2021
ANNUAL
REPORT
IFRS financial statements
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KEY FIGURES
FIVE-YEAR OVERVIEW
Revenues and earnings
Revenues (EUR k)
Net rental income (EUR k)
Consolidated profit for the period
(EUR k)
FFO (EUR k)1)
Earnings per share (EUR)1)
FFO per share (EUR)1)
1) Excluding minorities.
2021
183,670
163,271
209,678
116,455
1.18
0.65
2020
177,063
154,823
168,489
108,673
0.95
0.61
2019
187,467
162,904
581,221
112,572
3.27
0.63
2018
193,193
169,068
527,414
114,730
3.02
0.65
2017
193,680
172,911
296,987
113,834
1.94
0.74
Balance sheet
Dec. 31, 2021 Dec. 31, 2020 Dec. 31, 2019 Dec. 31, 2018 Dec. 31, 2017
Investment property (EUR k)
4,775,801
4,556,181
4,438,597
3,938,864
3,331,858
Total assets (EUR k)
Equity (EUR k)
Liabilities (EUR k)
Net asset value (NAV) per
share (EUR)
Net loan-to-value (Net LTV, %)
5,234,372
5,090,249
5,029,328
4,181,252
3,584,069
3,367,083
3,252,442
3,175,555
2,684,087
1,954,660
1,867,290
1,837,806
1,853,773
1,497,165
1,629,409
18.91
28.8
18.29
27.0
17.88
27.1
15.13
30.4
12.70
40.0
G-REIT figures
Dec. 31, 2021 Dec. 31, 2020 Dec. 31, 2019 Dec. 31, 2018 Dec. 31, 2017
G-REIT equity ratio (%)
Revenues including other income
from investment properties (%)
EPRA figures1)
EPRA earnings per share (EUR)
EPRA cost ratio A (%)2)
EPRA cost ratio B (%)3)
EPRA NRV per share (EUR)
EPRA NTA per share (EUR)
EPRA NDV per share (EUR)
EPRA net initial yield (%)
EPRA ‘topped-up’ net initial
yield (%)
EPRA vacancy rate (%)
69.1
100
2021
0.55
25.0
21.1
71.1
100
2020
0.61
26.6
22.1
70.9
100
2019
0.61
26.1
21.7
67.2
100
2018
0.62
23.0
19.0
57.1
100
2017
0.68
19.6
16.4
Dec. 31, 2021
Dec. 31, 2020
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2017
20.86
18.97
18.82
2.9
3.4
6.9
20.13
18.34
17.95
3.3
3.7
7.6
19.67
17.91
17.61
3.3
3.8
8.1
n/a
15.14
14.96
4.0
4.4
9.7
n/a
12.71
12.45
4.6
5.0
9.4
1) For further information, please refer to EPRA Best Practices Recommendations, www.epra.com.
2) Including vacancy costs.
3) Excluding vacancy costs.
CONTENT
DETAIL INDEX COMBINED MANAGEMENT REPORT ................................................ 2
A.
I.
II.
III.
IV.
V.
VI.
COMBINED MANAGEMENT REPORT ......................................................... 3
ECONOMICS AND STRATEGY ........................................................................... 3
FINANCIAL ANALYSIS .................................................................................. 11
EXPECTED DEVELOPMENTS ........................................................................... 21
REPORT REGARDING ALSTRIA AG .................................................................... 22
RISK AND OPPORTUNITY REPORT .................................................................... 27
SUSTAINABILITY REPORT ............................................................................. 53
VII.
DISCLOSURES REQUIRED BY TAKEOVER LAW ....................................................... 54
VIII. RENUMERATION REPORT .............................................................................. 58
IX.
ADDITIONAL GROUP DISCLOSURE .................................................................... 80
DETAIL INDEX CONSOLIDATED FINANCIAL STATEMENTS ....................................... 81
B.
C.
D.
E.
F.
G.
H.
I.
II.
III.
IV.
V.
VI.
I.
II.
I.
II.
CONSOLIDATED FINANCIAL STATEMENTS ................................................ 82
CONSOLIDATED INCOME STATEMENT ............................................................... 82
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME ....................................... 83
CONSOLIDATED STATEMENT OF FINANCIAL POSITION ............................................ 84
CONSOLIDATED STATEMENT OF CASH FLOWS ..................................................... 86
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY............................................. 88
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ......................................... 89
RESPONSIBILITY STATEMENT ............................................................. 165
INDEPENDENT AUDITOR’S REPORT ...................................................... 166
REPORT OF THE SUPERVISORY BOARD ................................................. 176
CORPORATE GOVERNANCE STATEMENT ................................................ 185
REIT DISCLOSURES ......................................................................... 204
REIT DECLARATION .................................................................................. 204
REIT MEMORANDUM ................................................................................. 206
FINANCIAL CALENDAR/IMPRINT .......................................................... 208
FINANCIAL CALENDAR ............................................................................... 208
CONTACT/IMPRINT .................................................................................. 208
alstria Annual Report 2021
Combined Management Report
DETAIL INDEX COMBINED MANAGEMENT REPORT
G
A.
COMBINED MANAGEMENT REPORT ......................................................... 3
ECONOMICS AND STRATEGY ........................................................................... 3
I.
1. STRATEGY .................................................................................................. 3
2. CORPORATE MANAGEMENT .............................................................................. 4
3. ECONOMY AND OFFICE MARKETS ....................................................................... 5
4. PORTFOLIO ANALYSIS .................................................................................... 6
II.
FINANCIAL ANALYSIS .................................................................................. 11
1. EARNINGS POSITION ..................................................................................... 11
2. FINANCIAL AND ASSET POSITION ....................................................................... 16
3. THE MANAGEMENT BOARD’S OVERALL ASSESSMENT OF THE FINANCIAL YEAR .................. 21
III.
EXPECTED DEVELOPMENTS ........................................................................... 21
1. EXPECTED ECONOMIC DEVELOPMENT ................................................................. 21
2. DEVELOPMENT OF THE REAL ESTATE MARKET: OUTLOOK FOR 2022 .............................. 21
3. OUTLOOK FOR THE ALSTRIA GROUP .................................................................. 21
IV.
REPORT REGARDING ALSTRIA AG .................................................................... 22
1. EARNINGS POSITION ..................................................................................... 22
2. FINANCIAL AND ASSET POSITION ....................................................................... 24
3. ADDITIONAL DISCLOSURE REGARDING ALSTRIA AG .................................................. 26
V.
RISK AND OPPORTUNITY REPORT .................................................................... 27
1. RISK REPORT.............................................................................................. 27
2. REPORT ON OPPORTUNITIES ........................................................................... 50
VI.
VII.
SUSTAINABILITY REPORT ............................................................................. 53
DISCLOSURES REQUIRED BY TAKEOVER LAW ....................................................... 54
VIII. RENUMERATION REPORT .............................................................................. 58
IX.
ADDITIONAL GROUP DISCLOSURE .................................................................... 80
1. CORPORATE GOVERNANCE GROUP DECLARATION PURSUANT TO SECTIONS 289F AND
315D HGB (“HANDELSGESETZBUCH”: GERMAN COMMERCIAL CODE) .............................. 80
2. EMPLOYEES ............................................................................................... 80
3. DIVIDEND .................................................................................................. 80
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alstria Annual Report 2021
Combined Management Report
A. COMBINED MANAGEMENT REPORT
I. ECONOMICS AND STRATEGY
1. STRATEGY
alstria office REIT-AG (alstria) (herein referred to as the “Company”, or “alstria AG”) is a German
stock corporation in the legal form of a Real Estate Investment Trust (REIT) that invests in office real
estate in major German economic centers. The Company has been listed on the Frankfurt Stock
Exchange since 2007 (WKN: A0LD2U). As of December 31, 2021, the alstria group consisted of the
parent company alstria AG and 43 direct and indirect subsidiaries (hereinafter “alstria” or the
“Group”). The parent company makes operational decisions. As of December 31, 2021, alstria’s real
estate portfolio comprised 112 buildings, with a lettable area of 1.4 million m² and a total value of
EUR 4.9 billion. The properties are predominantly located in the major German office markets of
Hamburg, Düsseldorf, Frankfurt, Stuttgart, and Berlin, where local and operating offices represent
alstria, which alstria defines as its core market. As a fully integrated and long-term oriented company,
alstria’s 171 employees actively manage the buildings over their entire life cycle.
At the end of fiscal year 2021, the Company entered into an investment agreement with Alexandrite
Lake Lux Holdings S.à r.l. (“Alexandrite” or the “Bidder”), a that the real estate private funds of
Brookfield Asset Management (“Brookfield”) controls on a voluntary public takeover offer for all
alstria-shares against cash compensation (the "Offer"). The takeover offer was published on
December 13, 2021, and the Executive Board and Supervisory Board expressed support in their joint
reasoned opinion, which was published on December 27, 2021. On January 18, 2022, the Bidder
declared the occurrence of all offer conditions and thus the successful takeover of the Company. At
the end of the second offer period on February 3, 2022, the ownership interest of the new majority
shareholder was 91.6 %.
The new majority shareholder has committed to support the Executive Board in the further
implementation of the Company's business strategy and to continue to drive the Company's growth.
In particular, value-enhancing modernization and repositioning opportunities with potential for
sustainable value creation based on hands-on asset management will be advanced to future-proof the
portfolio and continue the ongoing decarbonization process. In addition, in light of the new
shareholder structure, the Company's Executive Board will conduct a strategic review of the
Company's capital structure together with the Supervisory Board and the new majority shareholder.
In the future, the Company shall operate with a leverage ratio that meets the minimum requirements
for an investment grade rating with a Company leverage ratio of no more than 55 % (loan-to-value).
Any excess cash is to be used either for the purpose of reinvestment in strategic M&A transactions or
for other profitable investment opportunities (e.g., geographic diversification, investment in adjacent
asset classes). Fundamentally, the focus of the business will no longer be on paying dividends. Rather,
the preference will be for yield-enhancing reinvestment of available cash, focused on total return.
alstria Annual Report 2021
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Combined Management Report
Therefore, the new majority shareholder intends to reduce the annual distribution of dividends to the
extent legally permissible.
alstria’s corporate strategy is based on the following principles:
- Access to capital and a comprehensive operational knowledge based on an integrated business
model are fundamental success factors for alstria.
- By concentrating the real estate portfolio on the major German office markets and by focusing on
solvent tenants, alstria generates steady income primarily used for reinvesting in the portfolio.
- Continuous investments in the quality of the real estate portfolio secure and increase rental
income and property values, and improve the portfolio’s energy efficiency.
- Depending on the assessment of the market situation, properties are bought or sold. The goal is
risk-adjusted corporate growth and achieving a return in line with the market over the real estate
cycle.
2. CORPORATE MANAGEMENT
Alstria proactively controls the Group based on two key financial performance indicators: revenues
and funds from operations (FFO). Revenues mainly comprise rental income derived from the
Company’s leasing activities. The FFO is derived from real estate management. It excludes valuation
effects and other adjustments, such as noncash expenses / income, gain on disposal and expected
nonrecurring effects.*
In the 2021 financial year, alstria generated revenues of EUR 184 million and FFO of approx.
EUR 116 million. The result was thus significantly above the forecasted revenues of EUR 177 million
and FFO of EUR 108 million published at the beginning of 2021. alstria already raised the original
revenue and earnings forecast to the expected revenues of EUR 181 million and FFO of EUR 115 million
in the course of 2021. This was due to additional rental income from acquiring two properties and
concluding new leases on the one hand and lower real estate operating costs due to postponing
measures to 2022 on the other. A lower-than-planned disposal volume of non-strategic properties
explains how the revised forecast was also exceeded at the end of 2021.
The Company also monitors the progress of its Net LTV**, G-REIT equity ratio***, net-debt****/EBITDA,
and cash (cash and cash equivalents). For the Company’s internal control, in each case these are not
classified as the most relevant performance indicators. alstria’s Net LTV was 28.8 % as of
December 31, 2021, compared to 27.0 % at the end of the 2020 financial year. The G-REIT equity ratio
was 69.1 %, compared to 71.1 % in the previous year, and the minimum statutory rate of 45 %. The net-
debt / EBITDA was 9.0 % as of December 31, 2021, compared to 9.5 % as of December 31, 2020.
* For further details, please refer to page 12f.
** Net-debt / fair value of immovable assets (deducted by interests in joint ventures).
*** Total equity divided by the carrying amount for immovable assets. The minimum requirement according to G-REIT regulations is 45 %.
**** Total debt deducted by cash positions and short-term financial assets.
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alstria Annual Report 2021
Combined Management Report
The management at the level of the Company primarily focuses on the total operating performance.
alstria AG strives for stable results with low volatility.
3. ECONOMY AND OFFICE MARKETS
3.1.
Economic development
The economic performance in Germany in 2021 was again characterized by the effects of the ongoing
COVID-19 pandemic, material shortages due to the disruption of global supply chains, and rising
inflation. The optimistic growth forecasts from the beginning of the year could not be maintained in
the course of the year. With gross domestic product up 2.7 % and consumer prices rising by 3.1 %,
economic activity remained at a slow pace. The unemployment rate in Germany remained at a
moderate level of 5.7 %, and the number of corporate insolvencies decreased further year-on-year.
3.2. Office markets*
3.2.1. Vacancy slightly up, rents stable
An area’s economic performance directly affects the corresponding office property market because
economic activity, and with it the increase or decrease in employment, usually directly affects the
demand for office space. The ongoing COVID-19 pandemic in Germany continued to restrain leasing
activity over the course of the year, with the final quarter of 2021 seeing some revival in the
commercial leasing markets. The vacancy rate rose to 4.7 % over the course of the year (previous
year: 4.0 %), while both prime and average rents increased slightly despite the weak market situation.
Overall, office take-up rose by 23.7 % year-on-year to 3,200,000 m² ("Big 7" cities: Berlin, Düsseldorf,
Frankfurt, Hamburg, Cologne, Munich, and Stuttgart), according to the major commercial brokerage
houses. On the other hand, average rents in the "Big 7" cities remained largely stable. Berlin reached
the highest average rent for office space at EUR 30.50/m² (previous year: EUR 28.36/m²), followed
by Munich at EUR 23.68/m² (previous year: EUR 21.46/m²), Frankfurt at EUR 22.04/m² (previous year:
EUR 23.07/m²), Hamburg at EUR 18.06/m² (previous year: EUR 17.40/m²), Düsseldorf at EUR
16.57/m² (previous year: EUR 15.77/m²), Cologne at EUR 16.42/m² (previous year: EUR 15.90/m²),
and Stuttgart at EUR 16.10/m² (previous year: EUR 16.50/m²).
* Sources of real estate market data in this chapter are Colliers International Deutschland GmbH, BNP Paribas Real Estate, CBRE GmbH, and
Jones Lang LaSalle.
** Colliers International Deutschland GmbH, BNP Paribas Real Estate, CBRE GmbH and Jones Lang LaSalle.
alstria Annual Report 2021
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Combined Management Report
3.2.2. High transaction volumes, prices continue an upward trend
Despite the uncertainty regarding overall economic growth, the German office real estate sector
recorded a transaction volume of slightly over EUR 30 billion**. This is the second-highest figure ever
registered and is around 30 % above the 10-year average. Over 2021 as a whole, the transaction volume
in the "Big 7" cities was EUR 27.6 billion (Berlin: EUR 6.7 billion, Frankfurt: EUR 5.7 billion, Hamburg:
EUR 2.4 billion, Munich: EUR 6.7 billion, Düsseldorf: EUR 1.5 billion, Cologne: EUR 2.9 billion, and
Stuttgart: EUR 1.7 billion). Even with the ongoing COVID-19 pandemic, prices for office properties in
Germany remained at a high level. Despite an increasing share of home office use, investor confidence
in the asset class remains strong. Investors focused on well-located properties with long-term leases
from solvent tenants in A-locations in 2021.Prime yields in all A-locations declined over the course of
the year.
4. PORTFOLIO ANALYSIS
4.1.
Key metrics of the portfolio and investment locations
alstria owns, manages, and develops office buildings with a total lettable area of 1.4 million m². At
the end of 2021, 90.1 % of this was office and storage space and 9.9 % included other types of use
(retail, hotel, and other). By focusing on the large and liquid German office markets, from the
Management Board’s perspective, alstria benefits from the fundamental strength of the German
economy as a whole and can efficiently manage substantial sub-portfolios from its local offices. Rather
than large buildings, alstria typically prefers smaller, geographically close properties. alstria’s
management believes that such a portfolio design allows the company to spread the operational risk
over a larger number of buildings and thus reduce the overall risk of the real estate portfolio. The
buildings in the alstria portfolio have an average lettable area of 12,800 m² and an average market
value of EUR 43.5 million.
Key metrics
Number of properties
Market value (EUR bn)2)
Annual contractual rent (EUR m)
Valuation yield (%, contractual rent / market value)
lettable area (m²)
EPRA vacancy rate (%)
WAULT (weighted average unexpired lease term in years)
Average value per m² (EUR)
Average rent/m² (EUR / month)3)
Dec. 31, 2021
Dec. 31, 2020
1121)
4.9
204.6
4.2
109
4.6
199.1
4.4
1,434,000
1,427,800
6.9
5.7
3,398
13.33
7.6
6.1
3,205
12.93
1) The change as of December 31, 2020 is based on the acquisition of two properties and the sale of one property in fiscal year 2021 as well as
on the division of buildings 1 to 3 of the Carl-Reiß-Platz property into three independent properties.
2) Including fair value of owner-occupied properties.
3) Average rent for the office space.
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alstria Annual Report 2021
Combined Management Report
Total portfolio by region
(% of market value)
Dec. 31, 2021
Dec. 31, 2020
Change (pp)
Hamburg
Düsseldorf
Frankfurt
Stuttgart
Berlin
Others
34
25
21
10
9
1
33
27
20
12
8
0
1
−2
1
−2
1
1
alstria Annual Report 2021
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Combined Management Report
4.2.
Tenants and leases
Public tenants and large national and international companies in particular characterize alstria’s
tenant structure. The following table shows the ten largest tenants as of December 31, 2021:
alstria’s main tenants
(% of annual rent)
City of Hamburg
Mercedes-Benz AG
Bundesanstalt für Immobilienaufgaben
City of Frankfurt
GMG Generalmietgesellschaft
HOCHTIEF Aktiengesellschaft
Commerzbank Aktiengesellschaft
Hamburger Hochbahn AG
Residenz am Dom gem. Betriebsgesellschaft mbH
Württembergische Lebensversicherung AG
Dec. 31, 2021
Dec. 31, 2020
Change (pp)
12
11
5
3
2
2
2
2
2
1
12
12
5
3
2
2
2
2
1
1
0
−1
0
0
0
0
0
0
1
0
Due to the COVID-19 pandemic in Germany and the resulting uncertainty with regard to future
economic developments, the commercial leasing market again proved difficult. Large companies in
particular were reluctant to sign new leases, which is why the average size of the leases signed in
2021 was lower than in previous years. In view of the continuing uncertainty on the part of commercial
tenants, there was also an increased desire for partial or special termination rights and flexible terms
in the past year.
Letting metrics (m2)
New leases
Renewals of leases1)
Total
1) Option drawings of existing tenants are included.
2021
51,700
103,600
155,300
2020
62,000
57,500
119,500
Change
−10,300
46,100
35,800
Despite the weak commercial leasing market, alstria increased its letting volume (measured in terms
of new lettings and lease extensions) in 2021 compared to the prior year level. This was due to the
conclusion of several large-volume lease extensions at the end of the year.
Commercial leases usually have a limited term agreed in the respective lease. The following table
summarizes the share of expiring leases as a share of the total portfolio over the next three years:
Lease expiry profile
(% of annual rent)
2022
2023
2024
Dec. 31, 2021
Dec. 31, 2020
Change (pp)
7.0
10.7
8.0
11.3
10.3
8.3
−4.3
0.4
−0.3
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alstria Annual Report 2021
Combined Management Report
4.3.
Capital expenditure into the existing portfolio
In 2021, EUR 122 million was invested in the existing portfolio. The largest part of this amount,
EUR 90 million, was invested in development projects, which significantly improved the quality of the
spaces to achieve higher rents for new leases. The development capex increased significantly in 2021
because alstria currently sees the best return opportunities here. The current development portfolio
comprises 20 projects with a total lettable area of 342,900 m2.
Project
Besenbinderhof 41, Hamburg
Carl-Reiss-Platz 1, Mannheim
Carl-Reiss-Platz 2,3,4, Mannheim
Augustaanlage 60, Mannheim
Friedrich-Scholl-Platz 1, Karlsruhe
Gustav-Nachtigal-Str. 3, Wiesbaden
Gustav-Nachtigal-Str. 4, Wiesbaden
Gustav-Nachtigal-Str. 5, Wiesbaden
Gasstr. 18, Hamburg
Deutsche Telekom Allee 7, Darmstadt
Deutsche Telekom Allee 9, Darmstadt
Gartenstr. 2, Düsseldorf
Friedrich-List-Str. 20, Essen
Uhlandstr. 85, Berlin
Adlerstr. 63, Düsseldorf
Corneliusstr. 36, Düsseldorf
Maxstr. 3a, Berlin
Hanauer Landstr. 161−173, Frankfurt
Epplestr. 225, Stuttgart
Handwerkstr. 4/Breitwiesenstr. 27, Stuttgart
Total
1) Planned lettable area.
Lettable area
(m²)
Status
Estimated
completion
5,500
Under construction
8,500
Under construction
5,3001) Under construction
4,400
Under construction
26,800
Under construction
18,400
Under construction
800
In planning
7,600
Under construction
26,800
Under construction
22,200
60,700
4,800
9,000
9,400
2,700
3,100
4,200
10,500
106,000
6,200
342,900
In planning
In planning
In planning
In planning
In planning
In planning
In planning
In planning
In planning
In planning
In planning
Q3 2022
Q1 2023
Q1 2024
Q3 2022
Q3 2024
Q2 2022
n/a
Q3 2022
Q3 2022
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
alstria Annual Report 2021
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Combined Management Report
4.4.
Transactions
alstria’s investment decisions are based on both analyses of local markets and individual inspections
of each asset. The latter focuses on the attributes of location, size, and quality (relative to those of
direct competitors’ assets) as well as the long-term potential for value growth. alstria’s strategy aims
at both establishing a lucrative portfolio size at the respective locations and retracting from markets
that do not adhere to alstria’s core investment focus (“Big 7” office markets in Germany). In this
context, a property in Trier was sold in 2021. The sales made in Hamburg and Stuttgart were
opportunistic in character and served to optimize the portfolio’s risk/return profile. The sales
proceeds were mainly used to finance modernization measures in the existing portfolio. Reallocating
the capital provided continuously improves the portfolio’s risk/return profile. New properties were
purchased in the Frankfurt and Berlin core markets. There is significant value enhancement potential
for both properties acquired, which is to be leveraged in the coming years.
Disposals
Asset
Frauenstraße 5−9
Heidenkampsweg 44−46
Vaihinger Str. 131
Total Disposals
City
Trier
Hamburg
Stuttgart
Disposal
price
(EUR k)
24,750
9,100
63,000
96,850
Gain
to book
value
(EUR k)1), 2)
Signing
SPA
Transfer
of benefits and
burdens
−650
July 15, 2021
Oct. 31, 2021
1,070
Dec. 9, 2021 March 31, 20223)
15,730
Dec. 23, 2021 March 31, 20223)
16,150
1) Different from the position “Net result from the disposal of investment property” in the income statement. This position only contains contracts
which were signed in 2021 financial year and their transaction costs as well as capitalizations during the year which were booked until the time
of disposal.
2) Rounded to the nearest five thousand Euros.
3) Expected.
Acquisitions
Asset
Hanauer Landstr. 161−173
Mehringdamm 32−34
Total Acquisitions
1) Excluding transaction costs.
City
Frankfurt
Berlin
4.5.
Portfolio valuation
Acquisition
price
(EUR k)1)
30,300
50,250
80,550
Signing
SPA
Transfer of benefits and
burdens
Dec. 17, 2020
Apr. 30, 2021
March 1, 2021
Aug. 1, 2021
An external valuer (Savills Advisory Services Germany GmbH & Co. KG) valued alstria‘s entire real
estate portfolio at fair market value as of December 31, 2021 in accordance with the requirements
of IAS 40 in connection with IFRS 13. For the entire portfolio, the 2021 valuation resulted in an
appreciation of EUR 94.8 million; previous year: EUR 61.5 million (after deduction of capex and
acquisitions). Based on the determined market value as of December 31, 2021, there is an average
value of EUR 3,397 per m2 and, based on the ratio of contractual rent to the market value, a yield of
4.2 % in the total portfolio.
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alstria Annual Report 2021
Combined Management Report
II. FINANCIAL ANALYSIS
1. EARNINGS POSITION
EUR k
Revenues
Net rental income
Administrative and personnel expenses
Other operating result
Operating income
Net result from fair value adjustments to investment property
Net result from disposal of investment property
Net operating result
1.1.
Net operating result
2021
183,670
163,271
−28,094
−8,684
2020
177,063
154,823
−27,028
2,486
126,493
130,281
94,827
15,134
61,522
8,340
236,454
200,143
alstria closed the 2021 financial year with a net operating result (before financing costs and taxes) of
EUR 236,454 k, compared to EUR 200,143 k for the previous year.
Compared to the previous year, alstria had a significantly higher result from fair value adjustments
to investment properties.
1.2.
Revenues
In the reporting period, revenues totaled EUR 183,670 k (compared to EUR 177,063 k in 2020). This
corresponds to an increase of 3.7 % or EUR 6,607 k. The increase mainly resulted from revenues from
new leases and indexations, as well as revenues from new leases for the properties acquired in 2020
and 2021. The scheduled expiry of leases did not have a significant impact in the reporting period.
Partially offsetting the increase in revenues was a decrease in revenues due to the scheduled sales of
properties in 2020.
1.3.
Real estate operating expenses
Real estate operating expenses consist of recoverable and non-recoverable operating costs, and they
amounted to EUR 59,307 k (compared to EUR 60,607 k in 2020). The expense ratio of non-recoverable
operating costs decreased from 13.8 % in 2020 to 11.2 % in 2021. Thus, the Group’s net rental income
increased by EUR 8,448 k to EUR 163,271 k (compared to EUR 154,823 k in 2020).
1.4.
Administrative and personnel expenses
Administrative expenses remained stable year-on-year at EUR 8,325 k (compared to EUR 8,460 k in
2020). Personnel expenses were EUR 19,769 k for the reporting period and, therefore, EUR 1,201 k
higher than in the previous year (2020: EUR 18,568 k). The reason for the increase in the reporting
period is mainly due to an increase in the remuneration for convertible profit participation certificates
by EUR 893 k to EUR 2,785 k (2020: EUR 1,892 k), which resulted from alstria’s higher stock price. In
addition, due to an increased number of employees, salaries increased by EUR 444 k to EUR 10,983 k
(the annual average number of employees was 171 in 2021 compared to 166 in the previous year).
alstria Annual Report 2021
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Combined Management Report
Total administrative and personnel expenditures were approx. 15.3 % of total revenue and 0.6 % of
the portfolio’s market value (compared to 15.3 % and 0.6 % in 2020, respectively).
1.5. Other operating result
alstria’s other operating results amounted to EUR −8,684 k during the reporting period (compared
to EUR 2,486 k in 2020). An increase in income of EUR 1,301 k mainly resulted from EUR 910 k more
income from the reversal of individual value adjustment and from EUR 828 k higher income from
compensation payments and other charges on to tenants. An increase in expenses of EUR 12,471 k
resulted mainly from EUR 10,174 k higher expenses for legal and advisory fees due to the voluntary
public takeover offer and EUR 3,476 k higher expenses for the valuation of limited partner capital.
1.6.
Net result from fair value adjustments to investment property
In the 2021 financial year, the net result from fair value adjustments to investment property was
EUR 94,827 k (compared to EUR 61,522 k in 2020). The total of the increases in value amounted to
EUR 233,320 k (compared to EUR 218,686 k in 2020), while the total of the decrease in value amounted
to EUR 138,493 k (compared to EUR 157,164 k in 2020). Different value developments are recorded
on the asset level. While assets in prime locations with long-term leases and assets with completed
development projects showed valuation gains, assets in peripheral locations suffered from a decrease
in prices due to less demand.
1.7.
Net result from the disposal of investment property
In 2021, alstria achieved a positive result of EUR 15,134 k from the disposal of investment properties
(compared to EUR 8,340 k in 2020). The realized disposal gains mainly resulted from the sale of the
Vaihinger Strasse asset in Stuttgart.
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alstria Annual Report 2021
Combined Management Report
1.8.
Net financial result
EUR k
Interest expenses, corporate bonds
Interest expenses, other loans
Interest result Schuldschein
Other interest expenses
Financial expenses
Income from financial instruments
Other financial expenses
Net financial result
2021
−21,954
−2,142
−1,977
−815
−26,888
1,323
−454
−26,019
2020
−27,269
−2,321
−2,190
−228
−32,008
533
−357
−31,832
Financial expenses decreased by EUR 5,120 k to EUR 26,888 k mainly due to lower interest expenses
for corporate bonds.
The net financial result for the year increased by EUR 5,813 k to EUR 26,019 k, as compared to the
prior year. The average portfolio decreased compared with the previous year.
For details on the new loans, refer to the ‘Noncurrent and current financial liabilities’ section starting
on page 17.
1.9.
Share of the result of companies accounted for at equity
In 2021, alstria’s share of the result of companies accounted for at equity was EUR −108 k (compared
to EUR −9 k in 2020).
1.10. Net result from fair value adjustments to financial derivatives
To minimize the impact of interest-rate volatility on profits and losses, alstria uses financial
derivatives to hedge on floating-interest-rate loans. The amount of variable-rate bank loans was
reduced in favor of fixed-rate bonds. A derivative financial instrument, in the form of a cash flow
hedge with a most recent nominal value of EUR 44,168 k (December 31, 2020: EUR 44,168 k) ended
on April 30, 2021.
The net result from fair value adjustments on these financial derivatives amounted to EUR 0 k in 2021
(with no change from 2020).
Further details can be found in Section 6.5 of the consolidated financial statements.
1.11. Consolidated profit
The consolidated profit amounted to EUR 209,678 k (compared to EUR 168,489 k in 2020) in the
reporting period, which is an increase of EUR 41,189 k. The main drivers of this increase are the
increase of the net result from fair value adjustments on investment property, the increase of the
net result from the disposal of investment property, and higher revenues. Higher other operating
expenses caused a slightly opposite effect compared with the previous year. Undiluted earnings per
share amounted to EUR 1.18 for the reporting period (compared to EUR 0.95 in 2020).
alstria Annual Report 2021
13
Combined Management Report
REITs are fully exempt from German corporate income tax and trade tax. However, tax obligations
can arise to a minor extent for REIT subsidiaries.
1.12. Funds from operations (FFO)
alstria’s revenues and earnings developed above plan in the reporting period. Rental income increased
by 3.7 % to EUR 183,670 k (previous year: EUR 177,063 k), mainly due to revenues from new leases as
well as indexations. The scheduled expiry of leases did not significantly affect the reporting period.
