First
German
Real
estate
Investment
8
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AnnuAl RepoRt 2008
P rof ile
alstria office REIT-AG is an internally managed Real Estate Investment Trust (REIT) solely focused on
acquiring, owning and managing office real estate in Germany. alstria was founded in January 2006 and
was converted into the first German REIT in October 2007. Its headquarters are based in Hamburg.
alstria office REIT-AG owns a diversified portfolio of properties across attractive German office real
estate markets. Its current portfolio comprises 89 properties with an aggregate lettable space of
approx. 944,000 sqm and is valued at approx. EUR 1.8 billion.
alstria intends to expand its portfolio in the upcoming years as part of a sustainable growth strategy. This
strategy is based on selective investments and active asset and portfolio management as well as on
establishing and maintaining good relationships with its key customers and decision makers.
Key f ig ures
in EUR k
Revenues and Earnings
revenues
Net rental income
eBiTDA
Consolidated net profit
funds from operations (ffo)
Assets
investment properties
Total assets
equity
Net Asset Value
G-REIT Key Figures
g-reiT equity ratio
revenues plus other income from investment properties
NNNAV per share in eur
earnings per share in eur
2008
2007
Change
in %
102,055
93,222
-6,542
-56,000
39,415
82,552
76,192
85,911
52,810
31,540
1,805,265
1,693,718
1,873,493
1,835,520
729,667
729,667
870,875
870,875
23.6
22.4
-107.6
-206.0
25.0
6.6
2.1
-16.2
-16.2
40.3%
100%
13.03
-1.00
51.4%
100%
15.55
0.94
-11.1 pp
0 pp
-16.2
-206.0
shAre
isiN
symbol
Prime sector
industry group
Market segment
indices
Number of shares
share capital (notional) in eur
Market capitalisation (Dec. 31, 2008)
in eur
free float
De000A0lD2u1
AoX
financial services
real estate
Prime standard, frankfurt
s-DAX, ePrA, german reiT index, s&P/Citigroup global reiT index
56,000,000
56,000,000
277,200,000
39%
First
German
Real
estate
Investment
8
0
0
2
t
r
o
p
e
R
l
a
u
n
n
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G
A
T
-
I
E
R
e
c
i
f
f
o
a
i
r
t
s
l
a
AnnuAl RepoRt 2008
P rof ile
alstria office REIT-AG is an internally managed Real Estate Investment Trust (REIT) solely focused on
acquiring, owning and managing office real estate in Germany. alstria was founded in January 2006 and
was converted into the first German REIT in October 2007. Its headquarters are based in Hamburg.
alstria office REIT-AG owns a diversified portfolio of properties across attractive German office real
estate markets. Its current portfolio comprises 89 properties with an aggregate lettable space of
approx. 944,000 sqm and is valued at approx. EUR 1.8 billion.
alstria intends to expand its portfolio in the upcoming years as part of a sustainable growth strategy. This
strategy is based on selective investments and active asset and portfolio management as well as on
establishing and maintaining good relationships with its key customers and decision makers.
Key f ig ures
in EUR k
Revenues and Earnings
revenues
Net rental income
eBiTDA
Consolidated net profit
funds from operations (ffo)
Assets
investment properties
Total assets
equity
Net Asset Value
G-REIT Key Figures
g-reiT equity ratio
revenues plus other income from investment properties
NNNAV per share in eur
earnings per share in eur
2008
2007
Change
in %
102,055
93,222
-6,542
-56,000
39,415
82,552
76,192
85,911
52,810
31,540
1,805,265
1,693,718
1,873,493
1,835,520
729,667
729,667
870,875
870,875
23.6
22.4
-107.6
-206.0
25.0
6.6
2.1
-16.2
-16.2
40.3%
100%
13.03
-1.00
51.4%
100%
15.55
0.94
-11.1 pp
0 pp
-16.2
-206.0
shAre
isiN
symbol
Prime sector
industry group
Market segment
indices
Number of shares
share capital (notional) in eur
Market capitalisation (Dec. 31, 2008)
in eur
free float
De000A0lD2u1
AoX
financial services
real estate
Prime standard, frankfurt
s-DAX, ePrA, german reiT index, s&P/Citigroup global reiT index
56,000,000
56,000,000
277,200,000
39%
First
German
Real
estate
Investment
AnnuAl RepoRt 2008
the word tRuSt on the cover
was formed using aerial
photographs of the following
alstria properties:
t
R
u
S
t
Buxtehuder str. 9,11
hamburg
Kaiser-Wilhelm-str. 79-87
hamburg
Max-Brauer-Allee 41-43
hamburg
gorch-fock-Wall 15
hamburg
Buxtehuder str. 9,11
hamburg
ABouT AlsTriA
As the first German REIT,
we have
● a unique business model:
we buy and manage
office real estate
● a clear focus on one country
● a long-term orientation
oMV of iN VesTMeNT
ProPer Ties
Ke y fac ts 2008
more than EUR 100 m
between EUR 50 m and EUR 100 m
between EUR 25 m and EUR 50 m
between EUR 10 m and EUR 25 m
between EUR 5 m and EUR 10 m
between EUR 1 m and to EUR 5 m
● revenues increased
by 23.6% to eur 102,055 k
● funds from operations up 25%
to eur 39,415 k
● successful lease-ups
of more than 30,000 sqm
● Vacancy rate brought down
toward our tenant relationships
Hamburg
from 6.5% to 5.9%
● an entrepreneurial view
of market opportunities
Hanover
Detmold
Berlin
Potsdam
Magdeburg
Essen
Dortmund
Dusseldorf
Neuss
Wuppertal
Cologne
Bonn
Halle
Leipzig
Dresden
Erfurt
Zwickau
Jena
Frankfurt
Wiesbaden
Darmstadt
Mannheim
Wuerzburg
Nuremberg
Stuttgart
Augsburg
Munich
ToTAl poRTfolIo bRokEn down by USE
AlSTRIA`S CoRE TEnAnTS 2008
The key metrics for the portfolio as of Dec. 31, 2008
● office
● Retail
● Residential
● other
93%
3%
1%
3%
● City of Hamburg
● daimler
● barmer
● bilfinger berger
● Siemens
● deutsche
Rentenversicherung
● Rheinmetall
● HUk
● City of Hanover
● others
36%
14%
10%
6%
5%
3%
3%
2%
1%
20%
Metric
Number of properties
Market value (eur bn)
Contractual rent (eur m/annum)
Valuation yield
Approximate lettable area (in sqm)
Vacancy (% of lettable area)
WAulT (years)
Average rent/sqm/month (in eur)
Value
89
1.8
106.5
5.9%
944,000
5.9%
10
9.41
iMPriNT
Concept & Design
Berichtsmanufaktur GmbH, Hamburg
PrasserSander Markengestaltung, Hamburg
Realisation
Berichtsmanufaktur GmbH, Hamburg
Photos
Jan Northoff, Hamburg
Patrick Piel, Hamburg
First
German
Real
estate
Investment
AnnuAl RepoRt 2008
the word tRuSt on the cover
was formed using aerial
photographs of the following
alstria properties:
t
R
u
S
t
Buxtehuder str. 9,11
hamburg
Kaiser-Wilhelm-str. 79-87
hamburg
Max-Brauer-Allee 41-43
hamburg
gorch-fock-Wall 15
hamburg
Buxtehuder str. 9,11
hamburg
ABouT AlsTriA
As the first German REIT,
we have
● a unique business model:
we buy and manage
office real estate
● a clear focus on one country
● a long-term orientation
oMV of iN VesTMeNT
ProPer Ties
Ke y fac ts 2008
more than EUR 100 m
between EUR 50 m and EUR 100 m
between EUR 25 m and EUR 50 m
between EUR 10 m and EUR 25 m
between EUR 5 m and EUR 10 m
between EUR 1 m and to EUR 5 m
● revenues increased
by 23.6% to eur 102,055 k
● funds from operations up 25%
to eur 39,415 k
● successful lease-ups
of more than 30,000 sqm
● Vacancy rate brought down
toward our tenant relationships
Hamburg
from 6.5% to 5.9%
● an entrepreneurial view
of market opportunities
Hanover
Detmold
Berlin
Potsdam
Magdeburg
Essen
Dortmund
Dusseldorf
Neuss
Wuppertal
Cologne
Bonn
Halle
Leipzig
Dresden
Erfurt
Zwickau
Jena
Frankfurt
Wiesbaden
Darmstadt
Mannheim
Wuerzburg
Nuremberg
Stuttgart
Augsburg
Munich
ToTAl poRTfolIo bRokEn down by USE
AlSTRIA`S CoRE TEnAnTS 2008
The key metrics for the portfolio as of Dec. 31, 2008
● office
● Retail
● Residential
● other
93%
3%
1%
3%
● City of Hamburg
● daimler
● barmer
● bilfinger berger
● Siemens
● deutsche
Rentenversicherung
● Rheinmetall
● HUk
● City of Hanover
● others
36%
14%
10%
6%
5%
3%
3%
2%
1%
20%
Metric
Number of properties
Market value (eur bn)
Contractual rent (eur m/annum)
Valuation yield
Approximate lettable area (in sqm)
Vacancy (% of lettable area)
WAulT (years)
Average rent/sqm/month (in eur)
Value
89
1.8
106.5
5.9%
944,000
5.9%
10
9.41
iMPriNT
Concept & Design
Berichtsmanufaktur GmbH, Hamburg
PrasserSander Markengestaltung, Hamburg
Realisation
Berichtsmanufaktur GmbH, Hamburg
Photos
Jan Northoff, Hamburg
Patrick Piel, Hamburg
OThER I nFORMATIOn
FIna nCIaL CaLenDar 2009
Date
Event
Mar. 31, 2009
May 15, 2009
Publication of annual financial results for 2008 (Frankfurt)
Publication of financial results for Q1 2009 (Hamburg)
May 27 - 28, 2009
Roadshow, 7th Kempen European Property Seminar (Amsterdam)
June 3 - 5, 2009
NAREIT week (New York)
June 10, 2009
Annual General Meeting (Hamburg)
aug. 14, 2009
Publication of financial results for Q2 2009 (Hamburg)
Sep. 3 - 4, 2009
EPRA Annual Conference (Brüssel)
Oct. 1, 2009
Oct. 5, 2009
Roadshow, 4th Pan European Real Estate Conference (London)
Trade Fair, EXPO REAL (Munich)
152
Oct. 20 - 21, 2009
Conference Real Estate Share Initiative (Frankfurt)
nov. 9 -11, 2009
Messe German Equity Forum (Frankfurt)
nov. 13, 2009
Publication of financial results for Q3 2009 (Hamburg)
COntaCt
alstria office REIT-AG
Bäckerbreitergang 75,
20355 Hamburg, Germany
Phone: +49 (0) 40 22 63 41 - 300,
Fax:
www.alstria.com
+49 (0) 22 63 41 - 310
Investor Relations
Phone: +49 (0) 40 22 63 41 - 329
Fax:
e-mail: ir@alstria.de
http://investor-relations.alstria.com
+49 (0) 22 63 41 - 310
alstria office REIT-AG is a member of DIRK
(Deutscher Investor Relations Verband,
the German Investor Relations Association).
This report is also available in German.
Other reports issued by alstria office REIT-AG
are posted on the Company’s homepage.
taBLe OF COnt entS
2
6
Letter from the Board of Management
TRUST
18
alstria Stock
22
Group Management Discussion and Analysis
22
30
36
41
44
47
economics and Strategy
Financial analysis
risk and Opportunity Management
Disclosure requirements
additional group Disclosures
Subsequent events and Outlook
49
Consolidated Financial Statements
49
50
52
53
54
Consolidated Income Statement
Consolidated Balance Sheet
Consolidated Statements of Changes in equity
Consolidated Cash Flow Statement
notes
117
Auditors’ Report
118 Management
118
122
128
131
132
133
144
report from the Supervisory Board
Corporate governance report
Compensation report
reIt Declaration
reIt Memorandum
Valuation report
List of all Properties
150
Other Information
150
152
152
glossary
Financial Calender
Contact
PRE FAC E
M anag eMent L etter
2
Olivier Elamine
CEO alstria office REIT-AG
Dear Shareholders and Business Partners,
Ladies and Gentlemen!
Financial Crisis – Excellent Cash Flow
While the financial crisis has a firm grip on the economic environment
and clearly no player in our industry will remain unaffected by the
scarcity of available financing or the general economic downturn, the
financial performance of the alstria portfolio remained strong in 2008.
The portfolio generated more than EUR 102 million in rental revenues and
funds from operations of EUR 39.4 million. This operating result fully in
line with early 2008 company guidance is testimony to the high quality
of our portfolio and of our focus on operating efficiency and cost reduc-
tion – most of the measures having been initiated as early as 2007. We are
convinced that strong cash flows and asset quality are ultimately the
most decisive factors when it comes to managing a real estate company
in tough times.
Requirement to Deleverage – Strong Balance Sheet
With an equity ratio of 40%, alstria has one of the strongest balance
sheets in the German real estate universe. A healthy balance sheet
provides alstria with the strength and flexibility to effectively manage
the existing portfolio and benefit from additional opportunities as they
occur. Nevertheless, we are convinced that, in the future, alstria will need
an even stronger balance sheet. The mere notion that, in the coming
years, simply less debt will be available to finance real estate assets, and
that only the strongest companies will have access to liquidity puts
deleveraging on the strategic agenda for alstria. From our position of
strength, we consider deleveraging to be a systematic process that may
take another 18 to 24 months. At the end, we reckon with a capital struc-
ture that is probably closer to an equity ratio of 50% than to where the
equity ratio is today.
Preface
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alstria Stock
Group Management Discussion and Analysis
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Other Information
Glossary
Financial Calendar
Contact
Term
FFO
IFRS/IAS
Investment Property
Joint Venture
Net Asset Value (NAV)
Prime Standard
REIT (G-REIT)
Descrpition
Funds from operations (FFO) is not a measure of operating performance or liquidity under
generally accepted accounting principles, in particular IFrS, and should not be conside-
red as an alternative to the company’s income or cash flow measures as determined in
accordance with IFrS. Furthermore, no standard definition exists for FFO. thus, the FFO
or measures with similar names as presented by other companies may not necessarily
be comparable to the company’s FFO.
International Financial reporting Standards (IFrS). reporting standards (formerly called IaS)
which have been adopted by the International accounting Standards Board (IaSB).
the objective is to achieve uniformity and transparency in the accounting principles that
are used by businesses and other organizations for financial reporting around the world.
Property, land and buildings which are held as financial investment to earn rents or for
the growth and not used for the Company’s own purpose. the value of the investment
property is determined according to IaS 40.
Legally independent entity formed between two or more parties to undertake economic
activity together.
151
reflects the economic equity of the Company. It is calculated from the value of assets
less debt.
Market segment of the Frankfurt Stock exchange with the greates relevance and degree
of regulation. Being quoted on Prime Standard is a prerequisite for admission to DaX,
MDaX, SDaX, tecDaX.
real estate Investment trusts are public listed companies, fully tax transparant, which solely
invest in properties.
Roadshows
Corporate presentations to institutional investors.
Sale-and-Leaseback Transaction
Form of arrangement in which one party sells an asset to another party in exchange for
cash and contracts to lease the asset for a specified term.
Vacancy Rate
Valuation Yield
WAULT
Determines the vacancy within the portfolio and is calculated by comparing the vacancy
area and the total lettable area
Key performance indicator, which is determined at a given date by the contractual rent
in relation to the fair value of the property
Weighted average unexpired lease term. the weigthed average unexpired lease term
shows the average remaining lease length of a portfolio and is defined as the total contrac-
tual rent to be collected in relation to the contractual rent of the date of the report.
Management Letter
Preface
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alstria Stock
Group Management Discussion and Analysis
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Management
Other Information
The recent agreement on the renegotiated loan covenants is a first and
important step for us in that direction. The increase in the LTV covenant
from 60% to 65% gives us additional flexibility, and for alstria, it takes
the heat out of the ‘yield expansion debate’. The next step in our delever-
aging process will be driven by the selected disposal of assets. We started
this process quite successfully in the second half of 2008 and will
continue to work in that direction in the foreseeable future. The goal is to
put alstria in an even better financial position when our syndicated loan
needs to be refinanced at the end of 2011.
Slump in Market Prices – No Reversion to the Mean
Real estate values have fallen across the board in Germany in the last
twelve months as a consequence of the global financial crisis, and no as-
set has been fully immune to the fall. However, given the heterogeneity
of the market, value declines have been very different from an asset to
another. Long-term leased high-quality assets have resisted in a much
better fashion than yesterday’s favorite ‘opportunistic assets’, and do
not expect to revert to the mean. Some asset values will continue to fall,
while others will tend to stabilise. Stating that real estate assets in Ger-
many have fallen (or will fall) by x% is ignoring that, in Germany more
than in any other European country, the real estate market is not
uniform. Real estate investment performance is not driven by luck, but
still depends on real estate skills.
3
Alexander Dexne
CFO alstria office REIT-AG
PRE FAC E
4
4
Asset Management Focus – Strong Shield to Market Movements
The fall in real estate values seen in the German property market over the last
18 months is also substantially affecting alstria’s financial statements. In response to these
market changes alstria posted a EUR 88 million valuation loss in the accounts for 2008. Our
portfolio is valued at EUR 1,810 million now and the underlying valuation yield is at 5.9%. What
is not outright visible from these figures are the important asset management achievements
alstria was able to realise in the last financial year. The successful lease-up of more than
30,000 sqm which brought the vacancy rate down from 6.5% to below 6%, despite the acquisi-
tion of vacant assets and the sale of fully let assets. The agreement to relocate the ‘Ohnsorg
Theatre’ in Hamburg from Grosse Bleichen to Bieberhaus, and the development of additional
office space for Daimler in Stuttgart, all created additional value in the portfolio, thus helping
to mitigate the impacts of yield expansion by adding EUR 57 million in value to the portfolio
in 2008.
Counterparty Risk – Relationship Management
Challenging times bring about new perspectives, and it has become widely accepted common
practice to refer to business partners, banks, and tenants as ‘counterparty risks’. In financial
terms, counterparty risks at least need to be discounted for and at worst, be avoided
completely. alstria does not subscribe to this concept: the more challenging the times,
the closer we want to get to our tenants to support them in achieving their goals, in terms of
reducing occupancy cost, making more efficient use of space, or tackling increasing ancillary
expenses. The same is true of our financing partners. More than 87% of our syndicate banks
have supported our request to amend existing loan covenants, where they have accepted to
move the covenant up while we have accepted to ease there financial position. These are times
when past good partnership, and long-term value management pay off, and where past short-
term profits are clawed back.
Challenging Market Environment – Tail Wind Still Ahead
The German economy moved into recession in the fourth quarter of 2008. We expect the full
effect of the economic slow-down to first become visible as we go through 2009. Clearly, we
foresee reduced turnover in office space, pressure on top rents and increasing vacancies
Management Letter
Preface
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alstria Stock
Group Management Discussion and Analysis
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Auditor’s Report
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Other Information
5
5
in specific segments of the market to be some of the more visible impacts on the property
sector in 2009. But what do we expect to be the key impacts on alstria moving forward?
The extraordinary quality of our tenants together with the long leases that on average will
only expire in ten years put alstria in a relatively favorable position. We have a high visibility of
our cash flows which is giving the Company a lot of strength and flexibility today as it will
in the future.
We anticipate the next tail wind ahead of us to be driven by the level of refinancing that needs
to occur in the next few years, at a time when most real estate lenders are shrinking their
balance sheets. Although the CMBS market was less developed in Europe (and in
Germany) than it was in the US, we do expect an overhang of debt refinancing in the coming
years. This should keep the pressure on our industry to move forward, but also create opportu-
nities for doing the same, since lenders will need to exit equity position.
Staying Focused
We anticipate that the coming years will be challenging for the market in general. We also
appreciate that a number of factors that could drive the market are out of the sphere of influ-
ence of alstria, or of any real estate players, since they are linked to global considerations. In
this environment, it is even more important for alstria to stay focused on our core compe-
tences in terms of long-term value creation for German office properties with a special focus
on asset management and tenant relationship. Relative financial strength will only make
sense if it drives the right strategy!
Sincerely,
Olivier Elamine
Alexander Dexne
Chief Executive Officer
Chief Financial Officer
?????????????????
CREATING
6
L
I
N
K
S
Ludwig-Rosenberg-Ring 41
Hamburg
Grindelberg 62-66
Hamburg
Steinstr. 5-7
Hamburg
Wexstr. 7
Hamburg
Gorch-Fock-Wall 15
Hamburg
All buildings shown above
are part of the alstria portfolio.
Preface
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Alte Post
Ohnsorg Theatre
Bartholomayhaus
7
BETwEEN PAST AND FUTURE
The renovation or RepoSiTioninG of a building requires a delicate touch. it is
essential to ReTAin THe viRTueS oF THe oLd, while creating neW AppeAL for
the building’s current and future users.
ownership comes with obligations. especially when the property involved is the
ALTe poST in Hamburg. The old post office is one of the city’s most impressive
buildings. alstria will revitalise the property over the next two years, working with
expert partners and in constant collaboration with the Monument protection
department. The historic brick façade and distinctive tower will be preserved,
and a new six-storey office and retail building will be built behind it. The goal is
to successfully reposition this exceptional property.
8
?????????????????
Modernising the Building
while Retaining its Soul
Alte Post, Hamburg
For a property to remain attractive for tenants as the outside world changes, it needs to un-
dergo development from time to time. in the case of historic buildings, this is a particular-
ly complex undertaking. Many details have to be taken into account – not just while work-
ing closely with the department for the protection of historical monuments, but also to
provide the best possible solution for the City of Hamburg’s administrative offices, which had
leased the Alte post on a long-term basis. Their relocation to a nearby building benefits both the
City of Hamburg and alstria. Following this move, the Alte post is now ready to be optimised for
office and ground floor retail. its historic brick façade will remain completely intact.
The Alte post passage has stood empty since early 2009, and construction can begin. in its
present form, the ground-floor retail area was not very attractive to shoppers or retailers, and
the office space was clearly outdated, lacking modern technology, and having too low ceilings
for today’s standards. At dusk and dawn, this unique building looked sad, as it was the only
dark asset in the neighbourhood.
All this is about to change. one of the most impressive buildings in Hamburg will be tailored
to today’s needs. The ground floor retail area will be upgraded to today’s high-street require-
ments, and the new offices will offer best-in-class technology and space.
When renovating a property, the owner takes care to ensure the best possible solution for the
building, its tenants and the surrounding neighbourhood. With this objective in mind, alstria
teamed up with the Hamburg-based developer and asset managers Quantum immo bilien AG
for the Alte post project. This joint-venture combines financial muscle with real-estate expertise
and development know-how, and a different approach to property management. To optimally
integrate the new Alte post into its surroundings, the joint-venture partners and the City of
Hamburg are also designing a concept for poststrasse jointly that will provide fresh stimulus to
the city centre.
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Alte Post
Ohnsorg Theatre
Bartholomayhaus
HiStoR y
in 1847, the various postal organisations operating in
Hamburg were merged and the Alte Post was erected in
Hamburg’s poststrasse.
The building’s high clock-tower is characteristic of its Tuscan
style. it served as a visual pointer or needle telegraph,
and was the terminal for a news link to the elbe estuary.
At the time, pointer telegraphs enabled communication
over long distances, as early forerunners to our present-day
telegraph and fax machines. The tower acquired its current
appearance a few years later, when it turned out to be too
low. An octagon-shaped structure was added for extra height.
However, the tower served as a telegraph for only a few years
before Morse code replaced optical telegraphy.
in 1887, the postal administration moved to Stephansplatz,
and the building in poststrasse was used by Hamburg’s city
administration.
Between 1968 and 1971, it was completely gutted and re-
novated, although the old façade was kept. A small shopping
arcade was set up on the ground floor.
in 2008, alstria convinced the city to move out of
the building, ending their long-term lease and more than
100 years of municipal use of the property. in 2009, alstria
began repositioning the Alte post in Hamburg’s city center. in
2011, the new Alte post should be ready for the next centu-
ry, having regained its ‘landmark building’ status.
9
?????????????????
SAFEGUARDING
10
V
A
L
U
E
S
Amsinckstr. 28
Hamburg
Steckelhörn 12
Hamburg
Ludwig-Rosenberg-Ring 41
Hamburg
Max-Brauer-Allee 41-43
Hamburg
ernst-Merck-Str. 9
Hamburg
Gorch-Fock-Wall 15
Hamburg
All buildings shown above
are part of the alstria portfolio.
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Alte Post
Ohnsorg Theatre
Bartholomayhaus
11
it is in our interests to ensure that our developments have lasting benefits for all
the parties involved. Therefore, we see no contradiction between acting in a
sustainable manner and upholding entrepreneurial values. Because we want to
safeguard long-term value creation, we rely on solutions that benefit ourselves as
well as our tenants. This builds trust and forms the basis for LonG-TeRM TenAnT
ReLATionSHipS.
At the oHnSoRG THeATRe in HAMBuRG, alstria has jointly initiated an unusual
project with the tenant – the relocation of the theatre to near the city’s main rail
terminal. The partnership is based on both sides’ awareness of a responsible
treatment of assets, urban planning and traditions. ultimately, it is not just a
theatre that is being relocated from the Große Bleichen area of Hamburg to the
Bieberhaus, but a cultural asset and cultural values that have taken over 100
years to build.
?????????????????
Building Value through
Cooperative Management
ohnsorg theatre, Hamburg
Before buying a building, alstria analyses and anticipates the added value that ownership
might bring for all stakeholders in terms of the tenants, the neighbourhood and alstria itself.
After the purchase, alstria treats the property accordingly. potential identified early on is used to
optimise the portfolio. in this process, close and long-term relationships with tenants are essen-
tial for jointly creating lasting and economically viable assets. This was the spirit that guided
alstria in its negotiations with the ohnsorg Theatre in Hamburg. alstria’s approach was driven
by the belief that it is possible to move the ohnsorg Theatre out of the top retail location it
currently occupies, in a way that benefits all the stakeholders in the project.
alstria has big plans for the building, which has housed the traditional ‘Low German’ theatre
company since 1936. By 2011, alstria is planning to build a passage from Grosse Bleichen
to the canal located behind it. This will create additional retail space to match the exclusive
boutiques, upscale restaurants and attractive offices in the neighbourhood. it was equally im-
portant that the new home to the ohnsorg Theatre, in Hachmannplatz near Hamburg’s main
railway station, fulfills the ohnsorg Theatre´s and the city’s cultural requirement just as ideally,
and acts as a cultural magnet.
Three years from now, alstria will hand over a new theatre building to ohnsorg Theatre – ready
for use and equipped with every technical refinement. The move will secure the community
theatre’s survival for another two decades. in addition, the new premises offer opportunities
for both artistic and technical development: the new ceiling height enables productions that
wouldn’t have worked on the old stage. The generously-sized foyer, stalls and circle offer extra
space and unobstructed views. Apart from more space and an additional studio stage, the
building’s main advantage is its convenient location.
12
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Alte Post
Ohnsorg Theatre
Bartholomayhaus
The decisive factor for this is that the move is worthwhile for both sides. The ohnsorg Theatre
gains some 1,000 sqm more and gets to keep everything under one roof. And alstria can use
the property at Grosse Bleichen for more commercially attractive tenant relationships, thus
creating substantial added value for this building. By taking this contemporary management
approach, alstria safeguards the long-term value of its portfolio.
inteRView
An interview
with Christian Seeler,
Managing director
of the ohnsorg Theatre
Why is the ohnsorg Theatre moving to new premises?
We have been happy here for many years, but the technolo-
gy is outdated and we are bursting at the seams, so alstria’s
offer came just at the right time. The new location gives us
state-of-the-art technology and is even more convenient for
public transportation.
You are exiting the lease early. What part of the package
negotiated made up your mind?
There wasn’t any particular part that made us sure we’d
made the right decision. The terms did add up for us,
though, which was important. But how the negotiations
13
were handled was more crucial to our agreeing! especially
the constructive cooperation, as we each sounded out
the other party’s interests, jointly weighed up the pros and
cons, and so on.
do you think the ohnsorg Theatre came out of the negoti-
ations a winner?
Yes, absolutely! But i think that is true for both sides. alstria
also benefits from our move. This is what makes decisions
sustainable in the long-term: both parties must be satisfied.
?????????????????
14
A
C
T
I
V
E
Steckelhörn 12
Hamburg
Steinstr. 5-7
Hamburg
Buxtehuder Str. 9,11
Hamburg
Grindelberg 62-66
Hamburg
Amsinckstr. 28
Hamburg
ernst-Merck-Str. 9
Hamburg
All buildings shown above
are part of the alstria portfolio.
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Auditors´ Report
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Alte Post
Ohnsorg Theatre
Bartholomayhaus
15
MANAGEMENT
Real estate management schools tend to teach two different real estate
STRATeGieS. The Buy and Hold strategy, or the Buy and Sell strategy. At alstria,
we don’t buy cheap and sell expensive. neither do we buy and hold, as we are
not passive investors. We like to say that we ‘BuY And MAnAGe’ our assets.
alstria is currently extensively renovating the BARTHoLoMAYHAuS, an historic
office building in a sought-after location near Hamburg’s main railway station.
Although the building was rented out through mid-2009, we anticipated the
existing tenant moving out, and negotiated early termination at the beginning of
2008. What sounds like a risky manoeuvre, was actually a carefully thought-out
plan. Just six months after termination, a 20-year lease was signed with
HAMBuRGeR HoCHBAHn, a company that operates large parts of the city’s
public-transport system.
?????????????????
Plan Ahead and Act Purposefully
Bartholomayhaus, Hamburg
Modernising buildings, keeping long-term tenants, and finding new tenants – these are the
traditional tasks of asset management. But good asset managers who want to generate addi-
tional value go even further. They act instead of reacting, and proactively take things in hand. in
other words, they anticipate developments, and know how to take advantage of them, based
on an excellent knowledge of the market and a functioning network.
alstria’s forward-looking entrepreneurial spirit and distinct real-estate approach enabled it to
find an ideal future tenant for Bartholomayhaus. When alstria acquired the office building on
16
Steinstrasse, it came with a three-year contract with the then-tenant and a six-month period of
notice. Rather than waiting for the tenant to inform us of their plans, alstria anticipated their
upcoming move-out, and started proactively working on the lease-up of what we expected to
be a vacant building. This gave us ample time for an in-depth analysis of the building´s potential
and possible new tenants. Acting rather than reacting allowed us to sign a new lease on the
vacant building just a few months after it was vacated.
HiStoR y
Bartholomayhaus is located in the Kontorhaus district, which
is the name given to the area south-east of Hamburg’s old Town,
between Steinstrasse, Messberg, Klosterwall and Brandstwiete.
A series of narrow residential buildings were erected here in the
17th century. The housing shortage caused by the Hamburg fire of
1842 led to further overcrowding. ultimately, the cholera epidemic of
1892 forced a complete redevelopment of the area.
Later, Fritz Schumacher, Hamburg’s director of Construction and Chief
Structural engineer from 1909 onwards, prevailed with his progres-
sive ideas of city building and planned the district as an area of
office buildings. His revision of the development plan included
large-sized buildings, in anticipa tion of the space re-
quired by the emerging mercantile community after Hamburg
became part of the German customs system. The plan also included
giving each building its own distinct character.
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Alte Post
Ohnsorg Theatre
Bartholomayhaus
Hamburger Hochbahn, the operator of three underground lines and 120 bus routes was look-
ing for additional space near its central offices. alstria knew about these plans and as Bartho-
lomayhaus is not far from Hochbahn’s headquarters on Steinstrasse, it was the obvious choice
to offer them the property. After just a few months of vacancy, the centrally located building
has now been leased out for 20 years, and alstria closed the largest office-rental deal signed
in Hamburg in 2008.
Hamburger Hochbahn plans to use Bartholomayhaus as a new administrative unit, and has
commissioned alstria to gut it and kit it out with the latest technology. A friendly, welcoming
atmosphere is of particular importance for this modern office space, since this will be the new
home also to the Hamburger Hochbahn Customer Service Center. The rapid rental and tenant-
specific development of the building is a perfect example of alstria’s strategic maxim of active
property and portfolio management, coupled with the preservation and development of close,
long-term relationships with tenants.
17
ALSTRIA STOCK
A LSTRiA SToC K
18
Share Markets
Share markets were characterised by substantial losses during the course of 2008. Starting
near its all time high of over 8,000 points, the DAX fell gradually to around 6,000 in September
2008. What begun as a subprime crisis in 2007, emerged as a financial crisis in 2008. The inter-
bank market nearly came to a standstill between September and October. Governments set up
state guarantees and provided liquidity support to avoid further destabilisation. When the
financial crisis became evident and uncertainties grew, an increasing downward swing in the
DAX resulted in the following months to 4,810 at the end of the year. On year to year com-
parison, the DAX faced a loss of 40% in 2008. The MDAX and the SDAX followed this downward
trend generally. The MDAX closed 43% down and the SDAX 46% down on beginning of the
year.
Real Estate Shares
The development of real estate shares was not detached from the development of the share
markets in general. Real estate share indices began to be placed under pressure in 2007, when
the subprime crisis became evident. 2008 turned out to be an even more difficult year for real
estate shares. The EPRA indices for Germany and Europe fell by 55% and 51% respectively, and
it was virtually impossible for individual companies to withstand that trend.
Development in alstria´s Share Price
alstria’s share price started at EUR 10.40 in 2008. Following a peak of EUR 13.69 at the begin-
ning of April 2008, the following months price dropped to EUR 10 untilthe beginning of Sep-
tember. Afterwards, it fell to its lowest level of EUR 2.50 in the middle of November. Thereafter,
the share price recovered somewhat to EUR 4.95 as the yearend closing price. The effect of the
turbulence in the financial markets on alstria’s share price was almost as evident as on our
peer group. The share is now trading at a significant discount to the net asset value of EUR 13.
This is equivalent to a loss of 52%. In the same period, EPRA GERMANY and EPRA EUROPE lost
55% and 51% respectively.
On November 6, 2007 alstria’s management board decided to execute a share buy-back pro-
gramme. This programme uses the authorisation granted by the company’s shareholders at
the Annual General Meeting held in 2007. With this authorisation, alstria acquired 2.5% of its
share capital until September 2008 at the Frankfurt Stock Exchange (XETRA). On the balance
sheet date, alstria owned 1,375,755 treasury shares as a result of the share buy back programme.
For the time being, the intention is to hold the shares acquired in the form of treasury shares,
and eventually use them if the Shareholders’ Meeting grants appropriate authorisation.
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AoX
A0Ld2u
de000A0Ld2u1
028600810
AoXG.de
AoX GY
prime Standard
SdAX, epRA, German ReiT index
XeTRA, Frankfurt (prime Standard); open Market
in Berlin, Hamburg, Munich, Stuttgart
deutsche Bank AG; Jp Morgan
54,624,245
(56,000,000 minus 1,375,755 own shares)
19
Share Data
Share id code
Securities identification number
iSin – international securities
identification code
Common code
Reuters symbol
Bloomberg symbol
Market segment
indices
Trading floors
designated sponsors
no. of shares outstanding as at dec. 31
Coverage by Analysts
Being the first German REIT-AG, alstria is actively covered by a number of financial analysts
from renowned investments banks.
Investment Banks and Analysts
Bankhaus Lampe KG
Commerzbank Corporates & Markets
deutsche Bank
dresdner Kleinwort
dZ Bank
HSH nordbank
HSBC Trinkaus & Burckardt AG
Jp Morgan
Kempen & Co
M.M. Warburg & Co
Rabo Securities
Sal. oppenheim
SG Real estate
uniCredit Global Research
viSCARdi AG
Frank neumann
Burkhard Sawazki
Martin praum
Kai Malte Klose
Hasim Sengül
Steffen Wollnik
Thomas Martin
osmaan Malik
Remco Simon
Ralf dibbern
Ruud van Maanen
Sven Janssen
Marc Mozzi
Andre Remke
Karl dienst
ALSTRIA STO CK
20
Intense Investor Relations Activities
In 2008, alstria’s investor relations activities focussed specifically on informing investors,
financial analysts and the business press about developments at alstria, but also about the
general characteristics of a German REIT-AG. In addition to press and analyst conferences,
alstria staged numerous road shows with investors, and held interviews with journalists
at home and abroad.
Investor Conferences
Date
January 10, 2008
January 15, 2008
February 11-12, 2008
February 27, 2008
March 6-7, 2008
March 10-14, 2008
April 9, 2008
April 10 2008
April 22, 2008
April 29, 2008
May 28-29, 2008
June 12, 2008
June 20, 2008
August 29, 2008
September 4-5, 2008
September 6, 2008
october 6-8, 2008
october 16, 2008
october 20, 2008
november 11, 2008
november 26, 2008
november 27-28, 2008
Conference
deutsche Bank 2008 Real estate outlook Conference, new York
Morgan Stanley’s 3rd German property day, Athens
3rd dvFA Real estate Conference, Frankfurt
3. HSBC Trinkaus Real estate Conference, Frankfurt
Kempen & Co. european property Seminar, new York
mipim, Cannes
Real estate investors Conference, dresdner Kleinwort, London
uS ReiT day, Frankfurt
dresdner Kleinwort Conference, new York
German GRi, Frankfurt
Kempen & Co 6th european property Seminar, Amsterdam
11th Annual property Conference by Morgan Stanley, London
Sal. oppenheim Real estate Conference, vienna
property Finance europe German property Breakfast, London
epRA Annual Conference, Stockholm
Hamburger Börsentag, Hamburg
eXpo ReAL, Munich
pan-european Real estate Conference, London
initiative immobilien Aktie, Frankfurt
deutsches eigenkapitalforum, Frankfurt
Swiss equity Real estate day, Brussels
epRA Reporting and Accounting Summit, Brussels
Shareholder Structure
As of December 31, 2008, Captiva 2 Alstria Holding S.à r.l. held a 61% stake in alstria office REIT-
AG. The remainder of the shares are defined as free float, out of which Morgan Stanley held
more than 5% and Stichting Pensioenfonds and Cohen & Steers held more than 2.5% each.
On the balance sheet date, alstria held 2.5% proprietary shares as a result of the buy-back
programme.
Shareholder Structure by Investor
● Free Float
39%
● Captiva 2 Alstria Holding S.à r.l. 61%
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alstria
epRA euRope
epRA GeRMAnY
SdAX
dAX
21
Share Price Development
Dec. 28, 2007 EUR 10.25 indexed to 100
140
1,4
120
1,2
1,0
100
0,8
80
0,6
60
0,4
40
0,2
20
dec.
07
Feb.
08
April
08
June
08
Aug.
08
oct.
08
dec.
08
Key Figures per Share
in EUR (if not stated otherwise)
2008 high
2008 low
opening price
Closing price
Weighted average number of shares outstanding
Average trading volume in shares (XeTRA)
Average market capitalisation in euR million
Total number of shares outstanding as of dec. 31
FFo per share
nAv per share
2008
13.69
2.50
10.40
4.95
56,000,000
85,906
529.2
54,624,245
0.70
13.03
22
GROUP MANAG EM ENT D ISCU SSION
AND ANAL yS IS
eConoMiCS And STRATeGY (BuSineSS oveR
vieW)
Economic Conditions
What had started in 2007 as the subprime crisis around loans in the US residential real estate
sector, developed into a full fledged crisis in the global financial system in 2008. As one of the
key consequences of this crisis, credit supply came to a halt in all major economies with severe
impact on not only the real estate industry. During the course of 2008, most of the major
economies slid into recessionary mode and most economic forecasters predicted that reces-
sionary conditions would prevail at least throughout 2009.
