—
(4.7)
Total comprehensive income for the period . . . . . . . . . . . . . . . . . . . . . . . . . .
75.3
99.0
46.1
52.7
Note: May not sum up exactly due to rounding.
(1)
Figures taken from the Company’s audited consolidated financial statements as of and for the fiscal year ended December 31, 2013
including comparative financial information for the fiscal year 2012.
Net Operating Income from Letting Activities
Net operating income from letting activities is the sum of income from letting activities and expenses related to
letting activities. Income from letting activities comprises: rental income, income from other goods and services and income
from recharged utilities and other operating costs. Expenses related to letting activities comprise utilities and other operating
costs, maintenance expenses and other expenses.
46
The following table provides a breakdown of TLG’s income from and expenses related to letting activities for the
periods presented.
For the year ended
December 31,
2012(1)
2013
(audited)
(in € million)
(IFRS)
For the six-month
period ended
June 30,
2013
2014
(unaudited)
(in € million)
(IFRS)
Income from letting activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rental income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income from recharged utilities and other operating costs . . . . . . . . . . . . . . .
Income from other goods and services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expenses related to letting activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Utilities and other operating costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Maintenance expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
138.8
116.1
20.7
2.0
(41.6)
(28.6)
(5.3)
(7.7)
141.3
118.3
21.6
1.4
(35.1)
(27.6)
(5.1)
(2.4)
69.6
59.2
9.5
0.9
(16.9)
(13.5)
(1.9)
(1.6)
66.9
57.0
9.1
0.9
(16.9)
(12.7)
(1.9)
(2.3)
Net operating income from letting activities . . . . . . . . . . . . . . . . . . . . . . . . . . . .
97.1
106.3
52.7
50.0
(1)
Figures taken from the Company’s audited consolidated financial statements as of and for the fiscal year ended December 31, 2013,
Comparison of the Six-Month Periods Ended June 30, 2013 and June 30, 2014
Net operating income from letting activities decreased by €2.7 million, or 5.1%, from €52.7 million for the sixmonth period ended June 30, 2013 to €50.0 million for the six-month period ended June 30, 2014, primarily due to a decrease
in income from letting activities. The net operating income margin from letting activities (net operating income from letting
activities as a percentage of rental income) slightly decreased by 1.3 percentage points from 89.0% for the six-month period
ended June 30, 2013 to 87.7% for the six-month period ended June 30, 2014, primarily due to a decrease in rental income.
Rental income decreased by €2.2 million, or 3.7%, from €59.2 million for the six-month period ended June 30, 2013 to
€57.0 million for the six-month period ended June 30, 2014, primarily due to the sale of non-core properties (mainly nursing
homes) in November 2013. Expenses remained relatively stable despite the disposal of properties due to repair costs caused
by fire damage with regard to one property. The associated insurance payment was booked under other operating income.
Comparison of the Fiscal Years Ended December 31, 2012 and 2013
Net operating income from letting activities increased by €9.2 million, or 9.5%, from €97.1 million for the fiscal
year ended December 31, 2012 to €106.3 million for the fiscal year ended December 31, 2013, primarily due to an increase in
income from letting activities and a decrease of expenses related to letting activities. The net operating income margin from
letting activities (net operating income from letting activities as a percentage of rental income) increased by 6.3 percentage
points from 83.6% for the fiscal year ended December 31, 2012 to 89.9% for the fiscal year ended December 31, 2013,
primarily due to an increase in rental income and a decrease of other expenses related to letting activities. Rental income
increased by €2.2 million, or 1.9%, from €116.1 million for the fiscal year ended December 31, 2012 to €118.3 million for the
fiscal year ended December 31, 2013, primarily due to increased rents and lower vacancy rates. The increase in rental income
was partially offset by the decrease in rental income from the non-core portfolio due to the sale of non-core properties. Other
expenses related to letting activities decreased by €5.3 million from €7.7 million for the fiscal year ended December 31, 2012
to €2.4 million for the fiscal year ended December 31, 2013, primarily due to the decrease in other service costs.
Result from the Remeasurement of Investment Property
Result from the remeasurement of investment property comprises adjustments in the fair value of the properties
classified as investment property. The fair value of a property recorded under investment property is adjusted as a result of the
annual remeasurement of the investment property in accordance with IAS 40 or if a property is sold and reclassified as an
asset held for sale in accordance with IFRS 5.
Result from the remeasurement of investment property increased by €16.9 million, or 49.1%, from €34.4 million for
the six-month period ended June 30, 2013 to €51.3 million for the six-month period ended June 30, 2014. 74.9%, or
€38.4 million, of the gain from the remeasurement of investment property is attributable to properties sold and reclassified as
assets held for sale for the six-month period ended June 30, 2014 compared to 7.3%, or €2.5 million, for the six-month period
ended June 30, 2013. The remaining 25.1%, or €12.9 million for the six-month period ended June 30, 2014 and the remaining
92.7%, or €31.9 million for the six-month period ended June 30, 2013 of the gain from the remeasurement of investment
property resulted from fair value adjustments in accordance with IAS 40.
47
Result from the remeasurement of investment property increased by €19.1 million, or 36.0% from €53.1 million for
the fiscal year ended December 31, 2012 to €72.2 million for the fiscal year ended December 31, 2013. 19.7%, or
€14.2 million, of the result from the remeasurement of investment property for the year 2013 related to properties that were
classified as long-term assets held for sale in 2013 compared to €0.0 million in 2012.
Result from the Disposal of Investment Property
Result from the disposal of investment property is recorded if an investment property is sold and the notarization of
the sale and purchase agreement commences in the same quarter of the respective fiscal year as the closing of the transaction,
i.e., the payment of the purchase price.
Result from the disposal of investment property increased by €0.3 million from €0.2 million for the six-month
period ended June 30, 2013 to €0.5 million for the six-month period ended June 30, 2014. It increased by €0.5 million from
negative €45 thousand for the fiscal year ended December 31, 2012 to €0.5 million for the fiscal year ended
December 31, 2013.
Result from the Disposal of Real Estate Inventory
Result from the disposal of real estate inventory includes the difference between the book value of properties
accounted for under inventories and the purchase price for properties sold. Properties recorded under inventories are booked at
the lower of cost and net realizable value as at the reporting date.
Result from the disposal of real estate inventory decreased by €3.2 million, or 58.2%, from €5.5 million for the sixmonth period ended June 30, 2013 to €2.3 million for the six-month period ended June 30, 2014 mainly due to the relatively
lower stock of inventories compared to the previous year.
Result from the disposal of real estate inventory decreased by €19.6 million, or 71.5%, from €27.4 million for the
fiscal year ended December 31, 2012 to €7.8 million for the fiscal year ended December 31, 2013 mainly due to the relatively
lower stock of inventories compared to the previous year.
As of January 1, 2012, TLG recorded under inventories: (i) land with finished buildings, (ii) land under
development, (iii) other buildings in progress and (iv) undeveloped land that did not strategically fit within TLG’s portfolio
due to their current or potential use in the future. Inventory properties were recorded at acquisition cost without conducting
any fair value adjustments if the fair value exceeds the book value in subsequent periods. Since January 1, 2012, no properties
have been transferred from investment property to inventories. The initial book value of these properties amounted to
€72.7 million as of January 1, 2012, and the book value decreased to €22.3 million as of December 31, 2012, to €13.4 million
as of December 31, 2013 and to €13.3 million as of June 30, 2014. The book value of inventories decreased mostly by sales of
properties but this decrease was partially offset by additions for progress on constructions made on an unfinished building
which was already sold in 2013 but will be transferred following the completion of its construction in 2014.
Other Operating Income
The following table provides a breakdown of TLG’s other operating income.
For the year ended
December 31,
2012(1)
2013
(audited, unless
(in € million)
(IFRS)
For the six-month
period ended
June 30,
2013
2014
(unaudited)
(in € million)
(IFRS)
Reversal of provisions/liabilities and write-downs . . . . . . . . . . . . . . . . . . . . . . .
Insurance settlement payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
TLG WOHNEN/TAG Wohnen business management contract . . . . . . . . . . . . .
Subsidies for environmental remediation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Miscellaneous other operating income(2) (unaudited) . . . . . . . . . . . . . . . . . . . . .
1.3
1.3
2.9
1.3
2.9
9.5
1.0
1.6
0.3
6.2
0.5
0.5
0.7
0.1
2.1
1.6
0.7
0.3
0.1
0.9
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9.7
18.7
3.9
3.6
(1)
Figures taken or derived from the Company’s audited consolidated financial statements as of and for the fiscal year ended December 31,
2013, including comparative financial information for the fiscal year 2012.
(2)
“Miscellaneous other operating income” includes tenant maintenance contributions, derecognition of liabilities, income related to other
periods and miscellaneous other income.
48
Other operating income decreased by €0.3 million, or 7.7%, from €3.9 million for the six-month period ended
June 30, 2013 to €3.6 million for the six-month period ended June 30, 2014. The decrease in miscellaneous other operating
income was partially offset by increased reversals for provisions/liabilities and write-downs primarily due to the reversal of
the write-down of a rent receivable.
Other operating income increased by €9.0 million, or 92.8%, from €9.7 million for the fiscal year ended
December 31, 2012 to €18.7 million for the fiscal year ended December 31, 2013 mainly due to the higher reversals of
provisions/liabilities and write-downs. The reversals of provisions, liabilities and write-downs included in particular special
items such as income from the reversal of real estate transfer taxes amounting to €5.4 million. In addition, as arranged with
the creditor, accrued interest on the liabilities from the pass-through of purchase prices amounting to €3.0 million was
reversed. Liabilities from purchase price forwarding resulted from TLG’s obligation to pass on parts of the purchase price
received for the sale of properties which were co-owned by TLG, BEDIG AG i.L. and the state of Berlin.
Personnel Expenses
The following table provides a breakdown of TLG’s personnel expenses for the periods presented.
For the year ended
December 31,
2012(1)
2013
(audited)
(in € million)
(IFRS)
For the six-month
period ended
June 30,
2013
2014
(unaudited)
(in € million)
(IFRS)
Salaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Social security contributions and cost of old age pensions . . . . . . . . . . . . . . . . . .
Bonuses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Severance packages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(14.9)
(2.7)
(1.4)
—
(12.8)
(2.5)
(1.3)
(6.9)
(6.6)
(1.3)
(0.6)
(6.9)
(5.8)
(1.0)
(0.8)
—
Personnel expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(18.9)
(23.4)
(15.4)
(7.7)
(1)
Personnel expenses decreased by €7.7 million, or 50.0% from €15.4 million for the six-month period ended June 30,
2013 to €7.7 million for the six-month period ended June 30, 2013. This decrease was primarily due to the absence of a
one-off item like the severance packages and the decrease in salaries, both resulting from the headcount reduction in the
context of the reorganization of TLG. For additional information see “—Key Factors Influencing TLG’s Portfolio, Results of
Operations and the Comparability of Financial Information—Reorganization of TLG”.
Personnel expenses increased by €4.5 million, or 23.8%, from €18.9 million for the fiscal year ended December 31,
2012 to €23.4 million for the fiscal year ended December 31, 2013 primarily due to severance packages in an amount of
€6.9 million that were only partially offset by a decrease in salaries, both resulting from the headcount reduction in the context
of the reorganization of TLG. For additional information, see “—Key Factors Influencing TLG’s Portfolio, Results of
Operations and the Comparability of Financial Information—Reorganization of TLG”.
Depreciation
Depreciation slightly decreased by €41 thousand, or 5.5%, from €742 thousand for the six-month period ended
June 30, 2013 to €701 thousand for the six-month period ended June 30, 2014. Depreciation slightly decreased by
€0.1 million, or 6.3%, from €1.6 million for the fiscal year ended December 31, 2012 to €1.5 million for the fiscal year ended
December, 31 2013. For a discussion of the accounting differences regarding depreciation under IFRS and German GAAP,
see “—Key Factors Influencing TLG’s Portfolio, Results of Operations and the Comparability of Financial Information—
Accounting Factors—Valuation of Portfolio Properties” and “—Significant Accounting Policies—Investment Property
(IAS 40)”.
49
Other Operating Expenses
The following table provides a breakdown of TLG’s other operating expenses.
For the year ended
December 31,
2012(1)
2013
(audited, unless
(in € million)
(IFRS)
For the six-month
period ended
June 30,
2013
2014
(unaudited)
(in € million)
(IFRS)
Valuation allowances and impairment losses on receivables . . . . . . . . . . . . . . . . .
Advising and audit fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
General IT and administrative costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Advertising and marketing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Miscellaneous other operating expenses(2) (unaudited) . . . . . . . . . . . . . . . . . . . . .
Reversal of provisions/liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(3.4)
(1.0)
(2.8)
(1.2)
(3.6)
3.7
(1.9)
(2.0)
(2.8)
(0.5)
(4.3)
3.7
(0.4)
(1.2)
(1.2)
(0.3)
(1.9)
2.7
(0.5)
(1.2)
(0.9)
(0.2)
(1.7)
2.1
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(8.3)
(7.8)
(2.3)
(2.4)
(1)
Figures taken or derived from the Company’s audited consolidated financial statements as of and for the fiscal year ended December 31,
2013, including comparative financial information for the fiscal year 2012.
(2)
Miscellaneous other operating expenses includes depreciation of real estate inventory, ancillary costs for business premises, vehicle and
travel expenses, other taxes and other expenses.
Other operating expenses slightly increased by €0.1 million, or 4.3%, from €2.3 million for the six-month period
ended June 30, 2013 to €2.4 million for the six-month period ended June 30, 2014. The slight decrease in general IT and
administrative costs was mainly due to reduced expenses for insurance. Reversals of provisions/liabilities decreased by
€0.6 million, or 22.2%, from €2.7 million for the six-month period ended June 30, 2013 to €2.1 million for the six-month
period ended June 30, 2014.
Other operating expenses decreased slightly by €0.5 million, or 6.0%, from €8.3 million for the fiscal year ended
December 31, 2012 to €7.8 million for the fiscal year ended December 31, 2013. The increase in advising and audit fees and
the decrease in advertising and marketing are associated with the reorganization of TLG. For additional information, see
“—Key Factors Influencing TLG’s Portfolio, Results of Operations and the Comparability of Financial Information—
Reorganization of TLG”.
Earnings before Interest and Taxes (EBIT)
EBIT increased by €18.6 million, or 23.8%, from €78.3 million for the six-month period ended June 30, 2013 to
€96.9 million for the six-month period ended June 30, 2014, as a result of the increase in the result from the remeasurement of
investment property of €16.9 million. The decrease in net operating income from letting activities and result from the disposal
of real estate inventory in an amount of €5.9 million was more than offset by the decline in personnel expenses by
€7.7 million.
EBIT increased by €14.4 million, or 9.1%, from €158.4 million for the fiscal year ended December 31, 2012 to
€172.8 million for the fiscal year ended December 31, 2013, as an increase in net operating income from letting activities and
in other operating income was only partially offset by an increase of personnel expenses of €4.5 million in 2013. The increase
in the result from the remeasurement of investment property was offset by a decline in result from the disposal of real estate
inventory.
Income from Joint Ventures
In the six-month period ended June 30, 2014, TLG generated no income from joint ventures. In the fiscal year ended
December 31, 2013, the income from joint ventures amounted to €2.1 million and resulted mainly from the disposal of TLG’s
33% interest in AGD. It declined from €12.9 million for the fiscal year ended December 31, 2012, which was mainly the
result of the earnings and a gain from the fair value remeasurement of AGD’s property.
50
Total Interest and Similar Income and Total Interest and Similar Expenses (Interest Result)
Interest result is the sum of interest and similar income and interest and similar expenses. The following table
provides a breakdown of TLG’s interest result.
For the year ended
December 31,
2012(1)
2013
(audited)
(in € million)
(IFRS)
For the six-month
period ended
June 30,
2013
2014
(unaudited)
(in € million)
(IFRS)
Total interest and similar income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total interest and similar expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
0.9
(22.5)
0.7
(36.0)
0.4
(18.1)
0.4
(12.1)
Interest expenses for interest rate derivatives . . . . . . . . . . . . . . . . . . . . . . .
Interest on loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest expense on pension provisions . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other interest expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(8.9)
(12.8)
(0.3)
(0.5)
(7.0)
(28.6)
(0.2)
(0.2)
(3.7)
(14.2)
—
(0.2)
(2.1)
(8.8)
—
(1.1)
Interest result . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(21.6)
(35.4)
(17.7)
(11.7)
(1)
TLG’s interest result significantly increased by €6.0 million, or 33.9%, from negative €17.7 million for the
six-month period ended June 30, 2013 to negative €11.7 million for the six-month period ended June 30, 2014, primarily due
to lower expenses for interest on loans and lower interest expenses for interest rate derivatives. Expenses for interest on loans
decreased by €5.4 million, or 38.0%, from €14.2 million for the six-month period ended June 30, 2013 to €8.8 million for the
six-month period ended June 30, 2014 although current and non-current liabilities due to financial institutions slightly
increased by €12.8 million, or 1.8%, from €715.1 million as of June 30, 2013 to €727.9 million as of June 30, 2014. This
decrease resulted from an optimized financing structure and the repayment of the remaining amount outstanding of
€74.9 million under a loan that TLG assumed from its Existing Shareholders and that was part of the debt financing of the
acquisition of TLG at the end of 2012 by its Existing Shareholders (the “Acquisition Loan”) in January and August 2013.
The Acquisition Loan carried customary interest for loans that are taken out in the context of an acquisition of a company
which is higher than the interest on loans for financing an existing real estate portfolio. The interest on the Acquisition Loan
reflects the bridge financing character of the loan, its availability within a short period of time and the different security
package because initially it was only secured by the shares of the acquired Company.
Interest expenses for interest rate derivatives decreased by €1.6 million, or 43.2%, from €3.7 million for the
six-month period ended June 30, 2013 to €2.1 million for the six-month period ended June 30, 2014 mainly due to the
termination of existing hedge agreements and the conclusion of new hedge agreements with more favorable conditions for
TLG in March and April 2014.
TLG’s interest result significantly decreased by €13.8 million, or 63.9%, from negative €21.6 million for the fiscal
year ended December 31, 2012 to negative €35.4 million for the fiscal year ended December 31, 2013 primarily due to
increased expenses for interest on loans. TLG’s expenses for interest on loans increased by €15.8 million, or 123.4%, from
€12.8 million for the fiscal year ended December 31, 2013 to €28.6 million for the fiscal year ended December 31, 2013
mainly due to the higher amounts of debt outstanding over the course of 2013 and the higher interest rate on the Acquisition
Loan assumed by TLG in January 2013 compared to TLG’s other liabilities due to financial institutions.
In January 2013, TLG assumed €287.3 million of the total amount of €325.2 million of the Acquisition Loan and
the remaining €37.9 million in August 2013. TLG repaid €250.2 million in several installments of €97.3 million in the first
half of 2013 and €153.0 million in the second half of 2013 so that the outstanding amount under the Acquisition Loan was
reduced to €74.9 million as of December 31, 2013. The repayment of the Acquisition Loan was funded through new term
loans, cash from the disposal of investment and inventory properties as well as from the disposal of TLG’s 33% interest in
AGD in 2013. TLG drew loans in a nominal amount of €252.5 million over the course of 2013, of which a substantial amount
was paid out by the end of 2013 resulting in the high amount of cash and cash equivalents at end of period on the consolidated
statement of financial position. Cash and cash equivalents at end of the period increased by €78.4 million, or 129.6%, from
€60.5 million as of December 31, 2012 to €138.9 million as of December 31, 2013. Non-current and current liabilities due to
financial institutions increased by €146.2 million, or 30.5%, from €480.0 million for the fiscal year ended December 31, 2012
to €626.2 million for the fiscal year ended December 31, 2013.
51
Gain/loss from the Remeasurement of Derivatives
TLG uses financial derivatives primarily to hedge itself against risks resulting from floating interest rates on its
debt. Since March/April 2014, hedge accounting is applied for all derivatives because the old hedges for which no hedge
accounting was applied for were replaced with new agreements which are subject to hedge accounting.
Gain/loss from the remeasurement of derivatives decreased by €7.4 million from a gain of €5.4 million for the
six-month period ended June 30, 2013 to a loss of €2.0 million for the six-month period ended June 30, 2014, Due to the
application of hedge accounting, losses from the remeasurement of derivatives related to effective hedges in an amount of
€4.7 million were recorded under other comprehensive income (hedge accounting reserve) for the six-month period ended
June 30, 2014.
Gain/loss from the remeasurement of derivatives increased by €16.9 million from a loss of €10.0 million for the
fiscal year ended December 31, 2012 to a gain of €6.9 million for the fiscal year ended December 31, 2013, due to an increase
of the yield curve (Zinsstrukturkurve). In 2012 no hedge accounting was applied. In 2013 hedge accounting was only applied
for derivatives concluded at the end of 2013. Therefore, the changes in the fair value of derivatives were accounted for under
gain/loss from the remeasurement of derivatives for derivatives for which the hedge accounting was not applied for.
Income Taxes
The following table provides a breakdown of TLG’s income taxes.
For the year ended
December 31,
2012(1)
2013
(audited)
(in € million)
(IFRS)
For the six-month
period ended
June 30,
2013
2014
(unaudited)
(in € million)
(IFRS)
Current income tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(4.5)
(59.0)
(37.5)
(9.8)
(16.5)
(5.5)
(17.5)
(8.3)
Tax expense/income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(63.5)
(47.3)
(22.0)
(25.8)
(1)
Tax expenses increased by €3.8 million, or 17.3%, from €22.0 million for the six-month period ended June 30, 2013
to €25.8 million for the six-month period ended June 30, 2014 due to slightly increased current income taxes and increased
deferred taxes. Current income tax increased slightly by €1.0 million, or 6.1%, from €16.5 million for the six-month period
ended June 30, 2013 to €17.5 million for the six-month period ended June 30, 2014 due to an increase of EBT by
€15.1 million, or 22.2%, from €68.1 million for the six-month period ended June 30, 2013 to €83.2 million for the six-month
period ended June 30, 2014. Deferred taxes increased by €2.8 million, or 50.9%, from €5.5 million for the six-month period
ended June 30, 2013 to €8.3 million for the six-month period ended June 30, 2014, mainly due to the positive result from the
remeasurement of investment property in the same period.
Tax expenses decreased by €16.2 million, or 25.5%, from €63.5 million for the fiscal year ended December 31,
2012 to €47.3 million for the fiscal year ended December 31, 2013, mainly due to a significant decrease in deferred tax
expenses, which was partially offset by the increase in current income tax expenses. Current income tax expenses increased
by €33.0 million, from €4.5 million for the fiscal year ended December 31, 2012 to €37.5 million for the fiscal year ended
December 31, 2013. TLG utilized a tax loss carryforward in an amount of €7.2 million for the fiscal year ended December 31,
2012 to reduce its income taxes. Due to the change of ownership of TLG, the remaining tax loss carryforward in an amount of
€17.2 million expired and TLG could not reduce its income tax burden for the fiscal year ended December 31, 2013. Deferred
taxes decreased by €49.2 million, or 83.4%, from €59.0 million for the fiscal year ended December 31, 2012 to €9.8 million
for the fiscal year ended December 31, 2013. The significant amount of deferred taxes for the fiscal year ended December 31,
2012 resulted from the first time adoption of IFRS (see “—Reconciliation between German GAAP and IFRS for the Fiscal
Year 2012—Reconciliation of 2012 Consolidated Total Comprehensive Income and Equity from German GAAP to IFRS”)
while the deferred taxes for the fiscal year ended December 31, 2013 primarily related to the positive result from the
remeasurement of investment property.
52
Selected Consolidated Income Statement Data Prepared in Accordance with German GAAP
Until December 31, 2012, TLG prepared its consolidated annual accounts in accordance with German GAAP. The
consolidated income statement was prepared using the total cost method pursuant to Section 298 (1) in connection with
Section 275 (2) of the German Commercial Code (Handelsgesetzbuch (HGB)). For a reconciliation between the consolidated
net profit under German GAAP and IFRS for the fiscal year 2012, see “—Reconciliation between German GAAP and IFRS
for the Fiscal Year 2012—Reconciliation of 2012 Consolidated Total Comprehensive Income and Equity from German GAAP
to IFRS”. The following table provides an overview of TLG’s results of operations for the periods shown in accordance with
German GAAP.
For the year ended
December 31,
2011(1)
2012
(audited)
(in € million)
(German GAAP)
Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Increase (decrease) in work in progress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost of materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Disposals of real estate portfolio at carrying amounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost of purchased services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Personnel expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Wages and salaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Social security, post-employment and other employee benefit costs . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization, depreciation and write-downs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
of intangible and tangible fixed assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
of current assets in excess of the corporation’s standard depreciation . . . . . . . . . . . . . . . . . . . . . . . . . .
Other operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income from affiliated companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other interest and similar income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Write-downs of long-term financial assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest and similar expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Result from ordinary activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
247.4
2.7
39.1
(103.0)
(29.3)
(73.7)
(23.4)
(20.1)
(3.3)
(56.4)
(55.9)
(0.5)
(22.9)
0.5
0.8
(0.4)
(32.4)
52.0
219.7
(0.5)
16.6
(94.1)
(48.7)
(45.4)
(19.1)
(16.4)
(2.7)
(48.5)
(48.1)
(0.4)
(30.2)
2.3
0.9
(0.0)
(39.9)
7.1
Extraordinary expense/extraordinary result . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Taxes on income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated net income for the financial year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(23.1)
(10.1)
(0.2)
18.7
—
(4.5)
(0.1)
2.5
Accumulated losses brought forward . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Profit distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(28.9)
(73.7)
(84.0)
(18.4)
Consolidated net accumulated loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(84.0)
(99.9)
(1)
Includes TLG’s residential business, which was spun off to TLG WOHNEN GmbH effective as of January 1, 2012.
Sales
Sales decreased by €27.7 million, or 11.2%, from €247.4 million for the fiscal year ended December 31, 2011 to
€219.7 million for the fiscal year ended December 31, 2012. Sales from property management decreased by €58.4 million, or
30.0%, from €194.6 million for the fiscal year ended December 31, 2011 to €136.2 million for the fiscal year ended
December 31, 2012, primarily due to the spin-off of TLG’s residential segment effective as of January 1, 2012 to TLG
WOHNEN GmbH. Sales from the disposal of properties increased by €27.8 million, or 55.0%, from €50.5 million for the
fiscal year ended December 31, 2011 to €78.3 million for the fiscal year ended December 31, 2012 due to the sale of
seventeen properties in the fiscal year ended December 31, 2012 compared to eleven properties in the fiscal year ended
December 31, 2011. Sales from other services increased by €2.8 million, or 116.7%, from €2.4 million for the fiscal year
ended December 31, 2011 to €5.2 million for the fiscal year ended December 31, 2012. This increase resulted from sales
generated under an agency agreement with TLG WOHNEN GmbH.
53
Cost of Materials
The following table provides a breakdown of TLG’s cost for purchased materials and services.
For the year ended
December 31,
2011(1)
2012
(audited)
(in € million)
(German GAAP)
Disposals of real estate portfolio at carrying amounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost of purchased services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(29.3)
(73.7)
(48.7)
(45.4)
Cost of materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(103.0)
(94.1)
(1)
Cost of materials decreased by €8.9 million, or 8.6%, from €103.0 million for the fiscal year ended December 31,
2011 to €94.1 million for the fiscal year ended December 31, 2012 because the increase in disposals of real estate portfolio at
carrying amounts was more than offset by the decrease in cost of purchased services. Disposals of real estate portfolio at
carrying amounts related to write-downs of carrying amounts due to disposals and increased by €19.4 million, or 66.2%, from
€29.3 million for the fiscal year ended December 31, 2011 to €48.7 million for the fiscal year ended December 31, 2012 due
to larger disposals than in the previous year. Of the disposals of real estate portfolio at carrying amounts for the fiscal year
ended December 31, 2012, €45.6 million related to properties classified as fixed assets and €3.1 million related to properties
classified as current assets. Cost of purchased services significantly decreased by €28.3 million, or 38.4%, from €73.7 million
for the fiscal year ended December 31, 2011 to €45.4 million for the fiscal year ended December 31, 2012. Cost of purchased
services for the fiscal year ended December 31, 2012, included €36.9 million of property management expenses and
€8.5 million expenses for other purchased services.
Personnel Expenses
The following table provides a breakdown of TLG’s personnel expenses for the periods presented.
For the year ended
December 31,
2011(1)
2012
(audited)
(in € million)
(German GAAP)
Wages and salaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Social security, post-employment and other employee benefit costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(20.1)
(3.3)
(16.4)
(2.7)
Personnel expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(23.4)
(19.1)
(1)
Personnel expenses declined by €4.3 million, or 18.4%, from €23.4 million for the fiscal year ended December 31,
2011 to €19.1 million for the fiscal year ended December 31, 2012 due to the reduction in the number of employees, who
were transferred to TLG WOHNEN GmbH as of January 1, 2012.
Amortization, Depreciation and Write-Downs
Amortization, depreciation and write-downs decreased by €7.9 million, or 14.0%, from €56.4 million for the fiscal
year ended December 31, 2011 to €48.5 million due to the spin-off of TLG’s residential properties to TLG WOHNEN GmbH.
Scheduled depreciation of real estate assets decreased by €11.0 million, or 22.4%, from €49.1 million for the fiscal year ended
December 31, 2011 to €38.1 million for the fiscal year ended December 31, 2012, also due to the spin-off of TLG’s
residential properties. In addition, write-downs to the lower fair value increased by €3.0 million, or 56.6%, from €5.3 million
for the fiscal year ended December 31, 2011 to €8.3 million for the fiscal year ended December 31, 2012. Write-downs to the
lower fair value of a property are necessary if the carrying amount after periodical depreciation of that property is higher than
the fair value and are of extraordinary nature. These fair value adjustments are totally unrelated to fair value adjustments
under IAS 40 which also encompass upside adjustments. Write-downs of current assets in excess of the corporation’s standard
depreciation decreased by €0.1 million, or 20.0%, from €0.5 million for the fiscal year ended December 31, 2011 to
€0.4 million for the fiscal year ended December 31, 2012 and related to write-downs to the lower fair value.
54
Other Operating Expenses
Other operating expenses increased by €7.3 million, or 31.9%, from €22.9 million for the fiscal year ended
December 31, 2011 to €30.2 million for the fiscal year ended December 31, 2012. Other operating expenses for the fiscal year
ended December 31, 2012 include €17.8 million in expenses connected with the liquidation or sale of two subsidiaries. The
negative effect of these additional expenses was only partially offset by a decrease in other operating expense items.
Other Interest and Similar Income and Interest and Similar Expenses (Interest Result)
The following table provides a breakdown of TLG’s interest result.
For the year ended
December 31,
2011(1)
2012
specified)
(in € million)
(German GAAP)
Other interest and similar income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest and similar expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
of which interest paid on loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
of which compensatory payments on interest rate hedges . . . . . . . . . . . . . . . . . . . . . . . . . . .
of which provisions for expected losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
of which other interest expense (unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
0.8
(32.4)
(22.3)
(9.8)
—
(0.3)
0.9
(39.9)
(12.9)
(9.1)
(17.5)
(0.4)
Interest result (unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(31.6)
(39.0)
(1)
Interest result decreased by €7.4 million, or 23.4%, from negative €31.6 million for the fiscal year ended
December 31, 2011 to negative €39.0 million for the fiscal year ended December 31, 2012, mainly due to an increase of
provisions for expected losses in an amount of €17.5 million for the fiscal year ended December 31, 2012 that was only
partially offset by a decrease of interest paid on loans. Interest paid on loans declined by 9.4 million, or 42.2%, from
€22.3 million for the fiscal year ended December 31, 2011 to €12.9 million for the fiscal year ended December 31, 2012,
mainly due to the spin-off of TLG’s residential properties to TLG WOHNEN GmbH. The provisions for expected losses in an
amount of €17.5 million related to expected higher interest rate hedging costs as two banks exercised their termination rights
based on the change of control in TLG as of December 31, 2012.
Taxes on Income
Taxes on income decreased by €5.6 million, or 55.4%, from €10.1 million for the fiscal year ended December 31,
2011 to €4.5 million for the fiscal year ended December 31, 2012. Advance payment of corporation tax including the
solidarity surcharge and trade tax each slightly decreased by €0.1 million, or 11.1%, and €0.1 million, or 33.3%, from
€0.9 million and €0.3 million for the fiscal year ended December 31, 2011 to €0.8 million and €0.2 million for the fiscal year
ended December 31, 2012, respectively. Transfer to provisions for corporation tax and trade tax decreased by €2.3 million, or
63.9%, and €3.1 million, or 58.5%, from €3.6 million and €5.3 million for the fiscal year ended December 31, 2011 to
€1.3 million and €2.2 million for the fiscal year ended December 31, 2012, respectively.
Investment Property
The following table provides an overview of TLG’s investment property as of the dates shown.
As of January 1,
2012(1)
(audited, unless
(in € million)
(IFRS)
As of
December 31,
2012(1)
2013
(audited, unless
(in € million)
(IFRS)
As of June 30,
2014
(unaudited)
(in € million)
(IFRS)
Retail properties (unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Office properties (unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Hotel properties (unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other properties (unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Project development (unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . .
584.9
415.9
107.9
231.3
34.3
629.7
452.8
119.8
236.4
73.1
680.5
447.8
185.6
100.8
—
670.7
466.7
187.2
98.5
—
Investment Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,374.2
1,511.7
1,414.7
1,423.0
(1)
Figures taken from TLG’s audited consolidated financial statements as of and for the fiscal year ended December 31, 2013, including
comparative financial information for the fiscal year 2012.
55
The carrying amount (fair value) of investment property in the six-month period ended June 30, 2014 slightly
increased by €8.3 million, or 0.6%, from €1,414.7 million as of December 31, 2013 to €1,423.0 million as of June 30, 2014,
mainly due to the acquisition of the office property “Kaiserin-Augusta-Allee 104-106”, resulting in an overall increase in the
carrying amount of the office properties by €18.9 million, or 4.2%, from €447.8 million as of December 31, 2013 to
€466.7 million as of June 30, 2014. The fair value increase from office properties was partially offset by the fair value
decrease in retail properties by 9.8 million, or 1.4%, from €680.5 million as of December 31, 2013 to €670.7 million as of
June 30, 2014. The decrease related to the opportunistic sale of retail properties in Berlin for which a highly attractive price
was offered. €38.4 million of the gain from the remeasurement of investment property is attributable to these retail assets
which were sold and reclassified as long-term assets held for sale.
The carrying amount (fair value) of investment property in 2013 decreased by €97.0 million, or 6.4%, from
€1,511.7 million as of December 31, 2012 to €1,414.7 million as of December 31, 2013, mainly due to the decrease of other
properties by €135.6 million, or 57.4%, from €236.4 million as of December 31, 2012 to €100.8 million as of December 31,
2013 that resulted from the sale of non-core properties. This negative effect was partially offset by the fair value increase of
the retail and hotel portfolio by €50.8 million, or 8.1%, and by €65.8 million, or 54.9%, from €629.7 million and
€119.8 million as of December 31, 2012 to €680.5 million and €185.6 million as of December 31, 2013, respectively. The
increase was due to the completion of project developments of retail and hotel properties that reduced the fair value of project
developments from €73.1 million as of December 31, 2012 to zero as of December 31, 2013.
The table below provides a reconciliation between the carrying amounts (fair values) at the beginning and at the end
of the respective period.
2012(1)
2013
(audited)
(in € million)
(IFRS)
Carrying amount as of January 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Capitalization of construction activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reclassifications as assets held for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reclassifications from property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fair value adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Carrying amount as of December 31, 2012 and 2013 and June 30, 2014 . . . . . . . . . . .
1,374.2 1,511.7
28.1
3.6
54.6
36.4
(0.8) (209.3)
2.6
—
53.1
72.2
1,511.7 1,414.7
2014
(unaudited)
(in € million)
(IFRS)
1,414.7
20.0
7.0
(71.4)
1.3
51.3
1,423.0
(1)
Acquisitions decreased significantly by €24.5 million, or 87.2%, from €28.1 million for twelve properties in the
fiscal year ended December 31, 2012 to €3.6 million for two properties in the fiscal year ended December 31, 2013 and
increased by €16.4 million to €20.0 million for one office property in the six-month period ended June 30, 2014. From an
investment perspective, TLG focused on the finalization of project developments in the fiscal years ended December 31, 2012
and 2013, which is reflected by the comparably high amount capitalized for construction activities compared to acquisitions in
the fiscal year ended December 31, 2012 and 2013. Capitalization of construction activities decreased by €18.2 million, or
33.3%, from €54.6 million in the fiscal year ended December 31, 2012 to €36.4 million in the fiscal year ended December 31,
2013 before it significantly decreased by €29.4 million, or 80.8%, to €7.0 million in the six-month period ended June 30,
2014. Reclassifications as assets held for sale increased by €208.5 million from €0.8 million in the fiscal year ended
December 31,2012 to €209.3 million in the fiscal year ended December 31, 2013 and decreased by €137.9 million, or 65.9%,
to €71.4 million in the six-month period ended June 30, 2014. Reclassifications as assets held for sale resulted primarily from
the disposal of non-core properties including service properties (nursing homes), management intensive properties and
undeveloped land that no longer fit TLG’s strategic focus on office, rental and hotel properties. For a discussion of the fair
value adjustments, see “—Selected Consolidated Statement of Comprehensive Income Data Prepared in Accordance with
IFRS—Result from the Remeasurement of Investment Property”.
56
Liquidity and Capital Resources
Cash Flow
The following tables provide a breakdown of TLG’s cash flow.
For the year ended
December 31,
2012(1)
2013
(audited)
(in € million)
(IFRS)
For the six-month period
ended June 30,
2013
2014
(unaudited)
(in € million)
(IFRS)
Cash flow from operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest received . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income taxes paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash flow from operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash flow from investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash flow from financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . .
162.9
0.9
(21.7)
(7.7)
134.3
(79.0)
(28.4)
76.1
0.7
(57.0)
(5.9)
13.8
220.9
(156.3)
26.5
0.4
(33.9)
(0.6)
(7.6)
55.1
(37.1)
33.4
0.4
(35.6)
(4.5)
(6.3)
20.3
(128.4)
Change in cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
26.9
78.4
10.5
(114.4)
(1)
For the year ended
December 31,
2011
2012
(audited)
(in € million)
(German GAAP)
Cash flows from operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash flows from investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash flows from financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
124.3
(115.9)
19.2
142.5
(86.6)
(28.4)
Net change in cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
27.6
27.5
Description of Cash Flow during the Six-Month Period Ended June 30, 2013, the Six-Month Period Ended June 30, 2014,
the Year Ended December 31, 2012 and the Year Ended December 31, 2013 Prepared in Accordance with IFRS
Cash Flow from Operating Activities
Cash flow from operating activities increased by €6.9 million, or 26.0%, from €26.5 million during the six-month
period ended June 30, 2013 to €33.4 million during the six-month period ended June 30, 2014. The increase in cash flow from
operating activities is mainly the result of the significant reduction in cash outflows from trade payables and other liabilities.
The decrease in trade payables and other liabilities amounted to €28.5 million during the six-month period ended June 30,
2013 compared to €8.8 million during the six-month period ended June 30, 2014. The cash outflow attributable to trade
payables and other liabilities during the six-month period ended June 30, 2013 resulted primarily from the payment of RETT
relating to the spin-off of TLG’s residential portfolio to TLG WOHNEN GmbH.
Net cash flow from operating activities only slightly increased by €1.3 million from negative €7.6 million during the
six-month period ended June 30, 2013 to negative €6.3 million during the six-month period ended June 30, 2014 because the
increase in cash flow from operating activities was more than offset by the increase in interest paid by €1.7 million, or 5.0%,
from €33.9 million during the six-month period ended June 30, 2013 to €35.6 million during the six-month period ended
June 30, 2014 and the increase in income taxes paid by €3.9 million from €0.6 million during the six-month period ended
June 30, 2013 to €4.5 million during the six-month period ended June 30, 2014. The amount of interest paid during the sixmonth period ended June 30, 2013 and during the six-month period ended June 30, 2014 related to early settlements of
interest rate hedges.
Cash flow from operating activities decreased by €86.8 million, or 53.3%, from €162.9 million during the fiscal
year ended December 31, 2012 to €76.1 million during the fiscal year ended December 31, 2013. Earnings after elimination of
non-cash items decreased by €14.3 million, or 12.2%, from €116.3 million during the fiscal year ended December 31, 2012 to
57
€102.0 million during the fiscal year ended December 31, 2013.1 The positive cash effect from a decrease in inventories
decreased by €35.6 million, or 80.0%, from €44.5 million during the fiscal year ended December 31, 2012 to €8.9 million
during the fiscal year ended December 31, 2013 due to fewer disposals of properties held in inventories. In addition, cash flow
from changes in trade payables and other liabilities decreased by €37.0 million from €3.6 million (increase in trade payables
and other liabilities) during the fiscal year ended December 31, 2012 to negative €33.4 million (decrease in trade payables and
other liabilities) during the fiscal year ended December 31, 2013, primarily due to the payment of RETT relating to the spinoff of TLG’s residential portfolio to TLG WOHNEN GmbH.
Net cash flow from operating activities was additionally negatively affected in an amount of €33.6 million,
decreasing net cash flow from operating activities in total by €120.5 million, or 89.7%, from €134.3 million during the fiscal
year ended December 31, 2012 to €13.8 million during the fiscal year ended December 31, 2013. The additional negative
effect on cash flow primarily resulted from additional interest paid. Interest paid increased by €35.3 million, or 162.7%, from
€21.7 million during the fiscal year ended December 31, 2012 to €57.0 million during the fiscal year ended
December 31, 2013 primarily due to the early settlement of interest rate hedges.
Cash Flow from Investing Activities
Net cash flow from investing activities decreased by €34.8 million, or 63.2%, from €55.1 million during the sixmonth period ended June 30, 2013 to €20.3 million during the six-month period ended June 30, 2014. This significant
decrease was primarily due to the absence of any one-off effects during the six-month period ended June 30, 2014, such as the
cash inflow from the disposal of TLG’s 33% interest in the joint venture AGD in an amount of €71.2 million during the sixmonth period ended June 30, 2013. The net cash effect from acquisitions of properties and disposals from non-core properties
recorded in investment property increased by €36.6 million from negative €16.0 million during the six-month period ended
June 30, 2013 to €20.6 million during the six-month period ended June 30, 2014, mainly due to increased cash received from
disposals of investment property. Cash received from disposals of investment property increased by €46.2 million, from
€1.9 million during the six-month period ended June 30, 2013 to €48.1 million during the six-month period ended June 30,
2014, primarily due to the sale of non-core properties (nursing homes). Cash paid for acquisitions of investment property
increased by €9.6 million, or 53.9%, from €17.8 million during the six-month period ended June 30, 2013 to €27.4 million
during the six-month period ended June 30, 2014, primarily relating to the acquisition of the office property “KaiserinAugusta-Allee 104-106” in an amount of €19.0 million.
Net cash flow from investing activities increased by €299.9 million from negative €79.0 million during the fiscal
year ended December 31, 2012 to €220.9 million during the fiscal year ended December 31, 2013. This significant increase
was primarily due to significant disposals of non-core investment properties resulting in cash received from disposals of
investment property of €191.7 million during the fiscal year ended December 31, 2013 compared to only €0.8 million in the
previous year. Cash paid for acquisitions of investment property declined by €40.5 million, or 49.4%, from €82.0 million
during the fiscal year ended December 31, 2012 to €41.5 million during the fiscal year ended December 31, 2013.
Acquisitions of investment property declined by €24.5 million, or 87.2%, from €28.1 million during the fiscal year ended
December 31, 2012 to €3.6 million during the fiscal year ended December 31, 2013 because TLG in line with its then current
strategy did not focus on acquisitions in 2013. Capitalization of construction activities declined by €18.2 million, or 33.3%,
from €54.6 million during the fiscal year ended December 31, 2012 to €36.4 million during the fiscal year ended
December 31, 2013 due to reduced project development activity because in line with TLG’s then current strategy only
existing project developments were completed but no new project developments started. Cash received from disposals of joint
ventures increased by €68.0 million from €3.2 million cash that was distributed by AGD to TLG based on its participation in
AGD during the fiscal year ended December 31, 2012 to €71.2 million during the fiscal year ended December 31, 2013, due
to the disposal of TLG’s 33% interest in AGD.
Cash Flow from Financing Activities
Net cash flow from financing activities decreased by €91.3 million from negative €37.1 million during the
six-month period ended June 30, 2013 to negative €128.4 million during the six-month period ended June 30, 2014. This
decrease was primarily due to cash distributions to the Existing Shareholders in an amount of €233.0 million during the sixmonth period ended June 30, 2014, which was only partially offset by lower loan repayments and higher cash inflows from
1
Earnings after elimination of non-cash items for the fiscal year ended December 31, 2012 in an amount of €116.3 million
consists of earnings before taxes (€139.8 million), depreciation (€1.6 million), result from the remeasurement of investment
property (€(53.1) million), result from the measurement of derivatives (€10.0 million), change in the scope of consolidation
(€9.3 million), results from the measurement of joint ventures (€(10.6) million), results of joint ventures (€(2.3) million),
financial income (€(0.9) million) and financial expenses (€22.5 million) and earnings after elimination of non-cash items
for the fiscal year ended December 31, 2013 in an amount of €102.0 million consists of earnings before taxes
(€146.4 million), depreciation (€1.5 million), result from the remeasurement of investment property (€(72.2) million), result
from the remeasurement of derivatives (€(6.9) million), other non-cash expenses/income (€0.0 million), results of joint
ventures (€(2.1) million), financial income (€(0.7) million) and financial expenses (€36.0 million), all as reflected on the
Company’s consolidated cash flow statement as of and for the fiscal year ended December 31, 2013.
58
loans drawn. Repayments of bank loans decreased by €41.3 million, or 32.9%, from €125.6 million during the six-month
period ended June 30, 2013, to €84.3 million during the six-month period ended June 30, 2014. Cash received from loans
drawn increased by €115.6 million, or 157.7%, from €73.3 million during the six-month period ended June 30, 2013, to
€188.9 million during the six-month period ended June 30, 2014.
Net cash flow from financing activities decreased by €127.9 million from negative €28.4 million during the fiscal
year ended December 31, 2012 to negative €156.3 million during the fiscal year ended December 31, 2013. Such decrease
was primarily due to repayments of bank loans in an amount of €429.3 million during the fiscal year ended December 31,
2013 compared to €15.9 million during the fiscal year ended December 31, 2012. The negative impact of the repayment of
bank loans was only partially offset by cash received from bank loans in an amount of €252.5 million during the fiscal year
ended December 31, 2013, compared to €71.2 million during the fiscal year ended December 31, 2012, and by cash received
from equity contributions by the shareholder in an amount of €20.5 million. No cash distribution was made to the Existing
Shareholders during the fiscal year ended December 31, 2013, while cash distributions of €83.7 million were made to the
Company’s former shareholder the Federal Republic of Germany during the fiscal year ended December 31, 2012. The
assumption of the Acquisition Loan from the Existing Shareholders was not cash effective in 2013.
Description of Cash Flow during the Year Ended December 31, 2011 Compared to the Year Ended December 31, 2012
Prepared in Accordance with German GAAP
Cash Flows from Operating Activities
Cash flows from operating activities increased by €18.2 million, or 14.6%, from €124.3 million during the fiscal
year ended December 31, 2011 to €142.5 million during the fiscal year ended December 31, 2012 despite a lower
consolidated net income/loss during the period of €2.5 million during the fiscal year ended December 31, 2012 compared to
€18.7 million during the fiscal year ended December 31, 2011. This increase was primarily due to disposals of real estate
portfolio at carrying amount of €45.6 million during the fiscal year ended December 31, 2012 compared to €25.9 million
during the fiscal year ended December 31, 2011, changes in inventories, trade receivables and other assets as well as in trade
payables, special reserves in accordance with Section 27 (2) of the D-Mark Accounting Act (D-Mark-Bilanzgesetz,
“DMBilG”) and other liabilities in an aggregate amount of €19.3 million during the fiscal year ended December 31, 2012
compared to €1.7 million during the fiscal year ended December 31, 2011 and a positive effect from a change from
deconsolidation in an amount of €27.0 million during the fiscal year ended December 31, 2012. A decrease in provisions
reduced cash flow from operating activities by €0.1 million during the fiscal year ended December 31, 2012, while an increase
in provisions of €22.2 million during the fiscal year ended December 31, 2011 led to a corresponding increase in cash flows
from operating activities. The net effect of the corrections for other non-cash income/expenses decreased by €8.6 million from
a correction in an amount of €6.8 million during the fiscal year ended December 31, 2011 to a correction of negative
€1.8 million for non-cash income during the fiscal year ended December 31, 2012.
Cash Flows from Investing Activities
Cash flows from investing activities increased by €29.3 million from negative €115.9 million during the fiscal year
ended December 31, 2011 to negative €86.6 million during the fiscal year ended December 31, 2012. This increase was
primarily due to lower purchases of tangible fixed assets of €89.5 million during the fiscal year ended December 31, 2012
compared to €115.4 million during the fiscal year ended December 31, 2011.
Cash Flows from Financing Activities
Cash flows from financing activities decreased by €47.6 million from €19.2 million during the fiscal year ended
December 31, 2011 to negative €28.4 million during the fiscal year ended December 31, 2012. This decrease was primarily
due to cash payments to the Company’s former shareholder, the Federal Republic of Germany, in an amount of €83.7 million
during the fiscal year ended December 31, 2012 compared to such payments of €20.0 million in the fiscal year ended
December 31, 2011. The negative effect from the higher distribution to shareholders in 2012 was partially offset by the higher
positive net cash effect from cash proceeds from borrowings and cash repayments of borrowings of €55.3 million during the
fiscal year ended December 31, 2012 compared to €39.2 million during the fiscal year ended December 31, 2011.
59
FFO
The following table shows the calculation of FFO for the periods shown:
For the year ended
December 31,
2012
2013
specified)
(in € million)
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Result from the disposal of investment property . . . . . . . . . . . . . . . . . . . . . .
Result from the disposal of real estate inventory . . . . . . . . . . . . . . . . . . . . .
Result from the remeasurement of investment property . . . . . . . . . . . . . . . .
Gain/loss from the remeasurement of derivatives . . . . . . . . . . . . . . . . . . . . .
Other effects(1) (unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
periods(2) (unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustment for tax effects from the result of the disposal of investment
property and the disposal of real estate inventory as well as tax effects
from the settlement of interest rate swaps(3) (unaudited) . . . . . . . . . . . . . .
FFO (unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1)
For the six-month
period ended
June 30,
2013
2014
(unaudited)
(in € million)
76.3
0.0
(27.4)
(53.1)
10.0
(15.4)
59.0
99.1
(0.5)
(7.8)
(72.2)
(6.9)
(6.8)
9.8
46.1
(0.2)
(5.5)
(34.4)
(5.4)
4.2
5.5
57.4
(0.5)
(2.3)
(51.3)
2.0
(1.7)
8.3
N/A
N/A
0.6
9.5
3.2
52.6
31.4
46.1
13.6
24.4
4.6
26.0
(a)
Depreciation of owner-occupied properties (IAS 16) of €0.3 million for the fiscal year ended December 31, 2012, €0.3 million for
the fiscal year ended December 31, 2013, €0.1 million for the six-month period ended June 30, 2013 and €0.1 million for the sixmonth period ended June 30, 2014;
(b)
December 31, 2013, €0.7 million for the six-month period ended June 30, 2013 and €0.3 million for the six-month period ended
June 30, 2014;
(c)
Income from the 33% interest in the joint venture AGD, sold in 2013, of €12.9 million for the fiscal year ended December 31,
2012, €2.1 million for the fiscal year ended December 31, 2013 and €2.1 million for the six-month period ended June 30, 2013;
(d)
Personnel expenses for severance packages in connection with TLG’s reorganization in the amount of €6.9 million for the fiscal
year ended December 31, 2013 and €6.9 million for the six-month period ended June 30, 2013 as well as share based payment
expenses of €0.8 million for the six-month period ended June 30, 2014;
(e)
Income from the reversal of provisions for real estate transfer tax, provided for in connection with the spin-off of TLG’s residential
properties to TLG WOHNEN GmbH in 2012, of €5.4 million for the fiscal year ended December 31, 2013; and
(f)
Income from the reversal of liabilities and provisions in connection with purchase price pass-through obligations and accrued
interest which resulted from TLG’s obligation to pass on parts of the purchase price received for the sale of properties which were
co-owned by TLG, BEDIG AG i.L. and the state of Berlin in the amount of €4.8 million for the fiscal year ended December 31,
2013 and income from reversal of a provision for the subsidy repayment risk of €2.3 million for the six-month period ended
June 30, 2014.
(2)
The current income taxes shown in the six-month periods ended June 30, 2013 in the amount of €16.5 million and 2014 in the amount of
€17.5 million were calculated by using the integral method in accordance with IAS 34.30. Due to this calculation method a correction in
the amount of €0.6 million for the first half year of 2013 and in the amount of €9.5 million for the first half year of 2014 is made to show
the actually lower current tax expenses for the respective six-month period in the amount of €15.9 million for 2013 and of €8.0 million
for 2014.
(3)
Adjustments of the actual tax effect on current income taxes from the result of the disposal of investment property and real estate
inventory amounted to €3.2 million for the fiscal year ended December 31, 2012, €36.8 million for the fiscal year ended December 31,
2013, €13.6 million for the six-month period ended June 30, 2013 and €10.9 million for the six-month period ended June 30, 2014.
Adjustments of the reverse effect from the tax effective settlement of interest rate swaps (originally decreasing tax expense) amounted to
€5.5 million for the fiscal year ended December 31, 2013 and €6.4 million for the six-month period ended June 30, 2014.
Description of FFO for the Year Ended December 31, 2012 and the Year Ended December 31, 2013, the Six-Month Period
Ended June 30, 2013 and the Six-Month Period Ended June 30, 2014
FFO decreased by €6.5 million, or 12.4%, from €52.6 million for the fiscal year ended December 31, 2012 to
€46.1 million for the fiscal year ended December 31, 2013. The decrease was primarily due to higher interest expenses for
interest on loans and higher current income taxes, which only partially was offset by the increased income from letting
activities. TLG’s expenses for interest on loans increased mainly due to the higher amounts of debt outstanding over the course
of 2013 and the higher interest rate on the Acquisition Loan which TLG assumed from the Existing Shareholders compared to
TLG’s liabilities due to financial institutions. Tax expenses increased because TLG utilized tax loss carryforwards in the fiscal
year ended December 31, 2012 to reduce its income taxes. Due to the change of ownership of TLG, the remaining tax loss
carryforwards expired and TLG could not reduce its income tax burden for the fiscal year ended December 31, 2013.
60
FFO increased by €1.6 million, or 6.6%, from €24.4 million for the six-month period ended June 30, 2013 to
€26.0 million for the six-month period ended June 30, 2014, primarily due to lower interest expenses resulting from the
completion of the Company’s refinancing process, which were only partially offset by lower income from letting activities
driven by certain disposals of income generating non-core properties and higher current tax expenses.
Having achieved an FFO of €26.0 million in the first half of the fiscal year 2014, the Company forecasts that FFO
for the full fiscal year 2014 will amount to €50.0 million (for the assumptions underlying this FFO Forecast see “Profit
Forecast”).
Based on the annualized in-place rent as of September 15, 2014 and a level of net operating income from letting
activities margin that has been achieved in the six-month period ended June 30, 2014 as well as taking into account
administration cost savings from already contractually agreed headcount reductions effective as of January 1, 2015 as well as
the current average financing costs as reflected by the Company’s favorable average interest rate, the Company believes that
stabilized FFO (on a run rate basis) would be a middle single digit Euro million amount higher than its FFO Forecast for the
full fiscal year 2014.
The following table provides further information on the components the Company believes to be relevant for
assessing a stabilized FFO (on a run rate basis):
Annualized in-place rent (in € million)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net operating income from letting activities margin (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stabilized administration costs (in € million)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Financing costs at current average Company interest rate (in € million)(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Estimated cash taxes (in € million)(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
c. 118
c. 87%
c. (18) – c. (19)
c. (23) – c. (24)
c. (6) – c. (7)
Note: All figures above are unaudited
(1)
Annualized in-place rent as of September 15, 2014 excludes in-place rent for signed disposals and includes in-place rent of signed
acquisitions and new or renewed lease agreements.