A decrease in rental income due to the scheduled sales of properties in the 2020 financial year
partially offset the increase in rental income.
FFO after minority interests amounted to EUR 116.5 million (previous year: EUR 108.7 million), close
to the forecast figure of EUR 115.0 million. The increase of EUR 7.8 million compared to the
corresponding period of the previous year is directly related to the higher revenues and the lower
real estate operating expenses. The FFO margin improved accordingly to 63.4 % in 2021, 200 basis
points above the corresponding period of the previous year. Reconciliation of consolidated net income
to FFO is based on eliminating non-cash income items, those that are not expected to recur annually,
non-periodic items and items that do not serve the operating business. The adjustments between the
income figures in the income statement and FFO are shown in the table on the next page. The most
significant adjustments (> EUR 1,000 k) related to non-cash personnel expenses (EUR 2,071 k), non-
recurring other operating income (EUR –2,371 k), non-cash other operating expenses (EUR 13,949 k),
and expenses not attributable to the operating business in the net financial result (EUR 3,713 k).
Adjustments shown in the table are related primarily to Bond #5, which was issued at the end of the
second quarter of 2020. The share of the interest expense for Bond #5 that is not attributable to the
operating business was essentially deducted. The proceeds of Bond #5 have already been partially
invested in the portfolio and are also serving to finance future investments. The adjustments in the
other operating income relate to tenants’ compensation payments. The adjustments in the other
operating expenses mainly relate to expenses incurred in the course of the takeover bid and the
valuation of the limited partner capital.
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alstria Annual Report 2021
Combined Management Report
EUR k1)
Revenues
Revenues from service charge income
Real estate operating expenses
Net rental income
Administrative expenses
Personnel expenses
Other operating income
Other operating expenses
Net result from fair value adjustments to
investment property
Net result from the disposal of investment
property
Net operating result
Net financial result2)
Share of the result of companies accounted
for at equity
Pretax income
Income tax expenses
Consolidated profit
Minority interests
IFRS P&L
Adjustments
183,670
38,908
−59,307
163,271
−8,325
−19,769
5,930
−14,614
−
−
−
−
943
2,071
−2,371
13,949
94,827
−94,827
15,134
−15,134
236,454
−95,369
−26,019
3,713
FFO
2021
183,670
38,908
−59,307
FFO
2020
177,063
38,367
−60,607
163,271
154,823
−7,382
−17,698
3,559
−665
0
0
−7,350
−17,900
2,389
−1,806
0
0
141,085
−22,306
130,156
−19,604
−108
−
−108
−9
210,327
−91,656
118,671
110,543
−649
649
0
0
209,678
−91,007
118,671
110,543
−
−2,216
−2,216
−1,870
Consolidated profit / FFO (after minorities)3)
209,678
−93,223
116,455
108,673
Number of outstanding shares (k)
FFO per share (EUR)
1) Numbers may not sum up due to rounding.
178,033
0.65
177,793
0.61
2) The operating financial result contains interest expenses for financial liabilities, which are used for the financing of the existing portfolio. The
nonoperating financial result contains interest expenses for financial liabilities, which are not used for the financing of the existing portfolio.
This concerns the interest expenses for already refinanced financial liabilities and financial liabilities, which are intended for future property
investments.
3) FFO is not a measure of operating performance or liquidity under generally accepted accounting principles, in particular IFRS, and it should
not be considered an alternative to the Company’s income or cash flow measures as determined in accordance with IFRS. Furthermore, there
is no standard definition for FFO. Thus, alstria’s FFO values and the measures with similar names presented by other companies may not be
comparable.
alstria Annual Report 2021
15
Combined Management Report
2. FINANCIAL AND ASSET POSITION
2.1.
Investment properties
The total value of investment properties as of December 31, 2021 was EUR 4,775,801 k, compared to
EUR 4,556,181 k at the beginning of 2021. This increase in investment property value was mainly due
to investments during the year (EUR 121,590 k), the increase in value of the investment portfolio
following the revaluation (EUR 94,827 k), and the acquisition of a property in Frankfurt and a property
in Berlin (EUR 85,855 k). A slightly opposite effect resulted from a property in Trier being sold
(EUR 25,400 k) and two properties in Hamburg und Stuttgart (EUR 55,010 k), which were reclassified
as held for sale as of December 31, 2021.
EUR k
Investment property as of December 31, 2020
Investments
Acquisitions
Acquisition costs
Disposals
Transfer to assets held for sale
Transfer to property, plant, and equipment (owner-occupied properties)
Net loss / gain from fair value adjustments to investment property
Investment property as of December 31, 2021
Carrying amount of owner-occupied properties
Carrying amount of the forest
Fair value of assets held for sale
Interests in joint ventures
Carrying amount of immovable assets
Fair value adjustments of owner-occupied properties
Fair value of immovable assets
2.2.
Cash and cash equivalents
4,556,181
121,590
80,559
5,296
−25,400
−55,010
−2,242
94,827
4,775,801
18,832
2,683
72,100
923
4,870,339
10,563
4,880,902
Cash and cash equivalents decreased by EUR 147,276 k, from EUR 460,960 k to EUR 313,684 k, in the
reporting period. Operating activities generated a positive cash flow of EUR 116,434 k, which is close
to the FFO. Financing activities have shown a net cash outflow of EUR 77,278 k. This is mainly due to
the dividend payment of EUR 94,230 k. The borrowing of EUR 21,210 k for the energy-efficient
refurbishment of two development projects slightly offset this. Investing activities amounted to a
cash inflow of EUR 186,432 k, mainly because of acquiring investment properties for EUR 206,996 k.
This was slightly offset by proceeds of EUR 24,750 k from the sale of investment properties.
16
alstria Annual Report 2021
Combined Management Report
2.3.
Equity
Equity (EUR k)
Number of outstanding shares (k)
Net asset value per share (EUR)
Equity ratio (%)
G-REIT equity ratio (%)
Dec. 31, 2021
Dec. 31, 2020
Change
3,367,083
178,033
18.91
64.3
69.1
3,252,442
177,793
18.29
63.9
71.1
3.5 %
0.1 %
3.4 %
0.4 pp
−2.0 pp
Compared to December 31, 2020, equity increased by EUR 114,641 k as of December 31, 2021. The
period’s profit contributed to a higher equity of EUR 209,678 k. On the other hand, dividend payments
in May 2021 decreased the equity by EUR 94,230 k.*
2.4.
Limited partnership capital noncontrolling interests
Liabilities due to minority interests represent the limited-partner capital of noncontrolling
shareholders in the alstria office Prime Portfolio GmbH & Co. KG. In line with IFRS requirements, the
share capital that minority shareholders in German partnerships owned is treated as a liability on the
Company’s balance sheet.
2.5.
Noncurrent and current financial liabilities
alstria’s financial management is carried out at the corporate level. Individual loans and corporate
bonds are taken out at the property and the portfolio levels. alstria’s main financial goal is to establish
a sustainable long-term financial structure. Therefore, alstria diversifies its financing sources and
strives for a balanced maturity profile to enable coordinated and constant refinancing (see the
following overview of the loan facilities and maturity profile of financial debt on the next page).
* See also the consolidated statement of changes in equity on page 80.
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17
Combined Management Report
The loan facilities in place as of December 31, 2021 are in the following table.
Liabilities
Maturity
Loan #1
Loan #2
Loan #3
Loan #4
Loan #5
Loan #6
Total secured loans
Bond #2
Bond #3
Bond #4
Bond #5
June 28, 2024
Mar. 28, 2024
June 30, 2026
Sept. 29, 2028
Sept. 30, 2024
Mar. 31, 2023
Apr. 12, 2023
Nov. 15, 2027
Sept. 26, 2025
Jun. 23, 2026
Schuldschein 10y/fixed
May 6, 2026
Schuldschein 7y/fixed
May 6, 2023
Revolving credit line
Sept. 15, 2024
Total unsecured loans
Principal amount
drawn as of
Dec. 31, 2021
(EUR k)
LTV as of
Dec. 31, 2021
(%)
LTV
covenant
(%)
Principal amount
drawn as of
Dec. 31, 2020
(EUR k)
34,000
45,900
56,000
60,000
13,338
5,550
214,788
325,000
350,000
400,000
350,000
40,000
37,000
0
1,502,000
1,716,788
13.4
28.1
35.0
30.2
n/a
n/a
20.2
−
−
−
−
−
−
−
−
35.2
28.8
65.0
75.0
65.0
n/a
n/a
n/a
–
−
−
−
−
−
−
−
−
−
34,000
45,900
56,000
60,000
0
0
195,900
325,000
350,000
400,000
350,000
40,000
37,000
0
1,502,000
1,697,900
Dec. 31, 2021
Dec. 31, 2020
Nominal amount
(EUR k)
Ø cost of
debt
(%)
Ø
maturity
(years)
Nominal amount
(EUR k)
Ø cost of
debt
(%)
Ø
maturity
(years)
214,788
1,425,000
77,000
1,716,788
0.9
1.4
2.5
1.4
4.1
3.9
3.0
3.9
195,900
1,425,000
77,000
1,697,900
1.0
1.4
2.5
1.4
5.3
4.9
4.0
4.9
Total
Net LTV
Cash cost of
debt
Bank debt
Bonds
Schuldschein
Total
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alstria Annual Report 2021
Combined Management Report
Maturity profile of financial debt1) as of December 31, 2021 in EUR m
446.0
400.0
367.6
350.0
93.2
60.0
0.0
0.0
2021
2022
2023
2024
2025
2026
2027
2028
1) Excluding regular amortization.
2.6.
Compliance with and calculation of the Covenants, referring to § 11 of the Terms and
Conditions*
In case of the incurrence of new Financial Indebtedness for purposes other than the refinancing of
existing liabilities, alstria needs to comply with the following covenants:
▪ The ratio of Consolidated Net Financial Indebtedness to Total Assets will not exceed 60 %
▪ The ratio of Secured Consolidated Net Financial Indebtedness to Total Assets will not exceed
45 %
▪ The ratio of Unencumbered Assets to Unsecured Consolidated Net Financial Indebtedness will
be more than 150 %
In 2021 alstria did not incur any Financial Indebtedness. The nominal amount of the new loans
concluded in the fourth quarter of 2020 was paid out in the first quarter of 2021.
* The following section refers to the Terms and Conditions of the Fixed Rate Notes, as well as to the Terms and Conditions of the Schuldschein
(for further information, please refer to www.alstria.com). Capitalized terms have the meanings defined in the Terms and Conditions.
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19
Combined Management Report
Furthermore, alstria needs to maintain a ratio of the Consolidated Adjusted EBITDA over Net Cash
Interest of no less than 1.80 to 1.00. The ratio should be calculated and published at every reporting
date following the issuance of the bond or the Schuldschein, starting after the fifth reporting date.
EUR k
Cumulative 2021
Earnings Before Interest and Taxes (EBIT)
Net profit / loss from fair value adjustments to investment property
Net profit / loss from fair value adjustments to financial derivatives
Profit / loss from the disposal of investment property
Other adjustments1)
Fair value and other adjustments in joint venture
Consolidated Adjusted EBITDA
Cash interest and other financing charges
One-off financing charges
Net Cash Interest
Consolidated Coverage Ratio (min. 1.80 to 1.00)
1) Depreciation, amortization, and nonrecurring or exceptional items.
236,347
−94,827
−
−15,134
14,593
−
140,979
−23,382
−
−23,382
6.03
In the 2021 financial year no covenants under the loan agreements and / or the terms and conditions
of the bonds and Schuldschein had been breached. The breach of a covenant would lead to liquidity
outflow.
2.7.
Current liabilities
Current liabilities amounted to EUR 82,932 k (December 31, 2020: EUR 71,555 k) and mainly consisted
of short-term loan obligations of EUR 19,594 k (December 31, 2020: EUR 10,325 k) and of limited
partnership capital noncontrolling interests of EUR 15 k (December 31, 2020: EUR 15 k). Another
EUR 4,525 k of this total was attributable to income tax obligations (December 31, 2020: EUR 4,780 k)
that arose at the level of the consolidated alstria office Prime companies. Moreover, current liabilities
include trade payables (December 31, 2021: EUR 3,487 k; December 31, 2020: EUR 3,943 k) and other
current liabilities (December 31, 2021: EUR 52,331 k; December 31, 2020: EUR 49,948 k). The other
current
liabilities
include value-added tax
liabilities (December 31, 2021: EUR 1,728 k;
December 31, 2020: EUR 3,359 k), as well as received advance rent payments (December 31, 2021:
EUR 3,259 k; December 31, 2020: EUR 3,293 k). Furthermore, the other current financial liabilities
consisted
of
provisions
for
outstanding
invoices
(December 31, 2021:
EUR 28,488 k;
December 31, 2020: EUR 21,109 k) and tenants’ deposits
(December 31, 2021: EUR 8,858 k;
December 31, 2020: EUR 8,800 k).
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alstria Annual Report 2021
Combined Management Report
3. THE MANAGEMENT BOARD’S OVERALL ASSESSMENT OF THE FINANCIAL YEAR
Even though the economic restrictions due to the COVID-19 pandemic substantially strain the
economy, alstria‘s earnings position in 2021 developed as planned. Sales and earnings reflected the
real estate portfolio’s high quality and the efficient corporate structure. Note that regarding the
financial and asset position, the asset values again showed slight gains. The liquidity situation also
presented very comfortable throughout the 2021 financial year.
III. EXPECTED DEVELOPMENTS
The report on expected developments contains statements related to anticipated future
developments. The Company’s development depends on various factors, some of which are beyond
alstria’s control. Statements about expected developments are based on current assessments and are
thus, by their nature, are exposed to risks and uncertainty.
The alstria Group’s actual development may differ positively or negatively from the predicted
development presented in this report’s statement.
1. EXPECTED ECONOMIC DEVELOPMENT
The German government's very optimistic forecasts for GDP growth at the beginning of 2021 had to
be revised downward in the course of the year. The ongoing COVID-19 pandemic and resulting
disruptions to global supply chains again delayed economic recovery. For the current year, the
German government remains cautiously optimistic that the German economy will continue to recover
despite the ongoing pandemic, rising energy prices and continuing supply bottlenecks.
2. DEVELOPMENT OF THE REAL ESTATE MARKET: OUTLOOK FOR 2022
The continuing slowdown in economic development is also expected to affect the commercial real
estate market. The leasing market is expected to remain tight in 2022 because companies are
reluctant to sign long-term leases and lease additional space in light of the economic uncertainty.
However, regarding the transaction markets, alstria expects demand for real estate to remain at a
high level because of the persistently low level of interest rates.
3. OUTLOOK FOR THE ALSTRIA GROUP
Based on the existing leases and the high proportion of tenants with strong credit ratings, alstria
expects a stable revenue development of around EUR 183 million in 2022 despite the expected
subdued macroeconomic development. By contrast, FFO is expected to decrease to EUR 106 million.
This development in particular reflects how investments in the real estate portfolio had to be
postponed due to the pandemic and interrupted supply chains in 2021, and it will be made up for
accordingly in the current year. Postponing investment measures was a major cause of the higher-
than-planned earnings in 2021, which puts into perspective the expected decline in earnings in the
current year. However, the change of control resulting from the voluntary public takeover bid in
January 2022 and the subsequent discussion with the new majority owner regarding the future
alstria Annual Report 2021
21
Combined Management Report
corporate strategy may lead to adjustments in the sales and earnings forecast in the course of the
year.
IV. REPORT REGARDING ALSTRIA AG
1. EARNINGS POSITION
The following table shows the key operating figures of the audited income statements for the 2021
and 2020 financial years:
in EUR k
Total operating performance
Other operating income
Cost of purchased services
Personnel expenses
Depreciation
Other operating expenses
Net financial result
Net result of the year
2021
131,209
11,709
-25,366
-23,613
-39,455
-37,114
-48,280
-30,910
% of oper.
perf.
100.0
8.9
-19.3
-18.0
-30.1
-28.3
-36.8
-23.6
2020
129,824
20,308
-24,424
-17,983
-36,954
-31,606
3,283
42,448
% of oper.
perf.
100.0
15.6
-18.8
-13.9
-28.5
-24.3
2.5
32.7
Change
1,385
-8,599
-942
-5,630
-2,501
-5,508
-51,563
-73,358
1.1. Operating performance
The net result for the 2021 financial decreased by EUR 73,358 k to EUR -30,910 k (compared with
EUR 42,448 k in 2020). As the Company has been exempt from income taxes since its conversion into a
REIT structure, no tax expenses arose in 2021.
The decrease in the net result was mainly due to, a decrease of the net financial result by EUR 51,563 k
a decrease of other operating income by EUR 8,599 k, an increase of personnel expenses by 5,630 k as
well as an increase by EUR 5,508 k of other operating expenses.
1.2.
Total operating performance
alstria’s total operating performance improved in the 2021 financial year, primarily due to an increase
in let revenues as well as an increase in income from real estate-related services passed on to
subsidiaries. In the reporting period, revenues amounted to EUR 131,164 k. Together with the changes
in inventory amounting to EUR 45 k, alstria’s total operating performance amounted to EUR 131,209 k
(versus EUR 129,824 k in the previous year).
1.3. Other operating income
The other operating income decreased by EUR 8,600 k to EUR 11,709 k. While no properties were sold
in the year under review, income of EUR 13,827 k was generated from the sales in the previous year.
On the other hand, income from the issue of convertible profit participation rights increased by EUR
1,067 k. In addition, write-ups on property, plant, and equipment increased by an additional
EUR 1,640 k compared to the previous year. Finally, income from charges passed on and income from
the reversal of allowances increased by a total of EUR 1,606 k.
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alstria Annual Report 2021
Combined Management Report
1.4.
Personnel expenses
Personnel expenses increased by EUR 5,630 k compared to the previous year. The increase results from
higher expenses for share-based remuneration due to a change in the issuing modalities as well as a
grown share price compared to the previous year‘s reporting date (EUR +5,132 k).
1.5.
Depreciation and amortization
Depreciation increased by EUR 2,501 k compared to the previous year, to EUR 39,455 k. The effect is
mainly the result of an increase in scheduled depreciation on property, plant, and equipment.
1.6. Other operating expenses
Other operating expenses increased by EUR 5,508 k. The increase resulted primarily from expenses in
connection with the takeover bid (EUR 10,057 k) that arose in the second half of the financial year. In
contrast, property operating costs fell by EUR 3,279 k compared to the previous year. This is due to a
lower volume of new acquisitions, which caused lower expenses for reletting projects (EUR -1,403 k)
as well as lower expenses for maintenance (EUR -1,660 k). Expenses for the allowance on receivables
decreased by an additional EUR 1,976 k. The high expenses of the previous year resulted from write
downs on receivables caused by the COVID-19 pandemic.
alstria Annual Report 2021
23
Combined Management Report
1.7.
Financial result
in EUR k
Interest expenses, corporate bonds
Transaction costs
Interest result “Schuldschein” (“senior unsecured debt“)
Interest expenses from bank loans
Interest result from financial derivatives
Other interest expenses
Financial expenses
Income from participating interests
Income from loans to affiliates
Other interests and similar income
Write down on financial assets
Net financial result
2021
-19,406
-333
-1,940
-680
-48
-269
2020
-24,142
-2,393
-2,140
-891
-134
-314
-22,676
-30,014
0
4,778
1,057
-31,439
-48,280
27,460
5,334
510
-6
Change
(%)
-20
-86
-9
-24
-64
-14
-24
-100
-10
107
523,883
3,284
-1,571
Compared to the previous period, financial expenses decreased by EUR 7,338 k to EUR 22,676 k.
The decrease is mainly based on the decrease in interest expenses from corporate bonds by
EUR 4,736 k, which resulted from the repayment of a bond in the previous year. In addition, the
transaction costs decreased by EUR 2,060 k. In the previous year, these included the costs of issuing
a corporate bond.
In contrast, depreciation on financial assets increased by EUR 31,439 k. The increase results from an
unscheduled depreciation of an investment to its fair value.
2. FINANCIAL AND ASSET POSITION
On the balance sheet date, alstria owned 72 real estate properties (in 2020: 70). The following table
illustrates alstria’s changes in investment property in 2021:
in EUR m
Land and Buildings on December 31, 2020
Investments
Adjustments
Disposals
Appreciations on market value
Nonscheduled depreciation
Ordinary depreciation
Land and Buildings as of December 31, 2021
1,384.96
93.82
26.15
0.00
1.64
-2.48
-36.60
1,467.49
The land and buildings line item increased by EUR 82.6 m. In the reporting period, two properties
were acquired at purchase prices totaling EUR 80.6 m and an additional amount of EUR 13.3 m was
invested in existing properties. A contract for the disposal of a property was signed in the reporting
period, and the transfer of benefits and burdens is expected to take place in the first quarter of the
financial year 2022.
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The following table shows the real estate transactions during the period:
Disposals
Asset
City
Heidenkampsweg 44
Hamburg
Total Disposals
Acquisitions
Asset
City
Hanauer Landstraße 161-173
Frankfurt
Mehringdamm 32-34
Berlin
Total Acquisitions
1) Excluding transaction costs.
Sales price
(EUR k)
9,100
9,100
Sales price
(EUR k)1)
30,300
50,250
80,550
Signing
SPA
Transfer of
benefits and
burdens
Dec. 09, 2021
March 31, 2022
Signing
SPA
Transfer of
benefits and
burdens
Dec. 17, 2021
March 01, 2021
May 30, 2021
August 01, 2021
The prepayments and constructions in progress increased by EUR 6,314 k compared to the previous
year to EUR 39,405 k. In the year under review, modernization projects with an amount of
EUR 26,148 k were reclassified to the item buildings and land after completion. In contrast,
EUR 32,462 k were invested in modernization measures in the reporting year.
Financial assets decreased by EUR 85,751 k to EUR 1,038,782 k compared to the previous year‘s
reporting date. The decline is primarily based on the withdrawal of EUR 34,324 k from a subsidiary
and the impairment of an investment by EUR 31,439 k. In addition, loans amounting to EUR 22,069 k
were repaid in the year under review. On the other hand, a subsidiary was founded in the year under
review, with a contribution of EUR 2,638 k.
The Company’s cash position decreased by EUR 169,576 k to EUR 270,943 k. The cash outflows
resulted mainly from the payment of dividends (EUR 94,230 k), investments in fixed assets
(EUR 126,287 k), and interest repayments of EUR 22,676 k. In contrast, cash inflows resulted primarily
from rents and property-related services (EUR 131,164 k) as well as the taking up of loans
(EUR 22,069 k).
Total equity amounted to EUR 1,318,615 k, reflecting an equity ratio of 43.0 %, which is 2.5
percentage points below the prior year´s ratio of 45.5 %. The decrease in equity by EUR 124,660 k
results from the distribution of the dividends for the 2020 financial year of EUR 94,230 k and the
annual loss of EUR 30,910 k partly from the capital increase in the course of the conversion of
convertible participation rights of EUR 480 k.
Provisions increased by EUR 8,984 k, compared with the previous balance sheet date to EUR 30,159 k
as of December 31, 2022. The increase is mainly due to the addition of costs as part of the takeover
bid by Brookfield of EUR 10,057 k (see section 1.3.2, page 33f.). The line item mainly includes accruals
due to outstanding balances (EUR 19,710 k), share-based remuneration (EUR 4,497 k), bonuses
alstria Annual Report 2021
25
Combined Management Report
(EUR 2,335 k), risks of litigation (EUR 1,369 k), tax consulting (EUR 1,124 k), supervisory board
compensation (EUR 525 k), audit fees (EUR 362 k), and miscellaneous provisions (EUR 239 k).
Additionally, liabilities increased by EUR 12,547 k compared with the prior year. The increase results
primarily from taking out a loan in connection with the refurbishment of a property (EUR 5,550 k).
Finally, liabilities to affiliated companies increased by EUR 8,272 k, primarily due to an increase in
deposits from subsidiaries in the cash pool due to the net income for the year.
3. ADDITIONAL DISCLOSURE REGARDING ALSTRIA AG
3.1.
Employees
As of December 31, 2021, alstria AG had 163 employees (December 31, 2020: 159). The annual average
number of employees was 162 (previous year: 158). These figures exclude Management Board
members.
3.2. Outlook for alstria AG
For the fiscal year 2022 the company expects a stable total operating performance.
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V. RISK AND OPPORTUNITY REPORT
1. RISK REPORT
1.1.
Risk management
alstria has implemented a Group-wide system for structured risk management and early warning in
accordance with Section 91 para. 2 of the German Stock Corporation Act (AktG).
alstria AG is the parent company of the alstria group. alstria AG’s directly and indirectly held
subsidiaries considerably influence its results. Its business performance is fundamentally subject to
the same risks and opportunities as those of the alstria group, and therefore the following
explanations for the alstria group also apply to alstria AG.
All risks are recorded, evaluated, and monitored on at least a quarterly basis. The aim of alstria’s risk
management strategy is to minimize — or, where possible, completely avoid — the risks associated
with entrepreneurial activity in order to safeguard the Company against losses and risks to its going
concerns. The Company’s risk identification allows for the early identification of potential new risks
on an ongoing basis. Risk mitigation measures are defined so that alstria can undertake the necessary
steps to circumvent any identified risks (i.e., to insure, diversify, manage, or avoid those risks).
For alstria, risk management means growing sustainably and increasing the company's value while
managing appropriate risks and opportunities as well as avoiding inappropriate risks. alstria’s risk-
management system is an integral part of its management and control system, with the risk policy
being specified by the Management Board. The risk-management system is integrated into its regular
reporting to the Management Board and Supervisory Board, which ensures that risks are addressed
proactively and efficiently. The risk-management system thereby focuses on full coverage of the risks.
Identifying and assessing opportunities are not part of alstria’s risk-management system.
1.1.1. Structure of the risk-management system
Risk management is coordinated independently from individual business divisions. The risk manager
prepares a risk report on a quarterly basis and provides it to the Management Board. This report is based
on reports from the risk owners — those who are responsible for particular risk areas. The risk manager
also informs the Management Board on matters relating to implementing, operating, and overseeing the
risk and internal control system and assists the Management Board by, for example, reporting to the
Audit Committee of the Supervisory Board.
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alstria faces various risk areas within the context of its business activities. These are divided into the
following four risk categories:
▪ Strategic risks
▪ Operational risks
▪ Compliance risks
▪ Financial risks
Each risk category is assigned to one or several so-called “risk owners.” Inherent to the risk owners’
position in the Company is that they represent the area in which the identified risks could materialize;
the risk owner is also responsible for the assigned risk category.
alstria’s areas of risk and risk categories
Risk category
Strategic risks
Operational risks
Compliance risks
Financial risks
Risk owner
Finance & Controlling
Real Estate Operations,
Development, and IT
Legal
Finance & Controlling
The risk report presents the findings observed during risk identification, assessment, evaluation, and
monitoring. At the same time, this report’s comprehensive documentation ensures an orderly
assessment, which the responsible departments and the Supervisory Board conduct.
In addition, the divisions report their respective risks and opportunities to the Management Board in
weekly meetings.
1.1.2. Risk valuation
Risks are assessed according to their likelihood of occurrence and their magnitude of affect.
Accordingly, they are categorized as high, medium, or low. The potential damage includes any
potential negative deviation from alstria’s forecasts and objectives with regard to its total
comprehensive income or effects on the overall result of alstria.
Classification according to degree of impact
Expected impact in EUR m
Degree of impact
Between 0.0 and 0.6
Between 0.6 and 1.5
Between 1.5 and 6.0
Between 6.0 and 15.0
Greater than 15.0
minor
low
moderate
high
very high
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Classification according to likelihood
Probability/likelihood of occurrence
1 to 15 %
16 to 35 %
36 to 55 %
56 to 75 %
76 to 99 %
Description
very unlikely
unlikely
possible
likely
highly likely
According to this framework, a very unlikely risk is defined as one that occurs only in exceptional
circumstances and a highly likely risk as one that is expected to occur within a specified period.
Based on the likelihood that a specific risk event will occur and the affect it would have on alstria’s
business, financial position, profit, and cash flow, each risk is classified as high, medium, or low
according to the following matrix.
Risk classification
Probability
highly likely
likely
possible
unlikely
very unlikely
L
L
L
L
L
l
M
M
L
L
L
H
M
M
L
L
H
H
M
M
L
H
H
H
M
M
Degree of impact
minor
low
moderate
high
very high
L = low risk.
M = medium risk.
H = high risk.
In 2021, in principle the Company’s risk-management system was not subject to any significant
changes compared to the previous year. The following updates were implemented as part of the new
version of the auditing standard 340 issued by the Institute of Public Auditors for the audit of the risk
early warning system (IDW PS 340 new version):
▪ Determination of the risk-bearing capacity and comparison with the aggregated overall risk,
▪ use of a Monte Carlo simulation to determine the value at risk,
▪ documentation of the control measures to mitigate the main risks.
1.2.
Key characteristics of accounting-related internal controls and risk-management system
Regarding the reporting process, the control and risk-management system aims to ensure that
reporting is consistent and in line with legal requirements, generally accepted accounting principles,
the International Financial Reporting Standards (IFRS), and internal guidelines. Only then can it
provide true and reliable information to the recipients of the annual financial statements and the
combined management report. To this end, alstria has implemented an internal control and risk-
management system that combines all relevant principles, processes, and measures.
The internal control system consists of two areas: control and monitoring. In organizational terms,
the divisions’ treasury, controlling, and accounting divisions are responsible for control.
alstria Annual Report 2021
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The monitoring measures consist of elements incorporated into the process as well as independent
external elements. The integrated measures include process-related, system-based technical controls
such as the “dual control principle” (which is applied universally) and software-based checking
mechanisms. In addition, qualified employees with the appropriate expertise and specialized
departments, such as controlling, legal, and treasury, perform monitoring and control functions as
part of the various processes.
The Management Board and Supervisory Board (in particular, the Audit Committee) are involved in
the monitoring system. These groups perform various checks independent of the Company’s
processes. The internal audit function is transferred to an external auditing firm.
The Accounting Department acts as the central interlocutor for special technical questions and
complex reporting issues. If required, external experts (auditors, qualified accounting specialists,
etc.) are consulted.
In addition, the Company’s controlling department executes monitoring related to accounting. All
items and main accounts for the consolidated companies’ income statements and balance sheets, as
well as the consolidated income statements and the consolidated statement of financial position, are
reviewed regularly for accuracy and plausibility. This process is conducted for both the consolidated
financial statements and alstria’s individual financial statement. Accounting-related data are
monitored monthly or quarterly, depending on the frequency of their preparation.
The accounting-related risk-management system forms part of the alstria Group’s risk-management
system. The risk owner responsible for the finance area monitors the risks relevant to the accuracy
of accounting-related data. Risks are identified on a quarterly basis and the risk-management
committee assesses and documents them. Appropriate action is taken to monitor and optimize
accounting-related risks throughout the Group.
1.3.
Description and assessment of risks
According to the four risk categories described, alstria differentiates between strategic risks,
operational risks, compliance risks, and financial risks. All material risks inherent to the future
development of the Group’s position and performance (including effects on assets, liabilities, and
cash flows) and reputation are described in this section.
