Liveable housing.
Simply good.
QUARTERLY REPORT AS OF 30 SEPTEMBER 2020
2 | LEG IMMOBILIEN AG Q3 2020 | ||
3 | About this report | ||
3 | Key figures Q3 2020 | ||
4 | Portfolio | ||
8 | Analysis of net assets, financial position | ||
and results of operations | |||
18 | Risk and opportunity report | ||
19 | Forecast report | ||
20 | Consolidated financial statements | ||
20 | Consolidated statement of financial position | ||
21 | Consolidated statement of comprehensive income | ||
22 | Statement of changes in consolidated equity | ||
23 | Consolidated statement of cash flows | ||
24 | Selected notes | ||
24 | 1. | Basic information on the Group | |
24 | 2. | Interim consolidated financial statements | |
24 | 3. | Accounting policies | |
24 | 4. | Changes in the Group | |
25 | 5. | Business combinations | |
26 | 6. | Judgements and estimates | |
27 | 7. | Selected notes to the consolidated | |
statement of financial position | |||
33 | 8. | Selected notes to the consolidated | |
statement of comprehensive income | |||
35 | 9. | Notes on Group segment reporting | |
38 | 10. | Financial instruments | |
41 | 11. | Related-party disclosures | |
41 | 12. | Other | |
41 | 13. The Management Board and | ||
the Supervisory Board | |||
41 | 14. | Supplementary report |
43 Responsibility statement
43 Financial calendar 2020/2021
43 Contact details and imprint
3 | AT A GLANCE | LEG IMMOBILIEN AG Q3 2020 | ||
About this report | Key figures Q3 2020 | |||
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T1
Q3 2020 | Q3 2019 | + / - % | 01.01. - | 01.01. - | + / - % | |||||||||||
30.09.2020 | 30.09.2019 | |||||||||||||||
Results of operations | ||||||||||||||||
Rental income | € million | 156.5 | 147.3 | 6.2 | 464.5 | 439.8 | 5.6 | |||||||||
Net rental and lease income | € million | 126.2 | 114.3 | 10.4 | 365.7 | 340.2 | 7.5 | |||||||||
EBITDA | € million | 123.5 | 107.1 | 15.3 | 940.4 | 864.6 | 8.8 | |||||||||
EBITDA adjusted | € million | 125.0 | 112.7 | 10.9 | 360.2 | 330.5 | 9.0 | |||||||||
EBT | € million | 60.1 | 38.4 | 56.5 | 814.7 | 670.9 | 21.4 | |||||||||
Net profit or loss for the period | € million | 42.7 | 19.8 | 115.7 | 656.1 | 488.9 | 34.2 | |||||||||
FFO I | € million | 102.1 | 88.2 | 15.8 | 296.7 | 259.1 | 14.5 | |||||||||
FFO I per share | € | 1.43 | 1.38 | 3.6 | 4.25 | 4.09 | 3.9 | |||||||||
FFO II | € million | 102.1 | 86.5 | 18.0 | 295.5 | 255.9 | 15.5 | |||||||||
FFO II per share | € | 1.43 | 1.35 | 5.9 | 4.23 | 4.03 | 5.0 | |||||||||
AFFO | € million | 21.8 | 30.2 | - 27.8 | 94.0 | 122.6 | - 23.3 | |||||||||
AFFO per share | € | 0.30 | 0.47 | - 36.2 | 1.34 | 1.93 | - 30.6 | |||||||||
Portfolio | 30.09.2020 | 30.09.2019 | + / - % / bp | |||||||||||||
Number residential units | 138,601 | 133,806 | 3.6 | |||||||||||||
In-place rent | €/sqm | 5.91 | 5.77 | 2.5 | ||||||||||||
In-place rent (l-f-l) | €/sqm | 5.93 | 5.79 | 2.3 | ||||||||||||
EPRA vacancy rate | % | 3.3 | 3.9 | - 60 bp | ||||||||||||
EPRA vacancy rate (l-f-l) | % | 3.1 | 3.6 | - 50 bp | ||||||||||||
Statement of financial position | 30.09.2020 | 31.12.2019 | + / - % / bp | |||||||||||||
Investment property | € million | 13,222.2 | 12,031.1 | 9.9 | ||||||||||||
Cash and cash equivalents | € million | 848.8 | 451.2 | 88.1 | ||||||||||||
Equity | € million | 6,677.6 | 5,933.9 | 12.5 | ||||||||||||
Total financing liabilities | € million | 5,728.8 | 5,053.9 | 13.4 | ||||||||||||
Current financing liabilities | € million | 487.3 | 197.1 | 147.2 | ||||||||||||
LTV | % | 36.4 | 37.7 | - 130 bp | ||||||||||||
Equity ratio | % | 45.8 | 45.9 | - 10 bp | ||||||||||||
Adj. EPRA NAV, diluted | € million | 8,702.6 | 7,273.0 | 19.7 | ||||||||||||
Adj. EPRA NAV per share, diluted | € | 115.21 | 105.39 | 9.3 | ||||||||||||
bp = basis points
4 | PORTFOLIO | LEG IMMOBILIEN AG Q3 2020 |
Portfolio
Portfolio segmentation and housing stock | Performance of the LEG portfolio |
The regular cost rent adjustment for rent-restricted apartments that is conducted every three years took place in January 2020. The average
The LEG portfolio can be divided into three market clusters using a scoring system: high-growth markets, stable markets and higher- yielding markets. The indicators for the scoring system are described in the
LEG's portfolio is spread across around 180 locations with a geographical focus on North Rhine-Westphalia and further activities in Lower Saxony, Bremen and Rhineland-Palatinate. The average apartment size is 64 square metres with an average monthly rent of EUR 5.91 per square metre.
As at 30 September 2020, the portfolio consisted of 138,601 residential units; 1,295 commercial units and 35,892 garages and parking spaces. All of the acquisitions made in FY 2019 were transferred to the LEG portfolio by 1 January 2020 at the latest.
Operational development
In-place rent on a like-for-like basis was EUR 5.93 per square metre as of 30 September 2020, 2.3 % up on the previous year.
In the free-financed segment which accounts for around 75 % of LEG's portfolio, rents rose by 2.3 % to EUR 6.31 per square metre/ month (on a like-for-like basis). In the high-growth markets, in-place rent increased by 2.4 % to EUR 7.34 per square metre (on a like-for- like basis). The stable markets recorded a plus of 2.7 % to an average rent of EUR 5.94 per square metre (on a like-for-like basis). In the higher-yielding markets an average increase of 1.9 % to 5.71 Euro per square metre (on a like-for-like basis) was achieved.
rent in this segment increased by 2.0 % year on year or EUR 0.09 to EUR 4.89 per square metre (on a like-for-like basis) at the end of the reporting period.
The EPRA vacancy rate on a like-for-like basis was 3.1 % as at 30 Sep- tember 2020, down 50 basis points on the previous year. With an occupancy rate of 98.3 % (on a like-for-like basis) the LEG portfolio in the high-growth markets was nearly fully let at the end of the reporting period. In the stable markets the occupancy rate was 96.9 % (on a like-for-like basis). In the higher-yielding markets, it stood at 95.2 % (on a like-for-like basis).
5 | PORTFOLIO | LEG IMMOBILIEN AG Q3 2020 |
T2
Portfolio segments - top 3 locations | ||||||||||||||||||||||||||
Total portfolio | Change | |||||||||||||||||||||||||
like-for-like basis | ||||||||||||||||||||||||||
30.09.2020 | 30.09.2019 | |||||||||||||||||||||||||
Number | Share of | Living space | In-place rent | EPRA | Number | Share of | Living space | In-place rent | EPRA | In-place rent | Vacancy rate | |||||||||||||||
of LEG | LEG-portfolio | vacancy rate | of LEG | LEG-portfolio | vacancy rate | in % | basis points | |||||||||||||||||||
apartments | in % | in sqm | €/sqm | in % | apartments | in % | in sqm | €/sqm | in % | like-for-like | like-for-like | |||||||||||||||
High-growth markets | 41,918 | 30.2 | 2,783,151 | 6.68 | 1.9 | 39,691 | 29.7 | 2,641,528 | 6.58 | 2.0 | 2.3 | - 20 | ||||||||||||||
District of Mettmann | 8,500 | 6.1 | 590,990 | 6.84 | 2.2 | 8,484 | 6.3 | 589,864 | 6.71 | 2.3 | 1.8 | - 30 | ||||||||||||||
Muenster | 6,198 | 4.5 | 412,104 | 6.75 | 1.0 | 6,126 | 4.6 | 406,760 | 6.67 | 0.9 | 1.4 | 10 | ||||||||||||||
Dusseldorf | 5,422 | 3.9 | 352,442 | 7.99 | 1.9 | 5,352 | 4.0 | 348,054 | 7.78 | 3.1 | 3.1 | - 120 | ||||||||||||||
Other locations | 21,798 | 15.7 | 1,427,615 | 6.26 | 2.0 | 19,729 | 14.7 | 1,296,850 | 6.17 | 1.8 | 2.6 | 20 | ||||||||||||||
Stable markets | 54,203 | 39.1 | 3,456,210 | 5.62 | 3.4 | 51,051 | 38.2 | 3,271,626 | 5.47 | 3.8 | 2.6 | - 40 | ||||||||||||||
Dortmund | 13,722 | 9.9 | 896,604 | 5.47 | 2.8 | 13,581 | 10.1 | 889,245 | 5.29 | 3.3 | 3.1 | - 50 | ||||||||||||||
Moenchengladbach | 6,442 | 4.6 | 408,183 | 5.99 | 2.4 | 6,443 | 4.8 | 408,317 | 5.82 | 2.2 | 3.0 | 20 | ||||||||||||||
Essen | 3,372 | 2.4 | 217,538 | 5.67 | 3.4 | 3,373 | 2.5 | 217,595 | 5.51 | 3.1 | 2.9 | 40 | ||||||||||||||
Other locations | 30,667 | 22.1 | 1,933,885 | 5.61 | 4.0 | 27,654 | 20.7 | 1,756,469 | 5.47 | 4.4 | 2.2 | - 60 | ||||||||||||||
Higher-yielding markets | 42,360 | 30.6 | 2,573,636 | 5.45 | 5.0 | 43,064 | 32.2 | 2,647,198 | 5.31 | 6.5 | 2.0 | - 110 | ||||||||||||||
District of Recklinghausen | 9,022 | 6.5 | 548,855 | 5.35 | 3.5 | 9,864 | 7.4 | 618,328 | 5.14 | 6.1 | 2.0 | - 70 | ||||||||||||||
Duisburg | 6,339 | 4.6 | 383,679 | 5.84 | 3.4 | 6,847 | 5.1 | 423,821 | 5.68 | 6.0 | 1.8 | - 250 | ||||||||||||||
Maerkisch District | 4,608 | 3.3 | 284,508 | 5.35 | 4.7 | 4,567 | 3.4 | 281,400 | 5.20 | 4.2 | 2.1 | 70 | ||||||||||||||
Other locations | 22,391 | 16.2 | 1,356,595 | 5.40 | 6.1 | 21,786 | 16.3 | 1,323,649 | 5.29 | 7.4 | 1.9 | - 120 | ||||||||||||||
Total 1 | 138,601 | 100.0 | 8,820,838 | 5.91 | 3.3 | 133,806 | 100.0 | 8,560,352 | 5.77 | 3.9 | 2.3 | - 50 |
1 30.09.2020: Incl. 120 units intended for disposal.
6 | PORTFOLIO | LEG IMMOBILIEN AG Q3 2020 |
T3 | |||||||||||||||||||||||||||||
Performance LEG Portfolio | |||||||||||||||||||||||||||||
High-growth markets | Stable markets | Higher-yielding markets | Total | ||||||||||||||||||||||||||
30.09.2020 | 30.06.2020 | 30.09.2019 | 30.09.2020 | 30.06.2020 | 30.09.2019 | 30.09.2020 | 30.06.2020 | 30.09.2019 | 30.09.2020 | 30.06.2020 | 30.09.2019 | ||||||||||||||||||
Subsidised residential units | |||||||||||||||||||||||||||||
Units | 11,922 | 11,922 | 11,181 | 14,093 | 14,169 | 14,409 | 8,142 | 8,142 | 9,005 | 34,157 | 34,233 | 34,694 | |||||||||||||||||
Area | sqm | 820,872 | 820,872 | 775,125 | 954,367 | 958,770 | 982,329 | 534,763 | 534,770 | 598,114 | 2,310,001 | 2,314,411 | 2,360,546 | ||||||||||||||||
In-place rent | €/sqm | 5.21 | 5.19 | 5.11 | 4.82 | 4.81 | 4.73 | 4.54 | 4.53 | 4.46 | 4.90 | 4.88 | 4.79 | ||||||||||||||||
EPRA vacancy rate | % | 0.9 | 1.0 | 1.0 | 2.8 | 2.6 | 2.7 | 2.8 | 2.7 | 4.7 | 2.1 | 2.0 | 2.7 | ||||||||||||||||
Free-financed residential units | |||||||||||||||||||||||||||||
Units | 29,996 | 30,014 | 28,534 | 40,110 | 39,109 | 36,618 | 34,218 | 34,049 | 34,059 | 104,444 | 103,292 | 99,112 | |||||||||||||||||
Area | sqm | 1,962,279 | 1,963,494 | 1,867,846 | 2,501,844 | 2,437,142 | 2,287,854 | 2,038,874 | 2,026,479 | 2,049,084 | 6,510,837 | 6,434,956 | 6,199,806 | ||||||||||||||||
In-place rent | €/sqm | 7.30 | 7.26 | 7.20 | 5.93 | 5.90 | 5.79 | 5.69 | 5.66 | 5.56 | 6.28 | 6.25 | 6.15 | ||||||||||||||||
EPRA vacancy rate | % | 2.2 | 2.2 | 2.2 | 3.6 | 3.8 | 4.1 | 5.4 | 5.9 | 6.9 | 3.6 | 3.8 | 4.3 | ||||||||||||||||
Total residential units 1 | |||||||||||||||||||||||||||||
Units | 41,918 | 41,936 | 39,715 | 54,203 | 53,278 | 51,027 | 42,360 | 42,191 | 43,064 | 138,601 | 137,525 | 133,806 | |||||||||||||||||
Area | sqm | 2,783,151 | 2,784,366 | 2,642,971 | 3,456,210 | 3,395,913 | 3,270,183 | 2,573,636 | 2,561,249 | 2,647,198 | 8,820,838 | 8,749,367 | 8,560,352 | ||||||||||||||||
In-place rent | €/sqm | 6.68 | 6.64 | 6.58 | 5.62 | 5.59 | 5.47 | 5.45 | 5.42 | 5.31 | 5.91 | 5.88 | 5.77 | ||||||||||||||||
EPRA vacancy rate | % | 1.9 | 2.0 | 2.0 | 3.4 | 3.5 | 3.8 | 5.0 | 5.4 | 6.5 | 3.3 | 3.4 | 3.9 | ||||||||||||||||
Total commercial | |||||||||||||||||||||||||||||
Units | 1,295 | 1,288 | 1,259 | ||||||||||||||||||||||||||
Area | sqm | 215,458 | 214,464 | 207,946 | |||||||||||||||||||||||||
Total parking | |||||||||||||||||||||||||||||
Units | 35,892 | 35,460 | 34,117 | ||||||||||||||||||||||||||
Total other | |||||||||||||||||||||||||||||
Units | 2,746 | 2,736 | 2,611 | ||||||||||||||||||||||||||
1 30.06.2020/30.09.2020: Incl. 120 units intended for disposal.
7 | PORTFOLIO | LEG IMMOBILIEN AG Q3 2020 |
Value development
The following table shows the distribution of assets by market seg- ment. LEG did not execute a portfolio valuation in the third quarter. The rental yield based on in-place rents was 4.8 % as at 30 September 2020 (rent multiplier 20.7) excluding assets held for sale. The valuation of the residential portfolio corresponds to a net initial yield of 3.7 % as defined by EPRA.