(2)
Net operating income from letting activities margin is net operating income from letting activities which refers to income from letting
activities less expenses related to letting activities, divided by rental income, all as reflected in the consolidated statement of
comprehensive income for the respective period.
(3)
Administration costs after giving effect to the already agreed headcount reductions as of January 1, 2015 reducing TLG’s headcount to
127 employees.
(4)
TLG’s current average interest rate of 2.99% and financial liabilities due to financial institutions of €727.9 million as of June 30, 2014
plus €13.0 million to €14.0 million additional financial liabilities due to financial institutions relating to the acquisition of the K30 office
building plus €29.0 million to €30 million additional liabilities due to financial institutions relating to the acquisition of approximately
94.9% of the shares in TLG FAB (as defined below).
(5)
The Company estimates the cash taxes as follows: In a first step, it deducts from stabilized FFO pre tax (on a run rate basis) the
depreciation which is recognized under tax law in an amount of approximately €40 million. In a second step, it applies on the result of
FFO pre tax (on a run rate basis) minus depreciation its income tax rate of 30.875% (15.825% corporate tax rate including solidarity
surcharge and 15.05% trade tax rate).
Investments
The following table shows the amount of TLG’s investments in the relevant period in accordance with IFRS.
For the year ended
December 31,
2012(1)
2013
specified)
(in € million)
(IFRS)
For the six-month period
ended June 30,
2013
2014
(unaudited)
(in € million)
(IFRS)
Investments in investment properties(2) (unaudited) . . . . . . . . . . . . . . . . .
Investments in inventory properties(3) (unaudited) . . . . . . . . . . . . . . . . . .
Investments in property, plant and equipment(4) (unaudited) . . . . . . . . . .
Investments in intangible assets(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
82.7
6.5
0.2
0.3
40.0
5.2
0.2
0.2
17.0
1.8
0.0
0.1
27.1
3.7
0.4
0.2
Total investments (unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
89.7
45.6
18.9
31.4
(1)
Figures labelled as audited taken from the Company’s audited consolidated financial statements as of and for the fiscal year ended
December 31, 2013, including comparative financial information for the fiscal year 2012.
(2)
(3)
Acquisitions of investment property and capitalization of construction activities recognized in the carrying amount (fair value) of
investment property.
Refers to the acquistition cost of inventory properties.
(4)
Refers to additions (at cost) to owner-occupied properties, technical equipment and machinery and operating and office equipment.
(5)
Refers to additions (at cost) to intangible assets in the respective period.
61
Investments in Investment Properties
Acquisitions of investment properties amounted to €20.0 million in the six-month period ended June 30, 2014 due
to the acquisition of the office property “Kaiserin-Augusta-Allee 104-106” in Berlin. In accordance with TLG’s strategy to
reduce property developments after the completion of the existing developments capitalization of construction costs amounted
to €7.0 million in the six-month period ended June 30, 2014 relating to remaining construction work on project developments
that became operational as of December 31, 2013.
As part of TLG’s strategy to grow rental income, TLG made investments into its existing investment properties in
the abovementioned amounts. Most of the investments in investment properties related to capitalization of construction
activities, declining by €18.2 million, or 33.3%, from €54.6 million in the fiscal year ended December 31, 2012 to
€36.4 million in the fiscal year ended December 31, 2013. Furthermore, TLG reported acquisitions in an amount of
€28.1 million for twelve properties in the fiscal year ended December 31, 2012 and in an amount of €3.6 million for two
properties in the fiscal year ended December 31, 2013.
Investments in Inventory Properties
Investments in properties held in inventories increased by €1.9 million, or 105.6%, from €1.8 million in the sixmonth period ended June 30, 2013 to €3.7 million in the six-month period ended June 30, 2014 due to construction work on
an unfinished building already sold in 2013 which will be completed and transferred in 2014.
Investments in properties held in inventories decreased by €1.3 million, or 20.0%, from €6.5 million in the fiscal
year ended December 31, 2012 to €5.2 million in the fiscal year ended December 31, 2013 and were related to the unfinished
building mentioned above and another unfinished building, which was sold and transferred in 2013 (see “—Selected
Consolidated Statement of Comprehensive Income Data Prepared in Accordance with IFRS—Result from the Disposal of
Investment Properties”).
Investments since June 30, 2014 and Future Investments
Since June 30, 2014, TLG has made the following ongoing and future investments:
•
Acquisition of the office building Köpenicker Straße 30-31 (K30) in Berlin closed in September 2014 for a
purchase price of €23.0 million (including ancillary acquisition costs).
•
Acquisition of approximately 94.9% of the shares of TLG FAB S.à r.l., Luxemburg (“TLG FAB”), which
owns the “Forum am Brühl” in Leipzig at Richard-Wagner-Straße 1, 2-3. The purchase price was based on an
agreed asset value for the “Forum am Brühl” of €49.5 million (including ancillary acquisition costs), which
was adjusted with respect to cash and debt of TLG FAB (including the replacement by TLG of the existing
debt financing). The share purchase agreement was signed on September 5, 2014 and the transaction closed
effective October 1, 2014. The purchase price was partially debt financed.
•
The following table provides additional information on these two properties:
Annualized
Fair
in-place
Lettable
Location value(1)
rent(2)
WALT(3) area(4)
(As of the respective signing date)(5)
Köpenicker Str. 30-31 . . . . . . . Berlin
Richard-Wagner-Str. 1, 2-3 . . . Leipzig
22.9
49.7
1,344.1
3,297,1
6.5
5.1
Anchor tenant(s)
12,156 ver.di; Deutsche Bahn
26,500 Deutsche Bahn, APO-Bank
(1)
In € million.
(2)
In € thousand. Annualized in-place rent is calculated based on contracted rents as of the respective signing date, without
deduction for any applicable rent free periods, multiplied by twelve. In-place rent is not an IFRS measure.
(3)
In years. WALT refers to the weighted average lease term, i.e., the remaining average contractual lease term for
unexpired leases with a contractually fixed maturity.
(4)
In sqm and excluding parking space and open space.
(5)
Signing date for Köpenicker Straße 30-31: July 18, 2014. Signing date for Richard-Wagner-Straße 1, 2-3: September 5,
2014.
Besides the recent investments above which already closed, the Management and Supervisory Board have made no
firm commitments on any significant future investments.
However, the Company is currently negotiating with the seller of a retail asset in Berlin with a potential acquisition
price (including ancillary acquisition costs) of approximately €35 million and is currently conducting due diligence with
regard to an office asset in Rostock with an acquisition price (including ancillary acquisition costs) of approximately €16
million. In addition, the Company is currently reviewing in more detail potential acquisitions of office and retail properties
located in Berlin, Dresden/Leipzig, Rostock or the respective surrounding areas and other parts of eastern Germany in which
TLG operates with an aggregate fair value of €20 million and €140 million, respectively.
62
The Company plans to finance future acquisitions with debt and equity.
Equity
December 31, 2013 Compared to June 30, 2014 (IFRS)
In the six-month period ended June 30, 2014, TLG’s equity capital decreased by €179.5 million, or 22.4%, from
€801.0 million as of December 31, 2013 to €621.5 million as of June 30, 2014. TLG’s equity is fully attributable to its
Existing Shareholders. The decrease was primarily due to distributions to the Existing Shareholders in an amount of
€233.0 million from retained earnings in the six-month period ended June 30, 2014, which was only partially offset by net
income in an amount of €57.4 million for the six-month period ended June 30, 2014.
December 31, 2012 Compared to December 31, 2013 (IFRS)
TLG’s equity, which is, in the absence of any minority interest, fully attributable to TLG’s shareholders, decreased
by €205.7 million, or 20.4%, from €1,006.7 million as of December 31, 2012 to €801.0 million as of December 31, 2013. The
subscribed capital (gezeichnetes Kapital) amounted to €52.0 million as of December 31, 2013 and remained unchanged
compared to December 31, 2012. The capital reserves increased by €258.7 million, or 170.8%, from €151.5 million as of
December 31, 2012 to €410.2 million as of December 31, 2013 and the retained earnings decreased significantly by
€464.3 million, or 57.7%, from €804.3 million as of December 31, 2012 to €340.0 million as of December 31, 2013. The
increase of the capital reserves in 2013 in an amount of €258.7 million resulted from an addition to the capital reserves due to
the release of the special reserve in accordance with Section 27 (2) of the DMBilG, previously booked under retained earnings
in an amount of €438.1 million, additional shareholder contributions to capital reserves in an amount of €20.5 million by the
Existing Shareholders and a transfer from capital reserves in an amount of €199.8 million to retained earnings. The decrease
of the retained earnings by €464.3 million in 2013 resulted from non-cash distributions to the Existing Shareholders in an
amount of €325.2 million due to the assumption of the Acquisition Loan by TLG from the Existing Shareholders and the
release of the special reserve to capital reserves in an amount of €438.1 million which was partially offset by the transfer from
capital reserves to retained earnings in an amount of €199.8 million and consolidated net income for the year 2013 in an
amount of €99.1 million. Other comprehensive income, consisting of the hedge accounting reserve and actuarial gains and
losses, decreased slightly by €0.2 million from negative €1.0 million as of December 31, 2012 to negative €1.2 million as of
December 31, 2013.
December 31, 2011 Compared to December 31, 2012 (German GAAP)
TLG’s equity decreased by €157.5 million, or 16.4%, from €962.7 million as of December 31, 2011 to
€805.2 million as of December 31, 2012. The subscribed capital (gezeichnetes Kapital) amounted to €52.0 million as of
December 31, 2012 and remained unchanged compared to December 31, 2011. Capital reserves decreased by €160.3 million,
or 44.5%, from €360.3 million as of December 31, 2011 to €200.0 million as of December 31, 2012, due to the spin-off of
TLG’s residential portfolio to TLG WOHNEN GmbH (€148.7 million) which was recorded as a decrease of capital reserves,
and distributions in an amount of €30.0 million to the former shareholder, the Federal Republic of Germany, which were in an
amount of €11.6 million funded through cash withdrawals from the capital reserves. Consolidated net accumulated losses
increased by €15.9 million, or 18.9%, from €84.0 million as of December 31, 2011 to €99.9 million as of December 31, 2012,
due to the increase from the profit distribution which was not funded from the capital reserves (€18.4 million). Consolidated
net income in an amount of €2.5 million and changes in the reporting entity structure (€18.7 million) had a positive effect on
TLG’s equity in the year ended December 31, 2012.
Maturity Profile of Key Liabilities
The following table provides a maturity profile of TLG’s financial liabilities due to financial institutions as of
June 30, 2014.
As of June 30, 2014
Remaining terms
Book Value up to
more than
amount
1 year 1-5 years
5 years
(unaudited)
(in € million)
(IFRS)
Liabilities due to financial institutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
63
727.9
55.6
245.3
427.1
Financial Liabilities
The following table provides a breakdown of TLG’s financial liabilities according to IFRS as of the dates shown.
As of December 31,
2012(1)
2013
(audited, unless
(in € million)
(IFRS)
As of June 30,
2014
(unaudited)
(in € million)
(IFRS)
Liabilities due to financial institutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Financial derivatives (unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
480.0
43.4
626.2
18.8
727.9
8.7
Financial liabilities (unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
523.4
645.0
736.6
(1)
Figures taken or derived from TLG’s audited consolidated financial statements as of and for the fiscal year ended December 31, 2013,
For more information on the development of financial liabilities due to financial institutions see “—Selected
Consolidated Statement of Comprehensive Income Data Prepared in Accordance with IFRS—Financial Income and Total
Interest and Similar Expenses (Total Interest and Similar Result)”.
The following table provides a breakdown of TLG’s financial liabilities to banks according to German GAAP for
the dates shown.
As of December 31,
2011
2012
(audited, unless
(in € million)
(German GAAP)
Liabilities to banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Financial derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
696.8
—
480.1
—
Financial liabilities (unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
696.8
480.1
The significant decrease in liabilities to banks by €216.7 million, or 31.1%, from €696.8 million as of December 31,
2011 to €480.1 million as of December 31, 2012 was due to the transfer of liabilities to banks to TLG WOHNEN GmbH in
connection with the spin-off of TLG’s residential portfolio to TLG WOHNEN GmbH, whose sole shareholder was the
Federal Republic of Germany.
Other Liabilities
The following table provides a composition of other liabilities.
As of December 31,
2012(1)
2013
(audited)
(in € million)
(IFRS)
Total other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Liabilities to employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Advance payments received . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Liabilities from the pass-through of purchase price . . . . . . . . . . . . . . . . . . . . . . . . .
Investment subsidies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Liabilities to tenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Miscellaneous other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
38.3
2.2
3.7
18.0
7.0
2.8
1.1
3.5
19.5
5.2
0.5
1.6
5.5
2.4
1.2
3.1
As of June 30,
2014
(unaudited)
(in € million)
(IFRS)
12.9
4.1
0.7
1.9
—
2.6
1.2
2.3
(1)
December 31, 2013 Compared to June 30, 2014 (IFRS)
Other liabilities decreased by €6.6 million, or 33.8%, from €19.5 million as of December 31, 2013 to €12.9 million
as of June 30, 2014, mainly due to the absence of any liabilities from the pass-through of purchase prices.
64
December 31, 2012 Compared to December 31, 2013 (IFRS)
Liabilities to employees increased due to the headcount reductions conducted in 2013 (see “—Key Factors
Influencing TLG’s Portfolio, Results of Operations and the Comparability of Financial Information—Reorganization of TLG”
Advance payments received decreased by €3.2 million, or 86.5%, from €3.7 million as of December 31, 2012 to
€0.5 million as of December 31, 2013. Advance payments received related to the disposal of properties. Other taxes decreased
significantly by €16.4 million, or 91.1%, from €18.0 million as of December 31, 2012 to €1.6 million as of December 31,
2013, primarily due to the payment of the tax liability from RETT relating to the spin-off of TLG’s residential business to
TLG WOHNEN GmbH. Liabilities from the pass-through of purchase price decreased by €1.5 million, or 21.4%, from
€7.0 million as of December 31, 2012 to €5.5 million as of December 31, 2013. Liabilities from the pass-through of purchase
price resulted from TLG’s obligation to pass on parts of the purchase price received for the sale of properties which were coowned by TLG, BEDIG AG i.L. and the state of Berlin.
Deferred Taxes
Deferred tax assets and deferred tax liabilities resulted from temporary differences between the tax book value and
the fair value of assets. The following table provides an overview of deferred tax assets and deferred tax liabilities:
As of December 31,
2012(1)
2013
(audited)
(in € million)
(IFRS)
Deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4.5
79.3
3.5
88.1
As of June 30,
2014
(unaudited)
(in € million)
(IFRS)
5.4
96.3
(1)
TLG’s deferred tax assets decreased by €1.0 million, or 22.2%, from €4.5 million as of December 31, 2012 to
€3.5 million as of December 31, 2013, mainly due to lower book values of financial liabilities and increased by €1.9 million,
or 54.3% to €5.4 million as of June 30, 2014, due to lower negative book values of financial instruments.
TLG’s deferred tax liabilities increased by €8.8 million, or 11.1%, from €79.3 million as of December 31, 2012 to
€88.1 million as of December 31, 2013 and by €8.2 million, or 9.3%, to €96.3 million as of June 30, 2014, due to valuation
gains on investment property.
Provisions
The following table provides a composition of TLG’s pension provisions and other current provisions based on
balance sheet data prepared in accordance with IFRS.
As of December 31,
2012(1)
2013
(audited, unless
(in € million)
(IFRS)
As of June 30,
2014
(unaudited)
(in € million)
(IFRS)
Pension provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other current provisions(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6.9
22.2
6.9
16.2
6.8
12.3
Total (unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
29.1
23.1
19.1
(1)
Figures taken or derived from TLG’s audited consolidated financial statements as of and for the fiscal year ended December 31, 2013,
(2)
Other current provisions include provisions for personnel expenses from restructuring plan, provisions for litigation risks and other
miscellaneous provisions.
Pension provisions as of December 31, 2012 and 2013 and as of June 30, 2014 remained relatively stable and
amounted to €6.9 million, €6.9 million and €6.8 million, respectively. Other current provisions decreased by €6.0 million, or
27.0%, from €22.2 million as of December 31, 2012 to €16.2 million as of December 31, 2013, due to reversals of provisions
for litigation risks in an amount of €3.5 million and reversals of other miscellaneous provisions. Other current provisions
65
decreased by €3.9 million, or 24.1%, from €16.2 million as of December 31, 2013 to €12.3 million as of June 30, 2014,
primarily due to an additional release of provisions for litigation risks. For more information on TLG’s litigation, see
“Business––TLG’s Business Operations––Material Litigation”.
Other Financial Obligations
The following table provides a composition of TLG’s other financial obligations based on consolidated statement of
financial position data prepared in accordance with IFRS.
As of December 31,
2012(1)
2013
(audited)
(in € million)
(IFRS)
Other financial obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Future payments (net) for operating leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Purchase commitment for investment property and property, plant and equipment . . . . . . . . . . . . . . . . . . .
65.9
0.6
65.3
41.7
0.7
41.0
(1)
Other financial obligations decreased by €24.2 million, or 36.7%, from €65.9 million as of December 31, 2012 to
€41.7 million as of December 31, 2013, due to a decrease in purchase commitment for investment property and property,
plant and equipment. Purchase commitment for investment property and property, plant and equipment decreased by
€24.3 million, or 37.2%, from €65.3 million as of December 31, 2012 to €41.0 million as of December 31, 2013, primarily
due to the reduced volume of project developments. The decrease from reduced project development was partially offset by
the purchase price obligation regarding the office property “Kaiserin-Augusta-Allee 104-106” in Berlin, in 2013. Purchase
price obligations from acquisitions of properties are recognized if the sale and purchase agreements have been notarized in the
reporting period but the transfer of the property commences in a subsequent period.
Additional Information from the Unconsolidated Financial Statements Prepared in Accordance with German GAAP
as of and for the Year Ended December 31, 2013
TLG’s 2013 unconsolidated financial statements have been prepared in accordance with German GAAP. According
to these financial statements, equity decreased from €806.8 million as of December 31, 2012 to €585.0 million as of
December 31, 2013. The decrease by €221.8 million was primarily the result of non-cash distributions from the capital
reserves in an amount of €199.8 million, from the revenue reserves in an amount of €96.4 million and from net income in an
amount of €29.0 million to the Existing Shareholders by assuming the Acquisition Loan in a total amount of €325.2 million
from the Existing Shareholders. From the remaining revenue reserves an amount of €438.1 million was reclassified to capital
reserves and the Existing Shareholders contributed €20.5 million to the capital reserves. As a result of the distribution and the
reclassification, the capital reserve increased from €199.8 million as of December 31, 2012 to €458.6 million as of
December 31, 2013 and the revenue reserves decreased from €535.4 million as of December 31, 2012 to €0.8 million as of
December 31, 2013. For further information on TLG’s unconsolidated financial statements, see the notes to its unconsolidated
financial statements, which are set forth on pages F-116 et seq. of this Prospectus.
Quantitative and Qualitative Disclosure about Market Risk
Default Risk
Default risk is the risk that counterparties – essentially the tenants and acquirers of real properties – will be unable
to satisfy their contractual payment obligations and that this will result in a loss for TLG. Credit checks are conducted as part
of default risk management.
Trade receivables in particular are exposed to default risk. TLG does not consider itself exposed to any material
credit risk from any single counterparty. Given TLG’s broad, heterogeneous customer base, the concentration of its credit risk
is limited. Default risk is reduced through the careful screening of counterparties. In addition, TLG makes use of standard
collateral instruments such as sureties, liens, guarantees, letters of comfort, withholdings and security deposits. Where
necessary, valuation allowances are recognized in respect of receivables.
Professional credit checks are performed when screening counterparties, thus minimizing any potential for default
risk. Counterparty creditworthiness is subject to continuous monitoring. If a counterparty’s creditworthiness deteriorates
significantly, TLG undertakes efforts to reduce its existing exposure as quickly as possible. New exposures to such
counterparties are no longer entered into.
66
TLG’s balances with banks are fully protected against the risk of a bank default through the deposit protection
schemes in place for German banks. TLG regularly monitors the banks’ membership and amount subject to deposit
protection.
The maximum possible default risk is equal to the book value of financial assets, excluding the value of collateral
received or other risk-mitigating arrangements. Guarantees are not entered into for subsidiaries or equity investments.
Liquidity Risk
Liquidity risk is the risk that a company will not be able to fulfill its payment obligations at the contractually
stipulated time. To safeguard TLG’s liquidity, TLG’s treasury and controlling department constantly monitors and plans
TLG’s liquidity needs. Sufficient funds are constantly kept at hand to ensure that TLG is able to satisfy its obligations over a
certain period.
TLG has a short-term line of credit of €7.0 million which it may draw down as it needs. The credit line is unsecured.
The Company intends to reduce its short-term line of credit to €0.5 million.
The table below presents the contractually stipulated (undiscounted) payments of interest and principal for TLG’s
primary financial liabilities and financial instruments with a negative fair value. Maturities are based on the contractually
stipulated fixed-interest periods for the financial liabilities.
Carrying
amount
As of December 31, 2013
Maturities
< 1 year 1-5 years > 5 years
(audited)
(in € million)
(IFRS)
Types of liabilities
Financial liabilities due to financial institutions . . . . . . . . . . . . . . . . . . . . . . . . . . .
Financial instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trade payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other liabilities(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
626.2
18.8
14.6
19.5
123.9
6.2
14.6
16.1
261.4
14.4
—
3.4
318.1
(0.3)
—
—
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
679.1
160.8
279.3
317.8
(1)
For more information on other liabilities, see “—Liquidity and Capital Resources—Trade Payables and Other Liabilities”.
The table above includes all instruments held for which payments had already been contractually agreed as of
December 31, 2013. Planning figures for future new liabilities are not factored in. The floating interest payments for financial
instruments are calculated on the basis of the interest rates most recently set prior to the reporting date. Financial liabilities
which may be called at any time are always reported under the earliest repayment date.
Certain financing agreements stipulate financial covenants (essentially TLG’s equity ratio, Net LTV-Ratio and
interest and capital servicing cover ratio) which, if breached, may grant the bank an extraordinary call right. TLG counteracts
the risk of a breach of covenant through regular monitoring of the covenants and, where necessary, initiates measures aimed
to ensure compliance with the covenants. There also exists the option of rendering special payment to remedy a breach of
covenant. There were no breaches of covenants in 2012 or 2013.
Market Risk
Interest rate movements can also lead to higher financing costs as a result of rising interest rates. TLG counteracts
this interest rate risk by concluding interest rate hedges for floating rate loans and by entering into fixed interest agreements
with multi-year terms. Interest rate derivatives (consisting of interest rate swaps and caps) are used to hedge changes in
interest rates. The use of such interest rate derivatives is governed by a set of guidelines. Under those guidelines, financial
instruments may be used strictly for hedging purposes and not for trading purposes. In general, there exists an economic
hedge relationship for all floating rate loans. In individual cases, particularly those involving short-term loans, no hedge is
concluded.
Currency risk does not affect TLG since material business transactions are conducted in euros.
67
The table below presents the financial instruments held by TLG as of December 31, 2013.
Derivatives
Fair Value
< 1 year
(audited, unless
(in € million)
(IFRS)
Derivative HfT assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
of which caps . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
0.0
0.0
—
—
Derivative HfT liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
of which interest rate swaps . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
of which collars . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(18.6)
(16.8)
(1.8)
—
—
—
Derivatives used in hedges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(0.2)
(0.2)
—
—
Total (unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(18.8)
—
The table below presents the financial instruments held by TLG as of December 31, 2012.
Derivatives(1)
Fair Value
< 1 year
(audited, unless
(in € million)
(IFRS)
Derivative HfT assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
of which caps . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
0.0
0.0
—
0.0
Derivative Hft liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
of which collars . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(43.4)
(41.1)
(2.3)
(18.2)
(18.2)
—
Total (unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(43.4)
(18.2)
(1)
To the extent the derivatives concluded qualify for hedge accounting, they are used as hedges in accordance with
IAS 39. The cash flows from underlying transactions secured in cash flow hedges will flow through the statement of
comprehensive income in the years from 2014 to 2021.
In 2013, no ineffective portions of hedges were reported in the statement of comprehensive income as part of hedge
accounting. No hedge accounting was applied in 2012.
The table below shows the amount reported directly in other comprehensive income during the reporting period.
That amount corresponds to the effective portion of the fair value hedge.
2012(1)
2013
(audited)
(in € million)
(IFRS)
As of January 1, . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Recognized in equity during the reporting period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reversed from equity to income statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
—
—
—
(0.2)
—
As of December 31, . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
(0.2)
(1)
Sensitivity Analysis
In accordance with IFRS 7, interest rate risks are presented using sensitivity analyses. These analyses calculate the
impacts a change in market interest rates would have on interest income and expense, trading gains and losses and equity as of
the reporting date.
The sensitivity analysis examines what effects a parallel shift in the yield curve by +/- 100 basis points (“BP”)
would have on TLG’s equity and consolidated statement of comprehensive income. The cash-flow effects of a shift in the
yield curve relate solely to interest expenses and income for the subsequent reporting period.
68
Based on the financial instruments held or issued by TLG as of December 31, 2013, a hypothetical change –
quantified by way of sensitivity analysis – in the interest rates applicable to the relevant instruments would have had the
following (pre-tax) effects.
As of December 31, 2013
OCI-effect
Earnings-effect
+100 BP
-100 BP
+100 BP
-100 BP
(audited)
(in € million)
(IFRS)
Financial instruments
Financial liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Financial derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
4.0
—
(4.3)
(3.1)
7.0
0.9
(6.8)
Based on the financial instruments held or issued by TLG as of December 31, 2012, a hypothetical change –
quantified by way of sensitivity analysis – in the interest rates applicable to the relevant instruments would have had the
following (pre-tax) effects.
As of December 31, 2012(1)
OCI-effect
Earnings-effect
+100 BP
-100 BP
+100 BP
-100 BP
(audited)
(in € million)
(IFRS)
Financial instruments
Financial liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Financial derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1)
—
—
—
—
(2.6)
13.3
0.5
(13.8)
Significant Accounting Policies
The preparation of TLG’s consolidated financial statements in accordance with IFRS and the additional
(HGB)) requires management to make judgments, estimates and assumptions that affect the reported amounts of income or
revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities, at the end of the reporting period.
However, uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the
carrying amount of the asset or liability affected in future periods.
Significant accounting policies are those that require the most complex or subjective judgments, often as a result of
the need to make estimates about the effects of matters that are inherently uncertain.
Investment Property (IAS 40)
Under investment property, TLG reports the properties that are held to generate rental income or for capital
appreciation and not held for own use or sale in the ordinary course of business.
In individual instances, TLG has properties that are partially owner occupied and partially for use by third parties,
i.e., rented. These mixed-use properties are reported separately provided that a legal option exists for dividing the
corresponding property and that neither the part occupied by TLG nor the part occupied by a third party is immaterial.
If a change in use occurs that is documented by the start of owner occupancy or the start of development with the
intent to sell, properties are transferred out of the inventory of investment property.
Investment property is recognized at cost as of the date of acquisition. After recognition, investment property is
measured at fair value according to the option provided in IAS 40. Fair value is determined in accordance with IFRS 13. In
accordance with IFRS 13.9, fair value is defined as the price that would be received for the sale of an asset or paid for
transferring a liability in an orderly transaction between market participants at the measurement date. Fair value always
assumes the sale of an asset (exit price). It corresponds to the price to be paid to the seller in the event of a hypothetical sale of
a property on the measurement date, regardless of a company-specific intent or the ability to sell the asset.
Fair value is calculated on the basis of the highest and best use of the property (IFRS 13.27 et seq.). This implies
maximizing the use and value of the property if this is physically possible, legally permissible and financially feasible.
All fair value changes of the investment property are recognized in profit or loss for the current period. Determining
fair value for the investment property is based on a real estate appraisal conducted by Savills at the end of 2013/early 2014 for
the dates January 1, 2012, December 31, 2012 and December 31, 2013.
69
Project developments are recognized as investment property with their fair value if the fair value is reliably
determinable. The fair value is generally reliably determinable when the building permit has been received.
The fair value of the property held for generating rental income or for capital appreciation over the long term was
determined in accordance with international standards by means of DCF. Using this method, the fair value of a property is the
sum of the discounted cash flows for a ten-year planning period – consistent with standard practice – plus the residual value of
the property at the end of the planning period discounted to the measurement date, calculated on the basis of the sustainable
cash inflows from letting activities. Properties with negative cash inflows (including permanently vacant properties) were
valued using the liquidation method (land value less demolition costs, plus residual net income, if applicable).
Due to the limited availability of data and measurement parameters directly observable on the market, the
complexity of real estate appraisal as well as the degree of specificity of the property, fair value measurement of the
investment property is classified as level three under the measurement hierarchy of IFRS 13.86 (Measurement on the basis of
significant, unobservable inputs).
In particular, the following unobservable input factors were used for measurement:
•
Future rental income based on the individual property location, type, size and quality, taking into account the
terms of existing rental agreements, other contracts or external indicators such as rents customary for the
market for comparable properties;
•
Estimations of vacancy rates based on current and expected future market conditions after the expiration of
existing rental agreements;
•
Discount rates for the ten-year planning period reflecting the current market assessment with respect to the
uncertainty in terms of the amount and timing of future payment flows;
•
Capitalization rates based on the individual property location, type, size and quality, taking into account the
market information available on the reporting date; and
•
Residual values, particularly those based on assumptions of future maintenance and reinvestment costs,
vacancy rates and rents and growth rates customary for the market.
Financial Instruments (IAS 39)
Within TLG, financial instruments are entered into in order to hedge interest rate risks of real estate finance.
Financial instruments are recognized at fair value. Fair value changes of the derivatives are reported in profit or loss if a hedge
in accordance with the provisions of IAS 39 does not exist.
Derivatives accounted for as hedging instruments serve to hedge future, uncertain payment flows. A risk regarding
the amount of future cash flows exists for TLG, in particular from financial liabilities with variable interest rates. Fair value
changes are divided into an effective and an ineffective part. The dollar offset method is used to determine effectiveness. The
effective part is the portion of the measurement result representing an effective hedge against the cash flow risk from an
accounting perspective. The effective part is disclosed outside profit or loss in cumulative other reserves (other
comprehensive income, OCI) net of deferred taxes.
The ineffective part of the measurement result is recognized in the statement of comprehensive income and reported
under net interest income. The amounts recognized in other comprehensive income are recycled through profit or loss when
the gains or losses arising in connection with the underlying transaction affect income (recognized under net interest income).
In the event that a hedge is terminated prematurely, the amounts previously recognized in other comprehensive income are
recycled through profit or loss when the gains or losses arising in connection with the still existing underlying transaction
affect income. If the underlying transaction no longer exists, amounts still remaining in OCI are immediately recycled through
profit or loss.
The fair value of the financial instruments is determined on the basis of corresponding market values or
measurement methods. For cash and other current primary financial instruments, the fair values are approximately equal to the
carrying amounts recognized on the respective reporting dates.
For non-current receivables, other assets and liabilities, fair value is calculated on the basis of expected payment
flows using the reference interest rates applicable on the reporting date. The fair values of financial instruments are
determined on the basis of the reference interest rates on the reporting date plus the own or counterparty risk.
For the financial instruments to be recognized at fair value, fair value is always calculated using the corresponding
market or stock exchange prices. If there are no market or stock exchange prices, measurement is based on market
measurement methods customary for the market using market parameters specific to the instrument. Fair value is determined
using the DCF method, while individual credit ratings and other market conditions are used to calculate present value in the
form of credit ratings or liquidity spreads customary for the market.
70
For the fair value measurement of financial instruments, the measurement model uses relevant market prices and
interest rates observable on the reporting date obtained from external sources as inputs.
Reconciliation between German GAAP and IFRS for the Fiscal Year 2012
Reconciliation of 2012 Consolidated Total Comprehensive Income and Equity from German GAAP to IFRS
The changes in total comprehensive income were attributable to the following effects:
For the year ended
December 31, 2012
(audited)
(in € million)
Net income for the period in accordance with German GAAP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Recognition of loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fair value recognition of investment property and owner-occupied properties . . . . . . . . . . . . . . . . . . . . . . .
Recognition of deferred taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustments to pension provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustment to other provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustment of the carrying amount of the investment in AGD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Financial instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Correction for effect of deconsolidation based on exercise of option granted under German GAAP . . . . . .
Other effects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2.5
(0.1)
95.3
(59.0)
(0.3)
0.4
10.6
6.4
17.7
2.8
Net income for the period in accordance with IFRS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
76.3
Change due to amounts recognized directly to equity (actuarial gains/losses) . . . . . . . . . . . . . . . . . . . . . . .
(1.0)
Total comprehensive income in accordance with IFRS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
75.3
The changes in consolidated equity were attributable to the following effects:
As of
As of
January 1, 2012 December 31, 2012
(audited)
(in € million)
Consolidated equity in accordance with German GAAP . . . . . . . . . . . . . . . . . . . . . .
Recognition of loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Recognition of investment property and owner-occupied property at fair value . . . . . .
Recognition of deferred taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustments to pension provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustment to other provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Negative consolidation difference . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Financial instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Offsetting special reserve TLG WOHNEN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustment to the carrying amount of the investment in AGD . . . . . . . . . . . . . . . . . . . .
Other effects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated equity in accordance with IFRS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
962.7
0.2
198.1
(16.3)
1.7
1.4
7.9
(43.5)
22.2
25.1
(1.1)
1,158.6
805.3
0.1
255.9
(74.8)
0.0
1.8
7.0
(25.9)
—
35.7
1.7
1,006.7
The main differences between German GAAP and IFRS, including their effects on TLG’s net profit/loss for the
fiscal year ended December 31, 2012 and on TLG’s consolidated equity in accordance with IFRS as of January 1, 2012 and
December 31, 2012, relate to the following items in particular:
•
Under IAS 39.43, loans made available to TLG for financing must be recognized at fair value on the date the
loans were granted, which is equivalent to the present value of future payment obligations on the basis of a
corresponding market interest rate including transaction costs and discounts. The loans are measured at
amortized cost for subsequent measurement. In accordance with German GAAP, the loans are recognized in
their repayment amount. Any material transaction costs or discounts were capitalized and reversed over the
fixed-interest periods of the respective loans. Transaction costs or discounts not considered material were
expensed immediately.
•
Property held for generating rental income or for capital appreciation is classified as investment property in
accordance with IAS 40 and recognized at fair value in TLG in accordance with the option set forth in
IAS 40. Such property is recognized at amortized cost in the German GAAP consolidated financial statements.
71
•
The owner-occupied properties in property, plant, and equipment were also remeasured once on the date of
first-time adoption of IFRS due to the fact that the option pursuant to IFRS 1.D.5-D.7 was exercised. This
resulted in a fair value of €19.5 million being recognized. Remeasurement effects on equity amounted to
€5.7 million.
•
The differences between the carrying amounts in accordance with German GAAP as compared with the IFRS
figures, in particular for investment property, resulted in the recognition of deferred tax liabilities. In addition,
in preparing its consolidated financial statements in accordance with German GAAP, TLG exercised the option
set forth under Section 274 (1) of the German Commercial Code (Handelsgesetzbuch (HGB)) to not recognize
deferred tax assets; this option does not exist under IFRS.
•
Pension provisions were recognized at the settlement amount in the German GAAP consolidated financial
statements. The average interest rate of the last seven years – set by the Deutsche Bundesbank – is always used
to discount pension provisions. Pursuant to IFRS, an interest rate for high-quality corporate bonds is to be used
for discounting pension provisions.
•
Under IAS 37, reserves are only recognized if an external obligation exists, its occurrence is probable and the
amount can be reliably determined. In such cases, the most probable amount is recognized. By contrast,
provisions in the German GAAP consolidated financial statements were recognized in accordance with prudent
business judgement. In addition, there were reconciliation effects resulting from provisions for maintenance
expenses under German GAAP not being recognized. Additional effects arose from the fact that provisions
were discounted under IFRS using the risk-free interest rate, while discounting under German GAAP uses the
average interest rate of the last seven years which is set by the Deutsche Bundesbank.
•
A negative consolidation difference (negative goodwill) resulted from the purchase price allocation from
business combinations which was recognized as a liability under German GAAP and expensed over the
remaining useful life of the asset acquired. The negative goodwill does not meet the criteria for recognition
under IFRS and will be recorded under retained earnings.
•
In accordance with IAS 39, derivatives are recognized as a liability or as an asset in the statement of financial
position and measured at fair value. Under German GAAP, only provisions for expected losses in the amount
of the negative market value were recognized for derivatives, to the extent no hedge accounting was applied.
Derivatives constituting a hedge relationship were not recognized. In most cases, TLG applied hedge
accounting for derivatives under German GAAP while this was not done under IFRS as at the opening
statement of financial position date.
•
The special reserve for investment grants and subsidies, recognized in accordance with German GAAP to
account for the residential properties to be spun off to TLG WOHNEN GmbH, does not constitute a liability
due to the absence of existing commitments to third parties and was therefore eliminated from the IFRS
opening statement of financial position; this effectively increased equity by €22.1 million.
•
The carrying amount of the investment in AGD, under the equity method was adjusted to the extent that
uniform IFRS accounting policies were applied, impacting the valuation of properties, in particular. The
recognition of deferred taxes resulted in offsetting effects.
•
In its German GAAP consolidated financial statements for previous years, the Company applied capital
consolidation in accordance with German GAAP, and exercised the options set forth under Sections 301 and
309 of the German Commercial Code (Handelsgesetzbuch (HGB)). Under those provisions, any goodwill
arising upon the first-time inclusion of the subsidiary in the consolidated financial statements was offset
outside of profit or loss against retained earnings. The amount of goodwill originally offset was added back to
determine any disposal gains under German GAAP upon deconsolidation. By contrast, in the consolidated
financial statements in accordance with IFRS, disposal gains under German GAAP upon deconsolidation are
determined exclusively as the difference between TLG’s share in the subsidiary’s net assets at disposal and
selling price less the costs to sell. Accordingly, comprehensive income in accordance with IFRS was
€17.7 million greater in the fiscal year 2012. This did not result in any effects on equity.
72
Reconciliation of 2012 Consolidated Cash Flow Statement from German GAAP to IFRS
German GAAP
cash flow
statement for the
year ended
December 31,
2012
Note
Cash inflow (outflow) from operating activities . . . . . . . . . . . .
Cash inflow (outflow) from investing activities . . . . . . . . . . . . .
Cash inflow (outflow) from financing activities . . . . . . . . . . . .
142.4
(86.6)
(28.4)
b)
b)
—
Net increase (decrease) in cash and cash equivalents . . . . . .
27.4
Cash and cash equivalents at beginning of period . . . . . . . . .
42.5
Cash and cash equivalents at end of period . . . . . . . . . . . . . .
69.9
Reconciliation
(audited)
(in € million)
IFRS
cash flow
statement for the
year ended
December 31,
2012
(8.1)
7.6
—
134.3
(79.0)
(28.4)
(0.5)
26.9
a)
(9.0)
33.6
a)
(9.4)
60.5
a)
In the German GAAP consolidated financial statements, restricted funds were reported as a part of cash, while under IFRS, they are now
reported as a component of other (current) financial assets (€9.0 million).
b)
Due to the fact that recognition requirements differ between German GAAP and IFRS, a portion of the modernization measures reported
under German GAAP as maintenance expenses may be capitalized under IFRS. These capitalized modernization measures are presented
under IFRS as cash outflows from investing activities, while under German GAAP they are reported under cash flows from operating
activities. The reclassification of properties accounted for as property, plant and equipment (tangible fixed assets) under German GAAP
as inventories under IFRS offset this effect. Payments for investments in these properties are no longer presented as outflows from
investing activities under IFRS, but rather represent a component of outflows from operating activities.
73
PROFIT FORECAST
Forecast of Funds from Operations (“FFO”) Post Tax (Excluding Results of Disposals) for the Fiscal Year 2014 for
TLG IMMOBILIEN AG
The forecast of funds from operations for the fiscal year 2014 of TLG IMMOBILIEN AG (the “Company”)
described in this section applies to its FFO post tax and excluding results of disposals on a consolidated basis (the “FFO
Forecast”). The FFO Forecast is not a statement of fact and should not be interpreted as such by potential investors. Rather, it
reflects the forward-looking expectations of the management board of the Company with respect to the development of FFO
of the Company. Potential investors should not place undue reliance on this FFO Forecast.
For the FFO Forecast, the Company defines FFO as follows:
The net income/loss for the year adjusted for the result from the disposal of investment property, the result from the
disposal of real estate inventory, the result from the remeasurement of investment property, the gain/loss from the
remeasurement of derivatives and other effects, as well as before deferred taxes, tax effects from the result from the disposal
of investment property and the disposal from real estate inventory, as well as the tax effects from the settlement of interest rate
swaps and from IPO costs.
The FFO Forecast is based on the following assumptions made by the management of the Company. These
assumptions relate to factors outside of the Company’s influence or factors that the Company can only influence to a limited
extent. Even though the Company considers the assumptions of its management to be reasonable at the time of the publication
of the FFO Forecast, they may prove in retrospect to be incorrect or unfunded. Should one or more of these assumptions prove
to be incorrect or unfounded, the Company’s actual FFO could differ materially from its FFO Forecast.
FFO Forecast for the Current Fiscal Year 2014 for the Company
Based on the trends of the fiscal year 2014, the Company’s management anticipates FFO of €50 million for the
fiscal year 2014.
Explanatory Notes to the FFO Forecast
Principles of Evaluation
The FFO Forecast for the current fiscal year 2014 was prepared in accordance with the principles of the Institute of
Public Auditors in Germany (Institut der Wirtschaftsprüfer in Deutschland e.V., “IDW”) IDW Accounting Practice Statement:
Preparation of Profit Forecasts and Estimates in Accordance With the Specific Requirements of the Regulation on
Prospectuses and Profit Estimates on the basis of Preliminary Figures (IDW AcPS HFA 2.003) (IDW
Rechnungslegungshinweis: Erstellung von Gewinnprognosen und -schätzungen nach den besonderen Anforderungen der
Prospektverordnung sowie Gewinnschätzungen auf Basis vorläufiger Zahlen (IDW RH HFA 2.003)).
The FFO Forecast was prepared on the basis of the accounting principles of International Financial Reporting
Standards (IFRS), as adopted by the European Union. The applied methods of disclosure, accounting and valuation are
presented in the notes to the consolidated financial statements of the Company as of and for the year ended December 31,
2013.
For the purpose of this FFO Forecast, gross acquisition costs of approximately €73 million in the second half of
2014 were calculated, which will contribute rent for up to three months, respectively. An acquisition of an additional property
with a value of approximately €19 million, which was already acquired in February 2014, is also considered.
The FFO Forecast for the current fiscal year 2014 is influenced by a range of factors and is based on certain
assumptions made by the Company’s management.
Factors and Assumptions
Factors outside the Company’s influence
The FFO Forecast for the current fiscal year 2014 is subject to factors over which the Company has no influence.
These factors and the related assumptions of the Company are described below:
Factor: Unforeseen events such as “force majeure”
When preparing the FFO Forecast, the Company assumes that no material unforeseeable events will occur that
could result in material or lasting constraints on the ongoing operations of the entities of the group, such as force majeure (for
example fires, floods, hurricanes, storms, earthquakes or terrorist attacks), strikes, extraordinary macroeconomic events or
war.
74
Factor: Legislative and other regulatory measures
When preparing the FFO Forecast, the Company assumes that there will be no or only insignificant changes to the
current legal and regulatory framework and no material legal and regulatory changes (e.g. pertaining to tenancy and tax law).
Factor: Economic development in the real estate industry
For the purpose of the FFO Forecast, the Company assumes that:
•
there will be no financial crisis that affects Europe and especially Germany;
•
there will be no negative economic developments in Germany; and
•
there will be no negative developments in the real estate industry, especially in Germany, and the Company
will be able to retain its current competitive position.
Factor: Interest rate development
When preparing the FFO Forecast, the Company assumes that current interest rate levels will remain stable. Given
that the Company has hedged for a significant portion of its floating rate liabilities due to financial institutions, the Company
anticipates no significant negative effects on the financing costs.
Factors that can be influenced by the Company to a limited extent
Other factors, over which the Company has limited influence, may also influence the forecasted FFO for the group
for the fiscal year 2014. The relevant assumptions are described below:
Factor: Income from letting activities
Income from letting activities comprises in-place gross rent less rent deductions (rental income), income from
recharged utilities and other operating costs and income from other goods and services. For the purpose of the FFO Forecast,
the Company assumes income from letting activities will amount to approximately €135 million for the fiscal year 2014 based
on the current contracted rents (plus recharged costs). Due to the disposal of non-core properties from the portfolio, income
from letting activities will decrease by approximately €6 million compared to the previous year.
In the planning period for the second half of 2014, the Company expects that expiring leases will be primarily
compensated by new leases or renewals of existing leases. Furthermore, the Company assumes for the purpose of the FFO
Forecast, that the EPRA Vacancy Rate for investment properties will remain stable at the end of fiscal year 2014 compared to
June 30, 2014 (5%).
Factor: Expenses related to letting activities
Expenses related to letting activities include all costs related to letting activities, such as maintenance, nonrecoverable and other property-related costs. For the purpose of the FFO Forecast, the Company anticipates that the ratio of
expenses related to letting activities to income from letting activities will slightly increase for the fiscal year 2014 compared
to the fiscal year 2013.
Factor: Other operating income
In the FFO Forecast the Company anticipates that other operating income – before adjustment for other effects – in
fiscal year 2014 will be higher than in fiscal year 2013.
Factor: Personnel expenses and other operating expenses
For the purpose of the FFO Forecast, the Company assumes that personnel expenses will decrease compared to
fiscal year 2013, due to personnel reorganization measures. The Company further assumes that other operating expenses will
be higher than in the previous year due to consulting expenses and the implementation of new IT-software.
Factor: Finance expense
The Company assumes that
•
the debt ratio of the real estate portfolio will increase for the fiscal year 2014 compared to the previous year, in
order to achieve an efficient and market standard financing structure;
•
all covenants under financing agreements (especially financial covenants) will be complied with;
75
•
the interest rate risk will remain low, because the Company believes that the hedging instruments (interest rate
swaps) will be effective in fiscal year 2014;
•
the liquidity risk will remain low, because the Company believes that sufficient liquidity remains available, and
that the average financing conditions for the Company relating to the current financing agreements can be
maintained in case of the conclusion of new or extension of existing financing agreements; and
•
in the second half of 2014 the scheduled acquisitions of properties with gross acquisition costs of
approximately €73 million can be financed with 60% debt.
Factor: Current income tax expense
The Company expects stable corporate and trade tax rates, and that there will be no further changes in the tax
environment or in tax laws in the current fiscal year 2014. The relevant current income taxes adjusted for the purpose of the
FFO Forecast for the tax effects from the result from the disposal of investment property and the disposal of real estate
inventory, as well as the tax effects from the settlement of interest rate swaps and from IPO costs will amount to €7 million.
Factor: Other effects
The FFO Forecast excludes material non-recurring and miscellaneous effects which, contrary to 2013, will increase
FFO in 2014.
Factors that can be influenced by the Company
In the event of tenant fluctuations, the Company can determine what amount should be invested in new tenants, in
order to raise the rent potential of the rental space. The amount of the incurred expenses impacts the rent of new tenants and
new leases, and if applicable, the previous vacancy period. The Company has made object-specific assumptions about the
vacancy period and the costs resulting from a change of tenants.
Other Explanatory Notes
The FFO Forecast does not include any extraordinary items or results from non-recurring activities within the
meaning of the IDW Accounting Practice Statement IDW AcPS HFA 2.003 (IDW RH HFA 2.003).
The FFO Forecast for the current fiscal year 2014 was prepared on October 8, 2014. As the FFO Forecast relates to
a period not yet completed and has been prepared on the basis of assumptions about future uncertain events and actions, it
naturally entails substantial uncertainties. Because of these uncertainties, it is possible that the group’s actual FFO for the
current fiscal year 2014 may differ materially from the FFO Forecast.
76
Auditor’s Report on the Funds from Operations (FFO) Post Tax (Excluding Results of Disposals) (FFO Forecast) of
TLG IMMOBILIEN AG
Translation from the German language
Auditor’s Report
To TLG IMMOBILIEN AG, Berlin
We have audited whether the forecast of the funds from operations excluding disposals on a consolidated basis
(“FFO”) of TLG IMMOBILIEN AG for the period from January 1, 2014 to December 31, 2014, defined as net income/loss
for the year adjusted for the result from the disposal of investment property, the result from the disposal of real estate
inventory, the result from the remeasurement of investment property, the gain/loss from the remeasurement of derivatives and
other effects, as well as before deferred taxes, the tax effects from the result from the disposal of investment property and the
disposal from real estate inventory, as well as the tax effects from the settlement of interest rate swaps and from IPO costs,
prepared by TLG IMMOBILIEN AG, Berlin, (the “FFO Forecast”) has been properly compiled on the basis stated in the
explanatory notes to the forecast of the FFO and whether this basis is consistent with the accounting policies of the company.
The FFO Forecast comprises the forecast of the FFO of TLG IMMOBILIEN AG for the period from January 1, 2014 to
December 31, 2014 and explanatory notes to the forecast of the FFO.
The preparation of the FFO Forecast including the factors and assumptions presented in the explanatory notes to the
forecast of the FFO is the responsibility of the company’s management.
Our responsibility is to express an opinion based on our audit on whether the forecast of the FFO has been properly
compiled on the basis stated in the explanatory notes to the forecast of the FFO and whether this basis is consistent with the
accounting policies of the company. Our engagement does not include an audit of the factors and assumptions identified by
the company underlying the forecast of the FFO.
We conducted our audit in accordance with IDW Prüfungshinweis: Prüfung von Gewinnprognosen und schätzungen
i.S.v. IDW RH 2.003 und Bestätigung zu Gewinnschätzungen auf Basis vorläufiger Zahlen (IDW PH 9.960.3) (IDW Auditing
Practice Statement: The Audit of Profit Forecasts and Estimates in accordance with IDW AcPS HFA 2.003 and Confirmation
regarding Profit Estimates on the basis of Preliminary Figures (IDW AuPS 9.960.3)) issued by the Institut der
Wirtschaftsprüfer in Deutschland e.V. (Institute of Public Auditors in Germany) (IDW). Those standards require that we plan
and perform the audit such that material errors in the compilation of the forecast of the FFO on the basis stated in the
explanatory notes to the forecast of the FFO and in the compilation of this basis in accordance with the accounting policies of
the company are detected with reasonable assurance.
As the FFO Forecast relates to a period not yet completed and is prepared on the basis of assumptions about future
uncertain events and actions, it naturally entails substantial uncertainties. Because of the uncertainties it is possible that the
actual FFO of TLG IMMOBILIEN AG for the period from January 1, 2014 to December 31, 2014 may differ materially from
the forecast of the FFO.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, based on the findings of our audit, the forecast of the FFO has been properly compiled on the basis
stated in the explanatory notes to the forecast of the FFO. This basis is consistent with the accounting policies of the company.
Berlin, October 8, 2014
Ernst & Young GmbH
Wirtschaftsprüfungsgesellschaft
[Signed]
Plett
Wirtschaftsprüfer
(German Public Auditor)
[Signed]
Krüger
Wirtschaftsprüfer
(German Public Auditor)
77
MARKETS AND COMPETITION
Markets
TLG’s business activities are influenced by numerous demographic, economic and political factors. TLG is most
significantly affected by developments in, and related to, the commercial real estate market in Germany, particularly in Berlin
and eastern Germany (Brandenburg, Mecklenburg-Western Pomerania, Saxony, Saxony-Anhalt and Thuringia), where TLG’s
entire portfolio is located. Its portfolio mainly comprises office, retail and hotel properties. Given this focus, TLG is affected,
in general, by developments in macro-economic indicators such as population growth, economic growth, employment,
purchasing power and the consumer price index. More particularly, TLG is closely affected by trends in micro-economic
indicators, such as rent levels and vacancy rates, in the regions and commercial sectors where TLG operates.
General Demographic and Economic Developments in Germany and Eastern Germany
Germany
Germany is Europe’s largest economy. With a gross domestic product (“GDP”) per capita of €33,343 in 2013, its
productivity clearly exceeded the European average by 31%. Furthermore, Germany’s economy has proven to be relatively
resilient throughout the recent financial crisis compared to other major European countries. From 2009 to 2013, German GDP
grew by a compounded annual growth rate (“CAGR”) of 2.2%, compared to 1.2% in France and the United Kingdom and
0.9% for the European Union overall. Despite this above average growth in the past and already high productivity levels, GDP
per capita growth in Germany from 2014 to 2019 is expected to continue at a CAGR of 1.8%, thereby outpacing expected
overall growth in the European Union with a CAGR of 1.6% (from 2014 to 2018). This strong economic performance
corresponds to a low unemployment rate of 5.3% in 2013, compared to 7.5% in the United Kingdom, 10.3% in France and
10.8% in the European Union overall (Source: Federal Foreign Office; Economist Intelligence Unit, GDP Historicals;
Eurostat, Unemployment Rate).
This has made Germany a perceived “safe haven” for investors, leading to lower yields on Germany’s government
debt and strong demand for German assets. The following table shows the 2013 yield on German government debt compared
to other major countries in Europe:
10 year goverment yield
78%
91%
Government debt (2013, % of GDP)
91%
133%
2.5%
2.4%
88%
2.3%
2.1%
Spain
EU
(1)
1.3%
0.9%
Germany
94%
UK
France
Italy
(Source: Economist Intelligence Unit, Government Debt; Bloomberg as of September 02, 2014)
(1)
Based on EU 21 average.
Eastern Germany
While eastern Germany’s unemployment rate of 9.4% as of July 2014 was still higher than unemployment of 5.9%
in western Germany, eastern Germany has seen a faster decrease of unemployment levels. From 2009 to 2013, unemployment
in Berlin and the five eastern German states fell in each state, with the decline ranging from 3.5% to 1.8% in individual states,
compared to a decline of just 0.9% for western Germany. Also, parts of eastern Germany have already reached western
German levels, with unemployment in Saxony in July 2014 amounting to 8.4%, on par with Germany’s biggest state North
Rhine-Westphalia, while Thuringia actually recorded an even lower unemployment rate of just 7.5%. (Source: Federal
Unemployment Agency; Federal Statistical Office, Unemployment Rate).
78
This decline of unemployment rates corresponds to an overall increase in purchasing power, which has even
outpaced western German growth levels. The following graphic shows the high increase in purchasing power in eastern
Germany from 2008 to 2013:
Change in purchasing power 2008-2013 (national index for Germany = 100)
Absolute purchasing power growth 2008 to 2013 in % per annum
Above 120 (14)
105 to 110 (48)
95 to 100 (88)
110 to 120 (38)
100 to 105 (59)
90 to 95 (64)
(Source: Bulwiengesa, Food Retail Properties in Germany 2014)
This improvement of the overall economy has been fueled by a state-of-the-art-infrastructure built since the
reunification and the fact that more and more blue chips and strong small and medium sized entities have expanded their
operations to eastern Germany, attracted by lower wages compared to western Germany and public funding.
One of the challenges eastern Germany faces is a continuous population decline in certain areas. Since the
reunification, its overall population has shrunk by 11.4%, meaning a loss of more than two million inhabitants. However,
population shifts from eastern Germany to western Germany almost came to a standstill in 2012 for the first time since the
reunification, with a net migration shift of just 2,000 people towards western Germany. Eastern Germany’s overall population
is nevertheless expected to decrease by another 11.7% (approximately 1.9 million inhabitants) by 2030 (Source: Commercial
Portfolio TLG).
However, the cities of Berlin, Dresden, Leipzig and Rostock are all among the top 20 cities in terms of dynamic
development in all of Germany. The following graph shows the ranking of these cities:
66.7
West Germany
63.2
TLG core region
56.8
56.3
55.4
55.3
54.9
54.8
54.0
54.0
53.4
53.0
52.4
Wolfsburg
Ingolstadt
Erlangen
Regensburg
Leipzig
Würzburg
Braunschweig
Berlin
Kassel
Oldenburg
Dresden
Munich
Hamburg
Rostock
1
2
3
4
5
6
7
8
9
10
11
15
16
19
City
Rank
East Germany
57.3
The ranking and the corresponding numbers are based on a comprehensive list of factors (e.g., residential rent levels, life expectancy, crime
rates, indebtedness, unemployment rates of women, GDP etc.).