The order in which the risks are presented in each of the four categories reflects the currently
estimated relative exposure for alstria associated with these risks and thus indicates the risks’ current
importance to the Group. Additional unknown risks and those currently considered immaterial may
also negatively affect alstria’s business objectives and operations. Unless otherwise stated, the risks
described below relate to all Group companies.
The individual risks described relate to the planning period from 2022 to 2024.
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alstria Annual Report 2021
Corporate risks
Strategic risks
Market environment risks
Risks in relation to changes
to the legal environment
Risks due to inefficient
organizational structures
Operational risks
Refurbishment project risks
Vacancy risks
Shortfalls of rental payment risks
Maintenance risks
HR risks
IT risks
Risks relating to property transactions
Compliance risks
Risks resulting from not complying
with G-REIT legislation
Risks arising from fraud or
noncompliance
Litigation risks
Climate-related risks
Human rights risks
Financial risks
Breaches of covenants
Valuation risks
Refinancing on unfavorable terms
Interest rate risks
Tax risks
Liquidity risks
Combined Management Report
Likelihood
Risk
impact
Risk level
Change since
prior year
likely
unlikely
unlikely
possible
possible
possible
Possible
possible
possible
unlikely
unlikely
unlikely
unlikely
unlikely
unlikely
possible
unlikely
unlikely
unlikely
unlikely
unlikely
high
moderate
moderate
very high
high
high
high
low
low
moderate
moderate
moderate
moderate
low
low
high
high
high
high
high
moderate
H
L
L
H
M
M
M
L
L
L
L
L
L
L
L
M
M
M
M
M
L
L
unchanged
unchanged
unchanged
unchanged
unchanged
unchanged
unchanged
unchanged
unchanged
unchanged
unchanged
unchanged
unchanged
unchanged
unchanged
increased
unchanged
increased
increased
unchanged
unchanged
unchanged
Counterparty risks
very unlikely
high
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1.3.1. Impact of COVID-19 issues on alstria‘s risk situation
Due to the ongoing adverse effects of the COVID-19 pandemic, there are considerable uncertainties
regarding the global economic outlook. In particular, a renewed intensity of the COVID-19 pandemic,
for example, due to the appearance of new virus variants, could bring the recovery achieved thus far
to a standstill and even lead to a new recession. This could occur, for example, if current vaccines
are less effective with new variants, leading to the return of contact restrictions or lockdowns. The
spread of COVID-19 intensified again around the end of 2021 and beginning of 2022, with the
appearance of the highly infectious Omicron variant, which led to the number of new infections in
many countries increasing again and possibly further increasing. The number of diseases and the
course of the disease develop differently depending on the vaccination rate in each country.
Therefore, the pandemic’s effect varies considerably between regions and customer sectors.
Governments and other local authorities are working to contain the spread of infection through
implementing various countermeasures, such as contact restrictions, adherence to minimum hygienic
standards, wearing respiratory masks, vaccine mandates, and vaccination and testing services to avoid
widespread curfews and restrictions on the opening of certain economic sectors. Depending on
epidemiological trends and political pressure, governments are expected to relax existing restrictions
and avoid new ones to reduce the associated economic harm.
As a result, the extent and duration of the individual effects on the letting business are extremely
difficult to predict. For example, if containment measures are tightened or if they take an
unpredictably long time, this might significantly affect alstria’s business development in a way that
exceeds current expectations and might go beyond already initiated mitigation measures. Key
uncertainties of the COVID-19 crisis are its duration — these include, for example, further waves of
infections, virus mutations, the development of global vaccination progress, and the economic costs
of restrictions.
Potential consequences include an unsustainable burden of public and private debt that hampers the
post-pandemic recovery, severe disruptions in the financial system, and bankruptcies among alstria’s
customers and suppliers. In the long term, a rollback of globalization could reduce the potential for
future growth. Crisis assessment and management measures have been put in place across functions
to monitor carefully and to mitigate the various COVID-19 effects, with an emphasis on the health
and safety of its employees and its business continuity.
That the extent of the recession and unemployment did not result in being even higher in Germany is
primarily due to the extensive state support payments and short-time working. Even if the leading
indicators pointed to a limited recovery in the economy in 2022, the further course of the pandemic
will also incite great uncertainty for the coming months.
Regarding alstria’s risk situation, this uncertainty has negative effects, in particular on the market
environment risks, vacancy risks, and rent default risk (see table above). The effects are discussed in
detail below in these risks’ descriptions.
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1.3.2. Effects of the change of control
On January 12, 2022, Alexandrite Lake Lux Holdings S.à r.l. (“Bidder”) announced that the Bidder and
persons acting jointly with the Bidder acquired in total 89,904,173 of shares and voting rights (50.50%
of the issued share capital) of alstria office REIT-AG (“alstria,” ISIN DE000A0LD2U1). Subject to
fulfilling all offer conditions of the takeover offer, these shares and voting rights in alstria are
attributed, inter alia, to Brookfield Asset Management Inc. (“Brookfield”) to the effect that, after
settlement of the takeover offer, Brookfield will own indirectly more than 50% of alstria’s voting
rights and shares. Even though the takeover became effective after the balance sheet date, the
Bidder’s intention to make a takeover bid to the shareholders of alstria office RET-AG had already
been announced in November 2021. alstria AG’s Management Board and the Supervisory Board believe
the transaction is in the company’s interest and they recommended that alstria's shareholders accept
the offer. The successful conclusion of the transaction in the first quarter of 2022 had already been
expected at this point in time.
In the context of the Investment Agreement, the Bidder has committed to support the continued
execution of alstria’s strategy in particular by reducing the annual dividend payment and re-investing
excess cash through actively pursuing new value-add refurbishment and repositioning opportunities
and accelerated assets rotation.
In doing so, the Bidder announced it would support alstria's incumbent Management Board and intends
for the current members to continue running the company after the offer’s closing. The start of the
bidding process did not affect the risk management’s current structure and the current three-year
medium-term plan. Nevertheless, there are individual risks, not least because of “change of control”
clauses, which affect the risk assessment. For example, when Alexandrite exceeded a 50% stake in
January 2022, there was a change of control within the meaning of the bond terms.
Provisions were therefore made in an investor agreement to offset the takeover’s negative effects.
The assessment of the effects on the individual risks is discussed in the description of the respective
risk in the following sections. This is essentially the case with interest, refinancing, tax, REIT, and
employee risks.
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Combined Management Report
1.3.3. Strategic risks
Strategic risk management addresses the factors that influence the Company’s market environment,
regulatory environment, and strategic corporate organization.
Market environment risks
For the Group, market environment risks are derived from macroeconomic developments and their
impact on respective real estate markets. An economic downturn in the German market could result
in a decreasing number of employees and in lower demand for rental areas in office properties. For
alstria, this would lead to a higher risk of vacant space or to lower rental income.
Due to global markets’ high dependency, especially for the German economy, the global economy’s
development also has an indirect influence on alstria‘s business development, although alstria’s
business activities are limited to the domestic rental market. Moreover, during the COVID-19
pandemic, significant macroeconomic challenges have not been defused and in some cases, they have
intensified. A renewed escalation of the trade conflict between the U.S. and China, an intensified de-
coupling, and an intensification of the Western states' disagreement with Russia would significantly
worsen global growth prospects. A significant risk to alstria’s letting potential and cost structure
comes from mounting supply chain bottlenecks due to the increasing unavailability of circuit boards
for building technology and certain building materials. Bottlenecks in energy supply on the one hand
and in access to raw materials on the other would substantially reduce industrial production potential.
The escalating possibility of major defaults in the Chinese property sector, with potential spillover
effects into the entire real estate market and financial markets, would significantly affect growth
prospects of the Asian emerging countries and China. Further, it might have reverberations even on
the global financial system and the world economy. A substantial increase in inflation rates could lead
to serious distortions in global currency, capital, and foreign exchange markets if central banks
initiate the tightening cycle too fast and too aggressively.
Because the fiscal and monetary policy scope for action appears already largely exhausted, the
economic affect could be much greater compared to the fiscal year 2021. There is also great
uncertainty about the pandemic’s long-term consequences for important industries. In addition,
beyond COVID-19, the aforementioned essential trouble spots have not been defused and in some
cases even have intensified. Additionally, the highly interconnected global economy remains
vulnerable to natural disasters or further pandemics.
After the severe economic downturn in 2020, along with only moderate improvement in 2021, the
uncertainties of further economic development in Germany, the E.U., and the global economy remain
considerable. As a result, the market environment risks continue to show a high-risk level (H), as was
the case on the previous year's reporting date.
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Risks in relation to changes in the legal environment
Risks related to the Company’s legal environment result from changes to regulations and laws. These
may in turn affect key regulatory requirements and the corporate constitution of the alstria
companies. These include alstria’s classification as an REIT and other regulations concerning publicly
listed companies. New laws and regulations may result in new regulatory requirements and thus in
higher expenses. Overall, risks regarding the legal environment are classified as low (L), as they were
in the previous year.
Risk caused by inefficient organizational structures
Within the scope of the business organization’s strategic direction, there are further risks that the
inefficient organizational structures and the Company’s dependence on IT systems and structures
cause. Both the organizational structure and the IT infrastructure support strategic and operational
objectives. The transition from work in an office to digital work in locally decentralized structures
could thus be implemented without friction losses. Therefore, the risk of strategic corporate
organization remains low (L).
1.3.4. Operational risks
alstria’s operational risk management addresses property-specific risks and general business risks.
These include vacancy risk, tenants’ creditworthiness, and the risk of falling market rents. This risk
area also monitors personnel-related risks, such as loss of expertise and competencies due to staff
fluctuations. alstria applies various early warning indicators to monitor these risks. Ongoing insurance
checks, such as rent projections, vacancy analyses, and controlling lease terms and termination
clauses, are designed to help identify potential dangers and risks.
Refurbishment project risks
alstria realizes a significant number of refurbishment projects. All risks related to these projects are
managed through extensive project control and through a related budget-management process.
Potential risks include those of delayed completion, budget overrun, and deficiencies in construction.
The still-strong economy in the construction industry places high demands on procuring and executing
contracts due to the limited availability of craftsmen and construction companies. Even against the
backdrop of the COVID-19 pandemic, the bottlenecks the economy causes have not eased. Supply
chain issues and rising inflation make planning and executing construction projects difficult. The
volume of construction projects planned for the three financial years after the reporting period
remains high compared to the previous years’ long-term average. For these reasons, the risk resulting
from refurbishment projects continues to be classified as high (H).
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Vacancy risk
In the cases of lease terminations, leases that are not extended, and existing vacancies, there is a
risk that the rental area will not be re-let as planned, resulting in lower-than-anticipated revenues.
alstria’s budgeting is based on the assumption that rental areas can be re-let within a defined period
following the end of a lease. Because of the COVID-19 countermeasures, the economic downturns
described and the increased trend toward working from home already began in the 2020 financial
year. Even if the economic situation recovered somewhat in the reporting period, many companies
still had a high proportion of staff working from home. This development led to a continued reluctance
among many market participants to conclude new leases for office and commercial space. However,
the effect on existing tenancies is very limited. Due to long-cycle development of the demand for
office rental areas, there is usually time lag between changes in macroeconomic conditions and their
effect on alstria’s letting results. Vacancy risks are expected if tenants move out because they can
no longer pay their rents, if the leases of the rental space are not extended after the lease agreement
has expired, or if the space can no longer be re-let after tenants have moved out because the demand
due to economic situation or a sustainable trend toward home office no longer exists to a comparable
extent.
On the other hand, tenancies are of a long-term nature, thus, rental income does not usually fall
away spontaneously. For some tenants, the uncertainty also leads to maintaining the status quo and
due to the unclear entrepreneurial perspective, not looking for new rental space but rather extending
the existing lease with alstria. It was thus possible to enable new lettings and lease extensions in the
past financial year. Overall, the volume of lettings was again lower than the years before the COVID-
19 pandemic outbreak. Due to the longer planning and decision-making phases regarding the
companies leasing office space, a longer-lasting lag effect is to be expected. As a result, the vacancy
risk remains at a higher level and, as at the end of the previous reporting period, is classified as a
medium risk (M).
Shortfall of rental payment risks
An operational risk is a potential shortfall of rental payments from one or more major tenants; it
could be realized because of an economic downturn or of a particular case. Due to the described
consequences of the COVID-19 pandemic on many market participants’ economic situation, the risk
had increased that alstria’s tenants could also have trouble in meeting their rental payment
obligations. alstria’s main tenants are predominantly public institutions or companies with a high
rating. Actual defaults were limited during the year following the initial lockdown. Precautions had
already been taken in the previous financial year via increasing the write-downs on receivables. To
what extent the situation will affect the future payment behavior of tenants in the medium term
cannot be conclusively assessed at this time. If, due to a rampant spread of COVID-19 or the
emergence of a more dangerous virus variant, it becomes necessary to completely close down the
office space to extend contact restrictions, a large proportion or all of alstria's tenants could claim
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alstria Annual Report 2021
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the loss of business basis (legal term: “Wegfall der Geschäftsgrundlage”). In such a scenario, it is
possible there would be absolutely no rental income for the entire duration of the restriction. This
would significantly affect alstria's overall results. Due to the group’s equity position, there would still
be no threat to the going concern for the risk forecast period. As a result, the risk of default on rental
payments remains a medium risk (M), as was the case on the previous year’s reporting date.
Maintenance risks
To plan for the requirements of maintenance measures, the Company makes assumptions about a
property’s condition and the intended standard. Undetected defects, repair requirements resulting
from external damage, new legal requirements regarding the building’s condition, or incorrect
assessment of maintenance requirements could all result in higher-than-planned maintenance costs.
Due to alstria’s high maintenance budgets, the maintenance risk is categorized as medium (M), as it
was in the previous year.
HR risks
The skills and motivations of alstria’s employees decisively affect the Company’s success. The risk of
losing knowledge results from staff member fluctuation and from the inability to recruit sufficiently
qualified experts to fill vacancies in good time. Both cases could result in a shortfall of suitable
experts and key personnel, which could endanger alstria’s competitive advantages and further growth
opportunities in its markets. alstria mitigates these risks through the following measures: selective,
needs-oriented skill development for existing staff members; strengthening its image as an attractive
employer; university marketing; trainee programs; training apprentices; and profit-oriented variable
remuneration schemes. Furthermore, independent external experts anonymously carry out employee
surveys on employee motivation, management, and corporate culture. The takeover activities (see
Section V.1.3.2) could lead to impaired employee motivation if the impression is given that the
transferred company would not continue the operational and administrative activities in the existing
structure and manner, or if there is a major change in the corporate identity. To counteract this, the
Investor Agreement with the Bidder states that employees are critical to alstria's success and the
Bidder will therefore support alstria in attracting, developing, and retaining talent and maintaining a
collaborative work environment. The Bidder has also undertaken not to take any action that would
result in terminating alstria employees for operational reasons. In addition, alstria's headquarters will
remain in Hamburg and all of alstria's local branches will continue to operate in their current form.
Overall, alstria estimates the described risks to be at a low level (L), which corresponds to the
situation at the end of the previous year.
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IT risks
IT systems support the majority of alstria’s business processes. Any fault affecting the IT systems’
reliability or security could lead to delays or interruptions in operating activities. alstria protects
itself
against
IT
risks
through
constantly
examining
and
enhancing
the
information technology it deploys. In addition, it has installed modern hardware and software
solutions and safeguards against attacks. In view of attempted hacker attacks, measures were
implemented to combat such cyberattacks. Structural security measures are in place to protect the
computer center. All data are backed up daily in an internal depository and once per week in a
separate data depository. Workstations have access restrictions so that employees can only access
the systems they need for their work. During the transition from office work to decentralized digital
work in home offices, the IT security measures were transferred as far as possible to distance work.
An external IT consultant’s review confirmed the IT security’s effectiveness in the home offices.
Therefore, overall IT risks are assessed as unlikely to materialize; as in the prior year, their possible
consequences are considered low (L).
Risks relating to property transactions
alstria is exposed to risks related to the acquisition and disposal of real estate properties. A related
risk includes the partial or complete failure to detect the risks and liabilities associated with
properties during the due diligence process. In case of the disposal of real estate assets, alstria usually
provides potential purchasers certain warranties regarding factual and legal matters for the property
in question. The possibility that alstria’s management may not be aware of risks that are covered by
certain elements and warranties given in a sales agreement cannot be fully ruled out. As a result,
there is generally a risk that a prospective purchaser may charge alstria (as the seller) with breach of
warranty.
From a purchasing perspective, alstria is exposed to risks that hidden deficiencies on land and/or
property may not be observed and that unfavorable contractual agreements may be transferred to
the Company, resulting in additional future costs.
In both acquisition and selling proceedings, alstria responds to these risks with thorough technical,
legal, and tax analyses of all relevant property and contractual issues. It does so by employing internal
and external lawyers, tax advisors, architects, construction engineers, and other required experts. As
before, risks relating properties’ transactions are assessed to be of a medium (M) level.
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1.3.5. Compliance risks
Risks resulting from not complying with G-REIT legislation
alstria is registered in the commercial register as a German REIT-AG (G-REIT). The German REIT
segment allows alstria to offer investors an attractive profile and to distinguish itself in the capital
markets as a REIT. The REIT shares are traded on the Frankfurt Stock Exchange. The G-REIT status
does not influence admission to the regulated market (Prime Standard).
The Company must meet certain requirements to qualify for and retain its designation as a G-REIT.
The most significant requirements are that A G-REIT must be a stock corporation listed on an organized
market, and its registered office and management must be in Germany. Its registered share capital
must amount to at least EUR 15 million. All shares must be voting shares of the same class. Free float
must be at least 15 %, and no investor can directly hold 10 % or more of the shares or shares that
represent 10 % or more of the voting rights. Furthermore, at least 75 % of assets must consist of real
estate, and at least 75 % of gross income must be generated from real estate. At least 90 % of annual
profits as resulting under German GAAP-accounting are to be distributed to shareholders. The G-
REIT’s equity cannot fall below 45 % of the fair value of its real estate assets as recorded under IFRS.
REIT corporations are exempt from German corporate income tax (KSt) and German trade tax
(GewSt). This tax exemption has been applied to the Company with a retrospective effect since
January 1, 2007.
Capital and investment management activities maintain the Company’s G-REIT status in order to
support its business activities.
According to Section 15 of the REIT Act, alstria’s equity (as reported in its consolidated financial
statements) must not fall short of 45 % of its immovable assets. However, if the minimum equity ratio
is not satisfied for three consecutive financial years, the German exemption from corporate income
taxes (KSt) and trade taxes (GewSt) ceases at the end of the third financial year.
The G-REIT equity ratio is 69.1 % as of the balance sheet date. Accordingly, alstria complies with the
minimum G-REIT equity ratio requirement according to Section 15 of the G-REIT Act (REITG). alstria
cannot lose its G-REIT status because of failing to meet the 45 % threshold within the three-year
forecast period through December 31, 2024.
As part of the takeover process (see Section V.1.3.2), the acquiring company, Alexandrite, directly
acquired a stake of more than 10% in alstria-office REIT-AG. As of December 31, 2021, the share of
direct participation in the share capital and voting rights of alstria office REIT-AG amounted to 33.76%.
This share has increased further after the balance sheet date and as of February 21, 2022 amounted
to 65.59%. In addition, Lapis Luxembourg Holdings S.à r.l., a company acting jointly with the Bidder
within the meaning of Section 2, para. 5 WpÜG, directly held around 10.23% of the share capital and
the voting rights of alstria office REIT-AG. Furthermore, because of the further accumulation of shares
in the hands of the Bidder or companies affiliated with the Bidder, there is the possibility that the
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free float pursuant to the REIT Act of shares in the Company will fall below the limit of 15% of the
shares. As of the balance sheet date, the free float in accordance with the REIT Act was 46.69%.
The requirement to exceed the 10% ownership interest only takes effect once the direct interest has
existed for three years. If the proportion of a direct holding is not reduced to below 10% by the end
of the third year following the end of the year in which it was first exceeded, the REIT status is lost
retrospectively at the end of the second financial year following the end of the year in which it was
first exceeded. If the exceeding maximum investment limit in the present case is not remedied by
December 31, 2024, the REIT status of alstria office REIT-AG would cease to exist on December 31,
2023.
The Bidder has undertaken to alstria office REIT-AG to ensure compliance with the maximum
investment limit in good time, within the three-year period in accordance with the REIT Act.
In the event of violating the minimum free float, the same rule applies with regard to the timing:
because the free float was complied with as of December 31, 2021, the REIT status could not be lost
before December 31, 2024. Curing this regulation would be possible until December 31, 2025.
alstria constantly monitors compliance with all of the REIT criteria described, which the company
could influence. The Bidder has undertaken to avert violating exceeding the maximum holding and
the REIT status cannot be lost due to a potential violation of the minimum free float ratio in the
three-year forecast period relevant to the risk forecast. Therefore, as in the previous year, the risk
of non-compliance with the REIT criteria continues to be classified as low (L).
Risks resulting from fraud or noncompliance
alstria depends on all employees and management respecting the compliance standards in place.
alstria’s business expects employees and management members to comply with documented laws,
policies, and procedures. If alstria’s senior management fails to document and reinforce the
Company’s policies and procedures, or if employees commit criminal, unlawful, or unethical acts
(including corruption), such actions could have an adverse material effect on alstria’s business,
financial condition, and the results of operations. They would also harm alstria’s reputation in the
real estate market, thereby negatively affecting future business opportunities. The General Data
Protection Regulation (Datenschutzgrundverordnung), which came into force in the financial year
2020, provides significantly higher fines in the event of infringement. The data protection measures
already in place at alstria, as well as newly introduced guidelines and processes, are in line with the
General Data Protection Regulation’s requirements. alstria has implemented a compliance
organization, which addresses adequate and documented compliance rules and regulations and
provides training to all employees concerning compliance-related topics.
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In doing so, the Company has established central behavioral principles in the areas of:
▪ anti-corruption,
▪ avoiding conflicts of interest,
▪ handling confidential information and insider knowledge, and
▪ anti-discrimination, equality, and diversity concerns.
The materialization of compliance risks is assessed to be low (L), which is unchanged from the previous
year’s assessment.
Litigation risks
alstria AG or any of its subsidiaries could be involved in pending or foreseeable court or arbitration
proceedings that might significantly affect the Group’s business position at any time. Other risks
might arise from legal actions taken to address warranty claims, repayment claims, or any other
claims brought forward in connection with divested properties or development projects implemented
over the last few years.
After the legally binding clarification of the legal disputes in connection with converting DO Deutsche
Office AG into the limited partnership alstria office Prime Portfolio GmbH & Co. KG in 2016, neither
alstria office REIT-AG nor its subsidiaries are involved in current or foreseeable court or arbitration
proceedings that could significantly affect the Group’s economic position. This also applies to
warranty, repayment, or other claims asserted in legal proceedings in connection with the sale of real
estate or development projects carried out in recent years. Appropriate provisions have been made
at the respective Group company for any financial burdens arising from ongoing or foreseeable court
or arbitration proceedings.
Because none of the Group’s companies are currently exposed to civil rights proceedings or other
types of legal disputes and none are expected to occur, the risk of legal disputes is classified as low
(L), as it was in the previous year.
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Climate-related risks
Considering the long-term nature of the real estate business and the immovable nature of the assets,
it is imperative to take into account the effect of climate change on the prospects. The specific risks
related to climate change that the Company faces are listed below.
Physical risks — acute: alstria’s property portfolio is subject to extreme weather events, such as
flooding, storms, and hail, which may weaken building structures and threaten tenants’ safety. Such
phenomena will intensify in the coming years. alstria’s control process includes the following:
▪ Use of risk assessments from insurance companies to determine which buildings need to be
upgraded.
▪
Insurances covering the portfolio from the loss of rent due to fire, storms, hail, or any act of
God with a total insured value at least as high as alstria’s assets’ balance sheet value.
Transition risks — regulatory: After the Paris Agreement, new regulations, notably regarding energy
efficiency restrictions, are anticipated. These might impose increased stringent obligations on the
building sector, resulting in a need for more renovations per year. alstria’s control process includes
the following:
▪ Ongoing environmental monitoring and compliance with applicable laws and standards.
▪ Participation in industry bodies to monitor emerging legislation early.
Transition risks – market: Climate change has shaped tenants’ behavior in requiring flexible office
space often associated with energy-efficient solutions. Failing to respond to the growing demand for
sustainability services can result in a lack of attractive assets, implying a subsequent decline in their
rental potential. The prevention measures alstria takes are as follows:
▪ Offering additional services to help tenants run their offices efficiently.
▪ Recognizing early the financial requirements to upgrade and modernize buildings.
Similar to in the previous year, environmental risks are assessed at a low (L) level.
Risk of noncompliance with human rights
There is a risk that alstria’s activities will trigger activities or have an effect that violates human
rights, for instance, as a result of unworthy working conditions at construction sites or the production
of products or services used in business activities. alstria is fully committed to its responsibility to
respect human rights. Efficient management guidelines and the compliance organization, which is
particularly geared toward legal compliance, anti-discrimination, and diversity, support the goal that
alstria’s legal representatives and employees’ behaviors always correspond to high ethical standards.
These standards also apply to drafting contracts with contractors or customers, which should be done
to minimize the risk of noncompliance with human rights along the value chain. Throughout the group,
alstria especially respects the UN Guiding Principles on Business and Human Rights, which are
grounded in recognizing that states and companies must respect human rights. States are primarily
responsible for protecting their citizens’ human rights, and it is their obligation to translate their
international human rights duties into national regulations and laws that ensure protection of human
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rights. In situations where national laws do not cover internationally recognized human rights, or the
implementation of such laws is weak, the UN Guiding Principles clearly expect companies to operate
according to a higher international standard.
In Germany, the degree to which the government respects and protects human rights is rather high.
As a German real estate company focusing solely on German office properties, alstria operates within
the German law’s framework and accordingly obeys its human rights rules and regulations. Overall,
the risk of noncompliance with regard to human rights is classified as low (L), as in the previous year.
1.3.6. Financial risks
Due to alstria’s refinancing strategy, its financial risk situation remained stable compared to the
previous year’s reporting period.
Breaches of covenants
In the process of issuing corporate bonds, taking out loans and the issuance of a Schuldschein, alstria
agrees to comply with certain covenants, such as achieving a minimum income (debt service coverage
ratios) from mortgaged properties or not exceeding a certain level of debt (LTV). In the event of a
breach of these covenants, consequences arise, such as increased credit margins or, in the worst case,
a lender’s extraordinary termination of a loan. The risk of breaching loan agreements was classified
as a medium risk (M) as of the previous year's reporting date due to the low LTVs, which were and
still are well below the permitted gearing ratios.
When Alexandrite exceeded its 50% stake in January 2022 (see Section V.1.3.2), there was a change
of control within the meaning of the bond conditions. If within 120 days after the change of control
the rating falls below the category "investment grade" due to the change of control, the bondholders
are entitled to demand repayment of the fixed rate bonds from alstria at 101% of the nominal amount
of the fixed rate bonds plus unpaid claim accrued interest. The update of the rating by the rating
agency Standard & Poor's (S&P), which considered the increase in the LTV intended by the Bidder, led
to a reclassification of the rating to BBB-. This lowered the rating, which was previously BBB+. An
investment grade rating could be maintained, so that there is no breach of the bond conditions. The
decrease of the rating to the lowest level of the investment grade rating has nevertheless increased
the probability that the rating could fall below investment grade, violating the bond conditions,
resulting in its early repayment. The Bidder, Alexandrite, has undertaken to provide bridge financing
of the required magnitude and a term of up to two years in this case. Furthermore, it has assured
that it will offset any higher refinancing costs. Therefore, the effects on alstria's financing situation
are limited. Nevertheless, the probability of occurrence of the risk was increased from "unlikely" to
"possible". Overall, the risk from breaches of covenants as of December 31, 2021, was still classified
as a medium risk (M).
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Valuation risks
The fair value of the real estate properties the Company owns reflects their market value as
independent appraisers determine, which could be subject to change in the future. Generally, the
real estate properties’ market value depends on various factors, some of which are exogenous and
may be outside alstria’s control. These factors include declining rent levels, decreasing demand, and
increasing vacancy rates. Many qualitative factors also decide a property’s valuation, including its
conditions, expected market rents, and location. The mandated appraiser’s final assessment is to a
certain extent discretionary and may differ from another appraiser’s opinion. Should the factors
considered or assumptions made in valuing a property change to reflect new developments or for
other reasons, subsequent valuations of the respective property may result in a diminished market
value. If such valuations reveal significant decreases in market value compared to prior valuations,
the Company may incur significant revaluation losses with respect to such properties.
Factors such as economic changes, interest rate fluctuations, and inflation may adversely affect
properties’ value. To minimize these risks, regional diversification of investment portfolios,
consistent focus on the tenants’ individual needs, and detailed market research and analysis (broker
reports) are applied. In addition, Independent, internationally recognized experts determine the
market value of all of alstria’s assets at the end of each year. The consequences of the COVID-19
pandemic have not yet had negative effects on the current assessment.
The risk of higher inflation becoming entrenched, which could negatively affect the demand for real
estate and thus its value via the rise in interest rates, is perceived as inconsistent. In return, ceteris
paribus, higher nominal rental income would be expected, so that, at least in terms of model theory,
valuation pressure appears manageable. Historically, real estate has been inflation-proof in practice.
In summary, the risk of unexpected devaluations is classified as moderate (M), as in the previous year.
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Refinancing risks
The Group’s main financial instruments are fixed-interest bonds. In addition, there are mortgage-
backed bank loans. The bonds and bank loans’ main purpose is to finance alstria’s business activities.
The main risks arising from the Group’s financial instruments are cash flow risks, interest rate risks,
and liquidity risks. alstria Group’s current Net LTV is 28.8 %, which is a low value compared to the
average LTV of the real estate companies listed in the DAX segment of Deutsche Börse AG (DAX, MDAX,
and SDAX). The Group’s bank loan LTVs on the balance sheet date are well below the LTVs permitted
under the respective loan agreements (see an overview of loan facilities on page 18). Thus, the risk
of a covenant breach was encountered effectively. As of the balance sheet date, alstria's
creditworthiness was still rated BBB + by the rating agency Standard & Poor's and BBB - ("investment
grade") up to the date of publication. Refinancing the majority of alstria’s bonds and bank loans is
not required before the 2023 financial year, the maturity of one in four bonds. The other three bonds
have different maturities up to the 2027 financial year, so that there is a diversified maturity profile
and the refinancing of the entire loan at one point can be avoided (see the maturity profile of the
loans on page 19).
Due to the change in financing strategy because of the change of control in January 2022 (see the
comments on the risk from the breach of covenants and section V.1.3.2) with the reduction in the
S&P rating from BBB+ to BBB -, refinancing risk are estimated as more likely than on the previous
year's reporting date. While it was categorized as “very unlikely” that the risk from the refinancing
would materialize as of the previous year's reporting date, the assessment has now been changed to
"unlikely". The Bidder's assurance to ensure the financing requirements by providing bridge financing
of the required magnitude and with a term of up to two years and to offset any higher refinancing
costs was considered in this assessment.