T4
Market segments | ||||||||||||||
Residential | Residential | Share | Gross asset | In-place rent | Commercial/ | Total assets | ||||||||
units | assets | residential | value | multiplier | other assets | |||||||||
assets | ||||||||||||||
30.09.2020 | € million 1 | in % | €/sqm | € million 2 | € million | |||||||||
High-growth markets | 41,918 | 5,612 | 44 | 2,001 | 25.2x | 252 | 5,864 | |||||||
District of Mettmann | 8,500 | 1,159 | 9 | 1,964 | 24.1x | 77 | 1,236 | |||||||
Muenster | 6,198 | 948 | 7 | 2,296 | 28.4x | 50 | 998 | |||||||
Dusseldorf | 5,422 | 898 | 7 | 2,519 | 26.4x | 41 | 939 | |||||||
Other locations | 21,798 | 2,608 | 21 | 1,805 | 24.3x | 83 | 2,691 | |||||||
Stable markets | 54,203 | 4,404 | 35 | 1,284 | 19.3x | 141 | 4,545 | |||||||
Dortmund | 13,722 | 1,290 | 10 | 1,432 | 22.2x | 53 | 1,343 | |||||||
Moenchengladbach | 6,442 | 539 | 4 | 1,318 | 18.1x | 14 | 553 | |||||||
Essen | 3,372 | 280 | 2 | 1,281 | 19.3x | 10 | 290 | |||||||
Other locations | 30,667 | 2,295 | 18 | 1,208 | 18.3x | 64 | 2,359 | |||||||
Higher-yielding markets | 42,360 | 2,676 | 21 | 1,036 | 16.5x | 86 | 2,762 | |||||||
District of Recklinghausen | 9,022 | 584 | 5 | 1,054 | 16.9x | 20 | 603 | |||||||
Duisburg | 6,339 | 447 | 4 | 1,172 | 17.2x | 28 | 476 | |||||||
Maerkisch District | 4,608 | 279 | 2 | 980 | 15.9x | 3 | 283 | |||||||
Other locations | 22,391 | 1,366 | 11 | 1,002 | 16.2x | 34 | 1,400 | |||||||
Total portfolio 3 | 138,481 | 12,692 | 100 | 1,440 | 20.7x | 478 | 13,171 | |||||||
Assets under construction (IAS 40) | 14 | |||||||||||||
Leasehold and land values | 37 | |||||||||||||
Balance sheet property | ||||||||||||||
valuation assets (IAS 40) | 13,222 | |||||||||||||
Inventories (IAS 2) | 1 | |||||||||||||
Owner-occupied property (IAS 16) | 26 | |||||||||||||
Held for sale (IFRS 5) | 34 | |||||||||||||
Total balance sheet | 13,283 | |||||||||||||
- Excluding 276 residential units in commercial buildings; including 460 commercial units as well as several other units in mixed residential assets.
- Excluding 460 commercial units in mixed residential assets; including 276 residential units in commercial buildings, commercial, parking, other assets.
- 30.09.2020: Excluding 120 units reclassified to Assets held for sale (IFRS 5).
8 | ANALYSIS OF NET ASSETS, FINANCIAL POSITION AND RESULTS OF OPERATIONS | LEG IMMOBILIEN AG Q3 2020 | ||
Analysis of net assets, financial position and results of operations | ||||
Please see the > glossary in the 2019 annual report for a definition of | In the reporting period, net rental and lease income increased primarily | |||
individual key figures and terms. | due to higher net cold rents by 7.5 % to EUR 365.7 million. | |||
Adjusted EBITDA increased by 9.0 % to EUR 360.2 million. The adjusted | ||||
Results of operations | EBITDA margin increased slightly from 75.1 % (comparative period) | |||
to 77.5 % in the reporting period. | ||||
T5 |
Condensed income statement | |||||||||||
Q3 2020 | Q3 2019 | 01.01.- | 01.01.- | ||||||||
€ million | 30.09.2020 | 30.09.2019 | |||||||||
Net rental and lease income | 126.2 | 114.3 | 365.7 | 340.2 | |||||||
Net income from the disposal of investment properties | - 0.2 | - 0.4 | - 0.8 | - 0.8 | |||||||
Net income from the remeasurement of investment properties | 0.6 | 1.4 | 593.3 | 551.6 | |||||||
Net income from the disposal of real estate inventory | - 0.5 | - 0.7 | - 2.3 | - 2.0 | |||||||
Net income from other services | 1.3 | 0.9 | 4.2 | 1.5 | |||||||
Administrative and other expenses | - 8.2 | - 12.7 | - 32.6 | - 38.0 | |||||||
Other income | 0.1 | 0.1 | 0.1 | 0.4 | |||||||
Operating earnings | 119.3 | 102.9 | 927.6 | 852.9 | |||||||
Interest income | 0.1 | 0.2 | 0.1 | 0.2 | |||||||
Interest expenses | - 25.5 | - 40.6 | - 71.2 | - 92.7 | |||||||
Net income from investment securities and other equity investments | 0.0 | 0.4 | 1.9 | 3.1 | |||||||
Net income from the fair value measurement of derivatives | - 33.8 | - 24.5 | - 43.7 | - 92.6 | |||||||
Net finance earnings | - 59.2 | - 64.5 | - 112.9 | - 182.0 | |||||||
Earnings before income taxes | 60.1 | 38.4 | 814.7 | 670.9 | |||||||
Income taxes | - 17.4 | - 18.6 | - 158.6 | - 182.0 | |||||||
Net profit or loss for the period | 42.7 | 19.8 | 656.1 | 488.9 | |||||||
The increase of operating earnings by EUR 74.7 million in the reporting period was mainly due to EUR 41.7 million higher net income from the remeasurement of investment properties.
In the reporting period, net income from the fair value measurement of derivatives resulted primarily from changes in the fair value of embedded derivatives from the convertible bonds in the amount of EUR - 43.7 million (comparative period: EUR - 91.3 million).
Current income tax expenses of EUR - 2.9 million were recorded affecting net income in the reporting period (comparative period: EUR - 13.0 million).
9 | ANALYSIS OF NET ASSETS, FINANCIAL POSITION AND RESULTS OF OPERATIONS | LEG IMMOBILIEN AG Q3 2020 |
Net rental and lease income
T6
Net rental and lease income | |||||||||
Q3 2020 | Q3 2019 | 01.01.- | 01.01.- | ||||||
€ million | 30.09.2020 | 30.09.2019 | |||||||
Net cold rent | 156.5 | 147.3 | 464.5 | 439.8 | |||||
Profit from operating expenses | 0.4 | 1.0 | - 1.2 | - 0.9 | |||||
Maintenance for externally procured services | - 13.4 | - 11.5 | - 37.4 | - 36.9 | |||||
Staff costs | - 17.4 | - 16.8 | - 53.7 | - 48.8 | |||||
Allowances on rent receivables | - 1.3 | - 1.5 | - 5.6 | - 5.8 | |||||
Depreciation and amortisation expenses | - 2.4 | - 2.6 | - 7.4 | - 6.9 | |||||
Other | 3.8 | - 1.6 | 6.5 | - 0.3 | |||||
Net rental and lease income | 126.2 | 114.3 | 365.7 | 340.2 | |||||
Net operating income margin (in %) | 80.6 | 77.6 | 78.7 | 77.4 | |||||
Non-recurring project costs - rental and lease | 1.1 | 1.3 | 3.2 | 2.9 | |||||
Depreciation | 2.4 | 2.6 | 7.4 | 6.9 | |||||
Adjusted net rental and lease income | 129.7 | 118.2 | 376.3 | 350.0 | |||||
Adjusted net operating income margin (in %) | 82.9 | 80.2 | 81.0 | 79.6 | |||||
T7
EPRA vacancy rate | ||||
€ million | 30.09.2020 | 30.09.2019 | ||
Rental value of | ||||
vacant space - like-for-like | 19.0 | 21.9 | ||
Rental value of vacant space - total | 21.9 | 24.5 | ||
Rental value of the | ||||
whole portfolio - like-for-like | 622.3 | 610.2 | ||
Rental value of the | ||||
whole portfolio - total | 667.0 | 627.0 | ||
EPRA vacancy rate - | ||||
like-for-like (in %) | 3.1 | 3.6 | ||
EPRA vacancy rate - total (in %) | 3.3 | 3.9 | ||
The EPRA capex splits the capitalised expenditure of the reporting period in comparison to the comparative period in three components. On a like-for-like portfolio basis, the value-adding modernization work as a result of the strategic investment program surged by EUR 67.9 million to EUR 262.8 million in the reporting period. In the Development area most of the investment is due to the construction project in Hilden.
In the reporting period, the LEG Group increased its net rental and lease income by EUR 25.5 million compared to the same period of the previous year. The main driver of this development was the EUR 24.7 million rise in net cold rents. In-place rent per square metre on a like-for-like basis rose by 2.3 % in the reporting period. The increase in Other is mainly due to the expansion of value-added services. This was countered by the increase in staff costs by EUR 4.9 million, which was mainly due to an increase in the number of employees as well as to tariff increases.
Due to disproportionate increase of net rental and lease income compared with the development of in-place rent the NOI margin increased from 77.4 % to 78.7 % in the reporting period.
The EPRA vacancy rate like-for-like has improved compared to the comparative period and stands at 3.1 % as at 30 September 2020 (3.6 % as at 30 September 2019).
10 | ANALYSIS OF NET ASSETS, FINANCIAL POSITION AND RESULTS OF OPERATIONS | LEG IMMOBILIEN AG Q3 2020 | ||
T8 | T9 | |
EPRA capex | ||||
01.01. - | 01.01. - | |||
€ million | 30.09.2020 | 30.09.2019 | ||
Acquisitions | 6.7 | - | ||
Development | 3.2 | 3.1 | ||
Like-for-like Portfolio | 192.8 | 133.4 | ||
Capex | 202.7 | 136.5 | ||
In addition to the value-adding modernisation, the increase in maintenance expenses by EUR 1.7 million to EUR 60.1 million resulted in total investments of EUR 262.8 million in the reporting period (comparative period: EUR 194.9 million). The capitalisation rate increased to 77.1 % in the reporting period (comparative period: 70.0 %). Despite increase in area of investment properties in the reporting period total investments rose to EUR 29.38 per square metre (comparative period: EUR 22.25 per square metre) and without new construction activities to EUR 29.02 per square metre (comparative period: EUR 21.88 per square metre).
Maintenance and modernisation | |||||||||
Q3 2020 | Q3 2019 | 01.01. - | 01.01. - | ||||||
€ million | 30.09.2020 | 30.09.2019 | |||||||
Maintenance expenses | 23.0 | 19.7 | 60.1 | 58.4 | |||||
thereof investment properties | 21.5 | 19.7 | 57.8 | 57.6 | |||||
Capital expenditure | 80.3 | 58.2 | 202.7 | 136.5 | |||||
thereof investment properties | 79.5 | 58.2 | 200.7 | 132.4 | |||||
Total investment | 103.3 | 77.9 | 262.8 | 194.9 | |||||
thereof investment properties | 101.0 | 77.9 | 258.5 | 190.0 | |||||
Area of investment properties in million sqm | 9.01 | 8.76 | 8.94 | 8.76 | |||||
Average investment per sqm (€) | 11.46 | 8.89 | 29.38 | 22.25 | |||||
Average investment per sqm without new construction activities (€) | 11.69 | 8.77 | 29.02 | 21.88 | |||||
Net income from the disposal of investment properties
T10
Net income from the disposal of investment properties | ||||||||
Q3 2020 | Q3 2019 | 01.01. - | 01.01. - | |||||
€ million | 30.09.2020 | 30.09.2019 | ||||||
Income from the disposal of investment properties | 3.5 | 3.8 | 30.2 | 26.7 | ||||
Carrying amount of the disposal of investment properties | - 3.5 | - 3.8 | - 30.3 | - 26.7 | ||||
Costs of sales of investment properties | - 0.2 | - 0.4 | - 0.7 | - 0.8 | ||||
Net income from the disposal of investment properties | - 0.2 | - 0.4 | - 0.8 | - 0.8 | ||||
Disposals of investment properties increased in the reporting period. Income from the disposal of investment property amounted to EUR 30.2 million and relate mainly to objects, which were reported as
assets held for sale and were remeasured up to the agreed property value as of 31 December 2019.
11 | ANALYSIS OF NET ASSETS, FINANCIAL POSITION AND RESULTS OF OPERATIONS | LEG IMMOBILIEN AG Q3 2020 | ||
Net income from remeasurement of investment property
The remeasurement of investment properties was conducted as of 30 June 2020. There were minor changes in the third quarter 2020 due to the remeasurement of the assets held for sale according to IFRS 5.
Net income from remeasurement of investment property amounted to EUR 593.3 million in the reporting period which corresponds to a 4.8 % rise (incl. acquisitions) compared to the start of the financial year.
The average value of investment property (incl. IFRS 5 objects) is EUR 1,440 per square metre including acquisitions (31 December 2019: EUR 1,353 per square metre).
The increase in the value of the portfolio is the result of the further increase in rents as well as further reduction in the discount and capitalisation rates.
Net income from the disposal of real estate inventory
The disposal of the remaining properties of the former "Development" division continued as planned in the reporting period.
The remaining real estate inventory held as at 30 September 2020 amounts to EUR 0.4 million, of which EUR 0.4 million is land under development.
Administrative and other expenses
T11
Administrative and other expenses | ||||||||
Q3 2020 | Q3 2019 | 01.01. - | 01.01. - | |||||
€ million | 30.09.2020 | 30.09.2019 | ||||||
Other operating expenses | - 2.0 | - 2.7 | - 12.4 | - 10.1 | ||||
Staff costs | - 4.9 | - 9.0 | - 16.0 | - 24.4 | ||||
Purchased services | - 0.3 | - 0.3 | - 1.1 | - 0.9 | ||||
Depreciation and amortisation | - 1.0 | - 0.7 | - 3.1 | - 2.6 | ||||
Administratve and other expenses | - 8.2 | - 12.7 | - 32.6 | - 38.0 | ||||
Depreciation and amortisation | 1.0 | 0.7 | 3.1 | 2.6 | ||||
Non-recurring project costs and extraordinary and prior-period expenses | 0.5 | 4.7 | 6.9 | 12.0 | ||||
Adjusted administrative and other expenses | - 6.8 | - 7.2 | - 22.7 | - 23.3 | ||||
The increase in other operating expenses is mainly attributable to increased costs for advice and insurance. In contrast, staff costs in the comparative period were characterised by one-time payments (EUR 8.1 million). Non-recurring project costs therefore decreased significantly in the first nine months of 2020 compared to the same period of the previous year. Adjusted administrative expenses are therefore slightly lower than in the comparative period.
12 | ANALYSIS OF NET ASSETS, FINANCIAL POSITION AND RESULTS OF OPERATIONS |
Net finance earnings
T12
Net finance earnings | |||||||||
Q3 2020 | Q3 2019 | 01.01. - | 01.01. - | ||||||
€ million | 30.09.2020 | 30.09.2019 | |||||||
Interest income | 0.1 | 0.2 | 0.1 | 0.2 | |||||
Interest expenses | - 25.5 | - 40.6 | - 71.2 | - 92.7 | |||||
Net interest income | - 25.4 | - 40.4 | - 71.1 | - 92.5 | |||||
Net income from other financial assets and other investments | 0.0 | 0.4 | 1.9 | 3.1 | |||||
Net income from associates | - | 0.0 | - | 0.0 | |||||
Net income from the fair value measurement of derivatives | - 33.8 | - 24.5 | - 43.7 | - 92.6 | |||||
Net finance earnings | - 59.2 | - 64.5 | - 112.9 | - 182.0 | |||||
LEG IMMOBILIEN AG Q3 2020
Interest expenses decreased by EUR 21.5 million to EUR 71.2 million compared to the same period of the previous year. This includes the interest expense from loan amortisation, which decreased by EUR 19.7 million year on year to EUR 9.8 million. The interest expense from loan amortisation includes the measurement of the convertible and corporate bonds at amortised cost in the amount of EUR 4.7 million (comparative period: EUR 20.5 million). The main driver for the decrease are the refinancings carried out in the financial year 2019 and the early conversion of the convertible bond issued in 2014. The issue of the two corporate bonds in the fourth quarter 2019 as well as the issued convertible bond in June 2020 had an opposite effect.
Year-on-year a further reduction in the average interest rate to 1.35 % was achieved as at 30 September 2020 (1.64 % as at 30 September 2019) based on an average term of around 7.7 years (7.3 years as at 30 September 2019).
Dividends received from equity investments in non-consolidated and non-associated companies decreased by EUR 1.2 million year-on-year to EUR 1.9 million in the reporting period.
In the reporting period, net income from the fair value measurement of derivatives resulted primarily from changes in the fair value of embedded derivatives from the convertible bond in the amount of EUR - 43.7 million (comparative period: EUR - 91.3 million).