(Source: Immobilienscout24 and WirtschaftsWoche)
German and Eastern German Commercial Real Estate Markets
Germany
German commercial real estate is currently in very high demand, with investment volumes during the six-month
period ended June 30, 2014, totaling almost €17 billion, up by 27% compared to the same period in 2013 (Source:
Commercial Portfolio TLG).
79
The stable development of the food retail industry has also made food retail properties an attractive investment.
While yields have seen steady declines, they still remained close to or above 6% in 2013. Furthermore, yields for food retail
properties in eastern Germany, particularly in smaller- and medium-sized cities, have been the highest for all food retail
properties in Germany (Source: Bulwiengesa, Food Retail Properties in Germany 2014).
The following table provides an overview for the yield development for food retail properties in Berlin as well as
eastern and western Germany from 2008 to 2013:
Mean value
8.0
Net inial yield in retail trade in peripheral locaons (%)
EAST
EAST primary/secondary cies
EAST medium-sized/smaller cies
WEST
Berlin
2008
2011
7.5
7.0
6.5
6.0
5.5
2009
2010
2012
2013
(Source: Bulwiengesa, Food Retail Properties in Germany 2014)
Hotel Real Estate Market
Following negative developments in the wake of the financial crisis in 2009, the number of overnight stays in
Germany increased during 2013 for the fourth year in a row to 411 million, up by 1.1% compared to 2012. During the same
time span, the number of beds grew by 3% to approximately 3.6 million. Also in 2013, occupancy rates for hotel rooms
increased to 68.2% and occupancy rates for hotel beds to 34.8%, the latter marking a six-year high in the German hotel
market. This also had a positive impact on revenue per available room (“RevPAR”), which increased 1.0% during 2013 to
€65.50. At the same time, the average rate per room (“ARR”) decreased by 0.3% to €96.00 in 2013. As a result of the overall
positive development of the hotel industry, transaction volumes have been rising from €370 million in 2009 to €1.3 billion in
2013. During the six-month period ended June 30, 2014, this amount was already exceeded by an overall investment volume
of €1.8 billion and in 2014 volumes are expected to reach an all-time high (Source: Commercial Portfolio TLG; CBRE).
Berlin
Overnight stays in Berlin reached an all-time high of 26.9 million in 2013, making Berlin the number one
destination in all of Germany and placing the city in competition with other tourism magnets, such as London and Paris. It is
expected that overnight stays will surpass 30 million per year prior to the year 2020. This increase in overnight stays is fueled
not only by a growing tourism industry, but also by a higher number of business travelers. Strong demand has also led to an
increase in the overall number of hotel beds from 69,100 in 2003 to 131,200 in 2013. Nevertheless, the occupancy rate for
hotel beds has improved continuously between 2009 and 2012 from 48.8% to 53.2%. In 2013, RevPAR increased by 1.7% to
€63.21 and ARR amounted to €87.60 in 2013 (Source: TLG Real Estate in Berlin and Eastern Germany).
Dresden
Dresden recorded over four million overnight stays in 2013. The occupancy rate for hotel beds in Dresden reached
64% in 2013, with RevPAR and ARR reaching €46.32 and €66.70, respectively, during the same year (Source: Handelsblatt;
TLG Real Estate in Berlin and Eastern Germany).
Rostock
In 2013, the number of overnight stays surpassed 1.8 million. During the same year, the occupancy rate for hotel
beds in Rostock reached 69.2%. The city’s hotel market has seen a 25% increase of RevPAR between 2008 and 2013, with
RevPAR reaching €64.24 in 2013. During the same year, the ARR amounted to €92.81 (Source: Handelsblatt; TLG Real
Estate in Berlin and Eastern Germany).
Competition
TLG faces competition for tenants when letting its existing portfolio, for attractive properties when trying to acquire
new properties matching TLG’s target criteria and for buyers when disposing of properties.
82
Acquisition Activities
TLG regularly competes with other local and international investors to acquire portfolios and properties. The
competitive situation frequently depends on the investment volume and the characteristics of the property or portfolio in
general, but most of these competitors do not specifically target eastern Germany. As a general rule, there are no significant
barriers to entry to invest in real estate other than the availability of capital, real estate expertise and access to acquisition
offers.
Due to the heterogeneous competitive environment in the commercial real estate market in Germany, a precise
statement regarding the competitive position of TLG as compared to its competitors cannot be made. In particular,
international investment funds with different investment strategies and risk profiles, private equity firms as well as foreign and
domestic publicly listed property companies and to a certain extent family offices compete for properties and portfolios.
However, the Company believes that due to its long-standing expertise, close local relationships and clear focus on specific
segments of the commercial real estate market, TLG has obtained an excellent position allowing it to effectively compete
against even the most sophisticated competitors.
Letting Activities
TLG regularly competes for solvent tenants willing to pay what TLG considers to be attractive rent levels. Given
that the majority of TLG’s retail properties are situated in attractive micro locations where prospective tenants will find little
or no comparable retail space available in the respective catchment area, TLG faces the fiercest competition when letting its
office and hotel properties. Here, TLG’s competition is even more fragmented than competition for the acquisition of
properties, although TLG generally faces the same competitors (i.e., international investment funds with different investment
strategies and risk profiles, private equity firms as well as foreign and domestic publicly listed property companies and to a
certain extent family offices).
83
BUSINESS
Overview
TLG believes it is a leading commercial real estate company for Berlin and eastern Germany. As of June 30, 2014,
TLG’s portfolio comprised a total of 509 properties with an aggregate fair value of €1,510 million. With a WALT of 8.0 years
and an EPRA Vacancy Rate of just 4.0% (excluding non-core properties), the Company believes that this portfolio is well
positioned to generate stable cash flows for the foreseeable future. TLG is headquartered in Berlin and operates five local
offices in Dresden, Leipzig, Rostock, Erfurt and Chemnitz.
TLG’s Core Portfolio accounts for approximately 89% of the overall portfolio. Approximately 72% of this Core
Portfolio is located within the city limits of Berlin, Dresden, Leipzig and Rostock, with Berlin accounting for the largest
portion of these holdings (approximately 46% of the Core Portfolio). These cities and eastern Germany have seen increased
demand for commercial real estate. From 2009 to 2012, investment volumes for commercial real estate in Berlin and eastern
Germany increased from €1.22 billion to €3.48 billion and from €0.3 billion to €1.36 billion, respectively (Source:
Commercial Portfolio TLG). Given investment volumes of approximately €1.3 billion in Berlin and €1.37 billion in eastern
Germany during the six-month period ended June 30, 2014 (Source: Commercial Portfolio TLG), the Company believes that
this trend will continue and that rental income, letting and overall vacancies for the Core Portfolio should be positively
affected as a result.
Office properties, most of them situated in good or very good locations in city centers in Berlin, Dresden, Leipzig
and Rostock, accounted for 36% of TLG’s Core Portfolio (based on fair value as of June 30, 2014). The tenant base for this
office portfolio includes “blue chip” companies and their subsidiaries such as Daimler Real Estate GmbH and
SAP Deutschland AG & Co. KG, government related entities and agencies such as Ostseesparkasse Rostock and the Federal
Agency for Real Estate (Bundesanstalt für Immobilienaufgaben) as well as small and medium sized enterprises. TLG plans to
grow its office portfolio through additional acquisitions. The Company believes that this will further improve its market
position in what it considers to be a very dynamic office market in eastern Germany.
Retail properties, the majority of which are located in attractive micro-locations in Berlin and eastern German
growth regions, accounted for approximately 50% of TLG’s Core Portfolio (based on fair value as of June 30, 2014). The
micro-locations in which TLG’s retail properties are located are particularly attractive for food retailers and other sellers of
essential consumer goods because they are located in areas that allow the tenant to be a significant, in some cases even the
sole, retailer of the relevant consumer goods in the catchment area. As of June 30, 2014, approximately 35% of the annualized
in-place rent from TLG’s Core Portfolio related to lease agreements with major supermarket and discounter chains, including
large supermarket chains “EDEKA”, “REWE” and “Kaiser’s” and discounters “Aldi”, “Lidl”, “Netto” and “Penny” with
which TLG maintains longstanding and close business relationships. With a WALT of 7.3 years and an EPRA Vacancy Rate
of just 1.0% (each as of June 30, 2014), TLG’s retail portfolio was virtually fully-let and offers stable and secure rental
income. This makes tenant relationships with food retailers the backbone of TLG’s business. TLG also intends to grow its
retail portfolio through selected accretive acquisitions.
Five hotel properties located in the city centers of Berlin, Dresden and Rostock accounted for the remaining 15% of
TLG’s Core Portfolio (based on fair value as of June 30, 2014). The tenant base for these properties includes the well-known
hotel chains “Steigenberger”, “Motel One” and “Ramada”. With an EPRA Vacancy Rate of just 1.7%, these properties were
virtually fully-let and the long-term commitment of TLG’s tenants was evidenced by a WALT of 16.7 years (both as of
June 30, 2014). Lease agreements for TLG’s hotel properties generally provide for fixed lease payments, limiting TLG’s
dependence on the performance of hotel operators. Stable cash flows and a focus on dynamic markets make TLG’s hotel
portfolio a fitting complement for its office and retail portfolio.
TLG traces its origins back to several subsidiaries of the state owned privatization agency (Treuhandanstalt) that
were tasked with administrating and privatizing the real estate holdings of the former German Democratic Republic (Deutsche
Demokratische Republik). Between 1990 and 2012, TLG and its legal predecessors sold, restituted or municipalized over
100,000 properties in Berlin and eastern Germany, while investing more than €1.3 billion in commercial real estate during the
last ten years. With effect from January 1, 2012, TLG demerged substantially all of its residential real estate into a separate
entity TLG WOHNEN GmbH, which was subsequently privatized and with which TLG is no longer related. In 2012, the
Company was privatized through a sale to the Existing Shareholders. Since then, TLG has further streamlined its portfolio and
operations, focusing on what the Company believes to be the most attractive segments of the commercial real estate markets
in Berlin and eastern Germany. For further information on the Company’s history, see “General Information on the Company
and the Group—History and Development”.
TLG has classified 188 properties with an aggregate fair value of €171 million as of June 30, 2014 as non-core and
plans to divest the majority of this non-core portfolio in the medium term. As of June 30, 2014, the WALT for TLG’s noncore properties was 5.5 years and the EPRA Vacancy Rate amounted to 12.2%. Through September 15, 2014, TLG sold, or
signed agreements to sell, 48 non-core properties with an aggregate fair value of €70.6 million. However, the buyer of one
property that TLG had agreed to sell for approximately €23.9 million may have the right to withdraw from the purchase
agreement or to considerably reduce the purchase price, and in that case, TLG would likely incur a significant non-cash loss.
84
During the six-month period ended June 30, 2014, TLG generated rental income of €57.0 million and net operating
income from letting activities of €50.0 million. For the fiscal year ended 2013, TLG generated rental income of €118 million
and Adjusted EBITDA of €90.4 million. With a Net LTV-Ratio of 47.0% (as of June 30, 2014), TLG considers its financing
structure to be particularly sound and targets a long-term Net LTV-Ratio of 45-50%.
TLG’s Strengths
The Company believes that the following competitive strengths have been the primary drivers of TLG’s success in
the past and will continue to set it apart from its competitors in the future:
Market Leading Platform
TLG possesses strong local connectivity throughout Berlin and eastern Germany with more than 20 years of
regional focus and experience. The Company believes that its tenants particularly value TLG’s deep understanding of
commercial real estate markets in Berlin and eastern Germany and its approachability and high responsiveness to their needs,
and that this has made TLG a trusted and reliable partner for its key tenants. Furthermore, such strong local connectivity
through its six branch offices provides TLG with excellent access to information on potential acquisitions complementing its
Core Portfolio and the ability to properly value such acquisition targets as well as the respective local market dynamics and
letting market, which allows TLG to effectively manage its portfolio and identify market opportunities early on.
TLG’s top management has a broad transaction and integration track record, led by board members Niclas Karoff
and Peter Finkbeiner. Its internal structures cover major parts of the real estate value chain, focusing on those aspects that the
Company considers particularly value enhancing, in particular acquisitions and disposals as well as tenant management.
While TLG does not currently engage in any significant development activities, it retained the experience and capacity for
value enhancing (re-)developments and may choose to do so selectively if it can identify suitably attractive opportunities
within the current portfolio. The Company believes that, for the time being, its current platform also bears the capacity to
manage further acquisitions at only marginal incremental overhead costs.
Regional Focus on Berlin and Growth Regions in Eastern Germany
The German economy has shown consistent strong performance, with GDP growth from 2009 to 2013 exceeding
the European average and this outperformance is expected to continue between 2014 and 2019 (Source: Economist
Intelligence Unit, GDP Historicals). This has positively affected demand for commercial real estate in Germany in general,
and Berlin and eastern Germany in particular, with investment volumes increasing strongly between 2009 and 2013 and
continuing on a high level during the six-month period ended June 30, 2014 (Source: Commercial Portfolio TLG).
The Company believes that the Core Portfolio covers particularly attractive segments in these commercial real
estate markets. TLG has long been a market leader for office properties in excellent locations in Berlin and economically
strong eastern German cities such as Dresden, Leipzig and Rostock. Particularly in Berlin, locations of such quality are very
rare, which limits the potential for construction of competing office and hotel properties. The Company believes that these
dynamic market developments will help to further increase the demand for TLG’s office and hotel properties.
TLG’s regionally diversified retail portfolio generally profits from excellent micro-locations, which offer
competitive advantages for many of its tenants and stable rental income for TLG. Demand for food retail space, which
accounts for the majority of retail properties in TLG’s Core Portfolio, has been particularly strong in eastern Germany, with
rent developments from 2005 to 2014 clearly outpacing rent developments for food retail space in western Germany (Source:
Bulwiengesa, Food Retail Properties in Germany 2014). The Company believes that the positioning of its retail properties in
Berlin and eastern Germany combined with the attractive micro-locations of these properties allows TLG to capitalize on such
favorable developments.
TLG’s focus on clearly defined segments of the commercial real estate market ensures optimal use of its long-term
local expertise as well as risk diversification through a combination of growth potential from TLG’s office portfolio, stable
rental income from its retail portfolio, and a combination of both from the hotel portfolio. Furthermore, the Company believes
that a diversified property structure, tenant base and regional spread, combined with a high WALT for TLG’s Core Portfolio
of 8.0 years and a low EPRA Vacancy Rate of 4.0% (both as of June 30, 2014), will provide for particular resilience to
negative economic developments.
High-Quality Portfolio with Significant Share of Newly Built or Refurbished Properties
TLG’s Core Portfolio had a fair value of €1,338.9 million as of June 30, 2014. Approximately 84% of this Core
Portfolio has been newly built or fully-refurbished since 2000. The Company believes that there are currently no material
maintenance backlogs regarding its Core Portfolio. This makes properties in TLG’s Core Portfolio particularly attractive to
long-term oriented tenants. This has resulted in an EPRA Vacancy Rate of just 4.0% and a WALT of 8.0 years for TLG’s
Core Portfolio (both as of June 30, 2014), and the Company believes that these performance indicators evidence the high
attractiveness of its office, retail and hotel properties.
85
Strong Operating Cash Flows
TLG possesses strong operating cash flows. Particularly the retail properties of TLG’s Core Portfolio, which
account for approximately 50% of the fair value of this Core Portfolio, with a WALT of 7.3 years and 54% of lease
agreements expiring after 2020 (each as of June 30, 2014) contribute steady rental income. Furthermore, as of June 30, 2014,
31% of annualized in-place rent for office properties in TLG’s Core Portfolio was attributable to government related tenants
and TLG believes that default risks associated with government related tenants are particularly low. The Company expects
that the aforementioned factors will lead to strong operating cash flows from its Core Portfolio and allow it to pay dividends
in the amount of 70-80% of its annual FFO.
Conservative Financing Structure
The Company believes TLG’s financing structure to be relatively conservative. Its moderate Net LTV-Ratio of
47.0 % as of June 30, 2014, leaves headroom to fund additional growth and makes TLG less dependent on changes in the
availability or terms of debt financing. TLG’s conservative capital structure is evidenced by average debt maturities of 5.9
years with an annual average amortization of 2.2% and low average interest rates of 2.99% (all as of June 30, 2014).
Approximately 94% of TLG’s interest rates (based on the value weighted interest rates on the liabilities due to financial
institutions in an amount of €727.9 million as of June 30, 2014) are either fixed or hedged, limiting TLG’s risk from
increasing interest reference rates in the future. The Company believes that this provides a sustainable funding base for TLG’s
current and future operations. The vast majority of its loans are fixed or hedged through hedging instruments, reducing TLG’s
dependency on short-term economic changes.
TLG’s Strategy
Unlock tangible future growth through selected accretive acquisitions with a focus on larger properties
By classifying a total of 321 of TLG’s properties as its Core Portfolio, TLG has identified those properties that best
fit its geographic and property type focus and which it expects to provide particularly attractive long-term returns. TLG aims
to use the proceeds from the offering as well as other sources of equity and debt funding to acquire attractive properties
complementing TLG’s Core Portfolio. TLG’s acquisitions mainly focus on office properties in the city centers of Berlin and
major eastern German cities with favorable economic developments, especially Dresden, Leipzig and Rostock, as well as
retail properties in the same areas or particularly attractive micro-locations throughout eastern Germany.
TLG intends to use its extensive local network and close business relationships with existing tenants to identify
attractive acquisition targets. Lower fair values compared to selected commercial real estate markets in western Germany
allow TLG to acquire properties – especially outside of Berlin – with an attractive rental income at a comparably low price
level. TLG applies a rigid selection process that includes four stages in order to identify the most attractive properties among
the numerous proposals it generally receives during the course of any given year. Between June 30, 2014 and the date of this
Prospectus, TLG has already acquired one office property located in Berlin with a fair value of €23 million and by way of a
share deal another office property located in Leipzig with a fair value of €50 million.
TLG aims to identify mainly multi-tenant office properties, particularly in Berlin, Dresden, Leipzig and Rostock, as
well as retail properties and portfolios in attractive micro-locations, preferably with a minimum transaction value of €10
million. For office properties, TLG particularly targets properties with a vacancy rate of up to 30% in order to unlock value
through actively managing such properties. The Company believes, especially with reference to office properties, that
managing a smaller number of larger properties will require fewer asset and property management resources and thereby
provide more attractive returns. TLG’s long-term plan is to further reduce the number of properties while at the same time
increasing the overall fair value and hence the average size of the properties included in its Core Portfolio. TLG plans to
continue to grow in line with its strategic positioning and aims to increase the value of its Core Portfolio to approximately
€2.0 billion in the medium term.
Create additional value by investing in existing properties
TLG constantly aims to identify properties that can be upgraded through value enhancing modernizations and/or
expansions. TLG maintains close contacts with its tenants to ensure that it can meet their expectations and desires for
additional space requirements. Particularly with its retail portfolio, TLG has followed and assisted the expansions of some of
its major tenants in Berlin and eastern Germany over the last two decades and plans to continue to maintain such close links
by being a reliable partner. This allows TLG in various cases to extend existing lease agreements significantly ahead of the
scheduled expiry dates. TLG plans to further upgrade its Core Portfolio through value enhancing modernizations and/or
expansions.
Active portfolio management to unlock funds for future acquisitions
TLG has streamlined its portfolio by considerably reducing the total number of properties and only classifying
properties from the office, retail and hotel sector as belonging to the Core Portfolio. It intends to continue with this strategy by
further divesting non-core properties and fully disposing of its non-core portfolio in the medium term. Given that the majority
86
of TLG’s non-core properties are generating a net cash inflow (i.e., rents exceed the costs associated with letting and
maintaining these properties) or can be operated at little operating costs, TLG intends to wait for what it considers to be
sufficiently attractive prices before disposing of any properties. The Company believes that it will be able to use the proceeds
created from the disposal of non-core properties to grow the fair value of its Core Portfolio.
Focus asset management on individual property performance
By continuously streamlining its portfolio, TLG is able to free up management capacities that it can re-allocate to
intensify its asset management efforts. TLG plans to increase the micro-management of individual properties by instituting
additional reporting processes and expanding the number of performance indicators available through IT-based reporting
tools. In general, it intends to further optimize its IT-infrastructure in order to allow for an even more sophisticated monitoring
of its portfolio and corporate processes. The Company expects that these efforts will allow TLG to better monitor its existing
portfolio and thereby identify additional opportunities for value creation.
Further improve its financial and tax structure
TLG plans to further improve its financial structure by streamlining the consortium of banks that provide the
financing for its portfolio. As of June 30, 2014, TLG received financing from 20 banks. It plans to focus on a smaller number
of core relationships with selected banks to allow for an easier processing of individual loans and to further improve the
immediate availability of credit. TLG also plans to maintain its stable and attractive financing base, targeting a long-term Net
LTV-Ratio of 45-50%. In addition, the Company intends to further analyze opportunities to improve its tax structure,
especially with regards to its trade tax, which accounts for approximately 50% of TLG’s overall tax burden.
TLG’s Portfolio
As of June 30, 2014, TLG’s portfolio comprised 509 properties with an aggregate fair value of €1,510 million. 89%
of these properties were part of the Core Portfolio (measured by fair value as of June 30, 2014). TLG’s portfolio is split
between the Core Portfolio and its non-core portfolio as follows:
Core
Fair value (in € million) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Annualized in-place rent (in € million)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Number of properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total lettable area (in thousand sqm)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
EPRA Vacancy Rate (in %)(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
WALT (in years)(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
As of June 30, 2014
Non-core(1)
Total
1,338.9
99.4
321
900.1
4.0
8.0
170.8
14.5
188
439.2
12.2
5.5
1,509.7
113.9
509
1,339.3
5.0
7.7
(1)
Between June 30, 2014 and September 15, 2014, TLG sold 28 properties with an aggregate fair value of €36.9 million. Furthermore, as
of September 15, 2014, it has signed agreements to sell 20 additional properties with an aggregate fair value of €33.7 million. However,
the buyer of one property that TLG had agreed to sell for approximately €23.9 million may have the right to withdraw from the purchase
agreement or to considerably reduce the purchase price, and in that case, TLG would likely incur a significant non-cash loss.
(2)
by terminations and expirations of lease agreements as well as disposals and increased by new lease agreements and acquisitions.
Adjusting for the net effect of these changes, TLG’s annualized in-place rent as of September 15, 2014, amounted to €117.8 million.
(3)
(4)
The EPRA vacancy rate is the estimated market rental value of vacant space divided by the estimated market rental value of the whole
portfolio.
(5)
87
Core Portfolio
Overview
TLG’s Core Portfolio comprised 321 properties with an aggregate fair value of €1,339 million as of June 30, 2014.
The Company believes that these office, retail and hotel properties are located in particularly attractive macro- and/or microlocations and will provide above average returns. TLG’s Core Portfolio is split between office, retail and hotel properties as
follows:
As of June 30, 2014
Office Retail Hotel
(unaudited)
Fair value (in € million) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Annualized in-place rent (in € million)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Number of properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total lettable area (in thousand sqm)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
EPRA Vacancy Rate (in %)(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
WALT (in years)(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
476.5
32.2
45
338.9
9.2
5.7
667.0
54.9
271
485.3
1.0
7.3
195.4
12.4
5
75.9
1.7
16.7
(1)
periods, multiplied by twelve. In-place rent is not an IFRS measure.
(2)
(3)
The EPRA Vacancy Rate is the estimated rental value of vacant space divided by the estimated rental value of the whole portfolio.
(4)
Office Portfolio
TLG’s office portfolio is part of the Core Portfolio and comprised 45 properties as of June 30, 2014. Based on an
aggregate fair value of €477 million as of June 30, 2014, the office portfolio represented the second largest portion of TLG’s
real estate holdings (approximately 36% of the Core Portfolio and 32% of TLG’s overall portfolio) and TLG plans to further
increase this share. The following table provides an overview of office properties in TLG’s Core Portfolio:
Berlin
Fair value (in € million) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Annualized in-place rent (in € million)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Number of properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total lettable area (in thousand sqm)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
EPRA Vacancy Rate (in %)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
WALT (in years)(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
277.0
16.3
10
149.3
13.9
4.0
As of June 30, 2014
Leipzig/
Dresden Rostock
(unaudited)
55.0
4.0
6
56.0
2.3
3.5
86.0
6.2
12
50.9
3.5
13.2
Other
58.4
5.8
17
82.7
3.5
4.8
(1)
(2)
(3)
(4)
88
For its office portfolio, TLG focuses on properties located in the city centers of Berlin and economically strong
eastern German cities such as Dresden, Leipzig and Rostock. 58% of TLG’s office portfolio in the Core Portfolio is located in
Berlin, while the remainder is located in Dresden and Leipzig (12%), Rostock (18%) and other large eastern German cities
with favorable economic developments. The following graphic shows the clear focus of office properties in TLG’s Core
Portfolio on Berlin and what the Company believes to be the most attractive cities for office investments in eastern Germany:
Based on fair value of office properties in TLG’s Core Portfolio as of June 30, 2014.
Office properties in TLG’s Core Portfolio are generally of a high quality. Based on the fair value of these properties,
61% were newly built or fully-refurbished since 2000. Dynamic developments in the cities where TLG’s office properties are
located and TLG’s active portfolio management approach have led to an increase of the fair value per sqm for office
properties in TLG’s Core Portfolio from €1,217 as of December 31, 2011 to €1,406 as of June 30, 2014 (up by 15.5%). At the
same time, average rent per sqm has also increased from €8.78 as of December 31, 2011 to €9.05 as of June 30, 2014 (up by
3.1%).
Through a mix of disposals, modernizations and refurbishments as well as intensified letting efforts, TLG has been
able to consistently reduce the EPRA Vacancy Rate for office properties in its Core Portfolio. Starting by 14.9% in 2011 and
already declining to 10.4% in 2012, the EPRA Vacancy Rate has significantly decreased to 8.8% in 2013 and now stands at
9.2% as of June 30, 2014. TLG’s high EPRA Vacancy Rate in 2011 was primarily due to the 1alex Property, which saw a
steep increase in vacancies due to the move-out of the Federal Ministry for Families, Senior Citizens, Women and Youths and
the Federal Ministry for Environment, Environmental Protection, Building Security and Reactor Security in 2010 and 2011,
respectively. Since then, TLG has been able to reduce the EPRA Vacancy Rate for the 1alex Property from 67% to 37% as of
June 30, 2014 and won attractive tenants such as ADAC e.V. and Deutsche Bank AG. Excluding the 1alex Property,
TLG’s EPRA Vacancy Rate for office properties in the Core Portfolio amounted to just 3.7% as of June 30, 2014.
89
In the process of setting-up its office portfolio, TLG has also been able to create a high quality tenant structure,
including “blue chip” companies and their subsidiaries such as Daimler Real Estate GmbH and SAP Deutschland AG & Co.
KG, government related entities and agencies such as Ostseesparkasse Rostock and the Federal Agency for Real Estate
(Bundesanstalt für Immobilienaufgaben) and small and medium sized enterprises. The following table shows TLG’s top ten
tenants for office properties in its Core Portfolio:
As of June 30, 2014
Share of
Annualized
annualized
(1)
in-place rent
in-place rent(2)
(unaudited)
Daimler Real Estate GmbH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Ostseesparkasse Rostock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bundesanstalt für Immobilienaufgaben . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SAP Deutschland AG & Co. KG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Freistaat Thüringen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Landeshauptstadt Dresden . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
VHV Holding AG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Greater Union Filmpalast GmbH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deutsche Bank AG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
BARMER GEK Hauptverwaltung . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4.5
3.9
1.8
1.5
1.2
0.8
0.8
0.7
0.6
0.6
16.4
13.9
12.2
5.6
4.6
3.9
2.6
2.5
2.3
1.9
1.8
51.1
WALT(3)
5.3
16.4
2.1
2.5
3.7
5.2
5.5
3.8
4.6
9.8
7.2
(1)
In € million. Annualized in-place rent is calculated based on contracted rents as of June 30, 2014, without deduction for any applicable
rent free periods, multiplied by twelve. In-place rent is not an IFRS measure.
(2)
In %. The calculation of the share of annualized in-place rent only takes into account in-place rent for office properties in TLG’s Core
Portfolio and excludes in-place rent of office space used by TLG.
(3)
In years. WALT refers to the weighted average lease term, i.e., the remaining average contractual lease term for unexpired leases with a
TLG’s fifteen most valuable office properties represent 84% of the office portfolio within TLG’s Core Portfolio,
with the top five representing 55%. The following table provides additional information on TLG’s top fifteen office
properties:
As of June 30, 2014
Location
Fair
value(1)
Annualized
in-place
rent(2)
..................
Berlin
60.8
3,445.7
3.1
43,441
Englische Str. 27, 28, 30 . . . . . . . . . . . .
Schönhauser Allee 36; Ecke Sredzkiund Knaakstr. 97(5) . . . . . . . . . . . . . .
Am Vögenteich 23 . . . . . . . . . . . . . . . .
Karl-Liebknecht Str. 31, 33; Kleine
Alexanderstr. . . . . . . . . . . . . . . . . . . .
Postplatz 1; Wilsdruffer Str. 24(5) . . . . .
Berlin
56.4
4,456.1
5.3
17,815
Berlin
Rostock
54.3
47.6
3,486.4
3,120.0
4.3
18.4
31,331
19,470
Berlin
Dresden
43.8
29.5
1,803.5
1,979.7
1.4
2.7
24,376
10,537
Hausvogteiplatz 12(5) . . . . . . . . . . . . . .
Kaiserin-Augusta-Allee 104-106 . . . . .
Hermann-Drechsler Str. 1 . . . . . . . . . . .
Berlin
Berlin
Gera
21.3
19.2
15.1
400.4
1,368.3
1,505.8
2.6
4.5
4.2
8,204
14,828
28,044
Warnowallee 26-29 . . . . . . . . . . . . . . . .
Grunaer Str. 2/St.
Petersburger-Str. 9 . . . . . . . . . . . . . .
Budapester Str. 3, 5 . . . . . . . . . . . . . . . .
Rostock
11.7
959.3
7.6
6,329
Dresden
Dresden
11.3
8.7
981.0
576.0
4.6
4.9
18,123
6,727
Münzstraße 18/Max-Beer-Straße 3 . . .
Berlin
8.2
408.5
4.0
2,467
Lutherplatz 3 . . . . . . . . . . . . . . . . . . . . .
Jena
6.5
439.3
12.8
2,684
Brüderstr. 2/Große Steinstr. 82-85 . . . .
Halle
6.4
533.4
3.5
4,001
400.8
25,463.3
6.1
238,378
1alex
Property(5)
Total . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1)
In € million.
90
WALT(3)
Lettable
area(4)
Anchor tenant(s)
Deutsche Bank, Barmer
GEK Hauptverwaltung
Daimler Real Estate GmbH
Greater Union Filmpalast
GmbH
Ostseesparkasse Rostock
Bundesanstalt für
Immobilienaufgaben
SAP Deutschland AG &
Co. KG
TLG Immobilien GmbH
VHV Holding AG
Freistaat Thüringen –
Thüringer
Liegenschaftsmanagement
Ostseesparkasse Rostock
Landeshauptstadt Dresden
BARMER GEK
Hauptverwaltung
MCO Conversestore
GmbH
Stadt Jena Eigenbetrieb
Kommunale Immobilien
Jena
KKH Kaufmännische
Krankenkasse
Retail Portfolio
TLG’s retail portfolio is part of the Core Portfolio and comprised 271 properties as of June 30, 2014. Based on an
aggregate fair value of €667 million as of June 30, 2014, the retail portfolio made up the largest portion of TLG’s real estate
holdings (50% of the Core Portfolio and 44% of TLG’s overall portfolio). The following table provides an overview of retail
properties in TLG’s Core Portfolio:
Fair value (in € million) . . . . . . . . . . . . . . . . . . . . . . . . . .
Annualized in-place rent (in € million)(1) . . . . . . . . . . . . .
Number of properties . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total lettable area (in thousand sqm)(2) . . . . . . . . . . . . . . .
EPRA Vacancy Rate (in %)(3) . . . . . . . . . . . . . . . . . . . . . .
WALT (in years)(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Berlin
Brandenburg
232.6
16.4
32
157.5
0.2
8.6
38.3
3.3
14
24.2
0.1
7.6
As of June 30, 2014
MecklenburgWestern
Pomerania
Saxony
(unaudited)
97.3
7.7
36
61.3
4.9
7.6
199.1
18.0
120
154.2
0.6
5.9
SaxonyAnhalt
Thuringia
61.1
6.1
44
57.9
0.4
6.5
38.6
3.4
25
30.2
0.0
8.8
(1)
(2)
(3)
(4)
Based on fair value as of June 30, 2014, 52.9% of retail properties in TLG’s Core Portfolio are located in Berlin,
Dresden, Leipzig and Rostock, ensuring that TLG is not overly dependent on developments in any one state, region or city
while at the same time allowing TLG to benefit from positive macro-economic developments in these growth areas. The
micro-locations in which TLG’s retail properties are located are particularly attractive for food retailers and other sellers of
essential consumer goods because they enable the tenant to be a significant, in many cases even the dominant, retailer of the
relevant consumer goods in the relevant catchment area. The following graphic illustrates the regional focus of retail
properties in TLG’s Core Portfolio:
Based on fair value of retail properties in TLG’s Core Portfolio as of June 30, 2014.
For retail properties, TLG focuses on market leading food retailers as tenants such as supermarket chains operating
under the “EDEKA”, “REWE” and “Kaiser’s” brands and discounter chains operating under the “Aldi”, “Lidl”, “Netto” and
92
“Penny” brands. Furthermore, a do-it-yourself chain operating under the “Hellweg” brand is a significant tenant for of TLG’s
retail properties. While being only a smaller competitor, Hellweg, in 2012, showed the fastest growth in terms of floor space
and revenues among major German do-it-yourself chains (Source: Hahn Group, Retail Real Estate Report Germany 8th
Edition).
TLG considers itself one of the most important regional landlords for some of its food retail tenants, particularly in Berlin
and eastern Germany. The Company believes that this offers certain negotiation power when dealing with these tenants. The
following chart illustrates the focus of retail properties in TLG’s Core Portfolio on major supermarket and discounter chains:
As of June 30, 2014
Annualized in-place Share of annualized
rent(1)
in-place rent(2)
(unaudited)
Major supermarket and discounter chains . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
34.2
20.7
62.3
37.7
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
54.9
100.0
(1)
(2)
In %. The calculation of the share of annualized in-place rent only takes into account in-place rent from retail properties in TLG’s Core
Portfolio.
TLG has followed the expansions of some of these tenants in Berlin and eastern Germany for over two decades.
These long-standing relationships help TLG lease new retail space quickly and have made it a go-to landlord for such tenants
in Berlin and eastern Germany. The Company believes that its tenants particularly value TLG’s approachability, local roots
and expertise and the long-standing trust developed between TLG as the lessor and major supermarket and discounter chains
as the tenants. As of June 30, 2014, TLG’s top seven tenants for retail properties accounted for approximately 65% of
annualized in-place rent from retail properties in the Core Portfolio. The following chart provides an overview of the top
seven tenants for TLG’s retail properties:
As of June 30, 2014
Annualized in-place Share of annualized
rent(1)
in-place rent(2)
(unaudited)
WALT(3)
Netto Marken-Discount AG & Co. KG . . . . . . . . . . . . . . . . . . . . . . . . . .
REWE Markt GmbH Zweigniederlassung Ost . . . . . . . . . . . . . . . . . . . .
Hellweg Die Profibaumärkte GmbH & Co. KG . . . . . . . . . . . . . . . . . . .
Penny-Markt GmbH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
EDEKA(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Kaiser’s Tengelmann GmbH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Lidl Vertriebs-GmbH & Co. KG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
13.8
6.1
4.0
3.8
3.3
2.7
1.8
25.1
11.0
7.3
7.0
6.1
5.0
3.3
7.1
8.5
10.5
7.5
8.4
8.9
5.1
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
35.5
64.8
7.9
(1)
(2)
In %. The calculation of the share of annualized in-place rent only takes into account in-place rent from retail properties in TLG’s Core
Portfolio.
(3)
In years. WALT refers to the weighted average lease term, i.e., the remaining average contractual lease term for unexpired leases with a
(4)
Includes EDEKA Grundstückgsgesellschaft Nordbayern-Sachsen-Thüringen mbH, EDEKA Handelsgesellschaft Nord mbH and
EDEKA-MIHA Immobilien-Service GmbH.
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TLG’s hotel properties are all of mixed use (i.e., parts of the hotel property are also leased as offices, retail space or
for other uses), allowing for risk diversification within the individual property. As of June 30, 2014, the EPRA Vacancy Rate
of TLG’s hotel portfolio amounted to just 1.7%. Lease agreements for TLG’s hotel properties generally provide for fixed
lease payments, limiting TLG’s dependence on the performance of hotel operators. One contract provides for TLG to receive
additional rent payments if the hotel operations prove to be particularly profitable (i.e., TLG only shares in the upside of this
hotel property). At the same time, only little effort is required by TLG to manage its hotel portfolio given that smaller
refurbishments and repairs will generally be handled by the hotel operators themselves. With a WALT of 16.7 years (as of
June 30, 2014), TLG’s hotel portfolio allows for particular long-term stability and planning. Situated in good or very good
locations in Berlin, Dresden and Rostock, it also shares in the upside potential of positive developments of fair values in these
dynamic cities.
Non-Core Portfolio
As of June 30, 2014, TLG has classified a total of 188 properties with an aggregate fair value of €171 million as
non-core. These properties do not meet TLG’s Core Portfolio criteria given their location and/or use. The non-core portfolio
makes up only 11% of TLG’s entire portfolio. While they do not meet TLG’s Core Portfolio criteria, the majority of the
properties in TLG’s non-core portfolio either generate a net cash inflow (i.e., rents exceed the costs associated with letting and
maintaining these properties) or can be operated at little to no operating costs. Therefore, the non-core portfolio does not have
a negative impact on TLG’s cash flows.
TLG nevertheless intends to sell the majority of its non-core properties in the medium term, aiming for sales at or
above fair value, in order to invest the proceeds to further enhance the size and quality of its Core Portfolio. Between June 30,
2014 and September 15, 2014, TLG sold 28 properties with an aggregate fair value of €36.9 million. Furthermore, as of
September 15, 2014, it has signed agreements to sell 20 additional properties with an aggregate fair value of €33.7 million.
However, the buyer of one property that TLG had agreed to sell for approximately €23.9 million may have the right to
withdraw from the purchase agreement or to considerably reduce the purchase price, and in that case, TLG would likely incur
a significant non-cash loss.
The Company currently expects that the aggregate fair value of the non-core portfolio will amount to €97.3 million
by the end of the fiscal year 2014.
TLG’s Business Operations
Acquisitions and Disposals
TLG considers itself to be an active asset manager. It constantly aims to identify attractive opportunities to acquire
additional properties and dispose of its non-core portfolio at attractive prices. While TLG’s portfolio management is centrally
operated from its Berlin based headquarters, its local branches have a team of employees, which – together with the head of
the branch – are responsible for providing local market expertise and executing individual acquisitions and disposals. The
disposal and acquisition process will be centrally coordinated and supervised by the portfolio management department as well
as the member of the Management Board responsible for TLG’s portfolio management.
Acquisitions
Acquisitions of new attractive office and retail properties meeting its Core Portfolio criteria are a key part of TLG’s
strategy. TLG focuses its acquisition efforts on office properties in the city centers of Berlin and major eastern German cities
with favorable economic developments, especially Dresden, Leipzig and Rostock and retail properties in these same cities,
their respective surrounding areas as well as other attractive micro locations in different regions of eastern Germany. TLG
specifically targets the following types of acquisitions:
•
Office properties, mainly located in established secondary locations of Berlin (1B-Lagen) and good or very
good locations in the city centers of Dresden, Leipzig and Rostock. TLG typically targets single multi-tenant
properties (i.e., properties, parts of which are also rented as retail space or for other uses), preferably with a fair
value exceeding €10 million. Furthermore, TLG specifically targets properties with EPRA Vacancy Rates of
up to 30%, as the Company believes that it can acquire such properties at a discount and unlock additional
value potentials through modernizations, refurbishments and active letting management. The Company plans to
acquire office properties for an acquisition multiple in the range of approximately 13 to 16 times gross rental
income of the property to be acquired; and
•
Larger food retail properties, preferably with a value exceeding €10 million, or portfolios of smaller properties
in attractive micro locations (i.e., lack of competition within the relevant catchment area and therefore higher
attractiveness to food retailers) in Berlin and eastern German growth regions, suitable for supermarkets and
discounters which are fully-let or almost fully-let. In selected instances TLG may also acquire other retail
properties such as specialty markets (Fachmärkte) suitable for do-it-yourself chains or similar tenants. The
Company plans to acquire retail properties for an acquisition multiple in the range of approximately 11 to
15 times gross rental income of the property to be acquired.
95
TLG’s acquisition process generally follows a four-stage approach: TLG will first review any proposals received by
the seller, conduct a first screening, a site-visit and pre-calculate how a particular acquisition could complement its overall
portfolio, hand in an indicative bid and prepare the financing of a potential acquisition and finally proceed to negotiate the
purchase agreement and conduct a thorough due diligence. TLG generally only acquires properties that it considers
sufficiently attractive after completion of its four-stage acquisition process.
Within approximately eighteen months from the date of this Prospectus, TLG aims to deploy the proceeds from the
offering as well as additional credit financing and existing reserves to acquire office and food retail properties with an
aggregate fair value of €185.4 million until the end of the first quarter of 2016 if it can identify sufficiently attractive
opportunities, in addition to the aggregate €72.5 million it spent on the acquisition of the office building Köpenicker
Straße 30-31 (K30) in Berlin and the acquisition of approximately 94.9% of the shares of TLG FAB, which owns the “Forum
am Brühl” in Leipzig at Richard-Wagner-Straße 1, 2-3. The purchase price for the acquisitions was partially debt financed at
an interest rate of 2.3%, which is considerably below the already low average interest rate of 2.99%. In the current market
environment, TLG expects that debt financing for the acquisition of retail properties would be available at a similar rate of
approximately 2.5%. Besides the recent investments above which already closed, the Management and Supervisory Board
have made no firm commitments on any significant future investments. However, the Company is currently negotiating with
the seller of a retail asset in Berlin with a potential acquisition price (including ancillary acquisition costs) of approximately
€35 million and is currently conducting due diligence with regard to an office asset in Rostock with an acquisition price
(including ancillary acquisition costs) of approximately €16 million. In addition, the Company is currently reviewing in more
detail potential acquisitions of office and retail properties located in Berlin, Dresden/Leipzig, Rostock or the respective
surrounding areas and other parts of eastern Germany in which TLG operates with an aggregate fair value of €20 million and
€140 million, respectively.
TLG does not currently plan any acquisitions of hotel properties or project developments, but may do either/both on
an opportunistic basis.
Disposals
Disposals are generally made from properties in the non-core portfolio. TLG’s management decides on the disposal
of properties on a property-for-property basis, taking into account a property’s fair value as well as overall and local market
trends and developments. The Company believes that it will be able to divest the majority of the remaining properties in the
non-core portfolio in the medium term.
In selected cases, TLG’s management may also decide to sell properties from the Core Portfolio, if it believes that
the offered price is particularly attractive and allows for a realization of proceeds above a property’s fair value. As part of its
long-term focus on a portfolio with a smaller number of more valuable properties, TLG may intensify such efforts in the
future.
Between June 30, 2014 and September 15, 2014, TLG sold 28 properties with an aggregate fair value of €36.9
million. Furthermore, as of September 15, 2014, it has signed agreements to sell 20 additional properties with an aggregate
fair value of €33.7 million.
However, the buyer of one property that TLG had agreed to sell for approximately €23.9 million may have the right
to withdraw from the purchase agreement or to considerably reduce the purchase price due to the fact that the outline building
permit (Bauvorbescheid) will likely only allow for a more limited development than previously expected. While TLG would
likely incur a significant non-cash loss after the date of this Prospectus in connection with a reduction of the purchase price or
withdrawal of the buyer, TLG had previously recorded a gain from the remeasurement of investment property of
approximately €19.2 million during the six-month period ended June 30, 2014 due to the attractive purchase price it had been
able to negotiate. Based on a recent revaluation of the respective property, this gain exceeds any loss that TLG would incur in
subsequent periods in connection with a reduction of the purchase price or termination of the purchase agreement.
Tenant Management
TLG’s tenant management includes relationship management with its existing tenants, searches for prospective
tenants, maintenance, repair and value-enhancing investments in TLG’s portfolio and the contracting of third-party facility
management service providers. Such activities are organized locally. TLG’s headquarters nevertheless provide guidelines for
local operations and constantly monitor performance and compliance with these guidelines.
The offices in Berlin and Rostock form the northern branch of TLG’s tenant management, while the offices in
Dresden, Leipzig, Erfurt and Chemnitz comprise the southern branch. As of June 30, 2014, a total of 50 employees were
responsible for TLG’s local tenant management. TLG’s extensive property database (Liegenschaftsdatenbank) is used to track
land register (Grundbuch) information and Wodis Sigma is used to provide information on individual lease agreements and
rent payments thereunder as well as for the processing of such contractual relationships. Local offices are also responsible for
handling the title register process for TLG’s properties.
Relationships with Existing Tenants
All property-specific aspects relating to existing tenants are handled by TLG’s local offices and representatives.
This process includes regular meetings with representatives of TLG’s main tenants. The Company believes that maintaining
96
close business relationships with its tenants allows TLG to act proactively and responsively with regards to the demands of its
key tenants. Property performance is reviewed on a regular basis and property-by-property business plans are reviewed in
order to analyze the following items:
•
Potential value enhancements identified since the last business plan review;
•
Potential cost reductions identified since the last business plan review;
•
Property performance compared to the underwriting process; and
•
Potential risks associated with the property and measures taken to control those risks.
Furthermore, TLG conducts regular credit rating checks on its existing tenants to ensure that it has the relevant
information on the creditworthiness of its tenant base.
Letting Activities
TLG’s letting activities are also organized locally. All discussions relating to lease agreements are handled by the
heads of the local offices and/or the letting managers responsible for the respective tenant. TLG uses a wide array of sources
to find suitable tenants including contacts with its existing tenants, market knowledge of its local offices and real estate
agents. However, it will at all times retain control of the letting process and decide for itself whether a tenant is suitable for
the respective property. Prior to agreeing on any lease agreements, TLG will conduct a credit rating check on the prospective
tenant.
Property Investments
By monitoring individual properties and maintaining close business relationships with its tenants, TLG identifies the
potential and need for modernizations and expansions. Such opportunities are discussed between local property management
and TLG’s Berlin headquarters.
Any decision to make investments that have not been accounted for in TLG’s strategy planning and any investments
that have been accounted for exceeding €150,000 require approval from TLG’s headquarters. Investments exceeding
€250,000 require separate approval from the Management Board while investments exceeding €30 million require approval
from the Supervisory Board. Actual modernizations and repair works are outsourced to experienced third-party providers.
Facility Management
TLG does not perform any actual facility management tasks itself. However, it does hire and supervise a number of
experienced and well-known service providers such as Gegenbauer Holding SE & Co. KG and Dussmann Service
Deutschland GmbH to render such services and to ensure that TLG’s properties comply with all applicable building and
security regulations.
Employees
As experience and in-depth local market knowledge are fundamental for consistent performance in the commercial
real estate industry, TLG’s success depends on its ability to attract, train, retain and motivate qualified personnel. TLG
particularly aims to recruit young, qualified trainees and has therefore instituted a bachelor program, which allows such
trainees to gain both valuable practical experience as well as a bachelor of arts.
Nevertheless, TLG has recently reduced the number of its employees as part of its streamlining process and focused
on a portfolio comprising fewer properties with a reduced administrative exposure. TLG’s workforce has been reduced from
297 permanent and 15 temporary employees as of December 31, 2011, to 224 permanent and 17 temporary employees as of
December 31, 2012, 185 permanent and 12 temporary employees as of December 31, 2013 and 158 permanent and
10 temporary employees as of June 30, 2014. As of the date of this Prospectus, TLG’s workforce amounted to 140 permanent
and 10 temporary employees. The Company expects this process to be completed by 2015 (for additional information on
TLG’s reorganization of its workforce, see “Management’s Discussion and Analysis of Net Assets, Financial Condition and
Results of Operations—Key Factors Influencing TLG’s Portfolio, Results of Operations and the Comparability of Financial
Information—Reorganization of TLG”).
Information Technology
TLG uses both proprietary and external software systems. It uses mostly three different software systems, which are
to a certain degree interlinked.
Wodis Sigma
Wodis Sigma is a real estate software solution developed by Aareon. Wodis Sigma is mainly used by TLG’s
accounting department and also includes information used by property managers (e.g., in-depth information on lease
agreements, rent payments etc.).
97
Property Database
TLG’s property database (Liegenschaftsdatenbank) is based on proprietary software and includes property specific
information on land register records (Grundbuchauszüge) of individual properties as well as other legal (e.g., building
permits, contracts etc.) and non-legal (e.g., construction dates, acquisition dates etc.) data. TLG’s property database is also
used to coordinate insurance policies, contracts with third-party service providers and billing.
REVC
TLG’s latest software system, the Real Estate Value Creator (“REVC”), is a software solution designed by IRM
Management Network GmbH, which helps to improve the depth and quality of TLG’s controlling and portfolio management.
The REVC not only allows TLG to assess key performance indicators of individual properties and entire portfolios, but also
offers simulations of how acquisitions or disposals of certain properties would affect TLG’s overall portfolio and certain Key
Performance Indicators (e.g., rental income, EBITDA, FFO etc.). Data required by the REVC is automatically provided by
Wodis Sigma and the property database (Liegenschaftsdatenbank) by an interface. The results of the REVC simulations are
subject to plausibility checks.
Material Agreements
The following section provides a summary of any material agreements to which TLG is a party:
Financing Agreements
As of June 30, 2014, TLG had (consolidated) financial indebtedness (liabilities due to financial institutions) in the
amount of approximately €727.9 million (including accrued interest and liabilities under hedges). On this date, land-charge
secured loans from 20 banks with nominal amounts of up to €80.2 million were outstanding. The table below provides a
summary of loan agreements with a volume of more than €25 million:
Bank
Nominal loan amount in accordance
with IFRS(1)
Expiration of fixed
interest rate(2)
31.5
80.2
48.5
46.9
42.8
43.6
72.2
25.3
49.9
2017
2018
2019
2020
2020
2021
2020
2024
2024
Westfälische Landschaft Bodenkreditbank AG . . . . . . . . . . . . . . . . .
Landesbank Hessen-Thüringen Girozentrale . . . . . . . . . . . . . . . . . . .
Bayerische Landesbank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
HSH Nordbank AG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Berlin Hyp AG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
UniCredit Bank AG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deutsche Pfandbriefbank AG(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deutsche Pfandbriefbank AG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Berliner Sparkassse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1)
As of June 30, 2014 and in € million.
(2)
After the expiration of the fixed interest rate, TLG can terminate the loan if it does not want to accept the adjusted interest rate proposed
by the lender.
(3)
Includes an option for TLG to extend the loan until 2022 under certain circumstances.
The volume-weighted average remaining term of the land-charge secured loans is 5.9 years and the loans mature
between 2014 and 2024.
The loans bear interest at fixed rates or at variable rates of three-month EURIBOR plus margin. 94 % of the
outstanding floating-rate loan amount is currently hedged by fixed-for-floating swaps. Taking into consideration the hedging
instruments, the interest rates of the individual loans range from 1.015% per annum to 5.21% per annum. The rates depend,
among other things, on the quality of the properties securing the loan, the market conditions at the time the loan was raised,
the term and the financial leverage in respect of the financed properties. The interest rate can increase if extraordinary events
occur.
The terms provide for regular repayments of the loans during their respective terms, up to 5% per annum of the
initial loan amount. The loan agreements contain different repayment provisions including fixed amortization rates and
annuities.
Land charges have been granted over the properties as security. The loans are typically also secured by pledges or
assignments of the claims under interest hedging instruments and assignments of rent revenues, purchase price and insurance
claims. Some loan agreements also provide for pledges of the rent collection accounts as well as of special purpose accounts.
The loan agreements contain financial covenants customary for real estate borrowing, in particular with respect to
the LTV-Ratio. Most loan agreements require certain maximum LTV-Ratios, calculated as the quotient of the outstanding
98
loan amount (including senior-ranking loans) and the value of the borrowers’ properties. The value of the individual portfolios
was determined before the first utilization and will be determined again during the term of the loan. The maximum LTVRatios allowed depend on the quality and size of the financed properties, the market conditions at the time the loan was
provided and the lender, and range from 55% to 80%. Many loan agreements also contain liquidity-related financial covenants
such as minimum interest or debt-service cover ratios or maximum debt-to-rent ratios. The breach of financial covenants
usually allows the bank to terminate the respective loan and claim early repayment of the entire loan unless the breach is
cured by a (partial) repayment, or, as the case may be, the granting of additional security interest. At the date of this
Prospectus, TLG is not in breach of any financial covenants.
The loan agreements contain representations, information, corporate and property-related undertakings and
termination rights customary for real estate borrowing. There is no indication that any representations or material
undertakings have been breached. Termination rights exist if (interest, amortization or other) payments are not made when
due, financial covenants are not complied with, the borrower becomes insolvent or defaults on other financial liabilities,
representations or warranties turn out to have been incorrect, information obligations are violated by TLG or (other) material
contractual obligations are not complied with (unless the respective violation can be and is cured within a contractually
specified period). In addition, some of the loan agreements contain termination rights of the respective bank if the control over
the Company changes. In most cases, loan agreements also incorporate the respective bank’s general terms and conditions that
contain very broad termination rights, in particular the right to terminate the loan if there is or threatens to be a substantial
deterioration in the financial circumstances of the respective borrower or in the value of a security granted as a result of which
the repayment of the loan is jeopardized even if the security is realized.
Other Material Agreements
i.
Restitution Agreement
TLG has been and may in the future be subject to third-party claims in connection with restitution and compensation
claims. Under the German Asset Act (Vermögensgesetz (VermG)) former owners of assets that were dispossessed either by
the national socialist government between January 30, 1933 and May 8, 1945 or by the former German Democratic Republic
(Deutsche Demokratische Republik) can demand the restitution of such assets. If returning the assets is impossible due to a
valid sale to a third party the former owners have compensation claims under the German Investment Priority Act
(Investitionsvorranggesetz (InVorG)). The German Asset Allocation Law (Vermögenszuordnungsgesetz (VZOG)) provides for
similar regulations.
In order to ensure that such third-party claims would not prevent a privatization of TLG, the Federal Institute for
Special Tasks Arising from Unification (Bundesanstalt für vereinigungsbedingte Sonderaufgaben) (“BVS”) and TLG on
December 20, 2007 entered into an agreement for the cumulative assumption of liabilities regarding restitution claims brought
against TLG (the “Restitution Agreement”). The BVS is a federal office of Germany and the successor of Treuhandanstalt
(“THA”). Under the Restitution Agreement, the BVS will indemnify and hold harmless TLG against claims arising out of or
in connection with the aforementioned restitution laws. Thus, any claims brought against TLG in connection with the
aforementioned restitution laws will be fulfilled by Germany. As of the date of this Prospectus, a total of 11 of TLG’s
properties are subject to claims under the aforementioned restitution laws.
ii.
Demerger Agreement relating to TLG WOHNEN GmbH
By demerger agreement (Abspaltungs- und Übernahmevertrag) dated December 29, 2011, TLG transferred the vast
majority of its residential real estate holdings to TLG WOHNEN GmbH with effect from January 1, 2012. TLG WOHNEN
GmbH was subsequently privatized in 2012. Pursuant to Section 133 (1) of the German Reorganization and Transformation
Act (Umwandlungsgesetz), the Company and TLG WOHNEN GmbH are jointly and severally liable for any claims arising
against TLG prior to the demerger of TLG’s residential real estate (i.e., until January 1, 2017).
The Federal Republic of Germany has provided the Company with an indemnity from claims arising out of the
German Reorganization and Transformation Act in connection with the demerger of TLG WOHNEN GmbH. In return, the
Company has transferred any compensation claims it might have against TLG WOHNEN GmbH in connection with the
German Reorganization and Transformation Act to the Federal Republic of Germany.
iii.
Social Charter
In connection with its privatization, TLG has assumed an obligation to adhere to the social charter (Sozialcharta)
agreed between the Existing Shareholders and the Federal Republic of Germany on December 12/13, 2012, and relating to
approximately 330 residential tenants in TLG’s non-core portfolio as of the date of this Prospectus.