Therefore, the effects on alstria's financing situation are limited, but the conditions to be achieved
as part of the refinancing after the end of the two-year bridge financing could differ and make
refinancing on favorable terms more difficult.
The refinancing risk is therefore now classified as a medium risk (M) as of the balance sheet date,
after being classified as a low risk (L) on the previous year's reporting date.
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Interest rate risks
Interest rate risks result from fluctuations in market interest rates. These floating rates influence the
sum of interest expenses in the financial year and the three-year forecast period on which risk
management is based. Developing nominal interest rates also depends on the further development of
inflation rates.
alstria's hedging policy included the use of classic interest rate caps and if necessary, interest rate
swaps, if applicable to limit the Company’s exposure to interest rate fluctuations. It still provided
enough flexibility to dispose real estate assets. The interest base for the financial liability (loan) is
the EURIBOR, which is adjusted every three months. The majority of funding consists of long-term
fixed-interest loans and bonds and therefore, is not subject to interest rate risk up to its maturity.
For this reason, the interest rate risk was classified as a low risk (L) as of the previous year's reporting
date.
The downgrade of the rating as a result of the change of control in January 2022 (see the comments
on the risk of breaches of covenants and the refinancing risks as well as Section V.1.3.2) and the
possible refinancing of a corporate bond in the 2022 financial year led to the assessment of higher
interest rate risks. As of the previous year's reporting date, the need for refinancing, which could
have led to a change in the interest rate structure within the three-year risk assessment period, was
limited.
Therefore, the interest rate risk is now classified as a medium risk (M) as of the balance sheet date.
Tax risks
REITs are completely exempt from corporate income tax and trade tax. As a result, tax risks can only
arise in the case of lost REIT status or at a subsidiary level. Additionally, the Group faces risks from
value-added tax, real transfer tax, and property tax. Furthermore, changes in tax laws or their
interpretations may result in higher tax liability for prior tax periods that have not yet been approved.
Due to the takeover of the alstria office Prime Group, companies are included in the consolidated
financial statements that are not subject to the REIT legislation’s regulations. The restructuring,
which was implemented during the 2016 financial year, particularly the conversion of these
companies’ legal forms into limited partnerships, resulted in taxing hidden reserves and liabilities
within the acquired companies. Subsequently, the companies are tax transparent.
Due to the income tax exemption as a REIT and internal and external tax experts’ consistent
monitoring of tax-relevant issues, the probability of a tax loss is limited. Because certain tax-related
issues, such as real estate transactions or valuations of assets and liabilities as well as reentry into a
tax liability status that could result in high tax obligations over the three-year risk period, the risk
impact is considered significant.
Because of the Federal Constitutional Court judgment, the German legislature passed a new
regulation on property tax at the end of 2020. From January 1, 2022, new property tax values will
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apply; these will be the new tax base for property taxes beginning January 1, 2025. Basically, the
new model is value based. At the same time, an amendment to the Basic Law (Grundgesetz) grants
German states the right to deviate from the federal regulation, such as through using an area model.
In the case of nonresidential properties relevant to alstria — particularly business properties — the
so-called real value method is used in principle. The property value is thereby determined from the
building value, which is calculated based on standard production costs, usable space, year of
construction, and land value. The latter results from the multiplication of the land area by the
standard land value. Therefore, it is unnecessary to determine standard rents. Even if the new
concept is to be revenue neutral, an increase in the property tax for alstria’s real estate cannot be
ruled out. Basically, changes in property tax may affect tenants through higher service charge costs
because passing on costs to tenants was not restricted. The Federal Constitutional Court will allow
applying the current property tax rates until the end of 2024. Therefore, higher property tax rates
are not expected for the next three years.
The transfer of shares in companies with real estate assets can under certain circumstances, if certain
share quotas are exceeded, result in real estate transfer tax on the real estate of the company or
their subsidiaries. Because of Alexandrite's takeover activities, shares in alstria office REIT-AG will be
transferred. Due to the extensive real estate assets of the alstria Group, real estate transfer taxes
could be incurred to a considerable extent. Therefore, the Bidder has guaranteed the company that
it will refrain from transferring a harmful number of shares. In addition, the Bidder has warranted to
the Company that it will indemnify the Company and its affiliates against any property tax damage or
loss resulting from a breach of warranty or any other harmful measures.
Overall, there is therefore a medium (M) tax risk, which is unchanged from the previous year.
Liquidity risk
One of alstria’s core processes is cash management. The Company manages its future cash position
and monitors its progress daily. The Company uses a cash-forecasting tool to prevent liquidity risks.
As a basis for analysis, this liquidity-planning tool uses the expected cash flows from business activities
and the maturity of the financial investments.
Due to refinancing activities in recent years, such as placing several corporate bonds with diversified
maturity profiles, the substantial liquidity risk arising from repaying all or most of alstria’s credit
commitments in one sum (“balloon repayment”) has been managed successfully. Since the repayment
of the majority of the loans and bonds will not be due until 2023, the liquidity risk from the obligation
to repay loans has been classified as low (L), as in the previous year’s reporting date. The change of
control (see the explanations on the risk of breach of covenants, refinancing risks and the interest
rate risks as well as section V.1.3.2), will not result in any material changes, among other things due
to the Bidder's assurance that any financing requirements will be immediately offset by a bridge
financing.
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Counterparty risks
alstria hedges a portion of its risk by applying third-party instruments (interest rate derivatives,
property insurance, and others). alstria’s counterparties in these contracts are internationally
recognized institutions that leading rating agencies rate. alstria regularly reviews the ratings of its
counterparties to mitigate any risk of default. The 2007 financial crisis raised doubts regarding the
reliability of rating agencies’ assessments. In response to this concern, alstria uses other information
sources to verify rating agencies’ assessments. The COVID-19 crisis has not yet affected the
creditworthiness of alstria’s major contractual partners. The determination of fiscal policy and
monetary policy to support industries and particularly affected companies, as well as systemically
important institutions such as banks and insurance companies, can also contribute to this.
alstria is otherwise not exposed to significant credit risks. Hence, counterparty risk can be classified
as low (L), just as it was last year.
1.4. Overall risk assessment by the Management Board
alstria AG consolidates and aggregates all risks reported by the different business units and functions
adhering to its risk management policy. The most significant challenges have been mentioned first in
each of the four risk categories: strategic, compliance, operational, and financial.
Compared to the previous year, the COVID-19 pandemic also influenced alstria’s risk situation.
Furthermore, for assessing certain risks in relation to certain financial risks and risks from violations
of the REIT Act due to the change of control (see the explanations on the risk from the breaches of
covenants, the refinancing risks and the interest rate risk as well as Section V.1.3.2), questions arose
that led to updating the assessment and, as a result, there were only minor changes in the risks.
For the 2021 financial year, compared to 2020, only minor changes were noted in alstria’s risk level
matrix for risks categorized as high (H) or medium (M). At the end of the year, high risks accounted
for 9.1 % (December 31, 2020: 10.0 %) of all identified risks, whereas medium risks accounted for
34.5 % (December 31, 2020: 32.7 %). This is based on the continuing uncertainty of the economic
situation described above and the resulting increase in the probability of a drop in demand for new
office space as well as the possibility of payment difficulties and even bankruptcy among alstria’s
tenants. Due to the high proportion of government agencies, public-sector companies, and companies
with high credit ratings, the Management Board assesses the risk situation as manageable. The COVID-
19-related risks did not pose a threat to the company’s existence.
From the Management Board’s point of view, the conservative LTV and the solid REIT equity ratio are
stabilizing factors. Even if the long-term refinancing position with the downgrading of the S&P rating
to the lowest "investment grade" level BBB- appears somewhat less secure than before, the Bidder's
refinancing guarantees and compensation commitments represent a balance regarding the refinancing
risk and the risk of higher borrowing costs in the event of rising interest rates or margins. The low
LTV ratio reduces the risk that could arise if the property valuations come under pressure (e.g.,
because of inflation-driven interest rate hikes).
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Sufficient precautionary measures have been undertaken to counteract identifiable risks.
In addition to assessing the potential impact of the realization of risks on the value of the Group’s
net assets, the potential liquidity requirements for selected key risks are identified for a period of
three years. The assessed amount of liquidity amounted to EUR 55.1 million as of the balance sheet
date, compared to EUR 45.9 million as per December 31, 2020.
The risks described in the aggregated risk report do not threaten, whether individually or
cumulatively, alstria’s ability to continue as a going concern, given the likelihood of occurrence and
potential levels of impact.
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2. REPORT ON OPPORTUNITIES
2.1. Management of opportunities
alstria’s management aims to identify and assess opportunities as early as possible and to initiate
appropriate measures to take advantage of those opportunities and transform them into business
success.
Growth and earnings opportunities result both from alstria’s existing real estate portfolio and from
its acquired properties. Depending on a property’s position in its life cycle, opportunities may be
found in repositioning and development, in strengthening tenant relationships, or in selling the
property.
The Company’s financing activities safeguard the necessary funding to implement these activities.
Here, opportunities are based on ensuring sustainable financing, including equity funding, on
favorable terms.
Evaluating opportunities occurs in the context of annual budget planning and on an ongoing,
occasional basis during the year. The process begins with a careful analysis of the market environment
and of market opportunities related to the properties held in the portfolio. This analysis includes
assessing criteria, such as tenant needs, property categories, and regulatory changes. Regular
reporting addressing the management supports monitoring growth initiatives within the budget and
planning-approval processes.
The alstria Management Board is regularly updated on the status and progress of the initiatives being
implemented. The real estate operations department receives monthly reports in which the planned
costs and revenues are compared to the actual budget consumption and revenues. In addition,
financial and liquidity planning and forecasts are updated, and changes to the project scope are
clarified.
2.1.1. Opportunities related to real estate acquisitions
A property’s location is essential for its attractiveness. Opportunities arise when favorable
demographics and real estate dynamics characterize a regional market. Together with optimal
property management, location results in opportunities for long-term capital appreciation. alstria’s
acquisition strategy aims at identifying properties with the described opportunity structure.
Therefore, its investment strategy focuses on acquiring properties and portfolios with higher vacancy
rates, which are thus open to additional growth opportunities through the stabilization of the
properties’ leases. An important task to preserve these opportunities is the possibility of turning
COVID-19 challenges into opportunities, for example, through implementing pandemic-proof space
expansions and intelligent area use concepts with the integration of home offices with tenants and
potential tenants. Furthermore, negotiations with tenants to avert acute bottlenecks can include not
only a moratorium on rent payments, but also in return, an extension of the lease agreement and
thus secure the chance of long-term rental income.
Acquisitions will only be performed if the investment volume offers the prospect of achieving a
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sustainable increase in value. In particular, the low LTV debt ratio offers opportunities in the form of
greater flexibility for acquiring real estate.
2.1.2. Opportunities related to tenant relationships
Structured and active property and asset management both ensures the quality of alstria’s leasing
service and is the basis for sustainable tenant relationships. Opportunities arise through flexible
response to existing or potential tenants’ needs. The Company has the knowledge and resources to
provide solutions and implement tenants’ requirements, which allows opportunities to generate
sustainable, long-term leases.
2.1.3. Opportunities arising from real estate development
As a long-term-oriented real estate owner, alstria’s property portfolio also entails aging buildings that
require refurbishment or repositioning. Modernizing properties provides the opportunity for value
creation through reshaping assets for the next 20 to 30 years and through strengthening their future
attractiveness in the market and for tenants. The implementation of development projects is
becoming increasingly important, especially against the background of historically low purchase yields
on real estate. Corresponding to the risks from development projects, which have a high rating, the
renewed increase in the budget for development projects supports the opportunity to generate higher
rental yields and increases in the properties’ value through office developments tailored to the needs
of tenants and the market.
2.1.4. Opportunities from sustainable management
The alstria Management Board sees opportunities for a long-term strategy in supporting measures to
comply with and achieve the goals of the International Climate Change Agreement in Paris. This
consists of using a favorable political and regulatory environment, including sustainability, to shape
the basis for business activity in a sustainable manner. To this end, projects are actively initiated and
implemented that aim to reduce the high CO2 emissions generated in the real estate sector and to
neutralize them in the long term. Examples of this are the promotion of reliable, industry-compatible
CO2 reporting or the investigation of CO2-neutral building materials and solutions in the context of
construction and renovation projects.
2.1.5. Opportunities arising from financing
alstria’s financing strategy focuses on the optimal provision of funds to invest in new properties and
development projects. Opportunities arise from optimizing these financing terms, which requires
implementing long-term and flexible funding at favorable conditions and safeguarding financial
covenants at all times. Significant opportunities arise out of a low debt ratio (the Net LTV of bank
loans is currently 28.8 %; see the overview of loan facilities on page 18), which represents a
comfortable base for future funding and growth. Thus far, the funding options have mainly been
geared toward corporate bonds, mortgage-secured loans, or capital increases. Opportunities arise
from the diversification of funding sources and regarding the rating obtained. However, changes in
the financing strategy and the type of financing are expected as a result of the change of control (cf.
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the relevant comments on the risk of breaching covenants and the interest rate risk as well as
Section V.1.3.2). The low LTV offers opportunities in the sense of a wide range of alternative courses
of action, as well as the creation of a higher risk-return profile corresponding to the private real
estate market and a more effective overall return approach.
2.2. Overall summary of the Opportunities Report
alstria’s current refinancing situation with a relatively high equity ratio, which is reflected in the low
LTV, represents a stable basis for further development and offers degrees of freedom in the event of
a possible realignment of the financing strategy that resulted from the change of control. In terms of
revenues, alstria benefits from rental agreements with an average remaining term of around 5.7 years
and a potential increase in rental income due to implementing value-added development projects.
The Company owns a number of properties that offer attractive and value-adding refurbishment
opportunities. alstria’s portfolio is well balanced and has high-quality properties with tenants with
good credit ratings. The low LTV debt ratio also offers a chance for greater flexibility to acquire real
estate in the event that spontaneous opportunities arise.
alstria sees itself — also against the backdrop of the COVID-19 effects — well positioned to successfully
continue its strategy of acquisition, property development, letting, and property management, and
to recognize and implement its future market opportunities in this regard.
alstria’s core competence is asset management. The asset repositioning and refurbishment that alstria
continues to pursue and implement provide a strong basis for further organic increases in value within
the portfolio. Against this backdrop, the Bidder has undertaken under the Investor Agreement to
support further implementing alstria's strategy and to drive further growth through the active pursuit
of new value-enhancing restructuring and repositioning opportunities as well as an accelerated
rotation of assets.
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VI. SUSTAINABILITY REPORT*
In November 2021, alstria published its annual sustainability report for the financial year 2020. The
report provides insights into alstria’s environmental, employee-related, and societal performance. It
was prepared in accordance with the GRI standards and the EPRA real estate specific guidelines. In
addition, the recommendations of the FSB Task Force on Climate-related Financial Disclosure (TCFD)
have been considered. The report has received independent limited assurance for the sections ‘Our
Buildings’ and ‘Our People’ as well as for the ‘EPRA Sustainability Performance Indicators’.
Key sustainability achievements in financial year 2020 include the following:
- The average operational GHG emissions of alstria’s portfolio in use were approx. 50 % below
the benchmark for Germany as the scientific CRREM consortium determined.
-
the embedded and avoided GHG emissions of alstria’s complete development portfolio were
modeled. The calculation shows that an average alstria development generates about 60 %
less greenhouse gas emissions compared to the construction of a comparable new office
building.
- The assessment of climate-related risks for the Company was extended in financial terms
through publishing alstria’s first Carbon Accounting Report.
- The protection of biodiversity was further prioritized, for example, by preparing the
acquisition of a forest and by assessing the status and potential of green roofs.
- At the annual general meeting for financial year 2020, for the first time, a large majority of
alstria’s shareholders approved spending EUR 1.8 million of corporate assets on climate
change mitigation projects that do not meet the company’s risk-return expectations (Green
Dividend).
- The HR excellence awards 2020 recognized alstria’s approach to addressing COVID-19-related
challenges.
-
ESG ratings confirmed the Company’s leading industry position in sustainability. For example,
the Dow Jones Sustainability Index Europe and the Bloomberg Gender-Equality Index listed
alstria.
For further information, please refer to alstria’s Sustainability Report 2020/21.
* This section is an unaudited statement.
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VII. DISCLOSURES REQUIRED BY TAKEOVER LAW
Disclosures and the explanatory report pursuant to Sections 289a and 315a of the German
Commercial Code (Handelsgesetzbuch, HGB)
1. COMPOSITION OF SUBSCRIBED CAPITAL
On the balance sheet dated December 31, 2021, alstria’s share capital amounted to
EUR 178,032,997.00, divided into 178,032,997 no-par value bearer shares. All shares are fully paid in
and have equal rights and obligations. Each share entitles the bearer to one vote at the Annual General
Meeting and is decisive for the shareholder’s share in the Company’s profits. The shareholders’
individual rights and duties result from the provisions of the German Stock Corporation Act
(Aktiengesetz, AktG), particularly Sections 12, 53a et seq., 118 et seq., and 186.
2. RESTRICTIONS ON VOTING RIGHTS OR THE TRANSFER OF SHARES
The exercise of voting rights and the transfer of shares are based on statutory requirements and
alstria’s Articles of Association; the latter basis does not restrict either of these activities. According
to Sections 71b and 136 of the AktG, for example, the voting rights of the affected shares are excluded
by law. Other restrictions as to voting rights or the transfer of shares do not exist, or, as far as they
arise from agreements between shareholders, are not known to the Management Board.
3. SHAREHOLDINGS EXCEEDING 10 % OF VOTING RIGHTS
The Company was notified in accordance with Section 33 of the German Securities Trading Act (WpGH)
that Brookfield Asset Management Inc., Toronto, Canada held 95.11 % of the voting rights in the
Company as of February 17, 2022. 10.23 % of the voting rights were attributable to Lapis Luxembourg
Holdings S.à r.l. and 83.14 % of the voting rights were attributable to Alexandrite Lake Lux Holdings
S.à r.l. As of the balance sheet date December 31, 2021, alstria was not aware of any other
shareholders whose direct shareholding exceeded 10 % of voting rights.
4. SHARES WITH SPECIAL RIGHTS
There are no shares with special rights of control.
5. SYSTEM OF CONTROL FOR ANY EMPLOYEE SHARE SCHEME IN WHICH EMPLOYEES DO NOT
DIRECTLY EXERCISE CONTROL RIGHTS
Employees who hold alstria shares exercise their rights of control as any other shareholders do, in
accordance with the applicable law and the Articles of Association.
6. APPOINTMENT AND DISMISSAL OF MANAGEMENT BOARD AND AMENDMENTS TO THE ARTICLES
OF ASSOCIATION
alstria’s Management Board consists of one or more members who may be appointed or dismissed in
accordance with Sections 84 and 85 of the AktG. The Articles of Association do not contain any special
provisions in this respect. Pursuant to Section 84 of the AktG, members of the Management Board are
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appointed by the Supervisory Board for a maximum term of five years. Reappointment or extension
of the term of office is permitted for a maximum of five years in each case.
Amendments to the Articles of Association are made pursuant to Sections 179 and 133 of the AktG.
Pursuant to Section 12, para. 2 of the Articles of Association, the Supervisory Board is also authorized
to make changes and amendments to the Articles of Association that merely affect the wording
without passing a shareholder resolution in at General Meeting. In addition, the Supervisory Board is,
by resolution of the Annual General Meetings on May 16, 2017, and September 29, 2020, authorized
to adapt the wording of the Articles of Association to the utilization of the Company’s capitals and
after expiration of the applicable authorization periods.
Pursuant
to Section 15, para. 5 of
the Articles of Association,
in conjunction with
Sections 179 paras. 2 and 133 of the AktG, shareholders may make resolutions regarding such
amendments at a general meeting with a simple majority of the votes cast and a simple majority of
the share capital represented. Insofar as a larger majority is prescribed by law, such a majority shall
be decisive.
The Articles of Association were last amended in the reporting year by a resolution passed by the
Supervisory Board on September 9, 2021: Section 5, paras. 1, 2, and 7 of the Articles of Association
were formally adapted to a capital increase executed from the Company’s Conditional Capital III 2017.
Section 5, para. 4b and 4c of the Articles of Association were deleted because the Conditional
Capital II 2020 and the Conditional Capital III 2020 had become obsolete.
7. AUTHORITY OF MANAGEMENT BOARD REGARDING THE ISSUE AND BUYBACK OF SHARES
The Articles of Association authorize the Management Board, with the approval of the Supervisory
Board, to increase the share capital on or before September 28, 2025, by issuing new no-par value
bearer shares against contributions in cash and/or in kind one or more times, up to a total amount of
EUR 35,198,684.00. Further details are governed by Section 5, paras. 3, 4, and 4a of the Articles of
Association.
7.1
Conditional Capital
alstria holds three conditional capitals (pursuant to Sections 192 et seq. of the AktG), which are
regulated in Section 5, paras. 5, 7, and 8 of the Company’s Articles of Association.
7.1.1. Conditional Capital I 2020
The share capital is conditionally increased by up to EUR 16,750,000.00 by issuing up to 16,750,000
no-par value bearer shares. The conditional capital is to be carried out to the extent that the holders
of option or conversion rights or persons obliged to conversion under option or conversion bonds,
profit participation rights or participating bonds which were issued by alstria AG on the basis of the
authorization resolved by the shareholders in the Annual General Meeting on September 29, 2020,
under item 11 of the agenda exercise their option or conversion rights or, if they are obliged to
conversion or exercise of the option, fulfill their conversion obligation or, as the case may be, their
obligation to exercise the option and that no cash settlement is granted and no own shares are being
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used to satisfy such claims. Further details are governed by Section 5, para. 5 of the Articles of
Association.
7.1.2. Conditional Capital III 2017
The share capital is conditionally increased by an amount of up to EUR 560,425.00 by issuing up to
560,425 no-par-value bearer shares. The conditional capital increase shall be used exclusively to grant
shares to the holders of convertible profit participation certificates issued by the Company through
May 15, 2022, in accordance with the authorization of the General Meeting held on May 16, 2017. The
conditional capital increase is only carried out to the extent that issued convertible profit
participation certificates are converted into shares of the Company and no treasury shares are used
to satisfy the certificates. The new shares shall participate in the Company’s profits from the
beginning of the financial year in which they come into existence as a result of converting of
certificates.
7.1.3. Conditional Capital III 2020
Furthermore, the share capital is conditionally increased by an amount of up to EUR 1,000,000.00 by
issuing up to 1,000,000 no-par-value bearer shares. The conditional capital increase shall be used
exclusively to grant shares to the holders of convertible profit participation certificates issued by the
Company on or before September 28, 2025, in accordance with the authorization of the General
Meeting held on September 29, 2020. The conditional capital increase is only carried out to the extent
that issued convertible profit participation certificates are converted into shares of the Company and
no treasury shares are used to satisfy the certificates. The new shares shall participate in the
Company’s profits from the beginning of the financial year in which they come into existence as a
result of conversion of certificates.
7.2
Purchase of treasury shares
In the General Meeting held on September 29, 2020, the shareholders authorized the Management
Board, subject to the approval of the Supervisory Board, to acquire their own shares of the Company
of up to a total of 10 % of the share capital in place at the time of the authorization’s issuance on or
before September 28, 2025. The acquired shares and other treasury shares in the possession of, or to
be attributed to, alstria (pursuant to Sections 71a et seq. of the AktG) may at no time amount to
more than 10 % of the share capital. Shares may be purchased through a stock exchange, by means of
a public offer to all shareholders, or by making use of financial derivatives (put or call options, or a
combination of both).
8. SIGNIFICANT AGREEMENTS OF ALSTRIA AG THAT TAKE EFFECT UPON A CHANGE OF CONTROL
FOLLOWING A TAKEOVER BID
Some of alstria AG’s financing agreements contain clauses common to such contracts regarding a
change of control. In particular, the agreements entitle the lenders to request repayment of the loans
or an obligation by alstria to repay the loans in the event that any person, company, or a group of
persons should acquire, directly or indirectly, 50 % of the voting rights or a controlling influence in
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alstria Annual Report 2021
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alstria. However, for some financing agreements, the repayment obligation is subject to a downgrade
of the Company’s or the bonds rating, occurring within 120 days of the control change.
The total volume of obligations under those agreements with corresponding change of control clauses
amounted to approx. EUR 1,627 million on the balance sheet date.
There was no lowering of the rating as of the reporting date. As a result of the acquisition by
Brookfield, no loan was called or required to be repaid by alstria; only an undrawn credit line was
terminated.
9. COMPENSATION AGREEMENTS WITH MANAGEMENT BOARD MEMBERS AND EMPLOYEES IN CASE
OF A TAKEOVER BID
No compensation agreements with Management Board members or employees are in place that will
take effect in case of a takeover bid.
All these takeover provisions comply with statutory requirements or are reasonable and common
practice at comparable, publicly listed companies. They are not intended to hinder potential takeover
bids.
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VIII.
RENUMERATION REPORT
The remuneration report of alstria office REIT-AG (hereafter: alstria) explains the main elements of
the remuneration of the Company’s Management Board and Supervisory Board members. It describes
the amount and structure of the remuneration. The Management Board and the Supervisory Board
have jointly created this remuneration report and ensured that it corresponds with the legal
requirements of section 162 German Stock Corporation Act (AktG) as well as the recommendations
and suggestions of the German Corporate Governance Code (GCGC) in its current version as of
December
19th,
2019.
The
remuneration
report was
audited
by
KPMG
AG
Wirtschaftsprüfungsgesellschaft in accordance with the requirements of section 162 (3) AktG and is
an integral part of the audited combined management report for alstria office REIT-AG as of
December 31st, 2021.
The note of the audit of this remuneration report (www.alstria.com/annual_report_2021), the current
remuneration system
for the Management Board
(https://alstria.de/remuneration-system-
management-board) and the Supervisory Board (https://alstria.de/remuneration-system-supervisory-
board) as well as this remuneration report (https://alstria.de/Remuneration-report-2021.pdf) are
published on the website of the Company.
1. VIEW ON THE FINANCIAL YEAR 2021
• COVID-19 pandemic: weak leasing market
•
•
•
Strong investments in the existing portfolio
Stable transaction activity
Introduction of new Management Board remuneration system
• Takeover offer from Brookfield
Due to the COVID-19 pandemic in Germany, which will continue in 2021, and the resulting uncertainty
with regard to further economic development, the commercial letting market was again difficult.
Despite the weak commercial leasing market, alstria was able to increase its leasing performance (in
terms of new lettings and lease renewals) in 2021 compared to the previous year. This was due to the
conclusion of several large-volume lease extensions at the end of the year.
In 2021, a total of EUR 122 million was invested in the existing portfolio. The lion's share of this sum
(EUR 90 million) was spent on development investments, which significantly improved the quality of
the space in order to achieve higher rents for new leases. Development investments have increased
significantly in 2021 because alstria currently sees the best return opportunities in these properties.
The current development portfolio comprises 20 projects with a total lettable area of 342,400 m².
alstria's investment decisions are based on analyses of the local markets, individual consideration of
the respective building in terms of location, size and quality compared to direct competitor
properties, as well as long-term value enhancement potential. alstria's strategy is to build what it
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alstria Annual Report 2021
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considers to be a lucrative portfolio size in the respective locations and, if necessary, to withdraw
from markets that are not in the company's core investment focus ("Big 7" office markets in Germany).
In this context, a property in Trier was sold in 2021. The sales in Hamburg and Stuttgart were
opportunistic in nature and served to optimize the risk/return profile of the portfolio. The sales
proceeds were mainly used to finance the development measures in the existing portfolio. The
reallocation of the capital employed should make it possible to continuously improve the risk/return
profile of the portfolio. New properties were purchased in the core markets of Frankfurt and Berlin.
For both acquired properties, there is significant potential for value appreciation, which is to be
exploited in the coming years.
The Supervisory Board of alstria revised the remuneration system, which was last adjusted effective
January 1, 2018, in line with the new regulatory requirements under the AktG and the GCGC, and
presented it for approval at the annual general meeting of shareholders on May 6, 2021, which
approved the remuneration system 2021 by 85.93 % of votes cast.
The main changes in the 2021 remuneration system for the management board are summarized in the
following figure:
The remuneration system of the Management Board is performance-based and geared towards
promoting sustainable company performance. It is systematically depicted in the diagram below and
its main features are described in the following.
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Combined Management Report
The composition of the Supervisory Board changed in the financial year 2021. As Dr Bernhard Düttmann
and Stefanie Frensch left the Supervisory Board with the annual general meeting of shareholders 2021,
they were succeeded by Dr Frank Pörschke and Elisabeth Stheeman. Ms. Stheeman is a member of the
nomination and remuneration committee.
On December 13, 2021, Alexandrite Lake Lux Holdings S.à r.l., a company indirectly controlled by
Brookfield, made a voluntary public takeover offer to the shareholders to acquire all shares in alstria
office REIT-AG against payment of a cash consideration.
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2. REMUNERATION OF THE MANAGEMENT BOARD MEMBERS
2.1.
Remuneration Governance
The Supervisory Board is responsible for determining, implementing and reviewing the remuneration
of the Management Board. The nomination and remuneration committee formed from among the
members of the Supervisory Board discusses and reviews the remuneration system for the Management
Board at regular intervals and whenever necessary and prepares resolutions on any changes.
Therefore, any changes or relevant updates for the remuneration system will be prepared by the
nomination and remuneration committee. However, the whole Supervisory Board is responsible for
the final decision. The remuneration system will be submitted to the annual general meeting of
shareholders for approval in the event of significant changes, but at least every four years.
Total remuneration of the individual Management Board members is determined by the Supervisory
Board and covers all activities within the alstria Group. Criteria for the appropriateness of the
remuneration include the duties of the individual Management Board member, the personal
performance, the economic situation, the success and future prospects of alstria, as well as the
customary nature of the remuneration, taking into account the competitive environment and the
remuneration structure otherwise applicable in alstria.
To assess the appropriateness of the total remuneration of the members of the Management Board
compared to other companies, the Supervisory Board uses a suitable peer group of relevant
competitors in the Real Estate business. When the Supervisory Board revised the remuneration system
for the Management Board in financial years 2020/2021, this peer group comprised the following
companies of the EPRA Germany Index (ADO Properties, Aroundtown, Deutsche Euroshop, Deutsche
Wohnen, Grand City Properties, Hamborner REIT, LEG Immobilien, TAG Immobilien, TLG Immobilien,
Vonovia), and, in addition, for the European perspective, the companies of the EPRA Developed
Europe Office Index. In order to reflect national market practice and company size, MDAX companies
were also considered.
In order to assess the customary nature of remuneration within alstria, the ratio of Management Board
remuneration to the remuneration of Senior Management reporting directly to the Management Board
and of all employees is taken into account. Thereby, alstria regularly compares the average
remuneration levels (fixed salary, bonus, participation rights, excluding pension and healthcare) and
reviews and publishes the CEO pay ratio, which shows the CEO total remuneration in relation to the
median total remuneration of all employees and managers.
A lack of independence and conflicts of interest of members of the Supervisory Board and its
nomination and remuneration committee may prevent independent advice and supervision when
determining the remuneration of the Management Board. The Supervisory Board considers its
members and the members of its nomination and remuneration committee as independent.