In light of these developments, it seems rather remarkable that the basic figures in the office
property market in Germany were quite strong in 2008. Only three times in the history of the
German office market has a higher turnover in office space been achieved: In the six office
centres, total turnover in 2008 was 2.9 million sqm. The main drivers for this performance were
the GDP growth of approx. 1.4% and the fact that unemployment rates were on the decline
throughout most of the year.
Despite the positive developments in 2008, most of the relevant indicators for the real estate
industry have recently been on the decline, including GDP, the employment rate, the IFO Index
and overall exports. Accordingly, economists expect the German economy to contract through-
out 2009 with signs of recovery projected not to become visible before the end of the year or
in early 2010.
Regardless of the considerable efforts of the German Federal Government and the European
Central Bank (ECB) to stabilise the financial system and to stimulate credit supply, the availa-
bility of debt funding opportunities will remain scarce in the foreseeable future.
Economic conditions for the German real estate industry are expected to be very challenging
in 2009. With the financial crisis the spilling over into the real economy and the lack of credit
affecting development plans, demand for office space and top-level rentals are expected to
decline.
As a consequence of the lack of available finance, the direct investment markets are expected
to remain relatively flat throughout the year.
Improvement in investment market conditions can only be achieved under two prerequisites:
(i) stabilisation of the banking sector, and banks’ willingness to extend financing to real estate,
and (ii) refinancing or restructuring of high leveraged loans that previously, were mainly
financed by commercial mortgage backed securities (CMBS). alstria1 believes that it is unlikely
for both of these conditions to be met in 2009, and does not expect a window for recovery
before mid-2010.
1 The alstria office REIT-AG Group is referred to as ‘alstria’ or ‘the Group’ in the following.
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Additional Group Disclosures
Subsequent Events and Outlook
23
Overview of the German Market for Office and Commercial Real Estate1
Lease Price Development
Despite a gloomy forecast for the German economy at the end of the year, and a moderate
increase in the unemployment rate, the overall development of rents in the German office and
commercial real estate market was positive in 2008. According to the largest German real
estate association, IVD, tenants tended to increase their demand for space, while looking for
more efficient space, as well.
IVD announced that the net rents excluding service charges in German metropolises increased
by up to 4.5%, a rate which was noted last eight years ago. With this increase, rents in large
cities hardened for the third consecutive year. Rent development had reached its zenith by the
end of 2008. While top rents in Frankfurt and Dusseldorf remained stable on a high level, in-
creases were noted in Munich (+1.7%), Hamburg (+2.2%), Stuttgart (+2.9%), and Berlin (+4.8%).
Higher-than-average increases were announced by Magdeburg (+14%), Augsburg (+7.5%), and
Dresden (+6.5%) and others. Jones Lang LaSalle announced that top rents in 2008 were highest
in Frankfurt (EUR 37.00 per sqm), followed by Munich (EUR 30.50), Hamburg (EUR 23.00),
Dusseldorf (EUR 22.50), Berlin (EUR 22.00), and Stuttgart (EUR 18.00).
The average weighted rent for office space in medium areas levelled out at approx. EUR 7.40
throughout Germany. In German cities with more than 300,000 inhabitants, it was EUR 11.30.
Vacancies
The vacancy rate in German cities declined to a total of 8.9% in 2008, which translates into a
year-on-year fall in vacancies of around 4% to just under 7 million sqm. Comparing German
cities, the highest vacancy rate can be found in Leipzig (17%), followed by Dresden/Frankfurt
(each 14%), Dusseldorf (10%), Berlin and Cologne (each 9%), whereas Bremen/Duisburg (each
3%), and Essen/Hanover (each 4%) and Dortmund (5%) recorded the lowest vacancy rates.
Leasing Markets
In the six major German cities, new leasing contracts for a total of 2.9 million sqm of office-
space were signed. Compared to 2007, this is equivalent to a downturn of 7%. While Dusseldorf
(-16%) and Frankfurt (-9%) registered a distinctly lower turnover in office space compared to
2007, Stuttgart (+8%) was the only major city which showed an increase. In Hamburg, the total
leasings equated to 546,300 sqm, which represents a decline of 6.7% compared to 2007.
New Supply
In 2008, noticeably more new buildings were erected than in 2007. At approx. 890,000 sqm,
the construction of office and commercial space increased by nearly 48% compared to the
previous year. In 2009, the intention is to increase newly built office space from 890,000 sqm
to almost 1.2 million sqm, which will increase the pressure on top level rentals.
1 All figures referred to in this section are sourced from Jones Lang Lasalle, IVD, or Atis Real.
GROUP MANAG EM ENT D ISCU SSION
AND ANAL yS IS
24
Investments
The nationwide registered investment volume for commercially used real estate assets in 2008
has been significantly lower than the previous year’s record-breaking results. The total invest-
ment volume year-on-year was down by approx. 65%.
At the six most important German locations for office space, markets even dropped by 70%,
although this only represents a volume of EUR 9.2 billion. Throughout Germany, investment
turnover fell to about EUR 20 billion, from a starting point of around EUR 55 billion. Especially
the fourth quarter of 2008 caused a strong decline. Between October and December, only 17%
of the annual result was generated.
Average yields are just above 5% in the top five German cities of Berlin, Hamburg, Munich,
Cologne, and Frankfurt, with an upwards trend.
Outlook for 2009
Falling rents, high construction costs, compared to capital values, and a lack of financial
resources are expected to slow down development activities dramatically and therefore reduce
supply in the coming years.
Slowing economic activities, combined with lack of credit availability will have a negative
impact on average levels of rent across the German market. As a consequence of this slow
down, top rents are expected to fall between 5% and 10% in the coming twelve months in the
major German cities.
The Investment market remains highly dependent on the availability of financing, and a
further decline in values during the course of 2009 cannot be excluded.
Strategy and Structure
Against the background of the changing financial environment, alstria focused on regular
reviews of its business case, and its assets and liabilities, as well as its short and long term
perspectives.
The analysis of these parameters has led to the conclusion that, in view of the conservative
nature of alstria’s set-up, the Company is well prepared to navigate through the difficult times
ahead.
● alstria has a long term lease portfolio (around ten years weighted average lease lengths).
80% of the rental income comes from a small number of high quality tenants. More than
50% of the rental income comes from local authorities or institutional entities, which are
not impacted by the economical downturn.
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Additional Group Disclosures
Subsequent Events and Outlook
25
● alstria pursues a non-trading strategy, and focuses on long-term value creation through
asset management. Hence, the slow down in the investment market does not affect the
individual business plan, nor does it threaten the Company’s cashflow projection.
● The operating strategy involves helping alstria’s tenants to optimise the cost of running
their real estate. There is no contradiction in reducing overall real estate costs for alstria’s
tenants and increasing the returns of alstria simultaneously. In actual fact, the current
climate could create opportunities for alstria, at a time when most German corporations are
looking to reduce costs.
alstria will stay focused on its buy-and-manage strategy. Returns are expected to be realised by
pursuing active asset management according to the alstria business model. In 2008, the Ham-
burger Hochbahn AG letting, Alte Post joint-venture and the Grosse Bleichen and Bieberhaus
(Ernst-Merck-Strasse) refurbishment projects represented good examples of successful asset
management and underline the strong capability of alstria, and its unique approach to real
estate in the German real estate market.
alstria believes that the changes in the economic climate will require adjustments in capital
structures to be made by real estate companies. As such, the whole industry will need to un-
dergo deleveraging. Although alstria has one of the most conservative balance sheets for a
German real estate company with a 60% LTV target, it will not stay immune to this process.
However, the management at alstria does feel that the quality of the Company’s assets, the
unique stability of its cash flows, and the existing maturity of debt provides the strong sup-
port needed in this process.
alstria started to address deleveraging concerns as early as mid-2008, implementing selective
asset sales, which were all executed at a premium on IFRS valuations, as well as the
EUR 95 million refinancing of two of its assets with long term leases. These transactions
allowed the Company to preempt falling real estate values, and meet its main LTV covenants
by the end of 2008.
alstria’s REIT status is not impacted by the changing climate and the Company is more con-
vinced than ever that REITs will be the dominant asset class in the listed sector in Germany.
Although falling real estate values have eaten away at the REIT equity ratio, the Company’s aim
is to restore the ratio to the required level by the end of 2010.
alstria’s operating results in 2008 did not depend on trading results, and, hence, were not
impacted by the situation in the direct investment markets. alstria’s results demonstrate the
strong performance of its operations, with revenues of EUR 102 million and funds from opera-
tions (FFO)3 up 25% from EUR 31,540 k in 2007 to EUR 39,415 k in 2008. These results are in line
with the financial forecasts of EUR 101 million in turnover and EUR 40 million of funds from
operations. The year-onyear increase in the FFO is driven by the first time consolidation of the
last portfolio acquired, but also by alstria’s asset management results, and the reduction in
overall administration costs.
3 For further details, please refer to page 31.
GROUP MANAG EM ENT D ISCU SSION
AND ANAL yS IS
26
Portfolio Overview
Transactions
Taking account of the general volatility in the market, alstria had already announced on Janu-
ary 18, 2008, that it would not be pursuing any further acquisitions in the course of 2008.
Transactions were relatively few in 2008 as a result. On the acquisition side, alstria’s activities
were mainly driven by converting transactions based on the REIT exit tax benefit, or selective
asset acquisition for implementing the tenant relationship strategy. On the disposals side,
alstria was active throughout the year and signed its first joint-venture agreement, and
disposed of a limited number of assets for a total of EUR 18 million by the end of the year.
The acquisitions announced in Q4 2007 were all completed in the first three months of 2008.
These transactions added 18 properties and approx. 135,000 sqm of lettable space throughout
Germany to the portfolio. The new propertys’ main tenants are Bilfinger Berger, HUK Coburg
and the Deutsche Rentenversicherung Bund.
In the second quarter of 2008, alstria acquired a vacant office property located in Hamburg
(Max-Brauer-Allee 41–43) with total lettable space of approx. 3,200 sqm and total costs of
approx. EUR 4.6 million.
During the third quarter of 2008, alstria started to dispose of selected properties. To-date
notarial sales contracts for three properties and a plot of land have been signed. The transfer
of charges and benefits took place in Q4 2008, and with regard to the plot of land, the transfer
of charges and benefits is expected to take place in Q1 2009. The total sales price for these
transactions delivered a surplus of EUR 1,450 k, which is well above the latest IFRS fair values:
Selected Disposals in 2008 Support alstria’s Valuations
Properties in EUR k
Hamburg, duesternstr. 10
Hamburg, osterbekstr. 96
Leipzig, nikolaistr. 16
Latest IFRS
fair values
4,000
10,575
1,925
Sales price
Surplus
Surplus rate
4,950
11,000
2,000
950
425
75
23.8%
4.0%
3.9%
8.8%
Total Sales
16,500
17,950
1,450
Please refer to the Notes for a detailed description of the transactions detailed above.
Lease Ups
At the beginning of the year, vacancies in the portfolio amounted to approx. 62,000 sqm
(6.5%).
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Subsequent Events and Outlook
27
In total, alstria signed for more than 33,000 sqm of new leases4 in 2008, which represent
almost 53% of the vacant space at the beginning of the year. In the same period, 28,200 sqm
of space was released by tenants vacating properties at the end of their leases. Despite the sale
of fully-let properties, and the acquisition of additional vacant properties (3,200 sqm), alstria
was able to reduce its vacancy rate at the end of the year by 60 bps, to 5.9%, which represents
a total vacancy in the portfolio of approx. 55,500 sqm. Of these 55,500 sqm, 19,400 sqm consist
of strategic vacancies (i.e. vacancies managed by alstria as part of its repositioning strategy),
and the remainder are operational vacancies.
Among others, lease ups were mainly driven by letting approx. 13,000 sqm toHamburger
Hochbahn AG in October 2008 on a 20-year lease. The office space at Steinstrasse 5–7, which
was vacated earlier this year by BKK Mobil Oil, will be extensively reconstructed by alstria
before it is handed over to Hamburger Hochbahn AG in around April 2010. This building, which
is located near the main railway terminal in an area highly attractive to tenants, is now fully let,
just a few months after being vacated.
Furthermore, as part of its ongoing tenant relationship process, alstria signed two leases with
the City of Hamburg in November 2008. The first lease is for the vacant office building in Ham-
burg Altona acquired in April 2008. This property was fully let to the City of Hamburg in Octo-
ber on a 15-year fixed lease with an annual rent of around EUR 360 k. The second lease concerns
the Grosse Bleichen property in the city centre of Hamburg with approx. 4,800 sqm of con-
tracted space and a 10-year lease. In both cases, the tenant vacated high-potential buildings
owned by alstria in the key city centre area of Hamburg (in Alte Post and Kaiser-Wilhelm-
Strasse), allowing alstria to unlock the value of both buildings and safeguard the tenants’ the
cash flow at the same time.
As per the balance sheet key date, alstria’s portfolio consists of 89 office buildings with approx.
944,000 sqm of lettable space and a contractual vacancy rate of 5.9%. The portfolio is valued
at a yield of 5.9% and the remaining average unexpired lease term is around ten years.
The Key Metrics of the Portfolio on Dec. 31, 2008
Metric
number of properties
Market value (euR bn)
Contractual rent (euR m/annum)
valuation yield
Approximate lettable space (in sqm)
vacancy (% of lettable space)
WAuLT (years)
Average rent/sqm/month (in euR)
Value
89
1.8
106.5
5.9%
944,000
5.9%
10
9.41
4 New leases correspond to the leasing of vacant space. This does not take account of any lease renewals, prolongations,
or tenants exercising their renewal options.
GROUP MANAG EM ENT D ISCU SSION
AND ANAL yS IS
28
It is alstria’s strategy to invest throughout Germany and to not focus on apparent key markets.
One of the reasons driving this strategy is that in the past, many of the sub-centers have quite
frequently outperformed office hot spots like Frankfurt or Munich. alstria’s investment
decision is based on an analysis of the local markets and on the adequacy of the building
according to the local environment, in terms of location, size and quality. Consequently, the
typical exposure of a property in Dresden, Dortmund or Mannheim would still be lower than
the exposure of a property in Hamburg, Dusseldorf or Berlin.
OMV for Investment Properties
Hamburg
Hanover
Detmold
Berlin
Potsdam
Magdeburg
Essen
Dortmund
Dusseldorf
Neuss
Wuppertal
Cologne
Bonn
Halle
Leipzig
Dresden
Erfurt
Zwickau
Jena
Frankfurt
Wiesbaden
Darmstadt
Mannheim
Wuerzburg
Nuremberg
Stuttgart
Augsburg
Munich
more than eUR 100 m
between eUR 50 m and eUR 100 m
between eUR 25 m and eUR 50 m
between eUR 10 m and eUR 25 m
between eUR 5 m and eUR 10 m
between eUR 1 m and to eUR 5 m
Portfolio Valuation
2008 was highly impacted by falling property prices across Europe following the deterioration
of global market conditions and the global credit crunch. Regardless of the high quality of its
portfolio, alstria has not been immune to these falling values. However, the strict investment
discipline of the Company in 2007, where it carefully avoided investing in a peak market, and
its ability to leverage the REIT exit-tax benefit for its latest acquisitions has to some extent
shielded the Company from a drop in valuation, since it refrained from valuing its portfolio
when the market was at its peak.
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Subsequent Events and Outlook
In response to the high volatility in the markets and the significant changes in global environ-
mental conditions, alstria commissioned two comprehensive external valuations of the
portfolio, one mid-year and one at the end of the year. This approach ensures that there is no
valuation backlog and that book values constantly stay in line with the market. The total valu-
ation loss on investment properties was EUR 88.1 million for the whole year. This valuation
comprises EUR 145 million of gross valuation yield expansion, which was in part recouped
through a value increase of EUR 57 million achieved via asset management activities and/or
CPI adjustment leading to improved cash flows. This valuation adjustment takes the overall
value of investment properties to EUR 1,810 million according to the valuation certificate
which corresponds to a valuation yield of 5.9%.
The impact of market movements would have been much more significant without the suc-
cesses of alstria’s asset management: Overall about 33,000 sqm have been leased up within
the portfolio with the biggest leases being 13,000 sqm to Hamburger Hochbahn for 20 years
and the 3,200 sqm to the City of Hamburg for 15 years. Also the increase of rental income linked
to the indexation of around 35% of alstria’s portfolio contributed to offset part of the yield
shift in 2008.
Tenants
One of the key characteristics of the alstria portfolio is the stringent focus on a set number of
key tenants. Accordingly, in 2008 our top nine tenants accounted for more than 80% of the
total revenues. Also, the clear focus on one asset class, i.e. offices, is nicely reflected in the
2008 portfolio. Of the total lettable area, 93% is dedicated to offices.
totAl PoR tFolio BRoken down By USe
AlStRiA`S CoRe tenAntS 2008
29
● office
● Retail
● Residential
● other
93%
3%
1%
3%
● City of Hamburg
● daimler
● Barmer
● Bilfinger Berger
● Siemens
● deutsche
Rentenversicherung
● Rheinmetall
● HUk
● City of Hanover
● others
36%
14%
10%
6%
5%
3%
3%
2%
1%
20%
GROUP MANAG EM ENT D ISCU SSION
AND ANAL yS IS
Fi nAnCiA L AnALYSiS
Earnings Position
The increase in operating earnings in the financial year 2008 is mainly linked to the increase
in the size of the portfolio year-on-year following the last batch of acquisitions performed by
alstria.
The following table shows the key operating figures from the audited income statements for
the financial years 2008 and 2007:
Revenues Increased by 23.6% to EUR 102,055 k
Total revenues amounted to EUR 102,055 k (2007: EUR 82,552 k) for the 2008 financial year. This
increase was mainly driven by the transactions announced in Q4 2007 and closed in Q1 2008.
Real estate operating expenses amounted to 8.7% of revenues, or EUR 8,833 k. Net rental in-
come for 2008 was EUR 93,222 k.
in EUR k
Gross Rental Income
net rental income
operational expenses
net other income
Net Operating Income
profit on disposals of investment properties
net gain/loss from fair value adjustements
on investment properties
Net Operating Result before Finance Costs
2008
2007
102,055
82,552
93,222
-11,553
2,259
83,928
1,450
-88,116
-2,738
76,192
-12,783
583
63,992
0
11,170
75,162
The 2008 P&L is heavily impacted by net losses from fair value adjustments on investment
properties of EUR 88,116 k. In the 2007 financial year, in contrast, alstria faced a valuation gain
of EUR 11,170 k. On the other hand, alstria was able to gain profits on disposals of investment
properties of EUR 1,450 k (see investment properties).
30
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Favourable Effects on Recurring Expenses due to Optimisation
of Administrative Processes.
In 2008, alstria started to improve the efficiency of administrative processes and was able to
successfully reduce overhead expenses for external advisory services. Furthermore, the nega-
tive one-time effects of additional expenses resulting from the IPO and the G-REIT conversion
fell away in 2008.
Administrative and personnel expenses amounted to EUR 11,553 k on the year compared to
EUR 12,783 k in 2007. Accordingly, total recurring operating expenses amounted to 11.3% of
total revenues (compared to 15.5% in 2007). This improvement shows that although the
Company structure is lean, it was possible to implement measures to enhance the efficiency
of overheads.
Net other income mainly includes the reversal of accruals (EUR 1,116 k and a one-time separa-
tion payment of around EUR 1,000 k for early termination of a lease agreement) and expenses
of EUR 515 k.
31
alstria closed the 2008 financial year with a net operating loss before finance costs of
EUR 2,738 k, which was significantly influenced by the valuation result. This compares to
a gain of EUR 75,162 k in the previous year.
Funds From Operations at EUR 0.70 per Share
in EUR k
2008
2007
Change
Pre-Tax Income (EBT)
Minus net financial expenses
plus non-cash expenses
EBITDA
Minus net loss/gain from fair value
adjustements on investment properties
Minus net loss/gain from fair value
adjustements on financial deriavates
Minus profit on disposal of
investment property
plus net financial expenses
Funds From Operations2 (FFO)
-55,925
-48,112
1,271
-6,542
48,133
-35,115
2,663
-104,058
-12,997
-1,392
85,911
-92,453
-88,116
11,170
-99,286
-7,4031
8,086
-15,489
1,450
-48,112
39,415
0
-35,115
31,540
1,450
-12,997
7,875
1 Fair value loss disregarding realised fair value gains of EUR 2,328 k.
2 FFO is not a measure of operating performance or liquidity under generally accepted accounting principles, in particular IFRS,
and should not be considered as an alternative to the Company’s income or cash flow measures as determined in accordance
with IFRS. Furthermore, no standard definition exists for FFO. Thus, the FFO or measures with similar names as presented by other
companies may not necessarily be comparable with the Company’s FFO. EBITDA is not a measure of operating performance
or liquidity under generally accepted accounting principles, in particular IFRS, and should not be considered as an alternative to
the Company’s income or cash flow measures as determined in accordance with IFRS. Furthermore, no standard definition exists
for EBITDA. Thus, EBITDA or measures with similar names as presented by other companies may not necessarily be comparable
to the Company’s EBITDA.
GROUP MANAG EM ENT D ISCU SSION
AND ANAL yS IS
32
Funds from operations amounted to EUR 39,415 k in 2008 compared to EUR 31,540 k in 2007. As
a result, FFO per share amounted to EUR 0.70 in the 2008 financial year (2007: EUR 0.56).
The strong increase as compared to 2007 resulted mainly from the improvement in revenues
to EUR 102,055 k linked to further acquisitions made during the reporting period, which
amounted to an increase of EUR 19,503 k compared to 2007 rental income. This year’s operating
performance was largely driven by top line growth. The non-cash expenses include expenses
for share options and profit participation rights among others.
EBITDA amounted to EUR -6,542 k in 2008 as compared to EUR 85,911 k last year. The main rea-
sons for this significant difference are the fair value adjustments, which on one hand posi-
tively affected last years results, and, on the other, negatively impacted the reported result.
This comprised a fair value gain of EUR 8,086 k on derivatives, and a fair value gain of EUR 11,170 k
on investment properties that positively influenced last years EBITDA. In contrast, the fair val-
ue adjustments in the reporting period had a negative impact of EUR -95,519 k (EUR -88,116 k on
investment properties and EUR -7,403 k on derivatives).
Hedging Instruments
The devaluation of the financial derivatives was driven by the development of the yield curve
at the end of 2008. The fact that alstria’s debt exposure is fully hedged fixes the current overall
cost of debt for the existing portfolio at 4.7%. In order to limit the P&L impact from the volatil-
ity of the interest rate markets, the accounting policy for our derivatives has changed and al-
stria now applies hedge accounting to all the hedges that qualify. This allows the loss or gain
on the qualifying part of the derivatives to be recognised through the cash flow hedge reserve.
An overview of the composition and the changes since December 31, 2007 is described in detail
in the Notes.
In the 2008 financial year, EUR -49,579 k represents the effective change in value of the swaps,
which is recorded in equity as a ‘cash flow hedging reserve’ account. The fair value changes of
derivatives not categorised as a cash flow hedge (Caps), as well as the ineffective impact of
changes for the cash flow hedges are shown in the income statement under ‘Net gain/loss
from fair value adjustments on financial derivatives’. The interest payments and accruals on
swaps and caps are stated in the financial results. alstria’s current average hedge rate is 4.0%
with an average maturity of 3.4 years.
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Financial Result
alstria has a EUR 1.139 billion syndicated loan facility in place which was arranged by
J.P. Morgan, Natixis and HSH Nordbank. This facility is presently utilised to EUR 995.4 million
(EUR 991.8 million taking into account the deduction according to IFRS effective interest rate
method). The facility is used by alstria to partially finance the current investment property
base as well as future acquisitions. The interest rate on this syndicated loan is based on the
3-month EURIBOR floating rate plus a spread dependent on the average lease length of the
property portfolio and the LTV-ratio.
During the course of 2008, alstria agreed on a new EUR 95 million, seven-year, non-recourse
loan on the Hamburg properties Gaensemarkt 36 and Drehbahn 36 with Deutsche Hypo-
thekenbank. The interest rate on this loan is also based on the 3-month EURIBOR floating rate
plus a spread of 115 bps. The transaction took place in October 2008.
With this transaction, alstria started to restructure the current credit facility well before its
expiry in November 2011, with the aim of increasing capacity and flexibility, and having a more
structured maturity for the new facility.
33
Net Financial Expenses
in EUR k
Syndicated loan – interest and similar costs
Shareholder loan
interest loan deutsche Hypo
interest income
ineffective portion SWAp
others
Total
2008
-59,236
0
-1,186
12,6561
0
-346
2007
-41,580
-1,307
0
6,184
0
1,588
-48,112
-35,115
1 EUR 9,620 k of the income are interest represents for the derivatives; 2007 EUR 1,357 k interest income
for derivatives are shown under ‘Other’.
Consolidated Net Result Driven by Valuation Effects
The resulting loss before tax amounts to EUR -55,925 k for the 2008 financial year (profit before
tax of EUR 48,133 k in 2007). Consolidated net loss amounts to EUR -56,000 k (net profit of
EUR 52,811 k in 2007). The reason for the decrease in the consolidated net result compared to
the same period in 2007 resulted from a net loss from fair value adjustments in investment
property of EUR -88,116 k compared to a net gain in 2007 (EUR 11,170 k) and a significant
decrease in the net gain on financial derivatives (EUR -5,075 k in 2008 against EUR 8,086 k
in 2007). Altogether these valuation effects account for a EUR -112,447 k difference.
The loss per share amounts to EUR -1.00 in 2008 (2007: EUR 0.94 profit per share).
GROUP MANAG EM ENT D ISCU SSION
AND ANAL yS IS
34
Financial and Asset Position
Cash Position is EUR 31,426 k
Cash flow from operating activities for 2008 was at EUR 40,946 k. The strong improvement in
alstria’s operating performance is based on the growth of current business activities and is
also reflected in the increase in the FFO (EUR 7,875 k).
Cash flows from investing activities were impacted by the payments for the Bilfinger Berger
portfolio (also referred to as the ‘BLUE’ portfolio; EUR 105,770 k), the HUK Coburg portfolio
(EUR 50,262 k), as well as the purchase price payments for the acquisition of the properties in
Darwinstrasse, Berlin (EUR 52,350 k) and Max-Brauer-Allee, Hamburg (EUR 4.310 k). In the course
of the sale of the investment properties, Duesternstrasse 10, in Hamburg, Nikolaistrasse 16, in
Leipzig and Osterbekstrasse 96, in Hamburg, cash inflows of EUR 17.950 k were generated in the
second half of 2008. EUR 25,000 k cash outflow were used for the acquisition of a bond loan
issued by the state owned bank KfW.
Cash flow from financing activities reflects a further EUR 171,453 k drawdown of the syndicated
loan and the new loan with Deutsche Hypothekenbank (EUR 95,000 k) for the payment of the
investment properties stated above, and the payment of dividend (EUR 28,400 k). The redemp-
tion of EUR 107,495 k compromises the proceeds from the new loan, from the disposals and
a voluntary payment.
As a result, alstria closes the 2008 financial year with a cash position of EUR 31,426 k (2006:
EUR 103,036 k).
Equity Ratio of 38.9% – G-REIT Equity Ratio of 40.3%
The total investment property value amounts to EUR 1,805,265 k compared with EUR 1,693,718 k
at the beginning of the year:
in EUR k
Investment Properties as at Dec. 31, 2007
Acquisitions
Reclassification
disposals
Revaluations
Investment Properties as at Dec. 31, 2008
1,693,718
218,917
-2,754
-16,500
-88,116
1,805,265
Reclassifications take account of one building (Baeckerbreitergang 73, Hamburg; EUR 3.4 mil-
lion), which is no longer stated as investment property, but shown under development prop-
erty instead, and EUR 0.6 million reclassified as fixtures and fittings.
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35
The equity and liability side of the balance sheet reflects a total equity position of EUR 729,667 k,
with an equity ratio of 39% (December 31, 2007: EUR 870,876 k; 47%). The G-REIT equity ratio,
which is defined as total equity divided by real estate properties, is 40.3% (December 31,
2007: 51%).
According to the G-REIT Act, the minimum requirement for compliance is a G-REIT equity ratio
of 45% calculated at the end of the year. The G-REIT status is unaffected as long as the G-REIT
ratio at the end of the business year is not below 45% for three consecutive business years.
NNNAV at EUR 13.03 per Share
The NNNAV (Triple Net Asset Value according to EPRA4) fell from EUR 15.55 per share to EUR 13.03
per share. Dividend payments (EUR -28,400 k), further acquisition of treasury shares
(EUR -7,868 k), and the consolidated loss for the period (EUR -56,000 k) were responsible for the
reduction of alstria’s equity. The consideration of the devaluation of derivatives in the cash
flow hedge reserve reduces the equity by EUR -49,579 k. In total, this leads to a decrease in
equity from EUR 870,876 k to EUR 729,667 k5.
The long-term loan position amounts to EUR 1,086,801 k, up from EUR 927,400 k. The main
changes in the long-term loan position over the last twelve months resulted from (i) the
financing of new acquisitions and additional draw downs of EUR 171,453 k, and (ii) the loan
down payment of EUR 107,495 k following asset disposals.
A new EUR 95 million, seven years, non recourse loan on the Hamburg properties, Gaense-
markt 36 and Drehbahn 36, with Deutsche Hypothekenbank was agreed upon. This refinancing
transaction took place in October 2008, and had no impact on the Company’s net debt, as all
the proceeds were used to repay the main syndicated loan.
The LTV on the balance sheet date is 59.1% (covenant 60%) for the syndicated loan, and 75.4%
(covenant 80% - test date end of 2010) for the loan with Deutsche Hypothekenbank. The table
below shows the respective LTV-covenants with the associated properties OMV:
Liabilities
Syndicated loan
non-recourse loan
unencumbered
Total
Loan amount
in EUR k
OMV
in EUR k
995,374
1,682,915
95,000
-
126,000
1,350
1,090,374
1,810,265
LTV
in %
59.1
75.4
0.0
60.2
WAULT
8.9
22.3
7.3
9.7
Other current liabilities amount to EUR 28,329 k, and mainly relate to accrued interest
(EUR 12,609 k), which will become due in one year under the syndicated loan agreement, and
trade payables and other accruals.
4 EPRA: European Public Real Estate Association, Best Practices Committee, Schiphol Airport, The Netherlands.
5 See also the statement of shareholders’ equity in the consolidated financial statements section, page 52.
36
GROUP MANAG EM ENT D ISCU SSION
AND ANAL yS IS
R iSK And oppoR Tu niTY MAnAGeMenT
Risk Report
Risk Management
alstria has implemented a structured risk management and early warning system in accord-
ance with section 91 (2) of the German Stock Corporation Act (AktG). All risks are recorded,
evaluated and monitored on a quarterly basis. The Company’s risk identification procedure
allows for ongoing early identification of potential sources of new risk. Risk mitigation meas-
ures are defined in order to undertake any necessary steps to circumvent the risks identified,
i.e. to diversify, manage or avoid risks. For alstria, risk management means the targeted safe-
guarding of existing and future potential for success, as well as improving the quality of the
planning process of the Company. Risk management is assigned to the controlling group
organisationally. A risk report is drawn up by the risk manager and submitted directly to the
management board quarterly.
The risk report presents the organisational measures and regulations that are to be complied
with regarding risk identification, assessment, response, reporting and monitoring. At the
same time, comprehensive documentation of the report ensures that correct assessment is
performed by the departments responsible and the supervisory board.
Risks are assessed according to the likelihood of their occurrence and their magnitude of im-
pact. Overall risk is calculated and updated over a specific period of time by linking the various
parameters. By monitoring the risk management system, alstria is able to advance and adapt
its structures and processes continuously.
alstria’s risks are divided up into four categories:
● strategic risks
● operational risks
● compliance risks
● financial risks
All material risks to the future development of the Company’s position and performance are
described in this chapter as identified in accordance with alstria’s risk management system.
Strategic Risks
Strategic risk management mainly consists of the application of guidelines contained in the
investment policy, asset management policy and rules of management for relations with the
group’s core tenants.
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Subsequent Events and Outlook
Furthermore, risks resulting from the key market dynamics to alstria’s business are catego-
rised as strategic risks. In view of the increasingly tight situation in the financial markets,
general strategic risks could arise should the unstable situation persist and the future
macro-economic environment deteriorate. As long as there is no dramatic change in the wider
economic picture as it currently stands, alstria’s strategic risk situation remains stable.
Operational Risks
alstria’s operational risk management addresses property-specific risks and general business
risks. This includes, among others, vacancy risk, the creditworthiness of tenants and the risk
of falling market rents. Personnel related risks such as the drain on knowledge and skills are
also monitored in this risk area. The Company uses various early warning indicators to monitor
these risks. Rent projections, vacancy analyses, the control of the duration of leases and termi-
nation clauses, as well as ongoing insurance checks are meant to help to identify potential
dangers and risks. Operational risks that could arise from the financial crisis are seen mainly
in a potential shortfall of payment by a major tenant. Due to the fact that all of alstria’s main
tenants are public institutions, or still highly rated, the risk of shortfall in payments is
currently limited.
Compliance Risks
G-REIT Legislation
alstria is registered in the commercial register as a German REIT-AG (G-REIT). The new German
REIT segment allows alstria to offer high visibility to investors and differentiate itself as a REIT
on the capital market. In order to qualify for becoming and staying a G-REIT, certain require-
ments have to be fulfilled. The most relevant of those are the following: the G-REIT must be a
stock corporation listed on an organised market, and its statutory seat and management must
be in Germany. The registered share capital must be at least EUR 15 million with all shares being
voting shares of the same class. The free float must be at least 15% and no investor may di-
rectly hold 10% or more of the shares, or shares which represent 10% or more of the voting
rights. Furthermore, at least 75% of the assets must consist of real estate and at least 75% of
the gross income must be generated from real estate. At least 90% of the annual profits under
German GAAP must be distributed to the shareholders, and the G-REIT’s equity may not fall
short of 45% of the fair value of its real estate assets as recorded under IFRS rules. REIT stock
corporations are fully exempted from German corporate income tax and German trade tax.
Sellers who offer real estate to alstria may, subject to certain conditions, benefit from exit tax,
in the form of 50% relief on both income and corporate income tax, as well as the trade tax
payable on capital gains.
37
GROUP MANAG EM ENT D ISCU SSION
AND ANAL yS IS
38
Capital Management
Capital management activities are aimed at maintaining the Company’s classification as a
REIT in order to support its business activities and maximise shareholder value.
The Company manages its capital structure and makes adjustments in response to changes in
economic conditions. In order to maintain or adjust the capital structure, the Group can make
a capital repayment to its shareholders or issue new shares. No changes were made to the
aims, guidelines and processes as at December 31, 2008 and December 31, 2007.
The capital structure is monitored by the Company using the Key Performance Indicators (KPIs)
relevant for classification as a G-REIT. The G-REIT equity ratio, being the ratio of equity to
investment property, is the most important KPI. According to the Group’s strategy, the
G-REIT equity ratio must be between 45% and 55%.
The G-REIT equity ratio on the balance sheet date is 40.3%. According to the G-REIT Act, the
minimum requirement for compliance is a G-REIT equity ratio of 45% calculated at the end of
the year. The G-REIT status is unaffected as long as the G-REIT ratio at the end of the financial
year not below 45% in three consecutive financial years.
According to alstria’s implemented strategy, the G-REIT ratio is not expected to rise above 45%
in the next two financial years.
Legal Risks
The Company has not been sued in the course of any individual or other kind of legal dispute.
Currently there are no risks out of legal disputes.
Financial Risks
As a result of the financial crisis, assessing the financial risk situation is rather difficult.
alstria’s IPO in 2007, the credit facility appropriated, and the incorporation of the Group and its
financial partners place alstria in a position in which the financing risk of the Company is still
limited.
The financial instruments used by the Group mainly comprise bank loans and derivative
financial instruments. The main purpose of the bank loans is to finance the business activities
of alstria.
Derivative financial instruments include interest swaps and caps. The purpose of these instru-
ments is to hedge against interest risks arising from the Company’s business activities and its
sources of finance. The main risks arising from the Group’s financial instruments are those
relating to cash flow interest rate and liquidity risks.
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Other Information
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Risk and Opportunity Management
Information Pursuant to Section 315 (4) HGB
Additional Group Disclosures
Subsequent Events and Outlook
39
alstria’s current debt to equity ratio is approx. 60%. This is a reasonable rate compared to the
average leveraging rate of German real estate companies. alstria’s syndicated loan facility
agreement allows for a loan-to-value ratio (LTV) of 60%. After the loan restructuring, alstria
managed to keep the LTV at 59.1% on the balance sheet date. With the additional measures
implemented at the beginning of 2009, the risk of breach of covenant was proactively
resolved.
Apart from this, the Group is not exposed to any significant credit risks.
Interest Rate Risk
Interest rate risk results from market variations in interest rates. These affect the amount of
interest expenses in the financial year and the market value of derivative financial instruments
used by the Company.
alstria’s hedging policy uses a combination of plain vanilla swaps and caps, which limit the
exposure of the Company to interest rate fluctuations, but still provide enough flexibility
to allow for the disposal of real estate assets, avoiding any costs linked to an over-hedged situ-
ation. The interest base for the financial liability (loan) is the 3-month EURIBOR, which is
adjusted every three months. A number of different derivative financial instruments were
acquired to manage the interest expense. The maturity of the derivative financial instruments
is based on the life of the borrowings. The derivative financial instruments relate to interest
swaps in which the Company agrees to exchange with contracting partners, at specified inter-
vals, the difference between fixed and variable interest rate amounts calculated in reference to
an agreed notional principal amount. The swaps alstria uses to hedge its interest rate
payments qualify as cash flow hedges. In addition, interest caps were acquired; here the inter-
est is capped at a set maximum. If the maximum interest rate is exceeded, the difference
between the actual interest rate and the cap rate is paid out.
Liquidity Risk
Cash management is one of the core processes at alstria. The Company assesses its cash on a
daily basis. A cash forecasting tool is used to prevent any liquidity risk. This liquidity planning
tool uses the forecast cash flows from business activities and the maturity of the financial
investments as a basis for analysis.
Valuation Risks
Based on influencing factors like economic change, interest rates fluctuations and inflation,
rental income and hence the valuation of the property can be adversely affected. Regional di-
versification of the investment portfolio, consequent focussing on the tenant’s individual
needs and tight monitoring of the market (broker reports) are taken as risk mitigation proce-
dures. Furthermore, the market values of all the real estate at alstria are determined at least
annually at the end of the financial year by neutral, internationally recognised valuation
companies.
GROUP MANAG EM ENT D ISCU SSION
AND ANAL yS IS
40
Counterparty Risk
alstria hedges a portion of its risk by using third-party instruments (interest rate derivatives,
property insurance and others). alstria’s counterparties to these contracts are internationally
recognised institutions, which are rated by the main rating agencies. alstria reviews the rating
of its counterparties on a regular basis in order to mitigate any risk of default. The financial
crisis has raised doubts as to the reliability of rating agency’s assessments. To meet this objec-
tion, alstria started to perform a review of the main counterparties in order to reinforce the
rating agencies assessment.
Overall Assessment
No risk to the Company’s continued existence can be identified from past or future events. Any
possible negative impact on alstria’s risk situation by the adverse in the financial markets has
been analyzed thoroughly. Although alstria is clearly not unaffected by the financial crisis, the
Group undertook all measures necessary to minimise the adverse implications it has on al-
stria’s business situation.
Sufficient precautions have been taken against identifiable risks.
Opportunities for the Group
With the current finance situation in terms of favourable interest rates, alstria has safeguarded
its mid-term position on the refinancing side. On the revenue side, alstria benefits from long
term rent agreements of approx. ten years on average and potential rent increases according to
consumer price indexation. The alstria portfolio is well-balanced, and comprises many high-
quality and anchor buildings with high-quality tenants.