The social charter provides special protection for elderly and disabled tenants as well as their legal successors by
limiting TLG’s ability to terminate lease agreements with these tenants and prohibiting TLG from increasing rents for socalled luxury modernizations (Luxusrenovierungen) (i.e., modernization measures after which the respective property appeals
to a target group of tenants differing from the pre-modernization tenant structure). Furthermore, when disposing of residential
properties protected by the social charter TLG must ensure that the buyer of the respective property assumes TLG’s
obligations under the social charter. Failure to comply with the obligations under the social charter would force TLG to pay a
contractual penalty of at least €100,000.
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Material Litigation
In the course of TLG’s business activities, the Company and its subsidiaries are regularly parties to legal disputes,
including rental and warranty disputes. The following paragraphs describe any material legal proceedings with a value
exceeding €1 million that TLG is currently involved in:
•
TLG has filed an appeal against the revocation of subsidies granted by Sächsische Aufbaubank, a government
entity owned by the state of Saxony (“SAB”), in connection with a property located at Am Fuchsloch 10 in
Mochau. SAB is demanding the repayment of subsidies granted to Signet Solar GmbH, a former tenant of
TLG, which were partly transferred to TLG on behalf of Signet Solar GmbH in order to lower Signet Solar
GmbH’s leasing rates. The revocation was issued due to the insolvency of Signet Solar GmbH. The total value
of these proceedings amounts to approximately €3.6 million (excluding interest claims) as of the date of this
Prospectus;
•
TLG has filed an appeal against the revocation of subsidies granted by SAB in connection with the second
phase of building (2. Bauabschnitt) for a property located at Philipp-Reis-Straße 1 in Bautzen. SAB is
demanding the repayment of subsidies granted to Sphairon Access Systems GmbH, a former tenant of TLG,
which were partly transferred to TLG on behalf of Sphairon Access Systems GmbH in order to lower Sphairon
Access Systems GmbH’s leasing rates. The revocation was issued due to the insolvency of Sphairon Access
Systems GmbH. The total value of these proceedings amounts to approximately €1.7 million (excluding
interest claims) as of the date of this Prospectus; and
•
TLG is being sued by the state of Saxony in connection for repayment of subsidies granted by SAB in
connection with the first phase of building (1. Bauabschnitt) for a property located at Philipp-Reis-Straße 1 in
Bautzen. The state of Saxony is demanding the repayment of subsidies granted to Sphairon Access Systems
GmbH, a former tenant of TLG, which were partly transferred to TLG on behalf of Sphairon Access Systems
GmbH in order to lower Sphairon Access Systems GmbH’s leasing rates. The revocation was issued due to the
insolvency of Sphairon Access Systems GmbH. The total value of these proceedings amounts to approximately
€1.1 million (excluding interest claims) as of the date of this Prospectus.
As of June 30, 2014, the aggregate amount of claims brought against TLG amounted to €10.2 million and the
aggregate amount of claims brought by TLG to €2.6 million (both excluding interest claims). Approximately €9.5 million of
claims (including interest claims) brought against TLG were related to litigation in connection with subsidies granted by SAB.
The Company expects that it will settle all disputes with SAB within the foreseeable future and has already made provisions
for the claims brought by SAB. Furthermore, as of June 30, 2014, TLG had made provisions in the amount of €0.5 million for
other legal disputes and €0.3 million for litigation related costs.
During the last twelve months, TLG was involved in ten other material legal proceedings with a value exceeding
€0.3 million (excluding interest claims) with an aggregate value of approximately €8.7 million (excluding interest claims).
Apart from the legal proceedings described above, TLG is not and has not been party to any governmental, legal or
arbitration proceedings (including any pending or threatened proceedings) during the last twelve months, which may have, or
have had, significant effects on TLG’s financial position or profitability.
Intellectual Property
Given the nature of its business, intellectual property rights are of no special significance to TLG. It does not
depend on any patents or licenses.
Among others, the trademarks “TLG” and “TLG IMMOBILIEN” have been registered on behalf of the Company
with the German Patent and Trade Mark Office (Deutsches Patent- und Markenamt (DPMA)) and the Office for
Harmonization in the Internal Market. TLG predominantly uses the internet domain www.tlg.de, which is registered in the
Company’s name.
Insurance
TLG is covered through an all-risk building insurance that insures against fire, water main breaks, storms, hail and
certain other losses or damages, including loss of rent for a period of up to 24 months. In addition, TLG is covered through
third-party liability insurance, which provides insurance coverage for personal injury and damage to property. TLG has also
obtained insurance coverage against losses or damages from acts of terrorism, including loss of rent for a period of 24 months
resulting therefrom. Such insurance coverage against losses or damages from acts of terrorism is limited to an aggregate
amount of €25 million annually. TLG’s insurance policies contain market-standard exclusions and deductibles.
TLG regularly reviews the adequacy of its insurance coverage. The Company believes that TLG’s insurance
coverage is in line with market standards in the commercial real estate industry. However, there is no guarantee that it will not
suffer any losses for which no insurance coverage is available, or that the losses will not exceed the amount of insurance
coverage under existing insurance policies.
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REGULATORY ENVIRONMENT
TLG’s real estate portfolio is subject to a variety of laws and regulations in Germany. If TLG fails to comply with
any of these laws and regulations, it may be subject to civil liability, administrative orders, fines, or even criminal sanctions.
The following provides a brief overview of select federal regulations and the state regulations of Berlin,
Brandenburg, Mecklenburg-Western Pomerania, Saxony, Saxony-Anhalt and Thuringia that are applicable to TLG’s business
operations.
Tenancy Law for Commercial Properties
Unlike tenancy law for residential properties, German tenancy laws for commercial properties generally provide
landlords and tenants with far-reaching decisions in how they structure lease agreements. Also, general terms and conditions
(Allgemeine Geschäftsbedingungen (AGB)) used between entrepreneurs are only subject to a less strict review. There are,
however, certain areas, in which legal restrictions may limit a landlord’s negotiating power:
Strict Written Form Requirements
German tenancy law generally requires that lease agreements with a term of more than one year must be concluded
in written form. The requirements to comply with the written form have been specified by comprehensive case law. However,
lease agreements that do not comply with written form requirements are not automatically invalid. Rather, it is deemed to
have been concluded for an indefinite period with the consequence that it can be terminated at the earliest at the end of one
year after handover of the leased property to the tenant in accordance with the statutory notice period (i.e. notice of
termination is admissible at the latest on the third working day of a calendar quarter towards the end of the next calendar
quarter). Against the background of evolving case law on the formal invalidity of lease agreements, there is a risk that lease
agreements that were originally compliant with strict written form requirements may no longer satisfy the requirements
currently applicable and – regardless of the agreed fixed term – could be terminated at short notice.
Operating Costs
In the area of the operating costs of commercial tenancies, most of the ongoing costs of the property accruing to the
landlord may essentially be apportioned to the tenants. However, this requires a clause in the lease agreement stipulating
explicitly and specifically which operating costs shall be borne by the tenant. These clauses have to be even more specific and
transparent in case that they form part of the general terms and conditions used by the landlord. With respect to heating costs,
further legal provisions are contained in the Heating Costs Ordinance (Heizkostenverordnung (HeizkostenV)), banning lumpsum cost indemnification clauses and restricting the landlord’s leeway in apportioning heating costs among tenants.
Furthermore, costs that do not adhere to the landlord’s statutory obligation to take a cost-effectiveness approach
(Wirtschafltichkeitsgebot) may also not be apportioned to tenants and may even result in liability for damages.
Maintenance Costs, Cosmetic Repairs, Final Decorative Repairs
Lease agreements for commercial properties may generally transfer responsibility for the maintenance and repair of
let properties to tenants. This general principle is limited to the extent that the costs of maintenance and repairs to the roof and
structures and of areas located in the let property used by several tenants may not be fully transferred to tenants by use of
general terms and conditions. Instead, case law on general terms and conditions requires a contractual limitation on the
amount apportioned.
Expenses for cosmetic repairs (Schönheitsreparaturen) may, in principle, be allocated to tenants, provided that the
obligation to carry out ongoing cosmetic repairs is not combined with an undertaking to perform initial and/or final decorative
repairs. However, general terms and conditions may not allocate costs for cosmetic repairs to tenants if the execution of such
repairs is fixed to set deadlines or if the tenant is otherwise unfairly disadvantaged.
There is a trend in the case law of the German Federal Supreme Court (Bundesgerichtshof) to the effect that
restrictions originally developed for residential tenancy law are increasingly being applied to lease agreements for commercial
properties. This may result in provisions contained in commercial lease agreements no longer being valid in the future and
thus increasing costs to be borne by the landlord.
Land-use Regulations
German Planning Law
Under German planning law, municipal planning authorities have a considerable amount of discretion in exercising
their planning competence. They are, however, required by law to respect the land owners’ property rights as well as to pursue
a number of prescribed objectives, the most important of which include sustainable urban development and the protection of
the natural foundations of human life. Formal planning by municipalities takes a two-tiered approach.
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On the first level, each municipality can issue a zoning plan (Flächennutzungsplan) that represents, with respect to
the entire municipal territory, a basic classification of land uses according to urban development objectives and the needs of
the community. A zoning plan may restrict the use of land to special types of use or impose restrictions with respect to
environmental standards, but does not create or modify individual rights.
On the second level, development plans (Bebauungspläne) may determine the use of land in designated areas. A
development plan has to comply with the applicable zoning plan. A development plan establishes the applicable standards
with respect to such matters as the size of plots and the height, density and specific use of buildings erected on a plot and may
also designate land as being reserved for public purposes, social housing, infrastructure, open spaces, and protected areas.
Where there is no development plan or only a development with limited standards, permissible planning generally depends on
the location of the property (i.e., within or outside of urban areas) and the existing buildings in the surrounding area.
Urban Restructuring Planning
Communities may designate certain areas as restructuring areas (Sanierungsgebiete) and undertake comprehensive
modernization efforts regarding the infrastructure in such areas. While this may improve the value of properties located in
restructuring areas, being located in a restructuring area also imposes certain limitations on the affected properties (e.g., the
sale, encumbrance and letting of such properties, as well as reconstruction and refurbishment measures, are generally subject
to special consent by the competent municipal authorities). Most importantly, such properties may only be sold at prices
approved by the competent municipal authorities and approval is generally only granted if the proposed price excludes any
value gains from restructuring measures. Property owners may, however, negotiate the lifting of such limitations, which is
usually granted in exchange for compensatory payments.
Building Regulations
German building laws and regulations are quite comprehensive and address a number of issues, including, but not
limited to, permissible types of buildings, building materials, statics, proper workmanship, heating, fire safety, means of
warning and escape in case of emergency, access and facilities for the fire service, hazardous and offensive substances, noise
protection, ventilation and access and facilities for disabled people.
Protection of Existing Buildings
Owners of buildings that have been erected in compliance with applicable laws and regulations and have received a
building permit (Baugenehmigung) in principle enjoy constitutional protection of property with respect to such buildings.
Nevertheless, as an exception to this general rule, the competent authority may, under certain circumstances, demand
alterations to buildings on grounds of safety (e.g., fire safety) or health risks from a property. While mere non-compliance
with prevailing regulations generally does not warrant such orders, the occurrence of concrete safety or health risks with
respect to users of the building or the general public allows the competent authority to demand immediate action from the
owner. Relevant risks in this regard include fire risks, traffic risks, risks of collapse and health risks from injurious building
materials such as asbestos. To TLG’s knowledge, there are at the moment no official orders demanding any alterations to
existing buildings owned by TLG. The protection of existing buildings does not cover any alterations to such buildings or
changes in the type of use. A change of use may require a construction permit if the intended use differs from the use
classified in the development plan (Zweckentfremdung) or the intended use is subject to special regulations. Thus, for
example, the conversion of office or retail space into residential space or vice versa may require a construction permit.
Energy Saving Regulation
Sellers and landlords of commercial buildings are required to provide potential buyers or tenants with a special
certificate that discloses the property’s energy efficiency before any sale or new rentals. An energy certificate must be
prepared if an engineering assessment of the entire building’s energy consumption is performed in the course of
modernization measures, which allows for the certificate to be prepared at a reasonable cost. The energy certificate is
generally valid for ten years. The Energy Saving Act (Energieeinsparungsgesetz (EnEG)) reinforces the energy certificate
(e.g., by requiring that real estate advertisements in commercial media cite the heat transfer coefficient or U-value of the
property). The Energy Saving Ordinance (Energieeinsparverordnung (EnEV)), which enacts the Energy Saving Act, includes
various regulations regarding reconstruction works designed to improve energy efficiency. In general, the owner of a
commercial property must ensure that modernization measures and expansions of existing properties comply with regulations
under the Energy Saving Ordinance, remedy certain deficiencies and regularly inspect the energy efficiency of cooling
systems with cooling power in excess of twelve kilowatt hours. Furthermore, owners of buildings with more than 500 sqm of
usable area and regular public traffic (starker Publikumsverkehr) have to display the respective building’s energy certificate in
a visible place. Failure to comply with the Energy Saving Ordinance can be sanctioned as an administrative offense.
Monument Protection
Monument protection is generally regulated on the federal level and applies with different decrees of limitations. As
of June 30, 2014, 73 of TLG’s properties were subject to some form of monumental protection. Thereof, 29 properties were
subject to individual protection, meaning that parts of such properties (e.g., roofs, facades, installations etc.) are considered to
be of cultural value and may only be altered, modernized or demolished with prior written approval from the competent
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authorities, if at all. 28 properties were subject to ensemble protection, whereby whole ensembles of buildings are considered
of cultural value. Alterations to the appearance of such buildings may only be made with prior written approval from the
competent authorities. A further 16 properties were subject to ground monument protection given that they cover
archaeological sites (e.g., ancient foundations, burial sites etc.). Such ground monumental protection generally does not affect
the use of buildings situated on these properties. Major earthworks on such properties may however be delayed or prohibited
to preserve ground monuments.
Regulation Relating to Environmental Damage, Contamination and Property Maintenance
In addition to German tenancy law, TLG’s commercial real estate portfolio is subject to various rules and
regulations relating to the remediation of environmental damage and contamination.
Soil Contamination
Pursuant to the German Federal Soil Protection Act (Bundesbodenschutzgesetz), the responsibility for residual
pollution and harmful changes to soil (“Contamination”) lies with, among others, the perpetrator of the Contamination, such
perpetrator’s universal successor, the current owner of the property, the party in actual control of the property and, if the title
was transferred after March 1999, the previous owner of the property if he knew or must have known about the
Contamination. There is no general statutory ranking as to which of the aforementioned parties is primarily liable. Rather, this
decision is made at the discretion of the relevant local authority who will take into account the effectiveness of remediation as
a prevailing factor. Thus, the current owner of the contaminated property is usually the first party to be held responsible
because the owner is generally in the best position to undertake the necessary remediation work. However, a former owner
may be ordered to carry out remediation work if the current owner’s financial condition appears to be unsound. Other
responsible parties are required to indemnify the party that carried out the remediation work on a pro rata basis, regardless of
which party is held liable by the relevant local authority. The indemnity obligation can be waived or transferred by way of an
express contractual agreement. Furthermore, liability is not based on fault; thus the German Federal Soil Protection Act
(Bundesbodenschutzgesetz) does not require the relevant local authority to prove negligence or intent on the part of the liable
parties.
Administrative powers arising from the German Federal Soil Protection Act (Bundesbodenschutzgesetz) authorize
the relevant local authority to require risk inspections, investigations, remedial measures and other measures necessary for the
prevention of residual pollution or harmful changes in the soil.
Civil law liability for Contaminations can arise from contractual warranty provisions or statutory law. Warranty
obligations can generally be waived or can be limited by contract. According to statutory provisions, the perpetrator of the
Contamination can be held liable for damages or for the remediation of the Contamination and its consequences. TLG could
be subject to such liability if a property that TLG currently owns or formerly owned is detrimentally affecting the property of
one or more third parties. This civil liability exists independent of official action taken under the German Federal Soil
Protection Act (Bundesbodenschutzgesetz).
Asbestos Regulation
German law imposes obligations to remediate asbestos contamination under certain circumstances. Under the
asbestos guidelines (Asbest-Richtlinien) of the German federal states, the standard for determining a remediation obligation is
the presence of any health threat. The law distinguishes between friable asbestos, which is capable of releasing asbestos fibers
into the air as it ages or breaks, and non-friable asbestos, from which asbestos fibers are not usually released and which
therefore poses a limited risk to human health. Except in the event of structural alterations, there is generally no obligation to
remove non-friable asbestos under the asbestos guidelines.
Friable asbestos is generally found in construction materials that provide fire safety, noise abatement, moisture
protection, heat insulation and thermal protection. The asbestos guidelines set out criteria used in assessing the urgency of
remedying contamination, ranging from immediate action (including demolition, removal or coating of the asbestos) to risk
assessments at intervals of no more than five years. In the case of asbestos contamination, a tenant may also assert a right of
rent reduction or, in extreme circumstances, termination for good cause. German courts have held that a landlord may be
presumed to be in breach of its statutory obligations if the existence of a health threat cannot be excluded. Accordingly, the
courts have granted the right to rent reduction even in cases where the asbestos guidelines do not require immediate
remediation. Tenants may also claim compensatory damages if the defect was present at the time the contract was concluded
and they may claim compensation for personal suffering (Schmerzensgeld). Finally, tenants also have the right, subject to
certain conditions, to remedy the defect on their own and require that their reasonable expenses be reimbursed.
Regulation Relating to Polychlorinated Biphenyl (“PCB”), Dichlorodiphenyltrichloroethane (“DDT”), Pentachlorophenol
(“PCP”) and Lindane
Since PCB may cause fetal damage in pregnant women and is suspected to have carcinogenic effects, its production
was prohibited in Germany in 1983. However, PCB may still exist in buildings, such as in wood preservatives, synthetic
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materials, insulations or joints. DDT and Lindane are synthetic pesticides, which were also used in wood preservatives. DDT
is suspected to cause cancer and be genotoxic, while Lindane is suspected to harm the nervous system and may cause cancer.
PCP was used as a fungicide against mold and is also suspected to negatively affect human health.
Under various legal provisions, the owner of a building may be required to remedy PCB sources through the
elimination or sealing of construction elements that contain PCB. In particular, remediation measures may become necessary
if the PCB concentration in rooms that are designed for human use exceeds 300 nanograms per 1 cubic meter of air. The
existence of DDT, PCP and Lindane in buildings may, under certain circumstances, entitle the tenant to reduce the rent or to
claim damages. Moreover, the remediation of rooms or buildings may be required where DDT, PCP or Lindane
concentrations exceed certain thresholds.
Protection of Groundwater and Maintenance of Sewage Systems
Pursuant to the German Federal Water Management Act (Wasserhaushaltsgesetz), all sewage systems must be
constructed, operated and maintained according to the generally accepted Rules of Technology (annerkannte Regeln der
Technik). Property owners are required to check, among other things, for the sewage system’s condition, operability,
maintenance and the amount and quality of wastewater and the substances contained therein. In the case of deficiencies,
property owners must repair the sewage system. The German Federal Water Management Act (Wasserhaushaltsgesetz)
authorizes the German Federal Government (Bundesregierung), with approval of the Second Chamber of the German
Parliament (Bundesrat), to enact an ordinance specifying the abovementioned obligations concerning sewage systems. On
January 3, 2012, the German Federal Government (Bundesregierung) announced that no set date can currently be foreseen for
the enactment of such an ordinance.
Until an ordinance by the German Federal Government (Bundesregierung) is enacted, the federal state governments
may enact their own ordinances regarding the aforementioned obligations. Required testing intervals under such ordinances
vary from state to state and sometimes between different zones within one state.
Legionella Testing
Pursuant to the Federal Drinking Water Ordinance (Trinkwasserverordnung—TrinkwV 2001) as last amended on
August 7, 2013, the owners of specified centralized heated water supply facilities for use in commercially used multi-family
buildings are required to analyze stored heated water for the concentration of legionella (a pathogenic bacterium) by
December 31, 2013 at the latest and to repeat this test at least once every three years. Competent authorities may order
additional testing.
The analysis must be carried out by laboratories specified by the respective federal state. The existence of
appropriate sample extraction points (Probeentnahmestellen) must be ensured by the owner of the building. If specific limits
are exceeded, the competent authority will regularly adopt measures to improve the water quality.
German Law on Property Purchases
Purchasers of real estate located in Germany are required to bear certain costs. It is market practice that the
purchaser of real estate is required to pay the Real Estate Transfer Tax (“RETT”) (Grunderwerbsteuer). RETT in Berlin
currently amounts to 6.0%, in Brandenburg, Mecklenburg-Western Pomerania, Saxony-Anhalt and Thuringia to 5.0% and in
Saxony to 3.5% of the purchase value of the property. Additional costs, amounting to approximately 1.5% of the purchase
value, are incurred for notary fees and land registry office (Grundbuchamt) fees, depending on the value of the transaction.
These additional costs are usually also paid by the purchaser. While the RETT tax rate is determined on the state level, the
statutory RETT framework falls within the competency of the federal lawmakers.
Under the current tax laws, the acquisition of a participation in an entity that owns German real estate exceeding
95% is subject to RETT. Before June 6, 2013, the tax could be avoided by way of a share deal in which up to 94.9% of shares
in a property-owning entity and up to 94.9% of shares in an interim vehicle owning the remaining 5.1% in the propertyowning entity were acquired. An acquirer could thereby hold almost all of the shares in a property holding entity without
being subject to RETT. Following the Act for the Implementation of the EU-Directive on Mutual Assistance
(Amtshilferichtlinie- Umsetzungsgesetz), RETT is now also triggered if an acquisition or transaction results in an entity
holding an economic participation of at least 95% of an entity that owns a piece of German real property, regardless of
whether this is held (partly) directly or (partly) indirectly. The economic participation shall equal the sum of direct or indirect
participations in the respective entity’s capital or assets. To determine participations, the percentages of participations in the
capital or assets of the entities have to be multiplied. Thus, RETT is triggered if the overall effective ownership, taking into
account direct and indirect participation (economic ownership), is or exceeds 95% when accumulation is determined based on
economic interest calculated on a look-through basis.
Capital Investments Act (Kapitalanlagegesetzbuch)
The Capital Investments Act (Kapitalanlagegesetzbuch (KAGB)) regarding the regulation of capital investments,
implementing the European Directive 2011/61/EU on the administration of alternative investment funds and last amended in
June 13, 2014, regulates the administration of alternative investment funds. In June 2013, the BaFin published an
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interpretative letter specifying the bill’s scope. According to this letter, only funds that, among others, follow a fixed
investment strategy (festgelegte Anlagestrategie) opposed to a general business strategy (Unternehmensstrategie), are subject
to the Capital Investments Act. According to the BaFin, such a fixed investment strategy is characterized by the detailed
regulation of the investment criteria and a restriction of the investment discretion in the by-laws, statutes or other binding
documentation. Given that the Company’s statutory purpose leaves the Management Board with wide entrepreneurial
discretion and full managerial flexibility, TLG believes that under this guidance, neither the Company nor any of its current
asset-holding subsidiaries qualify as an alternative investment fund.
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INFORMATION ON THE EXISTING SHAREHOLDERS
Shareholder Structure (Before and After the Offering)
The shareholders of TLG IMMOBILIEN AG are LSREF II East AcquiCo S.à r.l., Luxemburg, a limited liability
company (société à responsibilité limitée), registered with the commercial and company register of Luxembourg (Registre de
Commerce et des Socieétés Luxembourg) under the company number B 173323, having its registered office at 33, rue du Puits
Romain, L-8070 Bertrange, Luxembourg, (“East AcquiCo”), which holds 94.9% of the shares in both the Company and
Delpheast Beteiligungs GmbH & Co. KG, a limited partnership with a limited liability company as general partner, registered
with the commercial register of the local court (Amtsgericht) of Frankfurt am Main, Germany, under the docket number
HRA 47217, having its registered office at Hamburger Allee 14, 60486 Frankfurt am Main, Germany, (“Delpheast” and,
together with East AcquiCo, the “Existing Shareholders”) which holds 5.1% of the shares in the Company.
The following table sets forth the shareholdings and voting rights of the Existing Shareholders immediately prior to
the offering, and their expected shareholding, together with the expected shareholding of the public float, upon completion of
the offering.
Shareholder
Actual (direct) ownership of, and
voting rights in, TLG IMMOBILIEN AG (in %)
upon completion of the upon completion of the
offering (assuming no
offering (assuming full
exercise of Greenshoe
exercise of Greenshoe
immediately prior
Option and issuance
Option and issuance
to the offering
of New Shares in full)
of New Shares in full)
East AcquiCo . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Delpheast . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Public float . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
94.9
5.1
0.0
45.4
0.0
54.6
39.9
0.0
60.1
The 94.9% limited partner of Delpheast is East AcquiCo. The remaining 5.1% limited partnership interest in
Delpheast is held by Delpheast L.P. Beteiligungs-GmbH, a limited liability company held by a third party not affiliated with
East AcquiCo. The general partner of Delpheast is Delpheast Verwaltungs-GmbH. East AcquiCo holds all of the shares in
Delpheast Verwaltungs-GmbH.
The Company is controlled by East AcquiCo due to East AcquiCo’s direct ownership of 94.9% of the voting rights
in the Company and the fact that East AcquiCo via its shareholdings in Delpheast and Delpheast Verwaltungs-GmbH also
indirectly controls the voting rights with respect to the shares in the Company held by Delpheast.
LSREF II East Lux GP SCA, a partnership limited by shares (société en commandite par actions), registered with
the commercial and company register of Luxembourg (Registre de Commerce et des Socieétés Luxembourg) under the
company number B 173601, having its registered office at 33, rue du Puits Romain, L-8070 Bertrange, Luxembourg
(“LS SCA”), is the sole shareholder of East AcquiCo.
LSREF II East Lux GP S.à r.l., a limited liability company (société à responsabilité limitée), registered with the
commercial and company register of Luxembourg (Registre de Commerce et des Socieétés Luxembourg) under the company
number B 171344, having its registered office at 33, rue du Puits Romain, L-8070 Bertrange, Luxembourg, is the general
partner of LS SCA.
LSREF II Delphi S.à r.l., a limited liability company (société à responsabilité limitée), registered with the
commercial and company register of Luxembourg (Registre de Commerce et des Socieétés Luxembourg) under the company
number B 165282, having its registered office at 33, rue du Puits Romain, L-8070 Bertrange, Luxembourg, is the sole limited
partner of LS SCA, holding the limited partner shares of LS SCA.
LSREF II Delphi LP S.à r.l. is a 100% subsidiary of Lone Star Capital Investments S.à r.l. (“LSCI”), registered with
the commercial and company register of Luxembourg (Registre de Commerce et des Socieétés Luxembourg) under the
company number B 91796, having its registered office at 33, rue du Puits Romain, L-8070 Bertrange, Luxembourg.
LSCI is not controlled by any of its shareholders and each current shareholder holds less than 50% of the voting
rights in LSCI.(1)
(1)
Shareholding disclosure obligations under the German Securities Trading Act (Wertpapierhandelsgesetz) end at this level.
106
The following chart sets forth the entities holding participations, directly or indirectly, in the Existing Shareholders
as described above:
LSREF II Delphi
L.P. S.à r.l. (Luxembourg)
Lone Star Capital
Investments S.à r.l.
(Luxembourg)
100 %
Limited Partner
LSREF II
East Lux GP
SCA
LSREF II East Lux GP S.à r.l.
(Luxembourg)
General Partner
100 %
Delpheast VerwaltungsGmbH (Germany)
General Partner
Delpheast Beteiligungs
GmbH & Co. KG
100 %
LSREF II East AcquiCo
S.à r.l.
94.9 %
94.9 %
Company
5.1 %
A majority of the indirect economic interest in the Company is ultimately held by Lone Star Real Estate Fund II
(U.S.), L.P. (Delaware) and Lone Star Real Estate Fund II (Bermuda), L.P. (Bermuda).
For information on selling restrictions applicable to the Existing Shareholders relating to the sale of shares in the
Company see “Underwriting—Selling Restrictions”.
107
GENERAL INFORMATION ON THE COMPANY AND THE GROUP
Formation, Incorporation, Commercial Name, Fiscal Year and Registered Office
The Company was formed as a limited liability company (Gesellschaft mit beschränkter Haftung) under German
law by memorandum of association dated June 18, 1991. Its legal name was “DUHO Verwaltungs-Gesellschaft mbH” with its
registered office in Berlin, Germany, and registered with the commercial register of the local court (Amtsgericht) of
Charlottenburg under the docket number HRB 38419 (“DUHO”).
By merger agreement dated August 14, 1996, TLG Treuhand Liegenschaftsgesellschaft mbH and a number of other
entities were merged onto DUHO and the Company changed its legal name into TLG Treuhand Liegenschaftsgesellschaft
mbH. The merger and the change in legal name were registered with the commercial register on August 30, 1996. By decision
of the Company’s general meeting dated July 26, 2002, the Company changed its legal name to TLG Immobilien GmbH. The
change in legal name was registered with the commercial register on August 21, 2002. On September 5, 2014, the Company’s
shareholders’ meeting approved a resolution to change the Company’s legal form to a German stock corporation
(Aktiengesellschaft) and its legal name to TLG IMMOBILIEN AG. The change in legal form and name was registered with
the commercial register on September 10, 2014. The Company is the parent company of TLG and operates under the
commercial name “TLG IMMOBILIEN”. The Company’s fiscal year is the calendar year.
The Company’s registered office is at Hausvogteiplatz 12, 10117 Berlin, Germany (tel. +49 (0) 30-2470-50).
History and Development
The Company traces its roots back to two former subsidiaries of THA, a state agency tasked with administrating
businesses owned by the former German Democratic Republic (Deutsche Demokratische Republik).
DUHO Verwaltungs-Gesellschaft mbH
DUHO was formed by memorandum of association dated June 18, 1991. Its formation was registered with the
commercial register of the local court (Amtsgericht) of Charlottenburg on June 24, 1991. DUHO’s capital was created through
spin-off mergers (verschmelzende Aufspaltungen) of 139 other legal entities owned by THA. 129 of these split-ups were
actually registered with the commercial register. DUHO’s articles of association were subsequently amended to reflect the
decreased number of split-ups. This company set-up through multiple spin-off mergers (verschmelzende Aufspaltungen) was a
very innovative, but not uncontested corporate measure; this process facilitated the bringing together of various assets in one
single transaction.
DUHO was tasked with the privatization of certain commercial real estate owned by trade organizations of the
former German Democratic Republic (Deutsche Demokratische Republik). On September 29, 1994, the shareholders’ meeting
decided to dissolve DUHO. The decision was registered with the commercial register on November 11, 1994. On June 31,
1996, the share capital of DUHO was transferred to the Federal Republic of Germany. On July 18, 1996 the shareholders’
meeting decided to continue DUHO’s business. The decision was registered with the commercial register on July 26, 1996.
Liegenschaftendienst für die Treuhandanstalt GmbH
Liegenschaftendienst für die Treuhandanstalt GmbH was founded by memorandum of association dated
November 12, 1990 and registered with the commercial register of the local court (Amtsgericht) of Charlottenburg under the
docket number HRB 36064 on December 10, 1990. It was rebranded Liegenschaftsgesellschaft der Treuhandanstalt mbH on
March 18, 1991 and tasked with the privatization of the real estate holdings of the former German Democratic Republic
(Deutsche Demokratische Republik). Until the end of 1994, Liegenschaftsgesellschaft der Treuhandanstalt mbH sold
approximately 37,000 properties from the holdings of THA for a total consideration of approximately €8.9 billion.
Approximately 11,000 other properties were restituted or municipalized.
In 1994, Liegenschaftsgesellschaft der Treuhandanstalt mbH was rebranded TLG Treuhand
Liegenschaftsgesellschaft mbH and the Federal Republic of Germany became the owner of its entire share capital.
Subsequently, TLG Treuhand Liegenschaftsgesellschaft mbH acquired over 100,000 properties from THA.
Merger and Privatization
TLG Treuhand Liegenschaftsgesellschaft mbH was then merged onto DUHO by merger agreement dated
August 14, 1996, and DUHO was rebranded TLG Treuhand Liegenschaftsgesellschaft mbH. Thus, the actual legal
predecessor of the Company is DUHO. Between 1995 and 2000, more than 75,000 properties were sold, restituted or
municipalized by TLG Treuhand Liegenschaftsgesellschaft mbH, DUHO and the Company.
In 2000, the Company began to pursue a new strategy of active portfolio management. On July 26, 2002, the
shareholders’ meeting decided to change the Company’s legal name to TLG Immobilien GmbH. The change was registered
with the commercial register on August 21, 2002. Between 2000 and the end of 2011, the portfolio and property management
processes were professionalized and the organization was streamlined, e.g. subsidiaries were merged or otherwise integrated,
108
Significant Subsidiaries
The following table provides an overview of the Company’s significant subsidiaries as of June 30, 2014. The
shareholdings reflect TLG’s direct and indirect economic interest in the respective entity. This means that shares held by the
respective company itself are not taken into account when computing the percentage of participation. As of June 30, 2014, no
amount was outstanding under the issued shares for each of the below listed subsidiaries.
Name and registered office
Hotel de Saxe an der Frauenkirche
GmbH, Dresden(3) . . . . . . . . . . . . . . . .
TLG Gewerbepark Grimma, GmbH,
Grimma . . . . . . . . . . . . . . . . . . . . . . .
(1)
Payables to
Capital
the
reserves as Net income/loss Company as
of June 30,
for the fiscal
of June 30,
2014
year 2013(2)
2014
(in € million unless otherwise specified)
(in accordance with German GAAP)
Receivables
from the
Company as
of June 30,
2014
Company
share of
capital(1)
Issued
capital as of
June 30,
2014
100
25.0
26.2
1.4
2.2
3.7
100
60.0
1.6
(6.6)
0.0
1.4
In %. directly or indirectly held as of June 30, 2014.
(2)
In € thousand.
(3)
The property “Hotel de Saxe” was previously held through a limited partnership structure (Kommanditgesellschaft) with a limited
liability company as general partner before it was changed to its current structure with a limited liability company owning the property.
The previous general partner in the limited partnership structure, Verwaltungsgesellschaft an der Frauenkirche GmbH i.L, Dresden, was,
after the change in structure, no longer necessary and is therefore in liquidation.
Statutory Auditor
Ernst & Young Wirtschaftsprüfungsgesellschaft GmbH, Stuttgart, office Berlin, Friedrichstraße 140, 10117 Berlin,
Germany, (“E&Y”) was appointed as the statutory auditor of the Company for the fiscal years 2011, 2012 and 2013. E&Y
audited the consolidated financial statements for the Company prepared in accordance with IFRS and the additional
(HGB)) for the fiscal year 2013, the consolidated financial statements for the Company prepared in accordance with German
GAAP for the fiscal years 2011 and 2012 and the Company’s unconsolidated financial statements prepared in accordance
with German GAAP for the fiscal year 2013 in accordance with Section 317 of the German Commercial Code
(Handelsgesetzbuch (HGB)) and generally accepted standards for the audit of financial statements promulgated by the
Institute of Public Auditors in Germany (Institut der Wirtschaftsprüfer in Deutschland e.V., “IDW”) and issued in each case
an unqualified auditor’s report (uneingeschränkter Bestätigungsvermerk). E&Y is a member of the Chamber of Public
Accountants (Wirtschaftsprüferkammer), Rauchstraße 26, 10787 Berlin, Germany.
Notifications, Paying Agent
In accordance with Section 3 (1) of the Articles of Association, the Company’s notifications are published in the
German Federal Gazette (Bundesanzeiger), unless mandatory statutes provide otherwise.
In accordance with the German Securities Prospectus Act (Wertpapierprospektgesetz), notifications in connection
with the approval of this Prospectus or any supplements thereto will be published in the manner of publication provided for in
this Prospectus, that is, through publication on the Company’s website, www.tlg.de, and the provision of printed copies at the
Company’s office at TLG IMMOBILIEN AG, Hausvogteiplatz 12, 10117 Berlin, Germany (tel. +49 (0) 30-2470-50).
The paying agent is COMMERZBANK. The mailing address of the paying agent is COMMERZBANK
Aktiengesellschaft, Kaiserstraße 16 (Kaiserplatz), 60311 Frankfurt am Main, Germany.
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DESCRIPTION OF SHARE CAPITAL OF TLG IMMOBILIEN AG
AND APPLICABLE REGULATIONS
Current Share Capital; Shares
The Company’s share capital currently amounts to €52,000,000.00. It is divided into 52,000,000 bearer shares with
no par value (Stückaktien), each such share with a notional value of €1.00. The share capital has been fully paid up. The
shares were created pursuant to German law.
Development of the Share Capital since the Company’s Foundation
The share capital of the Company has developed as follows:
On June 18, 1991, the Company, which was incorporated at that time in the legal form of a limited liability
company (Gesellschaft mit beschränkter Haftung), had a share capital of DM 50,000.00. By merger agreement dated
August 14, 1996, the Company was merged with TLG Treuhand Liegenschaftsgesellschaft and the share capital was increased
by DM 99,950,000.00 to DM 100,000,000.00. The merger was registered with the commercial register on August 30, 1996.
By resolution of the shareholders’ meeting of the Company held on July 26, 2002, the Company’s share capital was
redenominated into euro and increased from €51,129,188.12 by €870,811.88 to €52,000,000.00. The capital increase was
registered with the commercial register on August 21, 2002.
Additionally, by resolution of the extraordinary shareholders’ meeting expected to be held on October 22, 2014, the
Company’s share capital is expected to be increased by up to €9,302,326.00 (the “IPO Capital Increase”). The Existing
Shareholders are expected to waive their subscription rights. It is anticipated that the IPO Capital Increase will be registered
with the commercial register on or about October 23, 2014.
Authorized Capital
The Company currently has an authorized capital of €26,000,000.00. The Company intends to cancel the existing
authorization to issue authorized capital and to create a new authorized capital equaling 50% of the stated capital after the
registration of the IPO Capital Increase. The required resolutions are expected to be adopted by the extraordinary
shareholders’ meeting of the Company expected to be held on October 22, 2014 in connection with the IPO Capital Increase.
The exact amount of the increase in authorized capital will depend on the amount of the IPO Capital Increase. The increase of
the authorized capital will become effective at the time when it is registered with the commercial register. The application for
registration of the increase of the authorized capital is expected to be filed on or about October 22, 2014, and the Company
expects that the authorized capital will be registered on or about October 23, 2014 in the course of normal register traffic.
Under the current authorized capital (Section 6 of the Articles of Association), the Management Board is authorized,
with the consent of the Supervisory Board, to increase the share capital of the Company in the period until September 24,
2019 in an amount of up to €26,000,000.00, once or in several instances, by issuing up to 26,000,000 new no-par value bearer
shares (Stückaktien) against contributions in cash and/or in kind. Under the new authorized capital to be created in connection
with the IPO Capital Increase, the Management Board is expected to be authorized, subject to the consent of the Supervisory
Board, to increase the Company’s share capital by up to 50% of the share capital after the IPO Capital Increase through one or
more issuances before October 21, 2014, by issuing new no-par value shares (Stückaktien) against cash contributions and/or
contributions in kind. Under the existing and the new authorized capital shareholders are to be granted subscription rights.
However, the Management Board is authorized, with the consent of the Supervisory Board, to exclude the subscription rights
of the shareholders for one or more capital increases from the authorized capital: (i) in order to exclude fractional amounts
from subscription rights; (ii) if necessary, in order to grant holders of conversion or option rights or creditors of mandatory
convertible bonds or profit-sharing rights or bonds with conversion rights or warrants which are, or are to be, issued by the
Company or a direct or indirect subsidiary, subscription rights to newly issued no-par value bearer shares (Stückaktien) of the
Company to the extent they would be entitled thereto upon exercise of their conversion or option rights or upon fulfillment of
any mandatory conversion or to the extent the Company may elect to grant shares instead of the payment of a due amount
under such bonds or rights; (iii) for the issuance of shares against cash contributions, if the issuing price of the new shares is
not significantly below the market price of the shares already listed on a stock exchange (within the meaning of Section 203
(1) and (2) and Section 186 (3) sentence 4 of the German Stock Corporation Act (Aktiengesetz)) and the portion of the share
capital attributable to the new shares issued with an exclusion of subscription rights does not exceed a total of 10% of the
share capital, neither at the time when the authorization takes effect nor at the time when the authorized share capital is
utilized or (iv) for the issuance of shares against contributions in kind, including for, but not limited to, the purpose of
acquiring (also indirectly) businesses, parts of businesses or participations in businesses or other assets in connection with an
acquisition project, real properties and real estate portfolios, or for the fulfillment of convertible bonds or bonds with warrants
as well as profit-sharing rights or bonds with conversion rights or warrants or a combination of these instruments that are
issued against contribution in kind.
111
Conditional Capital
According to Section 7 of the Articles of Association, the capital stock of the Company is conditionally increased
by up to €26,000,000.00 through the issuance up to 26,000,000 new no par value bearer shares (Stückaktien). The conditional
capital increase is only to be effected insofar as the holders or creditors, as the case may be, of conversion rights or options, or
parties required to exercise conversion rights or profit-sharing rights or bonds with conversion rights or warrants (or a
combination thereof) which have been issued or guaranteed until September 24, 2019 on the basis of the authorization by the
general meeting held on September 25, 2014, by the Company or a direct or indirect subsidiary, exercise their conversion
rights or options or fulfill their conversion obligations, or to the extent the Company exercises an election right to deliver
shares in lieu of payment of due amounts.
The Management Board is authorized, with consent of the Supervisory Board, to issue convertible bonds or bonds
with warrants or profit-sharing rights or bonds with conversion rights or warrants up to a total nominal value of
€500,000,000.00 and with conversion rights or warrants for up to 26,000,000 shares. The shareholders have subscription
rights for such bonds or rights. However, the subscription rights can be excluded (i) in order to exclude fractional amounts,
(ii) for the issuance of such bonds/rights against contribution in cash if the issue price is not substantially below its value
determined in line with accepted methods of financial mathematics in particular and does not provide for conversion rights or
warrants for more than 10% of the share capital at the time of the authorization in September 2014 or (iii) for the issuance
against contribution in kind.
Purchase of Own Shares
The Company does not currently hold any of its own shares, nor does a third party on behalf or for account of the
Company.
The Company’s extraordinary shareholders’ meeting held on September 25, 2014 authorized the Management
Board through September 24, 2019, provided it complies with the legal requirement of equal treatment, to purchase the
Company’s own shares, up to a total of 10% of the Company’s share capital, (including share capital already held or
attributable pursuant to law). The Management Board may make use of this authorization immediately following the
commencement of trading. The shares may be purchased (i) on the stock exchange, (ii) by a public offer to all shareholders
(iii) by the issuance of tender rights (Andienungsrechte) on a pro rata basis to the shareholders, or (iv) by means of
derivatives, or a combination thereof. The shares may not be used for trading on the market. The Management Board is
expected to be authorized to cancel (einziehen) the shares or to use them with the Supervisory Board’s consent as follows:
(i) by selling the purchased shares against cash consideration, if the consideration does not significantly fall short of the
market price at the time of the sale, provided that the purchased shares so sold do not exceed 10% of the share capital of the
Company at the time of the adoption of the share purchase resolution, and (ii) by using the purchased shares as consideration
in kind, and (iii) by offering the purchased shares to, among others, employees of TLG as well as to executive directors of
TLG. This includes the authorization to transfer the shares free of charge or at preferential terms in connection with employee
stock participation programs and the transfer of the shares to a financial institution with the obligation to offer such shares to
the employees under the stock participation programs.
In addition, the Supervisory Board is authorized to use the purchased shares under exclusion of subscription rights
of existing shareholders to satisfy the rights of members of the Management Board to receive shares of the Company as part
of the compensation of such members set by the Supervisory Board. Also, if the purchased shares are sold in an offering to all
shareholders, the subscription rights of the existing shareholders may be excluded with the consent of the Supervisory Board
with respect to fractional shares.
General Provisions Governing a Liquidation of the Company
Apart from liquidation as a result of insolvency proceedings, the Company may be liquidated only with a vote of
75% or more of the share capital represented at the shareholders’ meeting at which such a vote is taken. Pursuant to the
German Stock Corporation Act (Aktiengesetz), in the event of the Company’s liquidation, any assets remaining after all of the
Company’s liabilities have been settled will be distributed among the shareholders in proportion to their shareholdings. The
German Stock Corporation Act (Aktiengesetz) provides certain protections for creditors which must be observed in the event
of liquidation.
General Provisions Governing a Change in the Share Capital
Under the German Stock Corporation Act (Aktiengesetz), a German stock corporation requires a shareholders’
meeting resolution passed by a majority of at least 75% of the share capital represented at the vote to increase its share capital.
Shareholders can also create authorized capital. This requires a resolution passed by a majority of at least 75% of the share
capital represented at the vote, authorizing the management board to issue a specific quantity of shares within a period not
exceeding five years. The nominal amount may not exceed half of the share capital existing at the time the authorization is
granted.
112
In addition, shareholders can create contingent capital by a resolution passed with a majority of at least 75% of the
share capital represented at the vote for the purposes of (i) issuing shares to holders of convertible bonds or other securities
granting a right to subscribe for shares; (ii) issuing shares as consideration in a merger with another company; or (iii) issuing
shares offered to managers and employees. The nominal amount of contingent capital may not exceed 10% of the share
capital at the time the resolution is passed in cases where it is being created to issue shares to managers and employees, and
may not exceed 50% in all other cases. Resolutions to reduce share capital require a 75% majority of the share capital
represented at the vote.
General Provisions Governing Subscription Rights
In principle, the German Stock Corporation Act (Aktiengesetz) grants all shareholders the right to subscribe for new
shares to be issued in a capital increase. The same applies to convertible bonds, bonds with warrants, profit participation rights
and participating bonds. Subscription rights are freely transferable and may be traded on German stock exchanges for a
prescribed period before the deadline for subscription expires. However, shareholders do not have a right to request admission
to trading of subscription rights. The shareholders’ meeting may, subject to a majority of at least 75% of the share capital
represented at the vote, resolve to exclude subscription rights. Exclusion of shareholders’ subscription rights also requires a
report from the Management Board, which must justify and demonstrate that the company’s interest in excluding subscription
rights outweighs the interest of the shareholders in being granted subscription rights. Excluding shareholders’ subscription
rights when new shares are issued is specifically permissible where:
•
the company is increasing share capital against cash contributions;
•
the amount of the capital increase does not exceed 10% of the share capital at issue; and
•
the price at which the new shares are being issued is not materially lower than the stock exchange price.
Exclusion of Minority Shareholders
Under Section 327a et seq. of the German Stock Corporation Act (Aktiengesetz), which governs the so-called
“squeeze-out under stock corporation law,” upon the request of a shareholder holding 95% of the share capital (“Majority
Shareholder”), the shareholders’ meeting of a stock corporation may resolve to transfer the shares of minority shareholders to
the Majority Shareholder against payment of adequate compensation in cash. The amount of the cash payment that must be
offered to minority shareholders has to reflect “the circumstances of the Company” at the time the shareholders’ meeting
passes the resolution. The amount of the cash payment is based on the full value of the company, which is generally
determined using the capitalized earnings method. The minority shareholders are entitled to file for a valuation proceeding
(Spruchverfahren), in the course of which the appropriateness of the cash payment is reviewed.
Under Sections 39a and 39b of the German Securities Acquisition and Takeover Act (Wertpapiererwerbs- und
Übernahmegesetz), in the case of a so-called “squeeze-out under takeover law,” an offeror holding at least 95% of the voting
share capital of a target company (as defined in the German Securities Acquisition and Takeover Act) after a takeover bid or
mandatory offer, may, within three months of the expiry of the deadline for acceptances, petition the Regional Court
(Landgericht) of Frankfurt am Main for a court order transferring the remaining voting shares to it against the payment of
adequate compensation. A resolution passed by the shareholders’ meeting is not required. The consideration paid in
connection with a takeover or a mandatory bid is considered adequate if the offeror has obtained at least 90% of the share
capital that was subject to the offer. The nature of the compensation must be the same as the consideration paid under the
takeover bid or mandatory offer; a cash alternative must always be offered. In addition, after a takeover bid or mandatory
offer, shareholders in a target company who have not accepted the offer may do so up to three months after the deadline for
acceptances has expired, provided the offeror is entitled to petition for the transfer of the outstanding voting shares in
accordance with Section 39a of the German Securities Acquisition and Takeover Act (Section 39c of the German Securities
Acquisition and Takeover Act (Wertpapiererwerbs- und Übernahmegesetz)). The provisions for a squeeze-out under stock
corporation law cease to apply once an offeror has petitioned for a squeeze-out under takeover law, and only apply again
when these proceedings have been definitively completed.
In addition, under the provisions of Section 62 (5) of the German Reorganization and Transformation Act
(Umwandlungsgesetz), within three months after the conclusion of a merger agreement, the shareholders’ meeting of a
transferring company may pass a resolution according to Section 327a (1) sentence 1 of the German Stock Corporation Act
(Aktiengesetz), i.e., a resolution on the transfer of the shares held by the remaining shareholders (minority interests) to the
transferee company (Majority Shareholder) in exchange for an adequate cash settlement if the Majority Shareholder has at
least 90% of the share capital. The result of this “squeeze-out under reorganization law” is the exclusion of the minority
shareholders in the transferring company. The entitlement to consideration is based on the provisions of Section 327a et seq.
of the German Stock Corporation Act (Aktiengesetz).
Under Section 319 et seq. of the German Stock Corporation Act (Aktiengesetz), the shareholders’ meeting of a stock
corporation may vote for integration (Eingliederung) with another stock corporation that has its registered office in Germany,
provided the prospective parent company holds at least 95% of the shares of the company to be integrated. The former
shareholders of the integrated company are entitled to adequate compensation, which must generally be provided in the form
113
of shares in the parent company. Where the compensation takes the form of own shares in the parent company, it is
considered appropriate if the shares are issued in the same proportion as shares of the parent company would have been issued
per share in the company integrated if a merger had taken place. Fractional amounts may be paid out in cash.
Shareholder Notification Requirements; Mandatory Takeover Bids; Directors’ Dealings
After the Company’s shares have been admitted to official trading on the Frankfurt Stock Exchange (Frankfurter
Wertpapierbörse), the Company, as a listed company, will be subject to the provisions of the German Securities Trading Act
(Wertpapierhandelsgesetz) governing disclosure requirements for shareholdings and the provisions of the German Securities
Acquisition and Takeover Act (Wertpapiererwerbs- und Übernahmegesetz).
The German Securities Trading Act (Wertpapierhandelsgesetz) requires that anyone who acquires, sells or whose
shareholding in any other way reaches, exceeds or falls below 3%, 5%, 10%, 15%, 20%, 25%, 30%, 50% or 75% of the
voting rights in an issuer whose country of origin is Germany and whose shares are admitted to trading on an organized
market must immediately, and no later than within four trading days of such fact, notify the issuer and at the same time the
BaFin. The notice can be drafted in either German or English and sent either in writing or via fax.
The notice must include the address of the individual or entity, the share of voting rights held and the date of
reaching, exceeding, or falling below the respective threshold. As a domestic issuer, the Company must publish such notices
immediately, but no later than within three trading days after receiving them, via media outlets or outlets where it can be
assumed that the notice will be disseminated in the non-European Union parties to the agreement on the European Economic
Area. The Company must also transmit the notice to the BaFin and to the German Company Register (Unternehmensregister)
for storage. There are certain exceptions to the notice requirements.
In connection with these requirements, the German Securities Trading Act (Wertpapierhandelsgesetz) contains
various rules that require the attribution of voting rights of certain persons associated with a shareholder or acting together
with a shareholder. For example, shares belonging to a third company are attributed to a company if the latter controls the
former; similarly shares held by a third company for the account of another company are attributed to the latter. Shares or
financial instruments held for trading by a securities services company are not taken into account for determining the
notification obligation if it is ensured that the voting rights held by them are not exercised and that they amount to no more
than 5% of the voting shares, or do not grant the right to purchase more than 5% of the voting shares.
Since the implementation of the German Risk Limitation Act (Risikobegrenzungsgesetz), any cooperation among
shareholders that is designed to effect a permanent and material change in the business strategy of the Company can result in
an attribution (Zurechnung) of voting rights, that is, the cooperation does not necessarily have to be specifically about the
exercise of voting rights. Coordination in individual cases, however, will not trigger the attribution (Zurechnung) of voting
rights.
If a shareholder willfully fails to file a notice or provides false information, the shareholder is excluded from
exercising the dividend rights attached to his or her shares for the duration of the failure. If a shareholder fails to disclose the
number of voting rights held and the shareholder acted willfully or was grossly negligent, the shareholder is generally not
permitted to exercise the administrative (voting) rights attached to his or her shares for a period of six months after he or she
files the necessary notification. In addition, a fine may be imposed for failure to comply with the notification obligation.
Except for the 3% threshold, similar notification obligations exist for the Company and BaFin for reaching,
exceeding or falling below the aforementioned thresholds when holding other financial instruments entitling their holder to
unilaterally acquire existing shares of the Company carrying voting rights by binding legal agreement. The Act on
Strengthening Investor Protection and Improving the Functionality of the Capital Market (Gesetz zur Stärkung des
Anlegerschutzes und Verbesserung der Funktionsfähigkeit des Kapitalmarkts), the relevant part of which came into effect on
February 1, 2012, extended this obligation to “other instruments” that grant the holder the right to acquire unilaterally, based
on a legally binding agreement, existing shares of the Company carrying voting rights that do not qualify as “financial
instruments” within the meaning of the German Securities Trading Act (Wertpapierhandelsgesetz), for example, securities
lending agreements or sales and repurchase agreements.
In addition, the Act on Strengthening Investor Protection and Improving the Functionality of the Capital Market
(Gesetz zur Stärkung des Anlegerschutzes und Verbesserung der Funktionsfähigkeit des Kapitalmarkts) led to the addition of
the new Section 25a of the German Securities Trading Act (Wertpapierhandelsgesetz). Pursuant to this provision, any person
who directly or indirectly holds financial instruments or other instruments that are not covered by Section 25 of the German
Securities Trading Act (Wertpapierhandelsgesetz), instruments that merely enable the holder to acquire existing shares
carrying voting rights of an issuer whose home country is Germany, must notify the issuer and, simultaneously, the BaFin
immediately, and within four trading days at the latest, when reaching, exceeding or falling below 5%, 10%, 15%, 20%, 25%,
30%, 50% or 75%. Accordingly, such financial or other instruments do not necessarily entitle the holder to claim delivery of
the shares. A notification requirement can be triggered if an acquisition of voting rights is only possible under the economics
of the instrument, for instance, if the counterparty to such financial or other instrument can reduce or mitigate its risk by
acquiring the relevant shares. Therefore, cash-settled equity swaps and contracts for the payment of price differences will
become subject to the notification requirement.
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A shareholder who reaches or exceeds the threshold of 10% of the voting rights, or a higher threshold, is obligated
to notify the issuer within 20 trading days regarding the objective being pursued through the acquisition of voting rights, as
well as regarding the source of the funds used for the purchase. Changes in those objectives must also be reported within
20 trading days. The Articles of Association have not made use of the option to release shareholders from this disclosure
obligation. In calculating whether the 10% threshold has been reached or exceeded, the attribution rules mentioned above
apply.
Furthermore, pursuant to the German Securities Acquisition and Takeover Act (Wertpapiererwerbs- und
Übernahmegesetz), every person whose share of voting rights reaches or exceeds 30% of the voting rights of the Company is
obligated to publish this fact, including the percentage of its voting rights, within seven calendar days by publication on the
Internet and by means of an electronically operated system for disseminating financial information and subsequently, unless
an exemption from this obligation has been granted by the BaFin, to submit a mandatory public tender offer to all holders of
shares in the Company. The German Securities Acquisition and Takeover Act (Wertpapiererwerbs- und Übernahmegesetz)
contains a series of provisions intended to ensure the attribution of shareholdings to the person who actually controls the
voting rights connected with the shares. If the shareholder fails to give notice of reaching or exceeding the 30% threshold or
fails to submit the mandatory tender offer, the shareholder is barred from exercising the rights associated with these shares
(including voting rights and, in case of willful failure to send the notice and failure to subsequently send the notice in a timely
fashion, the right to dividends) for the duration of the delinquency. A fine may also be imposed in such cases.
Executives of an issuer with “managerial responsibilities” within the meaning of the German Securities Trading Act
(Wertpapierhandelsgesetz) have to notify the issuer and the BaFin within five working days of transactions (so-called
directors’ dealings) undertaken for their own account relating to the shares of such issuer or to financial instruments based on
such shares. This also applies to persons who are “closely related to such executives” within the meaning of the German
Securities Trading Act (Wertpapierhandelsgesetz).