Furthermore, the members of the Supervisory Board and the nomination and remuneration committee
are required by law, the GCGC and the internal rules of procedure for the Supervisory Board to
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61
Combined Management Report
disclose immediately any conflicts of interest they may have. In such cases, the Supervisory Board
takes appropriate measures to take account of the conflict of interest. For example, the members
concerned do not participate in discussions and resolutions.
In the process of adjusting the remuneration system, the service contracts of the Management Board
members were also revised. The current remuneration amounts and a comparison with the 2020
financial year are shown individually in section 3.1 "Target remuneration and remuneration structure".
The remuneration in the financial year 2021 is fully in line with the remuneration system adopted by
the annual general meeting of shareholders 2021. The details of the application in the financial year
are presented hereafter.
2.2. Management Board Remuneration System
The following table summarizes the essential remuneration components and further contractual
provisions of the remuneration system for the Management Board 2021, which are described in more
detail below, and compares them to the previous remuneration system. Main changes compared to
the previous system are highlighted by underlining.
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alstria Annual Report 2021
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2.2.1. Target Remuneration and Remuneration Structure
The target remuneration of the Management Board members for the financial years 2021 and 2020,
which is contractually defined as payable upon 100 % target achievement, and the resulting
remuneration structure are presented below. The structure of the total target compensation is nearly
identical for both members of the Management Board.
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Combined Management Report
The sum of the fixed and variable remuneration elements constitutes the total target remuneration
in the event of 100 % target achievement by a Management Board member. The focus on the long-
term and sustainable development of alstria pursuant to section 87 (1) sentence 2 AktG is ensured by
the higher weighting of the Long-Term Incentive Plan compared to the Short-Term Incentive Plan.
The share of the Short-Term Incentive Plan in the variable remuneration amounts to around 33 %,
whereas the share of the Long-Term Incentive Plan accounts for around 67 % of the variable
remuneration.
2.2.2. Fixed Remuneration
Annual Base Salary
The annual base salary is paid in twelve equal monthly installments at the end of each month. If the
service contract begins or ends during a financial year, the annual base salary for that financial year
is payable on a pro rata temporis basis.
Fringe Benefits
Members of the Management Board also receive fringe benefits; these mainly consist of insurance
premiums and the private use of company cars. As a remuneration component, these ancillary benefits
are taxable. In principle, all Management Board members are equally entitled to them, while the
amount of use varies depending on their personal situations. The fringe benefits are included in the
maximum remuneration and therefore capped.
Furthermore, the company has taken out a D&O insurance (Directors & Officers Liability Insurance)
for the benefit of the members of the Management Board with a deductible of 10 % of the damage up
to the amount of one and a half times the annual fixed remuneration of the respective Management
Board member.
Pension Allowance
In addition, the Company grants the members of the Management Board monthly cash payments for
pension purposes in form of a pension allowance. These pension benefits amount to approximately
18 % of the members’ annual fixed salaries. For reasons of transparency and risk management, the
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alstria Annual Report 2021
Target remuneration20202020in T€in %in T€in T€in %in T€Annual base salary5003744040036360Fringe benefits 1)2822733328Pension allowance8868873773Short-Term Incentive Plan2501823120018189STI 2020--231--189STI 2021250--200--Long-Term Incentive5003744040036360LTI 2020-2024--440--360LTI 2021-2025500--400--Total target remuneration1,3661001,2261,1061001,010Olivier Elamine (CEO)2021Alexander Dexne (CFO)20211) Benefits for company cars and insurances.
Combined Management Report
Company has chosen a defined model for contribution to the members’ private pension plans. Thus,
there are no unforeseen future liabilities for alstria for pension claims.
2.2.3. Variable Remuneration
Short-Term Incentive Plan (STI)
As a short-term performance-based remuneration component, the STI is linked to the development
of certain quantitative performance targets. It is designed as a target bonus system. A possible STI
payout amount is calculated as the overall target achievement times the individual target amount as
indicated in the respective service contract; it is capped at 150 % of the individual target amount
(cap) and is paid out in cash. Overall target achievement is determined based on the weighted target
achievement of the performance targets. The performance targets support alstria’s strategy. In
addition to the performance targets, an individual multiplier ranging between 0.8 to 1.2 is applied to
determine the final payout.
The STI functions as follows:
FFO per share
The first STI performance target is the Funds From Operations (FFO) per share which contributes a
weighting of 80 % to the overall achievement of the STI. Funds From Operations are a key metric of
alstria’s strategy since they define the cash flow from operations. FFO per share is a non-GAAP metric
which is frequently used for real estate companies in lieu of earnings per share. alstria annually
publishes its FFO and FFO per share as well as a detailed reconciliation with its IFRS accounts.
The impact that acquisitions or disposals and changes to alstria’s share capital have on the FFO per
share for a financial year, will be disregarded by the Supervisory Board to guarantee a fair and well-
balanced incentive.
The payout amount of the STI depends on the degree of target achievement for the FFO per share.
The ratio of the FFO per share actually achieved during the financial year is measured against the
budgeted FFO per share. Target achievement for the FFO per share target can range between 0 % and
150 %. For a payout to occur, at least 70 % of the performance target value must be achieved
(threshold). If the actually achieved FFO per share is equal to the budgeted FFO per share the target
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Combined Management Report
achievement will be 100 %. A maximum of 130 % of the performance target value can be achieved
(cap) and results in a target achievement of 150 %.
The values of FFO per share set for the financial year 2021 as well as the actually achieved value and
the resulting target achievement are shown in the following table:
ESG targets
As second STI performance target, ESG targets with a total weighting of 20% are used.
For the year 2021, carbon emissions, resource management and compliance have been selected as
ESG criteria.
▪ Carbon emissions (50 % weighting):
▪
alstria remains at least on the path to achieve the science-based targets (assuming a linear
decrease of emissions between 2018 and 2030). This target cannot be exceeded and is thus
capped at 100 % target achievement. If alstria is not on the path, the target achievement is
zero.
▪ Resource Management (50 % weighting):
▪
Successful renewal of the ISO 50001 certification for the energy management system. This
target cannot be exceeded and is thus capped at 100 % target achievement. If alstria does not
successfully renew the ISO 50001 certification, the payout is zero.
▪ Compliance is used as a knock-out criterion:
▪
In case of incidents of corruption or non-compliance, i.e. a fine/penalty or other payment
(higher than EUR 5,000) for a major breach of corporate compliance regulations, the target
achievement for the entire ESG component is zero.
The target and actually achieved values of the selected ESG targets set for the 2021 financial year
and the resulting target achievement are shown in the following table:
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alstria Annual Report 2021
STI 2021FFO per share 1)Threshold0.45 €Target value0.64 €Maximum0.83 €Actual value 2)0.67 €Target achievement 2)108%1) Before minorities. 2) Preliminary numbers at the time of the preparation of this report.
Combined Management Report
The performance target “Carbon emissions” is measured as shown in the following table:
Overall target achievement for the STI is determined by calculating the weighted target achievements
of the two performance targets (FFO per share and ESG targets). The preliminary payout value
achieved is multiplied with an individual multiplier ranging between 0.8 and 1.2. This enables the
Supervisory Board to take into account the personal performance of the individual Management Board
member in addition to the achievement of financial and ESG performance targets.
The Supervisory Board set the individual modifier for the financial year 2021 on 1.0 for both Olivier
Elamine and Alexander Dexne. Thus, the Supervisory Board takes into account the excellent
operational performance in financial year 2021 in difficult market conditions.
The target achievement of the individual performance criteria as well as the resulting overall target
achievement after application of the individual modifier is shown in total below:
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STI 2021TargetCarbonemissionsRessource management ComplianceTarget valueContinue science based targets path of linear decrease of carbon emissions between 2018 and 2030Renewal ISO 50001 certification for alstria's energy management systemZero incidencesof corruption or major breaches of corporate compliance regulationsActual valueFulfilled FulfilledFulfilledTarget achievement100%100%100%ESGCarbon emissionsTargetLinear reduction of direct carbon emissions (Scope 1 GHG-protocol) by 30% between 2018 and 2030 for the company in thousand tCO2eLinear reduction of carbon portfolio emissions (Scope 3 "leased spaces" GHG- protocol) by 30% between 2018 and 2030 in thousand tCO2eUse of renewable energies in alstrias offices and common areas in leased spaces in %Starting point 2018 17.364.7100Target value 203012.145.3100*)Actual value13.832.6100Target achievement100%100%100%*) Target value 2021.Target achievementFFO per shareTarget achievementESGMultiplierTotal target achievementOlivier Elamine108%100%1.0106%Alexander Dexne108%100%1.0106%STI Target achievement 2021
Combined Management Report
Long-Term Incentive 2021-2025
The Long-Term Incentive (LTI) consists of so-called virtual stock awards, which are converted into
alstria shares after a four-year performance period. In each financial year, the members of the
Management Board are granted a long-term variable remuneration element with a target amount
determined in the service contract. The number of stock awards to be granted is based on the target
amount divided by the arithmetic mean of the alstria share price during the 60 trading days prior to
the grant date. The number of stock awards granted is then adjusted depending on the performance
of alstria’s share during the performance period both in absolute and relative terms compared to a
peer group. Payout of the Long-Term Incentive is capped at 250 % of the target amount.
Absolute TSR
The absolute TSR has a weighting of 25 %. Using the absolute TSR as a performance target aligns the
interests of the members of the Management Board with those of the shareholders. The absolute TSR
is generally derived from the weighted average cost of capital (WACC). The target values set by the
Supervisory Board for the financial year 2021 are shown in the figure below:
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alstria Annual Report 2021
Combined Management Report
Relative TSR
The relative TSR has a weighting of 75 %. By using relative TSR, an outperformance of relevant
competitors is incentivized, and interests of the shareholders are taken into account. The relative
TSR measures the return for shareholders consisting of share price development (including reinvested
dividends) of alstria compared to a selected peer group over the entire four-year performance period.
alstria compares its performance to the performance of relevant competitors, the FTSE EPRA/NAREIT
Developed Europe Index. As for the absolute TSR of alstria, 60 trading day averages are used for the
TSR of FTSE EPRA/NAREIT Developed Europe Index as well. The resulting absolute TSR of the FTSE
EPRA/NAREIT Developed Europe Index is subtracted from the absolute TSR of alstria to calculate the
outperformance. The target values set by the Supervisory Board for the financial year 2021 are shown
in the figure below:
The target amounts granted to the Management Board members for the financial year 2021, the grant
value at the start of the LTI tranche 2021-2025 and the resulting number of stock awards granted are
shown in the table below. Target achievement for the LTI tranche 2021-2025 will be reported in the
remuneration report for the corresponding financial year once the performance period is over.
alstria Annual Report 2021
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Combined Management Report
Long-Term Incentive 2017-2021
The previous tranches of the LTI up to and including the LTI tranche 2020-2024 included an individual
multiplier with a range of 0.7-1.3 in addition to the financial performance criteria, absolute and
relative TSR. In the course of the redesign of the 2021 remuneration system, this individual multiplier
was removed for all future tranches and retroactively for all tranches still in progress (LTI 2017-2021,
LTI 2018-2022, LTI 2019-2023, LTI 2020-2024) at the effective date of the new system.
The LTI tranche 2017-2021 was paid out in financial year 2021 and is reported as part of the
remuneration awarded and due to the Management Board members. To ensure transparent
comprehensibility of the payout amounts, the following table shows the target achievement of the
absolute and relative TSR of the LTI tranche 2017-2021. Outperformance in the LTI tranche 2017-2021
is calculated by dividing the absolute TSR of alstria by the absolute TSR of the FTSE EPRA/NAREIT
Index Europe Ex UK. With the redesign of the 2021 remuneration system, starting with the LTI tranche
2021-2025 outperformance is calculated by subtracting the TSR of the FTSE EPRA/NAREIT Developed
Europe from the absolute TSR of alstria.
The following table also summarizes the overall target achievement of the 2017-2021 LTI tranche for
each Management Board member individually.
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TargetamountGrantvalueNumber of stock awards grantedOlivier Elamine500,000 €14.2335,137Alexander Dexne400,000 €14.2328,110LTI Tranche 2021Grantalstria officeREIT-AGFTSE EPRA/NAREIT Europe Ex UKAbsolute TSR p.a.9.11%-Target achievement absolute TSRDevelopment 2017-202141.75%21.28%OutperformanceTarget achievement relative TSRLTI Tranche 2017-2021150%96.23%150%Target achievementabsolute TSR(weighting: 50%)Target achievementrelative TSR(weighting: 50%)Total target achievementOlivier Elamine150%150%150%Alexander Dexne150%150%150%Target achievementLTI Tranche 2017-2021
Combined Management Report
2.2.4. Share Ownership Guidelines
Members of the Management Board have undertaken to build a stock portfolio equivalent to three
years' fixed annual salaries over a period of five years starting in the 2018 financial year, which they
will hold until they leave office. As an interim target, Management Board members agreed to have
invested 2/3 of their full obligation within three years. The Share Ownership Guidelines (SOG) are
binding for the members of the Management Board as long as they are being granted stock awards
according to the Company’s Long-Term Incentive with a target value at least equal to their fixed
remuneration on an annual basis. The Share Ownership Guidelines aim, in particular, to align the
interests of the Board members with those of the shareholders and thus promote sustainable
entrepreneurial action.
At the end of the reporting period, all Management Board members had fulfilled their obligation to
purchase shares. To support the voluntary public takeover offer by Brookfield, the members of the
Management Board have tendered all shares which they held in excess of the currently required SOG
interim target. The SOG requirement as well as the status quo as of December 31, 2021 (post tendering
shares into the Takeover Offer) are shown in the following table:
2.2.5. Malus / Clawback
All variable remuneration components of the Management Board members are only paid out after the
end of the regular performance period. In the event that a Management Board member deliberately
commits a material breach of
▪
a material duty of care within the meaning of section 93 German Stock Corporation Act (AktG)
or
▪
a material duty under the service contract,
the Supervisory Board may at its reasonable discretion (section 315 of the German Civil Code
(Bürgerliches Gesetzbuch, ‟BGB”)) reduce the unpaid variable remuneration in the performance
period of which the breach occurred in part or in full (‟Malus”) or reclaim parts or all of the gross
amount of any variable remuneration already paid out (‟Clawback”).
Notwithstanding the above, Management Board members must repay any variable remuneration
already paid out if and to the extent that
▪
it turns out after the payment that the audited and approved consolidated financial statement
on which the calculation of the payment amount was based was incorrect and must therefore
alstria Annual Report 2021
71
Share Ownership GuidlinesNumber of alstria shares held before Takeover OfferNumber of alstria shares tendered *)Status quo in % ofannual basesalaryin T€in sharesin sharesin sharesin sharesOlivier Elamine1,500 119,510 139,540 69,113 70,427 Alexander Dexne1,200 95,686 85,453 27,800 57,653 *) in light of the voluntary public takeover offer by Brookfield, both Management Board members have tendered their individual amount of shares except for the portion which they are required to hold based on the SOG requirement.300Requirement
Combined Management Report
be publicly restated according to legal requirements and the relevant accounting standards,
and
▪ based on the restated, audited consolidated financial statement and the relevant
remuneration system, a lower or no payment amount would have been owed from the variable
remuneration.
In the financial year 2021 no Malus or Clawback regulations were applied.
2.2.6. Remuneration Related Legal Acts
Explanations of the post-contractual non-competition obligations agreed on with the members of the
Management Board, the provisions in the event of premature contract termination, and the
information required under section 162 (2) AktG on possible third-party benefits are provided below.
Third-Party Benefits
The Members of the Management Board were not awarded any third-party benefits in the financial
year 2021 for their activities as a Management Board member of alstria.
Contract Termination Provisions
In the event of resignation from office by the member of the Management Board or a withdrawal of
the appointment as member of the Management Board pursuant to section 84 paragraph 3 AktG, the
service contract ends after the expiration of the notice period of section 622 BGB. The right of alstria
and the Management Board member to terminate the service contract for good cause (‟wichtiger
Grund”) pursuant to section 626 paragraph 1 BGB remains unaffected.
In case of an early termination of the service contract by mutual agreement, the Management Board
member will receive the remuneration for the rest of the term of the service contract, but no more
than the value of two years’ full remuneration in any case calculated on the basis of the total
remuneration for the foregoing full financial year (severance payment). The same shall apply in case
of a withdrawal of the appointment according to section 84 paragraph 3 AktG, (but not in case of
resignation by the Management Board member), if the withdrawal of appointment occurred for
reasons the Management Board member is not responsible for.
Any withdrawal of the appointment occurring within a period of up to twelve months following a
change of control, shall be considered as a withdrawal the Management Board member is not
responsible for, unless the withdrawal is for good cause (‟wichtiger Grund” pursuant to section 626
paragraph 1 BGB).
In case within a period of up to twelve months after a change of control the position as member of
the Management Board is materially negatively impacted (e.g., by a material reduction of his
responsibilities), the Management Board member has the right to resign from office and to terminate
the service contract with a notice period of three months to the end of a month. In this case, the
Management Board member will receive the severance payment.
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Combined Management Report
A change of control occurs if (i) a third party acquires at least 30 % of the voting rights in alstria
pursuant to sections 29, 30 German Takeover Law (WpÜG) or (ii) alstria as a dependent entity,
concludes a corporate agreement within the meaning of section 291 et seq. AktG or (iii) alstria is
merged with a non-affiliated entity pursuant to section 2 et seq. of the German Reorganization Act
(UmwG), unless the enterprise value of the other entity is, at the time the merger decision is made
by the transferring company, less than 20 % of alstria’s enterprise value.
In the event of a contract termination, the STI shall be forfeited in case the contract is terminated
by alstria for good cause or the Management Board member has terminated the service relationship
without notice and without good cause (“wichtiger Grund”). In any other cases, the STI shall remain
unaffected.
For the LTI, there is no payout respectively transfer of shares before the end of the performance
period, except for the case alstria is delisted.
If a Board member retires from service with alstria for reasons of reaching the retirement age,
invalidity, occupational disability, early retirement, or death the number of granted stock awards
shall remain unaffected. The stock awards will still be transferred at the end of the performance
period. The same applies in the case of termination due to mutual agreement.
If the service contract with alstria is terminated by alstria for good cause (“wichtiger Grund”) subject
to section 626 BGB, all granted stock awards forfeit. The same applies in the event that the
Management Board member has resigned from office without good cause.
In the financial year 2021 no contract termination provisions or change-of-control provisions were
applied.
Post-Contractual Non-Compete Obligation
Post-contractual non-compete-obligations are agreed on with the Management Board members. For
the duration of six months after the termination of the service contract (for whatever reason), the
Management Board member may not exercise any professional activity for an enterprise which is in
direct or indirect competition to alstria. The Management Board member also undertakes, for the
duration of six months, not to set up or to acquire or to participate in such a company directly or
indirectly. alstria may waive the post-contractual non-compete-obligation at any time, and with the
expiration of a period of notice of six months.
For the duration of the post-contractual non-compete-obligation, alstria shall pay to the Management
Board member a remuneration amounting to 100 % of his last base salary. Payment of this
remuneration is due at the end of each month. Remuneration from any professional activity which is
not in competition to alstria shall be set off against accordingly. Furthermore, any severance payment
to a Management Board member will be offset against any payments according to the post-contractual
non-compete-obligation as far as the severance payment is due for the duration of the post-
contractual non-compete-obligation.
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Combined Management Report
3.
INDIVIDUALIZED DISCLOSURE OF THE REMUNERATION OF THE MANAGEMENT BOARD
The following table shows on an individual basis the remuneration awarded and due in accordance
with section 162 AktG for the members of the Management Board. Furthermore, the compliance with
the maximum remuneration according to section 87a AktG is reported.
3.1.
Remuneration Awarded and Due
As part of the individualized disclosure of the remuneration awarded and due to the members of the
Management Board for the financial year 2021, the following specific remuneration elements are
reported:
▪ The base salary as well as the fringe benefits and the pension allowance that were paid in the
financial year 2021
▪ The STI 2021 assessing performance in 2021 that will be paid out in the financial year 2022
▪ The LTI tranche 2017-2021, as the performance period ended in 2021 and it was paid out in
financial year 2021
In order to allow for a transparent disclosure, the respective remuneration amounts for the financial
year 2020 are included as additional information.
3.2. Maximum Remuneration according to section 87a AktG
Pursuant to section 87a paragraph 1 sentence 2 number 1 AktG, the Supervisory Board is required to
set a maximum remuneration for all remuneration elements, comprising base salary, fringe benefits,
pension allowance and short-term variable as well as long-term variable remuneration.
For the CEO, the maximum remuneration that can be paid in relation to any given year is
EUR 2,600,000. For the CFO and potential future Ordinary Management Board members, maximum
remuneration that can be paid in relation to any given year is set at EUR 2,100,000. Extraordinary
performance is required to actually achieve these maximum amounts.
The total of all payments resulting from commitments for the 2021 financial year can only be
determined after the expiry of the four-year performance period of the Long-Term Incentive.
However, in compliance with the maximum remuneration pursuant to section 87a paragraph 1
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alstria Annual Report 2021
Remuneration awarded and due20202020in T€in %in T€in T€in %in T€Annual base salary5002844040027360Fringe benefits 1)2822733228Pension allowance8858873573Short-Term variable remuneration2661523121314189STI 2020--231--189STI 2021 2)266--213--Long-Term variable remuneration936511,357765521,110STI 2017 (Deferral) 3)--83--68LTI 2016-2020--1,274--1,042LTI 2017-2021936--765--Total remuneration1,8181002,1431,4841001,7601) Benefits for company car and insurances.2) Preliminary numbers at the time of the preparation of this report.3) Payout of 25% of the STI after 3 years.Alexander Dexne (CFO)20212021Olivier Elamine (CEO)
Combined Management Report
sentence 2 number 1 AktG it can already be ensured today, that even in the event of a payout of the
Long-Term Incentive amounting to 250 % of the target amount (cap) the total of all remuneration
components would be below the maximum remuneration. A detailed report on compliance with the
maximum remuneration of the remuneration granted for the financial year 2021 will be provided in
the remuneration report for the corresponding year after the end of the performance period of the
LTI tranche 2021-2025.
4. REMUNERATION OF THE SUPERVISORY BOARD MEMBERS
The remuneration system of the Supervisory Board as well as the individual remuneration awarded
and due to the members of the Supervisory Board in the financial year 2021 are shown below.
4.1.
Remuneration system for the Supervisory Board Members
4.1.1. Remuneration governance
At the end of the fiscal year, the members of the Supervisory Board receive remuneration for each
full fiscal year, which is determined by resolution of the annual general meeting. The remuneration
for the members of the Supervisory Board was last confirmed by the annual general meeting of
shareholders in 2021 by 99.7 % of votes cast. The determination shall apply until the annual general
meeting decides otherwise. At least every four years or in case of a change, the remuneration system
of the members of the Supervisory Board is resubmitted to the annual general meeting of shareholders
for resolution. In the event that the annual general meeting of shareholders does not approve a
remuneration system put to the vote, a revised remuneration system shall be presented at the latest
at the following the annual general meeting of shareholders.
4.1.2. Remuneration system
The remuneration of the Supervisory Board members is not performance-related. It consists of a fixed
remuneration and a likewise fixed remuneration for committee work. The company reimburses the
expenses of the members of the Supervisory Board. The company has, at its own expense, taken out
an appropriate liability insurance (D&O insurance) for the benefit of the members of the Supervisory
Board to cover the risks arising from the performance of their duties (Art. 13 par. 2 of the Articles of
Association).
Members of the Supervisory Board each receive an annual fixed remuneration of EUR 50,000. The
chair of the Supervisory Board receives an additional annual amount of EUR 100,000 (factor 3); the
deputy chair receives an additional amount of EUR 25,000 (factor 1.5).
Membership in the audit committee entitles a member to an additional remuneration of EUR 10,000,
while the chair of the audit committee receives EUR 20,000 per year (factor 2). Membership in the
nomination and remuneration committee as well as the finance and investment committee each
entitle a member to an additional annual remuneration of EUR 7,500. The chairs of these committees
are compensated with additional EUR 15,000 per year (factor 2). Membership in the ESG committee
and in temporary committees does not entitle a member to additional remuneration.
alstria Annual Report 2021
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Combined Management Report
Members who belong to the Supervisory Board respectively one of its committees for only part of a
year receive a pro rata temporis remuneration. Variable remuneration elements do not exist and no
attendance fees are paid.
4.1.3. Self-Commitment for Share Purchases
The members of the Supervisory Board have agreed upon and entered into a commitment to acquire
shares of the Company for an amount corresponding to the annual fixed remuneration for their activity
as members, chair, or deputy chair of the Supervisory Board (without committees) within a build-up
phase and to hold them for the duration of their membership in the Supervisory Board of the Company
(Self-Commitment). By means of this Self-Commitment the members of the Supervisory Board intend
to adhere to the guiding principles of the Share Ownership Guidelines introduced for the members of
the Management Board and to declare their sustained commitment to the Company.
In December 2021, all Supervisory Board members with a tenure of three years or more had fulfilled
their Self-Commitment. The German authorities approved the voluntary public takeover offer
pursuant to the German Takeover Act (WpÜG) for up to 100 % of the shares in the Company as
announced by Brookfield (Takeover Offer) in December 2021. In this context, the Supervisory Board
and the Management Board of the Company decided to support the Takeover Offer and, on December
23rd, 2021, published a corresponding reasoned statement with a recommendation to the Company’s
shareholders to accept the Takeover Offer. In order to align with their own recommendation, the
Supervisory Board decided to suspend the Self-Commitment and tendered all of their shares.
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Combined Management Report
4.2.
Individualized Disclosure of the Remuneration of the Supervisory Board
The remuneration awarded and due to the current and former members of the Supervisory Board in
the 2021 financial year is presented in the following. A distinction is made between fixed
remuneration and committee remuneration.
In order to allow for more comprehensibility of the committee compensation above, the following
table gives an overview over the committee work of the Supervisory Board members for the year
2021.
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77
Supervisory Board RemunerationTotalremunerationTotalremunerationin T€in %in T€in %in T€in T€in %in T€in %in T€Dr Johannes Conradi (Chair)150.09115.09165.0150.09115.09165.0Richard Mully (Deputy Chair)75.08315.01790.075.08315.01790.0Dr Bernhard Düttmann 1)17.3746.02623.350.07417.52667.5Stefanie Frensch 1)17.3775.22322.550.07715.02365.0Benoît Hérault50.07417.52667.550.07417.52667.5Dr Frank Pörschke 2)32.97411.52644.4-----Elisabeth Stheeman 2)32.9779.92342.8-----Marianne Voigt50.07120.02970.050.07120.02970.01) Appointed until the annual general meeting of shareholders in the 2021 financial year.2) Appointment at the annual general meeting of shareholders in the 2021 financial year.20212020FixedremunerationCommittee remunerationFixed remunerationCommittee remuneration
Combined Management Report
5. COMPARATIVE PRESENTATION OF REMUNERATION AND COMPANY PERFORMANCE
In addition to the individualized disclosure of the remuneration of the Management Board and
Supervisory Board, section 162 (1) sentence 2 of the German Stock Corporation Act (AktG) also
requires a comparative presentation thereof with the remuneration of the workforce as well as the
Company’s performance. The following table therefore compares the remuneration awarded and due
to members of the Management and Supervisory Board with the average employee remuneration and
the key financial figures revenues and FFO per share, which were selected on the basis of their central
management function for the Company.
For the average employee remuneration, all employees of alstria are considered, with the exception
of trainees, interns, working students and marginally employed part-time employees. In addition,
employees who were not employed for the entire year under review or who were absent for more
than two months during the year under review are also not included. The remuneration stated
comprises the base salary and the bonus (each extrapolated to full-time equivalents) for the year in
question, the long-term variable remuneration amount paid out during the year in question as well as
contributions to the company pension scheme. Furthermore, fringe benefits such as payments for a
job ticket or allowances for a company car are also taken into account, as is the “Corona-bonus” for
2020.
Looking at the comparative presentation, it can be noted that the positive development of the
company is also reflected in the overall target achievement for the long-term variable remuneration
of the Management Board. For the LTI tranche 2017-2021, the total target achievement lies at 150 %,
the cap. The decrease in compensation is due in particular to the lower payout of the LTI tranche
2017-2021 compared to the LTI tranche 2016-2019, as the share price at the beginning of 2020, before
the start of the Covid 19 pandemic, was higher than at the beginning of 2021. In addition, with the
implementation of the changes to the Management Board remuneration system on January 1, 2021,
the individual multiplier for the LTI tranche 2017-2021 was also abolished. In terms of employee
remuneration, an adjustment effect is becoming apparent after many years of moderate salary
development.
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Combined Management Report
alstria Annual Report 2021
79
Comparative presentation20212020Development 2021/2020in T€in T€in %Management BoardOlivier Elamine1,8182,143-15Alexander Dexne1,4841,760-16Supervisory BoardDr. Johannes Conradi1651650Richard Mully90900Dr. Bernhard Düttmann 1)2368-65Stefanie Frensch 1)2365-65Benoît Hérault68680Dr. Frank Pörschke 2)44--Elisabeth Stheeman 2)43--Marianne Voigt70700EmployeesAverage96898Company performanceRevenues183,670177,0634FFO per share (in EUR) 3)0.670.6281) Appointed until the annual general meeting of shareholders in the 2021 financial year.2) Appointment at the annual general meeting of shareholders in the 2021 financial year.3) Before minorities.
Combined Management Report
IX. ADDITIONAL GROUP DISCLOSURE
1. CORPORATE GOVERNANCE GROUP DECLARATION PURSUANT TO SECTIONS 289F AND
315D HGB (“HANDELSGESETZBUCH”: GERMAN COMMERCIAL CODE)
The complete corporate governance declaration
is published on alstria AG’s website
(www.alstria.com). Thus, it is made permanently accessible to the public.
2. EMPLOYEES
As of December 31, 2021, alstria had 171 employees (compared to 167 on December 31, 2020). The
annual average number of employees was 171 (compared to 166 in the previous year). These figures
exclude Management Board members.
3. DIVIDEND
The Management Board, in agreement with the Supervisory Board, intends to propose to the Annual
General Meeting to use the balance sheet profit of alstria office REIT-AG for the 2021 financial year
to pay a dividend of EUR 0.04 per share. In the event that there are significant changes in the
company's available liquidity in the further course of the 2022 financial year, the Management Board
and Supervisory Board reserve the right to submit a different dividend proposal to the Annual General
Meeting. The payment of a dividend depends on the approval of the General Meeting.
Hamburg, February 24, 2022
alstria office REIT-AG
The Management Board
Olivier Elamine
CEO
Alexander Dexne
CFO
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alstria Annual Report 2021
Consolidated Financial Statements
DETAIL INDEX CONSOLIDATED FINANCIAL STATEMENTS
I.
II.
III.
IV.
V.
VI.