13 | ANALYSIS OF NET ASSETS, FINANCIAL POSITION AND RESULTS OF OPERATIONS | LEG IMMOBILIEN AG Q3 2020 | ||
Income tax expenses
T13
Income tax expenses | ||||||||
Q3 2020 | Q3 2019 | 01.01. - | 01.01. - | |||||
€ million | 30.09.2020 | 30.09.2019 | ||||||
Current tax expenses | - 0.9 | - 5.5 | - 2.9 | - 13.0 | ||||
Deferred tax expenses | - 16.5 | - 13.1 | - 155.7 | - 169.0 | ||||
Income tax expenses | - 17.4 | - 18.6 | - 158.6 | - 182.0 | ||||
Reconciliation to FFO
FFO I is a key financial performance indicator of the LEG Group. The LEG Group distinguishes between FFO I (not including net income from the disposal of investment properties), FFO II (including net income from the disposal of investment properties) and AFFO (FFO I adjusted for capex). The calculation methods for these key figures can be found in the
An effective Group tax rate of 18.3 % was assumed in the reporting period in accordance with Group tax planning (comparative period: 22.8 %).
The effective group tax rate used is significantly lower than in the comparative period, because since the financial year 2020 another large group company with a property portfolio is subject to the expanded trade tax reduction.
14 | ANALYSIS OF NET ASSETS, FINANCIAL POSITION AND RESULTS OF OPERATIONS | LEG IMMOBILIEN AG Q3 2020 | ||
FFO I, FFO II and AFFO were calculated as follows in the reporting period and the same period of the previous year:
T14
Calculation of FFO I, FFO II and AFFO | ||||||||||||||||
Q3 2020 | Q3 2019 | 01.01. - | 01.01. - | |||||||||||||
€ million | 30.09.2020 | 30.09.2019 | ||||||||||||||
Net cold rent | 156.5 | 147.3 | 464.5 | 439.8 | ||||||||||||
Profit from operating expenses | 0.4 | 1.0 | - 1.2 | - 0.9 | ||||||||||||
Maintenance for externally procured services | - 13.4 | - 11.5 | - 37.4 | - 36.9 | ||||||||||||
Staff costs | - 17.4 | - 16.8 | - 53.7 | - 48.8 | ||||||||||||
Allowances on rent receivables | - 1.3 | - 1.5 | - 5.6 | - 5.8 | ||||||||||||
Other | 3.8 | - 1.6 | 6.5 | - 0.3 | ||||||||||||
Non-recurring project costs (rental and lease) | 1.1 | 1.3 | 3.2 | 2.9 | ||||||||||||
Current net rental and lease income | 129.7 | 118.2 | 376.3 | 350.0 | ||||||||||||
Current net income from other services | 2.1 | 1.6 | 6.6 | 3.4 | ||||||||||||
Staff costs | - 4.9 | - 9.0 | - 16.0 | - 24.4 | ||||||||||||
Non-staff operating costs | - 2.4 | - 2.9 | - 13.6 | - 10.9 | ||||||||||||
Non-recurring project costs (admin.) | 0.5 | 4.7 | 6.9 | 12.0 | ||||||||||||
Extraordinary and prior-period expenses | 0.0 | 0.0 | 0.0 | 0.0 | ||||||||||||
Current administrative expenses | - 6.8 | - 7.2 | - 22.7 | - 23.3 | ||||||||||||
Other income and expenses | 0.0 | 0.1 | 0.0 | 0.4 | ||||||||||||
Adjusted EBITDA | 125.0 | 112.7 | 360.2 | 330.5 | ||||||||||||
Cash interest expenses and income | - 21.1 | - 19.4 | - 59.7 | - 58.4 | ||||||||||||
Cash income taxes from rental and lease | - 0.8 | - 3.8 | - 2.0 | - 10.0 | ||||||||||||
FFO I (before adjustment of non-controlling interests) | 103.1 | 89.5 | 298.5 | 262.1 | ||||||||||||
Adjustment of non-controlling interests | - 1.0 | - 1.3 | - 1.8 | - 3.0 | ||||||||||||
FFO I (after adjustment of non-controlling interests) | 102.1 | 88.2 | 296.7 | 259.1 | ||||||||||||
Weighted average number of shares outstanding | 71,451,447 | 63,904,421 | 69,876,373 | 63,426,930 | ||||||||||||
FFO I per share | 1.43 | 1.38 | 4.25 | 4.09 | ||||||||||||
Net income from the disposal of investment properties | 0.0 | - 0.1 | - 0.3 | - 0.3 | ||||||||||||
Cash income taxes from disposal of investment properties | 0.0 | - 1.6 | - 0.9 | - 2.9 | ||||||||||||
FFO II (incl. disposal of investment properties) | 102.1 | 86.5 | 295.5 | 255.9 | ||||||||||||
Capex | - 80.3 | - 58.0 | - 202.7 | - 136.5 | ||||||||||||
Capex-adjusted FFO I (AFFO) | 21.8 | 30.2 | 94.0 | 122.6 | ||||||||||||
At EUR 296.7 million, FFO I was 14.5 % higher in the reporting period than in the same period of the previous year (comparative period: EUR 259.1 million). In particular, this increase is attributable to the positive impact from the rise in net cold rent including the effects of the concluded acquisitions. As well the temporary decline in cash income taxes from rental business has an impact.
With slightly increased interest expenses, there is an increase of the interest coverage ratio (ratio of adjusted EBITDA to cash interest expense) from 566 % in the same period of the previous year to 603 % in the reporting period with simultaneously reduced net gearing.
15 | ANALYSIS OF NET ASSETS, FINANCIAL POSITION AND RESULTS OF OPERATIONS | LEG IMMOBILIEN AG Q3 2020 | ||
EPRA earnings per share (EPS)
The following table shows earnings per share according to the best practice recommendations by EPRA (European Public Real Estate Association):
T15
EPRA earnings per share (EPS) | |||||||||
Q3 2020 | Q3 2019 | 01.01. - | 01.01. - | ||||||
€ million | 30.09.2020 | 30.09.2019 | |||||||
Net profit or loss for the period attributable to parent shareholders | 41.8 | 19.1 | 653.4 | 486.2 | |||||
Changes in value of investment properties | - 3.8 | - 1.4 | - 593.4 | - 551.6 | |||||
Profits or losses on disposal of investment properties, development properties held | |||||||||
for investment, other interests and sales of trading properties including impairment | |||||||||
charges in respect of trading properties | 0.8 | 1.1 | 3.3 | 2.8 | |||||
Tax on profits or losses on disposals of trading properties | 0.2 | 1.5 | 1.0 | 2.9 | |||||
Changes in fair value of financial instruments and associated close-out costs | 33.8 | 24.5 | 43.7 | 92.6 | |||||
Acquisition costs on share deals and non-controlling joint venture interests | 3.2 | - 0.1 | 4.3 | 0.0 | |||||
Deferred tax in respect of EPRA adjustments | 0.1 | - 0.9 | 108.5 | 125.3 | |||||
Refinancing expenses | 0.0 | 4.5 | 0.4 | 4.9 | |||||
Other interest expenses | 1.1 | 0.0 | 1.1 | 0.2 | |||||
Non-controlling interests in respect of the above | 0.2 | 0.0 | 0.4 | 0.3 | |||||
EPRA earnings | 77.4 | 48.3 | 222.7 | 163.6 | |||||
Weighted average number of shares outstanding | 71,451,447 | 63,904,421 | 69,876,373 | 63,426,930 | |||||
= EPRA earnings per share (undiluted) in € | 1.08 | 0.76 | 3.19 | 2.58 | |||||
Potentially diluted shares | 3,438,349 | 5,370,572 | 3,438,349 | 5,609,317 | |||||
Interest coupon on convertible bond after taxes | 2.1 | - 0.6 | 2.1 | - | |||||
Amortisation expenses convertible bond after taxes | 0.7 | 10.5 | 0.7 | 13.2 | |||||
EPRA earnings (diluted) | 80.2 | 58.2 | 225.5 | 176.8 | |||||
Number of diluted shares | 74,889,796 | 69,274,993 | 73,314,722 | 69,036,247 | |||||
= EPRA earnings per share (diluted) in € | 1.07 | 0.84 | 3.08 | 2.56 | |||||
16 | ANALYSIS OF NET ASSETS, FINANCIAL POSITION AND RESULTS OF OPERATIONS | LEG IMMOBILIEN AG Q3 2020 | ||
Net assets
(Consolidated statement of financial position)
T16
Consolidated statement of financial position | ||||
€ million | 30.09.2020 | 31.12.2019 | ||
Investment properties | 13,222.2 | 12,031.1 | ||
Prepayments for | ||||
investment properties | 69.7 | 53.5 | ||
Other non-current assets | 280.8 | 269.2 | ||
Non-current assets | 13,572.7 | 12,353.8 | ||
Receivables and other assets | 128.9 | 89.6 | ||
Cash and cash equivalents | 848.8 | 451.2 | ||
Current assets | 977.7 | 540.8 | ||
Assets held for sale | 33.7 | 25.2 | ||
Total assets | 14,584.1 | 12,919.8 | ||
Equity | 6,677.6 | 5,933.9 | ||
Non-current financial liabilities | 5,241.5 | 4,856.8 | ||
Other non-current liabilities | 1,878.8 | 1,654.2 | ||
Non-current liabilities | 7,120.3 | 6,511.0 | ||
Current financial liabilities | 487.3 | 197.1 | ||
Other current liabilities | 298.9 | 277.8 | ||
Current liabilities | 786.2 | 474.9 | ||
Total equity and liabilities | 14,584.1 | 12,919.8 | ||
A fair value measurement of investment property was conducted in the reporting period. The resulting profit from remeasurement of investment property of EUR 593.3 million (comparative period: EUR 551.6 million) was the main driver for the increase compared to 31 December 2019. Furthermore, additions from acquisitions with EUR 431.5 million and capitalisation of property modernisation measures with EUR 203.5 million contributed to the increase of investment properties.
The recognition of real estate tax expense as other inventories (EUR 5.9 million) for the remainder of the financial year and the deferral of prepaid operating costs (EUR 29.9 million) contributed significantly to the development of the current assets.
Cash and cash equivalents increased by EUR 397.6 million to EUR 848.8 million. This development was mainly due to the cash flow from operating activities (EUR 240.5 million) and the capital measures implemented to finance investments. A capital increase (EUR 269.6 mil- lion), the issuance of a convertible bond (EUR 544.0 million), a registered bonds (EUR 50.0 million) as well as cash payments of loans in the amount of EUR 258.4 million are to be mentioned here. Scheduled and unscheduled repayments (EUR 173.5 million) and payments for acquisitions (EUR - 629.4 million) had an opposite effect. For the financial year 2019, less the dividend distribution through the issue of new shares, a cash dividend of EUR 172.4 million was paid.
The development of equity since 31 December 2019 was primarily due to the capital increase of EUR 354.1 million, the net profit for the period of EUR 647.5 million and the dividend payment of EUR 257.0 million (thereof EUR 84.6 million by issuing new shares).
Within the non-current liabilities, the issued convertible bonds increased the obligations by EUR 136.3 million, within the current liabilities these obligations increased by EUR 387.0 million. Driven by the property valuation as at 30 June 2020, deferred tax liabilities shown in other non-current liabilities increased by EUR 155.7 million.
Net asset value (NAV)
A further key metric relevant in the property industry is NAV. The calculation method for the respective key figure can be found in the
> glossary in the 2019 annual report.
The LEG Group reports a basic EPRA NAV of EUR 8,356.1 million as at 30 September 2020. The effects of the possible conversion of the convertible bond 2017 are shown by the additional calculation of diluted EPRA NAV. After further adjustment for goodwill effects, the adjusted diluted EPRA NAV amounts to EUR 8,702.6 million at the reporting date.
17 | ANALYSIS OF NET ASSETS, FINANCIAL POSITION AND RESULTS OF OPERATIONS | LEG IMMOBILIEN AG Q3 2020 | ||
T17
EPRA NAV | |||||||||||||
30.09.2020 | 31.12.2019 | ||||||||||||
Undiluted | Effect of exercise | Diluted | Undiluted | Effect of exercise | Diluted | ||||||||
of convertibles | of convertibles | ||||||||||||
€ million | and options | and options | |||||||||||
Equity attributable to shareholders of the parent company | 6,653.1 | - | 6,653.1 | 5,909.9 | - | 5,909.9 | |||||||
Non-controlling interests | 24.5 | - | 24.5 | 24.0 | - | 24.0 | |||||||
Equity | 6,677.6 | - | 6,677.6 | 5,933.9 | - | 5,933.9 | |||||||
Effect of exercise of options, convertibles and other equity interests | - | 444.9 | 444.9 | - | 26.1 | 26.1 | |||||||
NAV | 6,653.1 | 444.9 | 7,098.0 | 5,909.9 | 26.1 | 5,936.0 | |||||||
Fair value measurement of derivative financial instruments | 135.6 | - 15.4 | 120.2 | 84.0 | - | 84.0 | |||||||
Deferred taxes on WFA loans and derivatives | 1.6 | - | 1.6 | 6.2 | - | 6.2 | |||||||
Deferred taxes on investment property | 1,621.7 | - | 1.621.7 | 1,386.0 | - | 1,386.0 | |||||||
Goodwill resulting from deferred taxes on EPRA adjustments | - 55.9 | - | - 55.9 | - 55.8 | - | - 55.8 | |||||||
EPRA NAV | 8,356.1 | 429.5 | 8,785.6 | 7,330.3 | 26.1 | 7,356.4 | |||||||
Number of shares | 72,095,943 | 3,438,349 | 75,534,292 | 69,009,836 | 0 | 69,009,836 | |||||||
EPRA NAV per share (€) | 115.90 | - | 116.31 | 106.22 | - | 106.60 | |||||||
Goodwill resulting from synergies | 83.0 | - | 83.0 | 83.4 | - | 83.4 | |||||||
Adjusted EPRA NAV (w/o effects from goodwill) | 8,273.1 | 429.5 | 8,702.6 | 7,246.9 | 26.1 | 7,273.0 | |||||||
Number of shares | 72,095,943 | 3,438,349 | 75,534,292 | 69,009,836 | 0 | 69,009,836 | |||||||
Adjusted EPRA NAV per share (€) | 114.75 | - | 115.21 | 105.01 | - | 105.39 | |||||||
EPRA NAV | 8,356.1 | 429.5 | 8,785.6 | 7,330.3 | 26.1 | 7,356.4 | |||||||
Fair value measurement of derivative financial instruments | - 135.6 | 15.4 | - 120.2 | - 84.0 | - | - 84.0 | |||||||
Deferred taxes on WFA loans and derivatives | - 1.6 | - | - 1.6 | - 6.2 | - | - 6.2 | |||||||
Deferred taxes on investment property | - 1,621.7 | - | - 1,621.7 | - 1,386.0 | - | - 1.386.0 | |||||||
Goodwill resulting from deferred taxes on EPRA adjustments | 55.9 | - | 55.9 | 55.8 | - | 55.8 | |||||||
Fair value measurement of financing liabilities | - 401.6 | - | - 401.6 | - 333.5 | - | - 333.5 | |||||||
Valuation uplift resulting from FV measurement financing liabilities | 184.4 | - | 184.4 | 130.1 | - | 130.1 | |||||||
EPRA NNNAV | 6,435.9 | 444.9 | 6,880.8 | 5,706.5 | 26.1 | 5,732.6 | |||||||
Number of shares | 72,095,943 | 3,438,349 | 75,534,292 | 69,009,836 | 0 | 69,009,836 | |||||||
EPRA NNNAV per share (€) | 89.27 | - | 91.10 | 82.69 | - | 83.07 | |||||||
18 | ANALYSIS OF NET ASSETS, FINANCIAL POSITION AND RESULTS OF OPERATIONS • RISK AND OPPORTUNITY REPORT | LEG IMMOBILIEN AG Q3 2020 | ||
Loan-to-value ratio (LTV)
Net debt at the end of the reporting period is higher compared with 31 December 2019. Investment properties increased even more, which resulted in a further decline in loan-to-value ratio (LTV) of 36.4 % at the interim reporting date (31 December 2019: 37.7 %).