EU Short Selling Regulation (Ban on Naked Short-Selling)
Regulation (EU) No 236/2012 of the European Parliament and of the Council of March 14, 2012 on short selling
and certain aspects of credit default swaps (the “EU Short Selling Regulation”), the European Commission’s delegated
regulation for the purposes of detailing it, and the German EU Short Selling Implementation Act (EU-LeerverkaufsAusführungsgesetz) of November 15, 2012 only permits the short selling of shares when specific criteria are met. Under the
provisions of the EU Short Selling Regulation, significant net short selling positions in shares must be reported to the BaFin
and also published if they exceed a specific percentage. The reporting and publication process is detailed in the German
Regulation on Net-Short Positions (Netto-Leerverkaufspositionsverordnung) of December 17, 2012. The net short selling
positions are calculated by offsetting the short positions a natural person or legal entity has in the shares issued by the issuer
concerned with the long positions it has in this capital. The details are regulated in the EU Short Selling Regulation and the
other regulations the European Commission enacted on short-selling to specify it. In certain situations described in detail in
the EU Short Selling Regulation, the BaFin may restrict short selling and comparable transactions.
115
DESCRIPTION OF THE GOVERNING BODIES OF TLG IMMOBILIEN AG
Overview
The Company’s corporate bodies are the Management Board, the Supervisory Board and the shareholders’ meeting.
The powers and responsibilities of these corporate bodies are governed by the German Stock Corporation Act (Aktiengesetz),
the Articles of Association and the bylaws of the Management Board and the Supervisory Board.
The Management Board conducts the Company’s business in accordance with the law, the Articles of Association
and the bylaws of the Management Board, taking into account the resolutions of the shareholders’ meeting. The Management
Board represents the Company in its dealings with third parties. The Management Board is required to introduce and maintain
appropriate risk management and risk controlling measures, in particular setting up a monitoring system in order to ensure
that any developments potentially endangering the continued existence of the Company may be identified early. Furthermore,
the Management Board must report regularly to the Supervisory Board of the performance and the operations of the
Company. In addition, the Management Board is required to present to the Supervisory Board, no later than at the last
Supervisory Board meeting of each fiscal year, certain matters of business planning (including financial investment and
personnel planning) for the following fiscal year for approval by the Supervisory Board. Furthermore, as regards all matters of
particular significance to the Company, each member of the Management Board who becomes aware of such matters must
immediately report these matters, verbally or in writing, to the chairman and the vice chairman of the Supervisory Board or to
all members of the Supervisory Board. Significant matters also include any development or event at an affiliated company of
which the Management Board has become aware and that could have a material influence on the Company’s position.
The Supervisory Board appoints the members of the Management Board and has the right to remove them for good
cause. Simultaneous membership on the Management Board and the Supervisory Board is prohibited. The Supervisory Board
advises the Management Board in the management of the Company and monitors its management activities. The Management
Board may not transfer management tasks to the Supervisory Board. However, pursuant to the bylaws of the Management
Board, the Management Board must obtain the consent of the Supervisory Board for certain transactions or measures, in
particular transactions or measures that entail fundamental changes to the Company’s net assets, financial position or results
from operation.
The members of the Management Board and of the Supervisory Board owe duties of loyalty and due care to the
Company. In discharging these duties, the members of the governing bodies have to take into account a broad range of
interests, in particular those of the Company, its shareholders, employees and creditors. The Management Board must also
take into account the rights of shareholders to equal treatment and equal information. If the members of the Management
Board or Supervisory Board fail to discharge their duties, they are jointly and severally liable for damages to the Company. A
directors’ and officers’ (“D&O”) insurance policy, which provides for a deductible, protects the Management Board and
Supervisory Board members against claims for damages.
Under German stock corporation law (Aktiengesetz), neither individual shareholders nor any other person may use
its influence on the Company to cause a member of the Management Board or Supervisory Board to act in a manner that
would be detrimental to the Company. People using their influence to cause a member of the Management Board or
Supervisory Board, a holder of a general commercial power of attorney or an authorized agent to act in a manner causing
damage to the Company or its shareholders, are liable to compensate the Company for any resulting losses if they have acted
in violation of their obligation to use due care. Moreover, in this case, the members of the Management Board and
Supervisory Board are jointly and severally liable in addition to the person using its influence if they have acted in breach of
their obligations towards the Company.
Generally, an individual shareholder may not take court action against members of the Management Board or
Supervisory Board if he believes that they have acted in breach of their duties to the Company and, as a result, the Company
has suffered losses. Claims of the Company for damages against the members of the Management Board or Supervisory
Board may generally only be pursued by the Company itself; in the case of claims against members of the Supervisory Board,
the Company is represented by the Management Board, and in case of claims against members of the Management Board, it is
represented by the Supervisory Board. Pursuant to a ruling by the German Federal Court of Justice (Bundesgerichtshof), the
Supervisory Board must bring claims that are likely to succeed against Management Board members unless significant
considerations of the Company’s well-being, which outweigh or are at least equivalent to those in favor of such claim, render
such a claim inadvisable. If the representative body in question decides against pursuing the claim, claims against the
Management Board or Supervisory Board must be asserted if the general meeting adopts a resolution to this effect by a simple
majority.
Shareholders whose joint holdings equal or exceed 10% of the share capital or the pro-rata amount of €1.0 million
may petition the court to appoint a representative to pursue their claims for damages. Furthermore, shareholders whose joint
holdings equal or exceed 1% of the share capital or a proportionate interest of €100,000 at the time the petition is submitted
may petition in their own name for a claim for damages to be heard by the regional court (Landgericht) where the Company
has its registered office. For such a claim to be heard, the Company must have failed to make a claim when called on to do so
by the general meeting within an appropriate deadline set by them, and facts must have come to light justifying the suspicion
116
that the Company has sustained damages as a consequence of dishonesty or of a flagrant breach of the law or of the Articles
of Association and there are no significant grounds relating to the welfare of the Company outweighing such claim. The
Company is entitled to bring a claim for damages itself at any time, and any pending application or claim on the part of the
shareholders is barred once the Company does so.
The Company may only waive or settle a claim for damages against board members if at least three years have
elapsed since the vesting of the claim, so long as the shareholders’ meeting approves the waiver or settlement by a simple
majority and provided that no minority of shareholders whose aggregate shareholdings amount to at least one-tenth of the
share capital records an objection to such resolution in the minutes of the shareholders’ meeting.
Management Board
Current Composition of the Management Board
Pursuant to Section 8 (1) and (2) of the Articles of Association, the Management Board must consist of at least two
persons and the Supervisory Board determines the exact number of the members of the Management Board. The Supervisory
Board may appoint a Management Board member as chairman of the Management Board and another member as deputy
chairman. Currently, the Management Board consists of two members.
Reappointment or extension, each for a maximum period of up to five years, is permissible. The Supervisory Board
may revoke the appointment of a Management Board member prior to the expiration of his or her term for good cause, such as
a gross breach of fiduciary duty, or if the shareholders’ meeting passes a vote of no confidence with respect to such member,
unless the no-confidence vote was clearly unreasonable. The Supervisory Board is also responsible for entering into,
amending and terminating employment agreements with Management Board members and, in general, for representing the
Company in and out of court against the Management Board.
Pursuant to Section 10 of the Articles of Association, the Company is represented vis-à-vis third parties and in court
proceedings by two members of the Management Board or a member of the Management Board jointly with an authorized
signatory (Prokurist). The Supervisory Board may determine that all or specific members of the Management Board are
authorized to represent the Company individually.
The table below lists the current members of the Management Board.
Name
Age
Member since
Appointed until
Responsibilities
Peter Finkbeiner . . . . . . . . . . . . . . . . . . . .
45
2013
2018
Finance, Controlling, Accounting,
Investor Relations, Legal, IT, Human
Resources, Internal Audit
Niclas Karoff . . . . . . . . . . . . . . . . . . . . . .
43
2010
2018
Portfolio and Asset Management,
Acquisitions and Sales, Operating
Branches, Marketing, Public Relations,
Internal Audit
The following description provides summaries of the curricula vitae of the current members of the Management
Board and indicates their principal activities outside TLG to the extent that those activities are significant with respect to
TLG.
Peter Finkbeiner was born October 25, 1968 in Stuttgart.
Mr. Finkbeiner previously headed European asset management at Hudson Advisors. Prior to 2005, he worked
several years in banking, corporate finance and private equity with Deutsche Bank, KPMG and DZ Equity Partner.
Mr. Finkbeiner obtained a masters degree in economics (Diplom-Ökonom).
Alongside his office as a member of the Management Board, Mr. Finkbeiner is, or has been within the last five
years, a member of the administrative, management or supervisory bodies of and/or a partner in the following companies and
partnerships outside TLG:
Previously:
•
MIFA Mitteldeutsche Fahrradwerke AG (member of the supervisory board).
Niclas Karoff was born February 7, 1971 in Berlin.
Mr. Karoff was previously a board member of HSH Real Estate AG. Prior to 2008, he worked several years in
M&A and corporate finance, including with accounting and consulting firm BDO. Mr. Karoff obtained a masters degree in
business administration (Diplom-Kaufmann (FH)).
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Alongside his office as a member of the Management Board, Mr. Karoff is also the Speaker for the Regional Board
of German Property Federation ZIA for East Germany (including Berlin). Additionally, Mr. Karoff has during the past five
years held seats on the supervisory board and/or the shareholder board in a number of other companies. Each of these other
companies was part of the HSH Real Estate group of companies, ultimately owned in whole or in part by HSH Real Estate
AG and none of these other companies is, in the Company’s view, material for an assessment of TLG or the Offer Shares.
The members of the Management Board may be reached at the Company’s office at Hausvogteiplatz 12,
10117 Berlin, Germany (tel. +49 (0) 30-2470-50).
Management Service Agreements
New service agreements between the Company and the two members of the Management Board, Mr. Finkbeiner
and Mr. Karoff, were concluded on September 19/22, 2014 replacing the existing service agreements. If the initial public
offering and trading of the Company’s shares on the Frankfurt Stock Exchange (Frankfurter Wertpapierbörse) will not have
occurred on or before May 30, 2015, the former service agreements shall come into effect again.
The management service agreements have a term until December 31, 2018 and may generally only be terminated by
mutual agreement or by termination for due cause. If the appointment of a member of the Management Board is revoked, each
party can terminate the management service agreement with six months’ prior notice. The Company can release a member of
the Management Board from its duties under the respective service agreement for the remaining term of the service
agreement, provided it continues to pay the compensation, if (i) such service agreement has been terminated or (ii) such
member whose appointment to the Management Board has been revoked, is removed from the Management Board, regardless
of the service agreement’s termination. In case of an early termination of the management service agreements, the respective
member of the Management Board is entitled to a severance payment, except in case of a termination due to a severe breach
of duties. Severance payments may not exceed the lower of (a) two years’ compensation including Short-Term Incentives and
Long-Term Incentives (in each case as defined below) (the “Severance Payment Cap”), or (b) the amount of the payments
that will become due and payable for the remaining term of the service agreement, except for a Change of Control (as defined
below). Both service agreements provide for a Change of Control clause. If a third party were to directly or indirectly acquire
more than 50% of the Company’s shares, or if the Company becomes an affiliated company due to an affiliation in
accordance with Section 319 et seq. of the German Stock Corporation Act (Aktiengesetz) (“Change of Control”) and the
Change of Control materially affects the services or position of the respective member of the Management Board, the member
of the Management Board can terminate its service agreement by giving two months’ prior notice and would be entitled to a
severance payment in an amount of 150% of the Severance Payment Cap.
Compensation and Other Benefits of the Management Board Members
The compensation paid to former and current members of the Management Board for the periods indicated and the
provisions for pension obligations to former members of the Management Board as of the respective balance sheet date are set
forth in the following table:
Management Board(1)
2011
German
2012(2)
2013
GAAP
IFRS
IFRS
(audited)
(audited)
(audited)
(in € million)
Fixed remuneration components . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Variable remuneration components . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Termination benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Provisions for pension obligations to former members of management as of
December 31 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
0.6
—
—
0.5
0.7
—
0.5
0.3
0.5
3.0
2.8
2.7
(1)
Refers to the managing directors of TLG Immobilien GmbH.
(2)
For the fiscal year ended December 31, 2014, the Company expects that the aggregate compensation of the
members of the Management Board will amount to €900,000. The compensation for each member of the Management Board
consists of a base salary of €300,000, payable in twelve equal monthly installments in arrears and a variable bonus in a
minimum amount of €150,000. The amount of the variable bonus for the fiscal year 2014 was agreed upon between each
member of the Management Board and the Company under new service agreements, dated September 19/22, 2014.
In addition, the Company provided and will provide benefits in kind such as company cars, mobile phones and
contributions to health insurance, own-occupation disability insurance (Berufsunfähigkeitsversicherung), disability insurance
(Invaliditätsversicherung) or under pension plans (the “Ancillary Benefits”).
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Under the service agreements, the total maximum annual target compensation (excluding Ancillary Benefits) is
€750,000 per fiscal year (of which €450,000 is variable) for Mr. Finkbeiner and €750,000 per fiscal year (of which €450,000
is variable for Mr. Karoff, assuming target achievement of 100% for the Short-Term Incentive and the Long-Term Incentive
(both as defined below). The variable part of €250,000 attributable to the first Long-Term Incentive payment (assuming target
achievement of 100%) for the first four-year period between January 1, 2015 and December 31, 2018, will be paid out in the
first half of 2019. The following table provides more information on the compensation of the members of the Management
Board assuming 100% target achievement for the Short-Term Incentive and the Long-Term Incentive (both as defined below)
under the service agreements.
Name
Finkbeiner, Peter . . . . . . . . . . .
Karoff, Niclas . . . . . . . . . . . . .
(1)
Base Salary (in €)
Short-Term Incentive (in €)
Long-Term Incentive (in €)(1)
€300,000
€300,000
€200,000
€200,000
€250,000
€250,000
The Long-Term Incentive is payable for the first time after four years and thereafter for each following year on a (prior) four year rolling
basis.
Both of the service agreements include an annual base salary in an amount of €300,000, payable in twelve equal
monthly installments in arrears (the “Base Salary”).
The Short-Term Incentive is an annual payment dependent upon achievement of individual targets stipulated in an
annual shared target agreement between the Supervisory Board and Mr. Finkbeiner and Mr. Karoff, and measured by the
Supervisory Board in the first half of the following fiscal year (the “Short-Term Incentive”). Under the service agreements
the Short-Term Incentive targets have to be achieved at least with 70% to trigger any Short-Term Incentive payment. The
Short-Term Incentive targets can be outperformed but the amount of the payment under the Short-Term Incentive is capped at
130%. Assuming the Short-Term Incentive targets are fully met (100% performance), the Short-Term Incentive amounts to
€200,000 per annum for Mr. Finkbeiner and €200,000 per annum for Mr. Karoff.
The service agreements of the members of the Management Board also include a Long-Term Incentive, which will
be measured against the long-term incentive targets at the end of each four-year period (the “Long-Term Incentive”). The
Long-Term Incentive is payable for the first time after four years, i.e., after expiry of the first four-year period from January 1,
2015 until December 31, 2018, and thereafter for each following year on a (prior) four years rolling basis. The Long-Term
Incentive targets are (i) the development of the EPRA NAV (per share) and (ii) the development of the Company’s share price
in relation to the FTSE EPRA/NAREIT Europe index (or any successor index) both measured over the four-year period from
January 1 of the first year until December 31 of the fourth year. Each of the Long-Term Incentive targets is weighted with
50%. After each four-year period, the Supervisory Board will measure and determine the Long-Term Incentive payment based
on the performance of each Long-Term Incentive target. Both long-term financial targets are indexed to their initial amount
and relative amount, respectively, with 100%. This means, for example, if the EPRA NAV per share of the Company does not
increase but the share of the Company develops in line with the FTSE EPRA/NAREIT Europe index over the four-year period
the target will be deemed to be achieved by 100%. The outperformance of each of the long-term financial targets is capped at
250% while underperformance will be recognized on a pro rata basis. Assuming the aforementioned performance targets are
fully met (100% performance), the Long-Term Incentive amounts to €250,000 for Mr. Finkbeiner and €250,000 for
Mr. Karoff, payable for the first time in the fiscal year 2019 for the first four-year period from January 1, 2015 until
December 31, 2018. The Long-Term Incentive is settled in cash, but the Supervisory Board may also decide on a full or
partial settlement in shares of the Company.
The Company provides a D&O insurance policy for both members of the Management Board that includes under
the service agreements a deductible amounting to 10% of the Base Salary for each insured event and coverage cap of one-anda-half times the individual Management Board member’s Base Salary.
Exit Bonus Agreement
On September 8/18, 2014, the members of the Management Board and the Existing Shareholders canceled their
incentive agreements relating to a potential exit of the Existing Shareholders, which were concluded on April 11/30, 2014 and
signed new incentive agreements relating to a potential exit of the Existing Shareholders (the “Exit Bonus Agreement”). If
the Existing Shareholders partially divest shares of the Company in connection with the offering and the closing of the
offering occurs on or before May 31, 2015, the Existing Shareholders will pay each of the two members of the Management
Board a cash bonus in an amount of €1,050,000 and grant shares of the Company in an amount of €300,000 (the “Share
Bonus I”). In addition, the Existing Shareholders will grant shares of the Company in an amount of €850,000 to each member
of the Management Board (the “Share Bonus II” and together with the Share Bonus I, the “Share Bonuses”) for the full
divestment, directly or indirectly, in shares of the Company. For each partial divestment each member of the Management
Board is entitled to such fraction of the Share Bonus II as corresponds to the ratio that the shares divested bears to the
Remaining Shares. The remaining shares are the fixed number of shares held by the Existing Shareholders for the members of
the Management Board after the placement of their shares in connection with the offering but before any subsequent
divestments (the “Remaining Shares”). The number of shares of the Company for the Share Bonuses is calculated by
dividing the number of the Share Bonuses by the offer price. The Existing Shareholders will hold the shares of the Company
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for the Share Bonus II on behalf of the respective member of the Management Board. Each transfer of shares of the Company
under the Share Bonuses is subject to an unterminated service agreement between the member of the Management Board and
the Company, whereas any termination by the Company which is not based on a gross breach of duties by the respective
Management Board member will be disregarded for this purpose. Each bonus will become due and payable after the closing
of the respective event triggering the bonus payment. Each Existing Shareholder owes the bonus payments to each member of
the Management Board in an amount corresponding to the ratio of its respective shareholding to the total shareholding of the
Existing Shareholders in the Company.
Shareholdings of the Management Board Members
Currently, no member of the Management Board directly or indirectly holds any shares in the Company or options
on shares in the Company. The members of the Management Board will each hold shares of the Company after receiving the
Share Bonus I that will be paid if the closing of the offering occurs. The members of the Management Board may hold
additional shares of the Company after receiving the Share Bonus II in part or in full.
Under the new management service agreements, each member of the Management Board is required to hold a
minimum number of shares of the Company equal to the result of dividing two times such member’s Base Salary by the offer
price of the Offer Shares as long as such member serves on the Management Board (the “Minimum Shareholding”). The
shares of the Company held on behalf of the respective Management Board member under the Share Bonus II are deemed to
be held by the respective member of the Management Board when assessing whether the Minimum Shareholding obligation
of the respective Management Board member is fulfilled.
Supervisory Board
Pursuant to Section 11 (1) of the Articles of Association, the Supervisory Board consists of six members. It is not
subject to employee codetermination as provided by the German One-Third Employee Representation Act
(Drittelbeteiligungsgesetz) or the German Codetermination Act (Mitbestimmungsgesetz). Therefore, the members of the
Supervisory Board are all elected by the shareholders’ meeting as representatives of the shareholders. The members of the
Supervisory Board are generally elected for a fixed term of approximately five years. Reelection, including repeated
reelection, is permissible.
For each member of the Supervisory Board, the shareholders may, at the same time the respective member is
elected, appoint substitute members. These substitute members will replace the elected Supervisory Board member in the
event of his premature departure in an order that was defined at the time of the appointment. The term of office of the
substitute member replacing the departing member terminates if a successor is elected at the next shareholders’ meeting or the
following one, at the close of the shareholders’ meeting, otherwise on the expiry of the term of office of the departed member
of the Supervisory Board. Members of the Supervisory Board who were elected by the shareholders’ meeting may be
dismissed at any time during their term of office by a resolution of the shareholders’ meeting adopted by 75% of the votes
cast. In accordance with the Articles of Association, any member or substitute member of the Supervisory Board may resign
at any time, even without providing a reason, by giving two weeks’ notice of his resignation in writing. This does not affect
the right to resign with immediate effect for good cause.
Pursuant to Section 107 (1) of the German Stock Corporation Act (Aktiengesetz), the Supervisory Board elects its
chairman and vice chairman from among its members. Currently, Michael Zahn has been elected chairman of the Supervisory
Board and Alexander Hesse as vice chairman.
The German Stock Corporation Act (Aktiengesetz) stipulates that a quorum of the Supervisory Board is present if at
least three members, and at least one-half of the members of the Supervisory Board as mandated by law or the Articles of
Association, participate in the voting. The resolutions of the Supervisory Board are passed with a simple majority, unless
otherwise mandated by law. In the event of a parity of votes, the chairman or, if he or she is unable to vote, the vice chairman,
has the deciding vote.
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Members of the Company’s Supervisory Board
The table below lists the current members of the Supervisory Board.
Name
Age
Member since
Appointed until(1)
Michael Zahn (chairman) . . . . . . . . . . .
51
2014
2019
Chief Executive Officer and member of
the management board at Deutsche
Wohnen AG; Chief Executive Officer
and member of the management board at
GSW Immobilien AG;
Alexander Hesse (vice chairman) . . . . .
44
2014
2019
Senior Managing Director and Co-Head
European Real Estate Investments at
Lone Star Germany Acquisitions GmbH.
Dr. Michael Bütter . . . . . . . . . . . . . . . .
44
2014
2019
Chief Legal Officer, Chief Investment
Officer and member of the executive
board at Ferrostaal GmbH.
Dr. Claus Nolting . . . . . . . . . . . . . . . . .
63
2014
2019
Lawyer and consultant.
Axel Salzmann . . . . . . . . . . . . . . . . . . .
56
2014
2019
Chief Financial Officer and member of
the management board at ProSiebenSat.1
Media AG.
Elisabeth Talma Stheeman . . . . . . . . . .
50
2014
2019
Former Global Chief Operating Officer
at LaSalle Investment Management.
(1)
Principal occupation outside of TLG
In each case until the end of the general shareholders’ meeting.
The following description provides summaries of the curricula vitae of the current members of the Supervisory
Board and indicates their principal activities outside TLG to the extent those activities are significant with respect to TLG.
Michael Zahn was born June 28, 1963 in Stuttgart.
Mr. Zahn received his master’s degree in economics from the Albert-Ludwigs University in Freiburg im Breisgau,
Germany, in 1992. He later completed postgraduate courses in 2000 at the European Business School in Oestrich-Winkel,
Germany in conjunction with his professional career to become a corporate real estate manager and chartered surveyor. In
1993, Mr. Zahn started working at the association of Berlin-Brandenburg housing enterprises (Verband BerlinBrandenburgischer Wohnungsunternehmen), Domus AG, in Berlin, Germany. After a brief period as deputy managing
director at GEWOBA GmbH in 1996, he joined GEHAG AG (now GEHAG GmbH), where he worked in various
management roles between 1997 and 2007. From 2007 to June 2009, he was also chief financial officer of
KATHARINENHOF, a subsidiary of GEHAG. Mr. Zahn was first appointed to the management board of Deutsche Wohnen
AG in 2007 (as chief operating officer). Since 2008, Mr. Zahn has been the chairman of the management board of Deutsche
Wohnen AG. He was appointed after the successful integration of GEHAG in 2008. After the acquisition of 91.05% of the
shares (based on the share capital at the time) of GSW Immobilien AG in 2013, Mr. Zahn was also appointed chairman of the
management board of GSW Immobilien AG in January 2014.
Alongside his office as chairman of the Supervisory Board, Mr. Zahn is, or has been within the last five years, a
member of the administrative, management or supervisory bodies of and/or a partner in the following companies and
Currently:
•
Deutsche Wohnen AG (chairman of the management board; CEO);
•
GSW Immobilien AG (chairman of the management board; CEO);
•
GEHAG GmbH (chairman of the supervisory board);
•
KATHARINENHOF Seniorenwohn- und Pflegeanlagen Betriebs-GmbH (chairman of the supervisory board);
•
Eisenbahn-Siedlungs-Gesellschaft Berlin GmbH (chairman of the supervisory board);
•
Funk Schadensmanagement GmbH (member of the advisory board); and
•
G+D Gesellschaft für Energiemanagement mbH (chairman of the advisory board).
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Previously:
•
Deutsche Corporate Real Estate (managing director);
•
Deutsche Wohnen Management- und Servicegesellschaft mbH (managing director);
•
GEHAG Zweite Beteiligungs GmbH (managing director);
•
GEHAG GmbH (managing director);
•
Sanierungs- und Gewerbe Bau AG (member of the supervisory board);
•
Haus und Heim Wohnungsbau Aktiengesellschaft (member of the supervisory board); and
•
Rhein-Pfalz Wohnen GmbH (managing director).
Alexander Hesse was born October 24, 1969 in Cologne.
As a senior managing director and co-head European real estate investments at Lone Star, Mr. Hesse is in charge of
real estate and real estate debt investments in Germany, Austria and Eastern Europe. Mr. Hesse is chairman of the supervisory
board of Globe Trade Center S.A, Warsaw and was chairman of the advisory board of TLG Immobilien GmbH, Berlin. Prior
to joining Lone Star, between 2002 and 2007, he was the head of real estate of Hudson Advisors Germany, responsible for
real estate asset management and underwriting of Lone Star real estate and debt investments in Germany. Prior to this,
Mr. Hesse was a managing director at a listed German real estate company. Mr. Hesse graduated from WHU Otto Beisheim
School of Management and successfully participated in MBA programs at Penn State University and Instituto Tecnoló
Autónomo de México (ITAM).
Alongside his office as vice chairman of the Supervisory Board, Mr. Hesse is, or has been within the last five years,
a member of the administrative, management or supervisory bodies of and/or a partner in the following companies and
Currently:
•
Lone Star Germany Acquisitions GmbH (senior managing director and co-head european real estate
investments);
•
Lone Star Spain Acquisitions SL (director); and
•
Globe Trade Center S.A. (chairman of the supervisory board).
Previously:
•
Lone Star Germany Acquisitions GmbH (managing director real estate).
Dr. Michael Bütter, M.St. (Oxford), MRICS, was born March 19, 1970 in Hamburg.
Dr. Bütter passed both his first legal state exam (1996) and his second legal state exam (2000) in Hamburg and
holds post graduate degrees in economics and law from Oxford University (M.St.) and University of Hamburg (Dr. iur),
respectively. Dr. Bütter began his professional career as an associate at CMS Hasche Sigle and then worked as a senior
associate and team leader at Weil, Gotshal & Manges LLP before he joined Lovells LLP (now Hogan Lovells International
LLP). As partner and head of real estate and private equity at Lovells LLP (Hamburg) he advised on large-volume real estate
transactions and portfolio refinancings until he joined Deutsche Annington Immobilien SE (“Deutsche Annington”) in 2008
as a member of the executive committee, chief compliance officer and group general counsel. After completing e.g. Deutsche
Annington’s GRAND refinancing and Deutsche Annington’s initial public offering in 2013, he became a member of the
executive board of Ferrostaal GmbH in Essen as chief legal officer/chief investment officer, responsible for, among others, the
areas of mergers and acquisitions, legal, compliance and operational excellence. Dr. Bütter was admitted as a member of the
Royal Institution of Chartered Surveyors (MRICS) in 2013.
Alongside his office as a member of the Supervisory Board, Dr. Bütter is, or has been within the last five years, a
Currently:
•
Ferrostaal GmbH, Essen (chief legal officer/chief investment officer and member of the executive board).
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Previously:
•
Deutsche Annington Immobilien SE (group general counsel, CCO and member of the executive committee);
•
Joint Board of the German Railway Associations (Gemeinsamer Ausschluss des Bundeseisenbahnvermögens
(EWG)) (member of the supervisory board); and
•
Verband der Wohnungs- und Immobilienwirtschaft (VdW) Rheinland Westfalen e.V. (member of the
supervisory board).
Dr. Claus Nolting was born June 9, 1951 in Wolfsburg.
Following the completion of his legal studies and subsequent doctorate (Dr. iur.) at the universities of Marburg and
Bonn, Dr. Claus Nolting worked as a lawyer in Bonn and Cologne. In 1989, Dr. Nolting moved from the Association of
German Pfandbrief Banks (today Verband deutscher Pfandbriefbanken (VDP)) to the then Bayerische Vereinsbank in Munich
(now Unicredit Bank AG), where as a member of the management board he was jointly responsible for the real estate
financing business until his retirement in 2002.
Between 2003 and 2006, Dr. Nolting held the position of senior advisor for the private equity investor Cerberus. He
then assumed the position of chairman of the management board at COREALCREDIT BANK AG, an affiliate of the private
equity investor Lone Star. After the sale of the bank Dr. Nolting resigned from his position at the bank effective as of
March 31, 2014, and has since worked as a lawyer and consultant.
Alongside his office as a member of the Supervisory Board, Dr. Nolting is, or has been within the last five years, a
Currently:
•
IKB Deutsche Industriebank AG (member of the supervisory board).
Previously:
•
COREALCREDIT BANK AG (CEO).
Axel Salzmann was born September 19, 1958 in Oldenburg/Holstein.
Mr. Salzmann was appointed to ProSiebenSat.1 Media AG’s executive board as CFO, effective July 2008. From
2002 to 2007, he was CFO and Vice CEO at O2 Germany. From 1996 to 2001, Mr. Salzmann was Vice President, Chief
Financial Officer and Head of IT at Philips Medical Systems Germany and Eastern Europe. Mr. Salzmann held various offices
with the Philips Group from 1987 to 2001. In 1994, he was appointed CFO and Head of Human Resources of a home
appliance subsidiary, Philips Elektro Hausgeräte. Mr. Salzmann has a degree in industrial engineering from the University of
Hamburg.
Alongside his office as chairman of the Audit Committee of the Supervisory Board, Mr. Salzmann is, or has been
within the last five years, a member of the administrative, management or supervisory bodies of and/or a partner in the
following companies and partnerships outside TLG:
Currently:
•
ProSiebenSat.1 Media AG (CFO); and
•
Salzmann Consulting oHG (partner).
Previously:
•
O2 Germany (CFO, Deputy CEO); and
•
Deutsches Rechnungslegungs Standards Committee e.V. (member of the administrative board).
Elisabeth Talma Stheeman was born January 24, 1964 in Hamburg.
Ms. Stheeman received her bachelor’s degree in business administration from the Hamburg School of Business in
1985 and her diploma in business studies from the London School of Economics and Political Science in 1988. She began her
professional career at Vereins- und Westbank AG, moving from her initial position as trainee in 1982 to project manager and
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assistant to department head/board member, before joining Morgan Stanley in 1988. There, Ms. Stheeman worked in
corporate finance, capital markets and private equity and became the chief operating officer of investment banking/real estate
investing in 2007. Subsequently, she was then promoted in 2011 to chief operating officer of investment banking/natural
resources and real estate banking. In 2013, she became global chief operating officer of LaSalle Investment Management.
Alongside her office as a member of the Supervisory Board, Ms. Stheeman is, or has been within the last five years,
a member of the administrative, management or supervisory bodies of and/or a partner in the following companies and
Currently:
•
London School of Economics and Political Science (member of the Court of Governors); and
•
London School of Economics and Political Science (member of the Audit Committee).
Previously:
•
LaSalle Investment Management (member of Global Management Committee and JLL Global Operating
Committee);
•
Morgan Stanley, Investment Banking Division (Executive Director/COO of real estate and natural resources,
investment banking); and
•
Morgan Stanley, Investment Management Division/Merchant Banking (Executive Director/COO of global real
estate investing and merchant banking; member of global operating committee).
The members of the Supervisory Board can be reached at the Company’s office at Hausvogteiplatz 12,
10117 Berlin, Germany (tel. +49 (0) 30-2470-50).
Supervisory Board Committees
Pursuant to Section 12 (2) of the Articles of Association, the Supervisory Board may form committees from among
its members. The Supervisory Board’s decision-making authority may be delegated to these committees to the extent
permitted by law. The following committees have been established by the Supervisory Board:
The Audit Committee (Prüfungsausschuss) is concerned, in particular, with the oversight of the Company’s
accounting process and the effectiveness of its internal control system, internal auditing system, as well as the audit of the
annual financial statements including required independence of the auditor and additional services provided by the auditor, the
conclusion of audit agreements with the auditor, setting focus points for the audit and agreeing audit fees and - unless another
committee is entrusted therewith – compliance. It shall prepare the Supervisory Board’s resolutions on the annual financial
statements (including consolidated financial statements) and the Supervisory Board’s proposal to the general shareholders’
meeting upon the election of the auditor, and the instruction of the auditor. The chairman of the audit committee shall have
specialist knowledge and experience in the application of accounting standards and internal control processes. Furthermore,
the chairman of the audit committee shall be independent and may not be a former member of the Management Board whose
appointment ended less than two years prior to his appointment as chairman of the audit committee.
The current members of the audit committee are:
Name
Responsibilities
Axel Salzmann . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Michael Zahn . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Elisabeth Talma Stheemann . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Chairman
Member
Member
Section 107 (4) of the German Stock Corporation Act (Aktiengesetz) requires the Company to have at least one
independent member of the audit committee with expertise in the fields of accounting or auditing in the meaning of
Section 100 (5) of the German Stock Corporation Act (Aktiengesetz). Members of the Supervisory Board and the audit
committee are considered to be independent if such members have no business or personal relations with the Company, its
Management Board, controlling shareholders or related parties which could cause a substantial and not merely temporary
conflict of interest. As concerns the Supervisory Board and audit committee of the Company, Mr. Salzmann is considered to
possess the respective expertise and independence.
The Executive and Nomination Committee (Präsidial- und Nominierungsausschuss) shall debate key issues and
make proposals to the Supervisory Board with respect to the appointment and revocation of members of the Management
Board and with respect to their respective compensation and reductions in compensation. They make recommendations to the
Supervisory Board for Supervisory Board proposals to the shareholders’ meeting with respect to the election of Supervisory
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Board members. Furthermore, the executive and nomination committee is responsible for the establishment or material
amendment of existing employee participation and incentive programs. The executive and nomination committee shall consist
of the chairman of the Supervisory Board, the deputy chairman of the Supervisory Board and one additional member to be
elected by the Supervisory Board. The chairman of the Supervisory Board shall be the chairman of the executive committee
and nomination committee.
The current members of the executive and nomination committee are:
Name
Responsibilities
Michael Zahn . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Alexander Hesse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dr. Michael Bütter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Chairman
Member
Member
Compensation of the Members of the Supervisory Board
The compensation of the Supervisory Board members is provided for in Section 13 of the Articles of Association.
The Supervisory Board members’ compensation takes into account the responsibilities and scope of their activities. The
members of the Supervisory Board receive an annual fixed payment of €30,000. The chairman of the Supervisory Board
receives twice the amount and the deputy chairman of the Supervisory Board receives one and a half times this amount. In
addition, membership in committees is compensated as follows: €5,000 per annum for the membership in each of the audit
committee or the executive and nomination committee and €3,000 per annum for the membership in any other committee; the
chairman of any committee shall receive twice the respective amount. Attendance fees for face-to-face meetings shall be
€1,500 per day. The total compensation payable to a member of the Supervisory Board (including any compensation for the
membership in supervisory boards and similar controlling bodies within TLG) is capped at €80,000 per member of the
Supervisory Board and calendar year.
Members of the Supervisory Board are also reimbursed for their out-of-pocket expenses and VAT, and a D&O
insurance shall be taken out for the members of the Supervisory Board.
Shareholdings of the Supervisory Board Members
Currently, no member of the Supervisory Board directly or indirectly holds any shares in the Company or options
on shares in the Company.
Share Participation Plan and Employee Offering
The Company currently does not have a share participation plan in place and does not plan to introduce such a plan
within the foreseeable future.
Certain Information Regarding the Members of the Management Board and Supervisory Board
In the last five years, no member of the Management Board or the Supervisory Board has been convicted of
fraudulent offences. In the last five years, no member of the Management Board or the Supervisory Board has been associated
with any bankruptcy, receivership or liquidation acting in its capacity as a member of any administrative, management or
supervisory body or as a senior manager. In the last five years, no official public incriminations and/or sanctions have been
made by statutory or legal authorities (including designated professional bodies) against the members of the Management
Board or the Supervisory Board, nor have sanctions been imposed by the aforementioned authorities. No court has ever
disqualified any of the members of the Management Board or the Supervisory Board from acting as a member of the
administrative, management or supervisory body of an issuer, or from acting in the management or conduct of the affairs of
any issuer for at least the previous five years.
Mr Hesse is employed by Lone Star Germany Acquisitions GmbH which is an advisor to affiliates of the Existing
Shareholders. If the interests of the Existing Shareholders should diverge from those of the Company, conflicts of interest may
arise for Mr. Hesse. Apart from this, there are no conflicts of interest or potential conflicts of interest between the members of
the Management Board and Supervisory Board vis-`a-vis the Company and their private interests, membership in governing
bodies of companies, or other obligations.
No member of the Management Board or the Supervisory Board has entered into a service agreement with a
company of TLG that provides for special benefits, such as severance pay, at the end of the business relationship (other than
pensions or compensation in the case of an early termination of the service agreement, which is determined on the basis of the
remaining term of the agreement and the contractually agreed compensation). The members of the Management Board are not
bound by restrictive covenants and may therefore engage in competing activities following the end of their office.
There are no family relationships between the members of the Management Board and those of the Supervisory
Board, either among themselves or in relation to the members of the other body.
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Shareholders’ Meeting
Pursuant to Section 175 of the German Stock Corporation Act (Aktiengesetz), the annual shareholders’ meeting
takes place within the first eight months of each fiscal year and must be held, as the convening body shall decide, at the
Company’s registered office or in a German city with a stock exchange. Except where other persons are authorized to do so
by law or by the Articles of Association, the shareholders’ meeting shall be convened by the Management Board. Notice must
be issued in the German Federal Gazette (Bundesanzeiger) at least 30 days before the day of the shareholders’ meeting; the
day of the meeting itself and the day of the receipt of the notice not being included when calculating this period.
A shareholders’ meeting may also be convened by the Management Board, the Supervisory Board, or shareholders
whose shares collectively make up 5% of the capital stock of the Company. Shareholders or shareholder associations may
solicit other shareholders to make such a request, jointly or by proxy, in the shareholders’ forum of the German Federal
Gazette (Bundesanzeiger), which is also accessible via the website of the German Company Register (Unternehmensregister).
Prior to the shareholders’ meeting, shareholders are required to register in order to be entitled to participate in the
shareholders’ meeting and to exercise voting rights and have to provide evidence of their shareholding in form of a
confirmation by the depository institute for the beginning of the twenty-first day before the shareholders’ meeting.
Each share entitles its holder to one vote at the shareholders’ meeting. Unless otherwise stipulated by mandatory
statutory provisions or provisions of the Articles of Association, resolutions of the shareholders’ meeting are adopted by a
simple majority of the votes cast or, if a capital majority is required, by a simple majority of the registered share capital
represented at the meeting.
According to the current version of the German Stock Corporation Act (Aktiengesetz), resolutions of fundamental
importance (grundlegende Bedeutung) require both a majority of votes cast and a majority of at least 75% of the registered
share capital represented at the vote on the resolution. Resolutions of fundamental importance include:
•
amendments, other than editorial amendments, to the Articles of Association;
•
approval of contracts within the meaning of Section 179a of the German Stock Corporation Act (Aktiengesetz)
(transfer of the entire assets of the company) and management actions of special significance that require the
approval of the shareholders’ meeting in compliance with legal precedents;
•
capital increases, including the creation of conditional or authorized capital;
•
the issuance of, or authorization to issue, convertible and profit-sharing certificates and other profit-sharing
rights;
•
exclusion of subscription rights as part of an authorization on the use of treasury stock;
•
capital reductions, including the withdrawal of shares pursuant to Section 237(3) to (5) of the German Stock
Corporation Act (Aktiengesetz);
•
withdrawal of shares pursuant to Section 237 (2) of the German Stock Corporation Act (Aktiengesetz);
•
liquidation of the company;
•
continuation of the liquidated company after the resolution on liquidation or expiry of the time period;
•
approval to conclude, amend or terminate affiliation agreements (Unternehmensverträge);
•
integration of a stock corporation into another stock corporation and squeeze-out of the minority shareholders;
and
•
action within the meaning of the German Reorganization and Transformation Act (Umwandlungsgesetz).
Neither German law nor the Articles of Association limit the right of foreign shareholders or shareholders not
domiciled in Germany to hold shares of the Company or exercise the voting rights associated therewith.
Corporate Governance
The German Corporate Governance Code as amended on May 13, 2013 (the “Code”) contains recommendations
and suggestions for the management and supervision of German companies listed on a stock exchange. The Code incorporates
nationally and internationally recognized standards of good and responsible corporate governance. The purpose of the Code is
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to make the German system of corporate governance and supervision transparent for investors. The Code includes
recommendations and suggestions for management and supervision with regard to shareholders and shareholders’ meetings,
management and supervisory boards, transparency, accounting and auditing.
There is no obligation to comply with the recommendations or suggestions of the Code. However, the German
Stock Corporation Act (Aktiengesetz) requires that the management board and supervisory board of a German listed company
declare, every year, either that the recommendations have been or will be applied, or which recommendations have not been
or will not be applied and explain why the management board and the supervisory board do not/will not apply the
recommendations that have not been or will not be applied. This declaration is to be made permanently accessible to
shareholders. However, deviations from the suggestions contained in the Code need not be disclosed.
Prior to the listing of the shares of the Company, the Company is not obligated to issue a declaration relating to the
Code.
As of the date of this Prospectus, the Company complies with, and after the listing of the Company’s shares, intends
to further comply with all recommendations in the Code apart from the following:
•
No “chairman” or “spokesman” of the Management Board (Section 4.2.1 sentence 1 of the Code).
According to Section 4.2.1 sentence 1 of the Code, the Management Board shall be comprised of several
persons and have a chairman or spokesman. The Management Board consists of two members. Due to the
small size of the Management Board, good and close cooperation between the members of the board is ensured
and the Company believes there is no need for a chairman or spokesman of the Management Board.
•
No “fast close” of the consolidated financial statements and of the interim reports (Section 7.1.2 sentence 4 of
the Code).
Pursuant to Section 7.1.2, sentence 4 of the Code, consolidated financial statements shall be publically
accessible within 90 days of the end of the fiscal year and interim reports shall be publically accessible within
45 days of the end of the reporting period. The Company’s consolidated financial statements will be prepared
and made publically accessible within four months and the Company’s interim reports will be prepared and
publicly accessible within two months, each after the end of the reporting period. Due to the time required for a
thorough preparation of the consolidated financial statements and interim reports, it is anticipated that the
Company may not comply with the fast close recommendation of Section 7.1.2, sentence 4 of the Code.
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CERTAIN RELATIONSHIPS AND RELATED-PARTY TRANSACTIONS
In accordance with IAS 24, transactions with persons or companies which are, inter alia, members of the same
group as the Company or which are in control of or controlled by the Company must be disclosed, unless they are already
included as consolidated companies in the Company’s audited consolidated financial statements. Control exists if a
shareholder owns more than one half of the voting rights in the Company or, by virtue of an agreement, has the power to
control the financial and operating policies of the Company’s management. The disclosure requirements under IAS 24 also
extend to transactions with associated companies (including joint ventures) as well as transactions with persons who have
significant influence on the Company’s financial and operating policies, including close family members and intermediate
entities. This includes the members of the Management Board and Supervisory Board (or the members of the corresponding
governing bodies of TLG Immobilien GmbH) and close members of their families, as well as those entities over which the
members of the Management Board and Supervisory Board or their close family members are able to exercise a significant
influence or in which they hold a significant share of the voting rights.
Set forth below is a summary of such transactions with related parties for the fiscal years ended December 31,
2011, 2012 and 2013 up to and including the date of this Prospectus. Further information, including quantitative amounts, of
related party transactions are contained in the notes to the Company’s audited consolidated financial statements for the fiscal
years ended December 31, 2011, 2012 and 2013 and in the notes to the Company’s unaudited condensed consolidated interim
financial statements for the six-month period ended June 30, 2014, which are all included in the section “Financial
Information” of this Prospectus on page F-1 et seq. Business relationships between companies of TLG are not included. The
companies which are directly or indirectly controlled by the Company are listed under section F-85 et seq, F-70 et seq and
F-21 et seq of the notes to the Company’s audited consolidated financial statements for the fiscal years ended December 31,
2011, 2012 and 2013.
Relationships with the Existing Shareholders
Distributions
For an overview of distributions to the Existing Shareholders see “Dividend Policy; Results and Dividends per
Share; Use of Profits—Dividend Policy and Earnings per Share”.
Domination Agreement
Under the Domination Agreement, the Company was required to carry out its business at the direction of East
AcquiCo in accordance with Section 308 of the German Stock Corporation Act (Aktiengesetz). East AcquiCo was required to
cover all losses incurred by the Company and not covered by retained income during the duration of the Domination
Agreement in accordance with Section 302 of the German Stock Corporation Act (Aktiengesetz). Given that the Company did
not incur a loss during the fiscal year 2013, no losses had to be covered by East AcquiCo. Following the transformation of the
Company into a stock corporation (Aktiengesellschaft) the Domination Agreement was terminated on September 18, 2014. No
profit transfers were required or made under the Domination Agreement.
Acquisition Loan
In January 2013, TLG assumed €287.3 million of the total amount of €325.2 million of the Acquisition Loan that
was part of the debt financing of the acquisition of TLG at the end of 2012 by its Existing Shareholders and the remaining
€37.9 million in August 2013. TLG repaid €250.2 million in several installments over the course of 2013 and the remaining
€74.9 million in March 2014. The Acquisition Loan carried customary interest for loans that are taken out in the context of an
acquisition of a company which is higher than the interest on loans for financing an existing real estate portfolio. The interest
on the Acquisition Loan reflected the bridge financing character of the loan, its availability within a short period of time and
the different security package because initially it was only secured by the shares of the acquired company.
Shareholder Loan
On the basis of a loan agreement dated March 22, 2013, East AcquiCo granted a loan in the amount of €11.0 million
to the Company until April 30, 2013 for general business purposes. The loan was repaid before the final maturity on April 18,
2013. The interest rate was 6% per annum; the interest expense amounted to approximately €46 thousand for the period from
March 22, 2013 to April 18, 2013.
Indemnification and Cost Reimbursement Agreement
On October 13, 2014, the Existing Shareholders and the Company entered into an agreement regarding their
cooperation regarding the preparation of the offering. As required by law, the Existing Shareholders will reimburse the
Company for all external costs that are incurred in connection with the preparation and the execution of the offering pursuant
to this agreement on a pro rata basis calculated according to the ratio of the number of Existing Shares to the Offer Shares
placed in the offering. The costs to be reimbursed on such basis include, in particular, legal, auditor and other advisor fees,
underwriters’ commissions and costs of the offering. The cost reimbursement obligation of the Existing Shareholders remains
unaffected if the offering is postponed or cancelled. As required by law, the Existing Shareholders further agreed to indemnify
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the Company from all liability risks in connection with the offering on a pro rata basis, including the pro rata share of all
reasonable legal costs. In addition, the Company has agreed, upon indemnification by the Existing Shareholders and to the
extent legally permissible, to assign certain claims that the Company may have against board members of the Company or
third parties to the Existing Shareholders.
Relationships with Members of the Management Board
Exit Bonus Agreement
Under the Exit Bonus Agreement, the members of the Management Board may receive cash and share bonuses from
the Existing Shareholders in case of an exit in full or in part by the Existing Shareholders. For further information on the Exit
Bonus Agreement, see “Description of the Governing Bodies of TLG IMMOBILIEN AG—Management Board—Exit Bonus
Agreement”.
Relationships with Members of the Supervisory Board
Mr. Hesse is covered for his mandate as a member of the Supervisory Board through a D&O group insurance policy
provided and paid for by an affiliate of the Existing Shareholders.
Apart from the relationships stated above, the Company did not have any other significant business relationships
with related parties.
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UNDERWRITING
General
On October 14, 2014, the Company, the Existing Shareholders and the Underwriters entered into the Underwriting
Agreement relating to the offer and sale of the Offer Shares in connection with the offering.
The offering consists of 36,850,000 bearer shares with no par value (Stückaktien), each representing a share of
€1.00 in the Company’s share capital and with full dividend rights as of January 1, 2014, comprising 9,302,326 New Shares
from the IPO Capital Increase against contribution in cash, 21,545,674 Existing Shares from the holdings of East AcquiCo,
2,652,000 Existing Shares from the holdings of Delpheast and 3,350,000 Over-Allotment Shares from the holdings of East
AcquiCo made available to the stabilization manager on behalf of the Underwriters by way of a share loan to cover potential
Over-Allotments. 9,302,326 of the Offer Shares are New Shares and 24,197,674 of the Offer Shares are Existing Shares.
The offering consists of a public offering of the Offer Shares in Germany and Luxembourg and private placements
of the Offer Shares in certain jurisdictions outside Germany and Luxembourg. The Offer Period is expected to begin on
October 15, 2014 and is expected to end on October 23, 2014. In the United States, the Offer Shares will be offered for sale by
the Underwriters to qualified institutional buyers in reliance on Rule 144A. Outside the United States, the Offer Shares will be
offered and sold to professional and institutional investors in reliance on Regulation S. Any offer and sale of the Offer Shares
in the United States in reliance on Rule 144A will be made by broker-dealers who are registered as such under the U.S.
Securities Exchange Act of 1934.
The offer price for each Offer Share is expected to be determined jointly by the Company, the Existing Shareholders
and the Joint Bookrunners on or about October 23, 2014 on the basis of an order book prepared during the bookbuilding
process.
Under the terms of the Underwriting Agreement and subject to certain conditions, each Underwriter will be obliged
to acquire the number of Offer Shares set forth below opposite the Underwriter’s name:
Number of Offer
Shares to be
acquired(1)
Underwriters
Percentage of
Underwritten
Offer Shares
J.P. Morgan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
UBS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Kempen & Co . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
COMMERZBANK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
HSBC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
11,791,999
11,791,999
7,738,500
2,763,751
2,763,751
32.0%
32.0%
21.0%
7.5%
7.5%
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
36,850,000
100.0%
(1)
Assuming exercise of Greenshoe Option and issuance of all New Shares in full.
In connection with the offering, each of the Underwriters and any of their respective affiliates, acting as an investor
for its own account, may take up Offer Shares in the offering and in that capacity may retain, purchase or sell for its own
account such securities and any Offer Shares or related investments and may offer or sell such Offer Shares or other
investments otherwise than in connection with the offering. Accordingly, references in this Prospectus to Offer Shares being
offered or placed should be read as including any offering or placement of Offer Shares to any of the Underwriters or any of
their respective affiliates acting in such capacity. None of the Underwriters intend to disclose the extent of any such
investment or transactions otherwise than in accordance with any legal or regulatory obligation to do so. In addition certain of
the Underwriters or their affiliates may enter into financing arrangements (including swaps with investors) in connection with
which such Underwriters (or their affiliates) may from time to time acquire, hold or dispose of Offer Shares.
The mailing addresses of the Underwriters are as follows:
•
J.P. Morgan Securities plc, 25 Bank Street, Canary Wharf, London E14 5JP, United Kingdom;
•
UBS Limited, 1 Finsbury Avenue, London EC2M 2PP, United Kingdom;
•
COMMERZBANK Aktiengesellschaft, Kaiserstraße 16 (Kaiserplatz), 60311 Frankfurt am Main, Germany;
•
Kempen & Co N.V., Beethovenstraaat 300, 1077 WZ Amsterdam, the Netherlands; and
•
HSBC Trinkaus & Burkhardt AG, Königsallee 21/23, 40212 Dusseldorf, Germany.
Underwriting Agreement
In the Underwriting Agreement, dated October 14, 2014, the Underwriters agreed to underwrite and purchase the
Offer Shares with a view to offering them to investors in this offering. The Underwriters agreed to remit to the Company the
purchase price of the New Shares (less agreed commissions and expenses), at the time the shares are delivered, which is
expected to be two bank working days after admission to trading. The Underwriters further agreed to acquire 24,197,674
130
Existing Shares (as well as up to 3,350,000 additional shares of the Company with regard to a possible Over-Allotment) from
the Existing Shareholders and to sell such shares as part of the offering. The Underwriters agreed to remit the purchase price
(less agreed commissions and expenses) of the Existing Shares to the Existing Shareholders and the purchase price (less
agreed commissions and expenses) of the shares from the exercise of the Greenshoe Option, if any, to East AcquiCo at the
time the shares are delivered.
The obligations of the Underwriters are subject to various conditions, including, but not limited to, (i) the absence of
a material event, e.g. a material adverse change in or affecting the business, prospects, management, consolidated financial
position, shareholders’ equity or results of operations of TLG, or a suspension or material limitation in trading in securities
generally on the Frankfurt Stock Exchange (Frankfurter Wertpapierbörse), the London Stock Exchange or the New York
Stock Exchange, (ii) receipt of customary certificates, legal opinions, auditor letters, and (iii) the introduction of the
Company’s shares to trading on the Frankfurt Stock Exchange (Frankfurter Wertpapierbörse). The Underwriters have
provided and may in the future provide services to TLG and the Existing Shareholders in the ordinary course of business and
may extend credit to and have regular business dealings with TLG and the Existing Shareholders in their capacity as financial
institutions. For a more detailed description of the interests of the Underwriters in the offering, see “The Offering—Interests of
Parties Participating in the Offering”.
Commission
The Underwriters will offer the Offer Shares at the offer price. The Company (for the New Shares) and the Existing
Shareholders (for the Existing Shares, but not for the Over-Allotment Shares, if any) will pay the Underwriters a basic
commission of 1.50% of their respective gross proceeds from the offering. In addition to this base commission, the Company
and the Existing Shareholders may pay the Underwriters an additional discretionary fee of up to 1.25% of their respective
gross proceeds from the offering (excluding a potential Over-Allotment), payable entirely at the sole discretion of the
Company and the Existing Shareholders. The decision to pay any performance fee and its amount are within the sole
discretion of the Company and the Existing Shareholders, and such distribution is to be made within 35 days after the
settlement date of the offering. The Company and the Existing Shareholders will also agree to reimburse the Underwriters for
certain expenses incurred by them in connection with the offering. In addition, East AcquiCo will pay the Underwriters a
selling concession of 1.50% of the offer price for each share from the Greenshoe Option that is purchased at the offer price.
This selling concession will become payable upon payment of the offer price of the respective share from the Greenshoe
Option to East AcquiCo.
Greenshoe Option and Securities Loan
For the purpose of a possible Over-Allotment, the stabilization manager, for the account of the Underwriters, will be
provided with up to 3,350,000 Over-Allotment Shares in the form of a securities loan free of charge from East AcquiCo; this
number of Over-Allotment Shares will not exceed 10% of the Base Shares. The stabilization manager, for the account of the
Underwriters, is entitled to exercise the Greenshoe Option to the extent Over-Allotments were initially made; the amount of
shares is to be reduced by the number of shares held by the stabilization manager as of the date on which the Greenshoe
Option is exercised and that were acquired by the stabilization manager in the context of stabilization measures. The
Greenshoe Option will terminate 30 calendar days after the settlement date.