CONSOLIDATED INCOME STATEMENT ............................................................... 82
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME ....................................... 83
CONSOLIDATED STATEMENT OF FINANCIAL POSITION ............................................ 84
CONSOLIDATED STATEMENT OF CASH FLOWS ..................................................... 86
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY............................................. 88
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ......................................... 89
1. BASIS OF PRESENTATION ................................................................................ 89
2. BASIS OF PREPARATION ................................................................................. 90
3. SEASONAL OR ECONOMIC EFFECTS ON BUSINESS .................................................. 114
4. SEGMENT REPORTING ................................................................................. 115
5. NOTES TO THE CONSOLIDATED INCOME STATEMENT ............................................. 116
6. NOTES TO THE CONSOLIDATED STATEMENT OF FINANCIAL POSITION – ASSETS ............... 121
7. NOTES TO THE CONSOLIDATED STATEMENT OF FINANCIAL POSITION – EQUITY AND
LIABILITIES .............................................................................................. 131
8. OTHER NOTES .......................................................................................... 138
9. RELATED PARTY RELATIONSHIPS ..................................................................... 140
10. EARNINGS PER SHARE ................................................................................. 140
11. DIVIDENDS PAID AND DIVIDENDS PROPOSED ........................................................ 141
12. EMPLOYEES ............................................................................................. 141
13. SHARE-BASED REMUNERATION ....................................................................... 142
14. FINANCIAL RISK MANAGEMENT ....................................................................... 148
15. SIGNIFICANT EVENTS AFTER THE END OF THE REPORTING PERIOD ............................. 156
16. UTILIZATION OF EXEMPTING PROVISIONS ........................................................... 156
17. DISCLOSURES PURSUANT TO THE WERTPAPIERHANDELSGESETZ [GERMAN SECURITIES
TRADING ACT] AND EUROPEAN MARKET ABUSE REGULATION [MAR] ............................ 156
18. DECLARATION OF COMPLIANCE PURSUANT TO AKTG SECTION 161 ............................. 161
19. AUDITORS’ FEES ........................................................................................ 162
20. MANAGEMENT BOARD ................................................................................. 162
21. SUPERVISORY BOARD .................................................................................. 163
alstria Annual Report 2021
81
Consolidated Financial Statements
B. CONSOLIDATED FINANCIAL STATEMENTS
I. CONSOLIDATED INCOME STATEMENT
For the period from January 1 to December 31, 2021
EUR k
Revenues
Revenues from service charge income
Real estate operating expenses
Net rental income
Administrative expenses
Personnel expenses
Other operating income
Other operating expenses
Net result from fair value adjustments to
investment property
Net result from the disposal of investment
property
Net operating result
Net financial result
Share of the result of companies accounted
for at equity
Pretax result
Income tax expenses
Consolidated profit
Attributable to:
Notes
5.1
5.1
5.2
5.3
5.4
5.5
5.6
6.1
5.7
5.8
2.2.3
5.9
2021
183,670
38,908
-59,307
163,271
-8,325
-19,769
5,930
-14,614
2020
177,063
38,367
-60,607
154,823
-8,460
-18,568
4,629
-2,143
94,827
61,522
15,134
236,454
8,340
200,143
-26,019
-31,832
-108
210,327
-649
209,678
-9
168,302
187
168,489
Shareholders of alstria office REIT-AG
209,678
168,489
Earnings per share in EUR
Basic earnings per share
Diluted earnings per share
10
10
1.18
1.18
0,95
0,95
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alstria Annual Report 2021
Consolidated Financial Statements
II. CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the period from January 1 to December 31, 2021
EUR k
Notes
Consolidated profit for the period
Other comprehensive income for the period
Total comprehensive income for the period
Total comprehensive income attributable to
Shareholders of alstria office REIT-AG
2021
209,678
0
2020
168,489
0
209,678
168,489
209,678
168,489
alstria Annual Report 2021
83
Consolidated Financial Statements
III. CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As of December 31, 2021
ASSETS
EUR k
Noncurrent assets
Investment property
Equity-accounted investments
Property, plant, and equipment
Intangible assets
Financial assets
Total noncurrent assets
Current assets
Trade receivables
Income tax receivables
Other receivables
Cash and cash equivalents
Assets held for sale
Total current assets
Notes
Dec. 31, 2021
Dec. 31, 2020
6.1
6.2
6.3
6.3
6.4
6.6
6.6
6.7
6.8
4,775,801
4,556,181
923
22,936
274
39,185
1,021
18,360
55
39,108
4,839,119
4,614,725
3,922
1,289
4,258
313,684
72,100
395,253
4,572
1,230
8,762
460,960
0
475,524
Total assets
5,234,372
5,090,249
84
alstria Annual Report 2021
Consolidated Financial Statements
EUR k
Equity
Share capital
Capital surplus
Retained earnings
Revaluation surplus
Total equity
Noncurrent liabilities
Limited partnership capital noncontrolling
interests
Long-term loans and bonds, net of current portion
Other provisions
Other liabilities
Total noncurrent liabilities
Current liabilities
Limited partnership capital noncontrolling
interests
Short-term loans
Trade payables
Profit participation rights
Income tax liabilities
Other provisions
Other current liabilities
Total current liabilities
Total liabilities
Notes
7.1
7.2
7.3
7.4
7.5
7.2
7.3
7.5
5.4; 13.2
7.6
7.4
7.5
EQUITY AND
LIABILITIES
Dec. 31, 2021
Dec. 31, 2020
178,033
1,261,630
1,923,935
3,485
177,793
1,356,907
1,714,257
3,485
3,367,083
3,252,442
69,798
1,697,605
2,585
14,369
68,275
1,685,349
0
12,628
1,784,357
1,766,252
15
19,594
3,487
541
4,525
2,439
52,331
82,932
15
10,325
3,943
514
4,780
2,030
49,948
71,555
1,867,289
1,837,807
Total equity and liabilities
5,234,372
5,090,249
alstria Annual Report 2021
85
Consolidated Financial Statements
IV. CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ending December 31, 2021
EUR k
Notes
2021
2020
1. Cash flows from operating activities
Consolidated profit or loss for the period
Interest income
Interest expense
Result from income taxes
Unrealized valuation movements
Other noncash income (−)/expenses (+)
Gain (−)/loss (+) on disposal of investment properties
Depreciation and impairment of fixed assets (+)
Increase (−)/decrease (+) in trade receivables and other
assets not attributed to investing or financing activities
Increase (+)/decrease (−) in trade payables and other
liabilities not attributed to investing or financing activities
Cash generated from operations
Interest received
Interest paid
Income taxes paid
Net cash generated from operating activities
2. Cash flows from investing activities
Acquisition of investment properties
Proceeds from the sale of investment properties
Payment of transaction cost in relation to the sale
of investment properties
Acquisition of other property, plant, and equipment
Proceeds from the equity release of interests
in joint ventures
Payments for investment in financial assets
Proceeds from disposal of financial assets
209,678
168,489
-1,323
27,343
649
-91,239
5,957
-15,134
942
987
-533
32,365
-187
-61,769
7,181
-8,340
1,110
-2,342
-688
-182
137,172
135,792
1,323
-24,705
2,644
649
-32,383
-827
116,434
103,231
-206,996
24,750
-153,162
126,510
-1,006
-3,093
0
-87
0
-1,482
-238
46
-50,000
250,000
5.8
5.8
5.9
8.3
5.7
6.3
6.4
6.4
Net cash used in/generated from investing activities
-186,432
171,674
86
alstria Annual Report 2021
Consolidated Financial Statements
EUR k
Notes
2021
2020
3. Cash flows from financing activities
Cash received from cash equity contributions
Payments for the acquisition of shares in limited partnerships of
minority interests
Distributions on limited partnerships of minority shareholders
Proceeds from the issue of bonds and borrowings
Proceeds from the issuing of corporate bonds
Payments of transaction costs for taking out loans
Proceeds from the issue of convertible participation rights
Payments for the redemption portion of leasing obligations
Payments of dividends
Payments due to the redemption of bonds and borrowings
7.1
7.1
7.3
11
240
400
0
-1,957
21,210
0
0
287
-505
-94,230
-2,323
-9
-1,949
0
350,000
-2,204
0
-477
-94,125
-363,800
Net cash used in financing activities
-77,278
-112,164
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
-147,276
460,960
162,741
298,219
thereof restricted: EUR 0 k; previous year: EUR 0 k
6.7
313,684
460,960
alstria Annual Report 2021
87
Consolidated Financial Statements
V. CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the period from January 1 to December 31, 2021
EUR k
Notes
Share
capital
Capital
surplus
Retained
earnings
Revaluation
surplus
Total
equity
As of Dec. 31, 2020
177,793
1,356,907
1,714,257
3,485
3,252,442
Changes in the
financial year 2021
Consolidated profit
Other comprehensive
income
Total comprehensive
income
Payments of dividends
Share-based
remuneration
Change to the Stock
Awards Compensation
Conditions
Conversion of
convertible
participation rights
As of Dec. 31, 2021
11
5.4;
13.2
7.1
13.2
7.1
0
0
0
209,678
0
209,678
-94,230
3,210
-4,497
0
0
0
0
0
0
0
209,678
0
209,678
-94,230
3,210
-4,497
480
240
240
178,033
1,261,630
1,923,935
3,485
3,367,083
For the period from January 1 to December 31, 2020
EUR k
Notes
Share
capital
Capital
surplus
Retained
earnings
Revaluation
surplus
Total
equity
As of Dec. 31, 2019
177,593
1,448,709
1,545,768
3,485
3,175,555
Changes in the
financial year 2020
Consolidated profit
Other comprehensive
income
Total comprehensive
income
Payments of dividends
Share-based
remuneration
Conversion of
convertible
participation rights
As of Dec. 31, 2020
11
5.4;
13.2
13.2
7.1
0
0
0
168,489
0
168,489
-94,125
2,123
200
200
0
0
0
0
0
0
168,489
0
168,489
-94,125
2,123
400
177,793
1,356,907
1,714,257
3,485
3,252,442
88
alstria Annual Report 2021
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
Consolidated Financial Statements
VI. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
alstria office REIT-AG (the Company) is a listed real estate property corporation under the scope of
the G-REIT Act. The main objectives of the Company and its subsidiaries (the Group or alstria) are the
acquisition, management, operation, and sale of owned real estate property and the holding of
participations in enterprises that acquire, manage, operate, and sell owned property.
Alexandrite Lake Lux Holdings S.à r.l., Luxembourg, Grand Duchy of Luxembourg, (hereinafter
"Alexandrite" or “Bidder”) published its decision on December 13, 2021 to offer the shareholders of
alstria office REIT-AG to acquire their bearer shares in alstria office REIT-AG by way of a voluntary public
takeover bid. By the end of the offer period on February 3, 2022, the total number of alstria shares to
be taken into account for the minimum acceptance threshold was exceeded and amounted to 91.63% of
the share capital. The total number of alstria shares to be considered for the minimum acceptance
threshold was reached for the first time on January 11, 2022. This corresponded to a share of 50.50% of
the share capital. The company was thus to be included in the consolidated financial statements of
Alexandrite's ultimate parent company, Brookfield Asset Management Inc., Toronto, Canada
(hereinafter "Brookfield"), for the first time on January 11, 2022. Brookfield Asset Management Inc.
prepares the consolidated financial statements for the largest and smallest group of companies in the
Brookfield Group. Brookfield's consolidated financial statements are published on the company's website
at www.brookfield.com. As of the balance sheet date, December 31, 2021, Alexandrite held 46.17% of
the shares in the company, so that a significant influence on alstria office REIT-AG can be assumed. As
a result, alstria office REIT-AG is accounted for at equity in Brookfield's consolidated financial
statements as of the reporting date.
alstria prepared its consolidated financial statements in accordance with the International Financial
Reporting Standards (IFRS) as adopted by the European Union and with the additional requirements set
forth in Section 315e para. 1 of the German Commercial Code (HGB). The Management Board authorized
for issue the consolidated financial statements on February 24, 2022.
alstria office REIT-AG’s registered office and address is Steinstrasse 7, 20095 Hamburg, Germany. The
Company is entered in the commercial register at the local court of Hamburg under HRB No. 99204.
alstria prepares and reports its consolidated financial statements in Euro (EUR), the Group’s
functional currency. Due to rounding, the numbers presented may not add up precisely to the totals
provided.
The financial year ends on December 31 of each calendar year. The consolidated financial statements
presented in this report were prepared for the period from January 1 to December 31, 2021.
alstria Annual Report 2021
89
Consolidated Financial Statements
2. BASIS OF PREPARATION
Apart from investment property (land and buildings), properties held for sale and certain financial
instruments that are measured at fair values at the end of each reporting period, as explained in the
accounting policies below, the consolidated financial statements have been prepared based on
historical cost.
The preparation of financial statements in conformity with the IFRSs requires the use of certain
critical accounting estimates and for management to exercise its judgement when applying the
Group’s accounting policies. Areas involving a higher degree of judgement or complexity, or items
wherein assumptions and estimates have a significant impact on the consolidated financial
statements, are disclosed in Note 2.3.
The consolidated income statement is prepared using the total cost method. Single items are
summarized in the consolidated statement of financial position and the income statement. They are
commented on in the Notes to the financial statements.
Assets and liabilities are classified as noncurrent and current, respectively. Current items are defined
as items that are due in less than 1 year and vice versa for noncurrent items.
2.1.
Changes in accounting policies and mandatory disclosures
Effects of new and amended IFRSs
The Company adopted the following new amendments to existing standards for the first time for the
financial year beginning January 1, 2021:
EU
Endorsement
Dec. 15, 2020
Standard/
interpretation
Amendments to
IFRS 4
January 13,
2021
Amendments to
IFRS 9, IAS 39, IFRS
7, and IFRS 16
Content
The effective date of IFRS 17, which will
replace IFRS 4, is now Jan. 1, 2023; the
fixed expiry date for the temporary
exemption in IFRS 4 from applying IFRS 9
has been deferred to Jan. 1, 2023
Interest Rate Benchmark Reform – Phase 2
Applicable for
FY beginning
on/after
Jan. 1, 2021
Effects
None
Jan. 1, 2021
None
The changes to standards and to the framework concept did not have any material effects on the
Group's net assets, financial position, and results of operations.
90
alstria Annual Report 2021
Consolidated Financial Statements
New and amended IFRSs and interpretations to existing standards that are not yet effective and
that the Group has not adopted early
EU
Endorsement
Nov. 19, 2021
Standard/
interpretation
IFRS 17
Not yet
endorsed
Amendments to
IFRS 17
June 28, 2021
Amendments to
IFRS 3
Not yet
endorsed
Not yet
endorsed
Not yet
endorsed
Not yet
endorsed
Not yet
endorsed
Amendments to
IAS 1
Amendments to
IAS 1
Amendments to
IAS 8
Amendments to
IAS 12
Content
New standard “Insurance contracts”
Insurance contracts: Initial Application of
IFRS 17 and IFRS 9 – Comparative
Information
Business Combinations: Update of an
outdated reference in IFRS 3 without
significantly changing its requirements.
Annual Improvement 2018-2020
Presentation of Financial Statements:
Classification of Liabilities as Current or
Noncurrent
Presentation of Financial Statements and
IFRS Practice Statement 2: Disclosure of
Accounting policies
Applicable for
FY beginning
on/after
Jan. 1, 2023
Effects
None
Jan. 1, 2023
None
Jan. 1, 2022
None
Jan. 1, 2023
None
Jan. 1, 2023
None
Jan. 1, 2023
None
Definition of Accounting Estimates
Deferred Tax related to Assets and
Liabilities arising from a Single Transaction
Jan. 1, 2023
Jan. 1, 2023
None
None
No significant impact on financial reporting is expected from the other new standards and
amendments to the existing standards listed above.
The Group did not adopt any new or amended standards or interpretations early in the 2021 financial
year.
2.2.
Basis of consolidation
2.2.1. Subsidiaries
The consolidated financial statements incorporate the financial statements of alstria office REIT-AG
and entities controlled by the Company and its subsidiaries. Control is achieved when the Company
▪ exercises authority over the investee;
▪
▪
is exposed or has rights to variable returns from its involvement with the investee; and
can use its authority to affect the amount of its returns.
The Company reassesses whether it controls an investee if facts and circumstances indicate changes
to one or more of the three elements of control listed above.
Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases
when the Company loses control of the subsidiary. Specifically, the income and expenses of a
subsidiary acquired or disposed of during the year are included in the consolidated statement of
profit or loss and other comprehensive income from the date when the Company gains control until
the date when the Company ceases to control the subsidiary.
alstria Annual Report 2021
91
Consolidated Financial Statements
The profit or loss and each component of the other comprehensive income are attributed to the
Company’s owners and noncontrolling interests. The total comprehensive income of the subsidiaries
is attributed to the Company’s owners and noncontrolling interests, even if this results in the
noncontrolling interests having a deficit balance.
When necessary, adjustments are made to the financial statements of subsidiaries to align their
accounting policies with the Group’s accounting policies.
All intragroup assets and liabilities, equity, income, expenses, and cash flows relating to transactions
between members of the Group are eliminated in full upon consolidation.
Changes in the Group’s ownership interests in existing subsidiaries
Changes in the Group’s ownership interests in subsidiaries that do not result in the Group losing
control over the subsidiaries are accounted for as equity transactions. The carrying amounts of the
Group’s interests and noncontrolling interests are adjusted to reflect the changes in their relative
interests in the subsidiaries. Any difference between the amount by which the noncontrolling
interests are adjusted and the fair value of the consideration paid or received is recognized directly
in equity and attributed to the owners of the Company.
When the Group loses control of a subsidiary, a gain or loss is recognized in profit or loss and is
calculated as the difference between
(i) the aggregate of the fair value of the consideration received and the fair value of any
retained interest, and
(ii) the previous carrying amount of the assets (including any goodwill) and liabilities of the
subsidiary and any noncontrolling interests.
All amounts previously recognized in other comprehensive income in relation to that subsidiary are
accounted for as if the Group had directly disposed of the related assets or liabilities of the subsidiary
(i.e., reclassified to profit or
loss or transferred to another category of equity, as
specified/permitted by applicable IFRSs).
Business combinations
Acquisitions of businesses within the meaning of IFRS 3 are accounted for using the acquisition
method. The consideration transferred in a business combination is measured at fair value, which is
calculated as the sum of the acquisition-date fair values of the assets transferred by the Group,
liabilities incurred by the Group to the former owners of the acquiree, and the equity interests issued
by the Group in exchange for control of the acquiree. Acquisition-related costs are generally
recognized in profit or loss as incurred.
At the acquisition date, the identifiable acquired assets and the assumed liabilities are recognized
at their fair value.
92
alstria Annual Report 2021
Consolidated Financial Statements
Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any
noncontrolling interests in the acquiree, and the fair value of the acquirer’s previously held equity
interest in the acquiree (if any) over the net of the acquisition-date amounts of the identifiable
assets acquired and the liabilities assumed. After reassessment, if the net of the acquisition-date
amounts of the identifiable assets acquired and liabilities assumed exceeds the sum of the
consideration transferred, the amount of any noncontrolling interests in the acquiree and fair value
of the acquirer’s previously held interest in the acquiree fit and the excess is recognized immediately
in profit or loss as a bargain purchase gain.
Noncontrolling interests that are present ownership interests and entitle their holders to a
proportionate share of the entity’s net assets in the event of liquidation may be initially measured
either at fair value or at the noncontrolling interests’ proportionate share of the recognized amounts
of the acquiree’s identifiable net assets and reported under liabilities. The choice of measurement
is made on a transaction-by-transaction basis. Other types of noncontrolling interests are measured
at fair value or, when applicable, on the basis specified in another IFRS.
When a business combination is achieved in stages, the Group’s previously held equity interest in
the acquiree is remeasured to its acquisition-date fair value, and the resulting gain or loss, if any,
is recognized in profit or loss.
Amounts arising from interests in the acquiree prior to the acquisition date that have previously
been recognized in other comprehensive incomes are reclassified as profit or loss, where such
treatment would be appropriate if that interest were disposed of.
Significant companies wherein alstria office REIT-AG is directly or indirectly able to significantly
influence financial and operating decisions (associates), or directly or indirectly share control (joint
ventures), are accounted for using the equity method.
The acquisition of real estate property companies that do not represent a business in the sense of
IFRS 3 is shown as a direct purchase of real estate (asset deal). The acquisition costs of the property
company are assigned to the individually identifiable assets and liabilities on the basis of their fair
values. In this case, there is no goodwill.
2.2.2. Fully consolidated subsidiaries
The Group of consolidated companies, including alstria office REIT-AG, comprised 46 companies in
the financial year (2020: 48). As of the balance sheet date, 44 companies (prior-year balance sheet
date: 45 companies) existed. In addition, one joint venture and one noncontrolling interest have
been accounted for using the equity method.
alstria Annual Report 2021
93
Consolidated Financial Statements
In the consolidated financial statements of alstria office REIT-AG, the following companies are
included (statement according to Section 313 para. 2 and Section 315 (e) HGB):
No. Company
Headquarters
1 alstria office REIT-AG
2 alstria Bamlerstraße GP GmbH
3 alstria Englische Planke GP GmbH
Hamburg
Hamburg
Hamburg
4 alstria Gänsemarkt Drehbahn GP GmbH
Hamburg
5 alstria Halberstädter Straße GP GmbH2)
Hamburg
6 alstria Ludwig-Erhard-Straße GP GmbH2)
Hamburg
7 alstria Mannheim/Wiesbaden GP GmbH
8 alstria office Bamlerstraße GmbH & Co. KG1)
Hamburg
Hamburg
9 alstria office Englische Planke GmbH & Co. KG1)
Hamburg
alstria office Gänsemarkt Drehbahn
GmbH & Co. KG1)
10
Hamburg
11 alstria office Insterburger Straße GmbH & Co. KG1)
Hamburg
alstria office Mannheim/Wiesbaden
GmbH & Co. KG1)
12
13 alstria office Steinstraße 5 GmbH & Co. KG1)
14 alstria Portfolio 1 GP GmbH
15 alstria Portfolio 3 GP GmbH
16 alstria Prime Portfolio 2 GP GmbH
17 alstria Prime Portfolio GP GmbH
18 alstria solutions GmbH
19 alstria Steinstraße 5 GP GmbH
20 beehive GmbH & Co. KG1)
21 First Pine GmbH & Co. KG3)
Hamburg
Hamburg
Hamburg
Hamburg
Hamburg
Hamburg
Hamburg
Hamburg
Hamburg
Hamburg
22 alstria office Prime Portfolio GmbH & Co. KG1)
Hamburg
23 alstria office PP Holding I GmbH & Co. KG1)
24 alstria office Kampstraße GmbH & Co. KG1)
Hamburg
Hamburg
25 alstria office Berliner Straße GmbH & Co. KG1)
Hamburg
26 alstria office Hanns-Klemm-Straße GmbH & Co. KG1)
Hamburg
27 alstria office Maarweg GmbH & Co. KG1)
Hamburg
28 alstria office Heerdter Lohweg GmbH & Co. KG1)
Hamburg
29 alstria office Solmsstraße GmbH & Co. KG1)
30 alstria office PP Holding II GmbH & Co. KG1)
Hamburg
Hamburg
31 alstria office Wilhelminenstraße GmbH & Co. KG1)
Hamburg
32 alstria office Hauptstraße GmbH & Co. KG1)
Hamburg
33 alstria office Mergenthaler Allee GmbH & Co. KG1)
Hamburg
34 alstria office Am Hauptbahnhof GmbH & Co. KG1)
Hamburg
35 alstria office Kastor GmbH & Co. KG1)
Hamburg
36 alstria office Heidenkampsweg GmbH & Co. KG1)
Hamburg
Held
by
no.
Equity
interest (%)
Parent
company
Business activity
Asset management;
holding
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
94.0
94.0
94.0
94.0
94.0
94.0
94.0
94.0
94.0
94.0
94.0
94.0
94.0
94.0
94.0
1 General Partner of 8
1
1
1 General Partner of 9
General Partner
of 10
Former General
Partner
Former General
Partner
General Partner of
12
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
Own property
Own property
Own property
Own property
Own property
Own property
General Partner
of 11 and 21
General Partner
of 20
General Partner
of 23 to 46
General Partner
of 22
Service company
General Partner
of 13
Service company
Own property
Intermediate holding
22
Intermediate holding
23
23
23
23
23
23
Own property
Own property
Own property
Own property
Own property
Own property
22
Intermediate holding
30
30
30
30
30
30
Own property
Own property
Own property
Own property
Own property
Own property
94
alstria Annual Report 2021
Consolidated Financial Statements
37 alstria office An den Dominikanern GmbH & Co. KG1)
Hamburg
alstria office Carl-Schurz-Straße
GmbH & Co. KG1)
38
Hamburg
39 alstria office Pempelfurtstraße GmbH & Co. KG1)
Hamburg
40 alstria office Frauenstraße GmbH & Co. KG1)
Hamburg
alstria office Olof-Palme-Straße
GmbH & Co. KG1)
41
Hamburg
42 alstria office Region Nord GmbH & Co. KG1)
Hamburg
43 alstria office Region Süd GmbH & Co. KG1)
Hamburg
44 alstria office Region Mitte GmbH & Co. KG1)
Hamburg
45 alstria office PP Holding III GmbH & Co. KG1)
Hamburg
46 alstria office Vaihinger Straße GmbH & Co. KG1)
Hamburg
94.0
94.0
94.0
94.0
94.0
94.0
94.0
94.0
94.0
94.0
30
30
30
30
30
30
30
30
Own property
Own property
Own property
Own property
Own property
Own property
Own property
Own property
22
Intermediate holding
45
Own property
1) The Company has made use of the exemption from the obligation to prepare annual financial statements in accordance with the provisions
applicable to corporations in accordance with Section 264b HGB.
2) Terminated as a result of an upstream merger in financial year 2021.
3) Founded in financial year 2021.
Alongside alstria office REIT-AG, the consolidation comprised companies in which the Company
directly or indirectly held the majority of voting rights. The consolidated group at the balance sheet
date consisted of the Company, 21 domestic subsidiaries, and 24 domestic second-tier subsidiaries.
One company was founded in the financial year, two subsidiaries were terminated as a result of
mergers.
The reporting date for the consolidated financial statements is the same as the reporting date for the
Company and consolidated subsidiaries.
There were no further changes to the consolidated group in the 2021 financial year in comparison to
the consolidated financial statements as of December 31, 2020. All of the Group’s companies are
property management, holding, or general partner companies.
alstria Annual Report 2021
95
Consolidated Financial Statements
2.2.3. Interests in joint ventures and noncontrolling interests
As of the balance sheet date, the Group held investments in a joint venture and an associated
company. As of the previous year's reporting date, there were investments in two joint ventures. The
companies are or were accounted for using the equity method. The carrying value of EUR 923 k relates
to the associated company with EUR 815 k and the joint venture with EUR 108 k. As of the previous
year's reporting date, the book value of the associated company was EUR 915 k and that of the joint
venture was EUR 106 k.
Details of the Group’s joint ventures at the end of the reporting period are as follows:
in %
Name of joint venture
Kaisergalerie General Partner
GmbH i.L
Principal
activity
n/a
Place of incorporation
and business
Hamburg,
Germany
Proportion of ownership, interest,
and voting rights held by the Group
Dec. 31, 2020
Dec. 31, 2021
49.0
49.0
There were no unrecognized shares of joint venture’s losses or any significant restrictions as to the
ability of joint ventures to transfer cash funds to the Group.
Furthermore, alstria holds a noncontrolling interest in an affiliate, Fluxus Innovations S.C.Sp.
Luxemburg, based in Luxembourg, Grand Duchy of Luxembourg, amounting to EUR 815 k. The
Company was acquired in the 2016 financial year and is considered immaterial. Its business is the
investment in innovative real estate technology concepts. The Company recorded a loss of -EUR 100 k
(2020: EUR 0) in the reporting period, the joint venture a loss of -EUT 8 k (2020: -EUR 9 k).
2.3.
Key judgments and estimates
To a certain degree, estimates, assessments, and assumptions must be made in the course of
preparing the Group’s consolidated financial statements. These can affect the reported amounts and
recognition of assets and liabilities, contingent assets and liabilities on the balance sheet date, and
the amounts of income and expenses reported for the overall period. The major items that such
estimates, assessments, and assumptions affect are described hereafter. Actual amounts may differ
from the estimates. Changes in the estimates, assessments, and assumptions can have a material
impact on the consolidated financial statements.
2.3.1. Judgements
Management has made the following discretionary decisions in line with the Group’s accounting
policies. Apart from decisions involving estimations, it has the most significant effect on the amounts
recognized in the financial statements:
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Operating lease commitments—the Group as lessor
The Group has entered into commercial property leases in its investment-property portfolio. Based
on an evaluation of the terms and conditions of the arrangements, the Group has determined that all
significant risks and rewards of ownership of these properties remain with the Group. As a result, the
contracts are treated and accounted for as operating leases.
Equity-settled share-based payment transactions
As part of its remuneration, the Management Board was granted share-based payments (see Note
13.1). While the virtual shares issued in business year 2017 were cash-settled share-based payments,
in the 2018 financial year, share-based payments were for the first time equity settled.
All conditions of the share-based payment conditions were settled in advance by the parties involved.
The predominant value-determining parameters are objectively observable market parameters, such
as the share price performance of the alstria share or the performance of a benchmark index. At the
end of the term, the number of equity instruments to be granted can be adjusted by the Supervisory
Board of the Company in a narrow band (so-called discretionary factor). This leads to the question of
whether the grant date is in the current financial year or only at the time when the Supervisory Board
determines the discretionary factor. In the first case, the virtual shares are measured at fair value at
their issue. The amount of the valuation is to be recognized pro rata in equity over the term until
conversion. If the grant date falls to the end of the term, the value of the virtual shares must be
revalued at each reporting date and recognized as a liability.
The terms of the agreement on which the equity instruments were granted were already fixed when
the virtual shares were issued during the reporting period. The main value drivers are observable
market parameters. Therefore, the issue date of the virtual shares is considered the date of granting
the share-based payment with the result that the virtual shares were valued at the issue date and
recognized pro rata as personnel expenses and in the equity of the Group.
Four tranches of the stock awards described were granted by the end of the reporting period. With
the resolution of the Supervisory Board on December 2, 2021, it was determined that the stock awards
granted in the 2018 financial year are not to be settled with shares in the company, but with cash
settlement. This is a change in the terms of compensation for the Stock Awards, as a result of which
compensation changes from equity-settled to cash-settled. The values required for this are to be
shown as obligations under other provisions. In order to allocate the probable amount to the provision,
the Management Board has exercised the option of withdrawing these allocations from the capital
reserve without affecting income. As a result of this resolution, it is also assumed that the other
existing stock awards that were granted in the financial years 2019 to 2021 will be converted by cash
settlement as a result of a change in the contractual terms. Therefore, provisions are made for these
stock awards as well.