Therefore alstria is well positioned to withstand a challenging market such as the one expected
to prevail for the next twelve to 18 months. This provides the Company with the opportunity to
become one of the first movers towards new growth as soon as the market recovers.
alstria’s core competence is asset management. The asset repositioning and refurbishment
alstria is going to undertake with the Alte Post joint-venture, the Grosse Bleichen development
and the Bieberhaus reconstruction for the Ohnsorg-Theatre, strengthens the basis for value
increase throughout the portfolio.
alstria intends to start a sustainability project in co-operation with the City of Hamburg
targeted at environmentally favourable improvements to investment properties leased by
the City of Hamburg. This is another project offering excellent prospectus for the further cost
reduction and efficiency.
Being one of only two German REITs constitutes a substantial opportunity for alstria. This situ-
ation provides alstria with a distinct competitive advantage in the direct investment markets,
because alstria can offer corporate office real estate vendors the benefit of exit tax.
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alstria Stock
Group Management Discussion and Analysis
Consolidated Financial Statements
Auditors´ Report
Management
Other Information
Economics and Strategy
Financial Analysis
Risk and Opportunity Management
Information Pursuant to Section 315 (4) HGB
Additional Group Disclosures
Subsequent Events and Outlook
inFoR M ATion puRSuAnT To SeCTion 315 (4) HGB
And eXpLAnAToR Y RepoR T
Composition of Subscribed Capital, Voting Rights and Privileges
As per closing date on December 31, 2008, the Company’s share capital amounted to
EUR 56,000 k, divided up into 56,000,000 notional no-par value shares. The same rights and
duties are associated with all shares. Each share represents one vote at the general sharehold-
ers’ meeting.
Restrictions on Disposing of Shares or Voting Rights
Restrictions in disposing of shares or the use of voting rights do not exist, or as far as they
could arise from agreements between shareholders, are not known to the management board.
Exercising voting rights and the transfer of shares are based on the general legal requirements
and alstria’s articles of association, which do not restrict either of these activities.
Shareholders with an Interest of more than 10%
As per closing date of December 31, 2008, the Company was not aware any shareholders
whose direct interest exceeded 10% of the share capital. Captiva 2 Alstria Holding S.à r.l. retains
an indirect share in alstria of approx. 61% through wholly owned subsidiaries. None
of these companies holds more than 10% of alstria’s share capital directly.
Holders of Shares with Privileges
No shares exist granting privileges of controlling power.
Nature of Voting Rights Control if Employees Have a Share
in Capital and do not Directly Exercise their Right of Control
This constellation does not exist within the Company.
41
GROUP MANAG EM ENT D ISCU SSION
AND ANAL yS IS
42
Appointment and Dismissal of Management Board and
Supervisory Board Members and Amendments to the Articles of Association
alstria’s management board consists of one or more members who are appointed and
dismissed in accordance with sections 84, 85 of the German Stock Corporation Act (AktG) by
the supervisory board. The articles of association do not contain any special provisions in this
respect. According to section 84 AktG members of the management board are appointed for a
maximum term of five years. Re-appointment or extension of the term of office, in each case
for a maximum of five years, is admissible. During the reporting period the supervisory board
resolved on the prolongation of the office term and service contracts of the management
board members.
Amendments to the articles of association are made pursuant to sections 179 and 133 AktG. The
supervisory board is also authorised, without a resolution by the shareholders’ meeting, to
make changes in and amendments to the articles of association that merely affect the word-
ing. In accordance with section 15 (5) of the articles of association in conjunction with sections
179 (2), 133 AktG the shareholders resolve on such amendments in general meeting with a
simple majority of the votes cast and a simple majority of the share capital represented.
In resolutions where a larger majority is required by law for amendments to the articles of
association, that majority is decisive. Last the articles of association were amended by the
shareholders meeting on June 5, 2008, to allow for the communication of information to
shareholders by the way of remote data transfer.
Authority of Management Board Regarding Repurchasing
and Issuance of Shares
1. Authorised Capital
The articles of association authorise the management board to increase the share capital with
the approval of the supervisory board until March 14, 2012, by issuing new bearer shares against
contribution in cash and/or kind once or repeatedly up to a total amount of EUR 27,500 k.
2. Conditional Capital
The Company has three types of conditional capital at its disposal (sections 192 et seqq. AktG),
which are regulated in section 5 (5-7) of the articles of association.
a) Conditional Capital I
The share capital is conditionally increased by up to EUR 17,500 k by issuing up to 17.5 million
new no par value bearer shares with entitlement to a share in profits from the beginning of the
financial year in which they are issued. The conditional capital increase shall be carried out
only to the extent that conversion or option rights are exercised by holders of conversion or
option rights attached to bonds, which alstria or its subsidiary companies have issued against
cash payments in accordance with the resolution of the general meeting of March 15, 2007, or
that conversion obligations under such bonds are fulfilled, and only insofar as no other meth-
ods of performance are used in serving these rights. The management board is authorised to
determine further details of the conditional share capital increase.
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Information Pursuant to Section 315 (4) HGB
Additional Group Disclosures
Subsequent Events and Outlook
43
b) Conditional Capital II
The share capital of the Company is conditionally increased in an amount of up to EUR 2,000 k
by the issuance of up to two million no par value bearer shares. The purpose of the conditional
capital increase is to grant shares to the holders of subscription rights (Stock Options) which
are issued in accordance with the authority granted by the annual general meeting held on
March 15, 2007 by the Company. The conditional capital increase is only carried out insofar as
the holders of the Stock Options exercise these, and no own shares of the Company are used
for servicing.
The new shares will participate in the Company’s profits from the beginning of the financial
year in which they come into existence as a result of the Stock Options being exercised.
c) Conditional Capital III
The share capital is conditionally increased in an amount of up to EUR 500 k by the issuance of
up to 500,000 no par value bearer shares. The purpose of the conditional capital increase is to
grant shares to the holders of certificates which are issued by the Company in accordance with
the authority granted by the annual general meeting held on March 15, 2007. The conditional
capital increase is only carried out insofar as issued certificates are converted into shares of
the Company and no own shares are used for servicing the certificates.
The new shares will participate in the Company’s profits from the beginning of the financial
year in which they come into existence as a result of the conversion of certificates.
3. Purchase of Own Shares
The shareholders’ meeting on June 5, 2008 authorised the management board to acquire own
shares up to a total of 10% of the share capital until December 4, 2009. The shares acquired
and other own shares that are in the possession of or are to be attributed to the Company
pursuant to sections 71a et seq. AktG must altogether and at no point in time account for more
than 10% of the share capital. Shares may be purchased through a stock exchange, by means
of a public offer directed at all shareholders or by using derivatives (put or call options or a
combination of both).
Change of Control Clauses in Key Agreements Entered into by the Company
A significant syndicated loan agreement of the Company contains the authorisation to require
repayments of the loan in case of a change of control. In this agreement, a change of control
is defined as the takeover of more than 50% of the voting rights in alstria.
Compensation Agreements with Management Board
and Supervisory Board Members
No such agreements exist.
These provisions comply with the statutory requirements or are reasonable and common practice
by comparable listed enterprises. They are not intended to hinder potential take over bids.
GROUP MANAG EM ENT D ISCU SSION
AND ANAL yS IS
A ddiTi o nA L GRoup diSCLoSuReS
Employees
As of December 31, 2008; alstria employed 29 people (December 31, 2007: 20). The yearly
average number of employees was 28 (previous year: 15). These figures exclude the board
members.
44
On the trail of Hamburg‘s historic stage: members of the alstria office REIT-AG staff
in the auditorium of the Ohnsorg Theatre.
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Group Management Discussion and Analysis
Consolidated Financial Statements
Auditors´ Report
Management
Other Information
Economics and Strategy
Financial Analysis
Risk and Opportunity Management
Information Pursuant to Section 315 (4) HGB
Additional Group Disclosures
Subsequent Events and Outlook
Compensation Report
Management board members’ compensation comprises a fixed and a variable component
linked to the Company’s operating performance. In addition to their bonus, the members
of the management board receive share options as a long-term incentive component of
remuneration.
The members of the supervisory board receive a fixed remuneration.
The compensation report, containing details of the principles for defining management
board and supervisory board remuneration, is an integral component of the audited Group
Management Discussion and Analysis.
Sustainability Report
45
alstria manages a portfolio of around 944,000 sqm of office space located throughout
Germany. All these assets are closely connected to the public transport hub and form an inte-
gral part of the complex local socio-economic network in which they are embedded. The assets
of alstria host thousands of civil servants and corporate employees on a daily basis. Directly or
indirectly, the tenants and alstria consume electricity and water, produce waste and CO2 emis-
sions when operating the assets. alstria’s actions, or for that matter, the inaction of the Com-
pany, as real estate landlord, has a potential implications on the day-to-day lives of hundreds
of shareholders, workers, or just regular citizens and neighbours. As a long-term real estate
owner, alstria has a direct interest in the sustainable development of the cities in which it has
invested. As a real estate owner, alstria also has a corporate responsibility to those cities, as
real estate is a fundamental part of the way in which urban living space is shaped.
alstria’s business model is largely based on the strong belief that entering into sustainable
relationships between landlord and tenants is possible, and that no contradiction exists be-
tween improving the tenant benefit, and improving the long-term returns for alstria at the
same time. This policy will undoubtedly lead to the Group making decisions, that might sacri-
fice short-term returns, but improve long-term benefits for alstria and all of its shareholders.
When it comes to sustainability, the same spirit guides alstria’s actions that guides the
Company’s belief that there is no contradiction between improving the overall quality of life
and the long-term economic benefits to alstria as well.
GROUP MANAG EM ENT D ISCU SSION
AND ANAL yS IS
46
alstria office REIT-AG has highlighted below some of the events supported or staged by the
Company, where the decision was partially driven by sustainability considerations:
1. Sponsoring: alstria has sponsored several exhibitions of modern art in Hamburg. Sponsoring
provided free to the organisers by opening up vacant retail space in the Company portfolio.
2. Energy efficiency and improved security: as part of its regular maintenance program,
alstria prioritised work to improve energy efficiency and/or overall security in its buildings.
The work performed in either of those categories amounted to around EUR 500 k in 2008.
Here, alstria helped one of its main tenants, occupying more than 100,000 sqm to modern-
ise the power supply system on its premises. This led to a reduction in energy costs of more
than EUR 50 k a month.
3. Research and development: efforts here include the commission of an economic study on
the impact on city landscapes of changes in energy consumption behaviour, and an analysis
of the impact this will have on commercial real estate needs (in partnership with the Ham-
burg Institute of International Economics).
4. Improvement of market transparency: alstria has launched a partnership with IPD, the
German Reversion Index. The aim of this partnership is to measure the reversion potential in
the different German market segments. One of the goals pursued by the Company in setting
up this index was to increase the market knowledge in one of the most sensitive areas for
understanding German real estate.
The management at alstria is convinced that sustainability concepts need be taken into con-
sideration in all day-to-day decisions, and that this can only be achieved in implementing a
strong culture of corporate responsibility. They also think that less popular day-to-day changes
in the attitude and behaviour of alstria’s employees, tenants, or contractors, are much more
powerful tools of conviction than any big bang visible project.
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Consolidated Financial Statements
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Information Pursuant to Section 315 (4) HGB
Additional Group Disclosures
Subsequent Events and Outlook
Company Group and Dependent Company Report
Captiva Capital II S.à r.l., Luxembourg, holds a majority interest in alstria. According to Section
290 HGB alstria is required to prepare consolidated statements and a Group management re-
port comprising the Group companies controlled by the Group. Apart from this, alstria office
REIT-AG and all associated companies stated in the notes are consolidated within the alstria
Group.
Due to the majority interest of Captiva Capital II S.à.r.l, Luxembourg, in alstria, the Company
has drawn up a separate dependent Company report concerning relations with affiliated
companies, in ac cordance with Sec. 312 of the German Stock Corporation Act (AktG). This report
includes the following statement:
‘Our Company received appropriate remuneration for all the legal transactions and all the
measures stated in the report on related party relationships. This appraisal is based on the
circumstances, which were known to us at the time when the events, which are subject to
reporting, occurred.’
47
SuBSeQuenT evenTS And ouTLooK
alstria believes that changes in the world of finances will require adjustment in real estate
company capital structures. As such, the whole industry will need to undergo deleveraging.
Despite a 60% LTV-target, which makes alstria one of the most conservatively balance financed
stockmarket note real estate companies in Germany, it will not be immune to this process.
However, due to the quality of alstria’s assets, its unique cash flow stability, and the existing
maturity of debt, the management of alstria sees itself supported in this process.
As an integral part of the future financing strategy, alstria has been able to agree an amend-
ment of its current EUR 1.1 billion credit facility with the lenders. In this amendment, the LTV-
covenant has been adjusted from 60% to 65%. The current margin of 65 bps will be increased
by 20 bps immediately. The parties also agreed on a step-up margin if the LTV rises above 60%.
Provided the Company stays within the targeted capital structure with an LTV below 60%, this
amendment will lead to an annualised increase of interest expenses of around EUR 2 million.
GROUP MANAG EM ENT D ISCU SSION
AND ANAL yS IS
LTV
60% to 62.5%
62.5% to 65%
Additional step-up margin
50 bps
75 bps
alstria has a limited number of leases that will expire in the next two years, and no foreseen
refinancing need.
Lease Expiry
48
in % of annual rent
5.2
3.7
3.1
open
ended
2009
2010
alstria expects revenues of EUR 103 million and funds from operations of EUR 32 million based
on adjusted financing expenses and contracted rent for 2009. All things being equal,
financial performance is expected to be in the same order of magnitude in 2010.
Hamburg, February 18, 2009
The Management Board
Olivier Elamine
CEO alstria office REIT-AG
Alexander Dexne
CFO alstria office REIT-AG
income less expenses from passed on operating expenses
12.2,12.3
12.1
102,055
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Other Information
Consolidated Income Statement
Consolidated Balance Sheet
Consolidated Statements of Change in Equity
Consolidated Cash Flow Statement
Notes
Notes
2008
2007
0
-8,833
93,222
-6,878
-4,675
2,774
-515
-88,116
1,450
-2,738
12,656
-60,184
-5,075
-584
82,552
314
-6,674
76,192
-9,251
-3,532
588
-5
11,170
0
75,162
6,184
-38,683
8,086
-2,616
49
12.4
12.5
12.6
12.7
12.9
12.8
12.9
12.9
12.9
12.9
12.10
-53,187
-27,029
-55,925
-75
-56,000
48,133
4,678
52,811
-56,000
52,811
15
15
-1.02
-1.02
1.15
1.15
Consolidated income Statement
for the Year ended december 31, 2008
in EUR k
Revenues
Real estate operating costs
Net Rental Income
Administrative expenses
personnel expenses
other operating income
other operating expenses
net loss/gain from fair value adjustments on investment property
profit on disposal of investment property
Net Operating Result
Financial income
Financial expenses
net loss/gain from fair value adjustments on financial derivatives
other financial expenses
Financial Result
Pre-Tax Income (EBT)
income tax income/expense
Consolidated Profit for the Year
Attributable to: Shareholder
Earnings per Share in EUR
basic, for profit for the year attributable
to ordinary equity holders of the parent
diluted, for profit for the year attributable
to ordinary equity holders of the parent
CONSOLIDATED FINANCIA L STATEM ENT S
Consolidated Balance Sheet
as at december 31, 2008
in EUR k
ASSETS
Non-Current Assets
investment property
property, plant and equipment
intangible assets
Total Non-Current Assets
Current Assets
Trade receivables
Accounts receivable from affiliates
derivatives
Tax receivables
other receivables
Cash and cash equivalents
Total Current Assets
50
Notes
2008
2007
10.1
10.2
10.3
10.3
10.6;10.3
10.4
10.4
10.6
1,805,265
1,693,718
3,923
336
1,494
359
1,809,524
1,695,571
4,099
0
176
1
28,267
31,426
63,969
2,646
77
27,202
1,949
5,039
103,036
139,949
Total Assets
1,873,493
1,835,520
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Consolidated Income Statement
Consolidated Balance Sheet
Consolidated Statements of Change in Equity
Consolidated Cash Flow Statement
Notes
Consolidated Balance Sheet
as at december 31, 2008
in EUR k
Notes
2008
2007
EQUITY AND LIABILITIES
Equity
Share capital
Capital surplus
Hedging reserve
Treasury shares
Retained earnings
Total Equity
Non-Current Liabilities
11.1
10.4
56,000
755,285
-49,579
-14,983
-17,056
56,000
754,647
0
-7,115
67,344
729,667
870,876
Long-term loans, net of current portion
11.2
1,086,801
927,400
derivatives
other liabilities
Total Non-Current Liabilities
Current Liabilities
Short-term loans
Trade payables
payables to affiliates
profit participation rights
Liabilities of current tax
other current liabilities
Total Current Liabilities
Total Liabilities
10.5; 11.3
28,626
70
0
56
1,115,497
927,456
11.2
11.3
19; 12.5
11.6
11.3
12,609
4,561
0
53
21
11,085
28,329
8,936
3,068
15
5
5,332
19,832
37,188
1,143,826
964,644
Total Equity and Liabilities
1,873,493
1,835,520
51
CONSOLIDATED FINANCIA L STATEM ENT S
Consolidated Statement of Changes in equity
for the Year ended december 31, 2008
in EUR k
Notes
Share
capital
Capital
surplus
Hedging
reserve
Treasury
shares
Retained
earnings
Total
equity
As of Jan. 1, 2008
56,000 754,647
0
-7,115
67,344 870,876
Changes in Fiscal Year 2008
Consolidated profit for the year
Share-based payments
payments of dividends
valuation financial derivatives
Acquisition of treasury shares
valuation of available
for sale financial assets
other contributions
to capital surplus
16
10.5
0
0
0
0
0
0
0
0
768
0
0
0
-123
-7
0
0
0
-49,579
0
0
0
0
0
0
0
-7,868
0
0
-56,000
-56,000
0
-28,400
0
0
0
0
768
-28,400
-49,579
-7,868
-123
-7
As of Dec. 31, 2008
11.1
56,000 755,285
-49,579
-14,983
-17,056 729,667
52
Consolidated Statement of Changes in equity
for the Year ended december 31, 2007
in EUR k
Notes
Share
capital
Capital
surplus
Hedging
reserve
Treasury
shares
Retained
earnings
Total
equity
As of Jan. 1, 2007
8,000 375,066
Changes in Fiscal Year 2007
Consolidated profit for the year
Changes in the
consolidated Group
valuation shareholder loan
deferred taxes
Share-based payments
0
0
0
0
0
Contributions to share capital
48,000
0
-5,531
447
200
813
0
Contributions to
capital surplus (ipo)
Transaction costs of issue
of shares
Acquisition of treasury shares
other contributions
to capital surplus
0
0
0
0
240,000
-11,038
0
154,690
As of Dec. 31, 2007
11.1
56,000 754,647
0
0
0
0
0
0
0
0
0
0
0
0
0
14,533 397,599
0
0
0
0
0
0
0
0
-7,115
0
52,811
52,811
0
0
0
0
0
0
0
0
0
-5,531
447
200
813
48,000
240,000
-11,038
-7,115
154,690
-7,115
67,344 870,876
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Consolidated Income Statement
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Consolidated Statements of Change in Equity
Consolidated Cash Flow Statement
Notes
53
Consolidated Cash Flow Statement
for the Year ended december 31, 2008
in EUR k
Notes
2008
2007
1. Operating Activities
Consolidated loss/profit for the year
unrealised valuation movements
interest income
interest expense
Result from income taxes
other non-cash expenses (+)
Gain (-) on disposal of fixed assets
depreciation and impairment of fixed assets
decrease (+)/increase (-) in trade receivables and other assets
that are not attributed to investing or financing activities
decrease (-)/increase (+) in trade payables and other liabilities that are
not attributed to investing or financing activities
Cash generated from operations
interest received
interest paid
income tax paid
Cash Flows from Operating Activities
2. Investing Activities
Acquisition of investment properties
proceeds from sale of investment properties
Acquisition of other property, plant and equipment
Acquisition of financial assets
Acquisition of subsidiaries
12.9
12.9
12.9
12.10
12.8
-56,000
93,191
-12,656
60,184
75
1,271
-1,450
507
3,912
-1,467
87,567
11,556
-53,112
-5,065
40,946
52,811
-19,256
-6,184
38,683
-4,678
2,663
-175
348
-3,607
-22,792
37,813
6,184
-29,374
-1,949
12,674
12.8
-228,036
-291,640
17,950
-160
-25,000
0
3,700
-2,114
0
-16,444
Cash Flows Used in Investing Activities
13.3
-235,246
-306,498
3. Financing Activities
proceeds from equity contributions
Repurchase of own shares
proceeds from the disposal of own shares
proceeds from the issue of bonds and borrowings
payments of dividends
Acquisition of other investments
11.1
11.1
16
0
-7,972
104
266,453
-28,400
0
payment of the redemption of bonds and borrowings
13.3
-107,495
paymenst of transaction costs
payment for ipo costs
0
0
305,008
-7,115
0
332,124
0
-1,804
-243,262
-355
-12,040
Cash Flows Used in Financing Activities
122,690
372,556
4. Cash and Cash Equivalents at the End of the Period
Change in cash and cash equivalents (subtotal of 1 to 3)
Cash and cash equivalents at the beginning of the period
Cash and Cash Equivalents at the End of the Period
5. Composition of Cash and Cash Equivalents
Cash
Securities
Cash and Cash Equivalents at the End of the Period
-71,610
103,036
31,426
78,732
24,304
103,036
31,426
0
103,036
0
31,426
103,036
CONSOLIDATED FINANCIA L STATEM ENT S
notes to the Consolidated Financial Statements
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
54
Contents
Corporate Information
Basis of Preparation
Changes in Accounting Policy
and Disclosures
Basis of Consolidation
Consolidated Group
Key Judgments and Estimates
55
55
63
64
65
65
Seasonal or Economic Effects on Business 67
Summary of Significant
Accounting Policies
Segment Reporting
Notes to the Consolidated
Balance Sheet – Assets
Investment Property
Property, Plant and Equipment
Intangible Assets
Receivables and Other Assets
10.1
10.2
10.3
10.4
10.5 Derivative Financial Instruments
Cash and Cash Equivalents
10.6
11.
Notes to the Consolidated
Balance Sheet – Equity and Liabilities
Equity
Financial Liabilities
Trade Payables and Other Liabilities
Trust Assets and Liabilities
11.1
11.2
11.3
11.4
11.5 Deferred Taxes
11.6
Liabilities of Current Tax
12.
12.1
12.2
12.3
Notes to the Consolidated
Income Statement
Revenues
Income from Passed
on Operating Expenses
Expenses from Passed
on Operating Expenses
Administrative Expenses
Personnel Expenses
12.4
12.5
12.6 Other Operating Income
12.7 Other Operating Expenses
12.8 Disposal Proceeds
12.9
12.10
Financial and Valuation Result
Income Taxes
67
77
78
78
80
81
82
83
85
85
85
87
88
89
89
90
90
90
90
90
91
91
92
92
92
93
94
13.
13.1
13.2
13.3
14.
14.1
14.2
14.3
15.
16.
17.
18.
19.
20.
21.
22.
23.
24.
25.
26.
27.
28.
Other Notes
Compensation of Management
Board and Supervisory Board
Commitments and Contingencies
Consolidated Cash Flow Statement
Related Party Relationships
Preliminary Remarks
Remuneration
of Key Management Personnel
Related Party Transactions
Earnings per Share
Dividends Paid
Employees
Stock Option Program
Convertible Profit Participation
Rights Program
Financial Risk Management
Significant Events after
the End of the Reporting Period
Utilisation of Exempting Provisions
Disclosures Pursuant to Wertpapier-
handelsgesetz (German Securities
Trading Act)
Declaration of Compliance Pursuant
to Sec. 161 AktG (‘Aktiengesetz’:
German Stock Corporation Act)
Auditors’ Fees
Management Board
Supervisory Board
Management Compliance Statement
95
95
96
96
97
97
97
98
99
100
100
100
101
103
110
110
110
113
113
113
113
116
Preface
TRUST
alstria Stock
Group Management Discussion and Analysis
Consolidated Financial Statements
Auditors´ Report
Management
Other Information
Consolidated Income Statement
Consolidated Balance Sheet
Consolidated Statements of Change in Equity
Consolidated Cash Flow Statement
Notes
1. Corporate Information
The consolidated financial statements of alstria office REIT-AG (hereinafter also referred to as the
‘Company’ or ‘alstria office REIT-AG’) as of December 31, 2008 were authorised for issue by resolution of the
management board on February 18, 2009.
alstria office REIT-AG was transformed into a German Real Estate Investment Trust (G-REIT) in fiscal year
2007. The Company was registered as a REIT corporation (hereinafter also referred to as ‘REIT-AG’) in the
commercial register on October 11, 2007.
REIT-AGs are fully exempt from German corporate income tax and trade tax. Hence, alstria office REIT-AG
has been exempt from tax with retrospective effect since January 1, 2007.
The Company is a real estate property company in the meaning of the G-REIT Act. Pursuant to Section 2 of
its Articles of Association, the Company’s objective is the acquisition, the management, the operation and
the sale of owned real estate property as well as the holding of participations in enterprises, which acquire,
manage, operate and sell owned property. All the aforementioned objectives are subject to the conditions
of the G-REIT Act legislation.
55
The Company is a stock corporation which was founded in Germany and has its registered office in
Hamburg. The Company is registered in the commercial register at the local court of Hamburg under
HRB No. 99204. The Company’s address is Fuhlentwiete 12, D-20355 Hamburg, Germany.
The fiscal year ends on December 31 of each calendar year.
The following formations took place between January 1, 2008 and December 31, 2008:
● During the reporting period, alstria office REIT-AG incorporated alstria office Gänsemarkt
Drehbahn GmbH & Co KG.
● alstria Gänsemarkt Drehbahn GP GmbH acts as general partner and was provided with
EUR 25 k equity capital.
2. Basis of Preparation
The consolidated financial statements have been prepared under the historical cost convention except for
investment property (land and buildings) and financial instruments that have been measured at fair value
through profit or loss.
The preparation of financial statements in conformity with IFRS requires the use of certain critical account-
ing estimates. It also requires management to exercise its judgement in the process of applying the
Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas
where assumptions and estimates are significant to the consolidated financial statements are disclosed
in note 6.
CONSOLIDATED FINANCIA L STATEM ENT S
The consolidated financial statements are presented in Euro. All values are rounded to the nearest
thousand (EUR k) except when otherwise indicated.
These consolidated financial statements are financial statements for the period from January 1, 2008 to
December 31, 2008.
For the sake of clarity, items are summarised in the consolidated balance sheet and income statement and
commented on in the notes to the financial statements.
Assets and liabilities are classified as non-current – for items due in more than one year – or current.
The consolidated financial statements of alstria office REIT-AG and its subsidiaries (together ‘the Group’)
have been prepared in accordance with the International Financial Reporting Standards (IFRS) of the Inter-
national Accounting Standards Board (IASB) including the interpretations of the standards (IFRIC). All IFRS
and IFRIC were observed as adopted and prescribed by the EU.
56
alstria office REIT-AG did not prematurely adopt the following standards or amendmends that were revised
and published by the IASB in 2006, 2007 and 2008 respectively, but only became mandatory for fiscal years
beginning on or after January 1, 2009:
● IFRS 8 ‘Operating Segments’ replaces IAS 14 ‘Segment Reporting’. However, this standard issued in
November 2006 and adopted by the EU early in 2008 has not been taken into consideration. The
application is not expected to result in any significant impact on the financial position or performance
of the Group.
● IAS 23 (Amendment) ‘Borrowing Costs’ was issued in March 2007 as revised version and has been adopt-
ed by the EU December 10, 2008. The standard requires the capitalisation of borrowing costs when such
costs relate to a qualifying asset. A qualifying asset is an asset that necessarily takes a substantial period
of time to get ready for its intended use or sale. In accordance with the transitional requirements in the
Standard, the Group will adopt this as a prospective change. The application is not expected to result in
any significant impact on the financial position or performance of the Group.
● IAS 1- (Revised) ‘Presentation of Financial Statements’ was issued in September 2007 as revised version
and has been adopted by the EU December 17, 2008. The revised standard will prohibit the presentation
of items of income and expenses (that is, ‘non-owner changes in equity’) in the statement of changes in
equity, requiring ‘non-owner changes in equity’ to be presented separately from owner changes in
equity. All non-owner changes in equity will be required to be shown in a performance statement, but
entities can choose whether to present one performance statement (the statement of comprehensive
income) or two statements (the income statement and statement of comprehensive income). Where
entities restate or reclassify comparative information, they will be required to present a restated balance
sheet as at the beginning comparative period in addition to the current requirement to present balance
sheets at the end of the current period and comparative period. The Group will apply IAS 1 (Revised) from
January 1, 2009. It is likely that both the income statement and statement of comprehensive income will
be presented as performance statements.
Preface
TRUST
alstria Stock
Group Management Discussion and Analysis
Consolidated Financial Statements
Auditors´ Report
Management
Other Information
Consolidated Income Statement
Consolidated Balance Sheet
Consolidated Statements of Change in Equity
Consolidated Cash Flow Statement
Notes
● IFRS 2 (Amendment) ‘Share-based Payment’ was issued in January 2008 as revised version and has been
adopted by the EU December 16, 2008. The revision clarifies that the definition of vesting conditions only
concerns the requirement to provide services and performance conditions. On the other hand, it also
extends the regulations on the accounting treatment of premature cancellation of share-based payment
plans to include cancellation by employees. The transitional provisions provide for retrospective applica-
tion of the new regulation. As the opinion expressed by the IASB corresponds to the accounting method
used by the Group up to now, application of this new regulation does not have any effect on the financial
position or performance of the Group.
● IAS 32 (Amendment) ‘Financial Instruments: Presentation’ and IAS 1 ‘Presentation of Financial State-
ments’ were issued in February 2008 as revised versions but were not yet been adopted by the EU. The
revision mainly concerns the classification of puttable shareholder contributions as equity or financial
liabilities. The previous regulation forced entities in some cases to report the entity’s capital as financial
liabilities as a consequence of statutory termination rights on the part of the shareholder. In future, such
shareholder contributions are subject to certain conditions to be classified as equity. The transitional
provisions provide for retrospective application of the new regulation. The new regulation is not
expected to significantly impact the disclosure or measurement of the shareholder contributions in
the consolidated financial statements.
● IFRS 1 (Amendment) ‘First time adoption of IFRS’, and IAS 27 ‘Consolidated and separate financial state-
ments’, effective from January 1, 2009, has been adopted by the EU. The amended standard allows first-
time adopters to use a deemed cost of either fair value or the carrying amount under previous account-
ing practice to measure the initial cost of investments in subsidiaries, jointly controlled entities and
associates in the separate financial statements. The amendment also removes the definition of the cost
method from IAS 27 and replaces it with a requirement to present dividends as income in the separate
financial statements of the investor. All Group companies are already adopting IFRS; therefore this new
regulation does not have any effect on the financial position or performance of the Group. The Group will
apply IFRS 1 (Amendment) from January 1, 2009, as far as new Group companies would be consolidated
for which the new regulation would be applicable.
● IFRS 1 (Revised) ‘Restructured Version of IFRS 1’ was issued in November 2008). The new version of IFRS 1
retains the substance of the previous version, but within a changed structure. It has not yet been adopt-
ed by the EU. It replaces the previous version and is effective for entities applying IFRSs for the first time
for annual periods beginning on or after January 1, 2009. In December 2008 the IASB agreed to amend
IFRS 1 (2008) via Technical Correction such that the effective date for the above restructured version of
IFRS 1 is July 1, 2009. This amendment has been made to avoid unintended consequences related to the
adoption of the IFRS 3 (Revised) (2008) and IAS 27 (2008), which are effective July 1, 2009.
57
CONSOLIDATED FINANCIA L STATEM ENT S
58
● IAS 23 (Amendment), ‘Borrowing costs’ (effective from January 1, 2009). The amendment is part of the
IASB’s annual improvements project published in May 2008. The definition of borrowing costs has been
amended so that interest expense is calculated using the effective interest method defined in IAS 39
‘Financial instruments: Recognition and measurement’. This eliminates the inconsistency of terms
between IAS 39 and IAS 23. The Group will apply the IAS 23 (Amendment) prospectively to the capitalisa-
tion of borrowing costs on qualifying assets from January 1, 2009.
● IAS 28 (Amendment), ‘Investments in associates’ (and consequential amendments to IAS 32, ‘Financial
Instruments: Presentation’, and IFRS 7, ‘Financial instruments: Disclosures’) (effective from January 1,
2009). The amendment is part of the IASB’s annual improvements project published in May 2008. An
investment in associate is treated as a single asset for the purposes of impairment testing. Any impair-
ment loss is not allocated to specific assets included within the investment, for example, goodwill.
Reversals of impairment are recorded as an adjustment to the investment balance to the extent that
the recoverable amount of the associate increases. The Group will apply the IAS 28 (Amendment)
to impairment tests related to investments in subsidiaries and any related impairment losses from
January 1, 2009.
● IAS 36 (Amendment), ‘Impairment of assets’ (effective from January 1, 2009). The amendment is part
of the IASB’s annual improvements project published in May 2008. Where fair value less costs to
sell is calculated on the basis of discounted cash flows, disclosures equivalent to those for value-in-use
calculation should be made. The Group will apply the IAS 36 (Amendment) and provide the required
disclosure where applicable for impairment tests from January 1, 2009.
● IAS 38 (Amendment), ‘Intangible assets’ (effective from January 1, 2009). The amendment is part of the
IASB’s annual improvements project published in May 2008. A prepayment may only be recognised in
the event that payment has been made in advance of obtaining right of access to goods or receipt of
services. The Group will apply the IAS 38 (Amendment) from January 1, 2009.
● IAS 19 (Amendment), ‘Employee benefits’ (effective from January 1, 2009). The amendment is part of the
IASB’s annual improvements project published in May 2008.
● The amendment clarifies that a plan amendment that results in a change in the extent to which
benefit promises are affected by future salary increases is a curtailment, while an amendment that
changes benefits attributable to past service gives rise to a negative past service cost if it results in a
reduction in the present value of the defined benefit obligation.
Preface
TRUST
alstria Stock
Group Management Discussion and Analysis
Consolidated Financial Statements
Auditors´ Report
Management
Other Information
Consolidated Income Statement
Consolidated Balance Sheet
Consolidated Statements of Change in Equity
Consolidated Cash Flow Statement
Notes
● The definition of return on plan assets has been amended to state that plan administration costs are
deducted in the calculation of return on plan assets only to the extent that such costs have been
excluded from measurement of the defined benefit obligation.
● The distinction between short term and long term employee benefits will be based on whether
benefits are due to be settled within or after twelve months of employee service being rendered.
● IAS 37, ‘Provisions, contingent liabilities and contingent assets, requires contingent liabilities to
be disclosed, not recognised. IAS 19 has been amended to be consistent.
The Group will apply the IAS 19 (Amendment) from January 1, 2009. Since the Group does not run an em-
ployment benefit plan according to IAS 19 it is not expected to have any impact on the financial position
or performance of the Group.
● IAS 39 (Amendment), ‘Financial instruments: Recognition and measurement’ (effective from January 1,
2009). The amendment is part of the IASB’s annual improvements project published in May 2008.
59
● This amendment clarifies that it is possible for there to be movements into and out of the fair value
through profit or loss category where a derivative commences or ceases to qualify as a hedging instru-
ment in cash flow or net investment hedge.
● The definition of financial asset or financial liability at fair value through profit or loss as it relates to
items that are held for trading is also amended. This clarifies that a financial asset or liability that
is part of a portfolio of financial instruments managed together with evidence of an actual recent
pattern of short-term profittaking is included in such a portfolio on initial recognition.
● The current guidance on designating and documenting hedges states that a hedging instrument needs
to involve a party external to the reporting entity and cites a segment as an example of a reporting
entity. This means that in order for hedge accounting to be applied at segment level, the requirements
for hedge accounting are currently required to be met by the applicable segment. The amendment re-
moves the example of a segment so that the guidance is consistent with IFRS 8, ‘Operating segments’,
which requires disclosure for segments to be based on information reported to the chief operating
reporting purposes, each subsidiary designates
decision-maker. Currently,
contracts with Group treasury as fair value or cash flow hedges so that the hedges are reported in the
segment to which the hedged items relate. This is consistent with the information viewed by the chief
operating decision-maker.
for segment
When remeasuring the carrying amount of a debt instrument on cessation of fair value hedge account-
ing, the amendment clarifies that a revised effective interest rate (calculated at the date fair value hedge
accounting ceases) are used.
The Group will apply the IAS 39 (Amendment) from January 1, 2009. It is not expected to have an impact
on the Group’s income statement.
CONSOLIDATED FINANCIA L STATEM ENT S
60
● IAS 1 (Amendment), ‘Presentation of financial statements’ (effective from January 1, 2009). The amend-
ment is part of the IASB’s annual improvements project published in May 2008. The amendment clarifies
that some rather than all financial assets and liabilities classified as held for trading in accordance with
IAS 39, ‘Financial instruments: Recognition and measurement’ are examples of current assets and liabil-
ities respectively. The Group will apply the IAS 39 (Amendment) from January 1, 2009. It is not expected
to have an impact on the Group’s financial statements.
● IAS 16 (Amendment), ‘Property, plant and equipment’ (and consequential amendment to IAS 7, ‘State-
ment of cash flows’) (effective from January 1, 2009). The amendment is part of the IASB’s annual
improvements project published in May 2008. Entities whose ordinary activities comprise renting and
subsequently selling assets present proceeds from the sale of those assets as revenue and should trans-
fer the carrying amount of the asset to inventories when the asset becomes held for sale. A consequen-
tial amendment to IAS 7 states that cash flows arising from purchase, rental and sale of those assets are
classified as cash flows from operating activities. The amendment will not have a significant impact on
the Group’s operations because none of the Group’s companies ordinary activities comprise renting and
subsequently selling assets disclosed according to IAS 16.
● IAS 27 (Amendment), ‘Consolidated and separate financial statements’ (effective from January 1, 2009).
The amendment is part of the IASB’s annual improvements project published in May 2008. Where an
investment in a subsidiary that is accounted for under IAS 39, ‘Financial instruments: recognition and
measurement’, is classified as held for sale under IFRS 5, ‘Non-current assets held-for-sale and discontin-
ued operations’, IAS 39 would continue to be applied. The amendment will not have an impact on the
Group’s operations.
● IAS 31 (Amendment), ‘Interests in joint ventures’ (and consequential amendments to IAS 32 and IFRS 7)
(effective from January 1, 2009). The amendment is part of the IASB’s annual improvements project pub-
lished in May 2008. Where an investment in joint venture is accounted for in accordance with IAS 39, only
certain rather than all disclosure requirements in IAS 31 need to be made in addition to disclosures
required by IAS 32, ‘Financial instruments: Presentation’, and IFRS 7 ‘Financial instruments: Disclosures’.
It is expected that the Group will apply the IAS 31 (Amendment) from January 1, 2009.
● IAS 38 (Amendment), ‘Intangible assets’ (effective from January 1, 2009). The amendment is part of the
IASB’s annual improvements project published in May 2008. The amendment deletes the wording that
states that there is ‘rarely, if ever’ support for use of a method that results in a lower rate of amortisation
than the straight-line method. The amendment will not have an impact on the Group’s operations, as all
intangible assets are amortised using the straight-line method.