Termination/Indemnification
The Underwriting Agreement provides that the Underwriters may, under certain circumstances, terminate the
Underwriting Agreement, including after the shares have been allotted and listed, up to delivery and settlement. Grounds for
termination include, in particular, if:
•
there has been any adverse change, or any development involving a prospective adverse change, in or affecting
the business, prospects, management, consolidated financial position, shareholders’ equity or results of
operations of TLG;
•
the Company or TLG has incurred any liability or obligation, direct or contingent, or entered into any material
transaction not in the ordinary course of business, other than in each case as set forth or contemplated in this
Prospectus, the effect of which, in any such case, is in the reasonable judgment of the Underwriters so material
and adverse as to make it impractical or inadvisable to proceed with the offering or the delivery of the Offered
Shares on the terms and in the manner contemplated in this Prospectus;
•
a suspension or material limitation in trading on the Frankfurt, London or New York stock exchange (other
than for technical reasons) develops;
•
a general moratorium is imposed on commercial banking activities in Frankfurt am Main, London or New
York by the responsible authorities;
•
a material, not only temporary, disruption takes place in commercial banking or securities settlement or
clearance services in Germany, the United Kingdom, or the United States;
131
•
a change or development occurs involving a prospective change in German taxation affecting the Company,
the Shares or the transfer thereof or the imposition of exchange controls by Germany, the United Kingdom or
the United States; or
•
an outbreak or escalation of hostilities or war, or the occurrence of acts of terrorism or other calamity or crisis
has a material adverse impact on the financial markets in Germany, the United Kingdom or the United States.
If the Underwriting Agreement is terminated, the offering will not take place, in which case any allotments already
made to investors will be invalidated and investors will have no claim for delivery. Claims with respect to subscription fees
already paid and costs incurred by an investor in connection with the subscription will be governed solely by the legal
relationship between the investor and the financial intermediary to which the investor submitted its purchase order. Investors
who engage in short-selling bear the risk of being unable to satisfy their delivery obligations.
The Company and the Existing Shareholders have agreed in the Underwriting Agreement to indemnify the
Underwriters against certain liabilities that may arise in connection with the offering, including liabilities under applicable
securities laws.
Selling Restrictions
The distribution of this Prospectus and the sale of the Offer Shares may be restricted by law in certain jurisdictions.
No action has been or will be taken by the Company, the Existing Shareholders or the Underwriters to permit a public offering
of the Offers Shares anywhere other than Germany and Luxembourg or the possession or distribution of this document in any
other jurisdiction, where action for that purpose may be required.
The Offer Shares are not and will not be registered pursuant to the provisions of the Securities Act or with the
securities regulators of the individual states of the United States. The Offer Shares may not be offered, sold or delivered,
directly or indirectly, in or into the United States except pursuant to an exemption from the registration and reporting
requirements of the United States securities laws and in compliance with all other applicable United States legal regulations.
In the Underwriting Agreement, the Underwriters will represent and warrant that they have not offered or sold and will refrain
from offering or selling the Offer Shares in or into the United States except to persons they reasonably believe to be qualified
institutional buyers within the meaning of Rule 144A, and outside the United States except in accordance with Rule 903 of
Regulation S and in compliance with other U.S. legal regulations, and that neither they nor any third party acting on their
behalf have undertaken or will undertake (i) “direct selling efforts” as defined in Regulation S or (ii) “general advertising” or
“general solicitation”, each as defined in Regulation D under the Securities Act in relation to the Offer Shares.
The Company does not intend to register either the offering or any portion of the offering in the United States or to
conduct a public offering of shares in the United States. This Prospectus has been approved solely by the BaFin.
Accordingly, neither this document nor any advertisement or any other offering material may be distributed or
published in any jurisdiction other than Germany and Luxembourg except under circumstances that will result in compliance
with any applicable laws and regulations. Persons into whose possession this Prospectus comes are required to inform
themselves about and observe any such restrictions, including those set out in the preceding paragraphs. Any failure to comply
with these restrictions may constitute a violation of the securities laws of any such jurisdiction.
Sales in the United Kingdom are also subject to restrictions. Each of the Underwriters has represented and
warranted to the Company and the Existing Shareholders that:
(i)
it has only communicated or caused to be communicated and will only communicate or cause to be
communicated any invitation or inducement to engage in investment activity within the meaning of
Section 21 of the Financial Services and Markets Act 2000 (the “FSMA”) received by it in connection
with the sale of any Offer Shares in circumstances in which Section 21 (1) of the FSMA does not apply to
the Company; and
(ii)
it has complied and will comply with all applicable provisions of the FSMA with respect to anything done
by it in relation to the Offer Shares in, from or otherwise involving the United Kingdom.
The Underwriters have further represented and warranted in the Underwriting Agreement that they have not and
will not publicly offer the Offer Shares in any of the member states of the European Economic Area that have implemented
Directive 2003/71/EC as amended (the “Prospectus Directive”) from the date of the implementation of the Prospectus
Directive, unless (i) a prospectus for the Offer Shares has been previously published that has been approved by the competent
authority in such member state or has been approved in another member state of the European Economic Area that has
implemented the Prospectus Directive, and the competent authority in the member state in which the offer takes place has
been informed thereof in compliance with the Prospectus Directive; (ii) the offer is exclusively intended for so-called
qualified investors within the meaning of the Prospectus Directive; or (iii) the offering takes place under other circumstances
in which the publication of a prospectus by the Company is not required under Article 3 of the Prospectus Directive, to the
extent that this exemption has been implemented in the respective member state.
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TAXATION IN THE FEDERAL REPUBLIC OF GERMANY
The following section outlines certain key German tax principles that may be relevant with respect to the
acquisition, holding or transfer of shares. This summary does not purport to be a comprehensive or exhaustive description of
all German tax considerations that may be relevant to shareholders. This presentation is based upon domestic German tax
laws in effect as of the date of this Prospectus and the provisions of double taxation treaties currently in force between
Germany and other countries. It is important to note that the legal situation may change, possibly with retroactive effect.
This section does not replace the need for individual shareholders to seek personal tax advice. It is therefore
recommended that shareholders consult their own tax advisors regarding the tax implications of acquiring, holding or
transferring shares and what procedures are necessary to secure the repayment of German withholding tax (capital gains
tax), if possible. Only qualified tax advisors are in the position to adequately consider the particular tax situation of
individual shareholders.
Taxation of the Company
The Company’s taxable income, whether distributed or retained, is generally subject to German corporate income
tax at a uniform rate of 15% plus the solidarity surcharge of 5.5% thereon, resulting in a total tax rate of 15.825%.
Dividends and other shares in profits the Company receives from domestic and foreign corporations are not
generally subject to corporate income tax; however, 5% of each type of income is deemed to be a non-deductible business
expense. The same applies to profits earned by the Company from the sale of shares in another domestic or foreign
corporation. Different rules apply to free floating dividends, i.e., dividends earned on direct shareholdings in a distributing
corporation equal to less than 10% of its share capital at the start of the calendar year. Such free floating dividends are fully
taxed at the corporate income tax rate. The acquisition of a shareholding of at least 10% is deemed to have occurred at the
start of the calendar year. Losses incurred from the sale of such shares are not deductible for tax purposes, regardless of the
amount of shareholding.
In addition, the Company is subject to a trade tax with respect to its taxable trade profits from its permanent
establishments in Germany. When determining the amount on which to assess the trade tax, 25% of the tax-deductible interest
expenses will be added to the trade tax basis to the extent that the sum of all trade taxable add-back items exceeds €100,000.
The trade tax rate depends on the local municipalities in which the Company maintains its permanent
establishments. For the Company, it currently amounts to between approximately 14% and 16% of the taxable trade profit,
depending on the local trade tax multiplier.
For trade tax purposes dividends received from domestic and foreign corporations and capital gains from the sale of
shares in other corporations are treated in principle in the same manner as for corporate income tax purposes. However, shares
in profits received from domestic and foreign corporations are effectively 95% exempt from trade tax only if the Company
held and continues to hold at least 15% (10% in the case of companies resident for tax purposes in EU member states other
than Germany) of the registered share capital of the distributing corporation at the beginning or – in the case of foreign
corporations – since the beginning of the relevant tax assessment period. Additional limitations apply with respect to shares in
profits received from foreign non-EU corporations.
The provisions of the interest barrier restrict the extent to which interest expenses are tax deductible. Under these
rules, net interest expense (the interest expense minus the interest income in a fiscal year) are generally only deductible up to
30% of the taxable EBITDA (taxable earnings adjusted for interest costs, interest income, and certain depreciation and
amortization), although there are certain exceptions to this rule. Interest expense that is not deductible in a given year may be
carried forward to subsequent fiscal years of the Company (interest carry-forward) and will increase the interest expense in
those subsequent years. Under certain conditions, non-offsettable EBITDA can also be carried forward to subsequent years
(EBITDA carry-forward).
Any remaining losses of the Company can be carried forward in subsequent years and used to fully offset taxable
income for corporate income tax and trade tax purposes only up to an amount of €1 million. If the taxable income for the year
or taxable profit subject to trade taxation exceeds this threshold, only up to 60% of the amount exceeding the threshold may
be offset by tax-loss carry-forwards. The remaining 40% is subject to tax (minimum taxation). The rules also provide for a tax
carry-back to the previous year in regard to corporate income tax. Unused tax carry-forwards can generally continue to be
carried forward without time limitation.
If more than 50% of the subscribed capital, the membership interests, equity interests or voting rights is transferred
to an acquiring party within five years directly or indirectly, all tax-loss carry-forwards and interest carry-forwards are
forfeited. A group of acquirers with aligned interests is also considered to be an acquiring party for these purposes. In
addition, any current year losses incurred prior to the acquisition will not be deductible. If between 25% and 50% of the
subscribed capital, membership interests, equity interests or voting rights of the Company is transferred, a proportional
amount of tax-loss carry forwards, the unused losses and interest carry-forwards is forfeited. Tax-loss carry-forwards, unused
losses and interest carry-forwards taxable in Germany will not expire to the extent that they are covered by hidden reserves
taxable in Germany at the time of such acquisition.
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Taxation of Shareholders
Shareholders are taxed particularly in connection with the holding of shares (taxation of dividend income), upon the
sale of shares (taxation of capital gains) and the gratuitous transfer of shares (inheritance and gift tax).
Taxation of Dividend Income
In the future, the Company may pay dividends out of a tax-recognized contribution account. To the extent that the
Company does pay dividends from this account, the dividends are not subject to tax. However, dividends paid out of a taxrecognized contribution account lower the acquisition costs of the shares, which may result in a greater amount of taxable
capital gain upon the shareholder’s sale of the shares. To the extent that dividends from the tax-recognized contribution
account exceed the then lowered acquisition costs of the shares, a capital gain is recognized by the shareholder, which may be
subject to tax in accordance with the provisions regarding the disposal of shares outlined below.
Withholding Tax
The dividends distributed by the Company are subject to a deduction at source (withholding tax) at a 25% rate on
dividends distributed by the Company plus a solidarity surcharge of 5.5% on the amount of withholding tax (amounting in
total to a rate of 26.375%). The basis for determining the dividend withholding tax is the dividend approved for distribution
by the Company’s general meeting.
Dividend withholding tax is withheld regardless of whether and, if so, to what extent the shareholder must report the
dividend for tax purposes and regardless of whether the shareholder is a resident of Germany or of a foreign country.
As the Company’s shares are admitted to be held in collective safe custody (Sammelverwahrung) with a central
securities depository (Wertpapiersammelbank) and are entrusted to such central securities depository for collective safe
custody in Germany, the Company is not responsible for withholding the withholding tax; rather, it is, for the account of the
shareholders, the responsibility of one of the following entities in Germany authorized to collect withholding tax do so and
remit it to the relevant tax authority: (i) a domestic bank or financial service institute, a domestic securities trading company
or a domestic securities trading bank (including the domestic branches of foreign banks) that holds the shares in custody or
that manages them and pays out or credits the shareholders’ investment income or that pays the investment income to a
foreign entity, or (ii) the securities depository holding the collective deposit shares in custody if it pays the investment income
to a foreign entity.
Where dividends are distributed to a company resident in another member state of the European Union within the
meaning of article 2 of the Parent-Subsidiary Directive (EC Directive 2011/96/EU of November 30, 2011, as amended, the
“Parent-Subsidiary Directive”), the withholding of the dividend withholding tax may not be required, upon application,
provided that additional requirements are met (withholding tax exemption). This also applies to dividends distributed to a
permanent establishment located in another EU member state of such a parent company or of a parent company that is a tax
resident in Germany if the interest in the dividend-paying subsidiary is part of the respective permanent establishment’s
business assets. An important prerequisite for the exemption from withholding at source under the Parent-Subsidiary Directive
is that the shareholder has directly held at least 10% of the company’s registered capital continuously for one year and that the
German tax authorities (Bundeszentralamt für Steuern, Hauptdienstsitz Bonn-Beuel, An der Küppe 1, D-53225 Bonn) have,
based upon an application filed by the creditor on the officially prescribed form, certified to him that the prerequisites for
exemption have been met.
The dividend withholding tax rate for dividends paid to other shareholders without a tax domicile in Germany will
be reduced in accordance with the applicable double taxation treaty, if any, between Germany and the shareholder’s country
of residence, provided that the shares are neither held as part of the business assets of a permanent establishment or a fixed
base in Germany nor as part of the business assets for which a permanent representative in Germany has been appointed. The
reduction in the dividend withholding tax is generally obtained by applying to the Federal Central Office of Taxation
(Bundeszentralamt für Steuern, with its registered office in Bonn-Beuel, An der Küppe 1, D-53225 Bonn, Germany) for a
refund of the difference between the dividend withholding tax withheld, including the solidarity surcharge, and the amount of
withholding tax actually owed under the applicable double taxation treaty, which is usually 5-15%. Forms for the refund
procedure may be obtained from the Federal Central Office of Taxation (http://www.bzst.bund.de), as well as German
embassies and consulates.
Corporations that are not tax residents in Germany will receive a refund of two-fifths of the dividend withholding
tax that was withheld and remitted to the tax authorities. This applies regardless of any further reduction or exemption
provided under the Parent-Subsidiary Directive or a double taxation treaty.
Foreign corporations will generally have to meet certain substance criteria defined by statute in order to receive an
exemption from or (partial) refund of German dividend withholding tax.
The Company assumes liability for the withholding of taxes at the source on distributions. This does not apply to
church tax. The Company is released from liability for the violation of its legal obligation to withhold and transfer the taxes at
the source if it provides evidence that it has not breached its duties intentionally or grossly negligently.
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Taxation of Dividends of Shareholders with a Tax Domicile in Germany
Individuals who Hold the Shares as Private Assets
For individuals who are tax residents in Germany (generally, individuals whose domicile or usual residence is
located in Germany) and who hold the shares as private assets, the withholding tax will generally serve as a final tax. In other
words, once deducted, the shareholder’s income tax liability on the dividends will be settled, and he or she will no longer have
to declare them on his or her annual tax return (the “Flat Tax”).
The purpose of the Flat Tax is to provide for separate and final taxation of capital investment income earned; in
other words, taxation that is irrespective of the individual’s personal income tax rate. Shareholders may apply to have their
capital investment income assessed in accordance with the general rules and with an individual’s personal income tax rate if
this would result in a lower tax burden. In this case, the base for taxation would be the gross dividend income less the savers’
allowance of €801 (€1,602 for married couples filing jointly). Any tax and solidarity surcharge already withheld would be
credited against the income tax and solidarity surcharge so determined and any overpayment refunded. Income-related
expenses cannot be deducted from capital gains in either case.
If the individual owns (i) at least 1% of the shares in the Company and works for the Company or (ii) at least 25%
of the shares, the tax authorities may approve upon application that the dividends are treated under the partial-income method
(see below “—Sole Proprietors (Individuals)”).
Through 2014, shareholders who pay church tax and hold shares as private assets may request the Domestic Paying
Agent that pays out their capital investment income to withhold their church tax according to the church tax legislation of
their state and remit it to the relevant tax authority. Starting in 2015, entities required to collect withholding taxes on capital
investment income are required to likewise withhold the church tax on shareholders who pay church taxes, unless the
shareholder objects in writing to the German tax authorities sharing his private information regarding his affiliation with a
denomination. If church tax is withheld and remitted to the tax authority as part of the withholding tax deduction, then the
church tax on the dividends is also deemed to be discharged when it is deducted. The withheld church tax cannot be deducted
in the tax assessment as a special expense; however, 26.375% of the church tax withheld on the dividends is deducted from
the withholding tax (including the solidarity surcharge) withheld by the Company. If no church taxes are withheld along with
the withholding of capital gains tax, the shareholder who pays church tax is required to report his dividends in his income tax
return. The church tax on the dividends will then be imposed during the assessment.
Shares Held as Business Assets
The Flat Tax does not apply to the dividends from shares held as business assets of shareholders who are tax
resident in Germany. The taxation is based on whether the shareholder is a corporation, an individual or a partnership. The
capital gains tax withheld and paid to the tax authorities, including the solidarity surcharge, is credited against the income or
corporate income tax and the solidarity surcharge of the shareholder and any overpayment will be refunded.
Corporations
Dividends received by corporations resident in Germany are generally 95% exempt from corporate income tax and
solidarity surcharge, irrespective of the stake represented by the shares and the length of time the shares are held. The
remaining 5% is treated as a nondeductible business expense and, as such, is subject to corporate income tax (plus the
solidarity surcharge) with a total tax rate of 15.825%.
Different rules apply to free-floating dividends, i.e., dividends earned on direct shareholdings in the Company equal
to less than 10% of its share capital at the start of the calendar year. Such free floating dividends are fully taxed at the
corporate income tax rate. The acquisition of a shareholding of at least 10% is deemed to have occurred at the start of the
calendar year.
Business expenses actually incurred and having a direct business relationship to the dividends may be fully
deducted.
The amount of any dividends (after deducting business expenses related to the dividends) is fully subject to trade
tax, unless the corporation held at least 15% of the Company’s registered share capital at the beginning of the relevant tax
assessment period, entitling it to an intercorporate privilege for trade tax purposes. In the latter case, the aforementioned
exemption of 95% of the dividend income applies analogously for trade tax purposes, but the business expenses directly
related to the dividends (for example, financing costs) are not deductible unless they exceed the amount of dividend income
exempted.
Sole Proprietors (Individuals)
If the shares are held as part of the business assets of a sole proprietor (individual) with his tax domicile in
Germany, 40% of the dividend is tax exempt (so-called partial-income method). Only 60% of the expenses economically
related to the dividends are tax deductible. The partial-income method will also apply when individuals hold the shares
135
indirectly through a partnership (with the exception of personal investors who hold their shares through an asset management
partnership). If the shares are held as business assets of a domestic commercial permanent establishment, the full amount of
the dividend income (after deducting business expenses that are economically related to the dividends) is also subject to trade
tax, unless the taxpayer held at least 15% of the Company’s registered share capital at the beginning of the relevant tax
assessment period. In the latter case, the net dividends (after deducting directly related expenses) are exempt from the trade
tax. However, trade tax is generally credited – fully or in part – as a lump sum against the shareholder’s personal income tax
liability.
Partnerships
If the shareholder is a trading, or deemed to be a trading, partnership with its tax domicile in Germany, the personal
income tax or corporate income tax, as the case may be, and the solidarity surcharge are levied at the level of each partner
rather than at the level of the partnership. The taxation of each partner depends upon whether the partner is a corporation or an
individual. If the partner is a corporation, then the dividend is generally 95% tax exempt; however, dividends from a direct
shareholding representing less than 10% of the share capital are fully subject to taxation (see above “—Corporations”). If the
partner is an individual, only 60% of the dividend income is subject to income tax (see above “—Sole Proprietors
(Individuals)”).
Additionally, if the shares are held as business assets of a domestic commercial permanent establishment or deemed
to be a trading partnership, the full amount of the dividend income is also subject to trade tax at the level of the partnership. In
the case of partners who are individuals, the trade tax that the partnership pays on his or her proportion of the partnership’s
income is generally credited as a lump sum – fully or in part – against the individual’s personal income tax liability. If the
partnership held at least 15% of the Company’s registered share capital at the beginning of the relevant tax assessment period,
the dividends are not subject to trade tax. The business expenses directly related to the dividends (for example, financing
costs) are not deductible unless they exceed the amount of dividend income exempted. However, if the partners are
corporations, the 5% of the dividend income treated as nondeductible business expenses and will be subject to trade tax.
Financial and Insurance Sector
Special rules apply to companies operating in the financial and insurance sector (see below “—Special Treatment of
Companies in the Financial and Insurance Sectors and Pension Funds”).
Taxation of Dividends of Shareholders without a Tax Domicile in Germany
The dividends paid to shareholders (individuals and corporations) without a tax domicile in Germany are taxed in
Germany, provided that the shares are held as part of the business assets of a permanent establishment or a fixed base in
Germany or as part of the business assets for which a permanent representative in Germany has been appointed. The
withholding tax (including solidarity surcharge) withheld and remitted to the German tax authorities is credited against the
respective shareholder’s personal income tax or corporate income tax liability, and any overpayment will be refunded. The
same applies to the solidarity surcharge. These shareholders are essentially subject to the same rules applicable to resident
shareholders, as discussed above.
In all other cases, the withholding of the dividend withholding tax discharges any tax liability of the shareholder in
Germany. A refund or exemption is granted only as discussed in the section on dividend withholding tax above (see above
“—Taxation of the Company”).
Taxation of Capital Gains
Taxation of Capital Gains of Shareholders with a Tax Domicile in Germany
Shares Held as Private Assets
Gains on the sale of shares that are held as private assets by shareholders with a tax domicile in Germany, and
which were acquired after December 31, 2008, are generally taxable regardless of the length of time held. The tax rate is a
uniform 25% plus the 5.5% solidarity surcharge thereon (as well as any church tax).
The taxable capital gains are the difference between (a) the sales gains after deducting the direct sales costs and
(b) the acquisition cost of the shares. Under certain conditions, prior payments from the tax-recognized contribution account
may lead to reduced acquisition costs of the shares held as personal assets and, as a consequence, increase the taxable sales
gain. Losses on the sale of shares may only be netted against gains on the sale of shares.
If a domestic bank or financial service provider, a domestic securities trading company or a domestic securities
trading bank (the “Domestic Paying Agent”) sells the shares and pays out or credits the capital gains, said Domestic Paying
Agent withholds a withholding tax of 25% (plus 5.5% solidarity surcharge and any church tax) and remits this to the tax
authority, then the tax on the capital gain will generally be discharged. If the shares were held in safekeeping or administered
by the respective Domestic Paying Agent after acquisition, the amount of tax withheld is generally based on the difference
between the proceeds from the sale, after deducting expenses directly related to the sale, and the amount paid to acquire the
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shares. However, the withholding tax rate of 25% (plus the 5.5% solidarity surcharge thereon and any church tax) will be
applied to 30% of the gross sales proceeds if the shares were not administered by the same custodian bank since acquisition
and the original cost of the shares cannot be verified or such verification is not admissible. In this case, the shareholder is
entitled to verify the original costs of the shares in his annual Flat Tax.
Through 2014, shareholders who pay church tax and hold shares as private assets may request the Domestic Paying
Agent that pays out their capital investment income to withhold their church tax on the capital gain according to the church
tax legislation of their state and remit it to the relevant tax authority. Starting in 2015, entities required to collect withholding
taxes on capital investment income are required to likewise withhold the church tax on shareholders who pay church taxes,
unless the shareholder objects in writing to the German tax authorities sharing his private information regarding his affiliation
with a denomination. If church tax is withheld and remitted to the tax authority as part of the withholding tax deduction, then
the church tax on the capital gain is also deemed to be discharged when it is deducted. The withheld church tax cannot be
deducted in the tax assessment as a special expense; however, 26.375% of the church tax withheld on the capital gain is
deducted from the withholding tax (including the solidarity surcharge) withheld by the Company.
A shareholder may request that all his items of capital investment income, along with his other taxable income, be
subject to the progressive income tax rate instead of the uniform tax rate for private capital investment income if this lowers
his tax burden. The base for taxation would be the gross income less the savers’ allowance of €801 (€1,602 for married
couples filing jointly). The prohibition on deducting income-related costs and the restrictions on offsetting losses also apply to
tax assessments based on the progressive income tax rate. Any tax already withheld would be credited against the income tax
so determined and any overpayment refunded.
One exception to this rule is that a shareholder’s capital gains are subject to the partial-income method and not the
Flat Tax. Consequently, 60% of the proceeds from the sale of shares are subject to the individual income tax rate, if the
shareholder, or his legal predecessor in case of acquisition without consideration, has directly or indirectly held shares equal
to at least 1% of the Company’s share capital at any time during the previous five years (“Qualified Participation”). Of the
expenses economically related to the proceeds of the sale of shares, 60% is tax deductible.
In the case of a Qualified Participation, withholding tax (including the solidarity surcharge) is also withheld by the
Domestic Paying Agent. The tax withheld, however, is not treated as a final tax. Hence, the shareholder is obligated to declare
the gain on the sale on his income tax return. The withholding tax (including solidarity surcharge) withheld and remitted to
the German tax authorities is credited against the respective shareholder’s personal income tax or corporate income tax
liability in the tax assessment, and any overpayment will be refunded.
Shares Held as Business Assets
The Flat Tax does not apply to proceeds from the sale of shares held as business assets by shareholders domiciled in
Germany. If the shares form part of a shareholder’s business assets, taxation of the capital gains realized will then depend
upon whether the shareholder is a corporation, sole proprietor or partnership.
•
Corporations: In general, capital gains earned on the sale of shares by corporations domiciled in Germany are
95% exempt from corporate income tax (including the solidarity surcharge) and trade tax, irrespective of the
stake represented by the shares and the length of time the shares are held. However, 5% of the capital gains is
treated as a nondeductible business expense and, as such, is subject to corporate income tax (plus the solidarity
surcharge) and to trade tax. Losses from the sale of shares and any connected reductions in profit do not qualify
as tax-deductible business expenses.
•
Sole proprietors (individuals): If the shares were acquired after December 31, 2008 and form part of the
business assets of a sole proprietor (individual) who is a tax resident of Germany, 60% of the capital gains on
their sale is subject to the individual’s tax bracket plus the solidarity surcharge (partial-income method).
Correspondingly, only 60% of losses from such sales and 60% of expenses economically related to such sales
are deductible. For church tax, if applicable, the partial-income method also applies. If the shares are held as
business assets of a commercial permanent establishment located in Germany, 60% of the capital gains are also
subject to trade tax. The trade tax is fully or partially credited as a lump sum against the shareholder’s personal
income tax liability.
•
Partnerships: If the shareholder is a trading, or deemed to be a trading, partnership, personal income tax or
corporate income tax, as the case may be, is assessed at the level of each partner rather than at the level of the
partnership. The taxation of each partner depends upon whether the respective partner is a corporation or an
individual. If the partner is a corporation, the tax principles applying to capital gains that are outlined in
subsection 1 apply. If the partner is an individual, the tax principles applying to capital gains which are
outlined in subsection 2 apply. Upon application and provided that additional prerequisites are met, an
individual who is a partner can obtain a reduction of his personal income tax rate for profits not withdrawn
from the partnership. In addition, capital gains from the sale of shares attributable to a permanent establishment
maintained in Germany by a trading partnership are subject to trade tax at the level of the partnership. As a
rule, only 60% of the gains in this case are subject to trade tax if the partners in the partnership are individuals,
while 5% are subject to trade tax if the partners are corporations and shares are sold. Under the principles
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discussed under 1 and 2 above, losses on sales and other reductions in profit related to the shares sold are
generally not deductible, or only partially deductible, if the partner is a corporation. If the partner is an
individual, the trade tax the partnership pays on his or her share of the partnership’s income is generally
credited as a lump sum – fully or in part – against his or her personal income tax liability, depending on the tax
rate imposed by the local municipality and certain individual tax-relevant circumstances of the taxpayer.
Special rules apply to capital gains realized by companies active in the financial and insurance sectors, as well as
pension funds (see below “—Special Treatment of Companies in the Financial and Insurance Sectors and Pension Funds”).
When a Domestic Paying Agent is concerned, the proceeds from the sale of shares held in business assets are
generally subject to the same withholding tax rate as those of shareholders whose shares are held as private assets (see
“—Taxation of Capital Gains of Shareholders with a Tax Domicile in Germany—Shares Held as Private Assets”). However,
the Domestic Paying Agent may refrain from withholding the withholding tax if (i) the shareholder is a corporation,
association or estate with its tax domicile in Germany, or (ii) the shares form part of the shareholder’s domestic business
assets, and the shareholder informs the paying agent of this on the officially prescribed form and meets certain additional
prerequisites. If the Domestic Paying Agent nevertheless withholds taxes, the withholding tax withheld and remitted
(including the solidarity surcharge) will be credited against the shareholder’s income tax or corporate income tax liability and
any excess amount will be refunded.
Taxation of Capital Gains of Shareholders without a Tax Domicile in Germany
Capital gains realized by a shareholder with no tax domicile in Germany are subject to German income tax only if
the selling shareholder holds a Qualified Participation or if the shares form part of the business assets of a permanent
establishment in Germany or of business assets for which a permanent representative is appointed.
Most double taxation treaties provide for an exemption from German taxes and assign the right of taxation to the
shareholder’s country of domicile in the former case. However, certain double taxation treaties contain special provisions for
shareholdings in a real estate company. In the latter case the taxation of capital gains is governed by the same rules that apply
to shareholders resident in Germany.
Special Treatment of Companies in the Financial and Insurance Sectors and Pension Funds
If financial institutions or financial services providers hold or sell shares that are allocable to their trading book
pursuant to Section 1a of the German Banking Act (Gesetz über das Kreditwesen), they will neither be able to use the partialincome method nor have 60% of their gains exempted from taxation nor be entitled to the 95% exemption from corporate
income tax plus the solidarity surcharge and any applicable trade tax. Thus, dividend income and capital gains are fully
taxable. The same applies to shares acquired by financial enterprises (Finanzunternehmen) in the meaning of the German
Banking Act for the purpose of generating profits from short-term proprietary trading. The preceding sentence applies
accordingly for shares held in a permanent establishment in Germany by financial institutions, financial service providers and
finance companies domiciled in another member state of the European Union or in other signatory states of the agreement on
the European Economic Area. Likewise, the tax exemption described earlier afforded to corporations for dividend income and
capital gains from the sale of shares does not apply to shares that qualify as a capital investment in the case of life insurance
and health insurance companies, or those which are held by pension funds.
However, an exemption to the foregoing, and thus a 95% effective tax exemption, applies to dividends obtained by
the aforementioned companies, to which the Parent-Subsidiary Directive applies.
Inheritance and Gift Tax
The transfer of shares to another person by will or gift is generally subject to German inheritance and gift tax only if
1.
the decedent, donor, heir, beneficiary or other transferee maintained his or her domicile or habitual abode
in Germany, or had its place of management or registered office in Germany at the time of the transfer, or
is a German citizen who has spent no more than five consecutive years outside Germany without
maintaining a residence in Germany (special rules apply to certain former German citizens who neither
maintain their domicile nor have their habitual abode in Germany);
2.
the shares were held by the decedent or donor as part of business assets for which a permanent
establishment was maintained in Germany or for which a permanent representative in Germany had been
appointed; or
3.
the decedent or donor with place of management or registered office in Germany, either individually or
collectively with related parties, held, directly or indirectly, at least 10% of the Company’s registered
share capital at the time of the inheritance or gift.
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The fair value represents the tax assessment base. In general that is the stock exchange price. A special discount on
this amount applies to direct shareholdings of more than 25% in the Company depending on the composition of the business
assets and future business figures, if, inter alia, the heir or beneficiary meets a five-year holding period. Depending on the
degree of relationship between decedent or donor and recipient, different tax free allowances and tax rates apply.
The few German double taxation treaties relating to inheritance tax and gift tax currently in force usually provide
that the German inheritance tax or gift tax can only be levied in the cases of (1.) above, and also with certain restrictions in
case of (2.) above. Special provisions apply to certain German nationals living outside of Germany and former German
nationals.
Other Taxes
No German transfer tax, value-added tax, stamp duty or similar taxes are assessed on the purchase, sale or other
transfer of shares. Provided that certain requirements are met, an entrepreneur may, however, opt for the payment of valueadded tax on transactions that are otherwise tax exempt. Net wealth tax is currently not imposed in Germany.
On January 22, 2013, the Council of the European Union approved the resolution of the ministers of finance from
eleven EU member states (including Germany) to introduce a financial transaction tax within the framework of enhanced
cooperation. On February 14, 2013, the European Commission accepted the proposal for a Council Directive implementing
enhanced cooperation in the area of financial transaction tax. The plan focuses on levying a financial transaction tax of 0.1%
(0.01% for derivatives) on the purchase and sale of financial instruments.
A joint statement issued in May 2014 by ten of the eleven participating member states indicated an intention to
implement the financial transaction tax progressively, such that it would initially apply to shares and certain derivatives, with
this initial implementation occurring by January 1, 2016. However, full details are not available. Therefore it is not known to
what extent the elements of the European Commission’s proposal outlined in the preceding paragraph will be followed in
relation to the taxation of shares. The financial transaction tax proposal remains subject to negotiation between the
participating member states and is the subject of legal challenge. It may therefore be altered prior to any implementation, the
timing of which remains unclear. Additional EU member states may decide to participate. Prospective holders of the
Company’s shares are advised to seek their own professional advice in relation to the financial transaction tax.
139
TAXATION IN THE GRAND DUCHY OF LUXEMBOURG
The following information is of a general nature only and is based on the laws in force in Luxembourg as of the date
of this Prospectus. It does not purport to be a comprehensive description of all the tax considerations that might be relevant to
an investment decision. It is included herein solely for preliminary information purposes. It is not intended to be, nor should it
be construed to be, legal or tax advice. It is a description of the essential material Luxembourg tax consequences with respect
to the offering and may not include tax considerations that arise from rules of general application or that are generally
assumed to be known to shareholders. This summary is based on the laws in force in Luxembourg on the date of this
Prospectus and is subject to any change in law that may take effect after such date. Prospective shareholders should consult
their professional advisors with respect to particular circumstances, the effects of state, local or foreign laws to which they
may be subject, and as to their tax position. Please be aware that the residence concept used under the respective headings
applies for Luxembourg income tax assessment purposes only. Any reference in the present section to a tax, duty, levy impost
or other charge or withholding of a similar nature refers to Luxembourg tax law and/or concepts only. Also, please note that a
reference to Luxembourg income tax generally encompasses corporate income tax (impôt sur le revenu des collectivités),
municipal business tax (impôt commercial communal), a solidarity surcharge (contribution au fonds pour l’emploi), as well as
personal income tax (impôt sur le revenu). Corporate shareholders may further be subject to net wealth tax (impôt sur la
fortune) as well as other duties, levies or taxes. Corporate income tax, municipal business tax as well as the solidarity
surcharge invariably apply to most corporate taxpayers resident in Luxembourg for tax purposes. Individual taxpayers are
generally subject to personal income tax and the solidarity surcharge. Under certain circumstances, where an individual
taxpayer acts in the course of the management of a professional or business undertaking, municipal business tax may apply as
well.
Luxembourg Taxation of Shares of a Non-Resident Company
Withholding Taxes
Dividend payments made to shareholders by a non-resident company, such as the Company, as well as liquidation
proceeds and capital gains derived therefrom are not subject to a withholding tax in Luxembourg. Therefore, the Company
does not assume liability for withholding taxes at the source.
Income Tax
Taxation of Income Derived From Shares and Capital Gains Realized On Shares by Luxembourg Residents
Taxation of dividend income
Dividends and other payments derived from the shares of the Company by resident individual shareholders and nonresident individual shareholders having a permanent establishment or permanent representative in Luxembourg to which or
whom such shares are attributable, will in principle be subject to tax at the ordinary rates on the dividends received from the
Company. A tax credit may under certain conditions be granted for foreign withholding taxes against Luxembourg income tax
due on these dividends, without exceeding in any case Luxembourg tax on such income. Under current Luxembourg tax law,
50% of the gross amount of dividends received by resident individual shareholders may be tax exempt at the level of these
shareholders.
Dividends derived from the Company’s shares by fully-taxable Luxembourg resident companies are subject to
income taxes, unless the conditions of the participation exemption regime are satisfied.
Under the participation exemption regime, dividends derived from the shares of the Company may be exempt from
income tax at the level of the shareholder if cumulatively (a) the shareholder receiving the dividends is either (i) a fullytaxable Luxembourg resident company, (ii) a domestic permanent establishment of an EU resident company falling under
article 2 of the EU Parent-Subsidiary Directive, (iii) a domestic permanent establishment of a company limited by shares
(société de capitaux) that is resident in a state with which Luxembourg has concluded a double tax treaty, or (iv) a domestic
permanent establishment of a company limited by shares (société de capitaux) or of a cooperative company which is a
resident of a European Economic Area member state (other than a EU member state); and at the date on which the income is
made available, (b) the distributing company is a qualified subsidiary (“Qualified Subsidiary”), (c) the shareholder holds or
commits to hold directly (or even indirectly through certain entities) for an uninterrupted period of at least twelve months a
qualified shareholding (“Qualified Shareholding”). A Qualified Subsidiary means (a) a fully-taxable Luxembourg resident
company limited by share capital (société de capitaux), (b) a company covered by Article 2 of the amended EU ParentSubsidiary Directive or (c) a non-resident company limited by share capital (société de capitaux) liable to a tax corresponding
to Luxembourg corporate income tax. A Qualified Shareholding means shares representing a direct participation of at least
10% in the share capital of the Qualified Subsidiary or a direct participation in the Qualified Subsidiary of an acquisition price
of at least €1.2 million (or an equivalent amount in another currency). Liquidation proceeds are assimilated to a received
dividend and may be exempt under the same conditions. Shares held through a tax transparent entity are considered as being a
direct participation proportionally to the percentage held in the net assets of the transparent entity. If the participation
exemption does not apply, dividends may benefit from the 50% exemption under the relevant conditions set out above.
Any shareholder which is a Luxembourg resident entity governed by the law of December 17, 2010 on undertakings
for collective investment, as amended, by the law of February 13, 2007 on specialized investment funds, as amended, or by
140
the law of May 11, 2007 on the family estate management company, as amended, or by the law of June 15, 2004 on venture
capital vehicles, as amended, is not subject to any Luxembourg corporation taxes in respect of dividends received from the
Company. No tax credit is then available for Luxembourg withholding tax on dividends received from the Company.
Non-resident shareholders (not having a permanent establishment or permanent representative in Luxembourg to
which or whom the shares of the Company are attributable) will in principle not be subject to Luxembourg income tax on the
dividends received from the Company.
Taxation of capital gains
(a) Luxembourg resident Shareholders
Capital gains realized on the disposal of the shares of the Company by resident individual shareholders, who act in
the course of the management of their private wealth, are not subject to income tax, unless said capital gains qualify either as
speculative gains or as gains on a substantial participation (“Substantial Participation”). Capital gains are deemed to be
speculative and are subject to income tax at ordinary rates if the shares of the Company are disposed of within six months
after their acquisition or if their disposal precedes their acquisition. A participation is deemed to be substantial where a
resident individual shareholder holds, either alone or together with his spouse or partner and/or minor children, directly or
indirectly at any time within the five years preceding the disposal, more than 10% of the share capital of the Company. A
shareholder is also deemed to transfer a Substantial Participation if he acquired free of charge, within the five years preceding
the transfer, a participation that was constituting a Substantial Participation in the hands of the transferor (or the transferors in
case of successive transfers free of charge within the same five-year period). Capital gains realized on a Substantial
Participation are subject to Luxembourg income tax according to the half-global rate method (i.e., the average rate applicable
to the total income is calculated according to progressive income tax rates and half of the average rate is applied to the capital
gains realized on a Substantial Participation). A disposal may include a sale, an exchange, a contribution or any other kind of
alienation of the shares of the Company.
Capital gains realized on the disposal of the Company’s shares by resident individual Shareholders, who act in the
course of their professional/business activity, are subject to income tax at ordinary rates. Taxable gains are determined as
being the difference between the price for which the Company’s shares have been disposed of and the lower of their cost or
book value.
Capital gains realized by (a) a fully-taxable Luxembourg resident company or (b) the Luxembourg permanent
establishment of a non-resident foreign company on the shares of the Company are subject to income tax at the maximum
global rate of 29.22% (in Luxembourg City in 2014), unless the conditions of the participation exemption regime, as
described above, are satisfied except that the acquisition price must be of at least €6 million for capital gain exemption
purposes. Shares held through a tax transparent entity are considered as a direct participation holding proportionally to the
percentage held in the assets of the transparent entity. To the extent that expenses related to the (exempt) shareholding have
reduced the shareholder’s taxable profits (during the year of the sale or in prior years), these deductions will be recaptured at
the time the relevant shareholding is sold. Consequently, the capital gain realized will become taxable up to the amount of the
aggregate expenses and write-downs deducted during the respective and previous years in relation to the participation.
Taxable gains are determined to be the difference between the price for which the Company’s shares have been
disposed of and the lower of their cost or book value.
The shareholder which is a Luxembourg resident entity governed by the law of December 17, 2010 on undertakings
for collective investment, as amended, by the law of February 13, 2007 on specialized investment funds, as amended, or by
the law of May 11, 2007 on the family estate management company, as amended, or by the law of June 15, 2004 on venture
capital vehicles, as amended, is not subject to any Luxembourg corporation taxes in respect of capital gains realized upon
disposal of its shares.
(b) Non-resident Shareholders
Under Luxembourg tax laws currently in force (subject to the provisions of double taxation treaties), capital gains
realized on the disposal of the Company’s shares by a non-resident shareholder holding the shares of the Company through a
Luxembourg permanent establishment or through a Luxembourg permanent representative to which or whom the shares are
attributable are subject to income tax at ordinary rates. Taxable gains are determined as being the difference between the price
for which the shares have been disposed of and the lower of their cost or book value.
Net Wealth Tax
Luxembourg resident shareholders, as well as non-resident shareholders who have a permanent establishment or a
permanent representative in Luxembourg to which or whom the shares of the Company are attributable, are subject to
Luxembourg net wealth tax at the rate of 0.5% applied on its net assets as determined for net wealth tax purposes on the net
wealth tax assessment date, except if the shareholder is (i) a resident or non-resident individual, (ii) or governed by the
141
amended law of May 11, 2007 on family estate management companies, (iii) by the amended law of December 17, 2010 on
undertakings for collective investment, (iv) by the law of February 13, 2007 on specialized investment funds, as amended, or
(v) is a securitization company governed by the law of March 22, 2004 on securitization, as amended, or (vi) is a capital
company governed by the law of June 15, 2004 on venture capital vehicles, as amended.
Furthermore, in the case the shareholder is a fully-taxable Luxembourg resident collective entity (or (i) a domestic
permanent establishment of an EU resident company covered by Article 2 of the amended EU Parent-Subsidiary Directive, or
(ii) a domestic permanent establishment of a company limited by shares (société de capitaux) that is resident in a state with
which Luxembourg has concluded a double tax treaty, or (iii) a domestic permanent establishment of a company limited by
shares (société de capitaux) or of a cooperative company which is a resident of a European Economic Area member state
(other than a EU member state), the shares of the Company may be exempt for a given year, if the shares represent at the end
of the previous year a participation of at least 10% in the share capital of the Company or a participation of an acquisition
price of at least €1.2 million. The net wealth tax charge for a given year can be reduced if a specific reserve, equal to five
times the net wealth tax to save, is created before the end of the subsequent tax year and maintained during the five following
tax years.
Other Taxes
Under current Luxembourg tax laws, no registration tax or similar tax is in principle payable by the shareholder
upon the acquisition, holding or disposal of the Company’s shares. However, a fixed registration duty of €12 may be due upon
registration of the Company’s shares in Luxembourg in the case of legal proceedings before Luxembourg courts, in case the
shares must be produced before an official Luxembourg authority, or in the case of a registration of the shares on a voluntary
basis.
Under current Luxembourg tax law, where an individual shareholder is a resident of Luxembourg for inheritance tax
purposes at the time of his/her death, the shares are included in his or her taxable basis for inheritance tax purposes.
Gift tax may be due on a gift or donation of the Company’s shares if the gift is recorded in a Luxembourg notarial
deed or otherwise registered in Luxembourg.
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FINANCIAL INFORMATION
The following English-language condensed consolidated interim financial statements prepared in accordance with
IFRS on interim financial reporting (IAS 34) as of and for the six month-period ended June 30, 2014 (F-1 – F-15), the
consolidated financial statements prepared in accordance with IFRS as of and for the fiscal year ended December 31, 2013
(F-16 – F-63), the consolidated financial statements prepared in accordance with German GAAP as of and for the fiscal
years ended December 31. 2012 and December 31, 2011 (F-65 – F-78 and F-80 – F-93) and the unconsolidated financial
statements prepared in accordance with German GAAP as of and for the fiscal year ended December 31, 2013
(F-95 – F-105), of TLG IMMOBILIEN GmbH, Berlin, are translations of the respective German-language unaudited
condensed consolidated interim financial statements, the respective German-language audited consolidated financial
statements and the respective German-language audited unconsolidated financial statements.
TLG Immobilien GmbH, Berlin, Germany: Unaudited Condensed Consolidated Interim Financial
Statements (Prepared in Accordance with IFRS on Interim Financial Reporting) of TLG Immobilien
GmbH as of and for the Six-Month Period Ended June 30, 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-2
Consolidated Statement of Financial Position . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-3
Consolidated Statement of Comprehensive Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-4
Consolidated Statement of Changes in Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-5
Consolidated Cash Flow Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-6
Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-7
TLG Immobilien GmbH, Berlin, Germany: Audited Consolidated Financial Statements (Prepared in
Accordance with IFRS) of TLG Immobilien GmbH as of and for the Fiscal Year Ended December 31,
2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-16
Consolidated Statement of Financial Position . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-17
Consolidated Statement of Comprehensive Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-18
F-19
F-20
Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-21
Auditor’s report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-64
Accordance with German GAAP) of TLG Immobilien GmbH as of and for the Fiscal Year Ended
December 31, 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-65
Consolidated Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-66
Consolidated Income Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-67
F-68
F-69
Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-70
Auditor’s Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-79
December 31, 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-80
Consolidated Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-81
Consolidated Income Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-82
F-83
F-84
Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-85
Auditor’s Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-94
TLG Immobilien GmbH, Berlin, Germany: Audited Unconsolidated Financial Statements (Prepared in
December 31, 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-95
Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-96
Income Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-97
Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-98
Auditor’s report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-106
F-1
TLG Immobilien GmbH, Berlin, Germany: Unaudited Condensed Consolidated Interim
Financial Statements (Prepared in Accordance with IFRS on Interim Financial
Reporting) of TLG Immobilien GmbH as of and for the Six-Month Period Ended
June 30, 2014
F-2
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
30/06/2014
EUR ’000
unaudited
31/12/2013
EUR ’000
1,456,592
1,423,028
2,482
16,449
655
0
124
8,407
5,447
1,448,127
1,414,691
2,707
17,762
872
0
124
8,423
3,548
Current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trade receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Receivables from income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Financial instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other current financial assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Receivables and other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Assets classified as held for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
99,344
13,318
13,665
252
0
3,157
2,854
24,540
41,557
187,568
13,385
11,567
194
15
4,953
707
138,930
17,817
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,555,936
1,635,695
A) Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Subscribed capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Capital reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other comprehensive income (OCI) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-controlling interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
621,512
52,000
252,497
322,894
-5,879
0
801,036
52,000
410,249
339,939
-1,152
0
B)
Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
I.) Non-current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-current liabilities due to financial institutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pension provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-current financial instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other non-current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
II.) Current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current liabilities due to financial institutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trade payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payables due to shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other current provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current financial instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Liabilities included in disposal groups classified as held for sale . . . . . . . . . . . . . . . . . . . . .
934,424
787,152
672,375
6,815
8,744
2,942
96,276
147,272
55,574
12,188
0
12,329
57,266
0
9,915
0
834,659
630,245
513,002
6,931
18,788
3,384
88,140
204,414
113,225
14,573
0
16,193
44,287
0
16,136
0
Total equity and liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,555,936
1,635,695
A) Non-current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investment property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Advance payments on investment property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investment in joint ventures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other non-current financial assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
B)
F-3
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
01/01/2014 –
30/06/2014
EUR ’000
unaudited
01/01/2013 –
30/06/2013
EUR ’000
unaudited
Net operating income from letting activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income from letting activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
a) Rental income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
b) Income from recharged utilities and other operating costs . . . . . . . . . . . . . . . . . . . . . . . . .
c) Income from other goods and services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expenses related to letting activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
d) Utilities and other operating costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
e) Maintenance expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
f) Other expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Result from the remeasurement of investment property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Result from the disposal of investment property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Result from the disposal of real estate inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
a) Proceeds from real estate inventory disposed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
b) Book value of real estate inventory disposed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Personnel expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
50,021
66,903
56,997
9,053
853
16,882
12,690
1,903
2,289
51,330
458
2,289
5,901
3,612
3,633
7,658
701
2,423
52,700
69,636
59,216
9,472
948
16,936
13,463
1,865
1,608
34,382
228
5,483
14,262
8,779
3,878
15,380
742
2,289
Earnings before interest and taxes (EBIT) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
96,949
78,260
Income from joint ventures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Financial income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Financial expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gain (-) / loss from the remeasurement of derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
0
379
12,094
2,011
2,137
359
18,088
-5,422
Earnings before taxes (EBT) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
83,222
68,089
Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
25,817
21,991
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
57,405
46,098
0
0
Hedge accounting reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-4,727
0
Total comprehensive income for the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
52,678
46,098
Actuarial gains and losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
thereof recycling
F-4
F-5
0
0
0
0
0
0
Withdrawal from capital reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Distribution to shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Additional payment to capital reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Capital contribution relating to executive remuneration . . . . . . . . . . . . . . . . . . . . . . . . . .
52,000
-157,751
0
Total comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
30/06/2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-158,547
0
0
795
0
0
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
252,497
0
0
0
52,000
410,249
-33,115
-199,776
01/01/2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
52,000
-184,576
0
0
0
0
Additional payment to capital reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Release of special reserve (Art. 27 (2) DMBilG) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Addition to capital reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
30/06/2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
0
15,200
0
0
0
0
0
0
0
0
0
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
151,461
EUR ’000
52,000
EUR ’000
01/01/2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Capital
reserves
Subscribed
capital
322,894
-17,045
158,547
-233,000
0
0
57,408
57,408
0
339,939
762,908
-41,371
-287,246
0
0
0
199,776
46,099
0
46,099
804,278
EUR ’000
Retained
earnings
-4,851
-4,727
0
0
0
0
-4,727
0
-4,727
-124
0
0
0
0
0
0
0
0
0
0
0
-1,028
0
0
0
0
0
0
0
0
-1,028
-1,005
0
0
0
0
0
0
0
0
0
-1,005
Cumulative other comprehensive
income (OCI)
Hedge accounting Actuarial gains
reserve
and losses
EUR ’000
EUR ’000
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
EUR ’000
Non-controlling
interest
621,512
-179,523
0
-233,000
0
795
52,681
57,408
-4,727
801,036
780,788
-225,947
-287,246
15,200
0
0
0
46,099
0
46,099
1,006,734
EUR ’000
Total equity
CONSOLIDATED CASH FLOW STATEMENT
1.
2.
3.
4.
5.
01/01/2014 –
30/06/2014
EUR ’000
unaudited
01/01/2013 –
30/06/2013
EUR ’000
unaudited
Cash flow from operating activities
Earnings before taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Result from the remeasurement of investment property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Result from the remeasurement of derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Increase/decrease (–) in provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other non-cash expenses/income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Results of joint ventures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gain (–)/loss on disposal of property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . .
Increase (–)/decrease in inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Financial income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Financial expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Increase (–)/decrease in trade receivables and other assets . . . . . . . . . . . . . . . . . . . . . . . . . . .
Increase/decrease (–) in trade payables and other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . .
83,225
700
-51,330
2,012
-3,980
795
0
0
67
-379
12,094
-994
-8,813
68,091
742
-34,382
-5,422
-171
0
-2,137
38
6,781
-359
18,088
3,782
-28,507
Cash flow from operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
33,397
26,544
Interest received . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income taxes paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
361
-35,557
-4,490
361
-33,901
-555
Net cash flow from operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-6,289
-7,551
Cash flow from investing activities
Cash received from disposals of investment property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash received from disposals of property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . .
Cash paid for acquisitions of investment property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash paid for acquisitions of property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash paid for investments in intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash received from disposals of joint ventures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
48,107
0
-27,446
-189
-149
0
1,868
0
-17,839
-16
-82
71,214
Net cash flow from investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
20,323
55,145
Cash flow from financing activities
Cash received from equity contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash distribution to shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash received from bank loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Repayments of bank loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
0
-233,000
188,868
-84,293
15,200
0
73,326
-125,617
Net cash flow from financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-128,424
-37,091
Cash and cash equivalents at end of period
Change in cash and cash equivalents (subtotal of 1 to 3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash and cash equivalents at beginning of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-114,390
138,930
10,503
60,527
Cash and cash equivalents at end of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
24,540
71,030
Composition of cash and cash equivalents
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
24,540
71,030
Cash and cash equivalents at end of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
24,540
71,030
F-6
NOTES
A.
SELECTED NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS OF TLG
IMMOBILIEN GMBH AS AT 30 JUNE 2014
1.
Company information
TLG IMMOBILIEN GmbH, Berlin (TLG IMMOBILIEN), a German limited liability company (Gesellschaft mit
beschränkter Haftung, “GmbH”) domiciled in 10117 Berlin, Hausvogteiplatz 12, entered into the Berlin commercial register
under no. HRB 38419 B, together with its subsidiaries (TLG Group), is among the largest commercial real estate companies
in Berlin and eastern Germany.
The main activities of the Parent Company and its subsidiaries are the commercial exploitation, management,
development and acquisition of land and buildings.
2.
Group accounting principles
The interim consolidated financial statements of the TLG Group were prepared in accordance with IAS 34.10
(Interim Financial Reporting) in condensed form and in accordance with the International Financial Reporting Standards
(IFRS) adopted and published by the International Accounting Standards Board (IASB), as adopted by the European Union.
The interim consolidated financial statements were prepared in accordance with the provisions of Regulation (EC)
No. 1606/2002 of the European Parliament and of the Council of 19 July 2002 concerning the application of international
accounting standards in conjunction with section 315a (3) of the German Commercial Code (Handelsgesetzbuch, “HGB”),
taking into account the supplementary commercial regulations. The requirements of IAS 34 (Interim Financial Reporting)
have been complied with.
These interim consolidated financial statements do not include a separate presentation of the quarter from 1 April
2014 to 30 June 2014 because this is not a quarterly report, but rather a set of interim financial statements to be prepared once
annually on special grounds.
The interim consolidated financial statements comprise the consolidated statement of financial position, the
consolidated statement of comprehensive income, the consolidated statement of changes in equity, the consolidated cash flow
statement and the notes to the consolidated financial statements.
The interim consolidated financial statements have been prepared in euros.
Unless otherwise stated, all amounts are rounded to thousands of euros. Due to rounding, the figures reported in
tables and cross-references may deviate from their exact values as calculated.
The principal activities of the TLG Group are essentially unaffected by seasonal influences. The letting, sale and
purchase of commercial real estate is impacted by economic influences, however.
3.
Accounting policies
The accounting policies applied in these interim consolidated financial statements are essentially identical to those
applied in the consolidated financial statements prepared in accordance with IFRSs. These interim consolidated financial
statements should therefore be read in conjunction with the consolidated financial statements of TLG as at 31 December 2013.
The TLG Group has applied all new mandatory standards and interpretations as at 1 January 2014. The following
standards and interpretations which were mandatory as at 1 January 2014 did not have any or no significant impact on the
TLG Group’s interim consolidated financial statements:
•
IFRS 11, published by the IASB in May 2011, replaces IAS 31 and SIC-13.
•
IFRS 12 “Disclosure of Interests in Other Entities” stipulates the disclosures required in the notes for interests
in other entities with respect to risk and significance on the net assets, financial position and results of
operations.
•
The amendments to transitional provisions of IFRS 10, IFRS 11 and IFRS 12 are mainly limited to the figures
from the prior year in the event of changes due to the application of the new standards to a comparison year.
•
The IASB issued the revised IAS 27 in May 2011. With the publication of IFRS 10 and IFRS 12, the scope of
application for IAS 27 was limited to accounting for investments in subsidiaries, associates and joint ventures
in the separate financial statements of an entity.
F-7
•
The interpretation of IFRIC 21 published in May 2013 clarifies at which time an entity recognises a liability for
a levy imposed by a government.
•
IFRS 10 “Consolidated Financial Statements” focuses in particular on the possibility of de facto control in
consolidation issues.
•
The new IAS 28 “Investments in Associates and Joint Ventures” addresses the accounting for shares in
associates and joint ventures.
•
The amendment of IAS 32 clarifies the requirements for offsetting financial instruments. In particular, it
highlights the significance of the current legal right to offset. This is currently not expected to impact TLG.
•
The amendment of IAS 39 permits the continuation of hedge accounting after novation of an over-the-counter
(OTC) derivative as a hedging instrument. This is currently not expected to impact TLG.