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2.3.2. Estimates and assumptions
Significant key sources of estimation uncertainty and key assumptions concerning the future as of the
balance sheet date relate to the following balance sheet items. They present a significant risk, possibly
resulting in necessary material adjustments to the carrying amounts of assets and liabilities within the
next financial year. Applying estimates is particularly necessary to
▪ determine the fair value of investment property (see Note 6.1);
▪ determine the amortized cost of limited partnership capital of noncontrolling interests
(see Note 7.2);
▪ determine the fair value of other provisions (see Notes 7.4) and
▪ determine the fair value of stock awards granted to management (see Note 13.1)
At the end of the reporting period, the above-stated assets, liabilities, and equity instruments, which
are particularly exposed to estimation uncertainties, had the following impact on the consolidated
statement of financial position:
EUR k
Dec. 31, 2021
Dec. 31, 2020
Investment property and properties held for sale, without prepayments made
Limited partnership capital of noncontrolling interests
Other provisions
Other provisions
thereof stock award
thereof stock award
4,847,901
69,813
2,439
1,911
2,585
2,585
4,556,725
68,290
2,031
1,301
0
0
2.4.
Summary of significant accounting policies
The following accounting and valuation methods have been used to prepare the consolidated financial
statements of alstria office REIT-AG.
2.4.1. Fair value measurement
The Group measures financial instruments, such as derivatives, and nonfinancial assets, such as
investment property, at their fair value at each reporting date.
The fair value of an asset or liability is determined based on the assumptions that market participants
would use in pricing the asset or liability, regardless of whether that price is directly observable or
estimated by applying another valuation technique. In estimating fair value, it is assumed that the
transaction during which the disposal of the asset or the transfer of the liability occurs takes place
either
▪
▪
in the principal market for the asset or liability, or
in the most advantageous market for the asset or liability if no principal market exists.
The Group must have access to the principal market or the most advantageous market.
Fair value for measurement and/or disclosure purposes in these consolidated financial statements is
determined on such a basis. Hereby excluded are the following:
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▪
▪
share-based payment transactions that are within the scope of IFRS 2 “Share-based
payments”;
leasing transactions that are within the scope of IFRS 16 “Leases”; and
▪ measurements that have some similarities to fair value but are not fair value, such as net
realizable value in IAS 2 “Inventories” or value in IAS 36 “Impairment of assets.”
Market prices are not always available to determine the fair value. It must often be determined based
on various valuation parameters. In addition, for financial-reporting purposes, fair value
measurements are categorized as Level 1, 2, or 3 based on the degree to which the inputs to the fair
value measurements are observable and the significance of the inputs to the fair value measurement
in its entirety, which are described as follows:
▪
▪
Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or
liabilities that the entity can access at the measurement date.
Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable
for the asset or liability, either directly or indirectly.
▪
Level 3 inputs are unobservable inputs for the asset or liability.
Level 3 inputs require more extensive disclosures.
2.4.2. Investment property
Investment properties are properties held to earn rental income and/or for capital appreciation
(including property under construction for such purposes). They are not used in production or for
administrative purposes. This includes properties that are in production and are intended to serve the
aforementioned purposes. Investment properties are measured initially at cost at the time of purchase
or construction, including transaction costs. In accordance with IAS 40.17, costs incurred subsequently
for dismantling, replacement of parts, or maintenance of property are also included, insofar as these
contribute to an increase in the fair value of the property.
Costs of debt, which can be directly allocated to the acquisition or production of investment property,
are capitalized in the year in which they arise.
For subsequent measurement, the Company uses the fair value model according to IFRS 13.61 et seq.,
which reflects an income-capitalization approach combined with market conditions at the end of the
reporting period.
In the context of the fair value hierarchy described above, only inputs from Levels 2 and 3 are
applicable for property. The majority is categorized as Level 3. Inputs used in the valuation approach
that the Group has adopted for all of its properties include rental revenues, adjusted yield figures
(e.g., property-based capitalization rates), and vacancy periods. These inputs are not observable in
markets and are considered significant. Therefore, the fair value measurement used by the Group for
valuation of all investment properties is generally categorized as Level 3. Information about the
significant unobservable inputs used and their sensitivities to the fair values of the Group’s investment
property is presented in Note 6.1.
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Gains and losses arising from changes in the fair value of investment properties are included in the
profit or loss in the period when they arise.
An investment property derecognized upon disposal, or when the investment property is permanently
withdrawn from use, and future economic benefits are expected from the disposal. Any gain or loss
arising from derecognition of the property (calculated as the difference between the net disposal
proceeds and the carrying amount of the asset) is included in profit or loss in the period in which the
property is derecognized.
Investment properties are transferred to property, plant, and equipment when there is a change in
use evidenced by the commencement of owner occupation. The properties’ deemed cost for
subsequent accounting corresponds to the fair value at the date of reclassification.
When the use of a property changes from owner-occupied to investment property, the property is
remeasured to fair value and reclassified accordingly. Any gain arising from this remeasurement is
recognized in profit or loss to the extent that it reverses a previous impairment loss on the specific
property, with any remaining gain recognized in OCI and presented in the revaluation reserve.
Any loss is recognized in profit or loss. However, to the extent that an amount is included in the
revaluation surplus for that property, the loss is recognized in other comprehensive income and
reduces the revaluation surplus within equity.
Leases of land and buildings in which the Group acts as a lessee and which it sublet are also classified
as financial investments and subsequently measured at fair value. The investment properties are
shown with the addition of the leasing liabilities.
2.4.3. Valuation process for investment properties
The fair value hierarchy gives no information about the applied valuation techniques.
The basis for deriving fair value, as defined by IFRS 13.61, should, if possible, be based on valuation
techniques that are appropriate in the circumstances and for which sufficient data are available to
measure fair value, thereby maximizing the use of relevant observable inputs and minimizing the use
of unobservable inputs. The analysis in the previous section showed there was no sufficient number
of official comparable transactions to derive any market values. Therefore, fair value was determined
based on an income approach in accordance with IFRS 13.61.
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In estimating the fair value of the properties, their current use of the property is the highest and best
option. No fundamental change to the valuation method has occurred during the year.
As in the previous year, external real estate experts conducted the valuation of investment property
at fair value on December 31, 2021, using the “hardcore-and-top-slice” method, according to
internationally accepted valuation methods in accordance with IFRS. An accredited, external, and
independent expert performed the fair value measurement (Savills Advisory Services Germany GmbH
& Co. KG, Frankfurt am Main, Germany).
Description of the hardcore-and-top-slice method
According to the hardcore-and-top-slice method, rental income is horizontally segmented. The
hardcore portion represents the prevailing contractual rent. The top slice represents the difference
between market 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. In
addition, the method used by the independent experts is also appropriate and suitable for determining
market values in accordance with the provisions of the International Valuation Standards (IVS, or the
White Book).
To determine the fair values, the hardcore-and-top-slice method takes into account the following
points:
▪
the contractual rent for the remaining term of the lease (in the case of open-ended leases, a
residual term of 1 year to half of the previous rental period is assumed);
▪ a vacancy period of between 0 and 32 months following the expiry of the lease;
▪
▪
▪
the necessary maintenance costs to relet the properties;
relets at market rents (accounting for the difference between market and contractual rent);
capitalization rates reflecting the individual risk of the property and market activity
(comparable transactions);
▪ management costs between 1 and 3 % of the market rent;
▪ non-allocable costs of ongoing maintenance between EUR 3.50/m² and EUR 11.50/m²
depending on the property standard; and
▪
the net selling price as comparable.
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If the future development of these properties differs from the estimate, large-scale losses resulting
from the change in the fair value may be incurred. This can have a negative impact on future earnings.
The effects of the most significant input parameters on the valuation of the Group’s investment
properties are shown in Note 6.1.
The valuation method described also applies to investment properties in which development projects
are realized. In the case of development projects, the construction costs incurred are also taken into
account.
Gains or losses arising from changes in the fair values of investment properties are disclosed in the
income statement under the item “Net gain/loss from fair value adjustments on investment property”
in the year in which they arise.
Investment properties are derecognized when 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 recognized
in the income statement in the year of retirement or disposal.
2.4.4. Assets held for sale
Noncurrent assets intended for disposal under an asset deal are reported separately as being held for
sale in the consolidated financial statements if the formally required resolution of the Board — and,
when above a certain level of transaction volume, the Supervisory Board — for the sale of a property
is met until the end of the reporting period. If the disposal is to take the form of a share deal,
noncurrent assets and other assets and liabilities held for sale are reported separately on the
consolidated balance sheet.
Assets held for sale are measured at fair value on the date of reclassification and each subsequent
reporting date. Gains or losses from measuring individual assets held for sale and disposal groups are
reported under gain or loss on the disposal of investment property until they have been sold.
2.4.5. Leases
At inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract
is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a
period of time in exchange for consideration. To assess whether a contract conveys the right to control
the use of an identified asset, the Group uses the definition of a lease in IFRS 16.
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Further information on leases can be found in Notes 5.3 Administrative expenses, 5.8 Financial and
valuation results, 6.1 Investment property, 6.3 Intangible assets and property, plant and equipment
and 7.5 Trade payables and other obligations.
(i) As a lessee
At commencement or on modification of a contract that contains a lease component, the
contractually agreed fee is to be allocated on the basis of its relative stand-alone prices. However,
for the leases of property, the Group has elected not to separate non-lease components and account
for the lease and non-lease components as a single lease component.
The Group recognizes a right-of-use asset and a lease liability at the lease commencement date. The
right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability
adjusted for any lease payments made at or before the commencement date, plus any initial direct
costs incurred, and an estimate of costs to dismantle and remove the underlying asset or to restore
the underlying asset or the site on which it is located, minus any lease incentives received.
The right-of-use asset is subsequently depreciated using the straight-line method from the
commencement date to the end of the lease term, unless the lease transfers ownership of the
underlying asset to the Group by the end of the lease term or the cost of the right-of-use asset reflects
that the Group will exercise a purchase option. In that case, the right-of-use asset will be depreciated
over the useful life of the underlying asset, which is determined on the same basis as those of property
and equipment. In addition, the right-of-use asset is periodically reduced by impairment losses, if
any, and adjusted for certain remeasurements of the lease liability.
The lease liability is initially measured at the present value of the lease payments that are not paid
at the commencement date and is discounted using the interest rate implicit in the lease or, if that
rate cannot be readily determined, the Group's incremental borrowing rate. Generally, the Group
uses its incremental borrowing rate as the discount rate.
The Group determines its incremental borrowing rate by obtaining interest rates from various external
financing sources and makes certain adjustments to reflect the terms of the lease and the type of
asset leased.
Lease payments included in the measurement of the lease liability comprise the following:
▪
▪
fixed payments, including in-substance fixed payments;
variable lease payments that depend on an index or a rate, initially measured using the index
or rate as of the commencement date;
▪ amounts expected to be payable under a residual value guarantee; and
▪
the exercise price under a purchase option that the Group is reasonably certain to exercise,
lease payments in an optional renewal period if the Group is reasonably certain to exercise
an extension option, and penalties for early termination of a lease unless the Group is
reasonably certain that it will not terminate early.
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The lease liability is measured at amortized cost using the effective interest method. It is remeasured
when there is a change in future lease payments arising from a change in an index or rate, if there is
a change in the Group’s estimate of the amount expected to be payable under a residual value
guarantee, if the Group changes its assessment of whether it will exercise a purchase, extension, or
termination option, or if there is a revised in-substance fixed lease payment.
When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying
amount of the right-of-use asset, or it is recorded in profit or loss if the carrying amount of the right-
of-use asset has been reduced to zero. The Group presents right-of-use assets that do not meet the
definition of investment property in “property, plant, and equipment” and lease liabilities in “loans
and borrowings” in the statement of financial position.
Short-term leases and leases of low-value assets
The Group has elected not to recognize right-of-use assets and lease liabilities for leases of low-value
assets and short-term leases, including IT equipment. The Group recognizes the lease payments
associated with these leases as an expense in a straight-line basis over the lease term.
(ii) As a lessor
When the Group acts as a lessor, it determines at lease inception whether each lease is a finance
lease or an operating lease. To classify each lease, the Group makes an overall assessment of whether
the lease transfers substantially all of the risks and rewards incidental to ownership of the underlying
asset. If this is the case, the lease is a finance lease; if not, it is an operating lease. As part of this
assessment, the Group considers certain indicators such as whether the lease is for the major part of
the asset’s economic life. The Group has classified the sublease contracts on the basis of the right of
use and not the underlying asset, and it has come to the conclusion that the leases are operating
leases in accordance with IFRS 16.
The Group recognizes lease payments received under operating leases as income on a straight-line
basis over the lease term as revenues.
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2.4.6. Revenue and expense recognition
Revenues and other operating expenses are generally only recognized when the entity satisfies a
performance obligation by transferring a promised good or service to a customer. An asset is
transferred when the customer obtains control of the asset.
This is usually the case when services are rendered or goods or products have been delivered and the
risk has thus been transferred.
Revenue is measured at the fair value of the consideration received, excluding discounts, rebates,
and other sales taxes or duties. Revenues are recorded, excluding VAT. In addition, the following
specific recognition criteria must be met before revenues are recognized.
Rental income from operating leases on investment properties is, according to IFRS 16, recognized
on a straight-line basis over the terms of the relevant lease, regardless of the payment date. Initial
direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount
of the leased asset.
Revenues from service charge income are, according to IFRS 15, realized over the period of
performance, which essentially corresponds to the time at which service charge expenses are
recorded. With regard to the service charge costs of letting, alstria has a principal position. In this
respect, the operating costs charged to the tenants must be shown as sales. The costs incurred relating
to the provision of services in this context are presented as real estate operating expenses.
Proceeds from the sale of investment properties are recognized when the risks and opportunities
associated with ownership of the property have passed to the buyer (transfer of ownership, benefits,
and burdens of the property).
Operating expenses are recognized at the time of the service or when they are incurred.
Interest expenses and interest income are recognized using the effective interest method.
2.4.7. Income taxes
Income tax expense is recognized in profit or loss, except when it relates to items recognized in other
comprehensive income or directly in equity, in which case, current taxes are also recognized in other
comprehensive income or directly in equity, respectively.
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As a REIT-AG parent company, alstria office REIT-AG is exempt from corporation and trade taxes.
Current tax assets and liabilities for the current and prior periods are shown as the amount expected
to be recovered from or paid to the tax authorities. To take effect, the determination of the amount
is based on the tax rates and laws applicable on the reporting date or soon after.
2.4.8. Earnings per share
Basic earnings per share are calculated by dividing the profit attributable to the shareholders of the
parent company by the weighted-average number of shares outstanding during the financial year.
Diluted earnings per share are calculated based on the assumption that all potentially dilutive
securities and share-based payments are converted or exercised.
2.4.9. Impairments of assets according to IAS 36
Assets are tested for impairment when triggering events or changes in circumstances indicate that
the carrying amount may no longer be recoverable. The consequences of the COVID-19 pandemic gave
no indication that the carrying amounts of the assets for which IAS 36 is to be applied could no longer
be achieved.
An impairment loss is recorded at an amount equivalent to the excess of the carrying amount over
the recoverable amount. If the reasons for an impairment loss cease to apply, the impairment loss is
reversed as appropriate, but not above the maximum value that would have resulted if normal
amortization had been charged.
2.4.10. Property, plant, and equipment
Property, plant, and equipment are stated at cost less accumulated depreciation and impairment
losses. They include owner-occupied real estate, right-of-use assets according to IFRS 16, and
operating and office equipment. Such costs include the cost of replacing part of the property, plant,
and equipment at the time the cost is incurred, if the recognition criteria are met. All other repair
and maintenance costs are recognized in profit or loss as incurred.
The depreciation of operating and office equipment is calculated on a straight-line basis over the
estimated useful life of the asset (3 to 13 years). The useful life of owner-occupied property is
estimated at 33 to 50 years. While the building is depreciated on a scheduled basis, the land is not
subject to depreciation.
The growth of the tree population on a forest property in accordance with IAS 41 is also reported
under property, plant and equipment. Initial and subsequent valuations are measured at fair value
less estimated cost of sales.
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2.4.11. Intangible assets
The Group amortizes intangible assets with finite useful lives on a straight-line basis over their
respective estimated useful lives. Estimated useful lives for patents, licenses, and other similar rights
generally range from 3 to 10 years. Currently, the Company does not have intangible assets with
indefinite useful lives.
2.4.12. Financial instruments
Recognition and initial measurement
Trade receivables and debt securities issued are initially recognized when they are originated. All
other financial assets and liabilities are initially recognized when the Group becomes a party to the
contractual provisions of the instrument.
A financial asset (unless it is a trade receivable without a significant financing component) or financial
liability is initially measured at fair value plus, for an item not at FVTPL, transaction costs that are
directly attributable to its acquisition or issue. A trade receivable without a significant financing
component is initially measured at the transaction price.
Classification and subsequent measurement
Financial assets
On initial recognition, a financial asset is classified as measured at:
▪
▪
▪
amortized cost;
FVOCI — debt investment;
FVOCI — equity investment;
▪ or FVTPL.
Financial assets are not reclassified subsequent to their initial recognition unless the Group changes
its business model for managing financial assets, in which case all affected financial assets are
reclassified on the first day of the first reporting period following the change in the business model.
A financial asset is measured at amortized cost if it meets both of the following conditions and is not
designated at FVTPL:
▪
it is held within a business model whose objective is to hold assets to collect contractual cash
flows; and
▪
its contractual terms give rise to specified dates for cash flows that are solely payments of
principal and interest on the principal amount outstanding.
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A debt investment is measured at FVOCI if it meets both of the following conditions and is not
designated at FVTPL:
▪
it is held within a business model whose objective is achieved by both collecting contractual
cash flows and selling financial assets; and
▪
its contractual terms provide an increase of specified dates for cash flows that are solely
payments of principal and interest on the principal amount outstanding.
On initial recognition of an equity investment that is not held for trading, the Group may irrevocably
elect to present subsequent changes in the investment’s fair value in OCI. This election is made on
an investment-by-investment basis.
All financial assets not classified as measured at amortized cost are measured at FVTPL. This includes
all derivative financial assets (see Note 6.5.). On initial recognition, the Group may irrevocably
designate a financial asset that otherwise meets the requirements to be measured at amortized cost
or at FVOCI at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would
otherwise arise.
Financial assets – Business model assessment
With respect to financial assets, the Group pursues a business model with the objective of holding
assets in order to collect the contractual cash flows.
Financial assets – Assessment of whether contractual cash flows are solely payments of principal
and interest
In assessing whether contractual cash flows are solely payments of principal and interest, the Group
considers the contractual terms of the instrument. This includes assessing whether the financial asset
contains a contractual term that could change the timing or amount of contractual cash flows such
that it would not meet this condition.
A prepayment feature is consistent with the exclusive payments of principal and interest criterion if
the prepayment amount substantially represents unpaid amounts of principal and interest on the
outstanding principal amount, which may include reasonable additional compensation for early
termination of the contract.
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Financial assets – Subsequent measurement and gains and losses
Financial assets at
These assets are subsequently measured at fair value. Net gains and losses, including any interest or
FVTPL
dividend income, are recognized in profit or loss.
These assets are subsequently measured at amortized cost using the effective interest method. The
Financial assets at
amortized cost is reduced by impairment losses. Interest income, foreign exchange gains and losses,
amortized cost
and impairment are recognized in profit or loss. Any gain or loss on derecognition is recognized in
profit or loss.
Financial liabilities – Classification, subsequent measurement, and gains and losses
Financial liabilities are classified as measured at amortized cost or FVTPL. A financial liability is
classified as being at FVTPL if it is categorized as held-for-trading, it is a derivative, or it is designated
as such on initial recognition.
Financial liabilities at FVTPL are measured at fair value; net gains and losses, including any interest
expense, are recognized in profit or loss.
Other financial liabilities are subsequently measured at amortized cost using the effective interest
method. Interest expenses and foreign exchange gains and losses are recognized in profit or loss. Any
gain or loss on derecognition is also recognized in profit or loss. All financial liabilities are currently
classified at amortized cost.
Derecognition
Financial assets
The Group derecognizes a financial asset when the contractual rights to the cash flows from the
financial asset expire, or when it transfers the rights to receive the contractual cash flows in a
transaction in which all significant risks and rewards of ownership of the financial asset are transferred
or in which the Group neither transfers nor retains all significant risks and rewards of ownership and
does not retain control of the financial asset.
Financial liabilities
The Group derecognizes a financial liability when its contractual obligations are discharged, are
cancelled, or expire. The Group also derecognizes a financial liability when its terms are significantly
modified and the cash flows of the modified liability are substantially different, in which case a new
financial liability based on the modified terms is recognized at fair value.
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Upon derecognition of a financial liability, the difference between the carrying amount extinguished
and the consideration paid (including any noncash assets transferred or liabilities assumed) is
recognized in profit or loss.
Offsetting
Financial assets and financial liabilities are offset and the net amount presented in the statement of
financial position when, and only when, the Group currently has a legally enforceable right to set off
the amounts and intends either to settle them on a net basis or to realize the asset and settle the
liability simultaneously.
Derivative financial instruments and hedge accounting
Derivative financial instruments and hedge accounting
Derivative financial instruments, such as interest rate swap contracts, are measured at fair value and
classified as being held for trading unless they are designated as hedging instruments, for which hedge
accounting is applied. At the end of the previous year’s reporting period, the Group used derivative
financial instruments in the form of interest cap hedging relationships, the market values of which
were of a negligible magnitude, because the guaranteed interest rate cap is far above the underlying
yield curve. Due to the large gap between the yield curve and the secured interest rate cap, there
were no valuation effects (see Note 6.5).
Cash flow hedges
The effective portion of changes in the fair value of derivative instruments designated as cash flow
hedges is recognized in the line item other comprehensive income, and any ineffective portion is
recognized immediately in net income. Amounts accumulated in equity are reclassified to net income
during the same periods in which the hedged item affects net income.
If the hedge no longer meets the criteria for hedge accounting or the hedging instrument is sold,
expires, is terminated, or is exercised, then hedge accounting is discontinued prospectively. When
hedge accounting for cash flow hedges is discontinued, the amount that has been accumulated in the
hedging reserve remains in equity until, for a hedge of a transaction resulting in the recognition of a
nonfinancial item, it is included in the nonfinancial item’s cost on its initial recognition or, for other
cash flow hedges, it is reclassified to profit or loss in the same period or periods in which hedged
expected future cash flows affect profit or loss.
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If the hedged future cash flows are no longer expected to occur, the amounts that have been
accumulated in the hedging reserve and the cost of the hedging reserve are immediately reclassified
to profit or loss.
Other hedges
The Group uses neither any financial derivatives that qualify for the hedging of the fair value of
recognized assets or liabilities or a firm commitment (fair value hedges) nor such financial derivatives
that qualify for the hedging of a net investment in a foreign operation (net-investment hedge).
Cash and cash equivalents
The Company considers all highly liquid investments with less than three months’ maturity from the
date of acquisition to be cash equivalents.
For the purposes of the consolidated cash flow statement, cash and cash equivalents include those
defined above, other short-term, highly liquid investments with original maturities of three months
or less, and bank overdrafts.
2.4.13. Impairment
Nonderivative financial assets
Financial instruments and contract assets
The Group recognizes loss allowances for expected credit losses (ECLs) on financial assets measured
at amortized cost.
The Group generally measures loss allowances at an amount equal to the 12-month ECLs if the default
risk (for example, the credit default risk) has not increased significantly since the initial recognition.
Loss allowances for trade receivables are measured at an amount equal to lifetime ECLs unless they
are trade receivables from alstria’s main tenant.
Value adjustments on trade receivables are always based on the amount of the ECL over the term.
The Group applies the simplified approach in accordance with IFRS 9.5.5.15. When determining
whether the credit risk of a financial asset has increased significantly since initial recognition and
when estimating ECLs, the Group considers reasonable and supportable information that is relevant
and available without undue cost or effort. This includes both quantitative and qualitative information
and analysis, based on the Group’s historical experience and informed credit assessment as well as
forward-looking information.
The Group assumes that the credit risk of a financial asset other than trade receivables measured at
an amount equal to lifetime ECLs will have significantly increased if it is more than 30 days past due.
For trade receivables, the number of days past due could be significantly higher due to the fact that
service charge invoices are regularly under investigation on the tenants’ side, causing a delay in
acceptance by alstria until consent has been met. The same applies for rental receivables not paid
by the tenants in case of other disputes relating to the tenancy.
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111
Consolidated Financial Statements
The Group considers a financial asset to be in default when the borrower is unlikely to pay its credit
obligations to the Group in full, without recourse by the Group to actions such as realizing security
(if any is held). This usually does not apply to rental receivables for which the usual security deposit
of two months’ net rent is included in the assessment of whether a rental claim is deemed canceled.
The Group considers a financial asset to have low credit risk when its credit risk rating is equivalent
to the globally understood definition of “investment grade.” The Group considers this to be Baa3 or
higher per Moody’s Corporation, New York, USA or BBB- or higher per Standard & Poor’s Corporation,
New York, USA.
Lifetime ECLs are ECLs that result from all possible default events over the expected life of a financial
instrument.
12-month ECLs for financial assets are the portion of ECLs that result from default events that are
possible within the 12 months after the reporting date (or a shorter period if the expected life of the
instrument is less than 12 months).
The maximum period considered when estimating ECLs is the maximum contractual period over which
the Group is exposed to credit risk.
Measurement of ECLs
ECLs are a probability-weighted estimate of credit losses. Credit losses are measured as the present
value of all cash shortfalls (i.e., the difference between the cash flows due to the entity in accordance
with the contract and the cash flows that the Group expects to receive).
Credit-impaired financial assets
At each reporting date, the Group assesses whether financial assets carried at amortized cost and
debt securities at FVOCI are credit-impaired. A financial asset is credit-impaired when one or more
events that have a detrimental impact on the estimated future cash flows of the financial asset have
occurred.
Evidence that a financial asset is credit-impaired includes the following observable data:
▪ significant financial problems of the borrower or issuer;
▪ a breach of contract, such as a default; or
▪ probability that the borrower will enter bankruptcy or other financial restructuring.
Presentation of allowance for ECL in the statement of financial position
Loss allowances for financial assets measured at amortized cost are deducted from the gross carrying
amount of the assets.
Write-off
The gross carrying amount of a financial asset is written off when the Group has no reasonable
expectations of recovering a financial asset in whole or in part. For tenants, the Group makes
112
alstria Annual Report 2021
Consolidated Financial Statements
assessments individually with respect to the timing and amount of write-off based on whether there
is a reasonable expectation of recovery. The Group expects no significant recovery from the amount
written off. However, financial assets that are written off could still be subject to enforcement
activities.
2.4.14. Noncontrolling interests of limited partners
In addition to alstria office REIT-AG, other limited partners are minority shareholders in the subsidiary
alstria office Prime Portfolio GmbH & Co. KG (“alstria office Prime”), which is included in the
consolidated financial statements. From the Group’s point of view, the equity of these limited
partners is to be reported as debt capital in accordance with IFRS. They are shown in the consolidated
balance sheet under the item “limited partnerships of noncontrolling interests.” The limited partner
contributions are shown at amortized cost in accordance with the articles of association.
2.4.15. Provisions
Provisions are recognized when a present obligation to third parties exists as a result of a past event,
a future outflow of resources is probable, and a reliable estimate of that outflow can be made.
Provisions are measured, taking all risks into account at the best estimate of future cash outflows
required to meet the obligation. If they are not current, they are discounted. Provisions are not offset
with reimbursements.
A debt resulting from termination of employment (severance) is recognized when the Group may not
withdraw the offer of such services or if the Group recorded costs related to restructuring earlier.
2.4.16. Share-based payments
Share-based payments comprise cash-settled liability awards and, until the prior-year reporting date,
also stock awards that were intended to be settled in equity instruments.
The fair value of equity awards is generally determined using a modified Black-Scholes option-pricing
model at the grant date. It measures the total personnel expense, which is to be recognized in profit
or loss for the service period and which, in turn, increases equity (paid-in capital) by the same
amount. Equity-settled awards are granted to the Group’s employees in the form of convertible profit
participation certificates, the fair value of which is estimated at the respective grant dates by
applying a binary barrier-option model based on the Black-Scholes model; assumptions include an
automatic conversion once the barrier is reached. The model took the terms and conditions upon
which the instruments were granted into account. This valuation required the Company to make
estimates concerning these parameters, which are therefore subject to uncertainty. Share-based
compensation plans with compensation through equity instruments were issued to the Company’s
Management Board for the first time in the 2018 financial year (so called „long term Incentive plan
2018“ or „LTIP 2018“ with the granting of so called stock awards). The fair value of these stock awards
at the grant date was calculated using a 100,000-path Monte Carlo simulation based on the terms of
the LTIP 2018.
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113
Consolidated Financial Statements
Cash-settled liability awards were related to the virtual shares granted to the Management Board
until the 2017 financial year. The virtual shares are measured at each balance sheet date and are
accounted for as provisions. The proportional expense incurred in the period comprises the addition
to and reversal of the provision between two reporting dates and the dividend paid during the
respective period. This valuation requires the Company to make estimates about certain parameters,
and hence, they are subject to uncertainty. The fair value of the virtual shares granted is allocated
to the vesting period subject to the terms of the underlying share-based incentive plan. Due to the
changes, that have been made in the reporting period in the remuneration conditions for the stock
awards granted since the 2018 financial year, according to which these are no longer to be settled
with equity instruments but also with cash payments, the stock awards were also valued, as described
for the virtual shares that were granted up to and including 2017.
The personnel expenses resulting from the LTIP 2017 led to additions to other provisions in the
consolidated financial statements as of December 31, 2021 in the amount of EUR 400 k (December
31, 2020: EUR 75 k). Provisions for these instruments no longer existed as of the balance sheet date
(December 31, 2020: EUR 1,301 k) because the last tranche issued as cash-settled equity instruments
was converted in the reporting period. As a result of changes to the agreements on the stock awards
originally intended to be settled by equity instruments, which were granted from the 2018 financial
year, the agreement that these instruments are settled by equity shares was changed so that in the
event of Conversion to a cash settlement occurs. As a result, the presentation of the obligations
arising from these equity instruments has changed. The Group now reports obligations under other
provisions, which were reclassified from the capital reserve with no effect on income.
As of the balance sheet date, a provision amount of EUR 4,496 k was reported under other provisions.
Further details on the share-based payment schemes are given in Note 13 and the combined
management report.
3. SEASONAL OR ECONOMIC EFFECTS ON BUSINESS
The business activities of alstria office REIT-AG (primarily the generation of revenues from investment
properties) are not generally affected by seasonality. However, the sale of one or more large
properties can have a significant impact on revenues and operating expenses.
Experience shows that the real estate market tends to fluctuate as a result of factors such as changes
in consumers’ net income, GDP, interest rates, consumer confidence, demographics, and other factors
inherent to the market. Changes in interest rates might lead to a modified valuation of the investment
property.
114
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Consolidated Financial Statements
4. SEGMENT REPORTING
IFRS 8 requires a management approach, under which information on segments is presented to the
Management Board on the same basis used for internal-reporting purposes.
The services offered by alstria office REIT-AG focus exclusively on letting activities to commercial-
property tenants in Germany. In accordance with IFRS 8, a single reporting segment is identified that
comprises all of the Group’s operations.
The manner of reporting for this segment is consistent with the internal reporting provided to the
chief operating decision maker, who is responsible for allocating resources to the operating segments
of an entity and assessing their performance. The Group’s chief operating decision maker is the
Management Board.