● IAS 40 (Amendment), ‘Investment property’ (and consequential amendments to IAS 16) (effective from
January 1, 2009). The amendment is part of the IASB’s annual improvements project published in May
2008. Property that is under construction or development for future use as investment property is with-
in the scope of IAS 40. Where the fair value model is applied, such property is, therefore, measured at fair
value. However, where fair value of investment property under construction is not reliably measurable,
the property is measured at cost until the earlier of the date construction is completed and the date at
which fair value becomes reliably measurable. The Group will apply the IAS 40 (Amendment) from Janu-
ary 1, 2009. The amendment could have an impact on the Group’s financial statements.
Preface
TRUST
alstria Stock
Group Management Discussion and Analysis
Consolidated Financial Statements
Auditors´ Report
Management
Other Information
Consolidated Income Statement
Consolidated Balance Sheet
Consolidated Statements of Change in Equity
Consolidated Cash Flow Statement
Notes
61
● There are a number of minor amendments to IFRS 7, ‘Financial instruments: Disclosures’, IAS 8, ‘Account-
ing policies, changes in accounting estimates and errors’, IAS 10, ‘Events after the reporting period’, IAS
18, ‘Revenue’ and IAS 34, ‘Interim financial reporting’, which are part of the IASB’s annual improvements
project published in May 2008 (not addressed above). These amendments are unlikely to have an impact
on the Group’s accounts and have therefore not been analysed in detail.
alstria office REIT-AG did also not prematurely adopt the following standards that were revised and pub-
lished by the IASB in 2008, but only became mandatory for fiscal years beginning on or after July 1, 2009:
● IFRS 3 (Amendment), ‘Business Combinations’ was issued in January 2008 as revised version but it has
not yet been adopted by the EU. The standard was subject to comprehensive revision as part of the IASB
and FASB convergence project. The significant revisions relate in particular to the introduction of an
option for the measurement of minority interests between the purchased goodwill method and the full
goodwill method, in which the entire goodwill of the acquired entity must be recognised, including that
part attributable to minority interests. Other important aspects include the revaluation to profit or loss
of existing capital interests when control is initially obtained (business combination achieved in stages),
mandatory accounting for contingent consideration at the date of acquisition and the recognition of
transaction costs in profit or loss. The transitional provisions provide for prospective application of the
new regulation. As the Group is planning to continue using the purchased goodwill method for future
business combinations, the new regulation will not have any effect. The revaluation for business combi-
nation achieved in stages and the mandatory recognition of contingent considerations at the time
of acquisition will mean that the goodwill recognised will tend to be higher, reduced by acquisition-
related costs.
● IFRS 5 (Amendment), ‘Non-current assets held-for-sale and discontinued operations’ (and consequential
amendment to IFRS 1, ‘First-time adoption’) (effective from July 1, 2009). The amendment is part of the
IASB’s annual improvements project published in May 2008. The amendment clarifies that all of a
subsidiary’s assets and liabilities are classified as held for sale if a partial disposal sale plan results in loss
of control. Relevant disclosure should be made for this subsidiary if the definition of a discontinued
operation is met. A consequential amendment to IFRS 1 states that these amendments are applied
prospectively from the date of transition to IFRSs. The Group will apply the IFRS 5 (Amendment) prospec-
tively to all partial disposals of subsidiaries from January 1, 2010.
● IAS 27 ‘Group and Separate Financial Statements’ was issued in January 2008 as revised version but it has
not yet been adopted by the EU. The revisions are a product of the joint project by IASB and FASB to revise
accounting regulations relating to business combinations. The revisions primarily relate to accounting
for shares not involving control (minority interests) that will in future participate in full in the Group’s
losses and for transactions that lead to loss of control of a subsidiary and the effects of which are to be
recognised in profit or loss. In contrast, the effects of disposal of shares that do not lead to loss of con-
trol should be recorded directly in equity. The transitional provisions that generally require retrospective
application of revisions made, provide for prospective application in the cases listed above. Application
of this new regulation is not expected to result in any significant impact on the financial position or
performance of the Group.
CONSOLIDATED FINANCIA L STATEM ENT S
● IAS 39 (Amendment) ‘Financial instruments: Recognition and measurement – Amendments for eligible
hedged items’ was issued in July 2008 as revised version but it has not yet been adopted by the EU. The
amendment clarifies how the existing principles underlying hedge accounting should be applied in two
particular situations: (a) a one-sided risk in a hedged item, and (b) inflation in a financial hedged item.
The IASB has therefore focused on developing application guidance to illustrate how the principles
underlying hedge accounting should be applied in those situations. Application of this new regulation
is not expected to result in any significant impact on the financial position or performance of the Group.
In addition, alstria office REIT-AG did not prematurely adopt the following IFRIC interpretations that were
revised and published by IFRIC in 2007 and 2008, respectively, but only became mandatory for fiscal years
beginning on or after January 1, 2009:
62
● IFRIC 12 Service Concession Arrangements is effective from January 1, 2008 but has not yet been adopted
by the EU. This Interpretation applies to service concession operators and explains how to account for
the obligations undertaken and rights received in service concession arrangements. No member of the
Group is an operator and hence this Interpretation will have no impact on the Group.
● IFRIC 13, ‘Costumer Loyality Programmes’ (effective from July 1, 2008) was issued in June 2007, and has
not been adopted by the EU. This Interpretation requires customer loyalty award credits to be accounted
for as a separate component of the sales transaction in which they are granted and therefore part of the
fair value of the consideration received is allocated to the award credits and deferred over the period that
the award credits are fulfilled. The Group expects that this interpretation will have no impact on the
Group’s financial statements as no such schemes currently exist.
● IFRIC 14, IAS 19 – The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interac-
tion, will be effective from January 2008 and has been adopted by the EU in January 2009. This Interpre-
tation provides guidance on how to assess the limit on the amount of surplus in a defined benefit
scheme that can be recognised as an asset under IAS 19 Employee Benefits. The Group expects that this
Interpretation will have no impact on the financial position or performance of the Group.
● IFRIC 15, ‘Agreements for construction of real estates’ (effective from January 1, 2009). The interpretation
clarifies whether IAS 18, ‘Revenue’, or IAS 11, ‘Construction contracts’, should be applied to particular
transactions. It is likely to result in IAS 18 being applied to a wider range of transactions. IFRIC 15 is not
relevant to the Group’s operations as all revenue transactions are accounted for under IAS 18 and
not IAS 11.
Preface
TRUST
alstria Stock
Group Management Discussion and Analysis
Consolidated Financial Statements
Auditors´ Report
Management
Other Information
Consolidated Income Statement
Consolidated Balance Sheet
Consolidated Statements of Change in Equity
Consolidated Cash Flow Statement
Notes
● IFRIC 16, ‘Hedges of a net investment in a foreign operation’ (effective from October 1, 2008) has not yet
been adopted by the EU. IFRIC 16 clarifies the accounting treatment in respect of net investment hedg-
ing. This includes the fact that net investment hedging relates to differences in functional currency not
presentation currency, and hedging instruments may be held anywhere in the Group. The requirements
of IAS 21, ‘The effects of changes in foreign exchange rates’, do apply to the hedged item. The Group will
apply IFRIC 16 from January 1, 2009. It is unlikely that this IFRIC has an impact on the Group’s financial
statements.
● IFRIC 17 ‘Distributions of Non-cash Assets to Owners’. The Interpretation clarifies that:
a) Dividend payable should be recognised when the dividend is appropriately authorised and is no long-
er at the discretion of the entity.
b) An entity should measure the dividend payable at the fair value of the net assets to be distributed.
c) An entity should recognise the difference between the dividend paid and the carrying amount of the
net assets distributed in profit or loss.
63
The Interpretation also requires an entity to provide additional disclosures if the net assets being held
for distribution to owners meet the definition of a discontinued operation. IFRIC 17 applies to pro rata
distributions of non-cash assets except for common control transactions. The Interpretation is effective
for annual periods beginning on or after July 1, 2009 but has not yet been adopted by the EU. Earlier
application is permitted. It is unlikely that this IFRIC has an impact on the Group’s financial statements.
alstria office REIT-AG will apply the abovementioned standards and interpretations from the date on which
its application becomes binding.
Furthermore, additional standards and interpretations have been adopted, the application of which has no
material effects for alstria office REIT-AG.
3. Changes in Accounting Policy and Disclosures
The accounting policies adopted are consistent with those of the previous financial year except as
follows: The Group has adopted the following new and amended IFRS and IFRIC interpretations during the
year. Adoption of these revised standards and interpretations did not have any effect on the financial per-
formance or position of the Group. They did however give rise to additional disclosures, including in some
cases, revisions to accounting policies.
● IFRIC 11 ‘IFRS 2 – Group and Treasury Share Transactions’
● IAS 39 (Amendment) ‘Reclassification of financial assets’
The principal effects of these changes are as follows:
CONSOLIDATED FINANCIA L STATEM ENT S
64
IFRIC 11 ‘IFRS 2 – Group and Treasury Share Transactions’
This interpretation requires arrangements whereby an employee is granted rights to an entity’s equity
instruments to be accounted for as an equity-settled scheme, even if the entity buys the instruments from
another party, or the shareholders provide the equity instruments needed. alstria office REIT-AG did
prematurely adopt IFRIC Interpretation 11 IFRS 2 – ‘Group and Treasury Share Transactions’ as of January
2007, in so far as it applies to consolidated financial statements.
IAS 39 (Amendment) Reclassification of financial assets
This amendment to IAS 39, issued in October 2008, permits an entity to reclassify non-derivative financial
assets (other than those designated at fair value through profit or loss by the entity upon initial recogni-
tion) out of the fair value through profit or loss category in particular circumstances. The amendment also
permits an entity to transfer from the available-for-sale category to the loans and receivables category a
financial asset that would have met the definition of loans and receivables (if the financial asset had not
been designated as available for sale), if the entity has the intention and ability to hold that financial asset
for the foreseeable future. Reclassifications, that have been carried out on or after November 1, 2008 are
effective at the date of reclassification. Reclassifications before November 1, 2008 are allowed to be effec-
tive at an earlier point of time, but not earlier than July 1, 2008. The Amendement has no impact on the
financial statements of the Group.
Change in Presentation of Consolidated Balance Sheet
The Group uses derivative financial instruments such as interest rate swaps and caps to hedge its risks
associated with interest rate fluctuations. Any gains or losses arising from changes in fair value on deriva-
tives during the period that do not qualify for hedge accounting are taken directly to profit or loss. Starting
January 1, 2008 derivative financial instruments that qualify have been designated to a cash flow hedge
relation. The derivatives that qualify for cash flow hedge accounting are not categorised as current assets
any more, because they are closely linked to the maturity of the underlying hedged items. Therefore they
are presented as non current.
4. Basis of Consolidation
The consolidated financial statements comprise the financial statements of alstria office REIT-AG and its
subsidiaries as of December 31, 2008. The financial statements of the subsidiaries are prepared for the
same reporting year as for the parent Company, using consistent accounting policies.
Subsidiaries are entities where Group controls their business policies. Among other criteria it is possible to
exercise control with more than 50% of voting rights.
Subsidiaries are fully consolidated from the date of acquisition, i.e. the date on which the Group obtains
control. Inclusion in the consolidated financial statements ends as soon as the parent ceases to have
control.
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alstria Stock
Group Management Discussion and Analysis
Consolidated Financial Statements
Auditors´ Report
Management
Other Information
Consolidated Income Statement
Consolidated Balance Sheet
Consolidated Statements of Change in Equity
Consolidated Cash Flow Statement
Notes
All intragroup balances, transactions, income and expenses and profits and losses resulting from intra-
group transactions that are recognised in the carrying amounts of assets are eliminated in full.
In accordance with IFRS 3, all business combinations are stated using the purchase method. The recognised
assets and the acquired liabilities are measured in full at their fair value regardless of the ownership inter-
est. The carrying values on the date on which control over the subsidiary was obtained are relevant. Any
remaining debit difference is recognised as goodwill. After reassessment, any remaining credit difference
is recognised immediately as profit (‘lucky buy’). In the periods following the business combination, the
disclosed hidden reserves and charges are carried forward, amortised or released depending on the treat-
ment of the corresponding assets.
The Company generally applies IFRS 3 to account for transactions under common control. However, for
transactions under common control, any credit and debit differences resulting from capital consolidation
are recognised as an increase or decrease in capital surplus.
5. Consolidated Group
The following subsidiaries are included in the consolidated financial statements:
65
Group entity
verwaltung Alstria Sechste Hamburgische Grundbesitz GmbH, Hamburg
Alstria Sechste Hamburgische Grundbesitz GmbH & Co. KG, Hamburg
Alstria iv. Hamburgische Grundbesitz GmbH & Co. KG, Hamburg
Alstria vii. Hamburgische Grundbesitz GmbH & Co. KG, Hamburg
alstria office Gänsemarkt drehbahn GmbH & Co. KG
alstria Gänsemarkt drehbahn Gp GmbH
Share in
voting rights (in %)
100
51
100
100
100
100
The main business objective of the new founded alstria office Gänsemarkt Drehbahn GmbH & Co KG is the
leasing of office property throughout Germany.
6. Key Judgments and Estimates
The preparation of the consolidated financial statements in accordance with IFRS requires assumptions
and estimates to be made for various items which have an effect on the amount and disclosure of the
assets and liabilities as well as income and expenses. Actual amounts may differ from these estimates.
Judgements
In the process of applying the Group’s accounting policies, management has made the following judge-
ments, apart from those involving estimations, which has the most significant effect on the amounts
recognised in the financial statements:
CONSOLIDATED FINANCIA L STATEM ENT S
Operating Lease Commitments – Group as Lessor
The Group has entered into commercial property leases on its investment property portfolio. The Group
has determined, based on an evaluation of the terms and conditions of the arrangements, that it retains
all the significant risks and rewards of ownership of these properties and so accounts for the contracts as
operating leases.
Estimates and Assumptions
The key assumptions concerning the future and other key sources of estimation uncertainty at the balance
sheet date, that have a significant risk of causing a material adjustment to the carrying amounts of assets
and liabilities within the next financial year, are discussed below. Estimates are required in particular in
order to:
● determine the fair values of investment property
66
● determine the fair values of financial instruments
● determine the fair values of stock options granted to management
● determine the fair values of convertible profit participation certificates.
In particular, in determining the fair values of the investment property, alstria office REIT-AG must apply
and take account of numerous factors. A fair value measurement was performed by an independent third
party (Colliers CRE, London; see note 8). If the future development of these properties differs from the
estimate, large-scale impairment losses may incur. This can have a negative impact on future results of
operations.
A fair value measurement of the derivative financial instruments was performed by an independent third
party and the market data compiled thereof were included in the standard measurement models. Thus, the
usual estimation uncertainties exist regarding possible deviations from the market data used. Depending
on the parameterisation of the models, alstria office REIT-AG put the maximum range for these deviations
at between EUR -10,000 and EUR 10,000. We consider the models used to be adequate and believe that they
do not engender any uncertainty as to their applicability.
The fair value of stock options granted to the management board has been determined as of the granting
date and has been valued based on the expected volatility, life of option and labor turn rate using current
discount rates applicable for items with similar terms and risk characteristics. This valuation requires the
Company to make estimates about these parameters, and hence they are subject to uncertainty. The fair
value of the stock options granted as of April 3, 2007 and September 5, 2007, respectively, is allocated to
the vesting period according to the determinations in the underlying stock option program. The resulting
personnel expenses caused an addition to capital surplus of EUR 654 k (December 31, 2007: EUR 806 k) in
the consolidated financial statements as of December 31, 2008.
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alstria Stock
Group Management Discussion and Analysis
Consolidated Financial Statements
Auditors´ Report
Management
Other Information
Consolidated Income Statement
Consolidated Balance Sheet
Consolidated Statements of Change in Equity
Consolidated Cash Flow Statement
Notes
The fair value of convertible profit participation certificates granted to the employees of the Group were
estimated at the respective granting dates using a binary barrier option model based on the black-scholes-
assumptions since the conversion will be affected automatically once the barrier has been reached.
The model takes into account the terms and conditions upon which the instruments were granted. This
valuation requires the Company to make estimates about these parameters, and hence they are subject to
uncertainty.
The assets, liabilities and equity instruments stated above, which are particularly exposed to estimation
uncertainty, had the following impact on the consolidated balance sheet as of the balance sheet date:
in EUR k
Dec. 31, 2008
Dec. 31, 2007
investment property
positive fair values of derivatives
negative fair values of derivatives
valuation of stock options and convertible profit participation rights
1,805,265
176
28,626
768
1,693,718
27,202
0
813
67
7. Seasonal or Economic Effects on Business
The activities of alstria office REIT-AG (primarily the generation of revenues from investment properties) are
not generally affected by seasonal factors. However, the sale of one or more large properties may have a
significant impact on revenues and operating expenses.
From experience, the real estate market tends to fluctuate as a result of factors such as the net income of
consumers or GDP, changes in interest rates, consumer confidence, and demographic and other factors
inherent to the market. The change of the interest rate might lead to a lower valuation of the investment
property and derivatives.
8. Summary of Significant Accounting Policies
The following accounting and valuation methods have been used to prepare these consolidated financial
statements of alstria office REIT-AG.
Investment Property
Investment property comprises all property that is held in order to generate rental income or long-term
value increases in assets and is used neither in production nor for administrative purposes. It is recognised
at acquisition costs at the time of addition. The costs include the transaction costs which have to be
capitalised (particularly real estate transfer tax). In accordance with IAS 40.17, costs incurred subsequently
for dismantling, replacing in parts or maintenance of property are also included; no costs of this kind,
however, had been incurred as of the balance sheet date.
CONSOLIDATED FINANCIA L STATEM ENT S
68
For subsequent measurement the Company uses the fair value model according to IAS 40.33 et seq. which
reflects market conditions at the balance sheet date.
All market values were determined by Colliers CRE, London, a renowned appraiser and brokerage firm, as of
December 31, 2008.
The basis for deriving the fair values as defined by IAS 40.33 should be, where possible, prices in an active
market for similar property (IAS 40.45). An analysis showed that there was not a sufficient number of
official comparable transactions to derive any market values. In accordance with IAS 40.46, therefore, the
fair value was determined on the basis of an income approach.
The method used is a hardcore and top slice method, whereby rental income is horizontally segmented,
with the hardcore portion representing the prevailing contractual rent. The top slice represents the differ-
ence between market rent and contractual rent. This method fulfills the requirements of the Red Book,
a set of international valuation standards set forth by the Royal Institution of Chartered Surveyors. The
method used by Colliers is also appropriate and suitable for determining market values in accordance with
the provisions of the International Valuation Standards (IVS, or the White Book).
In order to derive the fair value, the properties were divided into two groups and valued accordingly.
Group 1 contained properties with anchor lease terms of less than five years and Group 2 properties with
anchor lease terms of more than five years.
Group 1 for properties with leases set to expire in five years or less:
Hardcore and top slice method, taking account of
● contractual rent for the remaining term of the lease
● a vacancy period of at least 18 months following expiry of the lease
● necessary maintenance costs to re-let the properties at a comparable rent level
● re-lets at market rents
● capitalisation rates reflecting the individual risk of the property as well as market activity
(comparable transactions)
● non-allocable operating costs in the amount of 5% of rental income p.a.
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Group Management Discussion and Analysis
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Other Information
Consolidated Income Statement
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Consolidated Statements of Change in Equity
Consolidated Cash Flow Statement
Notes
69
Group 2 for properties with anchor leases that are leased on a long-term basis to tenants with high credit
ratings:
Hardcore and top slice method, taking account of
● contractual rent for the remaining term of the lease
● re-lets at market rents (accounting for the difference between market rent and contractual rent)
● capitalisation rates reflecting the individual risk of the property as well as market activity
(comparable transactions)
● non-allocable operating costs in the amount of 5% of rental income p.a.
● net selling price.
Gains or losses arising from changes in the fair values of investment property are disclosed in the item ‘Net
gain from fair value adjustments on investment property’ in the income statement in the year in which
they arise.
Investment properties are derecognised when either they have been disposed of or when the investment
property is permanently withdrawn from use and no future economic benefit is expected from its disposal.
Any gains or losses on the retirement or disposal of an investment property are recognised in profit or loss
in the year of retirement or disposal.
Leases
The lessee is considered to be the beneficial owner of leased assets when the lessee bears all the risks and
rewards incidental to the assets (finance lease) in accordance with IAS 17. If the lessee is deemed beneficial
owner, the leased asset is recognised at fair value or the lower present value of the minimum lease
payments at the inception of the lease.
Operating Leases
Lease agreements that alstria office REIT-AG has entered into with commercial tenants are classified
as operating leases under IFRS. Accordingly, alstria office REIT-AG is lessor in numerous different types of
operating lease agreements for investment properties with a carrying amount of EUR 1,805,265 k
(December 31, 2007: EUR 1,693,718 k). These leases generate the majority of proceeds and income for alstria
office REIT-AG.
Impairment of Assets
Intangible assets with indefinite useful lives are not amortised; they are tested for impairment on an
annual basis.
Assets that are amortised are tested for impairment whenever triggering events or changes in circum-
stances indicate that the carrying amount may no longer be recoverable.
An impairment loss is charged in the amount of the excess of the carrying amount over recoverable
amount. If the reasons for an impairment loss cease to apply, the impairment loss is reversed as appro-
priate.
CONSOLIDATED FINANCIA L STATEM ENT S
70
Property, Plant and Equipment
Plant and equipment is stated at cost less accumulated depreciation and accumulated impairment losses.
Such cost includes the cost of replacing part of the plant and equipment when that cost is incurred, if the
recognition criteria are met. Likewise, when a major inspection is performed, its cost is recognised in the
carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All
other repair and maintenance costs are recognised in profit or loss as incurred.
Depreciation of plant and equipment is calculated on a straight line basis over the useful life of the asset
(three to 15 years).
An item of property, plant and equipment is derecognised upon disposal or when no future economic
benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset
(calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is
included in profit or loss in the year the asset is derecognised.
The assets’ residual values, useful lives and methods of depreciation are reviewed, and adjusted if
appropriate, at each financial year end.
Borrowing costs are recognised as an expense when incurred.
Intangible Assets
Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible
assets acquired in a business combination is fair value as at the date of acquisition. Following initial
recognition, intangible assets are carried at cost less any accumulated amortisation and any accumulated
impairment losses. Internally generated intangible assets, excluding capitalised development costs, are
not capitalised and expenditure is reflected in profit or loss in the year in which the expenditure is
incurred.
The useful lives of intangible assets are assessed to be either finite or indefinite.
Intangible assets with finite lives are amortised over the useful economic life and assessed for impairment
whenever there is an indication that the intangible asset may be impaired. The amortisation period and
the amortisation method for an intangible asset with a finite useful life is reviewed at least at each finan-
cial year end. Changes in the expected useful life or the expected pattern of consumption of future eco-
nomic benefits embodied in the asset is accounted for by changing the amortisation period or method, as
appropriate, and are treated as changes in accounting estimates. The amortisation expense on intangible
assets with finite lives is recognised in profit or loss in the expense category consistent with the function
of the intangible asset.
Depreciation of licence is calculated on a straight line basis over the useful life of the asset (three to
eight years).
Currently, the Company does not have intangible assets with indefinite useful lives.
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Group Management Discussion and Analysis
Consolidated Financial Statements
Auditors´ Report
Management
Other Information
Consolidated Income Statement
Consolidated Balance Sheet
Consolidated Statements of Change in Equity
Consolidated Cash Flow Statement
Notes
Gains or losses arising from derecognition of an intangible asset are measured as the difference between
the net disposal proceeds and the carrying amount of the asset and are recognised in profit or loss when
the asset is derecognised.
Taxes
Current tax assets and liabilities for the current and prior periods are measured at the amount expected to
be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the
amount are those that are enacted or substantively enacted by the balance sheet date.
Deferred taxes are not carried forward because according to the REIT status the whole Group is tax
transparent to income taxes.
Financial Instruments
Pursuant to IAS 39, a financial instrument is any contract that gives rise to both a financial asset at one
entity and a financial liability or equity instrument at another entity. Financial assets comprise in particu-
lar cash and cash equivalents, trade receivables, as well as other loans and receivables originated by the
enterprise, held-to-maturity investments and original and derivative financial assets held for trading.
Financial liabilities frequently underlie a claim to their return in cash or another financial asset. These
include in particular liabilities to banks and other creditors, trade payables and derivative financial liabili-
ties. Financial assets and liabilities are generally not offset.
71
Financial Assets
Recognition and measurement of financial assets is subject to the provisions of IAS 39. Depending on the
classification prescribed by IAS 39
● held-to-maturity
● measured at fair value through profit or loss
● available-for-sale
● loans and receivables,
financial assets are either measured at amortised cost or at fair value and recognised as of the balance
sheet date.
The fair values of quoted investments are based on current bid prices. If the market for a financial asset is
not active (and for unlisted securities), the Group establishes fair value by using valuation techniques.
These include the use of recent arm’s length transactions, reference to other instruments that are substan-
tially the same, discounted cash flow analysis, and option pricing models, making maximum use of
market inputs and relying as little as possible on entity-specific inputs.
CONSOLIDATED FINANCIA L STATEM ENT S
When financial assets are recognised initially, they are measured at fair value plus transaction costs for all
financial assets not carried out at fair value through profit or loss. Management decides on the classifica-
tion of financial assets on first-time recognition and reviews the classification on every balance sheet date.
A financial asset is derecognised when the entity loses control of the contractual rights that comprise the
financial instrument.
All regular way purchases and sales of financial assets are recognised on the trade date, which is the date
that the Group commits to purchase the asset. Regular way purchases or sales are purchases or sales of
financial assets that require delivery of assets within the period generally established by regulation or
convention in the marketplace.
Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is
classified in this category if acquired principally for the purpose of selling in the short-term. Derivatives are
also categorised as held for trading unless they are designated as hedges. Assets in this category are
classified as current assets.
72
Derivative financial instruments that are not part of an effective hedge pursuant to IAS 39 must be classi-
fied as ‘held for trading’ and recognised in profit or loss at fair value. If their fair value is negative, the
instruments are disclosed under financial liabilities.
Available-for-sale financial assets are non-derivatives that are either designated in this category or not
classified in any of the other categories. They are included in non-current assets unless management in-
tends to dispose of the investment within twelve months of the balance sheet date or unless the maturity
at balance sheet date is less than twelve months. The available-for-sale financial assets are initially
recognised at fair value and subsequently carried at fair value. Changes in the fair value of financial assets
classified as available-for-sale are recognised in equity; when they are sold or impaired their accumulated
fair value adjustments are included in the income statement.
The Group holds no financial assets which are according to the classification prescribed by IAS 39 classified
as held to maturity.
Financial assets have not been designated as ‘at fair value through profit or loss’.
Receivables
Receivables are classified as loans and receivables as defined by IAS 39 and measured initially at fair value
and subsequently at amortised cost, if necessary after deduction of any impairment. Amortised costs are
computed using the effective interest method less any allowance for impairment. The calculation takes
into account any premium or discount on acquisition and includes transaction costs and fees that are an
integral part of the effective interest rate.
Within the scope of the measurement of trade receivables, a solvency check was performed on the tenants
(risk associated with the legal validity of receivables) and certainty gained that there were no reasons for a
rent reduction (delcredere risk). This takes place on an individual property and portfolio basis respectively.
Non-interest bearing receivables due in more than one year are discounted.
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Group Management Discussion and Analysis
Consolidated Financial Statements
Auditors´ Report
Management
Other Information
Consolidated Income Statement
Consolidated Balance Sheet
Consolidated Statements of Change in Equity
Consolidated Cash Flow Statement
Notes
Gains and losses are recognised in profit or loss when the receivables are derecognised or impaired as well
as through the amortisation process.
If there is objective evidence that an impairment loss has been incurred, the amount of the loss is meas-
ured as the difference between the asset’s carrying amount and the present value of estimated future cash
flows discounted at the financial asset’s original effective interest rate (i.e. the effective interest rate
computed at initial recognition). The carrying amount of the asset is reduced directly. The amount of the
loss shall be recognised in profit or loss.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related
objectively to an event occurring after the impairment was recognised, the previously recognised impair-
ment loss is reversed, to the extent that the carrying value of the receivable does not exceed its amortised
cost at the reversal date. Any subsequent reversal of an impairment loss is recognised in profit or loss.
Provision for impairment is made when there is objective evidence (such as the probability of insolvency or
significant financial difficulties of the debtor) that the Group will not be able to collect all of the amounts
due under the original terms of the invoice. The carrying amount of the receivable is reduced directly.
Impaired assets are derecognised when they are assessed as uncollectible.
73
Derivative Financial Instruments and Hedge Accounting
The Group uses derivative financial instruments such as interest rate swaps and caps to hedge its risks
associated with interest rate fluctuations. Such derivative financial instruments are initially recognised
at fair value on the date on which a derivative contract is entered into and are subsequently remeasured
at fair value. Derivatives are carried as assets when the fair value is positive and as liabilities when the fair
value is negative.
The instruments were measured as of December 31, 2008 by an independent third party. The fair value of
derivative financial instruments is determined by discounting the expected future cash flows over the
remaining life of the agreement based on current market rates or term structures of interest rates.
The Group assesses whether embedded derivatives are required to be separated from host contracts when
the Group first becomes party to the contract. Reassessment only occurs if there is a change in the terms
of the contract that significantly modifies the cash flows that would otherwise be required.
The method used for recording gains and losses depends on whether the derivative was assigned to an
underlying transaction as a hedge. To this end, financial management defines the hedge relationship
between the hedging instrument and the hedged item and the aim of the risk management measure and
underlying strategy when concluding the hedge transaction.
CONSOLIDATED FINANCIA L STATEM ENT S
74
Any gains or losses arising from changes in fair value on derivatives during the period that do not qualify
for hedge accounting are taken directly to profit or loss.
For the purpose of hedge accounting, hedges are classified as cash flow hedges when hedging exposure to
variability in cash flows is attributable to a particular risk associated with a recognised liability.
At the inception of a hedge relationship, the Group formally designates and documents the hedge relation-
ship to which the Group wishes to apply hedge accounting and the risk management objective and strat-
egy for undertaking the hedge. The documentation includes identification of the hedging instrument, the
hedged item, the nature of the risk being hedged and how the entity will assess the hedging instrument’s
effectiveness in offsetting the exposure to changes in the hedged item’s cash flows attributable to the
hedged risk. Such hedges are expected to be highly effective in achieving offsetting changes in fair value
or cash flows and are assessed on an ongoing basis to determine that they actually have been highly effec-
tive throughout the financial reporting periods for which they were designated.
Cash flow hedges which meet the strict criteria for hedge accounting are accounted for as follows:
The effective portion of the gain or loss on the hedging instrument is recognised directly in equity, while
any ineffective portion is recognised immediately in profit or loss.
Amounts taken to equity are transferred to profit or loss when the hedged transaction affects profit or loss,
such as when the hedged financial income or financial expense is realised.
The Group uses no financial derivatives that qualify for the hedges of the fair value of recognised assets or
liabilities or a firm commitment (fair value hedges), nor such financial derivatives that qualify for hedges
of a net investment in a foreign operation (net investment hedge).
Cash and Cash Equivalents
Cash and short-term deposits in the balance sheet comprise current bank balances.
For the purposes of the consolidated cash flow statement, cash and cash equivalents include the cash and
cash equivalents defined above, other short-term highly liquid investments with original maturities of
three months or less, and bank overdrafts.
Current bank balances are recognised in the nominal amount.
Treasury Shares
Own equity instruments which are reacquired (treasury shares) are deducted from equity. No gain or loss
is recognised in profit or loss on the purchase, sale, issue or cancellation of the Group’s own equity instru-
ments.
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Group Management Discussion and Analysis
Consolidated Financial Statements
Auditors´ Report
Management
Other Information
Consolidated Income Statement
Consolidated Balance Sheet
Consolidated Statements of Change in Equity
Consolidated Cash Flow Statement
Notes
Liabilities
Financial liabilities, in particular trade payables, are stated at the amount repayable and are, if non-current
and non-interest bearing, discounted.
The fair values are determined by discounting the future contractually agreed cash flows at the interest
rates from the term structure of interest rates to the balance sheet date.
Recognition and measurement of financial liabilities is subject to the provisions of IAS 39. Depending on
the classification prescribed by IAS 39
● at amortised cost
● measured at fair value through profit or loss;
financial liabilities are either measured at amortised cost or at fair value and recognised as of the balance
sheet date.
75
All loans and borrowings are initially recognised at fair value less directly attributable transaction costs,
and have not been designated as ‘at fair value through profit or loss’. After initial recognition, interest
bearing loans and borrowings are subsequently measured at amortised cost using the effective interest
method. Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as
through the amortisation process.
The component of the convertible profit participation rights (Wandelgenussrechte) that exhibits character-
istics of a liability is recognised as a liability in the balance sheet, net of transaction costs. On issuance of
the jouissance shares, the fair value of the liability component is determined using a market rate for
an equivalent non convertible bond; and this amount is classified as a financial liability measured at
amortised cost until it is extinguished on conversion or redemption.
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or
expires. When an existing financial liability is replaced by another from the same lender on substantially
different terms, or the terms of an existing liability are substantially modified, such an exchange or modi-
fication is treated as a derecognition of the original liability and the recognition of a new liability, and the
difference in the respective carrying amounts is recognised in profit or loss.
Provisions
Provisions are set up if the entity currently has a legal or constructive external obligation and it is probable
that meeting this obligation will result in an outflow of economic benefits that can be reliably estimated.
The provisions are measured, taking account of all risks at the best estimate of future cash outflows
required to meet the obligation, and – if non-current – discounted. They may not be offset against
reimbursements.
CONSOLIDATED FINANCIA L STATEM ENT S
76
Share-based Payment Transactions
The members of the management board as well as employees of the Group receive remuneration in the
form of share-based payment transactions, whereby employees render services as consideration for equity
instruments (‘equity-settled transactions’). The cost of equity-settled transactions is measured
by reference to the fair value at the date on which they are granted. The fair value is determined using
an appropriate pricing model, further details of which are given in Note 18, 19 and in the compensation
report, respectively.
The cost of equity-settled transactions is recognised, together with a corresponding increase in equity,
over the period in which the performance and/or service conditions are fulfilled, ending on the date on
which the relevant assignee becomes fully entitled to the award (‘the vesting date’). The cumulative
expense recognised for equity-settled transactions at each reporting date until the vesting date reflects
the extent to which the vesting period has expired and the Group’s best estimate of the number of equity
instruments that will ultimately vest. The profit or loss charge or credit for a period represents the move-
ment in cumulative expense recognised as at the beginning and end of that period.
No expense is recognised for awards that do not ultimately vest, except for awards where vesting is condi-
tional upon a market condition, which are treated as vesting irrespective of whether or not the market
condition is satisfied, provided that all other performance and/or service conditions are satisfied.
Where the terms of an equity-settled award are modified, the minimum expense recognised is the expense
as if the terms had not been modified. An additional expense is recognised for any modification, which
increases the total fair value of the share-based payment arrangement, or is otherwise beneficial to the
assignee as measured at the date of modification.
Where an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and
any expense not yet recognised for the award is recognised immediately. However, if a new award is sub-
stituted for the cancelled award, and designated as a replacement award on the date on which it is granted,
the cancelled and new awards are treated as if they were a modification of the original award, as described
in the previous paragraph.
The dilutive effect of outstanding options is reflected as additional share dilution in the computation of
earnings per share as far as at the balance sheet date the related contingencies are achieved (further
details are given in Note 15).
Minority Interests in Partnerships
Under IAS 32.16 and IAS 32.19, a financial instrument is an equity instrument if, and only if, an entity has no
conditional or unconditional obligation to deliver cash or another asset. In addition, IAS 32.18(b) states that
the right of a partner to return his investment to the partnership for compensation at any time must be
disclosed as a liability, even when, in legal terms, the partner is an investor. Specifically, equity must be
reclassified as liabilities when the shareholders have a right of termination and the exercise of that right
justifies a settlement claim against the Company. Therefore minority interests in fully consolidated part-
nerships are disclosed under liabilities. The minority interests’ share in net profit or loss is recorded in the
income statement as income or an expense (financial result) in accordance with IAS 32.35.
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Notes
Revenue Recognition
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group
and the revenue can be reliably measured. Revenue is measured at the fair value of the consideration
received, excluding discounts, rebates, and other sales taxes or duty. The following specific recognition
criteria must also be met before revenue is recognised:
Rental Income
Rental income arising from operating leases on investment properties is accounted for on a straight line
basis over the lease terms.
Interest Income
Revenue is recognised as interest accrues (using the effective interest rate, which is the rate that exactly
discounts estimated future cash receipts through the expected life of the financial instrument to the net
carrying amount of the financial asset).
Income Taxes
The effects on prior year’s profit and loss result from the transformation of the Company into a G-REIT.
For a detailed description of the transformation, please see note 1.
77
The tax assets and liabilities reported as of December 31, 2006 for prior periods which amount to EUR 12,513 k
and EUR 19,869 k, respectively, were recognised in profit and loss in 2007 in the course of the G-REIT trans-
action.
9. Segment Reporting
IAS 14 requires segment reporting for business segments and geographical segments with distinguishable
and significant risks and returns.
The type of services offered by alstria office REIT-AG exclusively comprises lessor activities. There is also no
differentiation by tenant group since alstria office REIT-AG’s portfolio consists almost entirely of commer-
cial properties, with only a very few exceptions. When selecting tenants, alstria office REIT-AG places high
demands on tenants’ credit ratings, such that no different risks and returns pursuant to IAS 14.9 can be
derived from this criterion. For the valuation of the properties, a differentiation is made between proper-
ties with anchor lease terms of less than five years and more than five years; however, this allocation is
made on a rolling basis and therefore depends on the date. Furthermore, this differentiation does not
result in any structurally different cash flows for the fiscal year. Different risks are only snapshots and
change immediately when new anchor leases are concluded. However, it is not possible to identify a
segment from these criteria.
From a geographical perspective, alstria office REIT-AG operates exclusively in the German market and is
present all over Germany. As there are therefore no reportable segments within the meaning of IAS 14.9, the
criteria for segment reporting pursuant to IAS 14 are not met.
CONSOLIDATED FINANCIA L STATEM ENT S
10. Notes to the Consolidated Balance Sheet – Assets
10.1
Investment Property
This item, which comprises all investment properties held by the Company, breaks down as follows:
in EUR k
Fair Values
As of Jan. 1
Changes in the consolidated Group
Additions
disposals
78
Transfers and reclassifications
net result from the adjustment of the fair value of investment
property
Subtotal
prepayments
As of Dec. 31
2008
2007
1,693,718
1,289,536
0
218,917
-16,500
-2,754
-88,116
1,805,265
0
95,000
293,448
-3,525
0
11,170
1,685,629
8,089
1,805,265
1,693,718
alstria office REIT-AG uses the fair value model pursuant to IAS 40.33 et seq. for subsequent measurement.
External appraisals were obtained for measurement. For a detailed description of the valuation of assets,
please see Note 8.
On August 22, 2007, alstria office REIT-AG concluded a purchase agreement on the acquisition of a prop-
erty with a purchase price value of EUR 52,350 k, with the property being transferred to alstria office REIT-AG
with effect of March 3, 2008 (property Darwinstrasse).
On December 12, 2007, alstria office REIT-AG concluded a purchase agreement on the acquisition of further
properties with a purchase price value of EUR 105,770 k, with the properties being transferred to alstria
office REIT-AG with effect of March 3, 2008 (EUR 104,520 k) and May 2, 2008 (EUR 1,250 k) (BLUE portfolio).
On December 17, 2007, alstria office REIT-AG concluded a purchase agreement on the acquisition of further
properties with a purchase price value of EUR 50,262 k. The transfer of possession, benefits and burdens
took place on April 1, 2008 (Helios portfolio).