The TLG Group applied IFRS 2 “Share-based Payment” for the first time in financial year 2014 due to the launch of
a management share option programme in the course of financial year 2014.
4.
Fair value measurement
All assets, equity instruments and liabilities measured at fair value on the basis of other standards (excluding IAS 17
“Leases” and IFRS 2 “Share-based Payment”) are measured uniformly in accordance with IFRS 13. IFRS 13.9 defines fair
value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market
participants at the measurement date.
carrying amounts recognised on the respective reporting dates.
For non-current receivables, other assets and liabilities, fair value is calculated on the basis of expected payment
flows using the reference interest rates applicable on the reporting date. The fair values of financial instruments are
determined on the basis of the reference interest rates on the reporting date plus the own or counterparty risk.
For the financial instruments to be recognised at fair value, fair value is always calculated using the corresponding
market or stock exchange prices.
If there are no market or stock exchange prices, measurement is based on market measurement methods customary
for the market using market parameters specific to the instrument. Fair value is determined using the discounted cash flow
method, while individual credit ratings and other market conditions are used to calculate present value in the form of credit
ratings or liquidity spreads customary for the market.
interest rates observable on the reporting date obtained from external sources as inputs.
Investment property is measured at fair value. Fair value measurement of the investment property is classified as
Level 3 under the fair value hierarchy of IFRS 13.86 (measurement on the basis of unobservable inputs).
The market value of the property held for generating rental income or for capital appreciation over the long term is
determined by means of the discounted cash flow method (DCF). Properties with negative cash inflows (including
permanently vacant properties) are valued using the liquidation method (land value less demolition costs, plus residual net
income, if applicable). Appraisal of undeveloped land is conducted using the comparative value method taking into account
standard land values of the local committees for property values.
Given that the investment property was measured in the same manner as in the 2013 consolidated financial
statements, the detailed explanations relating to fair value measurement provided in the consolidated financial statements shall
continue to apply
In summary, the fair value hierarchy as of 30 June 2014 is as follows:
Fair value hierarchy
Level 1
Investment property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Derivatives with positive market value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Financial liabilities* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Derivatives with negative market value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
*
Fair value is determined solely for informational purposes in the notes.
F-8
Level 2
Level 3
1,423,028
0
727,949
8,744
And the fair value hierarchy as of 31 December 2013 is as follows:
Level 1
Level 2
*
Level 3
1,414,691
15
626,227
18,788
Fair value is determined solely for informational purposes in the notes.
There were no transfers between levels of the fair value hierarchy during the first half of 2014.
5.
Changes to the scope of consolidation
There have been no changes in the group of consolidated companies since 31 December 2013.
6.
Significant judgements and estimates
The preparation of the interim consolidated financial statements in accordance with IFRSs requires the management
to make assumptions and use estimates which have an impact on the carrying amounts reported for assets, liabilities, income
and expenses, as well as on the disclosure of contingent liabilities. These assumptions and estimates relate in particular to the
measurement of investment property, the recognition and measurement of assets and liabilities held for sale, the recognition
and measurement of pension provisions, the recognition and measurement of other provisions, the measurement of financial
liabilities and the recognition of deferred tax assets.
Although the management believes that the assumptions made and estimates used are appropriate, any unforeseen
changes in these assumptions may influence the TLG Group’s financial position and performance.
7.
Segment reporting
There have been no changes to the segment reporting as compared to the information provided by the management
in the consolidated financial statements as at 31 December 2013. Accordingly, there is still only one single reporting segment
in accordance with IFRS 8; this segment encompasses the TLG Group’s operating activities and the chief operating decision
makers receive regular reports on this segment.
8.
Selected notes to the consolidated statement of financial position
In financial year 2013 and through to the reporting date for the 2014 interim consolidated financial statements,
investment property as defined in IAS 40, including reclassifications as assets held for sale as defined in IFRS 5, developed
as follows:
01/01/2014 – 01/01/2013 –
30/06/2014
31/12/2013
EUR ’000
Carrying amount as at 01/01 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Capitalisation of construction activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reclassification as assets held for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reclassification from property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fair value adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Carrying amount as at 30/06 and 31/12 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,414,691
20,028
7,031
(71,389)
1,335
51,330
1,423,028
1,511,726
3,591
36,396
(209,259)
—
72,237
1,414,691
TLG’s portfolio strategy intends for a concentration on the retail and office asset classes, as well as on hotels with
long-term leases in certain prime inner-city locations, particularly in Berlin and Dresden. While the office portfolio is
intended to be largely limited to Berlin, Dresden, Leipzig and Rostock, the retail portfolio—which is currently dominated by
food retail properties in the retail foodstuffs sector—is more broadly distributed. Decisions pertaining to acquisitions and
disposals of properties and to necessary investments are subject to the aforementioned principles of portfolio strategy.
In the first half of 2014, the Berlin office portfolio added an attractive office property. After all project development
properties were reclassified during the previous year as under management as at 31 December 2013, further expansion work
was performed during the first half of 2014. The decline in project development activities is reflected in the amount
capitalised for construction activities: (EUR 7,031 thousand; full year 2013: EUR 36,396 thousand).
EUR 71,389 thousand was reclassified as assets held for sale to reflect disposals in keeping with the portfolio
strategy.
F-9
As in 2013, consistently favourable market conditions made it possible in particular to sell a number of inner-city
development plots at attractive prices in the first half of 2014 as well, with the result that the EUR 51,330 thousand fair value
adjustment in H1 2014 related to 75% of the assets held for sale. Properties reclassified as assets held for sale also included all
sales conducted during the year, which had first been reclassified as assets held for sale and then sold off.
In addition to the aforementioned favourable market conditions, the declined EPRA vacancy rate of 4.9%
(2013: 5.6%) in the first half year 2014 led to an increased fair value of the investment property.
The fair values of investment property were as follows, broken down by measurement approach and by asset class
as at 30 June 2014:
Table 1:
30/06/2014
Investment
properties
Discount rate
Weighted
average
(rated
according
to gross
present
Max.
value)
EUR ’000
Min.
Valuation method = Discounted-Cashflow (DCF)
Retail properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Office properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Hotel properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total (DCF) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
662,037
466,463
187,163
79,146
1,394,810
5.00%
4.00%
5.00%
3.75%
3.75%
15.00%
12.00%
6.25%
14.00%
15.00%
Valuation method = Liquidation method
Total (liquidation method) . . . . . . . . . . . . . . . . . . . .
8,620
230
19,368
28,218
3.00%
7.50%
5.00%
3.00%
5.00%
7.50%
9.50%
9.50%
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,423,028
Multiplier net rental . . . . . . . . . . . . . . . . . . . . . . . . . .
12.59
Capitalisation rate
Weighted
average
(rated
according
to net sales
price)
Min.
Max.
6.26%
5.53%
5.60%
7.23%
5.98%
5.50%
4.00%
6.25%
4.00%
4.00%
33.00%
15.00%
6.75%
25.00%
33.00%
8.13%
7.03%
6.48%
10.94%
7.67%
4.14%
7.50%
5.49%
5.07%
—
—
—
—
—
—
—
—
—
—
—
—
The following values were reported as at 31 December 2013:
31/12/2013
Investment
properties
Discount rate
Weighted
average
(rated
according
to gross
present
Max.
value)
EUR ’000
Min.
Hotel properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total (DCF) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
655,994
447,308
185,611
73,698
1,362,610
5.00%
4.00%
5.00%
5.00%
4.00%
15.00%
12.00%
6.25%
14.00%
15.00%
Total (liquidation method) . . . . . . . . . . . . . . . . . . . .
24,500
450
27,131
52,081
5.00%
7.50%
3.00%
3.00%
7.50%
7.50%
8.00%
8.00%
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,414,691
Multiplier net rental . . . . . . . . . . . . . . . . . . . . . . . . . .
12.68
Capitalisation rate
Weighted
average
(rated
according
to net sales
price)
Min.
Max.
6.25%
5.54%
5.61%
7.86%
6.01%
5.50%
4.00%
6.25%
6.00%
4.00%
25.00%
20.00%
6.75%
30.00%
30.00%
8.16%
7.12%
6.48%
11.46%
7.76%
5.78%
7.50%
5.07%
5.43%
—
—
—
—
—
—
—
—
—
—
—
—
Other financial assets included EUR 2,621 thousand in restricted funds as at 30 June 2014.
Cash and cash equivalents essentially consisted of bank balances. These included EUR 3,611 thousand in
restricted funds as at 30 June 2014. The decrease resulted primarily from distributions to shareholders.
F-10
The change in the components of Group equity can be taken from the consolidated statement of changes in equity.
In the first half of 2014, the distribution to the shareholders amounted to EUR 233,000 thousand. Of that amount,
EUR 158,547 thousand was distributed from capital reserves, EUR 843 thousand from revenue reserves and
EUR 73,610 thousand from retained earnings.
Liabilities due to financial institutions are broken down as follows:
30/06/2014 31/12/2013
EUR ’000
Liabilities to banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
727,949
626,227
30/06/2014 31/12/2013
EUR ’000
Remaining term up to 1 year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Remaining term longer than 1 year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
55,574
672,375
113,225
513,002
The increase in liabilities to banks resulted from the regular payments of principal, as well as from the draw-down
of tranches from existing and new loans amounting to EUR 188,868 thousand. In addition, EUR 75,409 thousand in old loans
was repaid.
Net leverage was calculated as follows as at 30 June 2014 and in comparison with the same period of the previous
year:
30/06/2014 31/12/2013
EUR ’000
Investment property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepayments for investment properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Owner-occupied properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-current assets held for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,423,028
2,482
15,139
41,558
13,318
1,414,691
2,707
16,464
17,817
13,385
Real estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,495,524
1,465,064
Liabilities due to financial institutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
727,949
24,540
626,227
138,930
Net debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
703,409
487,298
Net Loan to Value (Net LTV) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
47.0%
33.3%
The Group’s Net LTV increased as at the end of the reporting period as a result of the increase in liabilities to banks
through the draw-down of existing and new loan tranches and the decrease in cash.
Other provisions changed as follows:
As at
01/01/2014
Additions
Utilisations
EUR ’000
Reversals
As at
30/06/2014
Provisions for personnel expenses from restructuring plan . . . .
Provisions for litigation risks . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other miscellaneous provisions . . . . . . . . . . . . . . . . . . . . . . . . .
2,845
12,871
477
—
842
386
(2,614)
(42)
(150)
—
(2,284)
(3)
231
11,387
711
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
16,193
1,228
(2,806)
(2,287)
12,329
The provisions for litigation costs were reversed in part due to a litigation victory.
9.
Selected notes to the consolidated statement of comprehensive income
Net operating income from letting activities declined as a result of the strategically driven portfolio optimisation.
Income from letting activities, which was lower in comparison to the same period of the previous year, resulted
primarily from the sale of a portfolio of nursing home properties in November 2013.
Expenses related to letting activities experienced a relatively less sharp decrease because expenses were higher in
relation to one property as a result of fire damage. This was offset by a corresponding insurance settlement payment,
recognised under other operating income.
F-11
The result from remeasurement of investment property included EUR 38,439 thousand (half year 2013:
EUR 2,466 thousand) for properties classified as long-term assets held for sale.
Personnel expenses developed as follows:
01/01/2014 – 01/01/2013 –
30/06/2014
30/06/2013
EUR ’000
Salaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Social security contributions and cost of old age pensions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bonuses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Severance packages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5,839
1,041
778
—
6,636
1,261
628
6,855
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7,658
15,380
The Company initiated significant restructuring measures in the beginning of 2013. Over the course of the year, the
activities carried out by branch offices were integrated with the central office, thus concentrating operating activities there.
Additionally, the workforce was streamlined. This streamlining goes hand-in-hand with the strategic objectives of the
property portfolio.
TLG IMMOBILIEN is conscious of its social responsibility and on 7 March 2013 adopted measures for a
reconciliation of interests on the basis of the social plan dated 1 November 2011. In this context, the Company has incurred
expenses relating to severance packages.
The decrease in expenses for salaries and social security contributions was attributable primarily to the decline in
the employee headcount in connection with the restructuring measures.
The interest result can be broken down as follows:
01/01/2014 – 01/01/2013 –
30/06/2014
30/06/2013
EUR ’000
Interest income from bank balances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest income from default interest and deferrals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(199)
(174)
(6)
(195)
(161)
(3)
Total interest and similar income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(379)
(359)
Interest expenses for interest rate derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest on loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other interest expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,140
8,816
1,138
3,734
14,177
177
Total interest and similar expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
12,094
18,088
Interest result . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
11,715
17,729
Despite the overall increase in liabilities due to financial institutions, the decrease in interest on loans was due to the
optimisation of the Group’s financing structure. Moreover, in the previous year a loan liability taken over by the shareholders
increased liabilities. That loan was repaid in March 2014.
The interest expense for interest rate hedges was lower, particularly due to the fact that in March 2014 existing
interest rate hedges were unwound and then replaced by hedges at more favourable conditions.
The tax expense/income can be broken down as follows:
01/01/2014 – 01/01/2013 –
30/06/2014
30/06/2013
EUR ’000
Current income tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
17,469
8,348
16,450
5,541
Tax expense/income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
25,817
21,991
Prior-period income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
2
F-12
10. Additional disclosures relating to financial instruments
The table below presents the carrying amounts and fair values of financial instruments by class and measurement
category:
Measurement
category in
accordance
with IAS 39
30/06/2014
Other non-current financial
assets . . . . . . . . . . . . . . . . .
Trade receivables . . . . . . . . .
Other non-current financial
assets . . . . . . . . . . . . . . . . .
Financial derivatives1) . . . . . .
Cash and cash equivalents . . .
AfS
LaR
124
13,665
n/a
13,665
LaR
FAHfT
LaR
3,157
3,157
Total financial assets . . . . . .
Liabilities due to financial
institutions2) . . . . . . . . . . . .
Trade payables . . . . . . . . . . .
Other liabilities . . . . . . . . . . .
Measured at
amortised cost
Carrying
Fair
amount
value
FLaC
FLaC
FLHfT
FLaC
Total financial liabilities . . .
No
measurement
Measured
category in
at fair
accordance
value
with IAS 39
Carrying
Carrying
amount
amount
EUR ’000
No financial
instruments
in accordance
with IAS 32
Carrying
amount
124
13,665
3,157
0
24,540
0
24,540
24,540
41,486
41,361
727,949
12,188
768,078
12,188
12,857
5,466
752,993
785,731
Total items
in statement
of financial
position
Carrying
amount
0
0
0
8,744
0
8,744
0
41,486
7,391
727,949
12,188
8,744
12,857
7,391
761,737
Categorisation of underlying inputs for fair value measurement in accordance with IFRS 13.93(b) and IFRS 13.97:
1) Derivatives: Level 2 within the fair value hierarchy (measured on the basis of observable inputs/market data).
2) Liabilities to banks: Level 2 within the fair value hierarchy (measured on the basis of observable inputs/market data).
Measurement
category in
accordance
with IAS 39
31/12/2013
Other financial assets . . . . . .
Trade receivables . . . . . . . . .
Other financial assets . . . . . .
Cash and cash equivalents . . .
AfS
LaR
LaR
FAHfT
LaR
Total financial assets . . . . . .
Liabilities due to financial
institutions2) . . . . . . . . . . . .
Trade payables . . . . . . . . . . .
Other liabilities . . . . . . . . . . .
FLaC
FLaC
FLHfT
FLaC
Total financial liabilities . . .
Measured at
amortised cost
Carrying
Fair
amount
value
124
11,567
4,953
n/a
11,567
4,953
138,930
138,930
155,574
155,449
626,227
14,573
640,477
14,573
19,520
11,983
660,321
667,033
No
measurement
Measured
category in
at fair
accordance
value
with IAS 39
Carrying
Carrying
amount
amount
EUR ’000
No financial
instruments
in accordance
with IAS 32
Carrying
amount
124
11,567
4,953
15
138,930
15
15
0
18,608
180
18,608
180
0
155,589
7,537
626,227
14,573
18,788
19,520
7,537
679,109
Categorisation of underlying inputs for fair value measurement in accordance with IFRS 13.93(b) and IFRS 13.97:
1) Derivatives: Level 2 within the fair value hierarchy (measured on the basis of observable inputs/market data).
2) Liabilities to banks: Level 2 within the fair value hierarchy (measured on the basis of observable inputs/market data).
LaR =
HfT =
AfS =
FLaC =
FAHfT =
FLHfT =
Loans and Receivables
Held for Trading
Available for Sale
Financial Liabilities at Cost
Financial Assets Held for Trading
Financial Liabilities Held for Trading
F-13
Total items
in statement
of financial
position
Carrying
amount
The “Other financial assets” class includes AfS financial instruments amounting to EUR 124 thousand
(31 December 2013: EUR 124 thousand). These are shares in entities which are not fully consolidated or measured in
accordance with the equity method. The instruments are carried at amortised cost since there is no quoted price available for
them on an active market and it is not possible to reliably determine their fair value.
The carrying amounts of cash and cash equivalents, trade and other receivables, other financial assets, trade and
other payables and other liabilities for the most part have short remaining terms and approximated the fair values as at the
reporting date.
11. Related parties
Related parties are defined as companies or persons which have the ability to control or exercise a material
influence over the TLG Group, or which the TLG Group controls or exercises a material influence over.
Accordingly, the members and immediate relatives of the management and Advisory Board of TLG IMMOBILIEN
GmbH are considered related parties, as are members of management who exercise key executive functions, as well as the
TLG Group’s subsidiaries and joint ventures.
In addition, LSREF II EAST ACQUICO S.à r.l. and Delpheast Beteiligungs GmbH & Co. KG and their related
parties are considered related parties of TLG.
Related companies
In the first half of 2014, TLG distributed EUR 158,547 thousand from capital reserves, EUR 843 thousand from
revenue reserves and EUR 73,610 thousand from retained earnings to shareholders.
Receivables from and liabilities to related companies in the first half of 2014 amounted to:
30/06/2014
30/12/2013
EUR ’000
Statement of financial position and statement of comprehensive income
Liabilities to other related companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
0
87
In the first half of 2014, income and expenses from related companies amounted to:
01/01/2014 – 01/01/2013 –
30/06/2014
30/06/2013
EUR ’000
Statement of comprehensive income
Expenses for other related companies (interest) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expenses for other related companies (guarantee commissions) . . . . . . . . . . . . . . . . . . . . . . . . . . .
0
158
215
0
Related persons
On 11 April 2014, the management of TLG IMMOBILIEN GmbH entered into a bilateral bonus agreement with the
direct shareholders of the Company. Under the agreement, any future realised appreciation in the value of the Company will
be passed on to the beneficiaries in the form of a cash bonus payment.
The amount of the bonus to be paid will be determined on the basis of a reference value which is designed to reflect
the appreciation of shareholders’ invested equity over the term of their investment. The reference value is determined as the
total of distributions to the shareholders less contributions made by the shareholders into the investment. The bonus payment
is based on a percentage of the reference value, linked to a 0.4% cap.
The bonus payment by the shareholders falls due if several cumulative requirements have been meet.
•
Occurrence of an exit or partial exit event: neither the direct shareholders nor their associates continue to hold a
direct or indirect interest in TLG IMMOBILIEN GmbH or the amount of their interest falls below the total of
their current interest.
•
Distributions must exceed contributions paid by the shareholders by more than 50%.
•
At the (partial) exit date, the managing directors of TLG IMMOBILIEN GmbH must continue to be regularly
employed by the Company.
F-14
The incentive programme stipulates a direct payment from the shareholders to the managing directors. The TLG
Group is not obligated to make these payments. The bonus programme described is therefore accounted for analogously to
share-based payments granted to the management of TLG IMMOBILIEN GmbH in accordance with IFRS 2. This is offset by
an additional contribution by the shareholders into capital reserves.
Based on the assessment of the management of TLG IMMOBILIEN GmbH as to the likelihood of the
aforementioned conditions being satisfied, a bonus payment can be considered likely. The bonus will vest over a total of
18 months after the agreement of the bonus arrangement.
As at 30 June 2014, TLG IMMOBILIEN GmbH recognised EUR 795 thousand as an expense in accordance with
the provisions of IFRS 2.
An expense of EUR 2,217 thousand is expected for the remaining vesting period.
12. Contingent liabilities
There has been no change in contingent liabilities as compared to 31 December 2013.
13. Executive Board and Advisory Board
As at 30 June 2014, the composition of the Executive and Advisory Board has not changed since 31 December
2013.
14. Events after the reporting date
In July 2014, TLG had a purchase agreement notarised relating to a property with a volume of
EUR 21,500 thousand. The transfer of benefits and risks of ownership is planned for September 2014.
Berlin, 29 August 2014
The Management
[Signed]
F-15
TLG Immobilien GmbH, Berlin, Germany: Audited Consolidated Financial Statements
(Prepared in Accordance with IFRS) of TLG Immobilien GmbH as of and for the Fiscal
Year Ended December 31, 2013
F-16
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Reference
A) Non-current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investment property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Advance payments on investment property . . . . . . . . . . . . . . . . . . . . . .
Property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investment in joint ventures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other non-current financial assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
B)
Current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trade receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Receivables from income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Financial instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other current financial assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Receivables and other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Assets classified as held for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
31/12/2013
TEUR
31/12/2012
TEUR
01/01/2012
TEUR
F.1
F.1
F.2
F.2
F.3
F.4
F.6
F.14
1,448,127
1,414,691
2,707
17,762
872
0
124
8,423
3,548
1,615,158
1,511,726
3,016
18,442
1,466
69,077
128
6,850
4,453
1,480,514
1,374,231
5,325
21,617
1,901
59,377
132
5,390
12,540
F.7
F.5
F.14
I.1
F.4
F.6
F.8
F.9
187,568
13,385
11,567
194
15
4,953
707
138,930
17,817
104,213
22,260
9,578
167
6
10,042
1,633
60,527
0
638,270
72,742
19,065
263
49
9,497
1,037
33,590
502,027
1,635,695
1,719,371
2,118,784
801,036
52,000
410,249
339,939
-1,152
0
1,006,734
52,000
151,461
804,278
-1,005
0
1,158,572
52,000
360,316
746,254
0
2
I.1
F.15
834,659
630,245
513,002
6,931
18,788
3,384
88,140
204,414
113,225
14,573
0
16,193
44,287
0
16,136
712,637
508,592
392,865
6,888
25,272
4,266
79,300
204,045
87,176
29,818
0
22,162
12,678
18,158
34,051
960,212
480,148
407,267
5,377
33,523
5,149
28,832
480,064
16,793
19,727
53,748
27,682
15,901
0
41,435
F.9
0
0
304,779
1,635,695
1,719,371
2,118,784
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
A) Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Subscribed capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Capital reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other comprehensive income (OCI) . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-controlling interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
B)
Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
I.) Non-current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-current liabilities due to financial institutions . . . . . . . . . . . .
Pension provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-current financial instruments . . . . . . . . . . . . . . . . . . . . . . . . .
Other non-current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
II.) Current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current liabilities due to financial institutions . . . . . . . . . . . . . . . .
Trade payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payables due to shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other current provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current financial instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Liabilities included in disposal groups classified as held for
sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total equity and liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-17
F.10
F.11
F.12
I.1
F.15
F.14
F.11
F.15
F.15
F.13
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Net operating income from letting activites . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income from letting activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
a) Rental income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
b) Income from recharged utilities and other operating costs . . . . . . . . . . . . . . . . . . . .
c) Income from other goods and services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expenses related to letting activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
d) Utilities and other operating costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
e) Maintenance expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
f) Other expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Result from the remeasurement of investment property . . . . . . . . . . . . . . . . . . . . . . . . .
Result from the disposal of investment property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Result from the disposal of real estate inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
a) Proceeds from real estate inventory disposed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
b) Book value of real estate inventory disposed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Personnel expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reference
2013
EUR’000
2012
EUR’000
G.1
106,250
141,326
118,321
21,637
1,368
35,076
27,638
5,052
2,386
72,237
494
7,777
21,391
13,614
18,687
23,394
1,461
7,812
97,142
138,771
116,093
20,670
2,008
41,629
28,612
5,283
7,734
53,061
-45
27,395
77,549
50,154
9,691
18,948
1,573
8,290
172,778
158,433
2,134
652
36,039
-6,899
12,883
893
22,481
9,951
146,423
139,776
47,291
63,512
99,132
76,264
-23
-1,005
-124
0
98,985
75,259
G.2
G.3
G.4
G.5
G.6
Earnings before interest and taxes (EBIT) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income from joint ventures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Financial income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Financial expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gain (-)/loss from the remeasurement of derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . .
G.7
G.8
G.8
G.9
Earnings before taxes (EBT) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
G.10
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other comprehensive income (OCI) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
thereof non-recycling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Actuarial gains and losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
thereof recycling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Hedge accounting reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total comprehensive income for the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-18
F.10
F-19
258,787
410,249
0
52,000
0
0
0
0
0
Additional payment to capital reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Release of special reserve (Art. 27 (2) DMBilG) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Addition to capital reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
31/12/2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-199,776
0
20,493
0
438,071
0
0
0
0
151,461
0
0
0
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-208,854
0
52,000
0
0
Spin-off TLG WOHNEN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
31/12/2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-11,606
-197,248
0
0
0
0
0
0
0
Changes in scope of consolidation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
360,316
EUR ’000
52,000
EUR ’000
01/01/2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Capital
reserves
Subscribed
capital
339,939
-464,339
199,776
-325,177
0
-438,071
0
99,132
99,132
0
804,278
58,024
-18,394
0
76,418
155
76,264
0
746,254
EUR ’000
Retained
earnings
-124
-124
0
0
0
0
0
-124
0
-124
0
0
0
0
0
0
0
0
0
-1,028
-23
0
0
0
0
0
-23
0
-23
-1,005
-1,005
0
0
-1,005
0
0
-1,005
0
Cumulative other comprehensive
income (OCI)
Hedge accounting Actuarial gains
reserve
and losses
EUR ’000
EUR ’000
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
0
0
0
0
0
0
0
0
0
0
0
-2
0
0
-2
0
0
-2
2
EUR ’000
Non-controlling
interest
801,036
-205,699
0
-325,177
20,493
-438,071
438,071
98,985
99,132
-147
1,006,734
-151,837
-30,000
-197,248
75,412
155
76,264
-1,007
1,158,572
EUR ’000
Total equity
CONSOLIDATED CASH FLOW STATEMENT
Reference
1.
2.
3.
4.
5.
2013
EUR ’000
2012
EUR ’000
146,423
1,461
-72,237
-6,899
-5,959
0
2
0
-2,134
144
8,875
-652
36,039
4,463
-33,447
139,776
1,573
-53,061
9,950
-5,463
9,300
0
-10,556
-2,331
40
44,458
-893
22,481
4,111
3,564
Cash flow from operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
76,079
162,949
Interest received . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income taxes paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
650
-57,019
-5,871
858
-21,747
-7,728
Net cash flow from operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
13,839
134,332
Cash flow from investing activities
Cash received from disposals of investment property . . . . . . . . . . . . . . . . . . . . . . . . .
Cash received from disposals of property, plant and equipment . . . . . . . . . . . . . . . . .
Cash paid for acquisitions of investment property . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash paid for acquisitions of property, plant and equipment . . . . . . . . . . . . . . . . . . . .
Cash paid for investments in intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash received from disposals of joint ventures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
191,651
20
-41,496
-304
-193
71,214
779
5
-82,048
-555
-321
3,187
Net cash flow from investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
220,892
-78,953
20,493
0
252,511
-429,333
0
-83,748
71,200
-15,893
Net cash flow from financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-156,328
-28,442
Cash and cash equivalents at end of period
Change in cash and cash equivalents (subtotal of 1 to 3) . . . . . . . . . . . . . . . . . . . . . . .
Cash and cash equivalents at beginning of period . . . . . . . . . . . . . . . . . . . . . . . . . . . .
78,403
60,527
26,937
33,590
Cash and cash equivalents at end of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
138,930
60,527
Composition of cash and cash equivalents
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
138,930
60,527
Cash and cash equivalents at end of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
138,930
60,527
Cash flow from operating activities
Earnings before taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Result from the remeasurement of investment property . . . . . . . . . . . . . . . . . . . . . . . .
Result from the remeasurement of derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Increase/decrease (–) in provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Change in the scope of consolidation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other non-cash expenses/income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Results from measurement of joint ventures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Results of joint ventures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gain (–)/loss on disposal of property, plant and equipment . . . . . . . . . . . . . . . . . . . . .
Increase (–)/decrease in inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Financial income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Financial expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Increase (–)/decrease in trade receivables and other assets . . . . . . . . . . . . . . . . . . . . .
Increase/decrease (–) in trade payables and other liabilities . . . . . . . . . . . . . . . . . . . . .
Cash flow from financing activities
Cash received from equity contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash distribution to shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash received from bank loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Repayments of bank loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-20
G.5
G.2
G.9
F.13
G.7
G.7
F.7
G.8
G.8
F.5
F.15
F.10
F.11
NOTES
A.
GENERAL DISCLOSURES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF TLG IMMOBILIEN
GMBH
1.
Company information
The consolidated financial statements prepared for the 2013 financial year are based on the annual financial
statements of TLG IMMOBILIEN GmbH, Berlin (TLG IMMOBILIEN or the Parent Company), a limited liability company
located in Germany with headquarters in 10117 Berlin, Hausvogteiplatz 12, entered in the commercial register of Berlin under
HRB no. 38419 B, and its fully consolidated subsidiaries. The consolidated financial statements were prepared by the
management until 28 August 2014 and will be presented shortly to the shareholders for approval.
Due to the size relationships between the consolidated companies and the Parent Company, the consolidated
financial statements prepared are influenced primarily by the Parent Company.
TLG IMMOBILIEN GmbH was wholly owned by the Federal Republic of Germany until 31 December 2012.
Pursuant to the agreement dated 19 December 2012, the Federal Republic of Germany sold its 100% interest in the Parent
Company. Buyers were LSREF II East AcquiCo S.à.r.l., Luxembourg, with a share of 94.9% and Delpheast Beteiligungs
GmbH & Co. KG, Frankfurt a.M., with a share of 5.1%. The benefits and risks of ownership were transferred in accordance
with the contractual provisions on 31 December 2012.
Since 31 December 2012, its new parent company is LSREF II East AcquiCo S.à.r.l., Luxembourg. Its ultimate
parent company is LSREF II East Lux GP S.à.r.l., Luxembourg. TLG IMMOBILIEN entered into a control agreement on
2 January 2013 with LSREF II East AcquiCo S.à.r.l., Luxembourg.
The main activities of the Parent Company and its subsidiaries are the commercial exploitation, management,
development and acquisition of land and buildings.
2.
Group accounting principles
The consolidated financial statements of the TLG Group were prepared in accordance with International Financial
Reporting Standards (IFRS) adopted and published by the International Accounting Standards Board (IASB), as adopted by
the European Union. The consolidated financial statements were prepared in accordance with the provisions of Regulation
(EC) No. 1606/2002 of the European Parliament and of the Council of 19 July 2002 concerning the application of
international accounting standards in conjunction with section 315a (3) of the German Commercial Code (Handelsgesetzbuch,
“HGB”), taking into account the supplementary commercial regulations.
The consolidated financial statements comprise the consolidated statement of financial position, the consolidated
statement of comprehensive income, the consolidated statement of changes in equity, the consolidated cash flow statement
and the notes to the consolidated financial statements. The individual items are explained in the notes.
The consolidated financial statements have been prepared in euros.
Unless otherwise stated, all amounts are rounded to thousands of euros. Due to rounding, the figures reported in
tables and cross-references may deviate from their exact values as calculated.
The financial year of TLG IMMOBILIEN GmbH and the consolidated subsidiaries is the calendar year. The
financial statements of the subsidiaries are included in the consolidated financial statements using uniform accounting policies
and prepared as at the same reporting date as the financial statements of the Parent Company.
Preparation of the consolidated financial statements is always on the basis of recognition of assets and liabilities at
amortised cost. The exceptions to this are investment property, securities held for sale and financial instruments recognised at
fair value on the reporting date.
The consolidated financial statements and Group management report are published in the German Federal Gazette.
B.
FIRST-TIME ADOPTION OF IFRS
1.
Simplification rules and exemptions
IFRS 1 “First-time adoption of International Financial Reporting Standards” was used for the preparation of the first
IFRS financial statements. The opening IFRS statement of financial position was prepared as at 1 January 2012. For this, all
assets and liabilities were stated in accordance with the IFRS rules as at 31 December 2013. All changes resulting from
converting the accounts were offset directly against retained earnings in the opening IFRS statement of financial position.
F-21
The TLG Group uses the following simplification options under IFRS 1:
2.
•
Under IFRS 1.D5 - D7, owner-occupied property is measured using the deemed cost method as at 1 January
2012. The fair value of the property as at 1 January 2012 is recognised as the deemed cost.
•
In accordance with IFRS 1.B10, government loans are recognised at the carrying amount as at 1 January 2012,
reported under the accounting method used previously (HGB).
Reconciliation of consolidated total comprehensive income and consolidated equity from HGB to IFRS
TLG IMMOBILIEN GmbH prepared the consolidated financial statements in accordance with commercial law
provisions for the last time for the 2012 financial year. In this respect, the effects of the first-time adoption of IFRS to TLG
Group equity on 1 January 2012, and on 31 December 2012, and to the consolidated net income for the 2012 financial year
are shown below.
Changes to total comprehensive income result from the following effects:
2012
EUR ’000
Net income for the period in accordance with HGB . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,526
Differences increasing (decreasing) the result:
Recognition of loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fair value recognition of investment property and owner-occupied properties . . . . . . . . . . . . . . . . . . . . . . . . .
Recognition of deferred taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustments to pension provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustment to other provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustment to the carrying amount of the investment in AGD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Financial instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Correction for effect of deconsolidation based on exercise of option afforded under HGB . . . . . . . . . . . . . . .
Other effects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(82)
95,324
(59,004)
(282)
383
10,556
6,367
17,678
2,798
Net income for the period in accordance with IFRS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
76,264
Change due to amounts taken directly to equity:
Cash flow hedges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Actuarial gains/losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
(1,005)
Total comprehensive income in accordance with IFRS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
75,259
The changes in consolidated equity on the reporting dates result from the following effects:
31/12/2012 01/01/2012
EUR ’000
Consolidated equity in accordance with HGB . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
805,250
962,718
Differences increasing (decreasing) the Group equity:
Recognition of loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Recognition of investment property and owner-occupied properties at fair value . . . . . . . . . . . .
Recognition of deferred taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustments to pension provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustment to other provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Negative consolidation difference . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Financial instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Offsetting special reserve TLG Wohnen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustment to the value of the investment in AGD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other effects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
69
255,943
(74,848)
4
1,820
7,029
(25,920)
—
35,659
1,729
151
198,128
(16,292)
1,740
1,437
7,936
(43,452)
22,173
25,103
(1,071)
Consolidated equity in accordance with IFRS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,006,734
1,158,571
The main differences in the accounting policies under HGB and IFRS affect the following matters in particular:
•
Under IAS 39.43, loans made available to the TLG Group for financing must be recognised at fair value on the
date the loans were granted, which is equivalent to the present value of future payment obligations on the basis
of a corresponding market interest rate including transaction costs and discounts. The loans are measured at
amortised cost for subsequent measurement. In accordance with HGB, the loans are recognised in their
repayment amount. Any material transaction costs or discounts were capitalised and reversed over the fixedinterest periods of the respective loans. Transaction costs or discounts not considered material were expensed
immediately.
F-22
•
Property held for generating rental income or for capital appreciation is classified as investment property in
accordance with IAS 40 and recognised at fair value in the TLG Group in accordance with the option set forth
in IAS 40. Such property is recognised at amortised cost in the HGB consolidated financial statements. Please
refer to section E.1 for more detailed information. The owner-occupied properties in property, plant, and
equipment were also remeasured once on the date of first-time adoption of IFRSs due to the fact that the option
pursuant to IFRS 1.D.5-D.7 was exercised. This resulted in a fair value of EUR 19,526 thousand being
recognised. Remeasurement effects on equity amounted to EUR 5,696 thousand.
•
The differences between the carrying amounts in accordance with HGB as compared with the IFRS figures, in
particular for investment property, resulted in the recognition of deferred tax liabilities. In addition, in
preparing its consolidated financial statements in accordance with HGB, the TLG Group exercised the option
set forth under section 274 (1) HGB to not recognise deferred tax assets; this option does not exist under
IFRSs.
•
Pension provisions were recognised at the settlement amount in the HGB consolidated financial statements.
The average interest rate of the last seven years—set by the Deutsche Bundesbank—is always used to discount
pension provisions. Pursuant to IFRS, an interest rate for high-quality corporate bonds is to be used for
discounting pension provisions.
•
Under IAS 37, reserves are only recognised if an external obligation exists, its occurrence is probable and the
amount can be reliably determined. In such cases, the most probable amount is recognised. By contrast,
provisions in the HGB consolidated financial statements were recognised in accordance with prudent business
judgement. In addition, there were reconciliation effects resulting from provisions for maintenance expenses
under HGB not being recognised. Additional effects arose from the fact that provisions were discounted under
IFRSs using the risk-free interest rate, while discounting under HGB uses the average interest rate of the last
seven years which is set by the Deutsche Bundesbank.
•
A negative consolidation difference (negative goodwill) resulted from the purchase price allocation from
business combinations which was recognised as a liability under commercial law and expensed over the
remaining useful life of the asset acquired. The negative goodwill does not meet the criteria for recognition
under IFRS and will be recorded under retained earnings.
•
In accordance with IAS 39, derivatives are recognised as a liability or as an asset in the statement of financial
position and measured at fair value. Under HGB, only provisions for expected losses in the amount of the
negative market value were recognised for derivatives, to the extent no hedge accounting was applied.
Derivatives constituting a hedge relationship were not recognised. In most cases, TLG applied hedge
accounting for derivatives under HGB while this was not done under IFRSs as at the opening statement of
financial position date.
•
The special reserve for investment grants and subsidies, recognised in accordance with HGB to account for the
residential properties to be spun off from TLG IMMOBILIEN (see also section F.9), does not constitute a
liability due to the absence of existing commitments to third parties and was therefore eliminated from the
IFRS opening statement of financial position; this effectively increased equity by EUR 22,173 thousand.
•
The carrying amount of the investment in Altmarktgalerie Dresden KG, Hamburg (AGD), under the equity
method was adjusted to the extent that uniform IFRS accounting policies were applied, impacting the valuation
of properties, in particular. The recognition of deferred taxes resulted in offsetting effects.
•
In its HGB consolidated financial statements for previous years, the Company applied capital consolidation in
accordance with the provisions of German commercial law, and exercised the options set forth under sections
301 and 309 HGB. Under those provisions, any goodwill arising upon the first-time inclusion of the subsidiary
in the consolidated financial statements was offset outside of profit or loss against retained earnings. The
amount of goodwill originally offset was added back to determine any disposal gains under local GAAP upon
deconsolidation (see also section D.2). By contrast, in the consolidated financial statements in accordance with
IFRSs, disposal gains under local GAAP upon deconsolidation are determined exclusively as the difference
between the Group’s share in the subsidiary’s net assets at disposal and selling price less the costs to sell.
Accordingly, comprehensive income in accordance with IFRSs was EUR 17,678 thousand greater in financial
year 2012. This did not result in any effects on equity.
F-23
3.
Reconciliation of consolidated statement of cash flows from HGB to IFRS
2012
HGB CFS
Cash inflow (outflow) from operating activities . . . . . . . . . . . . . . . . . .
Cash inflow (outflow) from investing activities . . . . . . . . . . . . . . . . . .
Cash inflow (outflow) from financing activities . . . . . . . . . . . . . . . . . .
Net increase (decrease) in cash and cash equivalents . . . . . . . . . . . .
Cash and cash equivalents at beginning of period . . . . . . . . . . . . . .
Cash and cash equivalents at end of period . . . . . . . . . . . . . . . . . . . .
Reconciliation Explanation
EUR ’000
142,422
-86,591
-28,441
27,390
42,543
69,933
-8,090
7,638
0
-452
-8,953
-9,405
b)
b)
—
a)
a)
2012
IFRS CFS
134,332
-78,953
-28,441
26,938
33,590
60,528
The material changes resulted from the following items:
a)
In the HGB consolidated financial statements, restricted funds were reported as a part of cash, while under
IFRSs, they are now reported as a component of other current financial assets (EUR 8,953 thousand).
b)
Due to the fact that recognition requirements differ between HGB and IFRSs, a portion of the
modernisation measures reported under HGB as maintenance expenses may be capitalised under IFRSs.
These capitalised modernisation measures are presented under IFRSs as cash outflows from investing
activities, while under HGB they are reported under cash flow from operating activities. The
reclassification of properties accounted for as property, plant and equipment (“tangible fixed assets”)
under HGB as inventories under IFRSs offset this effect. Payments for investments in these properties are
no longer presented as outflows from investing activities under IFRSs, but rather represent a component
of outflows from operating activities.
C.
NEW ACCOUNTING STANDARDS
1.
Published but not yet mandatory International Financial Reporting Standards (IFRSs) and Interpretations
(IFRICs)
Standard/Interpretation
IAS 16, IAS 38
IAS 16, IAS 41
IAS 19
Contents
“Amendment to IAS 16 and IAS 38: Acceptable methods of
depreciation and amortisation”
“Amendment to IAS 16 and IAS 41: Bearer plants”
IFRS 14
“IAS 19 Amendment: Employee Contributions to Defined Benefit
Plans”
“Separate Financial Statements (as amended in May 2011)”
“Investments in Associates and Joint Ventures (as amended in
May 2011)”
“IAS 32 Amendment, Financial Instruments: Presentation: Offsetting
Financial Assets and Financial Liabilities”
“IAS 36 Amendment: Recoverable Amount Disclosures for NonFinancial Assets”
“Novation of Derivatives and Continuation of Hedge Accounting”
“Consolidated Financial Statements”
“Joint Arrangements”
“IFRS 11 Amendment: Accounting for acquisitions of interests in
joint operations”
“Disclosure of Interests in Other Entities”
“Amendment of Transitional Provisions of IFRS 10, IFRS 11 and
IFRS 12 (June 2012)”
“Amendment of IFRS 10, Consolidated Financial Statements,
IFRS 12, Disclosure of Interests in Other Entities, and IAS 27,
Separate Financial Statements—Investment Entities”
Financial Instruments: Classification and Measurement: Financial
Assets (November 2009), Financial Liabilities (October 2010),
Financial Instruments: Hedge Accounting, amendment of IFRS 7 and
IFRS 9: Mandatory application date and transition information
Regulatory Deferral Accounts
IFRS 15
“Revenue from Contracts with Customers”
IFRIC 21
Annual Improvements
Disclosures
“Improvements to International Financial Reporting Standards, Cycle
2010-2012 (December 2013)”
“Improvements to International Financial Reporting Standards, Cycle
2011-2013 (December 2013)”
IAS 27
IAS 28
IAS 32
IAS 36
IAS 39
IFRS 10
IFRS 11
IFRS 11
IFRS 12
IFRS 10, 11 and 12
IAS 27, IFRS 10, IFRS 12
IFRS 9
Annual Improvements
F-24
Applicable for
financial years beginning
1 January 2016 (not yet
endorsed)
endorsed)
1 July 2014 (not yet
endorsed)
1 January 2014
1 January 2014
1 January 2014
1 January 2014
1 January 2014
1 January 2014
1 January 2014
endorsed)
1 January 2014
1 January 2014
1 January 2014
No earlier than
endorsed)
endorsed)
endorsed)
17 June 2014
endorsed)
endorsed)
•
The amendments to IAS 16 and IAS 38 published in May 2014 clarify in particular that a depreciation method
that is based on revenue generated by an activity that includes the use of an asset is not appropriate. This also
generally applies to amortisation, albeit in these cases as a rebuttable presumption. In addition, it is also
clarified that a decline in the selling price of goods and services can serve as an indication for their economic
obsolescence, thus indicating a decrease in the economic potential for use of the assets needed in their
production. This is currently not expected to impact TLG.
•
The amendments to IAS 16 and IAS 41, relating to the accounting treatment of bearer plants, clarify that those
plants which are used in the production or supply of agricultural produce—analogously to internally generated
property, plant and equipment—are to be initially recognised at cost, and subsequently accounted for either at
cost or their lower fair value in accordance with the provisions of IAS 16. This is currently not expected to
impact TLG.
•
The amendment of IAS 19 in November 2013 provided clarification of IAS 19.93 with respect to the treatment
of employee benefits for defined benefit plans. These changes are not expected to impact the pension
obligations of TLG.
•
The new IAS 27 was amended so that it now only governs accounting for separate financial statements. This is
currently not expected to impact TLG.
•
The new IAS 28 “Investments in Associates and Joint Ventures” addresses the accounting for shares in
associates and joint ventures. The standard is to be applied by all companies with joint control or significant
influence over an investee. This is currently not expected to impact TLG.
•
The amendment of IAS 32 clarifies the requirements for offsetting financial instruments. In particular, it
highlights the significance of the current legal right to offset. This is currently not expected to impact TLG.
•
The amendment of IAS 36 aimed to clarify the disclosures in the notes with respect to the measurement of a
recoverable amount of an impaired asset. This is currently not expected to impact TLG.
•
The amendment of IAS 39 permits the continuation of hedge accounting after novation of an over-the-counter
(OTC) derivative as a hedging instrument. This is currently not expected to impact TLG.
•
IFRS 10 “Consolidated Financial Statements” focuses in particular on the possibility of de facto control in
consolidation issues. The principle of control is defined and set as a basis for consolidation. This definition is
supported by comprehensive application guidance demonstrating the various ways a reporting entity can
exercise control over another entity. The accounting requirements are presented. This is not expected to result
in any changes to the scope of consolidation at TLG.
•
IFRS 11, published by the IASB in May 2011, replaces IAS 31 and SIC-13. This is currently not expected to
impact TLG.
•
IFRS 12 “Disclosure of Interests in Other Entities” stipulates the disclosures required in the notes for interests
in other entities with respect to risk and significance on the net assets, financial position and results of
operations. Additional disclosures in the notes are anticipated to result for TLG.
•
The amendment to IFRS 11 published in May 2014 clarifies that both the first-time and the subsequent
acquisition of shares in a joint operation, which represents an operating unit, must be accounted for in
accordance with the provisions governing the accounting for business combinations in IFRS 3 and other
relevant standards, unless these contradict the provisions of IFRS 11. It is furthermore clarified that shares
already held in a joint operation shall not be remeasured in the case of the acquisition of additional shares if
joint control is maintained. This is currently not expected to impact TLG.
•
The amendments to transitional provisions of IFRS 10, IFRS 11 and IFRS 12 are mainly limited to the figures
from the prior year in the event of changes due to the application of the new standards to a comparison year.
This is currently not expected to impact TLG.
•
The IASB issued the revised IAS 27 in May 2011. With the publication of IFRS 10 and IFRS 12, the scope of
application for IAS 27 was limited to accounting for investments in subsidiaries, associates and joint ventures
in the separate financial statements of an entity. This is currently not expected to impact TLG.
•
IFRS 9 redefines the classification and measurement of financial assets. There will only be two measurement
categories (amortised cost and fair value). The part added in October 2010 governs the classification and
measurement of financial liabilities. Mainly the existing requirements of IAS 39 were taken over. There is a
change for financial liabilities measured at fair value. The amendments adopted in November 2013 relate to the
inclusion of a new general model for hedge accounting, which expands the scope of possible hedge and
F-25
underlying transactions and introduces new regulations for the measurement of effectiveness. The date of
initial application is expected to be 1 January 2018 at the earliest. The application of IFRS 9 is expected to
affect accounting for financial instruments in the TLG Group.
•
Under IFRS 14, an entity adopting IFRS for the first time is permitted, with some restrictions, to continue to
recognise regulatory deferral accounts which it initially presented in its financial statements prepared under its
previous GAAP accounting policies. This applies both to the first-time IFRS financial statements as well as
subsequent financial statements. Regulatory deferral accounts and changes in them must be disclosed
separately in the statement of financial position and in profit or loss or in other comprehensive income. In
addition, certain disclosures are required. This is currently not expected to impact TLG.
•
IFRS 15 “Revenue from Contracts with Customers” specifies when and in what amount an IFRS reporter will
recognise future revenue from contracts with customers. The core principle of the standard is that an entity will
recognise revenue to depict the transfer of promised goods or services to customers in an amount that reflects
the consideration to which the entity expects to be entitled in exchange for those goods or services. This core
principle is delivered in a five-step model framework. Under that framework, the contract(s) with a customer
are identified as well as the individual performance obligations in the contract. The transaction price is then
determined, representing the consideration expected by the entity for its services. The transaction price is then
allocated to the performance obligations in the contract. Finally, the entity recognises revenue when (or as) it
satisfies its performance obligations. The TLG Group is currently still analysing the potential impacts on
revenue recognition arising from the application of IFRS 15.
•
The interpretation of IFRIC 21 published in May 2013 clarifies at which time an entity recognises a liability for
a levy imposed by a government. This is currently not expected to impact TLG.
•
In December 2012, the IASB published “Annual Improvements to IFRS 2010-2012 Cycle”. They represent the
fifth collection of amendments to six existing IFRS standards. This is currently not expected to impact TLG.
•
In December 2013, the IASB published “Annual Improvements to IFRS 2011-2013 Cycle”. They represent the
sixth collection of amendments to four existing IFRS standards. This is currently not expected to impact TLG.
D.
CONSOLIDATION PRINCIPLES
1.
Consolidation methods
Subsidiaries
The consolidated financial statements of the TLG Group include TLG IMMOBILIEN GmbH and all material
subsidiaries over which TLG IMMOBILIEN GmbH has direct or indirect control of their financial and operating policies.
Subsidiaries are included for the first time from the date on which TLG IMMOBILIEN GmbH gains control. Control of the
subsidiaries is based on TLG IMMOBILIEN GmbH directly or indirectly holding the majority of voting rights.
Deconsolidation occurs as soon as control is no longer held by TLG.
The financial statements of the subsidiaries are included using uniform accounting policies and prepared as at the
same reporting date as the financial statements of TLG IMMOBILIEN GmbH.
Capital consolidation is accomplished using the purchase method under which the acquisition cost is offset against
the pro rata equity on the acquisition date. Using the purchase method, the equity of the acquired subsidiaries is determined on
their acquisition date by taking into account the fair value of the identifiable assets, liabilities and contingent liabilities,
deferred taxes and any goodwill on this date.
Non-controlling interests represent the portion of the net result and net assets not attributable to the shareholders of
TLG IMMOBILIEN GmbH. Non-controlling interests are shown separately in the consolidated statement of comprehensive
income and in the consolidated statement of financial position. They are reported under equity in the consolidated statement
of financial position, separately from the equity attributable to the shareholders of the Parent Company.
All intercompany receivables and liabilities, income and expenses, and profit and loss from intercompany
transactions are eliminated.
Associates and joint ventures
Associates are investments in which the TLG Group can exercise significant influence over the financial and
operating policies. The significant influence is regularly based on TLG IMMOBILIEN GmbH directly or indirectly holding
20 to 50 percent of the voting rights in the company which thus qualifies as an associate. At the reporting date, no associates
were included in the TLG Group’s consolidated financial statements. Joint ventures are entities directly or indirectly managed
by the TLG Group jointly with another party.
F-26
Joint ventures are included in accordance with the equity method. Otherwise, they are measured in accordance with
IFRS 5 if the shares are classified as held for sale.
Under equity valuation, the shares in joint ventures are initially carried in the consolidated financial statements at
acquisition cost adjusted by the Group’s share in the changes in net assets of the joint venture and by any impairment losses
from potential decreases in value.
TLG IMMOBILIEN GmbH included a joint venture, Altmarktgalerie Dresden KG, in its consolidated financial
statements until it was disposed of in financial year 2013. Furthermore, two joint ventures were measured at fair value or, if
this cannot be reliably measured for equity instruments that do not have a quoted price, at acquisition cost due to their minor
importance for the Group’s net assets, financial position and results of operations and reported under other non-current
financial assets.
Please refer to section I.7 for the list of shareholdings.
2.
Changes to the Group
Number of consolidated subsidiaries
As at 01/01 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Disposals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
As at 31/12 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Number of joint ventures accounted for using the equity method
As at 01/01 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Disposals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
As at 31/12 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2013
2012
4
—
4
6
2
4
2013
2012
1
1
—
1
—
1
The liquidation and, by the date the consolidated financial statements were prepared, deletion from the commercial
register of TLG Technologiepark Ilmenau GmbH i. L., Ilmenau, previously included in the scope of consolidation, and the
sale of TLG Gewerbepark Simson GmbH, Suhl, took place in the 2012 financial year.
Accordingly, the aforementioned companies were deconsolidated in the 2012 financial year.
Please refer to section I.7 for the list of shareholdings.
E.
EXPLANATION OF ACCOUNTING POLICIES
1.
Investment property
Under investment property, TLG reports the properties that are held to generate rental income or for capital
appreciation and not held for own use or sale in the ordinary course of business.
In individual instances, TLG has properties that are partially owner occupied and partially for use by third parties,
i.e., rented. These mixed-use properties are reported separately provided that a legal option exists for dividing the
corresponding property and that neither the part occupied by the company nor the part occupied by a third party is immaterial.
If a change in use occurs which is documented by the start of owner occupancy or the start of development with the
intent to sell, properties are transferred out of the inventory of investment property.
Investment property is recognised at cost as at the date of acquisition. After recognition, the properties are
recognised at fair value in accordance with the option provided for in IAS 40 in conjunction with IFRS 13. In accordance with
IFRS 13.9, fair value is defined as the price that would be received for the sale of an asset or paid for transferring a liability in
an orderly transaction between market participants at the measurement date. Fair value always assumes the sale of an asset
(exit price). It corresponds (theoretically) to the price to be paid to the seller in the event of a (hypothetical) sale of a property
on the measurement date, regardless of a company-specific intent or the ability to sell the asset.
Fair value is calculated on the basis of the highest and best use of the property (IFRS 13.27 et seq.). This implies
maximizing the use and value of the property if this is physically possible, legally permissible and financially feasible.
All fair value changes of the investment property are recognised in profit or loss for the current period.
Determining fair value for the investment property is based on a real estate appraisal conducted by Savills Advisory
Services GmbH at the end of 2013/early 2014 for the dates 31 December 2013, 31 December 2012 and 1 January 2012.
Project development is recognised as investment property at fair value, to the extent it is possible to reliably
determine fair value. The fair value of properties is generally determinable at the time construction permits are obtained.
F-27
The market value of the property held for generating rental income or for capital appreciation over the long term
was determined in accordance with international standards by means of the discounted cash flow method (DCF). Using this
method, the fair value of a property is the sum of discounted cash flows of a planning period of 10 years—consistent with
standard practice—plus the residual value of the property at the end of the planning period discounted to the measurement
date, calculated on the basis of the sustainable cash inflows from letting activities. Properties with negative cash inflows
(including permanently vacant properties) were valued using the liquidation method (land value less demolition costs, plus
residual net income, if applicable).
Appraisal of undeveloped land (reported under F.1 asset class “Other”) was conducted using the comparative value
procedure taking into account standard land values of the local committees for property values. If necessary, the residual value
method was applied to verify the plausibility of the land value.
Due to the limited availability of data and measurement parameters directly observable on the market, the
complexity of real estate appraisal as well as the degree of specificity of the property, fair value measurement of the
investment property is classified as level 3 under the measurement hierarchy of IFRS 13.86 (Measurement on the basis of
significant, unobservable inputs).
In particular, the following material unobservable input factors were used for measurement:
2.
•
Future rental income based on the individual property location, type, size and quality, taking into account the
terms of existing rental agreements, other contracts or external indicators such as rents customary for the
market for comparable properties;
•
Estimations of vacancy rates based on current and expected future market conditions after the expiration of
existing rental agreements;
•
Discount rates for the 10-year planning period reflecting the current market assessment with respect to the
uncertainty in terms of the amount and timing of future cash flows;
•
Capitalisation rates based on the individual property location, type, size and quality, taking into account the
market information available on the reporting date;
•
Residual values, particularly those based on assumptions of future maintenance and reinvestment costs,
vacancy rates and rents and growth rates customary for the market.
Property, plant and equipment
Property, plant and equipment are capitalised at cost and depreciated using the straight-line method over the
expected economic useful life. Costs are subsequently capitalised if they will increase the value in use of the property, plant
and equipment. Like any residual values, useful lives are also reviewed annually and adjusted, if necessary.