T18
LTV | ||||
€ million | 30.09.2020 | 31.12.2019 | ||
Financing liabilities | 5,728.8 | 5,053.9 | ||
Without lease liabilities IFRS 16 | ||||
(not leasehold) | 29.5 | 31.8 | ||
Less cash and cash equivalents | 848.8 | 451.2 | ||
Net financing liabilities | 4,850.5 | 4,570.9 | ||
Investment properties | 13,222.2 | 12,031.1 | ||
Assets held for sale | 33.7 | 25.2 | ||
Prepayments for investment properties | 69.7 | 53.5 | ||
Real estate assets | 13,325.6 | 12,109.8 | ||
Loan to value ratio (LTV) in % | 36.4 | 37.7 | ||
A condensed form of the LEG Group's statement of cash flows for the reporting period is shown below:
T19
Statement of cash flows | ||||
01.01. - | 01.01. - | |||
€ million | 30.09.2020 | 30.09.2019 | ||
Cash flow from operating activities | 240.5 | 224.8 | ||
Cash flow from investing activities | - 607.9 | - 4.7 | ||
Cash flow from financing activities | 765.0 | - 71.4 | ||
Change in cash and cash equivalents | 397.6 | 148.7 | ||
In the reporting period, the increase in cash flow from operating activities resulted from higher receipts from net cold rent.
The cash flow from investing activities is mainly influenced by acquisitions and modernisation work on the existing portfolio with cash payments of EUR - 629.4 million. In addition cash proceeds from property disposals of EUR 30.0 million, repayments of long term invested financial resources of EUR 25.1 million and prepayment for a company acquisition of EUR - 22.6 million have an effect.
Risk and opportunity report
The risks and opportunities faced by LEG in its operating activities
were described in detail in theThis did not include the new risks caused by the coronavirus pandemic. Due to the dynamic crisis situation and the second lockdown, it is difficult to assess short and medium-term development. However, the anticipated negative effects can generally be considered low, particularly in comparison to other sectors.
In view of the global effects of the coronavirus pandemic on the economy and society, all current forecasts can be made only with a considerably higher degree of uncertainty. This applies particularly in the context of international links and interrelations between the financial markets, the real economy and political decisions, which each individually have an influence on the economic effects of the pandemic already, but when combined are impossible to assess with any certainty ex ante. The following sections are therefore based on the fundamental premise that the coronavirus pandemic represents a temporary phenomenon.
Financial position
A net profit for the period of EUR 656.1 million was realised in the reporting period (comparative period: EUR 488.9 million). Equity amounted to EUR 6,677.6 million at the reporting date (31 December 2019: EUR 5,933.9 million). This corresponds to an equity ratio of 45.8 % (31 December 2019: 45.9 %).
In the first nine months of 2020, the main drivers of the cashflow from financing activities amounting to EUR 765.0 million were the issuance of a convertible bond (EUR 544.0 million), a registered bond (EUR 50.0 million), the capital increase (EUR 269.6 million) and the cash payments of loans (EUR 258.4 million). An opposite effect had the scheduled repayments (EUR - 173.5 million) of bank and subsidised loans as well as dividend payment (EUR - 172.4 million).
The LEG Group's solvency was ensured at all times in the reporting period.
Development of property prices and demand
Supply and demand for housing will still be the decisive factors for future price development. It can be assumed that the general conditions in terms of supply (only a slightly increasing number of comple- tions) and demand (continued high level of migration to Germany, particularly in cities and densely populated areas) will continue.
19 | RISK AND OPPORTUNITY REPORT • FORECAST REPORT | LEG IMMOBILIEN AG Q3 2020 | ||
Development of rent defaults and rent deferrals
Only a slight increase in rent defaults can be observed at present. This is partly due to the extensive state transfer payments. Due to the LEG-specific low level of commercial letting, potential rent defaults from commercial properties can be currently classified as insignificant.
Housing vacancies
No developments can be seen at present that would indicate higher vacancies. Although new lettings are in a difficult environment, on the other hand tenant terminations are also decreasing. In addition, it could be, as in the financial crisis in 2008/2009, that immigration from EU countries that are hard hit by the economic consequences of the Sars-CoV-2 pandemic could increase creating additional demand for housing in the medium term. In the event of a severe recession, it could even prove to be an opportunity specifically for LEG Group that the company has a large number of affordable apartments and can thus benefit from increased demand for inexpensive housing in times of recession.
Forecast report
Based on the business performance to date, LEG believes it is well positioned overall to confirm its outlook for fiscal year 2020. Regarding FFO I, the outlook is narrowed to an amount of around EUR 380 million (before: upper end in the range of EUR 370 million to EUR 380 million).
Regarding like-for-like rental growth LEG still expects an increase of around 2.3 %, in line with the adjusted guidance released with the quarterly report as of 30 June 2020. This includes Corona-related effects like the voluntary and temporary deferral of rent increases according to section 558 German Civil Code (rent increase up to local reference rent level), legally possible deferral of payments as well as some postponements of modernisation measures.
LEG further expects a slightly decreasing vacancy (on a like-for-like basis) compared to financial year-end 2019.
The outlook for investments remains unchanged after the adjustment made with the release of the quarterly report as of 30 June 2020.
T20
Outlook 2020
FFO I | c. EUR 380 million (before: | |
EUR 370 - 380 million, upper end) | ||
Like-for-like rental growth | c. 2.3 % 1 | |
Like-for-like vacancy | slightly decreasing compared to | |
financial year-end 2019 | ||
Investments | c. EUR 38 - 40 per sqm 1 | |
LTV | 43 % max. | |
Dividend | 70 % of FFO I | |
1 In line with the adjusted outlook released with the quarterly report as of 30 June 2020
With the earnings release as at 30 September 2020, the outlook has been extended by the following targets for financial year 2021.
T21
Outlook 2021
After carefully weighing up the information currently available at LEG Group, we have come to the conclusion that the effects of the Sars- CoV-2 pandemic on the housing sector in Germany and the effects on the business performance and the intrinsic value of the real estate assets of LEG Group should be manageable. There can even be opportunities for LEG Group in some cases.
The investments planned for the current fiscal year therefore amount to around EUR 38 - 40 per square metre.
In order to ensure a defensive long-term risk profile, LEG sticks to a maximum LTV of 43 %. LEG plans to distribute 70 % of its FFO I to shareholders as a dividend on a long-term basis.
For more details, please refer to the forecast report in the > 2019
FFO I
Like-for-like rental growth
Investments
LTV
Dividend
EUR 410 million to EUR 420 million
c. 3.0 %
c. EUR 40 - 42 per sqm
43 % max.
70 % of FFO I
For further information, please refer to the > consolidated financial | annual report (page 71 f.). |
statements as at 31 December 2019. |
20 CONSOLIDATED FINANCIAL STATEMENTS | LEG IMMOBILIEN AG Q3 2020 | |||
Consolidated statement of financial position | ||||
T22
Consolidated statement of financial position
Assets
€ million | 30.09.2020 | 31.12.2019 | ||
Non-current assets | 13,572.7 | 12,353.8 | ||
Investment properties | 13,222.2 | 12,031.1 | ||
Prepayments for investment properties | 69.7 | 53.5 | ||
Property, plant and equipment | 81.4 | 83.7 | ||
Intangible assets and goodwill | 141.2 | 140.6 | ||
Investments in associates | 9.9 | 9.9 | ||
Other financial assets | 35.7 | 23.2 | ||
Receivables and other assets | 0.3 | 0.3 | ||
Deferred tax assets | 12.3 | 11.5 | ||
Current assets | 977.7 | 540.8 | ||
Real estate inventory and other inventory | 9.7 | 4.6 | ||
Receivables and other assets | 112.2 | 81.8 | ||
Income tax receivables | 7.0 | 3.2 | ||
Cash and cash equivalents | 848.8 | 451.2 | ||
Assets held for sale | 33.7 | 25.2 | ||
Equity and liabilities | ||||
€ million | 30.09.2020 | 31.12.2019 | ||
Equity | 6,677.6 | 5,933.9 | ||
Share capital | 72.1 | 69.0 | ||
Capital reserves | 1,553.2 | 1,202.2 | ||
Cumulative other reserves | 5,027.8 | 4,638.7 | ||
Equity attributable to shareholders of the parent company | 6,653.1 | 5,909.9 | ||
Non-controlling interests | 24.5 | 24.0 | ||
Non-current liabilities | 7,120.3 | 6,511.0 | ||
Pension provisions | 164.9 | 164.9 | ||
Other provisions | 4.6 | 5.2 | ||
Financing liabilities | 5,241.5 | 4,856.8 | ||
Other liabilities | 222.3 | 152.8 | ||
Deferred tax liabilities | 1,487.0 | 1,331.3 | ||
Current liabilities | 786.2 | 474.9 | ||
Pension provisions | 5.4 | 7.0 | ||
Other provisions | 21.8 | 20.2 | ||
Provisions for taxes | 0.1 | 0.2 | ||
Financing liabilities | 487.3 | 197.1 | ||
Other liabilities | 258.5 | 239.2 | ||
Tax liabilities | 13.1 | 11.2 | ||
Total Assets | 14,584.1 | 12,919.8 | Total Equity and Liabilities | 14,584.1 | 12,919.8 | |
21 CONSOLIDATED FINANCIAL STATEMENTS | LEG IMMOBILIEN AG Q3 2020 | |||
Consolidated statement of comprehensive income | ||||
T23
Consolidated statement of comprehensive income
Q3 2020 | Q3 2019 | 01.01.- | 01.01.- | |||||
€ million | 30.09.2020 | 30.09.2019 | ||||||
Net rental and lease income | 126.2 | 114.3 | 365.7 | 340.2 | ||||
Rental and lease income | 215.4 | 204.2 | 632.5 | 604.6 | ||||
Cost of sales in connection with | ||||||||
rental and lease income | - 89.2 | - 89.9 | - 266.8 | - 264.4 | ||||
Net income from the disposal | ||||||||
of investment properties | - 0.2 | - 0.4 | - 0.8 | - 0.8 | ||||
Income from the disposal of investment properties | 3.5 | 3.8 | 30.2 | 26.7 | ||||
Carrying amount of the disposal | ||||||||
of investment properties | - 3.5 | - 3.8 | - 30.3 | - 26.7 | ||||
Cost of sales in connection with disposed | ||||||||
investment properties | - 0.2 | - 0.4 | - 0.7 | - 0.8 | ||||
Net income from the remeasurement | ||||||||
of investment properties | 0.6 | 1.4 | 593.3 | 551.6 | ||||
Net income from the disposal | ||||||||
of real estate inventory | - 0.5 | - 0.7 | - 2.3 | - 2.0 | ||||
Income from the real estate inventory disposed of | - | - | - | - | ||||
Carrying amount of the | ||||||||
real estate inventory disposed of | - | - | - | - | ||||
Costs of sales of the real estate inventory disposed of | - 0.5 | - 0.7 | - 2.3 | - 2.0 | ||||
Net income from other services | 1.3 | 0.9 | 4.2 | 1.5 | ||||
Income from other services | 2.9 | 2.5 | 9.4 | 5.8 | ||||
Expenses in connection with other services | - 1.6 | - 1.6 | - 5.2 | - 4.3 | ||||
Administrative and other expenses | - 8.2 | - 12.7 | - 32.6 | - 38.0 | ||||
Other income | 0.1 | 0.1 | 0.1 | 0.4 | ||||
Operating Earnings | 119.3 | 102.9 | 927.6 | 852.9 | ||||
Interest income | 0.1 | 0.2 | 0.1 | 0.2 | ||||
Interest expenses | - 25.5 | - 40.6 | - 71.2 | - 92.7 | ||||
Net income from investment securities | ||||||||
and other equity investments | 0.0 | 0.4 | 1.9 | 3.1 | ||||
Net income from the fair value | ||||||||
measurement of derivatives | - 33.8 | - 24.5 | - 43.7 | - 92.6 | ||||
Earnings before income taxes | 60.1 | 38.4 | 814.7 | 670.9 | ||||
Income taxes | - 17.4 | - 18.6 | - 158.6 | - 182.0 | ||||
Net Profit or loss for the period | 42.7 | 19.8 | 656.1 | 488.9 | ||||
Q3 2020 | Q3 2019 | 01.01.- | 01.01.- | |||||||
€ million | 30.09.2020 | 30.09.2019 | ||||||||
Change in amounts recognised | ||||||||||
directly in equity | - 4.9 | - 10.9 | - 8.6 | - 41.5 | ||||||
Thereof recycling | ||||||||||
Fair value adjustment of | ||||||||||
interest rate derivatives in hedges | 0.0 | - 6.7 | - 7.8 | - 25.1 | ||||||
Change in unrealised gains/(losses) | 0.0 | - 8.2 | - 8.3 | - 31.0 | ||||||
Income taxes on amounts | ||||||||||
recognised directly in equity | 0.0 | 1.5 | 0.5 | 5.9 | ||||||
Thereof non-recycling | ||||||||||
Actuarial gains and losses from the | ||||||||||
measurement of pension obligations | - 4.9 | - 4.2 | - 0.8 | - 16.4 | ||||||
Change in unrealised gains/(losses) | - 7.1 | - 6.0 | - 1.1 | - 23.6 | ||||||
Income taxes on amounts | ||||||||||
recognised directly in equity | 2.2 | 1.8 | 0.3 | 7.2 | ||||||
Total comprehensive income | 37.8 | 8.9 | 647.5 | 447.4 | ||||||
Net profit or loss for the period | ||||||||||
attributable to: | ||||||||||
Non-controlling interests | 0.8 | 0.7 | 2.7 | 2.7 | ||||||
Parent shareholders | 41.9 | 19.1 | 653.4 | 486.2 | ||||||
Total comprehensive income | ||||||||||
attributable to: | ||||||||||
Non-controlling interests | 0.8 | 0.7 | 2.7 | 2.7 | ||||||
Parent shareholders | 37.0 | 8.2 | 644.8 | 444.7 | ||||||
Basic earnings per share in € | 0.50 | 0.30 | 9.35 | 7.67 | ||||||
Diluted earnings per share in € | 0.50 | 0.30 | 9.35 | 7.67 | ||||||
22 CONSOLIDATED FINANCIAL STATEMENTS | LEG IMMOBILIEN AG Q3 2020 | |||
Statement of changes in consolidated equity | ||||
T24
Statement of changes in consolidated equity | ||||||||||||||||||||||||||||||
Cumulative other reserves | ||||||||||||||||||||||||||||||
Share capital | Capital reserves | Revenue reserves | Actuarial gains | Fair value | Equity | Non-controlling | Consolidated | |||||||||||||||||||||||
and losses from the | adjustment of | attributable to | interests | equity | ||||||||||||||||||||||||||
measurement of | interest derivatives | shareholders | ||||||||||||||||||||||||||||
€ million | pension obligations | in hedges | of the Group | |||||||||||||||||||||||||||
As of 01.01.2019 | 63.2 | 611.2 | 4,131.4 | - 35.1 | - 13.1 | 4,757.6 | 26.3 | 4,783.9 | ||||||||||||||||||||||
Initial application of IFRS 16 | - | - | - 4.6 | - | - | - 4.6 | - | - 4.6 | ||||||||||||||||||||||
As of 01.01.2019, adjusted | 63.2 | 611.2 | 4,126.8 | - 35.1 | - 13.1 | 4,753.0 | 26.3 | 4,779.3 | ||||||||||||||||||||||
Net profit or loss for the period | - | - | 486.2 | - | - | 486.2 | 2.7 | 488.9 | ||||||||||||||||||||||
Other comprehensive income | - | - | - | - 16.4 | - 25.1 | - 41.5 | 0.0 | - 41.5 | ||||||||||||||||||||||
Total comprehensive income | - | - | 486.2 | - 16.4 | - 25.1 | 444.7 | 2.7 | 447.4 | ||||||||||||||||||||||
Other | - | - | 1.3 | - | - | 1.3 | 0.8 | 2.1 | ||||||||||||||||||||||
Change in consolidated companies | - | - | - | - | - | - | - | - | ||||||||||||||||||||||
Capital increase | 5.4 | 546.1 | - | - | - | 551.5 | - | 551.5 | ||||||||||||||||||||||
Withdrawals from reserves | - | - | - | - | - | - | - 1.8 | - 1.8 | ||||||||||||||||||||||
Changes from Put-Options | - | - | - | - | - | - | - | - | ||||||||||||||||||||||
Distributions | - | - | - 223.1 | - | - | - 223.1 | - 5.9 | - 229.0 | ||||||||||||||||||||||
As of 30.09.2019 | 68.6 | 1,157.3 | 4,391.2 | - 51.5 | - 38.2 | 5,527.4 | 22.1 | 5,549.5 | ||||||||||||||||||||||
As of 01.01.2020 | 69.0 | 1,202.2 | 4,718.9 | - 53.0 | - 27.2 | 5,909.9 | 24.0 | 5,933.9 | ||||||||||||||||||||||
Initial application of IFRS 16 | - | - | - | - | - | - | - | - | ||||||||||||||||||||||
As of 01.01.2020, adjusted | 69.0 | 1,202.2 | 4,718.9 | - 53.0 | - 27.2 | 5,909.9 | 24.0 | 5,933.9 | ||||||||||||||||||||||
Net profit/loss for the period | - | - | 653.4 | - | - | 653.4 | 2.7 | 656.1 | ||||||||||||||||||||||
Other comprehensive income | - | - | - | - 0.8 | - 7.8 | - 8.6 | 0.0 | - 8.6 | ||||||||||||||||||||||
Total comprehensive income | - | - | 653.4 | - 0.8 | - 7.8 | 644.8 | 2.7 | 647.5 | ||||||||||||||||||||||
Other | - | - | 1.3 | - | - | 1.3 | - | 1.3 | ||||||||||||||||||||||
Change in consolidated companies | - | - | - | - | - | - | - | - | ||||||||||||||||||||||
Capital increase | 3.1 | 351.0 | - | - | - | 354.1 | - | 354.1 | ||||||||||||||||||||||
Withdrawals from reserves | - | - | - | - | - | - | - 2.2 | - 2.2 | ||||||||||||||||||||||
Changes from Put-Options | - | - | - | - | - | - | - | - | ||||||||||||||||||||||
Distributions | - | - | - 257.0 | - | - | - 257.0 | - | - 257.0 | ||||||||||||||||||||||
As of 30.09.2020 | 72.1 | 1,553.2 | 5,116.6 | - 53.8 | - 35.0 | 6,653.1 | 24.5 | 6,677.6 | ||||||||||||||||||||||
23 CONSOLIDATED FINANCIAL STATEMENTS | LEG IMMOBILIEN AG Q3 2020 | |||
Consolidated statement of cash flows | ||||
T25