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Notes
Under the purchase agreement dated April 4, 2008, alstria office REIT-AG concluded the acquisition of one
further property located in Hamburg with a purchase price value of EUR 4,310 k. The property has been
transferred to alstria office REIT-AG with effect of June 1, 2008.
Under the sales agreement dated June 27, 2008, alstria office REIT-AG concluded the sale of a plot of land
at Vahrenwalder Strasse 133, Hanover, with a total sales price value of EUR 1,250 k. The transfer of posses-
sion, benefits and burdens is expected to take place in the first quarter of 2009. At the balance sheet date
the plot of land was not recognised because it was not subject to an own valuation.
Under the sales agreement dated July 31, 2008, alstria office REIT-AG concluded the disposal of the
property Osterbekstrasse 96, Hamburg, with a total sales price value of EUR 11,000 k. The transfer of
possession, benefits and burdens took place on October 1, 2008.
Under the sales agreement dated August 1, 2008, alstria office REIT-AG concluded the disposal of the
property Duesternstrasse 10, Hamburg, with a total sales price value of EUR 4,950 k. The transfer of posses-
sion, benefits and burdens took place on October 1, 2008.
79
Under the sales agreement dated September 8, 2008, alstria office REIT-AG concluded the disposal of the
property Nikolaistrasse 16, Leipzig, with a total sales price value of EUR 2,000 k. The transfer of possession,
benefits and burdens took place on December 1, 2008.
The sold properties Duesternstrasse 10, Hamburg, Osterbekstrasse 96, Hamburg, and Nikolaistrasse 16,
Leipzig, had a carrying value of EUR 16,500 k at the time of their disposal.
The property Baeckerbreitergang 73, Hamburg is intended for owner occupation use. For this purpose, the
property will be refurbished. Therefore the property was re-categorised from investment property accord-
ing to IAS 40 to development property according to IAS 16. In addition EUR 627 k (fixtures and fittings) have
been reclassified out of property plant and equipment.
Expenses/income disclosed in the income statement pursuant to IAS 40.75(f):
● EUR 102,055 k (2007: EUR 82,552 k) rental income from investment property;
● EUR 7,383 k (2007: EUR 4,277 k) operating expenses (including repairs and maintenance) directly allo-
cable to investment property from which rental income was generated during the period under review;
and
● EUR 1,327 k (2007: EUR 688 k) operating expenses (including repairs and maintenance) arising from
investment property that did not generate rental income during the period under review.
CONSOLIDATED FINANCIA L STATEM ENT S
80
10.2 Property, Plant and Equipment
in EUR k
Acquisition and Production Cost
As of Jan. 1
Additions
Transfer from investment property
Reclassifications
As of Dec. 31
Accumulated Amortisation,
Depreciation and Write-Downs
As of Jan. 1
Additions
As of Dec. 31
Net Book Values
in EUR k
Acquisition and Production Cost
As of Jan. 1
Additions
As of Dec. 31
Accumulated Amortisation,
Depreciation and Write-Downs
As of Jan. 1
Additions
disposals
As of Dec. 31
Fixed assets
Furniture and
fixtures
Own occu-
pied property
Plant
75
84
0
0
159
23
35
58
0
0
3,381
0
3,381
0
0
0
1,727
0
0
-627
1,100
285
374
659
441
Total
2008
1,802
84
3,381
-627
4,640
308
409
717
101
3,381
3,923
Fixed assets
Plant
Furniture and
fixtures
Total
2007
0
1,727
0
75
0
1,802
1,727
75
1,802
0
285
0
0
23
0
0
308
0
285
23
308
Net Book Values
1,442
52
1,494
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Notes
The useful life of the assets is estimated with three to 15 years.
Within the merger in 2007 the plants were transferred from Verwaltung Alstria Dreizehnte Hamburgische
Grundbesitz GmbH, Hamburg, to alstria office REIT-AG. The plants constist of miscellaneous items like fire
extinguishers or a control panel for a closed-circuit television system.
alstria office REIT-AG intends to use one of its office buildings in Hamburg for owner occupation use. For
this purpose, the property will be refurbished. Therefore the property was re-categorised from investment
property according to IAS 40 to own occupied property according to IAS 16.
10.3
Intangible Assets
in EUR k
Acquisition and Production Cost
As of Jan. 1
Additions
As of Dec. 31
Accumulated Amortisation, Depreciation and Write-Downs
As of Jan. 1
Additions
As of Dec. 31
Net Book Values
in EUR k
Acquisition and Production Cost
As of Jan. 1
Additions
As of Dec. 31
Accumulated Amortisation, Depreciation and Write-Downs
As of Jan. 1
Additions
As of Dec. 31
Net Book Values
81
Licences
2008
399
76
475
40
99
139
336
Licences
2008
0
399
399
0
40
40
359
CONSOLIDATED FINANCIA L STATEM ENT S
The useful life of the intangible assets is estimated with three to eight years.
The intangible assets mainly consist of software licenses which amount to EUR 324 k (2007: EUR 350).
10.4 Receivables and Other Assets
Due to the specific nature of the business, the Group considers receivables due up to one year to be
current. The following table presents an overview on the receivables of the Group.
82
in EUR k
Trade Receivables
Rent receivables
Tax Receivables
Receivables and Other Assets
Available for sale financial asset
other assets
prepayments
Total
Dec. 31, 2008
Dec. 31, 2007
4,099
2,646
1
1,949
24,878
3,086
303
0
4,728
311
28,267
5,039
All receivables are due within one year from the balance sheet date. Therefore the fair values of all receiva-
bles are considered to be equal to their carrying amount.
Trade receivables were written down by EUR 255 k (December 31, 2007: EUR 0 k) due to rent payments in
arrears. Other assets than trade receivables were not impaired.
As of December 31, 2008, trade receivables of EUR 830 k were past due but not impaired. These relate to a
number of independent customers for whom there is no recent history of default. The ageing analysis of
these trade receivables is as follows:
in EUR k
Trade Receivables
up to 3 months
3 to 6 months
over 6 months
Total
Dec. 31, 2008
383
447
0
830
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Notes
To secure the Company’s loans, all receivables from rental and property purchase agreements as well as
insurance receivables and derivative financial instruments were assigned to the lenders (note 11.2).
The EUR 24,878 k available for sale financial asset relate to a bond loan issued by the state owned bank
KfW.
EUR 2,291 k of the other assets are made up of accruals resulting from the recognition of total rental
revenues on a straight line basis over the term of the lease agreements (rent smoothing).
Prepayments relate to annual insurance premiums that are payable in advance.
10.5 Derivative Financial Instruments
The following derivative financial instruments existed as of the balance sheet date:
Fair value
83
Product
in EUR k
Cap
Cap
Cap
Cap
Interest Rate Caps -
Held for Trading
Swap
Swap
Swap
Swap
Swap
Swap
Interest Rate Swaps -
Cash Flow Hedges
Total
Notional
Strike p.a.
in %
Maturity
date
Dec. 31,
2008
Dec. 31,
2007
75,000
41,721
26,184
80,880
80,880
95,000
148,785
100,000
75,000
625,000
4.9000
20.12.2012
176
1,126
3.8000
31.03.2011
0
961
3.8000
31.03.2011
0
604
4.0000
29.11.2011
0
1,811
176
4,502
3.1930
29.11.2011
-557
3,761
4.6000
20.10.2015
-1,447
3.9087
20.01.2012
-4,282
4.1160
10.07.2013
-4,517
4.9000
20.12.2012
-5,497
0
0
0
0
3.6170
29.11.2011
-12,326
18,939
-28,626
-28,450
22,700
27,202
CONSOLIDATED FINANCIA L STATEM ENT S
The changes of the derivatives result from various effects. The following table shows the changes of
alstria’s financial instruments since December 31, 2007 by category:
Change in Financial Derivatives
in EUR k
As at Dec. 31, 2007
effective change of fair values cash flow hedges
ineffective change of fair values cash flow hedges
Fair value changes of financial instruments held for trading (cap)
Changes of accrued interests concerning financial derivatives
84
Acquisitions
disposals
As at Dec. 31, 2008
27,202
-49,579
-5,544
469
1,061
4,348
-6,407
-28,450
The notional amount of the financial derivatives effective at balance sheet date is EUR 1,104,665 k (Decem-
ber 31, 2007: EUR 1,004,665 k). One swap with a notional of EUR 95,000 k will not become effective before
July 10, 2013. The cap with a notional of EUR 75,000 k is not designated as a cash flow hedge.
EUR -49,579 k changes in fair values of effective swaps have been recognised in the hedging reserve.
The ineffective portion recognised in the profit or loss that arises from cash flow hedges amounts to a loss of
EUR 5,544 k (2007: EUR 0 k).
Profit totalling to EUR 469 k (2007: profit of EUR 8,086 k) due to market valuations of derivatives not
included in hedge accounting were recorded in the income statement in the period of the financial
statements to December 31, 2008.
Together this results in a loss of EUR 5,075 k shown under net loss from fair value adjustments on financial
derivatives.
On January 14, 2008 alstria office REIT-AG entered with HSH Nordbank AG into an interest swap with a
notional amount of EUR 100,000 k at a swap rate of 4.1160%, expiring on July 10, 2013. This transaction is
effective as per July 10, 2008.
In the second quarter 2008 alstria office REIT-AG used the market opportunities to restructure its hedging
portfolio while keeping the same protection level. With value date April 21, 2008 alstria office REIT-AG
entered with Natixis into an interest rate swap with a notional amount of EUR 148,785 k at a swap rate of
3.9087%, expiring on January 20, 2012. This swap replaced existing interest rate caps for the same
combined notional amount and interest rate with maturity in March and November 2011. This transaction
resulted in a gain of EUR 813 k.
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Notes
On June 11, 2008 alstria office REIT-AG entered with HSH Nordbank AG into an interest swap with a
notional amount of EUR 75,000 k at a swap rate of 4.9000%, expiring on December 20, 2012. This swap
partly replaces the existing interest rate cap amounting to EUR 150,000 k with the same maturity. This
transaction is effective as per July 21, 2008. This restructuring resulted in the realisation of EUR 1,515 k.
On September 16, 2008 alstria office REIT-AG entered with HSH Nordbank AG into an interest swap with a
notional amount of EUR 95,000 k at a swap rate of 4.6000%, expiring on October 20, 2015. This transaction
is effective as per July 10, 2013.
10.6 Cash and Cash Equivalents
in EUR k
Bank balances
Dec. 31, 2008
Dec. 31, 2007
31,426
103,036
85
Bank balances earn interest at floating rates based on daily bank deposit rates.
11. Notes to the Consolidated Balance Sheet – Equity and Liabilities
11.1 Equity
For detailed information on equity we refer to the consolidated statement of changes in consolidated
equity.
Share Capital
Authorised
in EUR k
Dec. 31, 2008
Dec. 31, 2007
ordinary shares of euR 1 each
56,000
56,000
In the balance sheet of the consolidated financial statements as of December 31, 2008, the share capital of
alstria office REIT-AG amounted unchanged to EUR 56,000 k. Captiva 2 Alstria Holding S.à r.l., Luxembourg,
held, directly and indirectly, 61.0% of the shares in the Company, the remaining 39% of the shares are free
float with 2.5% treasury shares.
CONSOLIDATED FINANCIA L STATEM ENT S
Treasury Stock
in EUR k
Dec. 31, 2008
Dec. 31, 2007
non-par value bearer shares
-14,983
-7,115
By resolution of the shareholder meeting on March 15, 2007, the Company was authorised to acquire treas-
ury shares up to 10% of the capital stock during the period from November 7, 2007 to September 14, 2008.
On November 6, 2007, the Company’s management board resolved to acquire up to 2.5% of the shares
outstanding in connection with the above authorisation. The shares were acquired over the stock exchange
by a credit institution. The credit institution decided on when to acquire treasury shares independently
and without the involvement of the Company.
86
Capital Surplus
The capital surplus changed as follows during the fiscal year:
in EUR k
As of Jan. 1
Changes in the consolidated group
valuation shareholder loan/other iFRS adjustments
Share-based payments
Contributions to capital surplus
Transaction costs of issue of shares
valuation of available for sale financial assets
other contributions to capital surplus
As of Dec. 31
Dec. 31, 2008
Dec. 31, 2007
754,647
0
0
768
0
0
-123
-7
755,285
375,066
-5,531
647
813
240,000
-11,038
0
154,690
754,647
A stock option program was resolved on March 27, 2007 by the supervisory board of the Company and
accordingly stock options with a fair value of EUR 1,997 k were issued to members of the management
board of the Company on April 3, 2007 and September 5, 2007, respectively. Thereof stock options with a
fair value of EUR 446 k were forfeited as of December 31, 2007 in relation with the retirement of Dr. Michael
Börner-Kleindienst. As of December 31, 2008, this resulted in a further increase of the capital surplus of
EUR 654 k from the allocation of the fair values of the granted stock options over the respective vesting
period. Further EUR 114 k increase resulted from the vesting of the convertible profit participation certifi-
cates granted to employees of the Group.
Other contribution to capital surplus consists with EUR 123 k of the devaluation of financial assets availa-
ble for sale (bond loan) and with EUR 7 k of additional payments in relation to the IPO in 2007.
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Hedging Reserve
in EUR k
Hedging reserve
11.2 Financial Liabilities
in EUR k
Loans
Total
in EUR k
Loans
Total
Dec. 31, 2008
Dec. 31, 2007
-49,579
0
Non-current
Current
Dec. 31, 2008
1,086,801
12,609
1,099,410
1,086,801
12,609
1,099,410
87
Non-current
Current
Dec. 31, 2007
927,400
8,936
927,400
8,936
936,336
936,336
Nominal EUR 1,103,064 k (December 31, 2007: EUR 940,352 k) of the loans are repayable. The carrying amount
takes into account interest liabilities and transaction costs to be allocated under the effective interest
method upon raising the liabilities. The major part of these liabilities relate to a loan arranged with J.P.
Morgan Plc., Natixis Banques Populaires, German Branch, and HSH Nordbank AG for a nominal amount of
EUR 1,139,800 k. EUR 995,374 k (December 31, 2007: EUR 931,416 k) of this nominal amount had been drawn
as of the balance sheet date. To secure these liabilities, receivables from rental and property purchase
agreements as well as insurance receivables and derivative financial instruments were assigned to the
lenders, liens were granted on bank accounts and the registration of land charges was agreed (note 10.4).
Furthermore, a loan at a nominal amount of EUR 95,000 k plus accrued interests exists against Deutsche
Hypothekenbank (Actiengesellschaft), Hanover. Taking into account the effective interest method at
balance sheet date the loan has a book value of EUR 94,768 k plus accrued interests. The loan was entered
into by alstria office Gänsemarkt Drehbahn GmbH & Co. KG.
The variable interest of the loans is payable on a quarterly basis, with the standard margin and borrowing
costs for the market added to the respective EURIBOR rate.
Due to the variable interest rate, there are no significant differences between the carrying amounts and fair
values except of transaction costs.
CONSOLIDATED FINANCIA L STATEM ENT S
As of December 31, 2008, loans were reduced by transaction costs of EUR 3,574 k (December 31, 2007:
EUR 4,017 k).
The carrying amounts of the loans are all denominated in Euro; the fair value of all financial liabilities with
exception of the transaction cost approximates their nominal value on the balance sheet date.
The liabilities exposed to an interest rate risk are due as follows:
in EUR k
up to one year
More than one year
Total
88
Dec. 31, 2008
Dec. 31, 2007
0
1,086,801
1,086,801
0
927,400
927,400
The following loans are secured by land charges:
in EUR k
Dec. 31, 2008
Dec. 31, 2007
Financial liabilities secured by land charges
thereof on investment property
1,086,801
1,086,801
927,400
927,400
11.3 Trade Payables and Other Liabilities
in EUR k
Trade Payables
other trade payables
Other Current Liabilities
vAT liabilities
Liability for real estate transfer tax
Miscellaneous other liabilities
Due
Total
up to one year
in more than
one year
Dec. 31, 2008
4,561
0
4.561
790
2,146
8,149
0
790
0
2,147
701
8,219
11,085
70
11,155
1 This position is shown under Non-Current Liabilities in the Consolidated Balance Sheet.
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in EUR k
Trade Payables
other trade payables
Other Current Liabilities
vAT liabilities
Liability for real estate transfer tax
Miscellaneous other liabilities
Due
Total
up to one year
in more than
one year
Dec. 31, 2007
3,068
194
9,897
9,741
19,832
0
0
0
561
56
3,068
194
9,897
9,797
19,888
1 This position is shown under Non-Current Liabilities in the Consolidated Balance Sheet.
89
The disclosed carrying amounts approximate the fair values.
Other trade payables relate to operating costs not yet invoiced of EUR 3,435 k (December 31, 2007:
EUR 2,376 k) and liabilities from third-party real estate management services and rental activities
of EUR 1,126 k (December 31, 2007: EUR 692 k).
The liabilities for real estate transfer tax result from the acquisition of Bamler Servicepark and the projects
Blue, HUK and Darwinstrasse.
Miscellaneous other liabilities include substantially deferred income of EUR 2,451 k (2007: EUR 267).
Furthermore this item comprises received deposits of EUR 451 k (2007: EUR 285 k). Additionally, manage-
ment bonuses amounting to EUR 450 k (2007: EUR 400 k) are included.
11.4 Trust Assets and Liabilities
As at balance sheet date alstria office REIT-AG had trust assets and liabilities of EUR 451 k (December 31,
2007: EUR 285 k), in particular from rent deposits.
11.5 Deferred Taxes
According to its REIT status alstria office REIT-AG is fully tax transparent for income taxes starting from
January 1, 2007. Therefore at balance sheet date as well as at prior years’ balance sheet date deferred taxes
did not exist.
CONSOLIDATED FINANCIA L STATEM ENT S
11.6 Liabilities of Current Tax
Liabilities of current tax break down as follows:
in EUR k
Liabilities resulting from final taxation
Liabilities resulting from taxation of operating income 2006
other tax liabilities
Consolidated balance sheet
Dec. 31, 2008
Dec. 31, 2007
0
0
21
21
5,072
260
0
5,332
90
12. Notes to the Consolidated Income Statement
12.1 Revenues
in EUR k
Revenues from investment property
2008
102,055
2007
82,552
Revenues from investment property chiefly include net rents from investment property.
12.2
Income from Passed on Operating Expenses
in EUR k
income from passed on operating expenses
income from passed on operating expenses prior year
12.3 Expenses from Passed on Operating Expenses
in EUR k
expenses from passed on operating expenses
expenses from passed on operating expenses prior year
2008
17,057
0
17,057
2008
-17,057
0
-17,057
2007
11,007
-2,559
8,448
2007
-11,007
2,873
-8,134
The expenses from passed on operating expenses that are directly attributable to investment property
include in particular operating costs, maintenance and property-based taxes.
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12.4 Administrative Expenses
in EUR k
Legal and consulting fees
Communication
Audit fee
depreciation
Leasing costs
Supervisory board compensation
Travel expenses
Recruitment costs
Allocation
ipo expenses
Registration fees
other
12.5 Personnel Expenses
in EUR k
Salaries and wages
Social insurance contribution
Bonuses
expenses for share-based compensation (including euR 122 k
(prior year: euR 7 k) expenses for convertible profit
participation rights)
91
2008
3,061
574
538
506
309
305
237
139
94
0
0
1,115
6,878
2008
2,748
256
895
776
4,675
2007
4,118
264
428
348
160
301
201
208
174
1,402
470
1,177
9,252
2007
1,814
143
762
813
3,532
Convertible profit participation rights granted to employees entitle not only for a conversion in case the
conditions apply but also for an annual payment equivalent to the dividend per share. Therefore expenses
for share based compensation resulting from the convertible profit participation rights are to be recog-
nised as well in equity (for the conversion right) as against liabilities (for the dividend entitlement). Out of
the EUR 122 k expenses in relation to the profit participation rights EUR 114 k had to be recognised in
equity while EUR 8 k are reflected in the liabilities.
Within the course of 2008 the Group has employed 28 employees on the average (2007: 15).
CONSOLIDATED FINANCIA L STATEM ENT S
12.6 Other Operating Income
in EUR k
income from accrued liabilities
Compensation payment (rent)
From insurance compensation
Car use
other
2008
2007
1,166
1,000
95
36
477
227
121
50
25
165
2,774
588
92
Other operating income includes from accrued liabilities as well from reversal of liabilities as from balanc-
ing account for the consumption of accrued liabilities and a one time separation payment (Compensation
payment rent; EUR 1,000) relating to the early termination of a lease agreement.
12.7 Other Operating Expenses
in EUR k
impairment on trade receivables
off period expenses
other
12.8 Disposal Proceeds
2008
2007
255
251
9
515
0
0
5
5
in EUR k
2008
2007
investmet property disposal proceeds
Carrying value of investment property disposals
Profit on Disposal of Investment Property1)
17,950
-16,500
1,450
0
0
0
1) In 2007 disposal proceeds (EUR 175 k) are shown in the position other operating income.
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12.9 Financial and Valuation Result
The financial result breaks down as follows:
in EUR k
Financial income
in EUR k
Financial expenses
in EUR k
Commitment fees
Bank charges
Guarantee fees
Transaction costs
other financial expenses
2008
12,656
2008
-60,184
2007
6,184
2007
-38,683
2008
2007
93
-238
-82
-2
0
-262
-584
-796
-106
-504
-876
-334
-2,616
Total interest income and expenses for financial assets and liabilities that are not at fair value through
profit or loss were EUR 1,975 k (interest income; 2007: TEUR 6,184 k) and EUR 60,184 k (interest expenses;
2007: 38,683 k).
Total interest income and expenses calculated using the effective interest method for financial assets and
liabilities that are not at fair value through profit or loss were EUR 1,145 k (interest expenses; 2007: 1,164 k).
The effect on profit or loss of the fair value measurement of financial instruments and investment
property is as follows:
in EUR k
2008
2007
net loss (prior year: gain) from the fair value adjustments
on financial derivatives
-5,075
8,086
in EUR k
2008
2007
net loss (prior year: gain) from the fair value adjustments
on investment property
-88,116
11,170
CONSOLIDATED FINANCIA L STATEM ENT S
The net loss (2007: gain) from the fair value adjustments on financial derivatives relates as well to deriva-
tives that do not qualify for hedge accounting as to those that qualify for cash flow hedge accounting.
While the caps do not qualify for hedge accounting, the swaps are categorised as cash flow hedges.
Therefore the total changes of the caps valuation is reflected in profit and loss while for the swaps only
the ineffective portion of the changes is reflected in profit and loss. Because the derivatives were not des-
ignated to cash flow hedges before January 1, 2008, last year’s total changes of the swaps are reflected in
profit and loss.
It breaks down as follows:
in EUR k
2008
2007
94
ineffective change of the financial derivatives
designated to cash flow hedge
Change of financial derivatives not designated to a hedge position
Net Profit/Loss from Fair Value Adjustments
on Financial Derivatives
-5,544
469
-5,075
0
8,086
8,086
Further details on derivatives are shown under Note 10.5.
12.10 Income Taxes
The tax income/expense breaks down as follows:
in EUR k
2008
2007
Consolidated Income Statement
Current income tax expenses
deferred income tax income
-75
0
-75
-5,110
9,788
4,678
Because of obtaining the G-REIT status alstria office REIT-AG was subject to final taxation on the effective
date of the transfer into a G-REIT. For a detailed description of the transformation into a G-REIT, please see
note 1 of the prior year’s consolidated financial statements. The prior year’s tax expenses mainly resulted
from the final taxation. alstria office REIT-AG is tax exempted as by January 1, 2007. Deferred tax liabilities
and assets had to be released to income. As a result tax income of EUR 9,788 k arose in 2007. The EUR 75 k
tax expenses 2008 refer to corporate tax levied retrospectively for the financial year 2006.
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Deferred Income Tax
The final taxation in 2007 led to the following results. For 2008 according to the REIT tax exemption,
there were no impacts on profit and loss any more.
in EUR k
Deferred Income Tax Liabilities
Revaluation of investment property to fair value
Revaluation of a cap to fair value
Revaluation of interest rate swaps to fair value
Financial liabilities (transaction costs)
Deferred Income Tax Assets
Revaluation of investment property to fair value
prepaid expenses (transaction costs)
Shareholder loan
Tax loss carryforwards
Deferred Income Tax Income/Expense
Consolidated income statement
2008
2007
0
0
0
0
0
0
0
0
0
0
0
18,826
96
2,152
1,961
23,035
-5,432
-30
-180
-7,605
-13,247
9,788
95
13. Other Notes
13.1 Compensation of Management Board and Supervisory Board
Management Board
In 2008, the overall compensation of the members of the management board totalled EUR 1,401 k (2007:
EUR 2,203 k), whereof EUR 1,051 k represent the compensation and EUR 350 k transfer to provision.
Under the stock option program of alstria office REIT-AG, members of the management board held non-
transferable stock options for 375,000 shares of alstria office REIT-AG as at December 31, 2008 and 2007,
respectively. Details of the stock option program are also included in these Notes (see Note 18).
Further information on disclosures according to § 314 section 1 no. 6a HGB (German commercial law) and
IAS 24.16 is provided in the Compensation Report (page 128) that is presented in the Corporate Governance
Report and is also part of this notes.
Supervisory Board
Pursuant to the Articles of Association, supervisory board members’ fixed annual payment amounted to
EUR 292 k (2007: EUR 283 k).
CONSOLIDATED FINANCIA L STATEM ENT S
13.2 Commitments and Contingencies
There were no contingent liabilities as of the balance sheet date. Other financial obligations from ongoing
maintenance amount to EUR 6,105 k (2007: EUR 2,000 k). As of December 31, 2008 there was no rental
agreement for the administrative premises with a minimum lease length.
Operating Lease Commitments – Group as Lessor
The Group has entered into commercial property leases on its investment property portfolio, consisting of
the Group’s surplus office and manufacturing buildings. These non-cancellable leases have remaining
terms of between 5 and 20 years. All leases include a clause to enable upward revision of the rental charge
on an annual basis according to prevailing market conditions.
Future minimum rental receivable under non-cancellable operating leases are as follows:
96
in EUR k
Within one year
After one year but not longer than five years
More than five years
Dec. 31, 2008
Dec. 31, 2007
104,509
384,850
985,564
89,201
324,411
952,629
1,474,923
1,366,241
13.3 Consolidated Cash Flow Statement
The cash flow statement shows how the cash and cash equivalents of the Group changed in the course of
the fiscal year as a result of cash received and paid. In accordance with IAS 7, a distinction is made between
cash flows from operating activities and cash flows from investing and financing activities.
The cash and cash equivalents in the cash flow statement relate to all cash disclosed in the balance sheet,
i.e. cash on hand and bank balances.
The cash flows from investing and financing activities are calculated on the basis of payments. Whereas,
the cash flows from operating activities are derived indirectly based on the consolidated profit for the year.
Under the indirect method, changes to the balance sheet items recognised in connection with operating
activities are adjusted for effects arising from changes to the consolidated Group.
Thus changes to the relevant balance sheet items cannot always be reconciled to the corresponding
amounts from the published consolidated balance sheet.
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The payments for investing activities (EUR 235,246 k) (2007: EUR 306,498 k) were funded by additional
borrowings and by operating cash.
The repayments of borrowings (EUR 107,495 k) (2007: EUR 243,262 k) were financed by additional borrow-
ings, by operating cash and by using the cash and cash equivalents.
14. Related Party Relationships
14.1 Preliminary Remarks
Related parties are members of management of alstria office REIT-AG (management board and supervisory
board) and close family members of these persons. Related parties also include entities with controlling
influence over the Group and entities with joint control over or significant influence on alstria office
REIT-AG.
Captiva 2 Alstria Holding S.à r.l. (parent company), Captiva Capital Partners II SCA and Captiva Capital II
S.à r.l. (ultimate parent company) are considered to have a controlling influence over alstria office REIT-AG.
There was no group of entities with joint control or significant influence, with which business was
conducted in the fiscal year.
97
Two members of the supervisory board of alstria office REIT-AG are also executive managers of NATIXIS
Capital Partners Limited and NATIXIS Capital Partners GmbH. Therefore related parties during the fiscal
year also included NATIXIS Capital Partners Limited and NATIXIS Capital Partners GmbH.
In the view of alstria office REIT-AG’s management, all transactions with related parties have been entered
into on arm’s length terms or under conditions to alstria office REIT-AG’s favor.
14.2 Remuneration of Key Management Personnel
For a detailed description of the remuneration of key management personnel, please see note 13.1 and the
compensation report in the corporate governance report.
CONSOLIDATED FINANCIA L STATEM ENT S
98
14.3 Related Party Transactions
The following table provides the total amount of transactions which have been entered into with related
parties in 2008 and 2007:
in EUR k
2008
2007
Laid out expenses for Captiva Capital partners ii SCA
28
40
Acquisition of shares in Alstria iv. and vii. Hamburgische
Grundbesitz GmbH & Co. KG
Total acquisition of shares in Juna Beteiligungs-GmbH,
Frankfurt a.M.
0
15,821
0
1,848
interest expense shareholder loan alstria office ReiT-AG
0
1,206
performance guarantees
0
418
Service agreement with natixis Capital partners GmbH
0
210
use of office space
0
71
interest expense shareholder loan Alstria iv. Hamburgische
Grundbesitz S.à r.l. & Co. KG
interest expense shareholder loan Alstria vii. Hamburgische
Grundbesitz S.à r.l. & Co. KG
Asset management fees expensed for Alstria iv. and vii.
Hamburgische Grundbesitz GmbH & Co. KG
Management fees in line with the asset management agreement of
June 1, 2006 (natixis Capital partners GmbH). The agreement was
terminated with effect from March 1, 2007
0
64
0
45
0
31
0
27
Acquisition of shares in verwaltung Alstria Sechste GmbH, Hamburg
0
15
interest income for permission loan
to Alstria Fünfte Hamburgische Grundbesitz GmbH & Co. KG
Compensation for liability coverage of
Juna property GmbH & Co. KG liability
Compensation for liability coverage of Alstria vierte and
Siebte Hamburgische Grundbesitz S.à r.l. & Co. KG
0
9
0
2
0
1
Use of Office Space
For its head office in Hamburg, alstria office REIT-AG uses office space that was originally let by NATIXIS
Capital Partners GmbH under a lease agreement with HIH. NATIXIS Capital Partners GmbH meanwhile
assigned the lease agreement to alstria office REIT-AG with the consent of the lessor. Till then, alstria office
REIT-AG has reimbursed NATIXIS Capital Partners GmbH on an at-cost basis for the use of office space.
Expenses amounted to EUR 60 k for 2007. In 2008 the rent was, according to the assignment of the lease
agreement, directly paid to HIH. Therefore no related party issues arose any more.
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Performance Guarantees
Captiva Capital Partners II SCA has granted a number of payment guarantees for the benefit of NATIXIS
Corporate & Investment Bank S.A. in relation to the Company’s obligation arising from transaction with
respect to the acquisition of real estate properties. Generally, the seller of real estate property demands a
performance guarantee from a bank for the period from signing of the sale-and-purchase agreement until
payment of the purchase price. NATIXIS Corporate & Investment Bank S.A. has issued such performance
guarantees for the benefit of the respective sellers regarding sale-and-purchase agreements concluded
by alstria office REIT-AG. Captiva Capital Partners II SCA has arranged the issuance of such performance
guarantees and may be liable for any amounts paid by NATIXIS Corporate & Investment Bank S.A. to the
respective purchaser under such performance guarantees. Captiva Capital Partners II SCA is entitled to
receive a guarantee fee from alstria office REIT-AG. In 2008 no such payments incurred out of this agree-
ment. In 2007 alstria office REIT-AG paid to Captiva Capital Partners II SCA guarantee fees amounting
to EUR 418 k.
15. Earnings per Share
99
Basic earnings per share are calculated as the quotient of the profit attributable to the shareholders and
the weighted average number of shares outstanding during the fiscal year – except for the average number
of treasury shares held by the Company itself.
Diluted earnings per share amounts are calculated by dividing the profit attributable to ordinary equity
holders of the parent by the weighted average number of ordinary shares outstanding during the year –
except for the treasury shares held by the Company itself – plus the weighted average number of ordinary
shares that would be issued on the conversion of all the dilutive potential ordinary shares into ordinary
shares.
The following reflects the income and share data used in the earnings per share computations:
in EUR k
profit attributable to the shareholders (in euR k)
Average number of shares outstanding (in thousands)
Basic earnings per share (in euR)
2008
-56,000
54,697
-1.02
2007
52,811
46,082
1.15
There were no dilution effects resulting from the granted stock options or the convertible profit participa-
tion rights during the period under review as the related vesting conditions were not satisfied as of the
balance sheet date.
For further information concerning granted stock options and convertible profit participation rights we
refer to section 18 and 19.
There have been no other transactions involving ordinary shares or potential ordinary shares between the
reporting date and the date of completion of these financial statements.
alstria is authorised to issue up to EUR 20,000 k shares as conditional capital. These contingently issuable
shares could potentially dilute basic earnings per share in the future, but were not included in the calcula-
tion of diluted earnings per share because they are antidilutive for the period presented.
CONSOLIDATED FINANCIA L STATEM ENT S
16. Dividends Paid
The general meeting of alstria office REIT-AG on June 5, 2008 resolved to distribute a dividend for the
financial year 2007 of EUR 28,400 k (EUR 0.52 per share outstanding). The dividend was distributed on
June 6, 2008.
17. Employees
During the period from January 1, 2008 to December 31, 2008, on an average 28 employees (January 1, 2007
to December 31, 2007: on an average 15 employees) were employed at the Company. The average was
calculated by the fourth part of the total of employed people at the end of each quarter. On December 31,
2008, 29 people (December 31, 2007: 20 people) were employed at alstria office REIT-AG, excluding the
management board.
18. Stock Option Program
100
On March 27, 2007, the supervisory board of the Company resolved on the establishment of a stock option
program for the members of the management board. The supervisory board fixed the details of the stock
option program in accordance with an authorisation granted by the general meeting of shareholders of
March 15, 2007 and granted a first tranche of stock options to the management board.
The main terms of the stock option program resolved by the supervisory board can be summarised as
follows:
Under the stock option program, up to two million options entitling to the subscription of a maximum of
two million shares of the Company with a total notional value of EUR 2,000 k may be granted to members
of the management board. The stock options will be granted in annual tranches. The first tranche was
granted by the supervisory board in 2007, subject to the below said conditions. The exercise price for the
stock options granted in 2007 is EUR 16. Due to the development of the Company’s share price, the super-
visory board did not grant any stock options in 2008.
At the beginning of the reporting period 515,625 stock options outstanding existed. Therefore the amount
of stock options outstanding as at balance sheet date remained unchanged. None of these stock options
are exercisable. The personnel expenses resulting from the allocation of the fair values of the stock options
at granting date over the vesting period amounted to EUR 654 k in 2008 (note 12.5).
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The fair values of the options outstanding were estimated at the respective granting dates using a black-
scholes-model and partial-time barrier options, taking into account the terms and conditions upon which
the instruments were granted. The following table lists the inputs to the model used for the determination
of the fair value of the stock options granted:
Fair value of stock options granted on
Mar. 27, 2007
Sep. 5, 2007
dividend yield (%)
Risk-free interest rate (%)
expected volatility (%)
expected life of option (years)
exercise share price (euR)
Labour turnover rate (%)
Stock price as of valuation date (euR)
estimated fair value of one stock option at granting date (euR)
3.60
4.21
30.00
4.50
16.00
0.00
16.00
3.17
3.60
4.29
30.00
4.50
16.00
0.00
13.93
2.28
101
The term of each stock option is seven years beginning with the respective issue date. The stock options
may only be exercised if the current stock exchange price of the Company’s shares exceeds the stock
exchange price of the Company’s shares on the issue date by 20% or more for at least seven non sub-
sequent trading days of the Frankfurt Stock Exchange prior to the commencement of the respective
exercise period. The stock options may only be exercised after the expiration of a vesting period of two
years and then during the four exercise periods each year. Each exercise period lasts 30 days, commencing
with the day of announcement of the results for the first, second and third quarter, and the day of the
Company’s annual general meeting, respectively. There are no cash settlement alternatives.
19. Convertible Profit Participation Rights Program
On September 5, 2007 the supervisory board of the Company resolved the issuance of convertible profit
participation certificates (‘certificates’) to employees of the Company and to employees of companies in
which alstria office REIT-AG, directly or indirectly, holds a majority interest. Members of alstria office REIT-
AG’s management board are not considered employees of the Company in terms of this convertible profit
participation rights program. With its resolution, the supervisory board fixed the details of the convertible
profit participation rights program in accordance with an authorisation granted by the general meeting of
shareholders of March 15, 2007.
The main terms of the program resolved by the supervisory board can be summarised as follows:
The nominal amount of each certificate is EUR 1.00 and is payable upon issuance. Under the program,
a maximum of 500,000 certificates in an aggregate nominal amount of up to EUR 500 k may be issued.
3,600 certificates were issued on September 6, 2007 and further 42,000 certificates on June 6, 2008. Total
expenses relating to convertible profit participation rights were EUR 122 k in 2008 (note 12.5).
1,100 convertible profit participation rights expired during the reporting period. 44,500 convertible profit
participation rights were outstanding at the balance sheet date.
CONSOLIDATED FINANCIA L STATEM ENT S
102
The certificates are issued as non transferable rights. The certificates are neither sellable nor pledgeable or
otherwise chargeable.
The maximum term of each certificate is five years.
During its term, each certificate entitles to a preferred disbursement from the Company’s annual net
profit. The profit share corresponds to the dividend per share of the Company for a full business year of
the Company. For certificates held by a beneficiary for less than a full business year of the Company,
the profit share is reduced pro rata temporis.
Each certificate shall be converted into one non-par value bearer share of the Company on the second,
third, fourth or fifth anniversary date of the issue date if the then current stock exchange price of the
Company’s shares has exceeded the stock exchange price of the Company’s shares on the issue date by 5%
or more on at least seven non subsequent trading days.
Upon conversion of a certificate, the beneficiary shall pay an additional conversion price to the Company
for each certificate to be converted. The conversion price shall be the aggregate proportionate amount
in the Company’s share capital of the shares each certificate entitles to subscribe for and shall be payable
in addition to the offer price.
The management board, subject to the approval of the supervisory board, shall be entitled to amend the
program at any time. This also applies to the administration of certificates which have already been issued
provided that such amendment does not affect the commercial value of the certificates and/or a respec-
tive compensation is paid.
The fair values of the inherent options for conversion were estimated at the respective granting dates
using a binary barrier option model based on the black-scholes-assumptions since the conversion will be
affected automatically once the barrier has been reached. The model takes into account the terms and
conditions upon which the instruments were granted.
The following table lists the inputs to the model used for the determination of the fair value of the options
for conversion granted on September 6, 2007:
dividend yield (%)
Risk-free interest rate (%)
expected volatility (%)
expected life of option (years)
exercise share price (euR)
Labor turnover rate (%)
Stock price as of valuation date (euR)
3.70
4.20
30.00
2.00
2.00
10.00
13.18
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The estimated fair value of one option for conversion at the granteing date was EUR 10.77.
The following table lists the inputs to the model used for the determination of the options for conversion
granted on June 6, 2008:
dividend yield (%)
Risk-free interest rate (%)
expected volatility (%)
expected life of option (years)
exercise share price (euR)
Labor turnover rate (%)
Stock price as of valuation date (euR)
4.70
4.65
35.00
2.00
2.00
10.00
11.03
103
The estimated fair value of one option for conversion at the granting date was EUR 8.76.
Expected volatility is based on the historical volatility of comparative listed companies and was calculated
as an average of these comparables.