Grants received are deducted in determining acquisition cost.
Depreciation is applied consistently throughout the Group over the following useful lives:
Useful lives of property, plant and equipment in years
Owner-occupied properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Plants and machinery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other operating and office equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2013
2012
50-70
8-13
3-13
50-70
8-13
3-13
The carrying amounts of property, plant and equipment are assessed for impairment as soon as there are indicators
that the carrying amount of an asset exceeds its recoverable amount. An item of property, plant and equipment is either
derecognised upon disposal or when no future economic benefit is expected from its use or disposal. The gains or losses
resulting from derecognition of the asset are recognised in profit or loss in the consolidated statement of comprehensive
income.
In accordance with tax regulations on the depreciation of low-value assets introduced in January 2010, low-value
assets up to a net amount of EUR 150 are written off in full in their year of acquisition. Assets between EUR 150.01 and
EUR 1,000 net are assigned to pools annually and depreciated over five years using the straight-line method. Deviations from
the economic useful life are considered immaterial.
3.
Intangible assets
Purchased intangible assets are recognised at cost. The purchased intangible assets are software licenses with a
certain useful life. The software licenses are amortised using the straight-line method beginning on the date they are provided
over an expected economic useful life of three to five years.
F-28
4.
Impairment of non-financial assets
The Group conducts impairment testing for intangible assets and property, plant and equipment in accordance with
IAS 36 on an annual basis. In doing so, it determines whether there are indications of potential impairment. If such indications
exist, the recoverable amount is determined for the corresponding asset. This is equivalent to the higher of fair value less costs
to sell or value in use.
A market interest rate before taxes is used for discounting. During the financial year, there was no need to conduct
an impairment test as no triggering events occurred for property, plant and equipment and intangible assets.
Due to its recognition at fair value, investment property is not subjected to impairment testing under IAS 36.
If an asset’s realisable amount is lower than the carrying amount, the carrying amount of the asset is immediately
written down by recognising an impairment loss to profit or loss.
5.
Other financial assets
Within the Group, financial assets are always recognised on the day of trading. Under IAS 39, affiliates which are
not consolidated for reasons of materiality are classified in the category “Financial assets available for sale” for measurement
purposes. Financial assets available for sale are recognised at the present value on the reporting date or, if present value
cannot be determined reliably, at acquisition cost. Shares in companies not fully consolidated or accounted for using the
equity method are not quoted on a stock exchange. The present value of these instruments cannot be determined with
sufficient reliability due to the significant fluctuation range and the lack of an active market; as a result, they are recognised at
cost.
6.
Recognition of lease relationships as lessee
Leased assets over which the TLG Group retains beneficial ownership (finance leases in accordance with IAS 17)
are capitalised as an asset at the present value of the lease payments or, if lower, at the leased object’s fair value and
depreciated using the straight-line method. The depreciation period is the shorter of the term of the lease agreement and the
economic useful life. In cases where the ownership of the asset transfers to TLG at the end of the lease term, the depreciation
period is equivalent to the economic useful life. A liability is recognised in the amount of the present value of the obligation
arising from future lease payments. In subsequent periods, the amount is reduced by the share of principal payment included
in the lease payments.
Lease agreements under which beneficial ownership is not attributable to the TLG Group are classified as operating
leases. The expenses arising from these agreements are recognised through profit or loss at the time the corresponding leased
object is used.
7.
Recognition of lease relationships as lessor
Rental agreements for property are to be classified as operating leases under IAS 17 as the significant risks and
rewards of the property remain in the TLG Group.
Income from operating lease agreements is recognised in the consolidated statement of comprehensive income
under income from letting activities over the term of the corresponding agreements using the straight line method.
8.
Inventories
Inventories include land and buildings available for sale in the course of ordinary business. This may require a
period longer than twelve months to occur. They are initially recognised at cost. They are measured at the lower of cost and
net realisable value at the reporting date. Net realisable value is the estimated selling price in the ordinary course of business
less the estimated costs of completion and the estimated costs necessary to make the sale.
Please refer to section E.21 for treatment of borrowing costs.
9.
Receivables and other assets
Trade and other receivables and other assets are initially recognised at their fair value plus transaction costs.
Subsequent measurement is at amortised cost.
Based on experience and individual risk assessments, potential default risks are accounted for by recognising
appropriate impairment losses under consideration of the expected net incoming payments.
F-29
10. Cash and cash equivalents
Cash and cash equivalents comprise cash, demand deposits, other current, highly liquid financial assets with an
original maturity of no more than three months and overdraft facilities. Utilised overdraft facilities are shown as current
liabilities due to financial institutions in the statement of financial position. To the extent restricted funds do not meet the
criteria for classification as cash and cash equivalents, they are reported as financial assets.
11. Assets and liabilities held for sale
In addition to individual non-current assets, the balance sheet item “assets held for sale” can also comprise groups
of assets (disposal groups) or components of an entity (discontinued operation) if a sale within the next twelve months is
considered highly probable. The assets continue to be classified in accordance with IFRS 5 only if the assets can be sold
immediately in their current state and at terms that are usual and customary for sales of such assets. In practice, these criteria
are considered to be met for individual investment properties if there is already a notarised purchase agreement on the
reporting date although the transfer of benefits and risks of ownership will take place in a subsequent period.
Liabilities sold as part of the planned sale are a component of the disposal group or of the discontinued operation
and are also disclosed separately.
Assets held for sale are measured in accordance with IFRS 5 at the lower of carrying amount and fair value.
Investment property reported under assets held for sale is measured at fair value in accordance with IAS 40.
Assets and liabilities held for sale are reported in the same manner as those non-current assets or disposal groups
classified as held for distribution to owners.
Please also refer to the explanations in section F.9.
12. Liabilities due to financial institutions
First time recognition of liabilities due to financial institutions is at present value taking into account any transaction
costs as well as premiums and discounts. The present value on the date the loans were granted is equivalent to the present
value of future payment obligations on the basis of a market interest rate applicable for the maturity and risk.
Subsequent measurement is at amortised cost using the effective interest method. The effective interest rate is
determined on the date the financial liability was incurred. Changes in the terms with respect to the amount or the date of
interest and repayments result in the carrying amount of the liability being recalculated in the amount of the present value and
on the basis of the originally determined effective interest rate. Differences to the previously recognised carrying amount of
the liability are recognised through profit or loss. If changes in terms lead to substantially different contractual terms under
IAS 39.AG 62, the original liability is treated in accordance with IAS 39.40 as if it had been completely repaid. A new
liability is then recognised at fair value.
13. Pension obligations
Pension obligations are the result of obligations to employees. Obligations from defined benefit plans are measured
using the projected unit credit method. This method takes into account pensions and vested benefits known on the closing date
as well as expected future increases of salaries and pensions. The 2005 G tables by Dr Klaus Heubeck serve as the biometrical
basis.
Company pensions within the Group are formulated as both defined contribution plans and defined benefit plans.
For defined benefit plans, the amount of the promised benefits is based on the qualifying period of employment and the
pension component stipulated.
The regulatory framework in Germany is provided by the German company pension law (Betriebsrentengesetz);
accordingly, pension increases correspond to the inflation rate. In some instances, commitments guarantee an interest rate of
1 percent p.a., and then no further trends is applied. TLG bears the actuarial risks such as the longevity risk, interest rate risk
and inflation risk. There are no further plan-related risks at TLG.
The revaluation component in connection with the defined benefit plans, including actuarial gains and losses from
experience-based adjustments and changes of actuarial assumptions, are recognised directly in equity under cumulative other
reserves (other comprehensive income, OCI) in the period in which they are incurred.
There were no past service costs in the reporting year or in the previous year.
The interest rate effect included in pension expenses is reported in the consolidated statement of comprehensive
income under interest expense. Service costs are reported under personnel expenses.
F-30
14. Other provisions
Other provisions are recognised when the TLG Group has a legal or constructive obligation from a past event, its
fulfilment is probable and the amount can be reliably measured. The provision is recognised in the amount of the expected
settlement.
Long-term provisions are reported at the settlement amount discounted to the present value on the reporting date
using a corresponding risk-free interest rate applicable for the maturity, if the amount is material.
In accordance with IAS 1.35, gains and losses on a large number of similar transactions must be reported net in the
consolidated statement of comprehensive income. Only material individual transactions are reported separately in other
operating income under IAS 1.35 and IAS 1.97.
15. Financial instruments
Within the TLG Group, financial instruments are entered into in order to hedge interest rate risks of real estate
financing. Financial instruments are recognised at fair value. Fair value changes of the derivatives are reported in profit or loss
if a hedge in accordance with the provisions of IAS 39 does not exist.
Derivatives accounted for as hedging instruments serve to hedge future, uncertain cash flows. A risk regarding the
amount of future cash flows exists for the TLG Group, in particular from liabilities due to financial institutions with variable
interest rates. Fair value changes are divided into an effective and an ineffective part. The dollar offset method is used to
determine effectiveness. The effective part is the portion of the measurement result representing an effective hedge against the
cash flow risk from an accounting perspective. The effective part is disclosed outside profit or loss in cumulative other
reserves (other comprehensive income, OCI) net of deferred taxes.
The ineffective part of the measurement result is recognised in the consolidated statement of comprehensive income
and reported under net interest income. The amounts recognised in equity are always taken to the consolidated statement of
comprehensive income when the gains or losses arising in connection with the underlying transaction affect income
(recognised under net interest income). In the event that a hedge is terminated prematurely, the amounts recognised in equity
are recognised in profit or loss when the gains or losses arising in connection with the still existing underlying transaction
affect income. If the underlying transaction no longer exists, amounts still remaining in other comprehensive income (OCI)
are immediately posted to profit or loss.
16. Fair value of financial instruments
carrying amounts recognised on the respective reporting dates.
For non-current receivables, other assets and liabilities, fair value is calculated on the basis of expected cash flows
using the reference interest rates applicable on the reporting date. The fair values of financial instruments are determined on
the basis of the reference interest rates on the reporting date plus the own or counterparty risk.
For the financial instruments to be recognised at fair value, fair value is always calculated using the corresponding
market or stock exchange prices. If there are no market or stock exchange prices, measurement is based on market
measurement methods customary for the market using market parameters specific to the instrument. Fair value is determined
using the discounted cash flow method, while individual credit ratings and other market conditions are used to calculate
present value in the form of credit ratings or liquidity spreads customary for the market.
interest rates observable on the reporting date obtained from recognized external sources as inputs. Accordingly, the
derivatives are classified as Level 2 in the fair value hierarchy within the meaning of IFRS 13.72 et seq. (measurement on the
basis of observable inputs). Please also refer to section I.1.
17. Determining fair value
In accordance with the provisions of IFRS 13, fair value represents the price that would be received to sell an asset
or paid to transfer a liability on the principal (or in the adsence of a principal market the most advantageous) market. Fair
value must be measured by using the measurement parameters which best reflect market conditions as inputs. The fair value
hierarchy organises the inputs used in measurement into three levels of descending priority depending on their ability to
reflect market conditions:
•
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access
at the measurement date.
F-31
•
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability,
either directly (i.e., price) or indirectly (i.e., can be derived from the price).
•
Level 3: Unobservable inputs for the asset or liability.
Where various measurement inputs are relevant, the fair value measurement is categorised in the same level of the
fair value hierarchy as the lowest level input that is significant to the entire measurement.
Transfers between the individual levels are reviewed at the end of each financial year. There were no transfers
between the individual input levels in financial year 2013.
All assets, equity instruments and liabilities measured at fair value on the basis of other standards (excluding IAS 17
“Leases” and IFRS 2 “Share-based Payment”) are measured uniformly in accordance with IFRS 13. IFRS 13.9 defines fair
value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market
participants at the measurement date. Fair value always assumes the sale of an asset (exit price). This also applies if the
company does not have the intent or the capacity to sell the asset as at the measurement date or to transfer the liability at this
time. The concept of the highest and best use (IFRS 13.27 et seq.) is applied in determining the fair value of non-financial
assets. This implies maximizing the use and value of the asset if this is physically possible, legally permissible and financially
feasible. Fair value measurement of the investment property is classified as Level 3 under the fair value hierarchy of
IFRS 13.86 (measurement on the basis of unobservable inputs). For the measurement of investment property, please refer to
the explanations in section E.1 and F.1. For the measurement of financial instruments, see section E.15 and I.1.
In summary, the fair value hierarchy for the 2013 financial year is as follows:
Level 1
*
Level 2
Level 3
1,414,691
15
626,227
18,788
The fair value of liabilities due to financial institutions is determined solely for informational purposes in the notes.
And the fair value hierarchy for the 2012 financial year is as follows:
Level 1
*
Level 2
Level 3
1,511,726
6
480,041
43,431
The fair value of liabilities due to financial institutions is determined solely for informational purposes in the notes.
Explanations of the individual steps in the fair value hierarchy can be found in section I.1.—Other disclosures.
18. Recognition of income and expenses
Income from letting activities for which the corresponding rental and lease agreements are classified as operating
leases is recognised over the term of the agreement using the straight-line method. Lease incentives are included in the total
income from letting activities, with the effect of reducing income, over the term of the rental or lease agreement.
In addition, the result from letting activities includes income from recharged utilities and other operating costs if the
costs and the amount of the proceeds can be reliably determined and the services have been performed.
Proceeds from the sale of property are recorded when the significant risks and rewards of the property have been
transferred to the buyer. The transfer of beneficial ownership can be assumed when the title and rights of use as well as the
effective control of the property have passed to the buyer. Revenue recognition does not occur as long as the buyer still has
significant obligations, guarantees of return or rights of return.
Operating expenses are recognised as expenses upon use of the service or on the date of its causation.
Interest is recorded as income or expense in the proper period.
Dividends are recognised on the distribution date, whereby the period of distribution is normally the period in which
a legal entitlement is constituted.
F-32
19. Government grants
Government grants are recognised if there is reasonable assurance that the grants will be awarded and that the
company meets the associated conditions. They are to be recognised as income over the course of the periods necessary to
match them with the corresponding expenses that the government grants are intended to compensate.
Investment grants are grants to purchase or produce an asset. In the TLG Group, they are deducted from the
capitalised cost for the asset. Grants are recognised proportionally by applying a reduced depreciation amount over the useful
lives of the assets if they are subject to depreciation.
Ongoing subsidies in the form of maintenance, rental and expense allowances are recognised through profit or loss.
They are reported under other operating income.
Improvement loans and loans granted at favourable interest rates are property loans and are disclosed as liabilities
due to financial institutions. Compared to loans customary for the market, both have advantages such as low interest or
interest-free and payment-free periods. They are generally recognised at the present value on the basis of the market interest
rate applicable on the date they are taken out. The difference is transferred to an accrued item which is written down using the
straight-line method over residual maturity of the loan to reduce the expenses from amortizing the loan. Please refer to
section B.1 for special rules applicable to the first-time adoption of IFRSs in accordance with IFRS 1.B10.
20. Current and deferred taxes
The income tax expense represents the sum of the ongoing tax expense and deferred taxes.
Current tax expense is determined on the basis of the taxable income for the year. Taxable income differs from the
profit for the year as shown in the consolidated statement of comprehensive income due to expenses and income that will be
tax deductible in later years or those that will never become taxable or tax deductible. Liabilities and provisions of the Group
for current taxes are calculated using applicable tax rates.
Deferred taxes are recognised for the differences between the carrying amounts of assets and liabilities in the
consolidated financial statements and the corresponding tax law valuation for the calculation of taxable income. Deferred tax
liabilities are recorded, in general, on all taxable temporary differences; deferred tax assets are recorded when it is probable
that taxable profits will be available against which the deductible temporary differences can be offset. Deferred tax assets
comprise tax reductions arising from the expected use of existing tax loss carryforwards (or comparable circumstances) in
subsequent years and the realisation of which is assured with sufficient probability. Deferred taxes are also recognised for
outside basis differences if the requirements for this have been met.
Deferred tax liabilities and tax assets are determined on the basis of expected tax rates (and tax laws) that will
presumably apply on the date the debt is settled or the asset is realised. The tax regulations applicable or approved by the
German Bundestag and, if applicable, Bundesrat as at the closing date apply for this. The measurement of deferred tax assets
and liabilities reflects the tax consequences that would result from the manner in which the Group expects to settle the debt or
realise the asset as at the closing date.
Current or deferred taxes are recognised in profit or loss unless they are directly related to items recognised either in
other comprehensive income or directly in equity. In this case, the current or deferred tax is also recognised in other
comprehensive income or directly in equity.
Deferred tax assets and deferred tax liabilities are netted if the Group has an enforceable legal right to offset actual
tax refund claims against its actual tax liabilities, and if the deferred tax assets and liabilities are related to income taxes
collected by the same tax authority and concern the same tax subject.
21. Borrowing costs
If so-called qualified assets exist, interest on borrowings is capitalised if material.
22. Significant judgements and estimates
The application of the accounting policies requires the management to exercise judgement and use estimates which
may have an impact on the carrying amounts reported for assets, liabilities, income and expenses, as well as on the disclosure
of contingent liabilities.
However, the inherent uncertainty of these assumptions and estimates may produce results which by their nature
necessitate future adjustments to the carrying amounts of assets and liabilities.
F-33
This applies in particular for the following items:
•
Measurement of investment property: specifically, expected cash flows, the assumed vacancy rate and the
discount and capitalisation rates represent key measurement parameters for this item. This item is measured
using the DCF method, which discounts future cash flows to the reporting date. These estimates include
assumptions about future events. In light of the large number and geographical distribution of the properties in
question, individual measurement uncertainties are generally statistically insignificant. The value of the
properties is determined by an external appraiser on the basis of publicly available market data (e.g., property
market reports published by local valuation committees, data provided by inwis, etc.) and on the basis of the
TLG Group’s extensive expertise in the individual regional sub-markets.
Please refer to section F.1 for further information.
In addition, the following assumptions and estimates are of lower significance:
•
The management must determine whether assets intended for sale may be sold in their present condition and
whether the sale can be considered highly probable within the meaning of IFRS 5. If this is the case, the assets
and any related liabilities must be reported and measured as assets and liabilities held for sale.
•
Real property must be classified either under inventories or as investment property, depending on the intended
use of the property.
•
Buildings which are owner-occupied and leased to third parties must generally be accounted for as separate
assets in accordance with IAS 16 and IAS 40, unless the owner-occupied or leased portion of the property is
immaterial.
•
Accounting for pension provisions: Provisions for pensions and similar obligations are measured on the basis
of actuarial calculations. They are measured based on assumptions as to interest rates, mortality tables and
future pension increases.
•
Accounting for other provisions: The accounting for other provisions is subject to uncertainty with respect to
future price increases and the amount, timing and probability of utilisation of the relevant provisions.
•
Recognition of deferred tax assets: Deferred tax assets are recognised if future tax benefits are likely to be
realisable. The actual tax situation in future financial years, and thus the actual ability to realise deferred tax
assets, may deviate from the estimates made at the time the deferred taxes were recognised.
Further disclosures as to the assumptions and estimates made are included in the notes to the individual elements of
the financial statements. All assumptions and estimates were based on the prevailing conditions and assessments made as at
the end of the reporting period.
Furthermore, the management’s assessment of the future business development also relied on assumptions
concerning the future economic environment in the sectors and regions in which the TLG Group operates, which the
management considered realistic as at the reporting date. Although the management believes that the assumptions made and
estimates used are appropriate, any unforeseen changes in these assumptions could influence the Group’s net assets, financial
position and results of operations.
23. Capital management
The objective of the TLG Group’s capital management activities is to secure the Group’s ability to continue as a
going concern, as well as to generate a return for its shareholders. In addition, capital management serves to ensure that all
other stakeholders in the TLG Group receive the benefits to which they are entitled. In general, the intention is to increase the
value of the overall Group. This holistic capital management strategy has not changed since the previous year.
In conjunction with the TLG Group’s increased efforts to operate in line with standard market practice, capital
management is monitored using the net leverage ratio, as is customary within the industry. Net leverage describes the ratio of
net debt to the fair value of the investment property. Net debt is calculated as liabilities due to financial institutions minus cash
and cash equivalents.
As in the previous year, one of the Group’s objectives for the current financial year was to ensure continued access
to lending at economically appropriate financing costs by ensuring that an appropriate level of debt is not exceeded.
F-34
Net leverage was calculated as follows as at 31 December 2013 and in the previous year:
31/12/2013 31/12/2012
EUR ’000
Investment property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepayments for investment properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Owner-occupied properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-current assets held for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,414,691
2,707
16,464
17,817
13,385
1,511,726
3,016
16,697
0
22,260
Real estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,465,064
1,553,699
Liabilities due to financial institutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
626,227
138,930
480,041
60,527
Net debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
487,298
419,514
Net Loan to Value (Net LTV) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
33.3%
27.0%
In the table above, assets held for sale relate exclusively to investment property.
The Net Loan to Value (Net LTV) for the Group was 33.3%, thus representing an increase of 6.3 percentage points
since the previous year.
The Group’s capital management objectives were achieved during the year.
24. Segment reporting
TLG’s business activities are centred on the letting and management of its own commercial real estate. Activities
also include leveraging market conditions through the acquisition and disposal of real properties in order to optimise the
property portfolio.
For internal reporting purposes, these activities are classified under the segment for letting and managing the
Group’s own commercial real estate.
In accordance with IFRS 8, therefore, a separate reporting segment has been identified which encompasses the
Group’s operating activities. The chief operating decision makers receive regular reports on this segment. They determine the
allocation of resources only for this one segment and are responsible for monitoring their profitability. TLG’s management is
the chief operating decision maker.
Revenue is generated through a large number of tenants. Revenue amounting to greater than 10% of overall revenue
is generated through one single customer. EUR 17,539 thousand (previous year: EUR 17,569 thousand) of total revenue was
attributable to this customer.
F.
NOTES TO THE CONSOLIDATED STATEMENT OF FINANCIAL POSITION
1.
Investment property
The carrying amount of the investment property changed as follows in financial years 2013 and 2012:
2013
2012
EUR ’000
Carrying amount as at 01/01 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Capitalisation of construction activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reclassification as assets held for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reclassification from property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fair value adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,511,726
3,591
36,396
(209,259)
—
72,237
1,414,691
1,374,231
28,082
54,592
(804)
2,564
53,061
1,511,726
TLG’s portfolio strategy calls for a concentration on the retail and office asset classes, as well as on hotels with
long-term leases in certain prime inner-city locations, particularly in Berlin and Dresden. While the office portfolio is
intended to be largely limited to Berlin, Dresden, Leipzig and Rostock, the retail portfolio—which is currently dominated by
convenience store properties in the retail foodstuffs sector—is more broadly distributed. Decisions pertaining to acquisitions
and disposals of properties and to necessary investments are subject to the aforementioned principles of portfolio strategy.
Acquisitions in 2013 amounted to EUR 3,591 thousand (2 properties), and were significantly lower than in the
previous year (EUR 28,082 thousand; 12 properties). As in the previous year, investment centred on the completion of project
development properties. This is reflected in the amount capitalised for construction activities: EUR 36,396 thousand; previous
year: EUR 54,592 thousand.
F-35
EUR 209,259 thousand (2012: EUR 804 thousand) was reclassified as assets held for sale to reflect disposals in
keeping with the portfolio strategy. In addition to the nursing care properties, management-intensive properties in particular
and undeveloped land were reclassified. Properties reclassified as assets held for sale also included all sales conducted during
the year, which had first been reclassified as assets held for sale and then sold off.
Thanks to favourable market conditions, a number of inner-city development plots in particular were disposed of at
attractive prices, with the result that the EUR 72,237 thousand fair value adjustment in 2013 (previous year: EUR 53,061
thousand) related to 20% of the assets held for sale. The properties held in the portfolio as at 1 January and 31 December 2013
(current portfolio excluding acquisitions and reclassifications) accounted for 80% of the fair value adjustment. Fair values
were adjusted as a result of the measurement of investment property in the concolidated statement of comprehensive income.
The fair values of investment property were as follows, broken down by measurement approach and by asset class
as at 31 December 2013. Advance payments made for these properties are not included in this calculation but are recognised
separately in the statement of financial position.
Table 1:
31/12/2013
Investment
properties
EUR ’000
Discount rate
Weighted
average
(rated
according
to gross
present
Min.
Max.
value)
Capitalisation rate
Min.
Max.
Retail properties . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Office properties . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Hotel properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total (DCF) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
655,994
447,308
185,611
73,698
1,362,610
5.00%
4.00%
5.00%
5.00%
4.00%
15.00%
12.00%
6.25%
14.00%
15.00%
6.25%
5.54%
5.61%
7.86%
6.01%
5.50%
4.00%
6.25%
6.00%
4.00%
25.00%
8.16%
20.00%
7.12%
6.75%
6.48%
30.00% 11.46%
30.00% 7.76%
Total (liquidation method) . . . . . . . . . . . . . . . . . . .
24,500
450
27,131
52,081
5.00%
7.50%
3.00%
3.00%
7.50%
7.50%
8.00%
8.00%
5.78%
7.50%
5.07%
5.43%
—
—
—
—
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,414,691
Multiplier net rental (without project
development) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
12.68
Weighted
average
(rated
according
to net sales
price)
—
—
—
—
—
—
—
—
31/12/2012
Investment
properties
EUR ’000
Discount rate
Weighted
average
(rated
according
to gross
present
value)
Min.
Max.
Min.
Max.
Project development . . . . . . . . . . . . . . . . . . . . . . . . .
Total (DCF) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
598,266
452,337
119,759
186,200
73,100
1,429,662
3.05%
4.10%
6.55%
5.00%
5.90%
3.05%
15.00%
12.45%
6.95%
14.00%
7.00%
15.00%
6.87%
6.34%
6.67%
7.29%
6.32%
6.71%
3.75%
4.00%
6.50%
6.00%
6.00%
3.75%
25.00%
20.00%
6.50%
30.00%
7.25%
30.00%
8.22%
6.94%
6.50%
9.77%
6.33%
7.66%
31,460
450
50,154
82,064
2.00%
7.50%
3.00%
2.00%
7.50%
7.50%
8.00%
8.00%
4.69%
7.50%
4.93%
4.85%
—
—
—
—
—
—
—
—
—
—
—
—
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,511,726
Total (without project development) . . . . . . . . . . . . .
development) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,438,626
12.62
F-36
Capitalisation rate
Weighted
average
(rated
according
to net sales
price)
The following values were reported as at 1 January 2012:
01/01/2012
Investment
properties
EUR ’000
Discount rate
Weighted
average
(rated
according
to gross
present
Min.
Max.
value)
Project development . . . . . . . . . . . . . . . . . . . . . . . . .
Total (DCF) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
553,770
415,354
107,932
181,280
34,260
1,292,597
3.50%
4.50%
7.70%
5.00%
5.85%
3.50%
31,150
500
49,984
81,634
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,374,231
Total (without project development) . . . . . . . . . . . . .
development) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,339,971
Capitalisation rate
Min.
Max.
Weighted
average
(rated
according
to net sales
price)
15.00%
12.95%
7.75%
15.00%
8.25%
15.00%
7.32%
6.96%
7.73%
7.75%
7.04%
7.29%
3.75%
4.00%
6.50%
6.00%
6.00%
3.75%
25.00%
20.00%
6.50%
30.00%
7.25%
30.00%
8.32%
6.95%
6.50%
9.92%
6.37%
7.69%
2.00% 12.00%
5.00%
7.50%
3.00%
8.00%
2.00% 12.00%
5.03%
7.30%
5.02%
5.04%
—
—
—
—
—
—
—
—
—
—
—
—
12.20
The fair value of investment property totalled EUR 1,414,691 thousand as at 31 December 2013 (31 December
2012: EUR 1,511,726 thousand; 1 January 2012: EUR 1,374,231 thousand). Properties excluding project development
properties held in the portfolio as at 1 January and 31 December 2013 (current portfolio excluding acquisitions and
reclassifications) amounted to EUR 1,303,858 thousand and accounted for 92% of total properties as at 31 December 2013.
The value of the properties excluding project development properties held in the portfolio as at 1 January and
31 December 2013 (current portfolio) increased by 4.4% and 3.5% as compared to 31 December 2012 and 1 January 2012,
respectively, based on a positive two-year market trend, in particular in Berlin, as well as on a reduction in the EPRA vacancy
rate and a constant increase in actual rents. While the segment of the portfolio managed in line with the portfolio strategy—
accounting for approximately 90% (2012: 77%) of the properties neither acquired, disposed of or reclassified—increased in
value by 5.3% (2012: 4.7%), the value of segment of the portfolio not managed in line with the portfolio strategy was adjusted
by -1.2% (2012: -0.2%). Value adjustments related in particular to commercial properties intended for sale in the short-term.
The fair value of the investment properties under development was determined in particular by factoring in the
project stage as at the reporting date, estimated future development costs and expected time horizon until completion.
Properties which were under management as at the reporting date were no longer included under development
projects. The fair value of investment properties under construction as at the reporting date 31 December 2012 amounted to
EUR 34,260 thousand. As at 31 December 2012, the fair value amounted to EUR 73,100 thousand, whereby three properties
which had still been under construction during the previous year with a fair value of EUR 15,273 thousand were reclassified
as under management. One construction project with a fair value of EUR 2,970 thousand was launched in 2012. As at the
measurement date 31 December 2013, all development projects were reclassified as under management. The fair value of
these project development properties now under management represented EUR 108,944 thousand of total fair value as at the
reporting date 31 December 2013.
With fair value at EUR 1,362,610 thousand as at 31 December 2013 (31 December 2012: EUR 1,429,662 thousand;
1 January 2012: EUR 1,292,597 thousand), 96.3% of properties were measured in accordance with the DCF method
(31 December 2012: 94.6%; 1 January 2012: 94.1%).
In the overviews above, the fair value of the undeveloped plots of land as measured in accordance with the
liquidation approach is included under the “Other” asset class. The fair value of undeveloped land as at 31 December 2013
was EUR 17,894 thousand (31 December 2012: EUR 40,412 thousand; 1 January 2012: EUR 40,409 thousand), representing
1.3% (31 December 2012: 2.7%; 1 January 2012: 2.9%) of the total investment property.
The fair value of properties (excluding undeveloped land) measured in accordance with the liquidation approach
amounted to EUR 34,187 thousand as at 31 December 2013 (31 December 2012: EUR 41,652 thousand; 1 January 2012:
EUR 41,225 thousand), representing 2.4% (31 December 2012: 2.8%; 1 January 2012: 3.0%) of the total.
No significant changes were made to the valuation methods and models during the period under review.
F-37
The independent appraiser’s calculation of fair value was based on the following letting data as at the relevant
reporting dates:
Table 2:
Investment
properties
EUR ’000
31/12/2013
EPRAvacancy
rates
%
Average
net rental*
EUR/Sqm
Share of
temporary
rental
contract
%
Walt
temporary
rental
contracts
years
Retail properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Office properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Hotel properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total (DCF) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
655,994
447,308
185,611
73,698
1,362,610
1.6%
9.4%
4.5%
13.6%
5.7%
9.55
8.59
13.74
3.25
7.92
97.7%
89.8%
99.9%
75.5%
93.3%
7.7
5.7
17.4
5.0
8.0
Total (liquidation method) . . . . . . . . . . . . . . . . . . . . . . . . . . . .
24,500
450
27,131
52,081
0.0%
0.0%
0.0%
0.0%
4.46
0.00
2.32
3.63
100.0%
1.2%
72.0%
90.3%
3.9
0.0
1.8
3.4
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,414,691
5.6%
7.81
93.2%
8.0
*
Net rental per square meter—rented space as of closing date; without future rental contracts.
Investment
properties
EUR ’000
31/12/2012
EPRAvacancy
rates
%
Average
net rental*
EUR/Sqm
Share of
temporary
rental
contract
%
Walt
temporary
rental
contracts
years
Total (DCF) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
598,266
452,337
119,759
186,200
1,356,562
2.8%
19.5%
3.6%
5.8%
8.9%
9.52
8.55
14.93
4.42
7.75
97.7%
89.1%
100.0%
82.4%
92.5%
8.2
6.4
17.7
11.5
9.0
31,460
450
50,154
82,064
0.0%
0.0%
0.0%
0.0%
4.33
0.00
2.30
3.51
100.0%
0.6%
60.6%
86.9%
4.6
0.0
2.5
4.2
Total (without project development) . . . . . . . . . . . . . . . . . . . .
1,438,626
8.8%
7.62
92.4%
8.9
Project development** . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
73,100
21.1%
9.94
100.0%
17.8
*
**
Net rental per square meter—rented space as of closing date; without future rental contracts (excluding project development).
Project development in construction; Agreed pre-rental of closed rental contracts.
Investment
properties
EUR ’000
01/01/2012
EPRAvacancy
rates
%
Average
net rental*
EUR/Sqm
Share of
temporary
rental
contract
%
Walt
temporary
rental
contracts
years
Total (DCF) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
553,770
415,354
107,932
181,280
1,258,337
2.8%
23.1%
5.0%
4.0%
9.9%
9.53
8.37
14.78
4.32
7.59
98.0%
88.2%
100.0%
84.8%
92.8%
8.8
6.7
18.7
11.7
9.6
31,150
500
49,984
81,634
0.0%
0.0%
2.6%
0.4%
4.23
0.00
2.18
3.29
100.0%
22.8%
63.4%
85.3%
5.3
0.3
2.3
4.6
Total (without project development) . . . . . . . . . . . . . . . . . . . .
1,339,971
9.8%
7.42
92.6%
9.5
Project development** . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
34,260
26.1%
11.46
100.0%
18.6
*
**
Net rental per square meter—rented space as of closing date; without future rental contracts (excluding project development).
Project development in construction; Agreed pre-rental of closed rental contracts.
Please refer to www.epra.com for the definition of the EPRA vacancy rate.
F-38
As at the reporting date, 31 December 2013, investment property had an average EPRA vacancy rate of 5.6%
(31 December 2012, excl. project development properties: 8.8%; 1 January 2012, excl. project development properties: 9.8%).
The EPRA vacancy rate for project development properties now under management was 14.3% as at the reporting date. The
further trend with respect to the EPRA vacancy rate depends on the location and characteristics of the individual properties. In
general, the vacancy rate for retail and hotel properties is expected to remain low, as it was at 31 December 2013. The EPRA
vacancy rate is expected to decline for office properties, and no significant change is expected for the other properties.
The average actual rent amounted to EUR 7.81/m2 (31 December 2012, excl. project development properties:
EUR 7.62/m2; 1 January 2012, excl. project development properties: EUR 7.42/m2), representing a 2.5% increase. The WALT
(weighted-average lease term) was 8.0 years, down as compared to the 8.9 years for the previous year (1 January 2012:
9.5 years). This figure, reported as at the reporting date, does not factor in leases already entered into whose terms
commenced after the reporting date. The continued trend for rents was forecasted on the basis of individual assumptions made
for the planning period. A distinction was drawn between rents from existing leases and from new leases based on a
forecasted rate of fluctuation. Market rents increased each year during the detailed planning phase by a rate of increase
determined individually. Overall, a moderate increase in rents was assumed for the planning period.
As at the reporting date, TLG continues to assume that future fluctuations in fair value will result for the most part
from factors outside of TLG’s control. These factors include in particular the discount and capitalisation rates used to measure
the value of the properties.
In addition to the fair value measurement, a sensitivity analysis was conducted to assess the impact of changes in the
discount and capitalisation rates used. Assuming the discount and capitalisation rates underlying the valuation of the
properties were to rise or fall by 0.5 percentage points, the following changes would have occurred as at 31 December 2013:
Table 3:
Investment
properties
31/12/2013
-0.5%
Discount rate
0.0%
EUR ’000
+0.5%
Capitalisation rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-0.5%
0.0%
+0.5%
1,473,730
1,413,660
1,362,360
1,419,610
1,362,610
1,313,590
1,368,450
1,314,110
1,267,110
0.0%
53,110
52,081
51,650
-0.5%
0.0%
+0.5%
1,526,840
1,466,770
1,415,470
1,471,691
1,414,691
1,365,671
1,420,100
1,365,760
1,318,760
Total*
*
The sensitivity analysis is not applicable for the capitalisation rate using the liquidation method.
Investment
properties
31/12/2012
-0.5%
Discount rate
0.0%
EUR ’000
+0.5%
-0.5%
0.0%
+0.5%
1,550,352
1,488,282
1,435,552
1,488,562
1,429,662
1,379,692
1,430,202
1,374,122
1,326,482
0.0%
83,250
82,064
81,530
-0.5%
0.0%
+0.5%
1,633,602
1,571,532
1,518,802
1,570,626
1,511,726
1,461,756
1,511,732
1,455,652
1,408,012
Total*
*
F-39
The following values were reported as at 1 January 2012:
Investment
properties
01/01/2012
-0.5%
Discount rate
0.0%
EUR ’000
+0.5%
–0.5%
0.0%
+0.5%
1,404,397
1,350,567
1,304,247
1,343,567
1,292,597
1,248,357
1,285,337
1,237,367
1,195,757
0.0%
82,940
81,634
80,890
–0.5%
0.0%
+0.5%
1,487,337
1,433,507
1,387,187
1,425,201
1,374,231
1,329,991
1,366,227
1,318,257
1,276,647
Total*
*
With respect to changes in the further significant inputs and their impact on fair value, there were the following
qualitative sensitivities: an increase in rental income results in an increase in the value of investment property. Additionally,
an increase in the residual value results in an increase in the value of the property. An increase in the EPRA vacancy rate
results in a decline in the value of the properties.
The following payment claims arising under the minimum lease rates are expected over the next years on the basis
of the leases existing as at 31 December 2013:
Remaining
term up to
1 year
31/12/2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
31/12/2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
01/01/2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
104,849
107,522
102,617
Remaining
Remaining
term between
term more
1 and 5 years than 5 years
EUR ’000
330,256
361,664
341,271
418,930
556,154
546,716
Total
854,035
1,025,340
990,603
EUR 247 thousand in contingent rent payments were collected in financial year 2013 (previous year:
EUR 283 thousand).
The majority of investment property has been encumbered with collateral for loans. The properties are in principle
freely available to be sold. As a rule, collateral has been provided for financed properties in the form of land rights and the
assignment of rights and claims from sale agreements. In the event a property is sold, the financing is redeemed by special
payment.
2.
Property, plant and equipment and intangible assets
Property, plant and equipment and intangible assets have developed as follows:
Cost
as at 01/01/2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reclassifications in accordance with IAS 40 . . . . . . . . . . . . . . . . .
Disposals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
as at 31/12/2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Owneroccupied
properties
Technical
equipment
and
machinery
17,040
63
Operating
and office
equipment
EUR ’000
Intangible
assets
2,749
40
7,124
61
12,745
193
—
17,103
61
2,728
1.416
5,769
17
12,920
39,658
356
—
1.494
38,520
343
296
6,196
253
1,273
5,175
11,279
787
17
12,049
19,750
1,461
1,325
19,886
593
872
18,634
Cumulative depreciation, amortisation and write-downs
as at 01/01/2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Disposals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
as at 31/12/2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
639
1,933
125
35
2,023
Net carrying amount as at 31/12/2013 . . . . . . . . . . . . . . . . . . . . .
16,464
705
F-40
Total
Cost
as at 01/01/2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reclassifications in accordance with IAS 40 . . . . . . . . . . . . . . . . .
Disposals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
as at 31/12/2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Owneroccupied
properties
Technical
equipment
and
machinery
19,526
79
(2,565)
—
17,040
Operating
and office
equipment
EUR ’000
Intangible
assets
Total
4,059
—
—
1,310
2,749
7,858
155
—
888
7,124
12,795
321
—
371
12,745
44,237
554
(2,565)
2,569
39,658
Cumulative depreciation, amortisation and write-downs
as at 01/01/2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Disposals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
as at 31/12/2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
343
—
343
3,074
137
1,278
1,933
6,745
337
886
6,196
10,893
756
371
11,279
20,711
1,573
2,534
19,750
Net carrying amount as at 31/12/2012 . . . . . . . . . . . . . . . . . . . . .
16,697
816
928
1,466
19,908
The Group’s owner-occupied properties measured in accordance with IAS 16 were reclassified as investment
property due to a decrease in owner-occupied space in 2012.
The decrease in the carrying amounts for technical equipment and machinery, operating and office equipment and
intangible assets was due primarily to depreciation and amortisation.
3.
Investments in joint ventures
The tables below contain a summary of information relating to the company accounted for in accordance with the
equity method, Altmarkt-Galerie Dresden KG:
Companies accounted for in accordance with the equity method
Assets1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Liabilities1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity attributable to the Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1)
31/12/2013
31/12/2012
EUR ’000
01/01/2012
—
—
—
401,552
239,791
69,077
356,287
223,921
59,377
corresponds to 100% interest.
2013
2012
EUR ’000
Companies accounted for in accordance with the equity method
Revenue1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Profit/(loss)1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income for the period attributable to the Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1)
—
—
—
24,038
7,064
2,331
corresponds to 100% interest.
The equity investment reported under this line item was disposed of with effect from 30 April 2013. The disposal
gain is reported under income from joint ventures (section G.7).
4.
Other financial assets
Other financial assets were broken down as follows:
31/12/2013
31/12/2012
EUR ’000
01/01/2012
Shares in non-consolidated entities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Receivables from claims for damages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restricted funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other financial assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
124
19
53
4,236
646
128
41
228
9,406
367
132
38
53
8,952
453
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5,077
10,170
9,629
Restricted funds relate to term deposits which have essentially been pledged for guarantees and interest rate hedges.
Other financial assets are with respect to shares in non-consolidated entities non-current; the remainder is current.
F-41
5.
Trade and other receivables
The table below provides an overview of the Group’s trade and other receivables:
31/12/2013
31/12/2012
EUR ’000
01/01/2012
18,586
(7,019)
11,567
17,964
(8,386)
9,578
27,714
(8,649)
19,065
6,079
3,219
2,269
5,591
2,225
1,763
6,690
10,214
2,161
31/12/2013
31/12/2012
EUR ’000
01/01/2012
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Receivables from other taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Advance payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Receivables from letting incentives granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Miscellaneous other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
118
80
17
8,423
492
164
924
20
6,850
525
245
26
26
5,390
740
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9,129
8,484
6,428
Trade receivables, gross . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Valuation allowances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total trade receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
of which from letting activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
of which from the disposal of properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
of which other trade receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
All trade and other receivables are current.
Valuation allowances relate primarily to receivables originating prior to 1 January 2012.
Please refer to section I.1 for changes in write-downs and changes in collateral received.
6.
Other receivables and assets
Other receivables and assets are broken down as follows:
Letting incentives granted essentially consist of rent-free periods and subsidies for the initial fitting-out of hotels.
Other receivables and assets amounting to EUR 707 thousand (previous year: EUR 1,633 thousand; 1 January 2012:
EUR 1,037 thousand) are current; the remainder non-current.
7.
Inventories
Inventories were broken down as follows:
31/12/2013
31/12/2012
EUR ’000
01/01/2012
Land with finished buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Undeveloped land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Land under development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other buildings in progress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,724
3,981
—
6,680
8,124
8,871
920
4,346
46,534
19,801
3,750
2,657
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
13,385
22,260
72,742
The table below provides further information pertaining to inventories:
2013
2012
EUR ’000
Amount of inventories recorded as expenses during the reporting period . . . . . . . . . . . . . . . . . . . . . . .
Amount of inventories carried for longer than one year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
13,660
1,582
50,348
9,513
The increase in other buildings in progress was due to the construction progress made on a property which has
already been sold and which is scheduled to be completed in 2014; the benefits and risks of ownership will transfer to the
acquirer upon completion.
The reason for the decline in the remainder of the items is rooted in the Group’s strategy of divesting properties
which do not fit with the Group’s strategy. As at 31 December 2013, the portfolio essentially includes undeveloped land
which is suitable for residential properties.
Please refer to section G.6 for the amount of write-downs on inventories recognised as an expense during the period.
At 31 December 2013, EUR 6,680 thousand was pledged as collateral for loans (previous year: EUR 0 thousand).
F-42
8.
Cash and cash equivalents
Cash and cash equivalents broke down as follows as at the relevant reporting dates:
31/12/2013
31/12/2012
EUR ’000
01/01/2012
Bank balances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash-in-hand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
138,909
21
60,515
12
33,568
23
Total cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
138,930
60,527
33,590
Bank balances bear interest at floating interest rates for daily callable balances. Short-term deposits are made for
various terms of up to three months.
9.
Assets and liabilities held for sale
In accordance with the Spin-off Agreement dated 29 December 2011 and in preparation for the planned
privatisation of the Company, virtually all residential properties were spun off with effect from 1 January 2012 and transferred
to TLG WOHNEN GmbH, an entity formed specifically for that purpose on 28 November 2011. These properties and the
associated liabilities and assets were reported as held for sale as at 1 January 2012, directly prior to the spin-off. Given that the
spin-off occurred directly on 1 January 2012, it had no impact on the consolidated statement of comprehensive income or the
statement of cash flows; rather, the EUR 197,248 thousand decrease in net assets is only evident in the capital reserves.
Therefore, the assets and liabilities included in the relevant line items are presented in the following:
01/01/2012
EUR ’000
Investment property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total assets held for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
484,043
7
16,665
1,311
502,026
Liabilities due to financial institutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trade payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
272,631
2,092
684
29,372
Total liabilities included in disposal groups classified as held for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
304,779
In accordance with IFRS 5, only those assets are reported as held for sale as at the reporting dates 1 January 2012,
31 December 2012 and 31 December 2013 if the decision to sell had been taken as at the relevant reporting date, if the
conclusion of the sale within twelve months following the decision to sell was considered highly probable and if active efforts
to market the properties have been initiated.
31/12/2013
31/12/2012
EUR ’000
01/01/2012
Investment property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
17,817
—
—
Total assets held for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
17,817
—
—
*
Excl. TLG WOHNEN GmbH spin-off.
The carrying amount of the assets held for sale and associated liabilities changed as follows:
2013
2012
EUR ’000
Reclassifications from investment property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Disposals due to sale of land and buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Disposal of TLG Wohnen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
209,259
(191,442)
—
17,817
197,247
804
(804)
(197,247)
—
The results from the sale of assets held for sale are reported in the consolidated statement of comprehensive income
under result from the disposal of investment property.
F-43
10. Equity
Pursuant to the agreement dated 19 December 2012, the Federal Republic of Germany sold its 100% interest to the
current shareholders, with the benefits and risks of ownership transferring as at 31 December 2012. Non-controlling interests
no longer exist as at the reporting date (31 December 2012: EUR 0 thousand; 1 January 2012: EUR 2 thousand).
The subscribed capital of the Company was unchanged and amounted to EUR 52,000 thousand.
The capital reserves amounted to EUR 410,249 thousand (31 December 2012: EUR 151,461 thousand). The
changes (EUR 258,787 thousand) resulted from a EUR 438,071 thousand addition to capital reserves due to the reversal of the
special reserve in accordance with section 27 (2) of the D-Mark Accounting Act (D-Mark-Bilanzgesetz, “DMBilG”), a
EUR 199,776 thousand transfer to retained earnings and EUR 20,493 thousand in additional shareholder contributions to the
capital reserves.
The Group’s retained earnings decreased by EUR 464,339 thousand to EUR 339,939 thousand (31 December 2012:
EUR 804,278 thousand) as a result of distributions to shareholders amounting to EUR 325,177 thousand, resulting from the
reversal of the EUR 438,071 thousand special reserve in accordance with section 27 (2) DMBilG. By contrast, the transfer of
EUR 199,776 thousand from capital reserves to retained earnings and the EUR 99,132 thousand consolidated net income for
the year had a positive effect on retained earnings.
Where distributions to the shareholder were concerned, rather than making a cash payment to the shareholder, the
Company assumed, with discharging effect, the shareholder’s loan liabilities amounting to EUR 325,177 thousand.
Other comprehensive income primarily contains actuarial gains and losses of EUR 1,028 thousand (31 December
2012: EUR 1,005 thousand) as well as cumulative adjustments to the fair value of derivatives included in cash flow hedges of
EUR 124 thousand (31 December 2012: EUR 0 thousand).
Deferred taxes are distributed to the items of other comprehensive income as follows:
01/01 – 31/12/2013
Before
After
deferred Deferred deferred
taxes
taxes
taxes
EUR ’000
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Changes in fair values of interest rate derivatives used as cash flow hedges . . . . . . . . . . . . . . .
Actuarial gains and losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
108,942
(180)
(33)
(9,810)
56
10
99,132
(124)
(23)
Consolidated total comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
108,729
(9,744)
98,985
01/01 – 31/12/2012
Before
After
deferred Deferred deferred
taxes
taxes
taxes
EUR ’000
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Changes in fair values of interest rate derivatives used as cash flow hedges . . . . . . . . . . . . . . .
Actuarial gains and losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
135,268 (59,005)
—
—
(1,454)
449
76,264
—
(1,005)
Consolidated total comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
133,814
75,259
(58,556)
11. Liabilities due to financial institutions
In addition to regular and unscheduled repayments of principal, the following factors have resulted in changes to
liabilities to banks in connection with financing activities:
In the context of distributions to shareholders in financial year 2013 (see also section I.4), the Company assumed,
with discharging effect, the shareholder’s loan liabilities amounting to EUR 325,177 thousand. The principal on this loan was
reduced by EUR 250,247 thousand to EUR 74,929 thousand as at the reporting date through repayments. In addition,
EUR 252,511 thousand in loans were disbursed in financial year 2013 (previous year: EUR 71,200 thousand). All loans were
taken out by TLG IMMOBILIEN GmbH.
The loans were collateralised in general through the granting of corresponding liens, the assignment of rights arising
from the lease agreements and the pledge of shares. The vast majority of the portfolio properties generally serve as collateral.
As at 31 December 2013, the loan assumed from the shareholder amounting to EUR 74,929 thousand, project
finance of EUR 16,065 thousand and the principal repayments falling due in 2014 were reported as falling due within
one year.
F-44
Liabilities to banks have the following remaining maturities:
Remaining term up to 1 year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Remaining term longer than 1 year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
31/12/2013
31/12/2012
EUR ’000
01/01/2012
113,225
513,002
87,176
392,865
16,793
407,267
12. Pension provisions
The Group has made pension commitments to (former) executives and former managing directors who had begun
working for the Company between 1991 and 2001.
In 2013, current pensions were paid to 11 employees or former managing directors from within this group (2012: 10
employees or former managing directors). 15 eligible persons have accrued vested pension benefits. The average term of the
commitments was 11.54 years for the managing directors and 14.92 years for the general staff. Payments from pension plans
are expected to amount to EUR 280 thousand in 2014.
Pension provisions for defined benefit pension plans are calculated on the basis of actuarial assumptions in
accordance with IAS 19. The following parameters were applied in the respective financial years:
2013
2012
in %
Discount rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pension trend*) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
*)
3.10%
2.00%
3.10%
2.00%
In some instances, commitments guarantee an interest rate of 1 percent p.a., and then no further trend is applied.
Biometric assumptions are made on the basis of the 2005G mortality tables published by Dr. Klaus Heubeck.
Expenses for the defined benefit pension plans were broken down as follows in the respective financial years:
2013
2012
EUR ’000
Past service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
34
210
24
261
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
244
285
The present value of the pension obligations developed as follows in the respective periods:
2013
2012
EUR ’000
Present value of obligations as at 01/01 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Benefits paid directly by employer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Actuarial gains/losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6,888
34
210
(234)
33
5,377
24
261
(228)
1,454
Present value of obligations as at 31/12 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6,931
6888
The actuarial gains/losses incurred in the past financial year were recognised outside profit or loss under other
comprehensive income. EUR 33 thousand (2012: EUR 4 thousand) in gains/losses resulted from experience-based
adjustments and EUR 0 thousand (2012: EUR 1,450 thousand) resulted in changes in financial assumptions. Overall, other
comprehensive income included EUR 33 thousand in actuarial losses (2012: EUR 1,454 thousand).
Expenses for defined contribution plans amounted to EUR 994 thousand in the current year (2012: EUR 1,149
thousand). These related primarily to contributions to the statutory pension system.
Based on the commitments accounted for as at the reporting dates, a change in the individual parameters would
have had the following impact on the present value of the obligation, assuming all other assumptions remained constant.
Sensitivity analysis for 2013:
Change in
assumption
Discount rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pension trend*) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
*)
0.50%
0.50%
Increase in
assumption
EUR ’000
Reduction in
assumption
6,496
7,084
7,412
6,789
In some instances, commitments guarantee an interest rate of 1 percent p.a., and then no further trend is applied.
Increases and decreases in the discount rate, pension trend, wage and salary trend or mortality do not have the same
absolute impact on the calculation of pension obligations. If several assumptions were to change at the same time, the change
F-45
in the amount of total obligations need not necessarily correspond to the sum of individual effects caused by the changes in
the assumptions. It should further be noted that the sensitivities to a change in pension obligations merely reflect the
magnitude of the specific change in the relevant assumptions (e.g., 0.5%). If the change in the assumptions takes a different
order of magnitude, this will not necessarily have a linear effect on the change in the amount of the pension provisions.
13. Other provisions
Other provisions changed as follows during the financial year:
As at
01/01/2012
As at
01/01/2013
Provisions for personnel expenses from
restructuring plan . . . . . . . . . . . . . . . . . . . . . . . .
Provisions for litigation risks . . . . . . . . . . . . . . . . .
Other miscellaneous provisions . . . . . . . . . . . . . . .
1,256
22,809
3,617
424
18,217
3,522
2,845
711
55
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
27,682
22,162
3,611
Reversals
As at
31/12/2013
(424)
(2,589)
(94)
—
(3,468)
(3,006)
2,845
12,871
477
(3,107)
(6,474)
16,192
Additions Utilisations
EUR ’000
Provisions for personnel expenses after reconciliation of interests have been recognised due to the restructuring
measures resolved by the Company in 2013 and an associated workforce reduction in 2013 and 2014.
TLG has recognised provisions to account for the risk of losing pending proceedings before the courts; the
provisions were recognised in the amount of the expected utilisation. The court proceedings relate primarily to legal disputes
in connection with a public lending institution’s claim for the repayment of subsidies. The reversal of provisions in financial
year 2013 related primarily to provisions for interest on liabilities arising from the pass-through of purchase prices, which
were reversed in agreement with the creditor.
14. Deferred taxes
Deferred tax assets and liabilities result from temporary differences and tax loss carryforwards as follows:
31/12/2013
Deferred Deferred
tax
tax
assets
liabilities
31/12/2012
Deferred Deferred
tax
tax
assets
liabilities
EUR ’000
01/01/2012
Deferred Deferred
tax
tax
assets
liabilities
Investment property and owner-occupied properties . . . . .
Property, plant and equipment . . . . . . . . . . . . . . . . . . . . . .
Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Financial assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pension provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Liabilities to banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Financial liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,167
628
58
—
937
627
—
5,801
1,710
89,000
—
—
—
4,468
—
—
860
2,191
3,027
719
66
—
1,074
786
—
13,409
3,843
74,733
—
—
12,698
6,330
—
21
—
3,988
3,137
702
—
—
3,360
341
—
13,798
3,801
35,074
—
—
7,766
17,446
—
43
—
5,498
Total temporary differences . . . . . . . . . . . . . . . . . . . . . .
Loss carryforwards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
OBD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
11,927
—
—
96,519
—
—
22,923
—
—
97,771
—
—
25,138
24,413
—
65,827
—
16
Total deferred taxes before netting . . . . . . . . . . . . . . . . .
Netting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
11,927
8,379
96,519
8,379
22,923
18,470
97,771
18,470
49,551
37,011
65,843
37,011
Carrying amount after netting . . . . . . . . . . . . . . . . . . . .
3,548
88,139
4,453
79,300
12,540
28,832
Deferred tax assets and liabilities (before netting) are expected to be realised as follows:
2013
2012
EUR ’000
2011
Deferred tax assets
—Realised after more than 12 months Realised after more than 12 months . . . . . . . . . .
—Realised within 12 months Realised within 12 months . . . . . . . . . . . . . . . . . . . . . . . . .
3,480
8,447
4,598
18,325
4,180
45,371
Total deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
11,927
22,923
49,551
Deferred tax liabilities
—Realised after more than 12 months Realised after more than 12 months . . . . . . . . . .
—Realised within 12 months Realised within 12 months . . . . . . . . . . . . . . . . . . . . . . . . .
89,000
7,519
74,754
23,016
35,117
30,726
Total deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

TLG IMMOBILIEN AG J.P. Morgan UBS Investment Bank

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