Consolidated statement of cash flows
01.01. - | 01.01. - | |||
€ million | 30.09.2020 | 30.09.2019 | ||
Operating earnings | 927.6 | 852.9 | ||
Depreciation on property, plant and equipment | ||||
and amortisation on intangible assets | 12.9 | 11.6 | ||
(Gains)/Losses from the measurement of investment properties | - 593.4 | - 551.6 | ||
(Gains)/Losses from the disposal of assets held for sale | ||||
and investment properties | 0.2 | - | ||
(Decrease)/Increase in pension provisions and other non-current provisions | - 3.2 | 0.5 | ||
Other non-cash income and expenses | 4.6 | 4.0 | ||
(Decrease)/Increase in receivables, inventories and other assets | - 61.3 | - 45.5 | ||
Decrease/(Increase) in liabilities (not including financing liabilities) and provisions | 14.1 | 18.4 | ||
Interest paid | - 59.8 | - 58.6 | ||
Interest received | 0.1 | 0.2 | ||
Received income from investments | 3.1 | 3.1 | ||
Taxes received | 2.7 | 0.4 | ||
Taxes paid | - 7.1 | - 10.6 | ||
Net cash from/(used in) operating activities | 240.5 | 224.8 | ||
Cashflow from investing activities | ||||
Investments in investment properties | - 629.4 | - 166.4 | ||
Proceeds from disposals of non-current assets held for sale | ||||
and investment properties | 30.0 | 184.3 | ||
Investments in intangible assets and property, plant and equipment | - 11.0 | - 12.7 | ||
Investments in financial assets and other assets | 25.1 | - 9.9 | ||
Acquisition of shares in consolidated companies | - 22.6 | - | ||
Net cash from/(used in) investing activities | - 607.9 | - 4.7 | ||
01.01. - | 01.01. - | |||
€ million | 30.09.2020 | 30.09.2019 | ||
Cash flow from financing activities | ||||
Borrowing of bank loans | 258.4 | 436.5 | ||
Repayment of bank loans | - 173.5 | - 270.2 | ||
Issue of convertible corporate bonds | 544.0 | - | ||
Repayment of lease liabilities | - 8.0 | - 7.7 | ||
Other proceeds | - | 0.7 | ||
Other payments | - 1.3 | - | ||
Capital increase | 269.6 | - | ||
Issue of registered bonds | 50.0 | - | ||
Distribution to shareholders | - 172.4 | - 223.1 | ||
Distribution and withdrawal from reserves of non-controlling interest | - 1.8 | - 7.6 | ||
Net cash from/(used in) financing activities | 765.0 | - 71.4 | ||
Change in cash and cash equivalents | 397.6 | 148.7 | ||
Cash and cash equivalents at beginning of period | 451.2 | 233.6 | ||
Cash and cash equivalents at end of period | 848.8 | 382.3 | ||
Composition of cash and cash equivalents | ||||
Cash in hand, bank balances | 848.8 | 382.3 | ||
Cash and cash equivalents at end of period | 848.8 | 382.3 | ||
24 | CONSOLIDATED FINANCIAL STATEMENTS | LEG IMMOBILIEN AG Q3 2020 |
Selected notes
on the IFRS in terim consolidated financial statements as at 30 September 2020
1. Basic information on the Group | 2. Interim consolidated financial statements | 4. Changes in the Group |
LEG Immobilien AG, Dusseldorf (hereinafter: "LEG Immo"), its
subsidiary LEG NRW GmbH, Dusseldorf (hereinafter: "LEG") and the subsidiaries of the latter company (hereinafter referred to collectively as the "LEG Group") are among the largest residential companies in Germany. The LEG Group held a portfolio of 139,896 (30 September 2019: 135,065) residential and commercial units on 30 September 2020 (139,448 (30 September 2019: 132,019) units excluding IFRS 5 objects).
The LEG Group engages in three core activities as an integrated property company: the optimisation of the core business, the expansion of the value chain as well as the portfolio strengthening.
The interim consolidated financial statements are prepared in euros. Unless stated otherwise, all figures have been rounded to millions of Euro (EUR million). For technical reasons, tables and references can include rounded figures that differ from the exact mathematical values.
LEG Immo prepared the interim consolidated financial statements in accordance with the provisions of the International Financial Reporting Standards (IFRS) for interim reporting, as endorsed in the EU, and their interpretation by the International Financial Reporting Interpretations Committee (IFRS IC). Based on the option under IAS 34.10, the notes to the financial statements were presented in a condensed form. The condensed interim consolidated financial statements have not been audited or subjected to an audit review.
The LEG Group primarily generates income from the rental and letting of investment properties. Rental and lease business, in essence, is unaffected by seasonal and cyclical influences.
3. Accounting policies
The accounting policies applied in the interim consolidated financial statements of the LEG Immo are the same as those presented in the IFRS consolidated financial statements of LEG Immo as of 31 Decem- ber 2019. These interim consolidated financial statements as at 30 September 2020 should therefore be read in conjunction with the consolidated financial statements as at 31 December 2019.
The LEG Immo has fully applied the new standards and interpretations that are mandatory from 1 January 2020. The amendments to IFRS 3 will be considered in future business combinations. The amendments to the Interest Rate Benchmark Reform of IFRS 9, IAS 39 and IFRS 7 have no significant impact on the measurement of derivatives used in hedge accounting. Within the prospective effectiveness of the hedging relationship it is assumed that the underlying reference rate is not affected from the replacement of the IBOR reform.
On 12 May 2020, the conversion of LEG Immobilien AG into the legal form of an SE Societas Europaea (European Company) was initiated.
On 1 April 2020, LEG Wohngelegenheit Süd GmbH was consolidated for the first time.
On 16 June 2020, the companies LEG Rhein Neckar GmbH and LEG Niedersachsen GmbH were founded and consolidated for the first time.
25 | CONSOLIDATED FINANCIAL STATEMENTS | LEG IMMOBILIEN AG Q3 2020 | ||
5. Business combinations
On 8 November 2019, to enhance its portfolio LEG Immo signed a purchase agreement with the Baum Group on assuming a 94.9 % stake in each of the companies Baum Erste Wohnimmobilien Bremen GmbH, Baum Zweite Wohnimmobilien Bremen GmbH and Baum Wohnimmobilien Oldenburg GmbH.
Five employees were assumed in the scope of the transaction. After antitrust approval, the transaction was closed on 31 December 2019.
As at 31 December 2019, the acquisition of these companies was treated as a business combination within the meaning of IFRS 3 as material business processes were acquired.
The purchase price allocation is final as at 30 September 2020. The final consideration for the business combination is made up as follows:
T26
Consideration | ||||||
31.12.2019 | 31.12.2019 | Change | ||||
€ million | final | provisional | ||||
Net purchase price | 254.3 | 254.2 | 0.1 | |||
Contingent reimbursement | - | - | - | |||
Total consideration | 254.3 | 254.2 | 0.1 | |||
The purchase price can be allocated to the acquired assets and liabilities measured at fair values as follows:
T27
Purchase price allocation | ||||||
31.12.2019 | 31.12.2019 | Change | ||||
€ million | final | provisional | ||||
Investment properties | 231.1 | 231.1 | 0.0 | |||
Property, plant and equipment - finance lease | 0.1 | 0.2 | - 0.1 | |||
Deferred tax assets | 0.0 | 0.0 | 0.0 | |||
Receivables from operating costs | 3.9 | 3.9 | 0.0 | |||
Receivables and other assets | 0.5 | 0.8 | - 0.3 | |||
Cash and cash equivalents | 2.1 | 2.1 | 0.0 | |||
Total assets | 237.7 | 238.1 | - 0.4 | |||
Other financing liabilities | 0.1 | 0.1 | - | |||
Deferred tax liabilities | 23.8 | 23.8 | - | |||
Other provisions | 0.0 | 0.0 | - | |||
Trade payables not yet invoiced | 4.1 | 4.1 | - | |||
Other liabilities | 2.6 | 3.5 | - 0.9 | |||
Total liabilities | 30.6 | 31.5 | - 0.9 | |||
Net assets at fair value | 207.1 | 206.6 | 0.5 | |||
Non-controlling interests | 6.8 | 6.8 | - | |||
Net assets at fair value without non-controlling interests | 200.3 | 199.8 | 0.5 | |||
Consideration | 254.3 | 254.2 | 0.1 | |||
Goodwill | 54.0 | 54.4 | - 0.4 | |||
The fair value of the rent receivables acquired totals EUR 0.0 million. The gross amount of the rent receivables due amounts to EUR 0.3 million with an impairment of EUR 0.3 million recognised at the time of acquisition.
Non-controlling interests in the acquired companies are recognised at the level of their share in the acquired net assets.
The transaction costs of the business combination amount to EUR 1.3 million and essentially include legal and consulting expenses as well as real estate transfer tax.
The synergies anticipated from the business combination relate primarily to cost advantages and additional revenue potential.
For tax purposes, the goodwill is not deductible.
26 | CONSOLIDATED FINANCIAL STATEMENTS | LEG IMMOBILIEN AG Q3 2020 | ||
6. Judgements and estimates
The preparation of interim consolidated financial statements in accordance with IFRS requires assumptions and estimates to be made that affect the recognition of assets and liabilities, income and expenses and the disclosure of contingent liabilities. These assumptions and estimates particularly relate to the measurement of investment properties, the recognition and measurement of pension provisions, the recognition and measurement of other provisions, the measurement of financing liabilities, and the eligibility for recognition of deferred tax assets.
Although the management believes that the assumption and estimates used are appropriate, any unforeseeable changes in these assumptions could impact the net assets, financial position and results of operations. The current Covid-19 situation has been considered by judgements. There were no significant impacts. Moreover, there were no triggering events for the conduct of an impairment test on goodwill during the year.
In view of the global effects of the coronavirus pandemic on the economy and society, all current forecasts can be made only with a considerably higher degree of uncertainty. This applies particularly in the context of international links and interrelations between the financial markets, the real economy and political decisions, which each individually have an influence on the economic effects of the pandemic already, but when combined are impossible to assess with any certainty ex ante. The following sections are therefore based on the fundamental premise that the coronavirus pandemic represents a temporary phenomenon.
Development of property prices and demand
Supply and demand for housing will still be the decisive factors for future price development. It can be assumed that the general conditions in terms of supply (only a slightly increasing number of com- pletions) and demand (continued high level of migration to Germany, particularly in cities and densely populated areas) will continue.
Development of rent defaults and rent deferrals
Only a slight increase in rent defaults can be observed at present. This is partly due to the extensive state transfer payments. Due to the LEG-specific low level of commercial letting, potential rent defaults from commercial properties can be currently classified as insignificant.
Housing vacancies
No developments can be seen at present that would indicate higher vacancies. Although new lettings are in a difficult environment, on the other hand tenant terminations are also decreasing. In addition, it could be, as in the financial crisis in 2008/2009, that immigration from EU countries that are hard hit by the economic consequences of the Sars-CoV-2 pandemic could increase creating additional demand for housing in the medium term. In the event of a severe recession, it could even prove to be an opportunity specifically for LEG Group that the company has a large number of affordable apartments and can thus benefit from increased demand for inexpensive housing in times of recession.
After carefully weighing up the information currently available at LEG Group, we have come to the conclusion that the effects of the Sars-CoV-2 pandemic on the housing sector in Germany and the effects on the business performance and the intrinsic value of the real estate assets of LEG Group should be manageable. There could even be opportunities for LEG Group in some cases.
For further information, please refer to the > consolidated financial
statements as at 31 December 2019.
27 | CONSOLIDATED FINANCIAL STATEMENTS | LEG IMMOBILIEN AG Q3 2020 | ||
7. Selected notes to the consolidated statement of financial position
On 30 September 2020, the LEG Group held 138,601 apartments and 1,295 commercial units in its portfolio (139,448 units excluding IFRS 5 objects).
Investment property developed as follows in the financial year 2019 and in 2020 up to the reporting date of the interim consolidated financial statements:
T28
Investment properties
Residential assets | ||||||||||||||||||
Total | High-growth | Stable | Higher-yielding | without market | Commercial | Parking and | Lease-hold | Land values | ||||||||||
€ million | markets | markets | markets | allocation | assets | other assets | ||||||||||||
Carrying amount as of 01.01.2020 1 | 12,031.1 | 5,126.8 | 3,923.0 | 2,390.2 | 0.0 | 225.9 | 219.4 | 113.3 | 32.5 | |||||||||
Acquisitions | 431.5 | 116.1 | 187.5 | 86.6 | 12.6 | 11.3 | 8.7 | 5.7 | 3.0 | |||||||||
Other additions | 203.5 | 73.3 | 67.0 | 56.4 | 0.0 | 1.8 | 0.2 | 2.9 | 1.8 | |||||||||
Reclassified to assets held for sale | - 38.7 | - 3.7 | - 13.5 | - 7.3 | - 13.1 | - 0.4 | - 0.3 | 0.0 | - 0.3 | |||||||||
Reclassified from assets held for sale | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |||||||||
Reclassified to property, plant and equipment | - 1.1 | - 0.6 | - 0.1 | - 0.1 | 0.0 | 0.0 | - 0.2 | 0.0 | 0.0 | |||||||||
Reclassified from property, plant and equipment | 2.6 | 0.0 | 0.0 | 0.0 | 0.0 | 2.6 | 0.0 | 0.0 | 0.0 | |||||||||
Fair value adjustment | 593.3 | 237.3 | 215.4 | 114.6 | 0.5 | - 2.6 | 17.1 | 9.9 | 1.2 | |||||||||
Reclassification | 0.0 | 10.4 | - 4.4 | - 5.4 | 0.0 | - 5.5 | 6.9 | - 0.7 | - 1.3 | |||||||||
Carrying amount as of 30.09.2020 | 13,222.2 | 5,559.7 | 4,374.9 | 2,635.0 | 0.0 | 233.1 | 251.6 | 131.1 | 36.9 | |||||||||
1 Extension of the market classification to the whole territory of the Federal Republic of Germany.
€ million | ||
Fair value adjustment as of 30.09.2020 | 593.3 | |
- hereupon as of 30.09.2020 in the portfolio | 592.7 | |
- hereupon as of 30.09.2020 disposed investment properties | 0.6 | |
28 | CONSOLIDATED FINANCIAL STATEMENTS | LEG IMMOBILIEN AG Q3 2020 | ||
T29
Investment properties
Residential assets | ||||||||||||||||||||
Total | High-growth | Stable | Higher-yielding | Non NRW | Commercial | Parking and | Lease-hold | Land values | ||||||||||||
€ million | markets | markets | markets | assets | other assets | |||||||||||||||
Carrying amount as of 01.01.2019 | 10,709.0 | 4,607.3 | 3,296.8 | 2,212.1 | 164.5 | 209.4 | 184.9 | 3.4 | 30.6 | |||||||||||
Initial application of IFRS 16 | 35.8 | - 26.4 | - 9.3 | - 17.9 | - 2.7 | 0.1 | - 0.1 | 92.2 | 0.0 | |||||||||||
Acquisitions | 360.7 | 134.3 | 156.2 | 31.8 | 26.6 | 7.7 | 4.1 | - 0.3 | 0.2 | |||||||||||
Other additions | 201.5 | 73.8 | 66.3 | 49.3 | 3.8 | 3.7 | 0.1 | 3.6 | 0.8 | |||||||||||
Reclassified to assets held for sale | - 200.2 | - 9.3 | - 55.4 | - 125.9 | - 1.8 | - 1.1 | - 4.0 | 0.0 | - 2.8 | |||||||||||
Reclassified from assets held for sale | 0.1 | 0.0 | 0.0 | 0.1 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |||||||||||
Reclassified to property, plant and equipment | - 0.5 | 1.4 | - 0.1 | 0.1 | 0.0 | - 1.6 | 0.0 | - 0.2 | 0.0 | |||||||||||
Reclassified from property, plant and equipment | 1.3 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 1.3 | 0.0 | |||||||||||
Fair value adjustment | 923.4 | 427.0 | 283.8 | 132.6 | 7.2 | 7.0 | 34.7 | 28.0 | 3.0 | |||||||||||
Carrying amount as of 31.12.2019 | 12,031.1 | 5,208.1 | 3,738.3 | 2,282.2 | 197.6 | 225.2 | 219.7 | 128.0 | 31.8 | |||||||||||
€ million | ||||||||||||||||||||
Fair value adjustment 31.12.2019 | 923.4 | |||||||||||||||||||
- hereupon as of 31.12.2019 in the portfolio | 923.2 | |||||||||||||||||||
- hereupon as of 31.12.2019 disposed investment properties | 0.2 | |||||||||||||||||||
29 | CONSOLIDATED FINANCIAL STATEMENTS | LEG IMMOBILIEN AG Q3 2020 | ||
On 27 December 2019, LEG acquired the F 99 and F 101 projects (land plus defined construction project specifications) from F 101 Projekt GmbH & Co. KG. The purchase prices are due with the acceptance of the completed buildings (F 99 anticipated for 1 March 2022/F 101 for 1 September 2022).