20.
Financial Risk Management
The financial instruments chiefly used by the Group are bank loans and derivative financial instruments.
The main purpose of the bank loans is to finance the business activities of alstria office REIT-AG. The
Company also has various financial assets, such as cash and short-term deposits, which arise directly from
business activities.
Derivative financial instruments include interest swaps and caps. The purpose of these derivative financial
instruments is to hedge against interest risks arising from the Group’s business activities and its sources
of financing.
The main risks arising from the Group’s financial instruments are cash flow interest rate risks and liquidity
risks. The Group is not exposed to any significant credit risks. The amount that best presents the maximum
credit risk is the carrying amount of financial assets. The management board decides on strategies and
processes for managing specific risk types. These are presented below.
Risks that could arise as a result of the financial crisis are seen mainly in a potential shortfall of payment
of a major tenant. Due to the fact that all of alstria’s main tenants are public institutions or still highly
rated, the risk of shortfall of payments currently is limited.
The main risks arising from the Group’s financial instruments are interest rate risks and liquidity risks.
CONSOLIDATED FINANCIA L STATEM ENT S
alstria’s currently debt to equity ratio is approx. 60%. This is a reasonable rate compared to the average real
estate companies are leveraged. alstria’s syndicated loan facility agreement allows for a loan to value (LTV)
of 60%. After the loan restructuring alstria managed to keep the LTV at 59,1% at balance sheet date. With
the additional measures implemented at the beginning of 2009 the risk of breach of covenant was re-
sponded effectively.
Apart from this the Group is not exposed to any commoditiy or currency risks.
Interest Rate Risk
The following table sets out the carrying amount, by maturity, of the Group’s financial instruments that
are exposed to interest rate risk:
Fiscal Year as at December 31, 2008
104
in EUR k
variable interest
< 1
year
1-2
years
2-3 years
3-4
years
>4
years
Total
Loan facility of euR 1,139,800 k
Loan deutsche Hypothekenbank
Total
0
0
0
0
0
0
992,033
0
992,033
0
0
0
0
94,768
992,033
94,768
94,768
1,086,801
Fiscal Year as at December 31, 2007
in EUR k
variable interest
< 1
year
1- 2
years
2-3 years
3-4
years
>4
years
Total
Loan facility of euR 1,139,800 k
0
0
0
927,400
0
927,400
Due to the extensive portfolio of non-current financial liabilities with a variable interest risk, alstria office
REIT-AG is exposed to risks from fluctuations in market interest rates. The interest base for the financial
liability (loan) is the 3-month EURIBOR, which is adjusted every three months. A number of different
derivative financial instruments were acquired to manage the interest expense. The derivative financial
instruments relate to interest swaps in which the Company agrees to exchange with contracting partners,
at specified intervals, the difference between fixed and variable interest rate amounts calculated by
reference to an agreed-upon notional principal amount. In addition, interest caps were acquired; here the
interest is capped at a set maximum. If the maximum interest rate is exceeded, the difference between
the actual interest rate and the cap rate is paid out.
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The derivative financial instruments of alstria office REIT-AG are presented below:
Product
in EUR k
Cap
Cap
Cap
Cap
Swap
Swap
Swap
Swap
Swap
Swap
Total
Carrying amount/
fair value
Strike
in %
4.9000
3.8000
3.8000
4.0000
3.1930
4.6000
3.9090
4.1160
4.9000
3.6170
Notional Maturity date
2008
2007
75,000
41,721
26,184
80,880
80,880
95,000
148,785
100,000
dec. 12, 2012
Mar. 31, 2011
Mar. 31, 2011
nov. 29, 2011
nov. 29, 2011
oct. 20, 2015
Jan. 20, 2012
Jul. 10, 2013
75,000
dec. 20, 2012
625,000
nov. 29, 2011
176
0
0
0
-557
-1,447
-4,282
-4,517
-5,497
1,126
961
604
1,811
3,761
0
0
0
0
-12,326
-28,450
18,939
27,202
105
These interest swaps and interest caps are used to hedge the obligation underlying the loans.
The following table shows the sensitivity of alstria’s loans on consolidated profit or loss and equity accord-
ingly to a reasonably possible change in the interest rates (due to the effect on the floating interest loans).
All variables remain constant; the effects from the derivative financial instruments were not factored into
this calculation.
Loans
in EUR k
+80 basis points
-100 basis points
2008
7,050
-8,812
2007
5,714
- 7,143
The fair market value of derivative financial instruments is also subject to interest rate risks. A change in
the interest rate would give rise to the following changes of the respective fair market values:
a) Impact on equity
Financial Derivatives Qualifying to Cash Flow Hedge Accounting
in EUR k
+80 basis points
-100 basis points
2008
25,308
-32,963
2007
0
0
CONSOLIDATED FINANCIA L STATEM ENT S
b) Impact on income statement and equity accordingly
Financial Derivatives not Qualifying to Cash Flow Hedge Accounting
in EUR k
+80 basis points
-100 basis points
2008
338
-128
2007
24,042
-27,656
106
Liquidity Risk
The Company continually monitors the risk of potential liquidity bottlenecks using a liquidity planning
tool, which uses the expected cash flows from business activities and the maturity of the financial liabili-
ties as a basis for analysis. The long term refinancing strategy of the Group ensures the medium and long
term liquidity requirements.
As of the balance sheet date, the nominal financial liabilities had the following maturities in line with their
contractual maturity (basis is the 3-month EURIBOR as of December 31, 2008 plus 65 basispoints for loan
facility and plus 115 basispoints for loan Deutsche Hypothekenbank).
Fiscal Year as at December 31, 2008
in EUR k
interests
< 1 year
1 to 2
years
2 to 3
years
3 to 4
years
4 to 5
years >5 years
Total
52,202
39,591
36,461
3,904
3,893
7,018
143,069
Loan principle
Financial derivatives
Trade payables
other current
liabilites
1,341
9,139
4,561
7,793
0
994,033
0
0
95,000
1,090,374
9,139
8,715
2,860
1,421
2,966
0
0
0
0
0
0
0
0
0
0
34,240
4,561
7,793
75,036 48,730 1,039,209
6,764
5,314 104,984 1,280,037
Fiscal Year as at December 31, 2007
< 1 year
1 to 2
years
2 to 3
years
3 to 4
years
4 to 5
years >5 years
in EUR k
interests
57,940
48,868
48,868
44,648
Loan principle
Financial derivatives
Trade payables
other current
liabilites
0
0
3,068
19,371
0
0
0
0
0
0
0
0
927,400
0
0
0
80,379 48,868
48,868 972,048
0
0
0
0
0
0
Total
200,324
927,400
0
3,068
0
0
0
0
0
19,371
0 1,150,163
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Group Management Discussion and Analysis
Consolidated Financial Statements
Auditors´ Report
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Other Information
Consolidated Income Statement
Consolidated Balance Sheet
Consolidated Statements of Change in Equity
Consolidated Cash Flow Statement
Notes
The most significant liability is a syndicated loan from J.P. Morgan Plc., Natixis and HSH Nordbank AG for a
nominal EUR 1,139,800 k. EUR 995,374 k of this nominal amount had been utilised as of the balance sheet
date (December 31, 2007: EUR 931,416 k). The second major liability is a loan from Deutsche Hypotheken-
bank, with a nominal amount of EUR 95.000 k. This entire amount has been utilised as of balance sheet
date. To secure these liabilities, receivables from rental and property purchase agreements as well as insur-
ance receivables and derivative financial instruments were assigned to the lenders, liens were granted on
bank accounts and the registration of land charges was agreed. The obligations arising from the floating
interest bank loans were fully secured. Land charges with a carrying amount of EUR 1,782,315 k were
furnished as security.
Capital Management
Capital management activities are aimed at maintaining the Company’s classification as a REIT in order to
support its business activities and maximise shareholder value.
The Company manages its capital structure and makes adjustments in response to changes in economic
conditions. In order to maintain or adjust the capital structure, the Group can make a capital repayment to
its shareholders or issue new shares. No changes were made to the aims, guidelines and processes as of
December 31, 2008 and December 31, 2007.
107
The capital structure is monitored by the Company using the KPIs relevant for classification as a REIT.
The REIT equity ratio, being the ratio of equity to investment property, is the most important KPI. According
to the Group’s strategy, the REIT equity ratio shall be between 45% and 55% within the relevant term
provided by the REIT-law.
The following KPIs are also used to manage capital:
KPIs according G-REIT Law
in %
equity ratio acc. G-ReiT law
investment properties
Revenues gained from investment properties
income gained from disposal of investment properties1
1 Within five years based on the average property value during this period.
2008
2007
Guideline
40.3
96.5
100
1.24
51.4
92.3
100
0.25
> 45
> 75
> 75
<50
CONSOLIDATED FINANCIA L STATEM ENT S
Fair Value
The following table shows the carrying amount and fair value of all financial instruments disclosed in the
consolidated financial statements.
Dec. 31, 2008
Carrying
amount
Non financial
instruments
Financial instruments
Loans
and
receivables
Assets at
fair value
through
profit
and loss
Available-
for-sale
Total
Fair value
Assets as per
balance sheet
Trade receivables
derivatives
Receivables and
other assets
Cash and cash
equivalents
108
4,099
176
0
4,099
0
28,266
1,097
2,291
Total
63,967
1,097
31,426
0
31,426
37,816
0
176
0
0
0
0
4,099
176
4,099
176
24,878
27,169
27,169
0
31,426
31,426
176
24,878
62,870
62,870
Dec. 31, 2008
Carrying
amount
Non financial
instruments
Liabilities as per
balance sheet
Financial instruments
Liabilities at
fair value
through profit
and loss
Derivati-
ves hedge
accoun-
ting
Other
liabilities
Total
Fair value
Long term loans
1,086,801
0
0
1,090,374
0
1,090,374
1,090,374
derivatives (desi-
gnated for hedge
accounting)
Short term loans
Trade payables
other liabilities
28,626
0 0
0
28,626
0
0
0
12,609
4,561
7,863
0
0
28,626
12,609
4,561
7,863
28,626
12,609
4,561
7,863
12,609
4,561
11,156
0
0
3,293
3,293
Total
1,143,753
0 1,115,407
28,626 1,144,033 1,144,033
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Other Information
Consolidated Income Statement
Consolidated Balance Sheet
Consolidated Statements of Change in Equity
Consolidated Cash Flow Statement
Notes
Dec. 31, 2007
Carrying
amount
Non financial
instruments
Assets as per
balance sheet
Financial instruments
Assets at
fair value
through
profit and
loss
Loans
and
receivables
Available-
for-sale
Trade receivables
2,646
0
2,646
0
derivative financial
instruments
Receivables and
other assets
Cash and cash
equivalents
27,202
0 0
27,202
5,039
5,039 0
103,036
0
103,036
0
0
Total
137,923
5,039
105,682
27,202
0
0
0
0
Total
Fair value
2,646
2,646
27,202
27,202
0
0
103,036
103,036
132,884
132,884
109
Dec. 31, 2007
Carrying
amount
Non financial
instruments
Liabilities as per
balance sheet
Financial instruments
Liabilities at
fair value
through profit
and loss
Derivati-
ves hedge
accoun-
ting
Other
liabilities
Total
Fair value
Long term loans
927,400
0
0
931,416
0
931,416
931,416
derivatives (desi-
gnated for hedge
accounting)
Short term loans
Trade payables
other liabilities
Total
959,292
8,936
3,068
19,888
0
0 0
0
0
461
461
0
0
0
0
0
8,936
3,068
19,427
0
0
0
0
0
8,936
3,068
0
8,936
3,068
19,427
19,427
962,847
0
962,847
962,847
CONSOLIDATED FINANCIA L STATEM ENT S
The fair value of the derivative financial instruments and the loans was determined by an independent
expert by discounting the expected future cash flows at prevailing market interest rates.
Net gains and losses from financial instruments are as follows:
in EUR k
Fiancial instruments at fair value through profit or loss
Loans and receivables
2008
-5,075
-254
2007
8,086
0
110
Net losses during the reporting period result from valuation losses and, in case of loans and receivables,
from the write down on trade receivables.
21. Significant Events after the End of the Reporting Period
alstria office REIT-AG was able to agree an amendment of its current EUR 1.1 billion credit facility with the
lenders of the syndicated loan. Within this amendment the LTV-covenant has been adjusted from 60% to
65%. The current margin of 65 bps will be increased immediately by 20 bps. The contract parties also agreed
on a step-up of the margin if the LTV is above 60%. Provided the Company stays at its targeted capital
structure with an LTV below 60% this amendment will lead to an annualised increase of interest expenses
of around EUR 2 million.
LTV
60% to 62.5%
62.5% to 65%
Additional step-up margin
50 bps
75 bps
22. Utilisation of Exempting Provisions
The following German subsidiaries included in the consolidated financial statements of alstria office
REIT-AG have made use of the exemption granted in Sec. 264b HGB:
Alstria Sechste Hamburgische Grundbesitz GmbH & Co. KG, Hamburg
Alstria IV. Hamburgische Grundbesitz GmbH & Co. KG, Hamburg
Alstria VII. Hamburgische Grundbesitz GmbH & Co. KG, Hamburg
alstria office Gänsemarkt Drehbahn GmbH & Co. KG, Hamburg
23. Disclosures Pursuant to German Securities Trading Act (WpHG)
1. Ad-hoc Announcement
Date
Topic
Language
nov. 19, 2008
alstria office ReiT-AG: Financial results for the first nine months of 2008
German / english
Preface
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Group Management Discussion and Analysis
Consolidated Financial Statements
Auditors´ Report
Management
Other Information
Consolidated Income Statement
Consolidated Balance Sheet
Consolidated Statements of Change in Equity
Consolidated Cash Flow Statement
Notes
2. Directors’ Dealings
The following transactions were executed in 2008 and reported to alstria:
Name of
person sub-
ject to the
disclosure
requirement
olivier
elamine
olivier
elamine
olivier
elamine
Alexander
dexne
Marion
Stuhlmann
Marion
Stuhlmann
olivier
elamine
olivier
elamine
Alexander
Stuhlmann
Alexander
Stuhlmann
Function
Member of
manage-
ment board
Member of
manage-
ment board
Member of
manage-
ment board
Member of
manage-
ment board
natural
person in
relation to
member of
the supervi-
sory board
natural
person in
relation to
member of
the supervi-
sory board
Member of
manage-
ment board
Member of
manage-
ment board
Member of
supervisory
board
Member of
supervisory
board
Classifi-
cation of
the share
ISIN
Trans-
action
Place
Transaction
date
Price per
share
in u
Number
of
shares
Deal
volume
de000A0L-
d2u1
Share
purchase
Xetra
de000A0L-
d2u1
Share
purchase
Xetra
de000A0L-
d2u1
Share
purchase
de000A0L-
d2u1
Share
purchase
over the
counter
over the
counter
Jan. 11,
2008
Jun. 6,
2008
Jun. 6,
2008
Jun. 6,
2008
9.75
1,500
14,625
11.24
425
4,777
11.03
7,500
82,725
111
11.03
2,000
22,060
de000A0L-
d2u1
Share
purchase
Xetra
Sep. 2,
2008
10.33
787
8,130
de000A0L-
d2u1
Share
purchase
Xetra
de000A0L-
d2u1
Share
purchase
Xetra
de000A0L-
d2u1
Share
purchase
Xetra
de000A0L-
d2u1
Share
purchase
Xetra
de000A0L-
d2u1
Share
purchase
Xetra
Sep. 2,
2008
oct. 17,
2008
nov. 19,
2008
nov. 20,
2008
nov. 26,
2008
10.35
1,213
12,555
4.65
5,000
23,250
3.28
2,500
8,200
2.92
5,000
14,600
2.75
5,000
13,750
CONSOLIDATED FINANCIA L STATEM ENT S
112
3. Voting Rights Notifications
No. Date
Shareholders
1
2
3
4
5
6
7
8
9
Jan. 17, 2008
Mar. 31, 2008
Mar. 31, 2008
Mar. 31, 2008
Apr. 7, 2008 (Correc-
tion of the release on
17.01.08)
Apr. 10, 2008
Morgan Stanley investment
Management Limited
Morgan Stanley investment
Management Limited
Morgan Stanley investment
Management Limited
Morgan Stanley investment
Management Limited
Morgan Stanley investment
Management Limited
Cohen & Steers Capital
Management inc.
Apr. 10, 2008
Cohen & Steers inc.
Apr. 15, 2008
(Correction of the release
on Apr. 10, 2008)
Jul. 16, 2008
Cohen & Steers inc.
Stichting pensioenenfonds
ABp
10
Aug. 8, 2008
Captiva Alstria 7 S.à r.l.
11
Aug. 8, 2008
12
Aug. 8, 2008
(Correction of the release
on Aug. 18, 2007)
13
Jan. 5, 2009
CCT Corporate nominees
Limited
CCT Corporate nominees
Limited
CCT Corporate nominees
Limited
Voting
rights
(new)
4.83%
3.35%
5.03%
5.33%
4.84%
2.95%
2.84%
2.84%
2.79%
5.63%
50.20%
48.90%
0%
14
Jan. 5, 2009
Mourant Limited
52.04%
15
Jan. 5, 2009
Mourant & Co. Limited
52.04%
16
Jan. 5, 2009
Mourant ireland Limited
52.04%
17
Jan. 7, 2009
Morgan Stanley investment
Management Limited
18
Jan. 7, 2009
Morgan Stanley
19
Jan. 7, 2009
20
Jan. 7, 2009
21
Jan. 7, 2009
Morgan Stanley internatio-
nal Holdings inc.
Morgan Stanley internatio-
nal Limited
Morgan Stanley Group
(europe)
4.95%
4.96%
4.95%
4.95%
4.95%
Strike
threshold
5%
3%
5%
5%
5%
3%
3%
3%
3%
5%, 3%
50%
30%, 25%, 20%,
15%, 10%, 5%, 3%
50%, 30%, 25%,
20%, 15%, 10%,
5%, 3%
50%, 30%, 25%,
20%, 15%, 10%,
5%, 3%
50%, 30%, 25%,
20%, 15%, 10%,
5%, 3%
50%, 30%, 25%,
20%, 15%, 10%,
5%, 3%
5%
5%
5%
5%
5%
Date of
change
Jan. 14,
2008
Apr. 12,
2007
nov. 20,
2007
Feb. 28,
2008
Jan. 14,
2008
Feb. 01,
2008
Apr. 4,
2008
Apr. 4,
2008
Jun. 14,
2008
Sept. 4,
2008
Aug. 21,
2008
Aug. 14,
2007
dec. 22,
2008
dec. 22,
2008
dec. 22,
2008
dec. 22,
2008
dec. 19,
2008
dec. 19,
2008
dec. 19,
2008
dec. 19,
2008
dec. 19,
2008
Attri-
buted
shares
Disclosure
according
to Language
no
yes
yes
yes
yes
yes
yes
yes
no
yes
no
no
no
yes
yes
no
yes
yes
yes
yes
yes
§ 26 (1)
WpHG
§ 26 (1)
WpHG
§ 26 (1)
WpHG
§ 26 (1)
WpHG
§ 26 (1)
WpHG
§ 26 (1)
WpHG
§ 26 (1)
WpHG
§ 26 (1)
WpHG
§ 26 (1)
WpHG
§ 26 (1)
WpHG
§ 26 (1)
WpHG
§ 26 (1)
WpHG
German /
english
German /
english
German /
english
German /
english
German /
english
German /
english
German /
english
German /
english
German /
english
German /
english
German /
english
German /
english
§ 26 (1)
WpHG
German /
english
§ 26 (1)
WpHG
German /
english
§ 26 (1)
WpHG
German /
english
§ 26 (1)
WpHG
German /
english
§ 26 (1)
WpHG
§ 26 (1)
WpHG
§ 26 (1)
WpHG
§ 26 (1)
WpHG
§ 26 (1)
WpHG
english
english
english
english
english
Preface
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alstria Stock
Group Management Discussion and Analysis
Consolidated Financial Statements
Auditors´ Report
Management
Other Information
Consolidated Income Statement
Consolidated Balance Sheet
Consolidated Statements of Change in Equity
Consolidated Cash Flow Statement
Notes
24. Declaration of Compliance Pursuant to Sec. 161 AktG (‘Aktiengesetz’: German Stock Corporation Act)
The declaration of compliance required by Sec. 161 AktG regarding the recommendations of the
German Corporate Governance Code developed by the government commission has been submitted by the
management board and the supervisory board and is made permanently available to the shareholders on
alstria office REIT-AG’s website (www.alstria.com).
25. Auditors’ Fees
On June 5, 2008, the shareholder meeting elected PricewaterhouseCoopers AG Wirtschaftsprüfungs-
gesellschaft, Lise-Meitner-Str. 1, Berlin, to audit the separate and consolidated financial statements for
fiscal year 2008. The fee expenses in 2008 comprise as follows:
in EUR k
Audit services
other audit-related services (review)
Tax advisory services
other Services
2008
2007
356
82
0
100
419
0
30
504
113
26. Management Board
During the fiscal year the Company’s general managers were:
Mr. Olivier Elamine
Mr. Alexander Dexne
Chief Executive Officer (CEO)
Chief Financial Officier (CFO)
The attached compensation report contains details of the principles for the definition of the management
board and supervisory board remuneration.
27. Supervisory Board
Pursuant to the Company’s articles of association (section 9), the supervisory board consists of six mem-
bers, which are elected by the general meeting of shareholders. The expiration of the term of office is
identical for all members, i.e., the close of the annual general meeting of shareholders in the year 2011.
CONSOLIDATED FINANCIA L STATEM ENT S
During the fiscal year 2008 the members of the supervisory board were:
Alexander Stuhlmann Hamburg, Germany
Bvv versicherungsverein des Bankgewerbes a.G.
Member of the supervisory board
Bvv versorgungskasse des Bankgewerbes e.v.
Member of the supervisory board
Bvv pensionsfonds des Bankgewerbes AG
Member of the supervisory board
Capital Stage AG
vice-chairman of the supervisory board
Frank Beteiligungsgesellschaft mbH
Chairman of the advisory board
Hamburger Feuerkasse versicherung AG
vice-chairman of the supervisory board
HASpA Finanzholding
HCi Capital AG
Jahr Holding GmbH & Co. KG
Member of the board of trustees
Member of the supervisory board
Chairman of the advisory board
LBS Bausparkasse Schleswig-Holstein-Hamburg AG
Member of the supervisory board
Siedlungsbaugesellschaft Hermann und
paul Frank mbH & Co. KG
Chairman of the advisory board
Studio Hamburg Berlin Brandenburg GmbH
Member of the advisory board
until Apr. 30, 2008
WestLB AG
Ceo
114
John van Oost
London, england
nATiXiS Capital partners Ltd
Arman Amberley SaRL
Arman Mentelle SaRL
Arman plantagenet Bv
Arman voyager SpRL
Axiom Asset 1 GmbH & Co. KG
Axiom Asset 2 GmbH & Co. KG
Axiom immo Management GmbH
Captiva Capital Management SaRL
Captiva Healthcare Holding GmbH
Captiva industrial Gp GmbH
Captiva industrial Holding GmbH
express Holding Srl
Green Cove Capital Management SaRL
La Jolla Capital Management SaRL
natixis Capital partners GmbH
nATiXiS Capital partners Srl
ocala Capital Management LLC
director
Board member
Board member
Board member
Board member
director
director
director
Board member
director
director
director
Board member
Board member
Board member
director
Board member
Board member
Dr. Johannes Conradi Hamburg, Germany
Freshfields Bruckhaus deringer LLp
partner
Global head of real estate sector group
Managing partner of the Hamburg office
Member of the German management group
Richard Mully
dublin, ireland
Grove international partners LLp
Managing partner
Apellas Holdings B.v.
douglasshire international Holdings B.v.
event Hospitality Group B.v.
Hansteen Holdings pLC
Hellenic Land Holdings B.v.
Hypo Real estate Holdings AG
Karta Realty Limited
Med Group Leisure investments B.v.
nATiXiS Capital partners Ltd
director
director
director
director
director
Member of the supervisory board
director
director
director
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Group Management Discussion and Analysis
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Other Information
Consolidated Income Statement
Consolidated Balance Sheet
Consolidated Statements of Change in Equity
Consolidated Cash Flow Statement
Notes
nowe ogrody 2 Sp. z o.o.
nowe ogrody 3 Sp. z o.o.
nowe ogrody 4 Sp. z o.o.
nowe ogrody Sp. z o.o.
polish investment Real estate Holding B.v
polish investments Real estate Holding ii B.v.
Si Real estate Holding B.v.
Spazio investments nv
Spazio industriale ii B.v.
SRei di properties, inc.
director
director
director
director
director
director
director
director
director
director
Dr. Christian Olearius Hamburg, Germany
M.M. Warburg & Co KGaA
Spokesman of the partners
and general partner
Bankhaus Carl F. plump & Co., Bremen
Chairman of the supervisory board
Bankhaus Hallbaum AG, Hannover
Bankhaus Löbbecke AG, Berlin
Chairman of the supervisory board
Chairman of the supervisory board
115
Christian olearius Beteiligungsgesellschaft mbH,
Hamburg
director
degussa Bank GmbH, Frankfurt am Main
Chairman of the supervisory board
since dec. 9, 2008
dML deutsch-Märkische Landhandlung GmbH
director
Frachtcontor Junge & Co. GmbH, Hamburg
Chairman of the supervisory board
Gedo Grundstücksentwicklungs- und
verwaltungsgesellschaft mbH & Co KG, Grünwald
vice-chairman of the supervisory board
Hannover Finanz GmbH, Hannover
vice-chairman of the advisory board
KAiRoS vermögensverwaltungsgesellschaft mbH,
Bordesholm
director
KanAM Grund Kapitalanlagegesellschaft mbH,
Frankfurt am Main
Member of the supervisory board
until Jun. 30, 2008
Liquiditäts-Konsortialbank GmbH, Frankfurt am Main
deputy member of the administrative board
M.M. Warburg & Co Geschäftsführungs-AG,
Hamburg
Chairman of the supervisory board
M.M. Warburg & Co Hypothekenbank AG, Hamburg Chairman of the supervisory board
M.M. Warburg Bank (Schweiz) AG, Zürich
president of the administrative board
M.M. Warburg, olearius & Co. KG, Hamburg
General partner
M.M. Warburg-Hansa Ltd., Tortola/British virgin islands director
MARCARd, STein & Co AG, Hamburg
Chairman of the supervisory board
vTG Aktiengesellschaft, Hamburg
Warburg invest Kapitalanlagegesellschaft mbH,
Frankfurt am Main
Member of the supervisory board
Member of the supervisory board
Zweite KG Christian olearius Beteiligungsgesellschaft
mbH & Co., Hamburg
director
until Jul. 10, 2008
Daniel Quai
Geneva, Switzerland
nATiXiS Capital partners Ltd
Arman SW03
CdS Costruzioni S.p.A.
CdS Holding S.p.A.
CdS project development Bv
excelsia otto Srl
express Holdings Srl
natixis Capital partners GmbH
newreal SpA
director
director
director
director
director
director
director
Managing director
director
CONSOLIDATED FINANCIA L STATEM ENT S
Dr. Christian Olearius resigned from the supervisory board, effective August 31, 2008.
28. Management Compliance Statement
‘We confirm that, to the best of our knowledge, the consolidated financial statements give a true and fair
view of the net assets, financial position and results of operations of the Group and the Group manage-
ment report gives a true and fair view of business performance including the results of operations and the
situation of the Group, and describes the main opportunities and risks and anticipated development of the
Group in accordance with the applicable financial reporting framework.’
Hamburg, February 18, 2009
The Management Board
116
Olivier Elamine
CEO alstria office REIT-AG
Alexander Dexne
CFO alstria office REIT-AG
Preface
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alstria Stock
Group Management Discussion and Analysis
Group Management Discussion and Analysis
Consolidated Financial Statements
Consolidated Financial Statements
Auditors´ Report
Auditors´ Report
Management
Management
Other Information
Other Information
Consolidated Income Statement
Consolidated Balance Sheet
Consolidated Statements of Change in Equity
Consolidated Cash Flow Statement
Notes
117
Au diToRS´ R epoR T
‘We have audited the consolidated financial statements prepared by the alstria office REIT-AG, Hamburg,
comprising the balance sheet, income statement, statement of changes in equity, cash flow statement and
notes to the consolidated financial statements, together with the group management report for the
business year from January 1 through December 31, 2008. The preparation of the consolidated financial
statements and the group management report in accordance with IFRS as applicable within the European
Union and the supplementary provisions of Section 315a (1) German Commercial Code) is the responsibility
of the Company’s management Board. Our responsibility is to express an opinion on the consolidated
financial statements and the group management report based on our audit.
We conducted our audit of the consolidated financial statements in accordance with Section 317 HGB
[Handelsgesetzbuch – German Commercial Code] and German generally accepted standards for the audit of
financial statements promulgated by the Institut der Wirtschaftsprüfer (Institute of Public Auditors in
Germany – IDW). Those standards require that we plan and perform the audit such that misstatements
materially affecting the presentation of the net assets, financial position and results of operations in the
consolidated financial statements in accordance with (German) principles of proper accounting and in the
group management report are detected with reasonable assurance. Knowledge of the business activities and
the economic and legal environment of the Group and expectations as to possible misstatements are taken
into account in the determination of audit procedures. The effectiveness of the accounting-related internal
control system and the evidence supporting the disclosures in the consolidated financial statements and the
group management report are examined primarily on a test basis within the framework of the audit. The
audit includes assessing the annual financial statements of the companies included in consolidation, the
determination of the companies to be included in consolidation, the accounting and consolidation princi-
ples used and significant estimates made by the Company’s Management Board, as well as evaluating the
overall presentation of the consolidated financial statements and the group management report. We believe
that our audit provides a reasonable basis for our opinion.
Our audit has not led to any reservations.
In our opinion based on the findings of our audit the consolidated financial statements comply with the
legal requirements of IFRS as applicable within the Europeab Union and the supplementary provisions of
Section 315a (1) German Commercial Code, and give a true and fair view of the net assets, financial position
and results of operations of the Group in accordance with (German) principles of proper accounting.
The group management report is consistent with the consolidated financial statements and as a whole
provides a suitable view of the Group’s position and suitably presents the opportunities and risks of future
development.’
Berlin, February 24, 2009
PricewaterhouseCoopers
Aktiengesellschaft
Wirtschaftsprüfungsgesellschaft
sgd. Gregory Hartmann
Wirtschaftsprüfer
(German Public Auditor)
sgd. ppa. Markus Salzer
Wirtschaftsprüfer
(German Public Auditor)
118
MANAG EMENT
Re poR T FRoM THe SupeR
viSoR Y BoARd
Supervision of the Company’s Management
During the reporting year, the supervisory board supervised the Company’s management in accordance with
statutory law and the articles of association. Within the scope of its meetings, of the meetings of its
committees and by means of further reports provided by the management board both orally and in writing,
the supervisory board informed itself regularly and in detail on the situation and the development of the
Company, important commercial operations and the risk management. Transactions requiring the consent
of the supervisory board and the strategic direction of the Company have been discussed in detail. As far as
required by law, articles of association or rules of procedures, the supervisory board resolved after diligent
assessment and debate. The management board informed the supervisory board about events of fundamen-
tal importance also in between meetings; furthermore the chairman of the supervisory board and the
management board had information and consultation talks on a regular basis.
The market situation, development of the Company and internal organisation were addressed on each
ordinary supervisory board meeting during the reporting period. Moreover and especially during the global
financial crisis and the corresponding significant losses of the share price, the supervisory board debated
important specific matters which are material for the further development of the Company. The supervisory
board decided on legal transactions and measures in which it is obliged to participate in accordance with
statutory provisions, the articles of association, and the rules of procedure of the management board or the
rules of procedure of the supervisory board. This also applies to the Company’s budget planning.
In 2008, the supervisory board had seven meetings in plenary session, three of them in the first half and four
meetings in the second half of the calendar year. Additionally in 2008 the supervisory board made five
decisions by way of circular resolution and further two decisions by way of circular resolution in the begin-
ning of 2009. All supervisory board members attended each and every meeting personally or participated in
the resolutions by written vote. In financial year 2008 all members of the supervisory board took part in more
than half of the meetings of the supervisory board held during their term of office.
Focal Points of Discussion
The focal points of the supervisory board meetings were, at the beginning and in the middle of the reporting
year, the financing of future growth as well as cooperations and successes in the management of single
assets and significant new leases. In the fourth quarter of 2008, the supervisory board discussed with the
management board in one ordinary and two extraordinary plenary sessions the Company’s situation in the
global financial crisis, debated the risks arising from such crisis and elaborated measures to lead the
Company unaffectedly through the financial crisis. At the end of the reporting period, the supervisory board
was concerned with the annual and consolidated financial statements as of December 31, 2008 and the
corporate and budget planning for the financial year 2009 as well as with the prolongation of the office term
and service contracts of the management board members and the amendment of a loan agreement. During
the whole year 2008 the supervisory board dealt in detail with the valuation of the assets.
Further subjects were the discussion of the quarterly financial reports and the recommendations for resolu-
tion for the AGM.
Preface
TRUST
alstria Stock
Group Management Discussion and Analysis
Consolidated Financial Statements
Auditors´ Report
Management
Other Information
Report from the supervisory board
Corporate Governance Report
Compensation Report
REIT Declaration
REIT Memorandum
Valuation Report
List of properties
Members of the Supervisory Board
In the reporting period the supervisory board had the following members: Alexander Stuhlmann as chair-
man, John van Oost as vice-chairman and Dr. Johannes Conradi, Richard Mully, Dr. Christian Olearius, and
Daniel Quai as further members. Effective September 1, 2008, Dr. Christian Olearius resigned from his office.
He gave precious initial aid for alstria office REIT-AG. Thanks to his generous dedication to the Company,
he contributed essentially to the Company’s quick growth, the successful IPO and the fast establishment of
alstria office REIT-AG in the German real estate market. The supervisory board thanks Dr. Christian Olearius
for his outstanding services for the Company. By decision of the local court of Hamburg in February 2009
Roger Lee was appointed as member of the supervisory board of alstria office REIT-AG until the conclusion of
the next annual general meeting. The supervisory board will recommend to the annual general meeting to
elect Roger Lee as successor for Dr. Christian Olearius.
Committees of the Supervisory Board
The supervisory board had three committees during the reporting period. The chairmen of such committees
informed the plenary meetings about the committees’ work.
119
Members of the audit committee of the supervisory board are Dr. Johannes Conradi as chairman, John van
Oost and Daniel Quai. John van Oost was elected by the supervisory board as successor for Dr. Christian
Olearius. The members of the audit committee handle issues of accounting, the auditors’ necessary
independence, the issuing of the audit mandate, the determination of auditing focal points and the fee
agreement as well as issues of risk management and compliance. The audit committee had three meetings
in the reporting period.
The members of the investment committee are John van Oost as chairman, Richard Mully and Alexander
Stuhlmann. The committee decides on acquisitions and disposals of assets, provided that the consideration
is between EUR 30,000,000 and EUR 100,000,000. Beyond that amount, the supervisory board decides in
plenary session. The investment committee did not hold any meetings during the reporting period.
In the reporting period the supervisory board constituted a nomination and remuneration committee and
elected John van Oost as chairman, Richard Mully and Alexander Stuhlmann as members. The nomination
and remuneration committee prepares the discussions and resolutions of the supervisory board regarding
management board matters and accompanies the execution of the according resolutions of the supervisory
board. In some management board matters the committee has the power to resolve. The nomination and
remuneration committee had one meeting during the reporting period and took two resolutions by way of
written circular resolution.
MANAG EMENT
120
Audit of Annual and Consolidated Financial Statements
PricewaterhouseCoopers Aktiengesellschaft Wirtschaftsprüfungsgesellschaft, branch Berlin, audited the
annual financial statement and the management report of alstria office REIT-AG as well as the consolidated
financial statement and the consolidated management report for the business year ending December 31,
2008 prepared by the management board and provided them with an unqualified audit opinion. The audit
committee monitored the auditors’ work and independency and determined the focal points for the audit.
The annual financial statement and the management report of alstria office REIT-AG, the consolidated finan-
cial statement and the consolidated management report, the recommendation for the profit appropriation
as well as the auditors’ reports produced by PricewaterhouseCoopers Aktiengesellschaft Wirtschafts-
prüfungsgesellschaft, Berlin, were made available to all members of the supervisory board, immediately
after their preparation. Thereupon the audit committee and the supervisory board in plenary session have
reviewed the documents prepared by the management board. The auditors attended the meeting of the
audit committee and gave an account of the results of their audit. The audit committee prepared the review
of the documents by the supervisory board and reported on its work in the presence of the auditor in the
meeting of the supervisory board. The supervisory board discussed and verified the documents prepared by
the management board as well as the results of the auditors and sub sequently has affirmatively taken note
of them. No objections had to be raised. The supervisory board has approved the annual financial statement
and the consolidated financial statement. Thus, the 2008 annual financial statement for alstria office
REIT-AG has been adopted. The supervisory board followed the management board’s recommendation
for the profit appropriation.
Moreover, the management board presented the report on relations to affiliated companies pursuant to
section 312 German Stock Corporation Act (AktG) to the supervisory board. Likewise, the auditors’ report
prepared thereto by PricewaterhouseCoopers Aktiengesellschaft Wirtschaftsprüfungsgesellschaft, branch
Berlin, was presented to the supervisory board. The audit opinion of the auditor reads as follows:
‘On the basis of our dutiful audit and judgement, we confirm that
1. the factual statements of the report are correct,
2. the consideration of the Company for the legal transactions stated in the report was not
inadequately high.’
The supervisory board also reviewed this report by the management board and has affirmatively taken note
of the report prepared thereto by the auditors. In accordance with the final result of its own review, the
supervisory board approves the statement of the management board regarding the report pursuant to
section 312 (3) AktG. No objections had to be raised.
Preface
TRUST
alstria Stock
Group Management Discussion and Analysis
Consolidated Financial Statements
Auditors´ Report
Management
Other Information
Report from the supervisory board
Corporate Governance Report
Compensation Report
REIT Declaration
REIT Memorandum
Valuation Report
List of properties
Risk Management and Compliance
The audit committee assured itself of the efficiency of the risk management system and addressed the major
risks according to such a system with the auditors and the management board. The audit committee
discussed compliance issues with the management board on a regular basis.
Corporate Governance
During the reporting year the supervisory board also dealt with the Company’s fulfilment of the recommen-
dations of the German Corporate Governance Code. In March 2009 the management board and the supervi-
sory board issued the latest annual statement of compliance in accordance with section 161 AktG, which is
permanently made available to the shareholders on the website of the Company. The management board
and the supervisory board have declared that the Company followed and will follow almost all the recom-
mendations of the German Corporate Governance Code and which of the recommendations have not been
followed and will not be followed. Each member of the supervisory board discloses any possible conflict
of interest to the supervisory board and abstains from voting on the respective resolutions. When the
supervisory board makes decisions regarding contracts with supervisory board members pursuant to
section 114 AktG, the member concerned does not participate in the decision. The members of the super-
visory board examined the efficiency of their work on the basis of a questionnaire which was completed
by each member of the supervisory board. The result of the evaluation has turned out satisfactory.
The supervisory board would like to thank all employees and the management board for their dedication and
successful work in 2008.
121
Hamburg, March 2009
Alexander Stuhlmann
Chairman of the supervisory board
MANAG EMENT
CoRp oR ATe GoveRnAnCe RepoR T
alstria’s management and supervisory board are aware of the Company’s responsibilities towards its share-
holders, employees and business partners. For the purpose of a value-oriented corporate management,
alstria has therefore implemented the German Corporate Governance Code (as amended on June 6, 2008) to
a great extent, thereby surpassing legal provisions. The recommendations and suggestions made by
the government commission set up by the German Federal Ministry of Justice include internationally and
nationally accepted standards regarding good and responsible management of companies.