Portfolio acquisition 1
The acquisition of a property portfolio of around 2,010 residential and commercial units was notarised on 27 September 2019. The portfolio generates annual net cold rent of around EUR 7.1 million. The average in-place rent is around EUR 4.97 per square metre and the initial vacancy rate is around 4.5 %. The transaction was closed on 1 January 2020. The portfolio acquisition does not constitute a business combination as defined by IFRS 3.
Portfolio acquisition 2
The acquisition of a property portfolio of 1,406 residential and commercial units was notarised on 30 January 2020. The portfolio generates annual net cold rent of around EUR 6.0 million. The average in-place rent is around EUR 5.71 per square metre and the initial vacancy rate is around 4.4 %. The transaction was closed on 1 May 2020. The portfolio acquisition does not constitute a business combination as defined by IFRS 3.
Portfolio acquisition 3
The acquisition of a property portfolio of around 1,082 residential and commercial units was notarised on 16 June 2020. The portfolio generates annual net cold rent of around EUR 4.9 million. The average in-place rent is around EUR 5.79 per square metre and the initial vacancy rate is around 3.0 %. The transaction was closed on 1 August 2020. The portfolio acquisition does not constitute a business combination as defined by IFRS 3.
Investment property was remeasured most recently by the LEG Group as of the interim reporting date of 30 June 2020. No further fair value adjustment was made as at 30 September 2020. With regard to the calculation methods and parameters, please refer to the consolidated financial statements as at 31 December 2019.
Significant market developments and measurement parameters affecting the market values of the property portfolio of LEG Immo are reviewed each quarter. If necessary, the property portfolio is revalued. As at 30 September 2020, the results of this review did not require any value adjustment. Despite the proceeded Covid-19 pandemic there are no observable effects on the market, which could affect the long-term value of the property portfolio.
The following tables show the measurement method used to determine the fair value of investment property and the material unobservable inputs used as of 30 June 2020 and 31 December 2019:
30 | CONSOLIDATED FINANCIAL STATEMENTS | LEG IMMOBILIEN AG Q3 2020 | ||
T30
Valuation parameters as at 30 June 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
GAV | Valuation technique | Market rent | Maintenance cost | Administrative cost rate | Stabilised vacancy ratio | ||||||||||||||||||||||||||||||||||||||||||||||||||||
investment properties | residential/commercial | residential/commercial | residential/commercial | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
€/sqm | €/sqm | €/unit | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
€ million | min | Ø | max | min | Ø | max | min | Ø | max | min | Ø | max | |||||||||||||||||||||||||||||||||||||||||||||
Residential assets | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(incl. leasehold buildings) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
High-growth markets | 5,533 | DCF | 3.56 | 8.10 | 13.33 | 5.56 | 11.77 | 15.58 | 129 | 302 | 462 | 1.0 | 1.9 | 7.0 | |||||||||||||||||||||||||||||||||||||||||||
Stable markets | 4,237 | DCF | 2.31 | 6.55 | 9.98 | 6.58 | 11.82 | 15.08 | 159 | 300 | 462 | 1.5 | 3.0 | 9.0 | |||||||||||||||||||||||||||||||||||||||||||
Higher-yielding markets | 2,619 | DCF | 0.33 | 5.95 | 9.31 | 5.80 | 11.90 | 15.45 | 165 | 300 | 462 | 1.5 | 4.2 | 9.0 | |||||||||||||||||||||||||||||||||||||||||||
Residential units without | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
market allocation | 12 | DCF | 6.61 | 6.75 | 7.76 | 11.96 | 12.54 | 12.90 | 305 | 305 | 305 | 2.0 | 2.9 | 3.0 | |||||||||||||||||||||||||||||||||||||||||||
Commercial assets | 229 | DCF | 1.00 | 7.50 | 27.00 | 0.87 | 6.53 | 15.37 | 1 | 259 | 5,481 | 1.0 | 2.6 | 9.0 | |||||||||||||||||||||||||||||||||||||||||||
Leasehold (land) | 127 | DCF | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Parking and other assets | 249 | DCF | 1 | 37 | 887 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Land values | Earnings/ | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
36 | reference value method | 1 | 6 | 14 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Total portfolio (IAS 40) 1 | 13,043 | DCF | 0.33 | 6.76 | 27.00 | 0.87 | 11.77 | 15.58 | 1 | 275 | 5,481 | 1.0 | 3.1 | 9.0 | |||||||||||||||||||||||||||||||||||||||||||
Discount rate | Capitalisation rate | Estimated rental development | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
% | % | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
min | Ø | max | min | Ø | max | min | Ø | max | |||||||||||||||||||||||||||||||||||||||||||||||||
Residential assets | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(incl. leasehold buildings) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
High-growth markets | 3.5 | 4.6 | 5.4 | 2.1 | 5.2 | 9.5 | 1.2 | 1.7 | 2.0 | ||||||||||||||||||||||||||||||||||||||||||||||||
Stable markets | 3.4 | 4.6 | 5.5 | 2.0 | 5.8 | 11.2 | 0.8 | 1.3 | 1.8 | ||||||||||||||||||||||||||||||||||||||||||||||||
Higher-yielding markets | 3.5 | 4.7 | 5.3 | 3.0 | 6.3 | 10.6 | 0.7 | 1.0 | 1.5 | ||||||||||||||||||||||||||||||||||||||||||||||||
Residential units without | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
market allocation | 4.8 | 4.8 | 4.9 | 4.0 | 4.3 | 5.6 | 1.3 | 1.6 | 1.7 | ||||||||||||||||||||||||||||||||||||||||||||||||
Commercial assets | 2.5 | 6.5 | 9.0 | 2.8 | 7.2 | 9.5 | 0.7 | 1.5 | 1.9 | ||||||||||||||||||||||||||||||||||||||||||||||||
Leasehold (land) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Parking and other assets | 3.3 | 4.7 | 5.6 | 2.8 | 6.9 | 12.7 | 0.7 | 1.3 | 1.9 | ||||||||||||||||||||||||||||||||||||||||||||||||
Land values | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
4.5 | 4.7 | 5.3 | 2.9 | 11.2 | 12.7 | 0.2 | 1.3 | 1.9 | |||||||||||||||||||||||||||||||||||||||||||||||||
Total portfolio (IAS 40) 1 | 2.5 | 4.7 | 9.0 | 2.0 | 5.9 | 12.7 | 0.2 | 1.3 | 2.0 |
1 In addition, there are assets held for sale (IFRS 5) as at 30 June 2020 in the amount of EUR 3.1 million that are assigned to level 2 of the fair value hierarchy.
31 | CONSOLIDATED FINANCIAL STATEMENTS | LEG IMMOBILIEN AG Q3 2020 | ||
T31
Valuation parameters as at 31 December 2019 | ||||||||||||||||||||||||||||||||||
GAV | Valuation technique | Market rent | Maintenance cost | Administrative cost rate | Stabilised vacancy ratio | |||||||||||||||||||||||||||||
investment properties | residential/commercial | residential/commercial | residential/commercial | |||||||||||||||||||||||||||||||
€/sqm | €/sqm | €/unit | % | |||||||||||||||||||||||||||||||
€ million | min | Ø | max | min | Ø | max | min | Ø | max | min | Ø | max | ||||||||||||||||||||||
Residential assets | ||||||||||||||||||||||||||||||||||
High-growth markets | 4,824 | DCF | 3.84 | 8.16 | 13.33 | 5.56 | 11.77 | 15.58 | 215 | 303 | 462 | 1.0 | 1.8 | 6.0 | ||||||||||||||||||||
Stable markets | 3,665 | DCF | 2.40 | 6.36 | 9.84 | 4.53 | 11.82 | 15.08 | 198 | 300 | 462 | 1.5 | 3.1 | 9.0 | ||||||||||||||||||||
Higher-yielding markets | 2,200 | DCF | 0.36 | 5.85 | 8.78 | 1.92 | 11.91 | 15.45 | 164 | 300 | 462 | 1.5 | 4.3 | 9.0 | ||||||||||||||||||||
Acquisitions | 363 | DCF | 4.15 | 7.61 | 14.00 | 7.16 | 13.07 | 14.00 | 39 | 239 | 299 | 0.0 | 2.6 | 7.7 | ||||||||||||||||||||
Commercial assets | 211 | DCF | 1.00 | 7.41 | 27.00 | 0.87 | 5.99 | 13.03 | 1 | 279 | 5,482 | 1.0 | 2.6 | 9.0 | ||||||||||||||||||||
Leasehold | 520 | DCF | 1.50 | 6.46 | 11.25 | 7.42 | 11.63 | 14.88 | 11 | 279 | 2,662 | 1.0 | 2.9 | 7.0 | ||||||||||||||||||||
Parking and other assets | 215 | DCF | 0 | 37 | 54 | |||||||||||||||||||||||||||||
Land values | Earnings/ | |||||||||||||||||||||||||||||||||
33 | reference value method | 0 | 6 | 14 | ||||||||||||||||||||||||||||||
Total portfolio (IAS 40) 1 | 12,031 | DCF | 0.36 | 6.66 | 27.00 | 0.87 | 11.84 | 15.58 | 0 | 276 | 5,482 | 0.0 | 3.1 | 9.0 |
Discount rate | Capitalisation ratio | Estimated rent development | |||||||||||||||||
% | % | % | |||||||||||||||||
min | Ø | max | min | Ø | max | min | Ø | max | |||||||||||
Residential assets | |||||||||||||||||||
High-growth markets | 3.6 | 4.7 | 5.6 | 2.2 | 5.2 | 9.6 | 1.3 | 1.7 | 2.0 | ||||||||||
Stable markets | 3.6 | 4.7 | 5.6 | 2.5 | 6.0 | 10.0 | 0.8 | 1.2 | 1.8 | ||||||||||
Higher-yielding markets | 3.9 | 4.9 | 6.3 | 3.5 | 6.4 | 10.6 | 0.7 | 1.0 | 1.5 | ||||||||||
Acquisitions | 4.6 | 4.8 | 6.6 | 3.4 | 5.1 | 8.2 | 1.0 | 1.4 | 1.9 | ||||||||||
Commercial assets | 2.5 | 6.5 | 9.0 | 2.8 | 7.1 | 11.4 | 0.7 | 1.5 | 1.9 | ||||||||||
Leasehold | 3.6 | 4.9 | 6.9 | 3.1 | 6.3 | 12.4 | 0.8 | 1.2 | 1.9 | ||||||||||
Parking and other assets | 4.1 | 4.8 | 5.7 | 2.9 | 7.1 | 12.8 | 0.7 | 1.3 | 2.0 | ||||||||||
Land values | |||||||||||||||||||
3.6 | 4.8 | 5.4 | 2.2 | 11.1 | 12.3 | 0.9 | 1.3 | 1.9 | |||||||||||
Total portfolio (IAS 40) 1 | 2.5 | 4.8 | 9.0 | 2.2 | 6.05 | 12.8 | 0.7 | 1.3 | 2.0 |
1 In addition, there are assets held for sale (IFRS 5) as at 31 December 2019 in the amount of EUR 25.2 million that are assigned to level 2 of the fair value hierarchy.
32 | CONSOLIDATED FINANCIAL STATEMENTS | LEG IMMOBILIEN AG Q3 2020 | ||
With regard to the calculation methods, please refer to the > consoli-
dated financial statements as of 31 December 2019.
In addition, the LEG Group's portfolio still includes land and buildings accounted for in accordance with IAS 16.
Property, plant and equipment as well as intangible assets included right of use leases in the amount of EUR 29.5 million as of 30 Septem- ber 2020. The right of uses result from rented land and buildings, cars, heat contracting, measurement and reporting technology, IT peripheral devices as well as software. In the reporting period right of uses in the amount of EUR 5.4 million have been added.
T32
Right of use leases | ||||
€ million | 30.09.2020 | 31.12.2019 | ||
Right of use buildings | 4.5 | 5.8 | ||
Right of use technical equipment | ||||
and machinery | 17.3 | 19.2 | ||
Right of use operating and office equipment | 5.9 | 5.2 | ||
Property, plant and equipment | 27.7 | 30.2 | ||
Right of use software | 1.8 | 0.9 | ||
Intangible assets | 1.8 | 0.9 | ||
Cash and cash equivalents mainly consist of bank balances.
Changes in the components of consolidated equity are shown in the statement of changes in consolidated equity.
Financing liabilities are composed as follows:
T33
As of 30 September 2020, the issuance of a convertible bond with a carrying amount of EUR 552.4 million, the issuance of a registered bond in the amount of EUR 50.3 million, a loan of an acquisition in the amount of EUR 14.5 million and the cash payments of loans in the amount of EUR 245.0 million increased the financing liabilities. Scheduled and unscheduled repayments of EUR 173.0 million had an opposite effect.
Financing liabilities from real estate financing include among other things two convertible bonds with a nominal value of EUR 550.0 million and an IFRS carrying amount of EUR 522.4 million and a nominal value of EUR 400.0 million and an IFRS carrying amount of EUR 388.2 million as well as three corporate bonds, one with a nominal value of EUR 500.0 million (IFRS carrying amount of EUR 498.4 million), one with a nominal amount of EUR 300.0 million (IFRS carrying amount of EUR 298.9 million), and one with a nominal amount of EUR 500.0 million (IFRS carrying amount of EUR 501.1 million).
Already concluded leases starting after the reporting date will lead to probable cash outflows in the amount of EUR 15.9 million.
Financing liabilities | ||||
€ million | 30.09.2020 | 31.12.2019 | ||
Financing liabilities from real estate financing | 5,648.1 | 4,973.4 | ||
Financing liabilities from lease financing | 80.7 | 80.5 | ||
Financing liabilities | 5,728.8 | 5,053.9 | ||
Financing liabilities from property financing serve the financing of investment properties.
The main driver for the changes in maturity of financing liabilities as against 31 December 2019 is the issuance of the convertible bond 2020, the reclassification of the convertible bond 2017, cash payments of loans as well as repayment of the commercial papers.
T34
Maturity of financing liabilities from real estate financing
Remaining term | Total | |||||||
€ million | < 1 year | > 1 to 5 years | > 5 years | |||||
30.09.2020 | 477.3 | 1,808.8 | 3,362.0 | 5,648.1 | ||||
31.12.2019 | 187.5 | 1,456.3 | 3,329.6 | 4,973.4 | ||||
33 | CONSOLIDATED FINANCIAL STATEMENTS | LEG IMMOBILIEN AG Q3 2020 | ||
8. Selected notes to the consolidated statement of comprehensive income
Net rental and lease income is broken down as follows:
T35
Net rental and lease income | |||||
01.01.- | 01.01.- | ||||
€ million | 30.09.2020 | 30.09.2019 | |||
Net cold rent | 464.5 | 439.8 | |||
Profit from operating expenses | - 1.2 | - 0.9 | |||
Maintenance for externally procured services | - 37.4 | - 36.9 | |||
Staff costs | - 53.7 | - 48.8 | |||
Allowances on rent receivables | - 5.6 | - 5.8 | |||
Depreciation and amortisation expenses | - 7.4 | - 6.9 | |||
Other | 6.5 | - 0.3 | |||
Net rental and lease income | 365.7 | 340.2 | |||
Net operating income margin (in %) | 78.7 | 77.4 | |||
Non-recurring project costs - rental and lease | 3.2 | 2.9 | |||
Depreciation | 7.4 | 6.9 | |||
Adjusted net rental and lease income | 376.3 | 350.0 | |||
Adjusted net operating | |||||
income margin (in %) | 81.0 | 79.6 | |||
In the reporting period, LEG Immo increased its net rental and lease income by EUR 25.5 million compared to the same period of the previous year. The main driver of this development was the EUR 24.7 million rise in net cold rents. In-place rent per square metre on a like-for- like basis rose by 2.3 % in the reporting period. The increase in other is mainly due to the expansion of value-added services. This was countered by the increase in staff costs by EUR 4.9 million, which was mainly due to an increase in the number of employees as well as to tariff increases.
Due to disproportionate development of net rental and lease income compared with the development of in-place rent the NOI margin increased from 77.4 % to 78.7 % in the reporting period.
In the reporting period the following depreciation expenses for right of use from leases are included.
T36
Depreciation expense of leases | ||||
01.01.- | 01.01.- | |||
€ million | 30.09.2020 | 30.09.2019 | ||
Right of use buildings | 0.1 | 0.1 | ||
Right of use technical equipment | ||||
and machinery | 3.6 | 3.6 | ||
Right of use operating and office equipment | 1.6 | 1.5 | ||
Depreciation expense of leases | 5.3 | 5.2 | ||
In the reporting period expenses of leases of a low-value asset in the amount of EUR 0.4 million were included in the net rental and lease income (comparative period: EUR 0.2 million).
Net income from the disposal of investment properties is composed as follows:
T37
Net income from the disposal of investment properties
01.01.- | 01.01.- | |||
€ million | 30.09.2020 | 30.09.2019 | ||
Income from the disposal of investment | 30.2 | 26.7 | ||
Carrying amount of the disposal | ||||
of investment properties | - 30.3 | - 26.7 | ||
Costs of sales of investment properties | - 0.7 | - 0.8 | ||
Net income from the disposal | ||||
of investment properties | - 0.8 | - 0.8 | ||
Net income from the remeasurement of investment properties
The remeasurement of investment properties was conducted as of 30 June 2020. There were minor changes in the third quarter 2020 due to the remeasurement of the assets held for sale according to IFRS 5.
Net income from remeasurement of investment property amounted to EUR 593.3 million in the reporting period which corresponds to a 4.8 % rise (incl. acquisitions) compared to the start of the financial year.
As at 30 September 2020, the average value of investment property (incl. IFRS 5 objects) is EUR 1,440 per square metre including acquisitions (31 December 2019: EUR 1,353 per square metre).
The increase in the value of the portfolio is the result of the further increase in rents as well as further reduction in the discount and capitalisation rates.
34 | CONSOLIDATED FINANCIAL STATEMENTS | LEG IMMOBILIEN AG Q3 2020 | ||
Administrative and other expenses
T38
Administrative and other expenses | |||||
01.01. - | 01.01. - | ||||
€ million | 30.09.2020 | 30.09.2019 | |||
Other operating expenses | - 12.4 | - 10.1 | |||
Staff costs | - 16.0 | - 24.4 | |||
Purchased services | - 1.1 | - 0.9 | |||
Depreciation and amortisation | - 3.1 | - 2.6 | |||
Administratve and other expenses | - 32.6 | - 38.0 | |||
Depreciation and amortisation | 3.1 | 2.6 | |||
Non-recurring project costs and | |||||
extraordinary and prior-period expenses | 6.9 | 12.0 | |||
Adjusted administrative | |||||
and other expenses | - 22.7 | - 23.3 | |||
The increase in other operating expenses is mainly attributable to increased costs for advice and insurance. In contrast, staff costs in the comparative period were characterised by one-time payments (EUR 8.1 million). Therefore non-recurring project costs decreased significantly in the reporting period. Adjusted administrative expenses are therefore slightly lower than in the comparative period.
In the reporting period following depreciation expenses for right of use from leases are included.
T39
Depreciation expense of leases | ||||
01.01.- | 01.01.- | |||
€ million | 30.09.2020 | 30.09.2019 | ||
Right of use buildings | 1.5 | 1.5 | ||
Right of use operating and office equipment | 0.2 | 0.2 | ||
Right of use software | 0.1 | 0.1 | ||
Depreciation expense of leases | 1.8 | 1.8 | ||
Interest income
Net interest income is composed as follows:
T40
Interest income | ||||
01.01.- | 01.01.- | |||
€ million | 30.09.2020 | 30.09.2019 | ||
Other interest income | 0.1 | 0.2 | ||
Interest income | 0.1 | 0.2 | ||
T41
Interest expenses | ||||
01.01.- | 01.01.- | |||
€ million | 30.09.2020 | 30.09.2019 | ||
Interest expenses from real estate financing | - 51.0 | - 50.9 | ||
Interest expense from loan amortisation | - 9.8 | - 29.5 | ||
Prepayment penalty | - 0.4 | - 2.4 | ||
Interest expense from interest | ||||
derivatives for real estate financing | - 6.2 | - 5.8 | ||
Interest expense from change | ||||
in pension provisions | - 0.9 | - 1.9 | ||
Interest expense from interest | ||||
on other assets and liabilities | - 0.2 | - 0.6 | ||
Interest expenses from lease financing | - 1.6 | - 1.6 | ||
Other interest expenses | - 1.1 | 0.0 | ||
Interest expenses | - 71.2 | - 92.7 | ||
Interest expense from loan amortisation decreased by EUR 19.7 million year on year to EUR 9.8 million. This includes the measurement of the convertible and corporate bonds at amortised cost in the amount of EUR 4.7 million (comparative period: EUR 20.5 million). The main drivers for the decrease are the refinancings carried out in the financial year 2019 and the early conversion of the convertible bond issued in 2014. The issue of the two corporate bonds in the fourth quarter 2019 as well as the issued convertible bond in June 2020 had an opposite effect.
The conclusion of a derivative in the financial year 2019 resulted in an increase of interest expenses from interest derivatives by EUR 0.4 million in the reporting period.
35 | CONSOLIDATED FINANCIAL STATEMENTS | LEG IMMOBILIEN AG Q3 2020 | ||
Income taxes
T42
Income tax expenses | ||||
01.01.- | 01.01.- | |||
€ million | 30.09.2020 | 30.09.2019 | ||
Current tax expenses | - 2.9 | - 13.0 | ||
Deferred tax expenses | - 155.7 | - 169.0 | ||
Income tax expenses | - 158.6 | - 182.0 | ||
As at 30 September 2020, an effective Group tax rate of 18.3 % was assumed in accordance with Group tax planning (comparative period: 22.8 %).
Current tax expenses comprise taxes relating to other periods in the amount of EUR 0.1 million as at 30 September 2020 (comparative period: EUR 1.4 million).
Earnings per share
Basic earnings per share are calculated by dividing the net profit for the period attributable to the shareholders by the average number of shares outstanding during the reporting period.
On 25 June 2020, LEG Immo implemented a capital increase with shareholders' pre-emptive rights disapplied by way of accelerated bookbuilding. A total of 2,370,000 new shares were placed.
Due to issuing stock dividends for the financial year 2019 a capital increase was carried out on 22 September 2020. A total of 716,107 new shares were issued.
T43
Earnings per share (basic) | ||||
30.09.2020 | 30.09.2019 | |||
Net profit or loss attributable | ||||
to shareholders in € million | 653.4 | 486.2 | ||
Average numbers of shares outstanding | 69,876,373 | 63,426,930 | ||
Earnings per share (basic) in € | 9.35 | 7.67 | ||
T44 | ||||
Earnings per share (diluted) | ||||
30.09.2020 | 30.09.2019 | |||
Net profit or loss attributable | ||||
to shareholders in € million | 653.4 | 486.2 | ||
Convertible bond coupon after taxes | 2.6 | 2.0 | ||
Measurement of derivatives after taxes | 43.7 | 88.4 | ||
Amortisation of the | ||||
convertible bond after taxes | 1.9 | 13.9 | ||
Net profit or loss for the period | ||||
for diluted earnings per share | 701.6 | 590.5 | ||
Average weighted number | ||||
of shares outstanding | 69,876,373 | 63,426,930 | ||
Number of potentially new shares in the | ||||
event of exercise of conversion rights | 4,633,776 | 9,020,694 | ||
Number of shares for | ||||
diluted earnings per share | 74,510,149 | 72,447,624 | ||
Intermedia result | 9.42 | 8.15 | ||
Diluted earnings per share in € | 9.35 | 7.67 | ||
As at 30 September 2020, LEG Immo had potential ordinary shares from convertible bonds, which authorise the bearers to convert it into up to 4.6 million shares.
Diluted earnings per share are calculated by increasing the average number of shares outstanding by the number of all potentially dilutive shares. The net profit/loss for the period is adjusted for the expenses no longer incurring for the interest coupon, the measurement of the embedded derivatives and the amortisation of the convertible bond and the resulting tax effect in the event of the conversion rights being exercised in full.
Owing in particular to the expenses no longer incurring in the event of conversion for the measurement of the embedded derivative, the potential ordinary shares from the convertible bond are not dilutive within the meaning of IAS 33.41 as at 30 September 2019 and 30 September 2020.
The diluted earnings per share are therefore equal to basic earnings per share as at 30 September 2019 and 30 September 2020.
9. Notes on Group segment reporting
As a result of the revision of internal management reporting, LEG Group has no longer been managed as two segments since the 2016 financial year. The Group is now managed as one segment.
The LEG Group is managed by the following key performance indicators:
Reconciliation to FFO
FFO I is a key financial performance indicator of the LEG Group. The LEG Group distinguishes between FFO I (not including net income from the disposal of investment properties), FFO II (including net income from the disposal of investment properties) and AFFO (FFO I adjusted for capex). The calculation methods for these key figures can be found in the
36 | CONSOLIDATED FINANCIAL STATEMENTS | LEG IMMOBILIEN AG Q3 2020 | ||
FFO I, FFO II and AFFO were calculated as follows in the reporting period and the same period of the previous year:
T45
Calculation of FFO I, FFO II and AFFO | ||||||||||||||
Q3 2020 | Q3 2019 | 01.01. - | 01.01. - | |||||||||||
€ million | 30.09.2020 | 30.09.2019 | ||||||||||||
Net cold rent | 156.5 | 147.3 | 464.5 | 439.8 | ||||||||||
Profit from operating expenses | 0.4 | 1.0 | - 1.2 | - 0.9 | ||||||||||
Maintenance for externally procured services | - 13.4 | - 11.5 | - 37.4 | - 36.9 | ||||||||||
Staff costs | - 17.4 | - 16.8 | - 53.7 | - 48.8 | ||||||||||
Allowances on rent receivables | - 1.3 | - 1.5 | - 5.6 | - 5.8 | ||||||||||
Other | 3.8 | - 1.6 | 6.5 | - 0.3 | ||||||||||
Non-recurring project costs (rental and lease) | 1.1 | 1.3 | 3.2 | 2.9 | ||||||||||
Current net rental and lease income | 129.7 | 118.2 | 376.3 | 350.0 | ||||||||||
Current net income from other services | 2.1 | 1.6 | 6.6 | 3.4 | ||||||||||
Staff costs | - 4.9 | - 9.0 | - 16.0 | - 24.4 | ||||||||||
Non-staff operating costs | - 2.4 | - 2.9 | - 13.6 | - 10.9 | ||||||||||
Non-recurring project costs (admin.) | 0.5 | 4.7 | 6.9 | 12.0 | ||||||||||
Extraordinary and prior-period expenses | 0.0 | 0.0 | 0.0 | 0.0 | ||||||||||
Current administrative expenses | - 6.8 | - 7.2 | - 22.7 | - 23.3 | ||||||||||
Other income and expenses | 0.0 | 0.1 | 0.0 | 0.4 | ||||||||||
Adjusted EBITDA | 125.0 | 112.7 | 360.2 | 330.5 | ||||||||||
Cash interest expenses and income | - 21.1 | - 19.4 | - 59.7 | - 58.4 | ||||||||||
Cash income taxes from rental and lease | - 0.8 | - 3.8 | - 2.0 | - 10.0 | ||||||||||
FFO I (before adjustment of non-controlling interests) | 103.1 | 89.5 | 298.5 | 262.1 | ||||||||||
Adjustment of non-controlling interests | - 1.0 | - 1.3 | - 1.8 | - 3.0 | ||||||||||
FFO I (after adjustment of non-controlling interests) | 102.1 | 88.2 | 296.7 | 259.1 | ||||||||||
Weighted average number of shares outstanding | 71,451,447 | 63,904,421 | 69,876,373 | 63,426,930 | ||||||||||
FFO I per share | 1.43 | 1.38 | 4.25 | 4.09 | ||||||||||
Net income from the disposal of investment properties | 0.0 | - 0.1 | - 0.3 | - 0.3 | ||||||||||
Cash income taxes from disposal of investment properties | 0.0 | - 1.6 | - 0.9 | - 2.9 | ||||||||||
FFO II (incl. disposal of investment properties) | 102.1 | 86.5 | 295.5 | 255.9 | ||||||||||
CAPEX | - 80.3 | - 58.0 | - 202.7 | - 136.5 | ||||||||||
CAPEX-adjusted FFO I (AFFO) | 21.8 | 30.2 | 94.0 | 122.6 | ||||||||||
37 | CONSOLIDATED FINANCIAL STATEMENTS | LEG IMMOBILIEN AG Q3 2020 | ||
Net asset value (NAV)
A further key metric relevant in the property industry is NAV. The calculation method for the respective key figure can be found in the
The LEG Group reports a basic EPRA NAV of EUR 8,356.1 million as at 30 September 2020. The effects of the possible conversion of the convertible bond 2017 are shown by the additional calculation of diluted EPRA NAV. After further adjustment for goodwill effects, the adjusted diluted EPRA NAV amounts to EUR 8,702.6 million at the reporting date.
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EPRA NAV | |||||||||||||
30.09.2020 | 31.12.2019 | ||||||||||||
Undiluted | Effect of exercise | Diluted | Undiluted | Effect of exercise | Diluted | ||||||||
of convertibles | of convertibles | ||||||||||||
€ million | and options | and options | |||||||||||
Equity attributable to shareholders of the parent company | 6,653.1 | - | 6,653.1 | 5,909.9 | - | 5,909.9 | |||||||
Non-controlling interests | 24.5 | - | 24.5 | 24.0 | - | 24.0 | |||||||
Equity | 6,677.6 | - | 6,677.6 | 5,933.9 | - | 5,933.9 | |||||||
Effect of exercise of options, convertibles and other equity interests | - | 444.9 | 444.9 | - | 26.1 | 26.1 | |||||||
NAV | 6,653.1 | 444.9 | 7,098.0 | 5,909.9 | 26.1 | 5,936.0 | |||||||
Fair value measurement of derivative financial instruments | 135.6 | - 15.4 | 120.2 | 84.0 | - | 84.0 | |||||||
Deferred taxes on WFA loans and derivatives | 1.6 | - | 1.6 | 6.2 | - | 6.2 | |||||||
Deferred taxes on investment property | 1,621.7 | - | 1,621.7 | 1,386.0 | - | 1,386.0 | |||||||
Goodwill resulting from deferred taxes on EPRA adjustments | - 55.9 | - | - 55.9 | - 55.8 | - | - 55.8 | |||||||
EPRA NAV | 8,356.1 | 429.5 | 8,785.6 | 7,330.3 | 26.1 | 7,356.4 | |||||||
Number of shares | 72,095,943 | 3,438,349 | 75,534,292 | 69,009,836 | 0 | 69,009,836 | |||||||
EPRA NAV per share (€) | 115.90 | - | 116.31 | 106.22 | - | 106.60 | |||||||
Goodwill resulting from synergies | 83.0 | - | 83.0 | 83.4 | - | 83.4 | |||||||
Adjusted EPRA NAV (w/o effects from goodwill) | 8,273.1 | 429.5 | 8,702.6 | 7,246.9 | 26.1 | 7,273.0 | |||||||
Number of shares | 72,095,943 | 3,438,349 | 75,534,292 | 69,009,836 | 0 | 69,009,836 | |||||||
Adjusted EPRA NAV per share (€) | 114.75 | - | 115.21 | 105.01 | - | 105.39 | |||||||
38 | CONSOLIDATED FINANCIAL STATEMENTS | LEG IMMOBILIEN AG Q3 2020 | ||
Loan-to-value ratio (LTV)
Net debt at the end of the reporting period is higher compared with 31 December 2019. Investment properties increased even more, which resulted in a further decline in loan-to-value ratio (LTV) of 36.4 % at the interim reporting date (31 December 2019: 37.7 %).