Corporate Governance principles provide regulations for the following areas:
● they describe the major rights of the shareholders.
● they define clear management principles and the respective responsibilities for the
individual Company bodies.
122
● they regulate the interaction between these bodies.
● they demand straightforward and transparent communication with the public.
● they require conscientious, reliable accounting and auditing.
Relations with the Company’s Shareholders
alstria office REIT-AG respects the rights of shareholders and guarantees the exercise of these rights to the
best of its ability within the given statutory framework. In particular, these rights include the free purchase
and the free sale of shares, an appropriate fulfilment of one’s need for information, equal voting rights for
each share (one share-one vote) as well as participation in the annual shareholders’ meeting. Shareholders
may exercise their voting right at the annual general meeting either personally, via a representative of their
choice or an authorised Company proxy. The option of giving voting instructions is illustrated in the invita-
tion to the annual general meeting. The annual general meeting 2008 approved the electronic communica-
tion of information to shareholders. Thus, at request of the shareholder, the convening documents for
annual general meetings may be sent to the shareholders by way of electronic means. All documents that
are to be made available to the shareholders prior to the annual general meeting including the annual report
are published together with the agenda on alstria’s website.
Communication with the Public
When relaying information to people outside the Company, the management board observes the principles
of transparency, promptness, openness, comprehensibility and due equal treatment of shareholders. alstria
informs its shareholders and third parties about the Company’s position and significant business activities
mainly by financial reports, analysts conferences, press releases and ad-hoc news as well as by the annual
general meeting. On alstria’s website shareholders find comprehensive information on the Company and the
share, especially the financial reports, the share performance, announcements on the purchase or the dis-
posal of alstria’s shares or financial instruments based on them according to section 15a German Securities
Trade Act (WpHG). Additionally alstria publishes a financial calendar in its financial reports and on its website
that lists all important dates for the shareholders. All publications and announcements are published in
English and German language. A detailed list of all capital markets communications published in 2008 is
included in the annual document required by section 10 of the German Securities Prospectus Act (WpPG). The
annual document is also published on alstria’s website.
Preface
TRUST
alstria Stock
Group Management Discussion and Analysis
Consolidated Financial Statements
Auditors´ Report
Management
Other Information
Report from the supervisory board
Corporate Governance Report
Compensation Report
REIT Declaration
REIT Memorandum
Valuation Report
List of properties
123
Management Board
The management board as a whole, as well as each individual board member, will conduct the Company’s
business with the due care and diligence of a precise and conscientious management board member in
accordance with governing law, the articles of association, and the rules of procedure for the management
board. The management board manages the Company on its own responsibility. The management board
determines corporate objectives and – in coordination with the supervisory board – the Company’s strategic
approach and the Group’s policy and organisation. In doing so, it is obliged to act in the Company’s best
interests and committed to developing sustainable enterprise value. The management board ensures
appropriate risk management and risk controlling within the Company. The members of the management
board are obliged to disclose conflicts of interest to the supervisory board without undue delay. They shall
take on sideline activities, especially supervisory board mandates outside the Group, only with the approval
of the supervisory board. During the reporting period there were no such conflicts of interest. Important
transactions between the Company and the members of the management board as well as persons they are
close to or companies they have personal association with require the approval of the supervisory board. This
includes decisions or measures that fundamentally change the Company’s assets, financial or earnings situ-
ation. All transactions must comply with standards customary in the sector. No such transactions did exist
during the reporting period.
Supervisory Board
It is the task of the supervisory board of alstria office REIT-AG to appoint the management board members,
to regularly advice the management, and to supervise and support it and the achievement of alstria’s
long-term goals. The supervisory board is directly involved in transactions of fundamental importance. The
supervisory board reports on its activities in financial year 2008 on pages 118 to 121 of the annual report.
Cooperation between the Management Board and the Supervisory Board
The management board and the supervisory board cooperate closely and trustfully to the benefit of the
Company. The chairman of the supervisory board keeps in regular contact with the management board. The
management board coordinates the Company’s strategic alignment with the supervisory board and dis-
cusses with it the current state of strategy implementation, business development, risk situation, risk man-
agement and the Company’s compliance at regular intervals.
Reporting and Audit of Annual Financial Statement
During the financial year alstria informs shareholders and third parties regularly by means of the consoli-
dated financial statements, the half-year report and interim reports. Consolidated reporting complies with
the International Financial Reporting Standards (IFRS).
For corporate law purposes (calculation of dividend, creditor protection), the annual financial statement is
prepared in accordance with national regulations (German Commercial Code). The consolidated financial
statement is reviewed by the supervisory board as well as by the auditors elected by the annual general
meeting. The audit committee of the supervisory board issues the audit assignment and concludes a fee
agreement with the auditors after verifying the auditor’s independence. PricewaterhouseCoopers Aktien-
gesellschaft Wirtschaftsprüfungsgesellschaft, Berlin, was elected as auditor and group auditor for the
financial year 2008 and for the review of the half-year financial report. The auditor participates in the super-
visory board’s and the audit committee’s discussions of the annual financial statements and consolidated
financial statements and reports the basic audit results.
MANAG EMENT
Stock Option Program and Similar Securities-Based Incentive Systems
Stock Option Program
The stock option program provides for the issuance of option rights to the Company’s management board
members. Please refer to the compensation report on page 128 for further information.
Employee Participation Program
The employee participation program provides for the issuance of convertible profit participation certificates
to the employees of alstria and to the employees of Companies in which alstria, directly or indirectly, holds
a majority interest. Members of the management board are not considered employees of alstria.
The nominal amount of each certificate is EUR 1. Under the program, up to 500,000 certificates in an aggre-
gate nominal amount of up to EUR 500 k may be issued. Up to now, 44,600 certificates have been issued.
124
Each certificate will be converted into one no par value bearer share of alstria if the stock exchange price
exceeds the stock exchange price of alstria’s shares on the issuance date by at least 5% on at least seven
non-subsequent trading days prior to the mandatory conversion date. The certificates will only be converted
if the beneficiary pays the conversion price and at the mandatory conversion date is still employed with
alstria or a subsidiary. The maximum term of each certificate is five years.
Directors’ Dealings
Under section 15a WpHG, the management and supervisory board members of alstria office REIT-AG, as well
as persons who have a close relationship with such members (family members) are obligated to report
trading in alstria shares. In addition to the purchase and sale of alstria shares, any transactions in securities
relating to alstria shares (e.g. the sale of purchase of options on alstria shares) have to be reported. The
Company has to be notified about such transactions within five working days and has to publish them
immediately. This obligation is inapplicable if the total value of these tradings does not exceed EUR 5 k
during one calendar year.
Preface
TRUST
alstria Stock
Group Management Discussion and Analysis
Consolidated Financial Statements
Auditors´ Report
Management
Other Information
Report from the supervisory board
Corporate Governance Report
Compensation Report
REIT Declaration
REIT Memorandum
Valuation Report
List of properties
The following transactions were executed in 2008 and reported to alstria:
Directors’ Dealings in 2008
Name
of board
member
olivier
elamine
olivier
elamine
olivier
elamine
Alexander
dexne
Marion
Stuhlmann
Marion
Stuhlmann
olivier
elamine
olivier
elamine
Alexander
Stuhlmann
Alexander
Stuhlmann
Function
Member of
manage-
ment board
Member of
manage-
ment board
Member of
manage-
ment board
Member of
manage-
ment board
natural
person in
relation to
member of
the supervi-
sory board
natural
person in
relation to
member of
the supervi-
sory board
Member of
manage-
ment board
Member of
manage-
ment board
Member of
supervisory
board
Member of
supervisory
board
Classifi-
cation of
the share
ISIN
Trans-
action
Place
Transaction
date
Price per
share
in u
Number
of
shares
Deal
volume
de000A0L-
d2u1
Share
purchase
Xetra
de000A0L-
d2u1
Share
purchase
Xetra
de000A0L-
d2u1
Share
purchase off-market
de000A0L-
d2u1
Share
purchase off-market
Jan. 11,
2008
Jun. 6,
2008
Jun. 6,
2008
Jun. 6,
2008
9.75
1,500
14,625
11.24
425
4,777
11.03
7,500
82,725
125
11.03
2,000
22,060
de000A0L-
d2u1
Share
purchase
Xetra
Sep. 2,
2008
10.33
787
8,130
de000A0L-
d2u1
Share
purchase
Xetra
de000A0L-
d2u1
Share
purchase
Xetra
de000A0L-
d2u1
Share
purchase
Xetra
de000A0L-
d2u1
Share
purchase
Xetra
de000A0L-
d2u1
Share
purchase
Xetra
Sep. 2,
2008
oct. 17,
2008
nov. 19,
2008
nov. 20,
2008
nov. 26,
2008
10.35
1,213
12,555
4.65
5,000
23,250
3.28
2,500
8,200
2.92
5,000
14,600
2.75
5,000
13,750
MANAG EMENT
Directors’ Share Ownership Details
No. 6.6 of the German Corporate Governance Code recommends that the direct or indirect ownership of
shares of the Company or related financial instruments such as derivatives by a member of the supervisory
board or of the management board shall be disclosed if it amounts to more than 1% of the issued shares of
the Company. If the total owned by all members of the supervisory board and members of the management
board amounts to more than 1% of the issued shares of the Company, ownership should be disclosed for
management board members as a group and for supervisory board members as a group.
No member of the management board or the supervisory board directly or indirectly owns more than 1% of
the Company’s subscribed capital. The entire holdings of all members of the management board and super-
visory board do not exceed 1% of the shares issued by the Company.
126
Corporate Governance Code and Compliance Declaration
The official compliance declaration of alstria’s management and supervisory board is accessible on astria’s
website (www.alstria.com). With regard to a few individual items alstria has, after thorough deliberation,
decided not to comply with the code. These items are specified in the declaration. The reasons for non-
compliance are stated in the latest declaration that management board and supervisory board issued on
March 03, 2009.
alstria complied with the recommendations of the ‘Government Commission German Corporate Governance
Code’ as amended on June 6, 2008 since the last declaration of compliance as of November 20, 2008 with the
following exceptions and intends to further comply with the recommendations to the same extent:
Deductible in the Case of D&O Insurances, No. 3.8
With regard to the D&O insurance effected for the management and supervisory board of alstria office
REIT-AG, no deductible has been agreed. Both management and supervisory board believe that the sense of
responsibility applied in fulfilment of their duties is fully guaranteed without any such deductible.
Possibility of Limitation (Cap) on Stock Options, No. 4.2.3
The supervisory board has not agreed a cap on the stock option program for the management board in the
event of extraordinary and unforeseeable developments. For any future stock option programs and similar
systems, there will be a discussion as to whether a cap should be agreed.
Specialist Knowledge and Experience of the Chairman of the Audit Committee,
No. 5.3.2
The chairman of the audit committee is not a professional auditor. Nevertheless, due to his comprehensive
professional expertise as a lawyer regarding Commercial Law and Commercial Real Estate Law and his
several years of work experience in the audit committee at alstria office REIT-AG, the Company believes that
he is sufficiently qualified to act as chairman of the audit committee.
Performance-Related Compensation for Members of the Supervisory Board, No. 5.4.7
The members of the supervisory board do not receive a performance-related remuneration in addition to
their fixed remuneration. The reason for the deviance from the German Corporate Governance Code in this
regard is the relatively small size of the Company.
Preface
TRUST
alstria Stock
Group Management Discussion and Analysis
Consolidated Financial Statements
Auditors´ Report
Management
Other Information
Report from the supervisory board
Corporate Governance Report
Compensation Report
REIT Declaration
REIT Memorandum
Valuation Report
List of properties
Discussion of Half-Year and Quarterly Financial Reports with the Management Board
by the Supervisory Board or its Audit Committee prior to the Publication, No. 7.1.2
The management board makes the half-year and quarterly financial reports available to the supervisory
board prior to their publication. In addition the management board discusses the reports in detail with the
supervisory board shortly after their publication. In case of major variations from the budget or business
plan as approved by the supervisory board, the management board offers to discuss the numbers prior to
the publication. Management board and supervisory board consider this procedure as appropriate and
sufficient.
All other recommendations of the German Corporate Governance Code as amended on June 06, 2008 have
been and will be implemented in their entirety. alstria has appointed a corporate governance representative
within the Company to report amendments to an implementation of the German Corporate Governance
Code to the management and supervisory boards at least once a year. In this way alstria ensures the con-
tinuous observance of these principles in the Company. By means of analysis, supervision and transparency,
alstria lays the foundations for fair and efficient corporate management. This will remain alstria’s standard
in the future as well.
127
MANAG EMENT
CoMpe nSATion RepoR T 1
Management Board Compensation
The total compensation paid to the members of the management board in the financial year 2008 was
EUR 1,051 k. In 2008, management board compensation comprised fixed and variable components. There
were no advance payments to board members, no credits and no granting of pension benefits.
Individual Management Board Member Compensation in 2008 (in EUR k)
Management board
member
olivier elamine
Chief executive officer
Alexander dexne
Chief Financial officer
Total
Fixed
compen-
sation
Performance
based com-
pensation1
Other
payments2
Long-term
incentives
Total
remune-
ration
265
300
565
350
100
450
17
19
36
0
0
0
632
419
1,051
128
1 Related to 2007 performance. 2 Comprises benefits for company cars.
Individual Management Board Member Compensation in 2007 (in EUR k)
Management board
member
olivier elamine
Chief executive officer
Alexander dexne
Chief Financial officer
since Jun. 1, 2007
dr. Michael Börner-
Kleindienst
Chief operating officer
from Mar. 1 to
oct. 31, 2007
dr. Robert Hannemann
Chief Financial officer
until Feb. 1, 2007
Total
Fixed
compen-
sation
Performance
based com-
pensation1
Other
payments2
Long-term
incentives4
Total
remune-
ration
265
175
350
n/a
4273
n/a
50
917
50
400
43
25
7
5
80
502
1,160
53
253
251
685
n/a
806
105
2,203
1 Related to 2006 performance.
2 Comprises benefits like company cars or relocation allowances.
3 Includes severance payment of EUR 250 k.
4 Total non-cash expenses recognised for 2007.
1 This compensation report is an integral component of the audited group management discussion and analysis and notes and is also part of the
Corporate Governance Report.
Preface
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alstria Stock
Group Management Discussion and Analysis
Consolidated Financial Statements
Auditors´ Report
Management
Other Information
Report from the supervisory board
Corporate Governance Report
Compensation Report
REIT Declaration
REIT Memorandum
Valuation Report
List of properties
The Company has agreed to assume the premiums of a combined disability and risk life insurance policy for
both members of the management board, providing each for an insurance sum of EUR 5 k per month (until
reaching the age of 65) in case of invalidity as well as EUR 2,500 k as lump sum coverage in case of death. If
Mr. Elamine or Mr. Dexne should die during the term of their service contract, the fixed remuneration shall be
paid for the month of death and the following three months. The bonus shall be paid on a pro rata temporis
basis until the end of the month of death. Mr. Elamine and Mr. Dexne are subject to a post-contractual
non-compete obligation for up to twelve months after termination of their respective service contracts and
are entitled to a compensation amounting to their last fixed salary for the duration of such post-contractual
non-compete obligation.
In 2008 former management board members received payments in a total amount of EUR 250 k. The
Company did not have to build accruals and deferrals for pensions of former management board members.
Stock Option Program
On March 27, 2007 the supervisory board of the Company resolved on the establishment of a stock option
program for the members of the management board. The supervisory board fixed the details of the stock
option program in accordance with an authorisation granted by the general meeting of shareholders of
March 15, 2007 and granted a first tranche of stock options to the management board.
129
The main terms of the stock option program resolved by the supervisory board can be summarised as
follows:
Under the stock option program, up to two million options entitling to the subscription of a maximum of
two million shares of the Company with a total notional value of EUR 2,000 k may be granted to members of
the management board. The stock options will be granted in annual tranches. The first tranche was granted
by the supervisory board in 2007, subject to the below said conditions. The exercise price for the stock op-
tions granted in 2007 is EUR 16. The exercise price for options to be granted in future will be 100% of the
arithmetic means of the XETRA trading’s final auction of alstria’s shares on the Frankfurt Stock Exchange on
the last ten trading days before the options have been issued (‘Issue Date’). Due to the development of the
Company’s share price, the supervisory board did not grant any stock options in 2008. The stock options
granted to Olivier Elamine and Alexander Dexne in the financial year 2007 triggered expenses in the amount
of EUR 335 k for Olivier Elamine and EUR 125 k for Alexander Dexne in the financial year 2008.
The term of each stock option is seven years beginning with the respective issue date. The stock options may
only be exercised if the stock exchange price of the Company’s shares exceeds the stock exchange price of the
Company’s shares on the issue date by 20% or more for at least seven non subsequent trading days of the
Frankfurt Stock Exchange after the issue date, but prior to the commencement of the respective exercise
period. The stock options may only be exercised after the expiration of a vesting period of two years and then
during the four exercise periods each year. Each exercise period lasts 30 days, commencing with the day of
announcement of the results for the first, second and third quarter, and the day of the Company’s annual
general meeting, respectively. There are no cash settlement alternatives.
MANAG EMENT
Supervisory Board Compensation
Supervisory board compensation totalled EUR 291.6 k in 2008. The supervisory board members receive an
annual fixed compensation of EUR 40 k each. The chairman of the supervisory board receives additional
remuneration of EUR 20 k p.a., his deputy receives an additional EUR 10 k p.a. Members who are on the board
for only part of the year receive pro rata remuneration for that part of the year. Furthermore, membership in
(EUR 10 k) and chairmanship of (EUR 15 k) the audit committee are taken into account in the evaluation of the
supervisory board members’ compensation amount. Membership in other committees is not taken into
account. No advance payments were made to the supervisory board, no credits were granted to the super-
visory board and no compensation was paid for individually performed services.
Individual Supervisory Board Member Compensation (in EUR k)
130
Supervisory board member
Compensation for
2008
Compensation for
2007
Alexander Stuhlmann – chairman of the supervisory board
John van oost – vice chairman of the supervisory board;
since Sep. 2008 member of the audit committee
dr. Johannes Conradi – member of the supervisory board;
chairman of the audit committee
Richard Mully – member of the supervisory board
dr. Christian olearius – until Aug. 2008 member of the
supervisory board and the audit committee
daniel Quai – member of the supervisory board
and the audit committee
Stephan Fritsch – member of the supervisory board
until Jan. 2007
Total
60.0
53.3
55.0
40.0
33.3
50.0
-
291.6
50.0
52.5
48.1
38.3
43.8
48.8
1.7
283.2
Preface
TRUST
alstria Stock
Group Management Discussion and Analysis
Consolidated Financial Statements
Auditors´ Report
Management
Other Information
Report from the supervisory board
Corporate Governance Report
Compensation Report
REIT Declaration
REIT Memorandum
Valuation Report
List of properties
Re iT deC LAR ATi o n
Statement of the Management Board
Regarding the compliance with the requirements of sections 11 to 15 Real Estate Investment Trust Law
(REIT Act) as per December 31, 2008, we declare the following in relation with our financial statement accord-
ing to section 264 German Commercial Code (HGB) and our consolidated financial statement according to
section 315a HGB as per balance sheet date:
1. As per balance sheet date, 31.52% of alstria’s shares were free float according to section 11 (1) REIT Act. This
was stated to the German Federal Financial Supervisory Authority (BaFin).
2. In accordance with section 11 (4) REIT Act, as per balance sheet date, no shareholder owned directly
10% or more of our shares or shares of such an amount, that he holds 10% or more of the voting rights.
3. In accordance with section 12 (2) the Group held EUR 1,809 million immovable assets as per balance sheet
date, which equals 97% of assets. No REIT service companies were included into the consolidated financial
statement.
131
4. For the financial year 2008 the entire sales revenues of the Group plus other earnings from immovable
assets in the meaning of section 12 (3) and (4) REIT Act amounted to EUR 103.5 million. This equals
100% of total revenues.
5. In 2008 a dividend payment of EUR 28.4 million for the prior financial year was distributed to the
shareholders. The financial year 2007 did not result in a net income according to commercial law pursuant
to section 275 HGB and pursuant to section 13 REIT Act.
6. Since 2007 the Group realised 1.2% of the average portfolio of its immovable assets and therefore did not
trade with real estate according to section 14 REIT Act.
7. The Group’s equity according to section 15 REIT Act as stated on balance sheet date was EUR 730 million.
This equals in conformance with section 15 REIT Act 40.3% of the immovable assets. For the first time, the
equity ratio fell below the threshold pursuant to section 15 REIT act.
Hamburg, February 18, 2009
Olivier Elamine
CEO
alstria office REIT-AG
Alexander Dexne
CFO
alstria office REIT-AG
MANAG EMENT
Re iT M eMoRAnduM
132
Auditor‘s Memorandum according to Section 1 (4) of the Act on German Real Estate Stock Corporations
with Listed Shares (REIT Act)
To alstria office REIT-AG, Hamburg
As auditor of the financial statement and the consolidated financial statement of alstria office REIT-AG,
Hamburg, for the business year from January 1, to December 31, 2008, we have audited the information given
in the attached declaration of the management board members for the compliance with the requirements
of Section 11 to 15 of the REIT Act (hereinafter referred to as „REIT declaration“). The information given in the
REIT declaration is in the accountability of the management board of the company. Our responsibility is to
express an opinion on the information given, based on our audit.
We conducted our audit considering the audit advice promulgated by the Institut der Wirtschaftsprüfer
(Institute of Public Auditors in Germany) (IDW): Particularities concerning the audit of a REIT stock corpora-
tion according to Section 1 (4) REIT Act, a pre-REIT stock corporation according to Section 2 Clause 3 REIT Act
and the audit according to Section 21 (3) Clause 3 REIT Act (IDW PH 9.950.2). Therefore we have planned and
performed our audit to make a judgement with reasonable assurance if the free float ratio and the maximum
stock ownership per shareholder according to Section 11 (1) and (4) REIT Act agrees with the announcements
due to Section 11 (5) REIT Act as of December 31, 2008 and if the provided information concerning the require-
ments of Section 12 to 15 REIT Act is in accordance with the respective information disclosed in the financial
statement and the consolidated financial statements of the company. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion based on the findings of our audit, the information given in the REIT declaration concerning
the free float ratio and the maximum stock ownership per shareholder due to Section 11 (1) and (4) REIT Act
agrees with the announcements made according to Section 11 (5) REIT Act as of December 31, 2008 and the
information provided concerning the compliance with Section 12 to 15 REIT Act are appropriate.
This memorandum is solely provided for submission to the tax authorities of the city of Hamburg within the
tax declaration according to Section 21 (2) REIT Act.
Berlin, February 24, 2009
PricewaterhouseCoopers
Aktiengesellschaft
Wirtschaftsprüfungsgesellschaft
sgd. Gregory Hartman
Wirtschaftsprüfer
(German Public Auditor)
sgd. ppa. Markus Salzer
Wirtschaftsprüfer
(German Public Auditor)
Preface
TRUST
alstria Stock
Group Management Discussion and Analysis
Consolidated Financial Statements
Auditors´ Report
Management
Other Information
Report from the supervisory board
Corporate Governance Report
Compensation Report
REIT Declaration
REIT Memorandum
Valuation Report
List of properties
vALuATi o n RepoR T
The Directors
alstria office REIT-AG
Fuhlentwiete 12
20355 Hamburg
Germany
FAO: Alexander Dexne
The Directors
HSH Nordbank AG
Gerhart-Hauptmann-Platz 50
20095 Hamburg
Germany
Colliers CRe
9 Marylebone Lane
London
W1u 1HL
Tel: 020 7935 4499
Fax: 020 7344 6539
direct Line
direct Fax
Mobile
020 7344 6609
020 7344 6539
07768 500 202
chris.fowler-tutt@collierscre.co.uk
Dear Sirs
THE ALSTRIA OFFICE REIT-AG PORTFOLIO VALUATION AS AT 31 DECEMBER 2008
We refer to your instructions to provide you with our opinion of the Market Value of the above portfolio,
as at 31 December 2008, for balance sheet purposes, debt covenant calculation and inclusion within your
financial year end accounts.
133
We have pleasure in presenting our report.
INSPECTIONS AND QUALIFICATIONS
The properties have been inspected and valued by suitably qualified surveyors who fall within the require-
ments as to competence as set out in PS 1.4 and 1.5 of the Valuation Standards 6th Edition (the ‘Red Book’)
issued by the Royal Institution of Chartered Surveyors (the ‘RICS’).
We confirm that Colliers CRE complies with the requirements of independence and objectivity under PS 1.6
and that we have no conflict of interest in acting on your behalf in this matter.
The properties were all inspected at various times between June 2006 and December 2007 by either Christo-
pher J Fowler-Tutt, BSc MRICS, Robert Mayhew BSc (Hons) MRICS, Nick Harris BSc (Hons) MRICS, Charlie Henry
BSc (Hons) MRICS, Adrian Camp BSc (Hons) MRICS or Giles Bendell BSc MRICS. In November 2008 a sample of
the portfolio comprising 16 properties located in Hamburg were inspected:
Alte Königstr. 29-39
Amsinckstr. 28
Amsinckstr. 34
Buxtehuder Str. 9-11
Besenbinderhof 41
Basselweg 73
Eppendorfer Landstr. 59
Ernst-Merck-Str. 9
Gorch-Fock-Wall 11
Gorch-Fock-Wall 15-17
Grindelberg 62-66
Große Bleichen 23-27
Hamburger Str. 43-49
Poststr. 11
Steinstr. 10
Max-Brauer-Allee 41-43 (inspected for the first time).
Individual reports for each of the above properties are attached to Appendix IV to this report.
MANAG EMENT
The extent of our investigations and the sources of information on which we have relied upon are as
described in Section 4 – Valuation Procedures and Assumptions contained within the Red Book.
We confirm that our valuation complies with the requirements of IAS 40 – Investment Property. Where an
entity opts to account for investment property using the fair value model, IVSC considers that the require-
ments of this model are met by the valuer adopting Market Value.
Our General Assumptions and Definitions form Appendix I to this report.
THE PORTFOLIO AND ITS LOCATION
The portfolio comprises 89 office investment properties located throughout Germany. The regional location
profile of the portfolio across Germany’s states is illustrated below, where it can be seen that the largest
concentration of investment property in terms of value, 50.43%, is held in the City of Hamburg. The portfolio
also comprises properties in the cities of Augsburg, Berlin, Bonn, Darmstadt, Detmold, Dortmund, Dresden,
Dusseldorf, Erfurt, Essen, Frankfurt, Halle, Hannover, Jena, Koln, Leipzig, Magdeburg, Mannheim, Munich,
Nurnberg, Potsdam, Stuttgart, Wiesbaden, Wuppertal, Wurzburg and Zwickau.
134
● Hamburg
50.43%
● Baden-wuerttemberg
17.49%
● north Rhine westphalia 12.37%
● Bavaria
6.05%
● Berlin
3.84%
● lower Saxony
3.15%
● Hessen
● Saxony
● thuringia
● Saxony Anhalt
● Brandenburg
2.94%
2.27%
0.65%
0.51%
0.31%
FLOOR AREAS
In accordance with your instructions we have not measured the subject premises and have relied upon the
floor areas and car parking stated in the most recent tenancy schedule provided by alstria office REIT-AG
(Alstria).
Preface
TRUST
alstria Stock
Group Management Discussion and Analysis
Consolidated Financial Statements
Auditors´ Report
Management
Other Information
Report of the Supervisory Board
Corporate Governance Report
Compensation Report
REIT Declaration
REIT Memorandum
Valuation Report
List of properties
TENURE
We have been provided with the following reports, which we have had regard to in arriving at our opinions
of value.
due diligence Report
draft due diligence Report
Summary of Major Findings
Legal due diligence Report
Legal due diligence Report
Legal due diligence Report
Legal due diligence Report
draft preliminary Key issues Report for Legal due diligence
Red Flag List of Legal due diligence
preliminary Legal due diligence Report
dated 12 december 2005
dated 26 September 2006
dated 27 September 2005
dated 26 September 2006
dated 24 october 2006
dated 16 July 2007
dated 31 october 2007
dated 14 november 2007
dated 14 december 2007
dated 1 April 2008
135
All of the above reports were prepared by your lawyers Messrs. Alpers & Stenger, Freshfields Bruckhaus
Deringer and Lovells. Our valuations assume that, with the exception of the matters disclosed within the
aforementioned reports, there are no unusual, onerous or restrictive covenants in the titles which are likely
to affect the value.
LETTINGS
We have relied upon the letting details contained within the following reports prepared by your lawyers
Messrs. Alpers & Stenger, Freshfields Bruckhaus Deringer and Lovells.
due diligence Report
draft due diligence Report
Summary of Major Findings
Legal due diligence Report
Legal due diligence Report
Legal due diligence Report
Legal due diligence Report
draft preliminary Key issues Report for Legal due diligence
Red Flag List of Legal due diligence
dated 12 december 2005
dated 26 September 2006
dated 27 September 2005
dated 26 September 2006
dated 24 october 2006
dated 16 July 2007
dated 31 october 2007
dated 14 november 2007
dated 14 december 2007
In circumstances where there have been tenant changes we have relied solely upon summary letting details
provided by Alstria. We have assumed all information provided to be accurate, up-to-date and complete.
MANAG EMENT
RENT ROLL
We have been provided with a finalised tenancy schedule dated 2 December 2008 by Alstria to which we have
had regard in arriving at our opinions of value. We have compared the new rent roll with the one provided to
us on the 30 June 2008 and have enquired about any changes. We have assumed all information provided to
be accurate, up-to-date and complete.
CONDITION
We have not carried out building surveys of the properties and neither have we tested the drainage or service
installations in the buildings as this was outside the scope of our instructions. If there is significant capital
expenditure required on a property this sum will have been deducted from the value reported.
We have been provided with the following reports prepared on your behalf by URS Deutschland GmbH
(URS):
136
Technical due diligence Report
Technical and environmental due diligence Assessment
intermediate environmental Bullet point Report
Technical due diligence Report
Technical and environmental due diligence Assessment
Revised Final Report
Technical and environmental due diligence Assessment
dated 19 december 2005
dated 25 August 2006
dated 9 october 2006
dated 29 december 2006
dated 7 november 2007
dated 13 november 2007
Technical and environmental due diligence Assessment Reports
dated 21 december 2007
Technical and environmental due diligence Assessments
dated 22 december 2007
In respect of Max-Brauer Allee 41-43, Hamburg we have been provided with a Technical Due Diligence
Assessment dated 1 April 2008 provided by Messrs ARGOS Projektmanagement GmbH.
ENVIRONMENTAL MATTERS
We have been provided with the following reports, prepared on your behalf by URS Deutschland GmbH (URS),
which we have relied upon in arriving at our opinions of value.
Technical due diligence Report
Technical and environmental due diligence Assessment
intermediate environmental Bullet point Report
Technical due diligence Report
Technical and environmental due diligence Assessment
Revised Final Report
Technical and environmental due diligence Assessment
dated 19 december 2005
dated 25 August 2006
dated 9 october 2006
dated 29 december 2006
dated 7 november 2007
dated 13 november 2007
Technical and environmental due diligence Assessment Reports
dated 21 december 2007
Technical and environmental due diligence Assessments
dated 22 december 2007
Preface
TRUST
alstria Stock
Group Management Discussion and Analysis
Consolidated Financial Statements
Auditors´ Report
Management
Other Information
Report of the Supervisory Board
Corporate Governance Report
Compensation Report
REIT Declaration
REIT Memorandum
Valuation Report
List of properties
In respect of Max-Brauer-Allee 41-43, Hamburg we have been provided with a Technical Due Diligence Assess-
ment dated 1 April 2008 provided by Messrs ARGOS Projektmanagement GmbH.
TOWN PLANNING
We have not made any formal searches or enquiries in respect of the properties and are, therefore, unable to
accept any responsibility in this connection. We have, however, relied upon the following reports:
due diligence Report
draft due diligence Report,
Summary of Major Findings,
Legal due diligence Report,
Legal due diligence Report
Legal due diligence Report
draft preliminary Key issues Report for Legal due diligence
Red Flag List of Legal due diligence
preliminary Legal due diligence Report
dated 12 december 2005
dated 26 September 2006
dated 27 September 2005
dated 26 September 2006
dated 16 July 2007
dated 31 october 2007
dated 14 november 2007
dated 14 december 2007
dated 1 April 2008
137
All of the above were prepared by your lawyers Messrs. Alpers & Stenger, Freshfields Bruckhaus Deringer and
Lovells for formal search information, town planning and permit issues and we have had regard to this infor-
mation in arriving at our opinions of value.
73, Bäckerbreitergang, Hamburg
A formal inspection of this property was carried out on 5 December 2008 by Christopher J Fowler-Tutt, BSc
MRICS and Adrian Camp BSc (Hons) MRICS. The property is currently vacant and is due to undergo a total
refurbishment.
In forming our opinion of value, we confirm that we have taken into consideration the Preliminary Legal
and Tax Due Diligence Report prepared by Messrs. Alpers & Stenger, dated September 2006, which has been
provided to us by Alstria.
We have not, however, had sight of any formal technical or environmental due diligence reports. Therefore,
we have relied upon the information provided to us by Alstria when arriving at our opinion of Market Value
and Rental Value. Inter alia, this includes architects plans, area calculations produced for Alstria by Messrs
Hohaus Hinz & Seifert GmbH dated 30 September 2008. We have assumed all information provided to be
accurate, up-to-date and complete.
MANAG EMENT
138
MARKET APPROACH
In preparing our valuations we have taken into account market trends in the locality and except where you
have advised us to the contrary, or our other enquiries have alerted us to this, we have assumed that there
have been no material changes to any of the properties or their surroundings that might have a material
effect on value, since the time of our inspection.
In arriving at our opinions of value we have had regard to comparable investment transactions in determin-
ing the net initial yield and equivalent yield which we have adopted in capitalising the current income stream.
Where properties have less than 5 years of term certain left we have adopted income void periods which
range from 18 to 24 months depending upon the type of property prior to reletting. For properties with a large
car parking provision we have adopted a structural void ranging from 5 to 20%, depending on the vacancy
rate at the date of valuation. In the case of properties with small car parking provisions we have adopted a
void period of 3 months. In addition, where appropriate, we have allowed for capital expenditure either to
undertake works necessary to relet properties at the end of the lease or deal with extra ordinary items of
disrepair that are the responsibility of the lessor.
We are of the opinion that this portfolio as a whole or each of its individual assets would appeal to a wide
range of purchasers including funds, property companies and institutions. It would also be of interest to
overseas investors attracted by the high quality income stream secured over long unexpired lease terms. We
consider that demand for the portfolio would be strong.
NON-RECOVERABLE EXPENSES
In arriving at our opinion of the value we have made a total deduction of 5% from the income receivable to
allow for non-recoverable costs. Such costs relate to items which cannot be recovered from the tenant and
generally includes the expense of maintaining and repairing all structural components of the property and
associated access roads, as well as being financially responsible for maintenance and repair items and man-
agement expenses etc. However, it does not include tenant improvement measures that have been taken
into consideration. Moreover, when the technical due diligence reports showed that additional Capital
Expenditure was required, we have deducted all, or part of those additional costs from our valuation on the
basis of a day 1 deduction.
MARKET RENT
In preparing our valuation we have made an analysis of the Market Rent of the portfolio and compared it
to the passing rent. Any difference between the Market Rent and the passing rent has been taken into
onsideration in our valuation.
Preface
TRUST
alstria Stock
Group Management Discussion and Analysis
Consolidated Financial Statements
Auditors´ Report
Management
Other Information
Report of the Supervisory Board
Corporate Governance Report
Compensation Report
REIT Declaration
REIT Memorandum
Valuation Report
List of properties
MARKET VALUE
We are of the opinion that the aggregate Market Value, as at 31 December 2008, of these 89 freehold proper-
ties is EUR 1,810,265,000 (one billion eight hundred and ten million, two hundred and sixty five thousand
euros).
This value reflects the following aggregate net yields
Yield
initial
equivalent
Reversion (dec 2018)
%
5.34
5.68
5.97
139
We confirm that all of the foregoing opinions of value, with the exception of Daimler Chrysler HQ property
and the three Berlin City properties, are net of the requisite purchaser’s costs of 5%. In respect of the
Daimler Chrysler HQ investment property in Stuttgart purchaser’s costs of 4.25% were adopted reflecting the
high value of this single asset and the relatively low costs associated with its management For the three
Berlin City properties, we have adopted the requisite purchaser’s costs of 6% to reflect the higher rate of land
transfer tax.
The market value of the portfolio is the sum of the individual market values of each of its assets. This
aggregate figure makes no allowance for any effect that placing the whole portfolio on the market may have
on the overall realisation. The market value of the portfolio sold as in a single transaction would not neces-
sarily be the same as the aggregate figure reported.
DISCLOSURES
In accordance with UK Practice Statement 5.4 we confirm the following:
Colliers CRE have valued this portfolio since 2006.
The total fees earned in the latest financial year from alstria office REIT-AG amounted to substantially less
than 5% of our Company turnover.
We do not undertake any non-valuation fee earning work for alstria office REIT-AG.
MANAG EMENT
LIABILITY AND PUBLICATION
This report is private and confidential and for the sole use of alstria office REIT-AG for publication in its
reports and accounts and HSH Nordbank AG for calculation of debt covenant
HSH Nordbank AG is an agent and security agent under the facility agreement to be entered into with Alstria
Office AG as borrower (the ‘Facility Agreement’) for and on behalf of itself and each of HSH Nordbank AG,
Natexis Banques Populaires and J. P. Morgan Plc as mandated lead arrangers under the Facility Agreement.
HSH Nordbank AG, Natexis Banques Populaires and J. P. Morgan Chase Bank N.A. as original lenders under the
Facility Agreement and each of their respective assignees or transferees (the ‘Finance Parties’) and to each
such Finance Party.
We do not accept any responsibility to any third party for the whole or any part of its contents.
140
Neither the whole nor any part of this valuation or any reference thereto may be included within any
published document, circular or statement or disclosed in anyway without our prior written consent to the
form and context in which it may appear. In breach of this condition, no responsibility can be accepted
to third parties for the comments or advice contained in this report.
Yours faithfully
Christopher J Fowler-Tutt BSc MRICS
Director
For and behalf of Colliers CRE
Adrian Camp BSc (Hons) MRICS
Director
For and behalf of Colliers CRE
Preface
TRUST
alstria Stock
Group Management Discussion and Analysis
Consolidated Financial Statements
Auditors´ Report
Management
Other Information
Report of the Supervisory Board
Corporate Governance Report
Compensation Report
REIT Declaration
REIT Memorandum
Valuation Report
List of properties
APPENDIX I
GENERAL ASSUMPTIONS AND DEFINITIONS
The valuations have been prepared by a suitably qualified valuer, as defined by PS1.1 of the Appraisal and
Valuation Standards, on the basis set out below unless any variations have been specifically referred to under
the heading ‘Special Remarks’:
1 Market Value (MV)
Where we have been instructed to value the properties on the basis of Market Value, we have done so in
accordance with PS 3.2 of the Appraisal and Valuation Standards issued by The Royal Institution of Chartered
Surveyors, which is defined as follows:
‘The estimated amount for which a property should exchange on the date of valuation between a willing
buyer and a willing seller in an arm’s-length transaction after proper marketing wherein the parties had each
acted knowledgeably, prudently and without compulsion.’
141
The interpretative commentary on Market Value, as published in International Valuation Standards 1, has
been applied.