T47
LTV | |||||
€ million | 30.09.2020 | 31.12.2019 | |||
Financing liabilities | 5,728.8 | 5,053.9 | |||
Without lease liabilities IFRS 16 | |||||
(not leasehold) | 29.5 | 31.8 | |||
Less cash and cash equivalents | 848.8 | 451.2 | |||
Net financing liabilities | 4,850.5 | 4,570.9 | |||
Investment properties | 13,222.2 | 12,031.1 | |||
Assets held for sale | 33.7 | 25.2 | |||
Prepayments for investment properties | 69.7 | 53.5 | |||
Real estate assets | 13,325.6 | 12,109.8 | |||
Loan-to-value ratio (LTV) in % | 36.4 | 37.7 | |||
10. Financial instruments
The table on > page 39 shows the financial assets and liabilities broken down by measurement category and class. Receivables and liabilities from finance leases and derivatives used as hedging instruments are included even though they are not assigned to an IFRS 9 measurement category. With respect to reconciliation, non-financial assets and non-financing liabilities are also included although they are not covered by IFRS 7.
The fair values of financial instruments are determined on the basis of corresponding market values or measurement methods. For cash and cash equivalents and other short-term primary financial instruments, the fair value is approximately the same as the carrying amount at the end of the respective reporting period.
For non-current receivables, other assets and liabilities, the fair value is calculated on the basis of the forecast cash flows, applying the reference interest rates as of the end of the reporting period. The fair values of derivative financial instruments are determined based on the benchmark interest rates in place as of the reporting date.
For financial instruments at fair value, the discounted cash flow method is used to determine fair value using corresponding quoted market prices, with individual credit ratings and other market conditions being taken into account in the form of standard credit and liquidity spreads when calculating present value. If no quoted market prices are available, the fair value is calculated using standard measurement methods applying instrument-specific market parameters.
When calculating the fair value of derivative financial instruments, the input parameters for the valuation models are the relevant market prices and interest rates observed as of the end of the reporting period, which are obtained from recognised external sources. The derivatives are therefore attributable to level 2 of the fair value hierarchy as defined in IFRS 13.72 ff (measurement on the basis of observable inputs).
Both the Group's own risk and the counterparty risk were taken into account in the calculation of the fair value of derivatives in accordance with IFRS 13.
39 | CONSOLIDATED FINANCIAL STATEMENTS | LEG IMMOBILIEN AG Q3 2020 | ||
T48 | ||||||||||||||||||||||||
Classes of financial instruments for financial assets and liabilities 30.09.2020 | ||||||||||||||||||||||||
Measurement | Measurement | Measurement | Measurement | |||||||||||||||||||||
(IFRS 9) | (IFRS 16) | (IFRS 9) | (IFRS 16) | |||||||||||||||||||||
Carrying | Amortised | Fair value | Fair value | Carrying | Amortised | Fair value | Fair value | |||||||||||||||||
amounts | cost | through | 30.09.2020 | amounts | cost | through | 30.09.2020 | |||||||||||||||||
as per | profit or loss | as per | profit or loss | |||||||||||||||||||||
statement | statement | |||||||||||||||||||||||
of financial | of financial | |||||||||||||||||||||||
positions | positions | |||||||||||||||||||||||
€ million | 30.09.2020 | € million | 30.09.2020 | |||||||||||||||||||||
Assets | Liabilities | |||||||||||||||||||||||
Other financial assets | 35.7 | 35.7 | Financial liabilities | - 5,728.8 | - 6,050.4 | |||||||||||||||||||
Hedge accounting derivatives | - | - | FLAC | - 5,648.1 | - 5,648.1 | - 6,050.4 | ||||||||||||||||||
AC | 23.7 | 23.7 | 23.7 | Liabilities from lease financing | - 80.7 | - 80.7 | - | |||||||||||||||||
FVtPL | 12.0 | 12.0 | 12.0 | Other liabilities | - 480.8 | - 480.8 | ||||||||||||||||||
Receivables and other assets | 112.4 | 112.4 | FLAC | - 174.7 | - 174.7 | - 174.7 | ||||||||||||||||||
AC | 74.5 | 74.5 | 74.5 | Derivatives HFT | - 127.0 | - 127.0 | - 127.0 | |||||||||||||||||
Other non-financial assets | 37.9 | 37.9 | Hedge accounting derivatives | - 46.9 | - 46.9 | |||||||||||||||||||
Cash and cash equivalents | 848.8 | 848.8 | Other non-financial liabilities | - 132.2 | - 132.2 | |||||||||||||||||||
AC | 848.8 | 848.8 | 848.8 | Total | - 6,209.6 | - 5,822.8 | - 127.0 | - 80.7 | - 6,531.2 | |||||||||||||||
Total | 996.9 | 947.0 | 12.0 | 996.9 | Of which IFRS 9 | |||||||||||||||||||
measurement categories | ||||||||||||||||||||||||
Of which IFRS 9 | ||||||||||||||||||||||||
measurement categories | FLAC | - 5,822.8 | - 5,822.8 | - 6,225.1 | ||||||||||||||||||||
AC | 947.0 | 947.0 | 947.0 | |||||||||||||||||||||
Derivatives HFT | - 127.0 | - 127.0 | - 127.0 | |||||||||||||||||||||
FVtPL | 12.0 | 12.0 | 12.0 | |||||||||||||||||||||
AC = Amortised cost
FVtPL = Fair value through profit and loss
FLAC = Financial liabilities at amorised cost
HFT = Held for trading
40 | CONSOLIDATED FINANCIAL STATEMENTS | LEG IMMOBILIEN AG Q3 2020 | ||
T49 | |||||||||||||||||||||||
Classes of financial instruments for financial assets and liabilities 31.12.2019 | |||||||||||||||||||||||
Measurement | Measurement | Measurement | Measurement | ||||||||||||||||||||
(IFRS 9) | (IFRS 16) | (IFRS 9) | (IFRS 16) | ||||||||||||||||||||
Carrying | Amortised | Fair value | Fair value | Carrying | Amortised | Fair value | Fair value | ||||||||||||||||
amounts | cost | through | 31.12.2019 | amounts | cost | through | 31.12.2019 | ||||||||||||||||
as per | profit or loss | as per | profit or loss | ||||||||||||||||||||
statement | statement | ||||||||||||||||||||||
of financial | of financial | ||||||||||||||||||||||
positions | positions | ||||||||||||||||||||||
€ million | 31.12.2019 | € million | 31.12.2019 | ||||||||||||||||||||
Assets | Liabilities | ||||||||||||||||||||||
Other financial assets | 23.2 | 23.2 | Financial liabilities | - 5,053.9 | - 5,306.8 | ||||||||||||||||||
Hedge accounting derivatives | - | - | FLAC | - 4,973.4 | - 4,973.4 | - 5,306.8 | |||||||||||||||||
AC | 11.2 | 11.2 | 11.2 | Liabilities from lease financing | - 80.5 | - 80.5 | |||||||||||||||||
FVtPL | 12.0 | 12.0 | 12.0 | Other liabilities | - 392.0 | - 392.0 | |||||||||||||||||
Receivables and other assets | 82.0 | 82.0 | FLAC | - 126.8 | - 126.8 | - 126.8 | |||||||||||||||||
AC | 76.7 | 76.7 | 76.7 | Derivatives HFT | - 60.3 | - 60.3 | - 60.3 | ||||||||||||||||
Other non-financial assets | 5.3 | 5.3 | Hedge accounting derivatives | - 39.0 | - 39.0 | ||||||||||||||||||
Cash and cash equivalents | 451.2 | 451.2 | Other non-financial liabilities | - 165.9 | - 165.9 | ||||||||||||||||||
AC | 451.2 | 451.2 | 451.2 | Total | - 5,445.9 | - 5,100.2 | - 60.3 | - 80.5 | - 5,698.8 | ||||||||||||||
Total | 556.4 | 539.1 | 12.0 | 556.4 | Of which IFRS 9 | ||||||||||||||||||
measurement categories | |||||||||||||||||||||||
Of which IFRS 9 | |||||||||||||||||||||||
measurement categories | FLAC | - 5,100.2 | - 5,100.2 | - 5,433.6 | |||||||||||||||||||
AC | 539.1 | 539.1 | 539.1 | ||||||||||||||||||||
Derivatives HFT | - 60.3 | - 60.3 | - 60.3 | ||||||||||||||||||||
FVtPL | 12.0 | 12.0 | 12.0 | ||||||||||||||||||||
AC = Amortised cost
FVtPL = Fair value through profit and loss
FLAC = Financial liabilities at amorised cost
HFT = Held for trading
41 | CONSOLIDATED FINANCIAL STATEMENTS | LEG IMMOBILIEN AG Q3 2020 | ||
As at 30 September 2020, the fair value of the very small equity investments was EUR 12.0 million, unchanged to the valuation as at 31 December 2019. The fair value of the very small equity investments is calculated using DCF procedures as there are no quoted prices in an active market for the relevant equity investments. The fair value calculated using valuation models is allocated to level 3 of the IFRS 13 measurement hierarchy. Allocation to level 3 takes place based on valuation models with inputs not observed on a market. This relates primarily to the capitalisation rate of 4.8 %. As at 30 Sep- tember 2020, the fair value of the very small equity investments was EUR 12.0 million. The stress test of this parameter on the basis of plus 50 basis points results in the fair value being EUR 11.0 million lower and at minus 50 basis points EUR 13.2 million higher.
11. Related-party disclosures
Please see the IFRS consolidated financial statements as at 31 Decem- ber 2019 for the presentation of the IFRS 2 programmes for long-term incentive Management Board agreements.
12. Other
There were no changes with regard to contingent liabilities in comparison to 31 December 2019.
14. Supplementary report
Since 7 October 2020 Martin Wiesmann is member of the Supervisory Board.
The acquisition of a property portfolio of around 6,418 residential and commercial units was notarised on 22 June 2020. The portfolio generates annual net cold rent of around EUR 30.2 million. The average in-place rent is around EUR 5.95 per square metre and the initial vacancy rate is around 2.5 %. The transaction was closed for 6,104 units on 1 November 2020. The transition date for the remaining 314 units will be on 1 January 2021. The portfolio acquisition does not constitute a business combination as defined by IFRS 3.
13. The Management Board and the Supervisory Board
There were no changes to the composition of the Supervisory Board as at 30 September 2020 compared with the disclosures as at 31 December 2019.
The following change occurred in the composition of the Management Board:
Effective 1 July 2020, Susanne Schröter-Crossan was appointed as CFO of LEG Immo.
On 19 August 2020, LEG Immo signed a purchase agreement with the Fischbach Holding GmbH assuming a 100 % stake of the company Fischbach Service GmbH (rebranded in LWS Plus GmbH). The trans- action's objectives are the expansion of the value chain and the reduction of the interfaces between the LEG Group and the general contractors, so that in the course of the refurbishments of vacant apartments the LEG Group assume the steering and controlling function.
29 employees were taken on in the scope of the transaction. After antitrust approval, the transaction was closed on 1 October 2020.
As at 1 October 2020, the acquisition of the company was treated as a business combination within the meaning of IFRS 3 as material business processes were acquired.
42 | CONSOLIDATED FINANCIAL STATEMENTS | LEG IMMOBILIEN AG Q3 2020 | ||
The provisional consideration for the business combination is made up as follows:
T50
Provisional consideration | ||
01.10.2020 | ||
€ million | provisional | |
Net purchase price | 22.6 | |
Contingent reimbursement | 11.8 | |
Total consideration | 34.4 | |
The provisional purchase price can be allocated to the acquired assets and liabilities measured at fair values as follows:
T51
Provisional purchase price allocation | ||
01.10.2020 | ||
€ million | provisional | |
Factory and office equipment | 0.1 | |
Property, plant and equipment - finance lease | 0.6 | |
Intangible assets | 0.0 | |
Inventories | 5.8 | |
Receivables and other assets | 0.7 | |
Cash and cash equivalents | 2.4 | |
Total Assets | 9.6 | |
Other provisions | 0.1 | |
Other liabilities | 5.6 | |
Total Liabilities | 5.7 | |
Net assets at fair value | 3.9 | |
Non-controlling interests | 0.0 | |
Net assets at fair value without non-controlling interests | 3.9 | |
Consideration | 34.4 | |
Goodwill | 30.5 | |
The transaction costs of the business combination amount to EUR 0.2 million and essentially include consulting expenses.
The synergies anticipated from the business combination relate primarily to cost advantages as well as a reduction of the vacancy duration and thereby a reliable letting.
For tax purposes, the goodwill is not deductible.
In addition to the total consideration, due to the currently incomplete existing data basis the purchase price allocation is provisional in respect to the following items:
- Inventories
- Accounting for leases
- Deferred tax expenses
- Contingent liabilities.
The LEG Group concluded agreements of secured financing in the amount of EUR 130 million. These funds will be paid in the fourth quarter 2020.
There were no other significant events after the end of the interim reporting period on 30 September 2020.
Dusseldorf, 12 November 2020
LEG Immobilien AG
The Management Board
Lars von Lackum (CEO)
Susanne Schröter-Crossan (CFO)
Dr Volker Wiegel (COO)
43 | RESPONSIBILITY STATEMENT • FINANCIAL CALENDAR 2020/2021 • CONTACT DETAILS AND IMPRINT | LEG IMMOBILIEN AG Q3 2020 | ||
Responsibility statement | Financial calendar 2020/2021 |
Contact details and imprint
"To the best of our knowledge, and in accordance with the applicable reporting principles for financial reporting, the consolidated financial statements give a true and fair view of the assets, liabilities, financial position and profit or loss of the LEG Group, and the management report of the Group includes a fair review of the development and performance of the business and the position of the LEG Group, together with a description of the principal opportunities and risks associated with the expected development of the LEG Group."
Dusseldorf, 12 November 2020
LEG financial calendar 2020/2021
Release of quarterly report as of 30 September 2020
Release of annual report 2020
Release of quarterly statement as of 31 March 2021
Release of quarterly report as of 30 June 2021
Release of quarterly statement as of 30 September 2021
12 November 2020
10 March 2021
11 May 2021
10 August 2021
10 November 2021
PUBLISHER
LEG Immobilien AG Hans-Böckler-Straße 38 D- 40476 Dusseldorf Tel. + 49 (0) 2 11 45 68 - 0info@leg-wohnen.dewww.leg.ag
CONTACT DETAILS
Investor Relations
Frank Kopfinger
LEG Immobilien AG The Management Board
Lars von Lackum (CEO)
Susanne Schröter-Crossan (CFO)
Dr Volker Wiegel (COO)
For additional information, see the Investor Relations calendar on our
Tel. +49 (0) 2 11 45 68 - 400ir@leg.ag
CONCEPT, EDITING DESIGN
HGB Hamburger Geschäftsberichte GmbH & Co. KG, Hamburg
The quarterly report as of 30 September 2020 is also available in German.
In case of doubt, the German version takes precedence.
LEG Immobilien AG Hans-Böckler-Straße 38 D- 40476 Dusseldorf Tel. + 49 (0) 2 11 45 68 - 0info@leg-wohnen.dewww.leg.ag
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LEG Immobilien AG published this content on 12 November 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 12 November 2020 11:00:14 UTC