2 Market Rent (MR)
Valuations based on Market Rent (MR), as set out in PS 3.4 of the Appraisal and Valuation Standards, adopt
the definition as settled by the International Valuation Standards Committee which is as follows:
‘The estimated amount for which a property, or space within a property, should lease (let) on the date
of valuation between a willing lessor and a willing lessee on appropriate lease terms in an arm’s-length
transaction after proper marketing wherein the parties had acted knowledgeably, prudently and without
compulsion.’
MR will vary significantly according to the terms of the assumed lease contract. The appropriate lease terms
will normally reflect current practice in the market in which the property is situated, although for certain
purposes unusual terms may need to be stipulated. Matters such as the duration of the lease, the frequency
of rent reviews, and the responsibilities of the parties for maintenance and outgoings, will all impact on MR.
In certain States, statutory factors may either restrict the terms that may be agreed, or influence the impact
of terms in the contract. These need to be taken into account where appropriate. The principal lease terms
that are assumed when providing MR will be clearly stated in the report.
Rental values are provided for the purpose described in this report and are not to be relied upon by any third
party for any other purpose.
3 Rental Assessment
We have been provided with an updated tenancy schedule and rent roll to which we have had regard in
arriving at our opinions of value.
MANAG EMENT
4 Purchase and Sale Costs
In arriving at our opinion of value we have allowed for purchaser’s costs of 5%, or 6% for Berlin assets.
This reflects 3.5% (4.5% for Berlin) for land tax with the remainder being apportioned between agents and
legal fees. Because of the high value of the portfolio we consider it appropriate to adopt slightly lower profes-
sional fees than usual. In respect of the Daimler Chrysler HQ investment property in Stuttgart purchaser’s
costs of 4.25% were adopted reflecting the high value of this single asset and the relatively low costs associ-
ated in managing it.
5
Condition
As this was outside the scope of our instruction, we have not carried out a building survey, nor have we
inspected the woodwork or other parts of the structure which are covered, unexposed or inaccessible.
142
We have been provided with a Technical Due Diligence Report prepared by on behalf of the alstria office
REIT-AG as listed in our certificate which we have had regard to in arriving at our opinion.
Where we have noticed items of disrepair during the course of our inspections, they have been reflected in
our valuation which we comment upon in the individual reports attached hereto.
6 Environmental Matters
We have relied upon the environmental investigation undertaken in respect of the property as listed in our
certificate. We have been provided with a report highlighting the potential risks at the subject property and
have had regard to this report in arriving at our opinion of value. We comment upon the environmental issue
in the report attached hereto.
7 Fixtures and Fittings
In arriving at our opinions of value we have disregarded the value of all process related plant, machinery,
fixtures and fittings and those items which are in the nature of tenants’ trade fittings and equipment. We
have had regard to landlords’ fixtures such as lifts, escalators, central heating and air conditioning forming
an integral part of the buildings.
Where the properties are valued as an operational entity and includes the fixtures and fittings, it is assumed
that these are not subject to any hire purchase or lease agreements or any other claim on title. No equipment
or fixtures and fittings have been tested in respect of Electrical Equipment Regulations and Gas Safety Regu-
lations and we assume that where appropriate all such equipment meets the necessary legislation. Unless
otherwise specifically mentioned the valuation excludes any value attributable to plant and machinery.
8
Tenure, Lettings and Reports on Title and/or Tenancies
We have not inspected the title deeds, lease and related legal documents and have instead relied upon the
Legal Due Diligence as listed in our certificate. We confirm we have relied upon the information contained
therein in arriving at our opinions of value.
9 Taxation
Whilst we have had regard to the general effects of taxation on market value, we have not taken into account
any liability for tax which may arise on a disposal, whether actual or notional, and neither have we made any
deduction for Capital Gains Tax, Valued Added Tax or any other tax.
Preface
TRUST
alstria Stock
Group Management Discussion and Analysis
Consolidated Financial Statements
Auditors´ Report
Management
Other Information
Report of the Supervisory Board
Corporate Governance Report
Compensation Report
REIT Declaration
REIT Memorandum
Valuation Report
List of properties
10 Mortgages
We have disregarded the existence of any mortgages, debentures or other charges to which the properties
may be subject.
11 Operational Entities
Where the properties are valued as an operational entity and reference has been made to the trading history
or trading potential of the property, reliance has been placed on information supplied to us. Should this
information subsequently prove to be inaccurate or unreliable, the valuations reported could be adversely
affected.
Our valuations do not make any allowance for goodwill.
12 Local authorities, Statutory Undertakers and Legal Searches
We have relied upon the Legal Due Diligence Report as listed in our certificate with respect of formal search-
es and enquiries for the property and are therefore unable to accept any responsibility in the connection. We
have, however, made informal enquiries of the local planning authority in whose areas the properties are
situated as to whether or not they are affected by planning proposals. We have not received a written reply
and, accordingly, have had to rely upon information obtained verbally.
143
We have also relied upon the Legal Due Diligence Report in respect of all consents, licences and permissions
including, inter alia, fire certificates, enabling the property to be put to the uses ascertained at the date of
our inspection have been obtained and that there are no outstanding works or conditions required by lessors
or statutory, local or other competent authorities.
13 Arrears
We have assumed that all rents and other payments payable by virtue of the leases have been paid to date.
If there are rents or other arrears, we recommend that we should be informed in order that we may consider
whether our valuation should be revised.
14 Insurance
In arriving at our valuation we have assumed that the buildings are capable of being insured by reputable
insurers at reasonable market rates. If, for any reason, insurance would be difficult to obtain or would be
subject to an abnormally high premium, it may have an effect on value.
15 Liability Cap
We confirm that the extent of our liability in respect of this valuation and report is limited to a maximum
sum of £ 50 million.
16 Standard Terms of Business
We confirm that this valuation report has been provided in accordance with our Standard Terms of
Business.
144
MANAG EMENT
LiS T oF ALL pRopeR TieS
Portfolio alstria office REIT-AG
ASSET NAME
HAMBURG
Alte Königsstrasse 29
Alter Steinweg 4
Amsinckstrasse 28
Amsinckstrasse 34
Bäckerbreitergang 73-75 **
Basselweg 73
Besenbinderhof 41
Buxtehuder Strasse 9-11a
drehbahn 36
eppendorfer Landstrasse 59
ernst-Merck-Strasse 9 (Bieberhaus)
Gänsemarkt 36
Garstedter Weg 13
Gorch-Fock-Wall 11
Gorch-Fock-Wall 15,17
Grindelberg 62-66
Grosse Bleichen 23-27 ***
Hamburger Strasse 1-15
Hamburger Strasse 43-49
Hammer Steindamm 129
Harburger Ring 17
Herthastrasse 20
Johanniswall 4
Kaiser-Wilhelm-Strasse 79-87
Kanalstrasse 44
Kattunbleiche 19
Kümmelstrasse 5-7
Lenhartzstrasse 28
Ludwig-Rosenberg-Ring 41
Max-Brauer-Allee 41,43***
Max-Brauer-Allee 89-91
nagelsweg 41-45
Öjendorfer Weg 9-11
ottenser Marktplatz 10/12
poststrasse 11 (Alte post)
poststrasse 51
* Based on valuation of Colliers CRE as of December 31, 2008.
** Reclassified as development properties.
*** Considered signed lease contracts.
CITY
TOTAL LETTABLE AREA
(SQM)
OFFICE AREA
(SQM)
VACANCY
(SQM)
PASSING RENT
(EUR)
ERV*
(EUR)
OMV*
(EUR)
Hamburg
Hamburg
Hamburg
Hamburg
Hamburg
Hamburg
Hamburg
Hamburg
Hamburg
Hamburg
Hamburg
Hamburg
Hamburg
Hamburg
Hamburg
Hamburg
Hamburg
Hamburg
Hamburg
Hamburg
Hamburg
Hamburg
Hamburg
Hamburg
Hamburg
Hamburg
Hamburg
Hamburg
Hamburg
Hamburg
Hamburg
Hamburg
Hamburg
Hamburg
Hamburg
Hamburg
4,300
32,000
8,100
6,200
2,400
2,700
5,000
7,700
25,700
3,300
17,500
20,900
3,600
8,700
7,700
18,400
17,700
21,600
20,500
7,200
3,100
3,300
14,000
5,500
8,500
12,400
15,700
1,100
5,000
3,200
9,800
6,200
6,100
1,000
6,600
1,700
3,600
28,000
7,800
5,900
2,100
1,900
3,500
5,100
20,200
2,600
12,500
18,100
2,700
7,200
5,800
17,400
13,200
9,100
19,300
6,300
1,500
2,700
10,500
4,200
7,900
9,800
13,300
900
3,600
2,700
7,000
5,900
5,900
1,000
4,600
1,200
2,400
2,300
100
500
8,100
200
3,100
400
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
6,600
560,000
3,950,000
950,000
720,000
0
260,000
480,000
560,000
3,240,000
380,000
2,070,000
3,050,000
340,000
1,020,000
810,000
2,070,000
1,990,000
2,000,000
2,360,000
540,000
310,000
290,000
1,680,000
270,000
910,000
1,510,000
1,370,000
100,000
460,000
0
900,000
880,000
560,000
150,000
850,000
380,000
547,796
4,317,048
990,000
765,000
553,200
291,600
481,200
532,800
3,504,000
558,600
2,375,509
3,196,800
360,000
981,000
798,000
2,136,240
3,370,832
3,082,402
2,716,296
558,000
344,667
318,000
1,788,525
938,400
971,760
1,434,000
1,776,000
148,800
527,760
331,200
957,000
957,015
684,240
153,600
2,609,790
446,372
Preface
TRUST
alstria Stock
Group Management Discussion and Analysis
Consolidated Financial Statements
Auditors´ Report
Management
Other Information
Report from the supervisory board
Corporate Governance Report
Compensation Report
REIT Declaration
REIT Memorandum
Valuation Report
List of properties
ASSET NAME
HAMBURG
Alte Königsstrasse 29
Alter Steinweg 4
Amsinckstrasse 28
Amsinckstrasse 34
Bäckerbreitergang 73-75 **
Basselweg 73
Besenbinderhof 41
Buxtehuder Strasse 9-11a
drehbahn 36
eppendorfer Landstrasse 59
ernst-Merck-Strasse 9 (Bieberhaus)
Gänsemarkt 36
Garstedter Weg 13
Gorch-Fock-Wall 11
Gorch-Fock-Wall 15,17
Grindelberg 62-66
Grosse Bleichen 23-27 ***
Hamburger Strasse 1-15
Hamburger Strasse 43-49
Hammer Steindamm 129
Kaiser-Wilhelm-Strasse 79-87
Harburger Ring 17
Herthastrasse 20
Johanniswall 4
Kanalstrasse 44
Kattunbleiche 19
Kümmelstrasse 5-7
Lenhartzstrasse 28
Ludwig-Rosenberg-Ring 41
Max-Brauer-Allee 41,43***
Max-Brauer-Allee 89-91
nagelsweg 41-45
Öjendorfer Weg 9-11
ottenser Marktplatz 10/12
poststrasse 11 (Alte post)
poststrasse 51
* Based on valuation of Colliers CRE as of December 31, 2008.
** Reclassified as development properties.
*** Considered signed lease contracts.
CITY
TOTAL LETTABLE AREA
(SQM)
OFFICE AREA
(SQM)
VACANCY
(SQM)
PASSING RENT
(EUR)
ERV*
(EUR)
OMV*
(EUR)
Hamburg
Hamburg
Hamburg
Hamburg
Hamburg
Hamburg
Hamburg
Hamburg
Hamburg
Hamburg
Hamburg
Hamburg
Hamburg
Hamburg
Hamburg
Hamburg
Hamburg
Hamburg
Hamburg
Hamburg
Hamburg
Hamburg
Hamburg
Hamburg
Hamburg
Hamburg
Hamburg
Hamburg
Hamburg
Hamburg
Hamburg
Hamburg
Hamburg
Hamburg
Hamburg
Hamburg
4,300
32,000
8,100
6,200
2,400
2,700
5,000
7,700
25,700
3,300
17,500
20,900
3,600
8,700
7,700
18,400
17,700
21,600
20,500
7,200
3,100
3,300
14,000
5,500
8,500
12,400
15,700
1,100
5,000
3,200
9,800
6,200
6,100
1,000
6,600
1,700
3,600
28,000
7,800
5,900
2,100
1,900
3,500
5,100
20,200
2,600
12,500
18,100
2,700
7,200
5,800
17,400
13,200
9,100
19,300
6,300
1,500
2,700
10,500
4,200
7,900
9,800
13,300
900
3,600
2,700
7,000
5,900
5,900
1,000
4,600
1,200
0
0
0
0
2,400
0
0
0
0
0
2,300
100
0
0
0
0
500
8,100
0
0
200
0
0
3,100
400
0
0
0
0
0
0
0
0
0
6,600
0
560,000
3,950,000
950,000
720,000
0
260,000
480,000
560,000
3,240,000
380,000
2,070,000
3,050,000
340,000
1,020,000
810,000
2,070,000
1,990,000
2,000,000
2,360,000
540,000
310,000
290,000
1,680,000
270,000
910,000
1,510,000
1,370,000
100,000
460,000
0
900,000
880,000
560,000
150,000
850,000
380,000
547,796
4,317,048
990,000
765,000
553,200
291,600
481,200
532,800
3,504,000
558,600
2,375,509
3,196,800
360,000
981,000
798,000
2,136,240
3,370,832
3,082,402
2,716,296
558,000
344,667
318,000
1,788,525
938,400
971,760
1,434,000
1,776,000
148,800
527,760
331,200
957,000
957,015
684,240
153,600
2,609,790
446,372
145
MANAG EMENT
ASSET NAME
Rahlstedter Strasse 151-157
Schlossstrasse 60
Steckelhörn 12
Steinstrasse 10
Steinstrasse 5-7 ***
Wandsbeker Chaussee 220
STUTTGART
epplestrasse 225
ernsthaldenstrasse 17
Siemensstrasse 33
DUSSELDORF AREA
Bamler Strasse 1-5
146
Benrather Schlossallee 29-33/Ludolfstrasse 3
Friedrichstrasse 19
Gathe 78
Jagenbergstrasse 1
Max-eyth-Strasse 2
Mecumstrasse 10
BERLIN
darwinstrasse 14-18 / Quedlingburger Str. 2
Holzhauser Strasse 175-177
Marburger Strasse 10
MUNICH
Arnulfstrasse 150
Hofmannstrasse 51
Landshuter Allee 174
HANOVER
Arndtstrasse 1
vahrenwalder Strasse 133
Werner-von-Siemens-platz 1
* Based on valuation of Colliers CRE as of December 31, 2008.
*** Considered signed lease contracts.
CITY
TOTAL LETTABLE AREA
(SQM)
OFFICE AREA
(SQM)
VACANCY
(SQM)
PASSING RENT
(EUR)
OMV*
(EUR)
Hamburg
Hamburg
Hamburg
Hamburg
Hamburg
Hamburg
Stuttgart
Stuttgart
ditzingen
essen
duesseldorf
duesseldorf
Wuppertal
neuss
dortmund
duesseldorf
Berlin
Berlin
Berlin
Munich
Munich
Munich
Hanover
Hanover
Hanover
2,900
11,900
14,700
26,800
21,900
3,200
425,800
346,600
23,700
48,190,000
56,741,957
912,895,000
107,400
2,500
27,300
137,200
36,400
5,000
2,100
8,500
24,700
7,000
8,600
92,300
22,200
7,400
6,200
35,800
5,900
22,100
6,900
34,900
10,200
7,100
21,700
39,000
2,900
9,500
12,600
22,200
21,900
2,500
77,900
2,200
13,100
93,200
29,000
4,300
1,300
4,100
23,900
6,600
8,500
77,700
20,800
7,000
5,600
33,400
5,600
20,400
6,500
32,500
8,400
6,700
21,300
36,400
14,660,000
260,000
1,820,000
14,709,000
278,400
2,227,140
16,740,000
17,214,540
286,150,000
5,400
5,400
3,400
500
5,000
2,500
2,500
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
290,000
960,000
1,870,000
3,240,000
3,460,000
400,000
3,790,000
520,000
400,000
920,000
3,410,000
180,000
1,230,000
3,420,000
480,000
900,000
4,800,00
980,000
2,430,000
900,000
4,310,000
1,020,000
990,000
1,860,000
3,870,000
ERV*
(EUR)
324,000
1,041,000
1,981,548
2,928,000
3,588,837
375,120
4,104,647
530,400
560,640
1,008,338
2,976,000
710,004
1,303,866
3,288,000
728,721
906,207
1,102,200
2,706,000
1,176,000
1,162,200
1,019,251
1,986,000
4,922,928
69,500,000
4,984,200
74,250,000
4,167,451
57,000,000
8,900
10,450,000
11,193,895
161,400,000
Preface
TRUST
alstria Stock
Group Management Discussion and Analysis
Consolidated Financial Statements
Auditors´ Report
Management
Other Information
Report from the supervisory board
Corporate Governance Report
Compensation Report
REIT Declaration
REIT Memorandum
Valuation Report
List of properties
ASSET NAME
Rahlstedter Strasse 151-157
Schlossstrasse 60
Steckelhörn 12
Steinstrasse 10
Steinstrasse 5-7 ***
Wandsbeker Chaussee 220
STUTTGART
epplestrasse 225
ernsthaldenstrasse 17
Siemensstrasse 33
DUSSELDORF AREA
Bamler Strasse 1-5
Friedrichstrasse 19
Gathe 78
Jagenbergstrasse 1
Max-eyth-Strasse 2
Mecumstrasse 10
MUNICH
Arnulfstrasse 150
Hofmannstrasse 51
Landshuter Allee 174
HANOVER
Arndtstrasse 1
vahrenwalder Strasse 133
Werner-von-Siemens-platz 1
Benrather Schlossallee 29-33/Ludolfstrasse 3
BERLIN
darwinstrasse 14-18 / Quedlingburger Str. 2
Holzhauser Strasse 175-177
Marburger Strasse 10
* Based on valuation of Colliers CRE as of December 31, 2008.
*** Considered signed lease contracts.
CITY
Hamburg
Hamburg
Hamburg
Hamburg
Hamburg
Hamburg
Stuttgart
Stuttgart
ditzingen
essen
duesseldorf
duesseldorf
Wuppertal
neuss
dortmund
duesseldorf
Berlin
Berlin
Berlin
Munich
Munich
Munich
Hanover
Hanover
Hanover
(SQM)
2,900
11,900
14,700
26,800
21,900
3,200
107,400
2,500
27,300
137,200
36,400
5,000
2,100
8,500
24,700
7,000
8,600
92,300
22,200
7,400
6,200
35,800
5,900
22,100
6,900
34,900
10,200
7,100
21,700
39,000
TOTAL LETTABLE AREA
OFFICE AREA
(SQM)
VACANCY
(SQM)
PASSING RENT
(EUR)
2,900
9,500
12,600
22,200
21,900
2,500
0
0
0
0
0
0
290,000
960,000
1,870,000
3,240,000
3,460,000
400,000
OMV*
(EUR)
ERV*
(EUR)
324,000
1,041,000
1,981,548
2,928,000
3,588,837
375,120
425,800
346,600
23,700
48,190,000
56,741,957
912,895,000
77,900
2,200
13,100
93,200
29,000
4,300
1,300
4,100
23,900
6,600
8,500
77,700
20,800
7,000
5,600
33,400
5,600
20,400
6,500
32,500
8,400
6,700
21,300
36,400
0
0
5,400
5,400
3,400
0
0
500
5,000
0
8,900
0
2,500
0
2,500
0
0
0
0
0
0
0
0
14,660,000
260,000
1,820,000
14,709,000
278,400
2,227,140
16,740,000
17,214,540
286,150,000
147
3,790,000
520,000
400,000
920,000
3,410,000
180,000
1,230,000
4,104,647
530,400
560,640
1,008,338
2,976,000
710,004
1,303,866
10,450,000
11,193,895
161,400,000
3,420,000
480,000
900,000
4,800,00
980,000
2,430,000
900,000
4,310,000
1,020,000
990,000
1,860,000
3,870,000
3,288,000
728,721
906,207
4,922,928
69,500,000
1,102,200
2,706,000
1,176,000
4,984,200
74,250,000
1,162,200
1,019,251
1,986,000
4,167,451
57,000,000
148
MANAG EMENT
ASSET NAME
SAXONY
Lothar-Streit-Strasse 10b
Ludwig-erhard-Strasse 49
Washingtonstrasse 16-16a
Zellescher Weg 21-25a
Zwinglistrasse 11-13
COLOGNE/BONN
Bertha-von-Suttner-platz 17
Bonner Strasse 351
Gereonsdriesch 13
Horbeller Strasse 11
OTHERS
Am Gräslein 12
Am Roten Berg 5
Carl-Reiß-platz 1,3,5
doktorweg 2-4 / Bismarkstrasse 3
emil-von-Behring-Strasse 2
eserwallstrasse 1-3
Goldsteinstrasse 114
Gustav-nachtigal-Strasse 3
Gustav-nachtigal-Strasse 4
Halberstädter Strasse 17
Helene-Lange-Strasse 6-7
Johannesstrasse 164-165
Joliot-Curie-platz 29-30
Regensburger Strasse 223-231
Rheinstrasse 23
Schweinfurter Strasse 4
Spitzweidenweg 107
Steubenstrasse 72-74
Total
* Based on valuation of Colliers CRE as of December 31, 2008.
CITY
TOTAL LETTABLE AREA
(SQM)
OFFICE AREA
(SQM)
VACANCY
(SQM)
PASSING RENT
(EUR)
ERV*
(EUR)
OMV*
(EUR)
Zwickau
Leipzig
dresden
dresden
dresden
Bonn
Cologne
Cologne
Cologne
nuernberg
erfurt
Mannheim
detmold
Frankfurt
Augsburg
Frankfurt
Wiesbaden
Wiesbaden
Magdeburg
potsdam
erfurt
Halle
nuernberg
darmstadt
Wuerzburg
Jena
Mannheim
1,000
6,300
20,600
6,500
3,100
37,500
1,400
10,900
2,400
6,700
21,400
2,700
5,300
17,400
9,800
9,300
5,600
8,500
18,500
700
7,600
3,400
5,800
1,100
8,900
2,700
5,100
3,300
4,100
119,800
943,700
1,000
6,000
17,500
5,400
2,800
32,700
1,100
9,500
2,100
6,100
18,800
2,500
4,100
14,700
8,600
8,400
5,100
7,900
16,500
700
6,900
2,600
4,200
500
7,300
2,300
4,100
3,000
4,100
2,980,000
3,507,961
41,030,000
2,731,356
37,390,000
4,500
300
1,600
6,400
0
0
0
0
0
1,700
1,700
600
2,400
1,200
0
0
0
0
0
100
600
100
300
200
400
0
200
800
0
140,000
750,000
1,230,000
760,000
100,000
200,000
1,480,000
350,000
480,000
2,510,000
250,000
140,000
1,590,000
800,000
1,500,000
690,000
1,090,000
2,400,000
110,000
610,000
380,000
520,000
80,000
320,000
490,000
160,000
530,000
115,200
700,260
1,683,565
786,000
222,936
199,200
1,502,580
345,576
684,000
342,000
316,803
1,718,054
825,018
1,494,000
733,671
1,056,067
2,402,400
138,720
663,840
409,632
569,154
120,000
333,212
538,200
242,723
500,400
1,010,000
1,095,000
103,500
6,900
12,670,000
13,498,894
170,650,000
774,800
55,500
106,520,000
118,963,182
1,810,265,000
Preface
TRUST
alstria Stock
Group Management Discussion and Analysis
Consolidated Financial Statements
Auditors´ Report
Management
Other Information
Report from the supervisory board
Corporate Governance Report
Compensation Report
REIT Declaration
REIT Memorandum
Valuation Report
List of properties
CITY
TOTAL LETTABLE AREA
(SQM)
OFFICE AREA
(SQM)
VACANCY
(SQM)
PASSING RENT
(EUR)
ERV*
(EUR)
OMV*
(EUR)
1,000
6,000
17,500
5,400
2,800
32,700
1,100
9,500
2,100
6,100
18,800
2,500
4,100
14,700
8,600
8,400
5,100
7,900
16,500
700
6,900
2,600
4,200
500
7,300
2,300
4,100
3,000
4,100
0
0
4,500
300
1,600
6,400
0
0
0
1,700
1,700
600
2,400
1,200
0
0
0
100
0
0
600
100
300
200
400
0
200
800
0
140,000
750,000
1,230,000
760,000
100,000
115,200
700,260
1,683,565
786,000
222,936
2,980,000
3,507,961
41,030,000
200,000
1,480,000
350,000
480,000
2,510,000
250,000
140,000
1,590,000
800,000
1,500,000
690,000
1,090,000
2,400,000
110,000
610,000
380,000
520,000
80,000
199,200
1,502,580
345,576
684,000
2,731,356
37,390,000
149
342,000
316,803
1,718,054
825,018
1,494,000
733,671
1,056,067
2,402,400
138,720
663,840
409,632
569,154
120,000
1,010,000
1,095,000
320,000
490,000
160,000
530,000
333,212
538,200
242,723
500,400
Total
774,800
55,500
106,520,000
118,963,182
1,810,265,000
103,500
6,900
12,670,000
13,498,894
170,650,000
ASSET NAME
SAXONY
Lothar-Streit-Strasse 10b
Ludwig-erhard-Strasse 49
Washingtonstrasse 16-16a
Zellescher Weg 21-25a
Zwinglistrasse 11-13
COLOGNE/BONN
Bertha-von-Suttner-platz 17
Bonner Strasse 351
Gereonsdriesch 13
Horbeller Strasse 11
OTHERS
Am Gräslein 12
Am Roten Berg 5
Carl-Reiß-platz 1,3,5
doktorweg 2-4 / Bismarkstrasse 3
emil-von-Behring-Strasse 2
eserwallstrasse 1-3
Goldsteinstrasse 114
Gustav-nachtigal-Strasse 3
Gustav-nachtigal-Strasse 4
Halberstädter Strasse 17
Helene-Lange-Strasse 6-7
Johannesstrasse 164-165
Joliot-Curie-platz 29-30
Regensburger Strasse 223-231
Rheinstrasse 23
Schweinfurter Strasse 4
Spitzweidenweg 107
Steubenstrasse 72-74
* Based on valuation of Colliers CRE as of December 31, 2008.
Zwickau
Leipzig
dresden
dresden
dresden
Bonn
Cologne
Cologne
Cologne
nuernberg
erfurt
Mannheim
detmold
Frankfurt
Augsburg
Frankfurt
Wiesbaden
Wiesbaden
Magdeburg
potsdam
erfurt
Halle
nuernberg
darmstadt
Wuerzburg
Jena
Mannheim
1,000
6,300
20,600
6,500
3,100
37,500
1,400
10,900
2,400
6,700
21,400
2,700
5,300
17,400
9,800
9,300
5,600
8,500
18,500
700
7,600
3,400
5,800
1,100
8,900
2,700
5,100
3,300
4,100
119,800
943,700
OTHER INFORMATION
GLoS SAR Y
Term
Descrpition
Asset Management
Cash Flow
Contractual Rent
Coverage
derivative Financial instrument
150
eBit
eBitdA
ePRA index
Fair Value
(or open Market Value (oMV))
value-orientated running and/or optimisation of properties through letting management,
refurbishment, repositioning, and tenant management.
indicator that shows the net inflow of cash from sales activities and other current activities
during a given period.
At a given date, the contractual rent reflects the total annualized rent taking into
consideration all signed rental contracts
information provided on a listed public company in the form of studies and research reports
by banks and financial analysts.
derivative financial instruments or derivatives are contracts to safeguard and compasate for
financial risk positions. The values are derived based on the trend of a market dependent
underlying security (e.g. interest rate or shares).
earnings before interest and Taxes.
earnings before interests, Taxes, depreciation and Amortisation. eBiTdA is not a measure
of operating performance or liquidity under generally accepted accounting principles, in
particular iFRS, and should not be considered as an alternative to the company’s income
or cash flow measures as determined in accordance with iFRS. Furthermore, no standard
definition exists for eBiTdA. Thus, eBiTdA or measures with similar names as presented
by other companies may not necessarily be comparable to the company’s eBiTdA.
The epRA index is the well-known international index which tracks the performance of
the largest european and north American listed property companies. european public
Real estate Association (epRA) is an organisation that represents the interests of the major
european property management companies and supports the development and market
presence of european public property companies. its members include companies such
as alstria office ReiT-AG, financial analysts, investors, advisors and auditors.
The estimated amount for which a property should exchange on the date of valuation
between a willing buyer and a willing seller in an arm‘s-length transaction after proper
marketing wherein the parties had each acted knowledgeably, prudently and without
compulsion.The Fair value for alstria’s investment properties is reviewed regulary by external
appraisers.
PRE FAC E
M anag eMent L etter
2
Olivier Elamine
CEO alstria office REIT-AG
Dear Shareholders and Business Partners,
Ladies and Gentlemen!
Financial Crisis – Excellent Cash Flow
While the financial crisis has a firm grip on the economic environment
and clearly no player in our industry will remain unaffected by the
scarcity of available financing or the general economic downturn, the
financial performance of the alstria portfolio remained strong in 2008.
The portfolio generated more than EUR 102 million in rental revenues and
funds from operations of EUR 39.4 million. This operating result fully in
line with early 2008 company guidance is testimony to the high quality
of our portfolio and of our focus on operating efficiency and cost reduc-
tion – most of the measures having been initiated as early as 2007. We are
convinced that strong cash flows and asset quality are ultimately the
most decisive factors when it comes to managing a real estate company
in tough times.
Requirement to Deleverage – Strong Balance Sheet
With an equity ratio of 40%, alstria has one of the strongest balance
sheets in the German real estate universe. A healthy balance sheet
provides alstria with the strength and flexibility to effectively manage
the existing portfolio and benefit from additional opportunities as they
occur. Nevertheless, we are convinced that, in the future, alstria will need
an even stronger balance sheet. The mere notion that, in the coming
years, simply less debt will be available to finance real estate assets, and
that only the strongest companies will have access to liquidity puts
deleveraging on the strategic agenda for alstria. From our position of
strength, we consider deleveraging to be a systematic process that may
take another 18 to 24 months. At the end, we reckon with a capital struc-
ture that is probably closer to an equity ratio of 50% than to where the
equity ratio is today.
Preface
TRUST
alstria Stock
Group Management Discussion and Analysis
Consolidated Financial Statements
Auditors´ Report
Management
Other Information
Glossary
Financial Calendar
Contact
Term
FFO
IFRS/IAS
Investment Property
Joint Venture
Net Asset Value (NAV)
Prime Standard
REIT (G-REIT)
Descrpition
Funds from operations (FFO) is not a measure of operating performance or liquidity under
generally accepted accounting principles, in particular IFrS, and should not be conside-
red as an alternative to the company’s income or cash flow measures as determined in
accordance with IFrS. Furthermore, no standard definition exists for FFO. thus, the FFO
or measures with similar names as presented by other companies may not necessarily
be comparable to the company’s FFO.
International Financial reporting Standards (IFrS). reporting standards (formerly called IaS)
which have been adopted by the International accounting Standards Board (IaSB).
the objective is to achieve uniformity and transparency in the accounting principles that
are used by businesses and other organizations for financial reporting around the world.
Property, land and buildings which are held as financial investment to earn rents or for
the growth and not used for the Company’s own purpose. the value of the investment
property is determined according to IaS 40.
Legally independent entity formed between two or more parties to undertake economic
activity together.
151
reflects the economic equity of the Company. It is calculated from the value of assets
less debt.
Market segment of the Frankfurt Stock exchange with the greates relevance and degree
of regulation. Being quoted on Prime Standard is a prerequisite for admission to DaX,
MDaX, SDaX, tecDaX.
real estate Investment trusts are public listed companies, fully tax transparant, which solely
invest in properties.
Roadshows
Corporate presentations to institutional investors.
Sale-and-Leaseback Transaction
Form of arrangement in which one party sells an asset to another party in exchange for
cash and contracts to lease the asset for a specified term.
Vacancy Rate
Valuation Yield
WAULT
Determines the vacancy within the portfolio and is calculated by comparing the vacancy
area and the total lettable area
Key performance indicator, which is determined at a given date by the contractual rent
in relation to the fair value of the property
Weighted average unexpired lease term. the weigthed average unexpired lease term
shows the average remaining lease length of a portfolio and is defined as the total contrac-
tual rent to be collected in relation to the contractual rent of the date of the report.
OThER I nFORMATIOn
FIna nCIaL CaLenDar 2009
Date
Event
Mar. 31, 2009
May 15, 2009
Publication of annual financial results for 2008 (Frankfurt)
Publication of financial results for Q1 2009 (Hamburg)
May 27 - 28, 2009
Roadshow, 7th Kempen European Property Seminar (Amsterdam)
June 3 - 5, 2009
NAREIT week (New York)
June 10, 2009
Annual General Meeting (Hamburg)
aug. 14, 2009
Publication of financial results for Q2 2009 (Hamburg)
Sep. 3 - 4, 2009
EPRA Annual Conference (Brüssel)
Oct. 1, 2009
Oct. 5, 2009
Roadshow, 4th Pan European Real Estate Conference (London)
Trade Fair, EXPO REAL (Munich)
152
Oct. 20 - 21, 2009
Conference Real Estate Share Initiative (Frankfurt)
nov. 9 -11, 2009
Messe German Equity Forum (Frankfurt)
nov. 13, 2009
Publication of financial results for Q3 2009 (Hamburg)
COntaCt
alstria office REIT-AG
Bäckerbreitergang 75,
20355 Hamburg, Germany
Phone: +49 (0) 40 22 63 41 - 300,
Fax:
www.alstria.com
+49 (0) 22 63 41 - 310
Investor Relations
Phone: +49 (0) 40 22 63 41 - 329
Fax:
e-mail: ir@alstria.de
http://investor-relations.alstria.com
+49 (0) 22 63 41 - 310
alstria office REIT-AG is a member of DIRK
(Deutscher Investor Relations Verband,
the German Investor Relations Association).
This report is also available in German.
Other reports issued by alstria office REIT-AG
are posted on the Company’s homepage.
taBLe OF COnt entS
2
6
Letter from the Board of Management
TRUST
18
alstria Stock
22
Group Management Discussion and Analysis
22
30
36
41
44
47
economics and Strategy
Financial analysis
risk and Opportunity Management
Disclosure requirements
additional group Disclosures
Subsequent events and Outlook
49
Consolidated Financial Statements
49
50
52
53
54
Consolidated Income Statement
Consolidated Balance Sheet
Consolidated Statements of Changes in equity
Consolidated Cash Flow Statement
notes
117
Auditors’ Report
118 Management
118
122
128
131
132
133
144
report from the Supervisory Board
Corporate governance report
Compensation report
reIt Declaration
reIt Memorandum
Valuation report
List of all Properties
150
Other Information
150
152
152
glossary
Financial Calender
Contact
First
German
Real
estate
Investment
AnnuAl RepoRt 2008
the word tRuSt on the cover
was formed using aerial
photographs of the following
alstria properties:
t
R
u
S
t
Buxtehuder str. 9,11
hamburg
Kaiser-Wilhelm-str. 79-87
hamburg
Max-Brauer-Allee 41-43
hamburg
gorch-fock-Wall 15
hamburg
Buxtehuder str. 9,11
hamburg
ABouT AlsTriA
As the first German REIT,
we have
● a unique business model:
we buy and manage
office real estate
● a clear focus on one country
● a long-term orientation
oMV of iN VesTMeNT
ProPer Ties
Ke y fac ts 2008
more than EUR 100 m
between EUR 50 m and EUR 100 m
between EUR 25 m and EUR 50 m
between EUR 10 m and EUR 25 m
between EUR 5 m and EUR 10 m
between EUR 1 m and to EUR 5 m
● revenues increased
by 23.6% to eur 102,055 k
● funds from operations up 25%
to eur 39,415 k
● successful lease-ups
of more than 30,000 sqm
● Vacancy rate brought down
toward our tenant relationships
Hamburg
from 6.5% to 5.9%
● an entrepreneurial view
of market opportunities
Hanover
Detmold
Berlin
Potsdam
Magdeburg
Essen
Dortmund
Dusseldorf
Neuss
Wuppertal
Cologne
Bonn
Halle
Leipzig
Dresden
Erfurt
Zwickau
Jena
Frankfurt
Wiesbaden
Darmstadt
Mannheim
Wuerzburg
Nuremberg
Stuttgart
Augsburg
Munich
ToTAl poRTfolIo bRokEn down by USE
AlSTRIA`S CoRE TEnAnTS 2008
The key metrics for the portfolio as of Dec. 31, 2008
● office
● Retail
● Residential
● other
93%
3%
1%
3%
● City of Hamburg
● daimler
● barmer
● bilfinger berger
● Siemens
● deutsche
Rentenversicherung
● Rheinmetall
● HUk
● City of Hanover
● others
36%
14%
10%
6%
5%
3%
3%
2%
1%
20%
Metric
Number of properties
Market value (eur bn)
Contractual rent (eur m/annum)
Valuation yield
Approximate lettable area (in sqm)
Vacancy (% of lettable area)
WAulT (years)
Average rent/sqm/month (in eur)
Value
89
1.8
106.5
5.9%
944,000
5.9%
10
9.41
iMPriNT
Concept & Design
Berichtsmanufaktur GmbH, Hamburg
PrasserSander Markengestaltung, Hamburg
Realisation
Berichtsmanufaktur GmbH, Hamburg
Photos
Jan Northoff, Hamburg
Patrick Piel, Hamburg
First
German
Real
estate
Investment
8
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
G
A
T
-
I
E
R
e
c
i
f
f
o
a
i
r
t
s
l
a
AnnuAl RepoRt 2008
P rof ile
alstria office REIT-AG is an internally managed Real Estate Investment Trust (REIT) solely focused on
acquiring, owning and managing office real estate in Germany. alstria was founded in January 2006 and
was converted into the first German REIT in October 2007. Its headquarters are based in Hamburg.
alstria office REIT-AG owns a diversified portfolio of properties across attractive German office real
estate markets. Its current portfolio comprises 89 properties with an aggregate lettable space of
approx. 944,000 sqm and is valued at approx. EUR 1.8 billion.
alstria intends to expand its portfolio in the upcoming years as part of a sustainable growth strategy. This
strategy is based on selective investments and active asset and portfolio management as well as on
establishing and maintaining good relationships with its key customers and decision makers.
Key f ig ures
in EUR k
Revenues and Earnings
revenues
Net rental income
eBiTDA
Consolidated net profit
funds from operations (ffo)
Assets
investment properties
Total assets
equity
Net Asset Value
G-REIT Key Figures
g-reiT equity ratio
revenues plus other income from investment properties
NNNAV per share in eur
earnings per share in eur
2008
2007
Change
in %
102,055
93,222
-6,542
-56,000
39,415
82,552
76,192
85,911
52,810
31,540
1,805,265
1,693,718
1,873,493
1,835,520
729,667
729,667
870,875
870,875
23.6
22.4
-107.6
-206.0
25.0
6.6
2.1
-16.2
-16.2
40.3%
100%
13.03
-1.00
51.4%
100%
15.55
0.94
-11.1 pp
0 pp
-16.2
-206.0
shAre
isiN
symbol
Prime sector
industry group
Market segment
indices
Number of shares
share capital (notional) in eur
Market capitalisation (Dec. 31, 2008)
in eur
free float
De000A0lD2u1
AoX
financial services
real estate
Prime standard, frankfurt
s-DAX, ePrA, german reiT index, s&P/Citigroup global reiT index
56,000,000
56,000,000
277,200,000
39%