A larger number of tenants generate revenues. Total revenues amount to EUR 222,578 k (2020:
EUR 215,430 k), of which EUR 29,936 k (2020: EUR 29,020 k) and EUR 25,012 k (2020: EUR 25,966 k)
are related to leases to the Group’s two largest customers. No other single customer has contributed
10 % or more to the consolidated revenues in the 2020 or 2021 financial years.
alstria Annual Report 2021
115
Consolidated Financial Statements
5. NOTES TO THE CONSOLIDATED INCOME STATEMENT
5.1.
Revenues
EUR k
Revenues from investment properties
Revenues from service charge income
Revenues
2021
183,670
38,908
222,578
2020
177,063
38,367
215,430
Revenues from investment properties mainly comprised rental income. The rental income includes
effects totaling EUR 3,144 k (2020: EUR 4,058 k), which are attributable to rent-free periods. Due to
the granting of rent relief in connection with the COVID-19 pandemic, rental income in the amount
of EUR 753 k was waived in the previous financial year. Agreements for such a rent waiver were no
longer made in the reporting period. The reduced rental income was spread over the remaining term
of the respective rental agreement. In addition, revenues from investment properties include income
from asset management services in relation to the leased real estate properties in the amount of
EUR 3,049 k (2020: EUR 2,617 k).
Rental income from property leases contains variable rental income amounting to EUR 5,945 k
(2020: EUR 6,686 k). These are rental agreements in which the rental payments are linked to the
operating results of the tenants.
5.2.
Real estate operating expenses
EUR k
Operating costs that can be charged to tenants
Vacancy costs
Maintenance and refurbishment
Ongoing repairs
Legal and advisory fees
Electricity costs
Property management
Insurance expenses
Rent expenses
Other expenses
Total
2021
38,822
7,185
5,431
4,838
1,122
286
208
194
122
1,099
59,307
2020
36,173
7,803
8,429
5,598
842
252
177
190
86
1,057
60,607
116
alstria Annual Report 2021
Consolidated Financial Statements
5.3.
Administrative expenses
EUR k
Legal and consulting fees
Depreciation
IT maintenance
Communication and marketing
Audit fee (audit and audit-related services)
Supervisory Board compensation
Leasing payments and rents
Insurance expenses
Office area costs
Recruitment
Contributions
Office equipment
Travel expenses
Training & workshops
Other
Total
2021
2,138
943
656
590
564
526
494
446
290
290
200
183
141
137
727
2020
2,563
1,110
705
653
584
525
484
302
296
218
160
172
183
148
357
8,325
8,460
The lease payments and rents in the 2021 financial year amounting to EUR 494 k are related to short-
term and low-value leases.
5.4.
Personnel expenses
EUR k
Salaries and wages
Social insurance contribution
Bonuses
Expenses for share-based compensation
thereof relating to virtual shares
thereof relating to the convertible profit participation certificates
Amounts for Management Board retirement provisions and disability
Other
Total
2021
10,983
1,971
2,392
3,772
987
2,785
161
490
19,769
2020
10,539
1,873
2,402
3,132
162
460
18,568
1,240
1,892
The increase in personnel expenses is based on the increase in expenses for share-based compensations
from the convertible profit participation certificates for the employees. The reason is a higher number
of convertible profit participation certificates issued and the higher share price at the time they were
granted.
Convertible profit participation rights granted to employees grant the right not only to a conversion
when the conditions apply but also to an annual payment equivalent to the dividend amount paid out
per share.
alstria Annual Report 2021
117
Consolidated Financial Statements
The employer’s contribution to statutory pension insurance, included in wages and salaries, amounts
to EUR 944 k for the 2021 financial year.
On average, the Group employed 171 employees in 2021 (2020: 166).
5.5. Other operating income
EUR k
Compensation payments and other recharges
Revaluation of trade receivables
Income from the reversal of accrued liabilities
Property management services
Health insurance reimbursement
Proceeds from forest management
Revaluation of the limited partnership capital noncontrolling interests
Reversal of allowance on financial assets
Collection of security deposits
Other
Total
2021
3,686
910
350
80
61
60
0
0
0
783
5,930
2020
3,365
0
99
107
41
0
279
250
75
413
4,629
Compensation payments and other charges result from early termination of leases and refurbishment
activities conducted by alstria. The latter refers to refurbishments the tenants had originally
committed to carry out themselves upon conclusion of the leasing contracts. The revaluation of trade
receivables is based on a better than originally, in the light of the COVID-19 pandemic, assumed
payment behavior of tenants.
5.6. Other operating expenses
EUR k
Legal and advisory fees
Revaluation of the limited partnership capital noncontrolling interests
VAT payments made for previous years
Settlement agreements
Impairment on trade receivables
Final settlement of sales based rents from previous years
Other operating expenses
Total
2021
10,213
3,476
377
354
156
0
38
14,614
2020
39
0
0
0
1,371
459
274
2,143
Legal and consulting fees mainly relate to consulting services in connection with the Brookfield's
takeover bid (see Note 1). The higher valuation allowances on receivables in the 2020 financial year
were related to higher expected defaults on rent receivables as a result of the COVID-19 pandemic.
118
alstria Annual Report 2021
Consolidated Financial Statements
5.7.
Net results of the disposal of investment property
EUR k
Proceeds from the disposal of investment property - transferred to buyer
Carrying amount of investment property disposed of - transferred to buyer
Costs in relation to the sale of investment properties - transferred to buyer
Gain on disposal of investment property - transferred to buyer
Agreed selling price of held-for-sale investment properties
Carrying amount of investment property at the time of reclassification to
held-for-sale
Costs in relation to the sale of investment properties - held for sale
Valuation result of held-for-sale investment properties
Gain on disposal of investment property
2021
24,750
-25,418
-222
-890
72,100
-55,292
-784
16,024
15,134
2020
126,510
-116,687
-1,483
8,340
0
0
0
0
8,340
In the 2021 financial year, the sale of properties that were sold below their book value resulted in a
loss of EUR 890 k. In the 2020 financial year, no properties were sold below their book value.
5.8.
Net financial result
The financial result breaks down as follows:
EUR k
Income from financial instruments and other interest income
Interest expenses, corporate bonds
Interest result ”Schuldschein”
Interest expenses, other loans
Other interest expenses
Financial expenses
Commitment fees
Financial expenses lease liability IFRS 16
Other
Other financial expenses
2021
1,323
-21,954
-2,142
-1,977
-815
-26,888
−283
−89
−82
−454
2020
533
−27,269
−2,321
−2,190
−228
−32,008
−254
−95
−8
−357
Net financial result
−26,019
−31,832
alstria Annual Report 2021
119
Consolidated Financial Statements
Income from financial instruments and other interest income result primarily from loans and interests
received. Negative interest income is included in the amount of EUR 316 k.
The decrease in interest expenses from corporate bonds is due to the repayment of a corporate bond
in the fourth quarter of the previous year.
The total interest expenses calculated by applying the effective interest method for financial
liabilities (i.e., not recognized at fair value through profit or loss) amounted to EUR 2,669 k (interest
expenses, 2020: EUR 3,261 k).
In neither of the two former financial years did the Group hold any financial assets available for sale.
Therefore, the net result from the disposal of financial assets available for sale amounted, as in the
previous year, to EUR 0.
There was no net gain or loss from the change in the fair values of derivative financial instruments,
either in the 2021 financial year or the previous year.
Further details and explanations on derivatives are presented in Note 6.5.
5.9.
Income tax expenses
On January 1, 2007, alstria office REIT-AG obtained G-REIT status. At that time, it was subject to final
taxation and has been effectively tax exempt with regard to corporate and trade tax since then.
Minor tax-payment obligations may arise at Group level for affiliates serving as a general partner of
a partnership or for REIT Service Companies.
With the acquisition of the alstria office Prime Portfolio GmbH & Co. KG, however, companies were
included in the consolidated financial circle that are not subject to the REIT exemption. This resulted
in expenses for income taxation at the level of the alstria office Prime Portfolio GmbH & Co. KG
subgroup.
Income tax expense comprises essentially current tax expenses from previous years. A deferred tax
result is no longer expected due to the de facto tax exemption of the Group.
120
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Consolidated Financial Statements
6. NOTES TO THE CONSOLIDATED STATEMENT OF FINANCIAL POSITION – ASSETS
6.1.
Investment property
This item, comprising investment properties held by the Company, breaks down as follows:
EUR k
Investment property as of December 31
Investments
Acquisitions
Acquisition costs
Disposals
Transfer to assets held for sale
Transfer to property, plant, and equipment (owner-occupied properties)
Net loss / gain from fair value adjustments to investment property
Investment property as of December 31
2021
4,556,181
121,590
80,559
5,296
−25,400
−55,010
−2,242
94,827
4,775,801
2020
4,438,597
144,928
7,000
784
-96,650
0
0
61,522
4,556,181
Three properties were sold in the 2021 financial year, one of which was transferred to the buyer in
the financial year and two of which are included in assets held for sale at the end of the reporting
period.
Property transaction
Contract signed until 2020,
transferred in 2021
Contract signed and
transferred in 2021
Contract signed in 2021,
transferred 2022
Total
Acquisition
Disposal
Number of
properties
Transaction amount
in EUR k
Number of
properties
Transaction amount
in EUR k
1
1
0
2
30,300
50,250
0
80,550
0
1
2
3
0
24,750
72,100
96,850
Capital expenditure (EUR 121,590 k) comprises subsequent acquisition and production costs relating
to property acquisitions and refurbishment projects.
The investment property includes rights-of-use assets from leases, which are shown in the amount of
the leasing liabilities of EUR 4,695 k.
alstria Annual Report 2021
121
Consolidated Financial Statements
Borrowing costs that would have had to be capitalized as construction costs were not incurred during
the reporting period (2020: EUR 0).
The alstria office REIT-AG applied the fair value model pursuant to IAS 40.33 et seq. for subsequent
measurement of investment property. External appraisals were obtained for measurement. For a
detailed description of the valuation of assets, please see Note 2.4.
The item “net result from fair value adjustments on investment property” on the income statement
in the amount of EUR 138,493 k (2020: EUR 156,892 k) is attributable to a change in unrealized losses.
The total of the increases in value amounted to EUR 233,320 k (2020: EUR 218,686 k). The properties
sold in the financial year did not affect the net result from the valuation of investment properties
(2020: devaluation of EUR 272 k).
As in the previous year, all real estate held as investment property measured at fair value is classified
as Level 3 in the fair value hierarchy.
The Group has considered the nature, characteristics, and risks of its properties, as well as the level
of the fair value hierarchy within which the fair value measurements are categorized, in determining
the appropriate classes of investment property.
The following factors help determine the appropriate classes:
a) The real estate segment: Within all investment portfolios, the majority of the lettable area
is dedicated to offices. Therefore, all investment properties belong to one asset class: offices.
b) The geographical location of all properties is Germany.
c) The level of fair value hierarchy for all investment properties is Level 3.
d) There are large differences between the contractual lease terms. This also affects the
weighted average unexpired lease term (WAULT) for each investment property. A distinction
is made between objects with a short, medium, and long WAULT.
As a result, three appropriate classes of investment properties emerged:
▪ Germany – Office – Level 3 – short WAULT (0–5 years);
▪ Germany – Office – Level 3 – medium WAULT (> 5–10 years); and
▪ Germany – Office – Level 3 – long WAULT (> 10 years).
122
alstria Annual Report 2021
Consolidated Financial Statements
Quantitative information about fair value measurements using unobservable inputs (alstria
portfolio) (Level 3)
EUR k, unless stated otherwise
Portfolio
Fair value on
Dec. 31, 2021
German offices
4,775,801
Number of properties:
Valuation
technique
Hardcore
and top slice
111
0 ≤ WAULT ≤ 5 Years
German offices
2,506,715
Number of properties:
Hardcore
and top slice
75
5 < WAULT ≤ 10 Years
German offices
1,588,340
Number of properties:
Hardcore
and top slice
Unobservable
inputs
Estimated rental value
(EUR/m²/mo.)
Adjusted yield
Void period of office
leases expiring within
the next 5 years
[months]
Estimated rental value
(EUR/m²/mo.)
Adjusted yield
Void period of office
leases expiring within
the next 5 years
[months]
Estimated rental value
(EUR/m²/mo.)
Adjusted yield
Void period of office
leases expiring within
the next 5 years
[months]
Range
Min. Max.
Weighted
average
7.2
25.6
2.5 %
8.9 %
14.4
4.3 %
1.0
32.0
15.2
7.2
25.6
2.9 %
8.9 %
14.1
4.6 %
1.0
30.0
15.2
9.4
23.3
2.8 %
6.4 %
14.7
4.2 %
1.0
32.0
15.5
10.8
20.7
2.5 %
3.2 %
15.1
2.7 %
1.0
12.0
6.5
29
WAULT > 10 Years
German offices
Number of properties:
7
680,746
Hardcore
and top slice
Estimated rental value
(EUR/m²/mo.)
Adjusted yield
Void period of office
leases expiring within the
next 5 years [months]
Sensitivity of measurement to variance of significant unobservable input
A decrease in the estimated rental income decreases the fair value.
An increase in the vacancy period decreases the fair value.
An increase in the adjusted yield decreases the fair value.
A decrease in the estimated rental income leads to an increase in the adjusted yield; an increase in
the estimated rental income leads to a decrease in the adjusted yield.
A decrease in the vacancy period increases the adjusted yield; an increase in the vacancy period
decreases the adjusted yield.
alstria Annual Report 2021
123
Consolidated Financial Statements
In the following, the influence of changes in the capitalization rates (adjusted return) on the market
values is indicated. As of December 31, 2021, the valuation report contains an indication that the
market disturbance in view of the COVID-19-pandemic resulted in a reduction in the transaction values
and liquidity of the markets. This note implies that there are currently significantly greater
uncertainties than would be the case under normal market conditions. Against the background of the
increased uncertainty due to the COVID-19 pandemic, the intervals have been extended this year.
Fair value of investment properties (EUR m)
Capitalization rate
Dec. 31, 2021
Dec. 31, 2020
−0.50 %
−0.25 %
0.00 %
0.25 %
0.50 %
5,631
5,169
4,776
4,436
4,139
5,353
4,924
4,556
4,236
3,954
Operating lease commitments – Group as lessor
The Group has entered into commercial property leases on its investment property portfolio, which
consists of the Group’s offices and commercial real estate. These noncancelable leases have
remaining maturity of between 1 and 20 years. Most leases include an indexation clause allowing
rental charges to be raised annually according to consumer price indexation.
Future minimum rental charges receivable as agreed in noncancelable operating leases are as follows:
EUR k
Within 1 year
After 1 year but not longer than 5 years
Longer than 5 years
Total
Dec. 31, 2021
Dec. 31, 2020
186,926
550,571
428,047
196,220
562,729
452,403
1,165,544
1,211,352
Disclosures concerning expenses/income as recorded in the income statement pursuant to
IAS 40.75 (f) include the following:
▪ EUR 222,577 k (2020: EUR 215,430 k) in revenues from investment properties, of which
EUR 344 k is related to subleases of rights-of-use assets;
▪ EUR 52,121 k (2020: EUR 52,804 k) in operating expenses (including repairs and maintenance)
directly allocable to investment properties from which rental income was generated during
the period under review; and
▪ EUR 7,185 k (2020: EUR 7,803 k) in operating expenses (including repairs and maintenance)
arising from investment properties that did not generate rental income during the period
under review.
Investment properties, held-for-sale properties, and own used properties amounting to
EUR 1,039,701 k (December 31, 2020: EUR 807,100 k) served as collateral for bank loans.
124
alstria Annual Report 2021
Consolidated Financial Statements
6.2.
Equity-accounted investment
As of the balance sheet date, alstria held shares in an investment with a book value of EUR 815 k and
shares in a joint venture with a book value of EUR 108 k. Further details on the investments accounted
for using the equity method can be found in Note 2.2.3.
6.3.
Intangible assets and property, plant, and equipment
The intangible assets consist of licenses to other rights and software licenses with carrying amounts
of EUR 242 k and EUR 32 k, respectively. The useful life of the intangible assets is estimated to be
between 1 and 10 years.
The alstria office REIT-AG occupies areas for its own use in five of its office buildings in Hamburg,
Berlin, Düsseldorf, Frankfurt and Stuttgart. Therefore, the owner-occupied areas of the properties
are categorized as “Property, plant, and equipment” according to IAS 16, and amortized according to
plan. The area in Stuttgart was occupied in the reporting period and led to the reclassification of
EUR 2,243 k, which corresponds to the market value of the area at the time the own use started.
The following table shows the development of property, plant, and equipment.
EUR k
Acquisition and production
cost
Furniture and
fixtures
Plant
Owner-
occupied
property
IFRS 16
right-of-use
assets
Forrest
Total 2021
As of January 1, 2021
1,266
2,838
17,944
0
Additions
Reclassification from
Investment Property
Disposals
0
0
0
As of December 31, 2021
1,266
91
0
-122
2,807
Accumulated amortization,
depreciation, and write-
downs
5
2,683
2,243
0
0
0
807
402
0
0
22,855
3,181
2,243
-122
20,192
2,683
1,209
28,157
As of January 1, 2021
1,227
1,704
1,034
Additions
Disposals
13
0
219
-89
326
0
As of December 31, 2021
1,239
1,834
1,360
0
0
0
530
257
0
788
4,495
815
-89
5,221
Net book values as of
December 31, 2021
27
973
18,832
2,683
421
22,936
alstria Annual Report 2021
125
Consolidated Financial Statements
EUR k
Acquisition and production cost
As of January 1, 2020
Additions
Disposals
As of December 31, 2020
Accumulated amortization,
depreciation, and write-downs
As of January 1, 2020
Additions
Disposals
As of December 31, 2020
Net book values as of
December 31, 2020
Plant
Furniture and
fixtures
Owner-occupied
property
IFRS 16
right-of-use
assets
Total 2020
1,266
0
0
1,266
1,215
12
0
1,227
3,348
172
-682
2,838
2,097
272
-665
1,704
17,929
15
0
17,944
713
321
0
1,034
787
20
0
807
250
280
0
530
23,330
207
-682
22,855
4,275
885
-665
4,495
39
1,134
16,910
277
18,360
Three (previous year: two) of these properties were pledged with a mortgage to secure loans from
the Group.
The forest property with an area of 2,168 hectares was acquired in the reporting period for sustainable
management and use. The growth is a mixed pine forest. Accounting is carried out in accordance with
IAS 41.
6.4.
Financial assets
EUR k
Dec. 31, 2020
Repayments
Investment in
financial assets
Valuation
Dec. 31, 2021
Noncurrent financial assets
39,108
0
87
-10
39.185
The financial assets of EUR 39,185 k (December 31, 2020: EUR 39,108 k) are related to long-term
deposits in the amount of EUR 38,864 k with a term up to the end of the 2032 financial year. A further
amount of EUR 234 k is attributable to a below -3 % share in a stock corporation on which alstria cannot
exert any significant influence. A further EUR 87 k was invested in a minority interest in a company to
enable CO2 storage technology.
Current financial assets did neither exist at the end of the reporting period nor at the end of the
previous.
There were no further value adjustments for financial assets as of the balance sheet date.
126
alstria Annual Report 2021
Consolidated Financial Statements
6.5.
Derivative financial instruments
The following derivative financial instruments were in place at the end of the reporting period:
Product
Strike p.a. (%)
Maturity date
Cap
3.000
Apr. 30, 2021
Financial derivatives –
cash flow hedges
Total
Notional
(EUR k)
Dec. 31, 2021
Fair value
(EUR k)
0
0
0
0
0
0
Notional
(EUR k)
44,168
44,168
44,168
Dec. 31, 2020
Fair value
(EUR k)
0
0
0
Derivative financial instruments that are not designated for a cash flow hedge relationship were not
held on the balance sheet date or during the year. A derivative financial instrument, qualifying for
cash flow hedging, with a most recent nominal value of EUR 44,168 k (December 31, 2020:
EUR 44,168) ended April 30, 2021.
Because the value of the derivatives on the balance sheet date, the previous balance sheet date, and
during the financial year was EUR 0, there was no impact from the change in value of derivative
financial instruments in the 2021 financial year.
alstria Annual Report 2021
127
Consolidated Financial Statements
6.6.
Receivables and other assets
Due to the specific nature of the business, the Group considers receivables with a remaining term of
up to 1 year to be current. The following table presents an overview of the Group’s receivables:
EUR k
Trade receivables
Rent receivables
Other receivables
Maintenance reserves
Receivables against employees
Creditors with debit balance
Security deposits and other deposits granted
Cash in transit
Receivables and other assets
Financial assets
VAT receivables
Deductible capital gains taxes
Prepayments made
Non-financial assets
Other receivables
Dec. 31, 2021
Dec. 31, 2020
3,922
4,572
268
238
92
11
6
21
636
1,880
1,029
713
3,622
4,258
268
222
174
36
314
128
1,142
2,677
4,578
365
7,620
8,762
The deductible capital gains taxes are related to the taxation on hidden reserves in the course of the
change of legal form in subsidiaries in the 2016 financial year. Affected are companies of the Prime
Portfolio subgroup, which, following the takeover of the former DO Deutsche Office Group, changed
from the legal form of a limited liability company to the legal form of a limited partnership.
All receivables are due within 1 year from the balance sheet date. The fair value of all receivables is
equal to their carrying amount.
The expected credit losses are calculated in two ways. For alstria’s key tenants, default probabilities
observed on the market made available by Bisnode Deutschland GmbH, Darmstadt, Germany, are
used. For its receivables from the remaining (non-key) tenants, alstria uses an impairment matrix.
The receivables of these other tenants are valued based on historical probabilities of default. Future
developments or macroeconomic indicators are monitored, and adjustments are made if necessary.
Based on various regulations applied by the state to mitigate the medical risks of the COVID-19
pandemic, the expectation of a cooling business climate was considered in the valuation of assets in
the financial year 2020. The clustering of receivables was refined in accordance with the internal
monitoring of the effects of the pandemic. In addition, adjustments were made for the calculation of
the expected credit loss according to IFRS 9 for trade receivables, which should cover the possible
effects of the pandemic on the respective customers. As a result, the risk provision for tenants who
are not classified as key tenants (other tenants) in the financial year 2020 increased by EUR 381 k. In
the reporting period, adjustments that could be explicitly derived from the consequences of the
pandemic were no longer necessary.
128
alstria Annual Report 2021
Consolidated Financial Statements
On this basis, alstria estimates the following default rates:
EUR k
Default rate
0-30 days overdue
31-90 days
overdue
91-180 days
overdue
More than 180 days
overdue
11.22%
23.70%
41.54%
100.00 %
Trade receivables from tenants of alstria are valued as follows:
EUR k
Gross amount
Provision made for
default of receivables
over the entire term
Provision made for
default of receivables
over 12 months
Net amount
0-30 days overdue
31-90 days overdue
91-180 days overdue
More than 180 days overdue
Total other tenants
Key tenants
Total
633
331
368
490
1,822
2,926
4,748
-71
-78
-153
-490
-792
-
-792
The allowance for trade receivables developed as follows:
EUR k
As of January 1
Additions
Net revaluation of allowances (see Note 5.5 and 5.6)
As of December 31
562
253
215
0
1,030
2,892
3,922
2020
436
1,371
-71
1,736
-34
-34
2021
1,736
156
-1,066
826
Receivables from rental agreements and property disposals, as well as insurance receivables and
derivative financial instruments, have been assigned to the lenders (Note 7.3) to secure the Group’s
mortgage-backed loans.
alstria Annual Report 2021
129
Consolidated Financial Statements
6.7.
Cash and cash equivalents
EUR k
Bank balances
Dec. 31, 2021
Dec. 31, 2020
313,684
460,960
Current accounts held with banks attract variable interest rates for on-call balances. As of the
reporting date, no cash amounts were subject to restrictions. Due to the very low credit default
probabilities of the banks for the daily available bank balances, there was no impairment of cash and
cash equivalents. The credit rating was based on observable market parameters.
In addition, cash and cash equivalents include EUR 8,858 k in rent deposits received from tenants
(December 31, 2020: EUR 8,800 k). These tenant deposits, recognized under cash and cash
equivalents, are offset by an item included under Other Liabilities.
6.8.
Assets held for sale
The assets held for sale comprise two properties. The transfer of benefits and burdens is expected
for both properties in the first quarter of 2022 after the preparation of these consolidated financial
statements. The sale of properties resulted in disposal revenues of EUR 72,100 k.
The properties reported are not the properties shown in the previous year, which were transferred to
the buyer as planned in 2021.
The ‘gain on disposal of investment property’ is increased by the valuation result from the property
held for sale in the amount of EUR 16,024 k (see Note 5.7).
The valuation of assets held for sale is generally based on the contract prices and, therefore, included
within Level 1 of the fair value hierarchy.
130
alstria Annual Report 2021
Consolidated Financial Statements
7. NOTES TO THE CONSOLIDATED STATEMENT OF FINANCIAL POSITION – EQUITY
AND LIABILITIES
7.1.
Equity
For detailed information on equity, please refer to the consolidated statement of changes in
consolidated equity.
Share capital
EUR k
Dec. 31, 2021
Dec. 31, 2020
Ordinary shares of EUR 1 each
178,033
177,793
The conversion of profit participation rights (Note 13.2) in the second quarter of 2021 resulted in the
issuance of 240,250 new shares by making use of the conditionally increased capital provided for such
purposes. The share capital of alstria office REIT-AG increased by EUR 240,250.00 as compared with
December 31, 2020, and as of December 31, 2021, it is represented by 178,032,997 no-par value
bearer shares.
The following table shows the reconciliation of the number of shares outstanding:
Number of shares
2021
2020
Shares outstanding on January 1
177,792,747
177,593,422
Conversion of convertible participation rights
240,250
199,325
As of December 31
178,032,997
177,792,747
As a result of the takeover bid by Alexandrite (see Note 1), 46.17% of the shares in the company were
attributable to Alexandrite as of the balance sheet date.
Capital reserve
The capital reserve changed as follows during the financial year:
EUR k
As of January 1
Payment of dividends
Share-based remuneration
Change in the payment conditions of the Stock Awards from
equity to cash settled
Conversion of convertible participation rights
2021
1,356,907
−94,230
3,210
-4,497
240
2020
1,448,709
−94,125
2,124
0
199
As of December 31
1,261,630
1,356,907
The change in the payment conditions for the Stock Awards is a contractual change, as a result of
which the payment changes from being settled through equity instruments to being settled in cash.
The values required for this settlement are to be shown as obligations under other provisions. In order
to allocate the corresponding amount to the provision, the Management has used the option of
allocating them from the capital reserve without affecting income (see Note 2.3.1).
alstria Annual Report 2021
131
Consolidated Financial Statements
The share premium resulting from the conversion of 240,250 profit-participation rights resulted in an
increase in capital reserves of EUR 240 k.
Revaluation surplus
Following the relocation of the headquarters within Hamburg in the first quarter of the financial year
2018, the office space that had previously been used as owner-occupied property again became
investment property and was remeasured at fair value. The fair value revaluation resulted in an
increase in the carrying amount of the property in the amount of EUR 3,485 k. The increase in value
was recognized in other comprehensive income and allocated to the revaluation surplus.
Treasury shares
As of December 31, 2021, the Company held no treasury shares.
By resolution of the Annual General Meeting held on September 29, 2020, the Company’s
authorization to acquire treasury shares was renewed. The resolution authorized alstria office REIT-
AG to acquire up to 10 % of the capital stock until September 28, 2025. There is no intention to make
use of this authorization at present.
Retained earnings
Retained earnings as of December 31, 2021, totaled EUR 1,923,935 k (December 31, 2020: profit
carried forward of EUR 1,714,257 k). At the dividend’s due date, alstria office REIT-AG’s stand-alone
positive retained earnings were not high enough for the payment of the dividend according to German
GAAP (HGB). Therefore, the amount of the dividend payouts was released from the available capital
reserve in 2021.
Authorized capital
By resolution of the Annual General Meeting on September 29, 2020, the Company’s Authorized
Capital 2019 in the amount of EUR 35,483 k was renewed through the Authorized Capital I.
The Authorized Capital I 2020 authorizes the Management Board, with the Supervisory Board’s
approval, to increase the Company’s share capital by September 28, 2025, by up to a total of
EUR 35,199 k.
132
alstria Annual Report 2021
Consolidated Financial Statements
Conditional capital
The Company’s share capital has been conditionally increased to grant convertible profit participation
rights to the employees of the Company and its subsidiaries and to issue bearer convertible or option
bonds, profit participation rights, or participating bonds. As of December 31, 2020, the conditional
capital amounted to EUR 18,310 k. This was divided into Conditional Capital I 2020 (EUR 16,750 k),
Conditional Capital III 2017 (EUR 560 k), and Conditional Capital III 2020 (EUR 1,000 k).
In the year under review, Conditional Capital III 2017 was used in the amount of EUR 240 k.
7.2.
Noncontrolling interests of limited partners
In the 2017 financial year, alstria office REIT-AG acquired 2,128,048 limited partner shares. A further
3,593,463 limited partner shares were redeemed against cash compensation by alstria office Prime.
In the financial years 2018 to 2020, a further 47,781 limited partner shares were acquired. No limited
partnership shares were acquired in the 2021 financial year.
In the reporting period, the change in value of the existing limited partnership shares of noncontrolling
interests resulted in expenses of EUR 3,476 k (2020: gain of EUR 279 k). The fair value of the limited
partnerships of noncontrolling interests reported as of the balance sheet date amounted to
EUR 69,813 k, whereby EUR 69,798 k are to be classified as long term and EUR 15 k as short term.
7.3.
Financial liabilities
EUR k
Loans
Corporate bonds
Mortgage loans
Schuldschein
KfW-loan
Total
EUR k
Loans
Corporate bonds
Mortgage loans
Schuldschein
Total
Noncurrent
Current
Total
Loan Accrued interest
Total current
Dec. 31, 2021
1,415,486
195,619
76,902
9,598
1,697,605
0
0
0
9,290
9,290
8,964
64
1,276
0
8,964
64
1,276
9,290
1,424,450
195,683
78,178
18,888
10,304
19,594
1,717,199
Noncurrent
Current
Total
Loan Accrued interest
Total current
Dec. 31, 2020
1,412,849
195,635
76,865
1,685,349
0
0
0
0
8,964
94
1,267
8,964
94
1,267
1,421,813
195,729
78,132
10,325
10,325
1,695,674
The table presents the long-term loans and the net of the current portion as stated under noncurrent
liabilities. Furthermore, it shows the current amount due within 1 year, recorded as an item in short-
term loans in current liabilities.
alstria Annual Report 2021
133
Consolidated Financial Statements
As of December 31, 2021, the total repayable amount of the corporate bonds, the bank loans, the
Schuldscheindarlehen, and the convertible bond drawn by alstria (as of the prior year’s balance sheet
date) was EUR 1,716,788 k (December 31, 2020: EUR 1,697,900 k). The carrying amount of
EUR 1,717,199 k (EUR 1,697,605 k, noncurrent, and EUR 19,594 k, current) considers interest
liabilities and accrued transaction costs. Financial liabilities with a maturity of up to 1 year are
recognized as current loans.
The following table shows the changes in financial liabilities:
EUR k
Long-term loans and bonds,
net of current portion
Short-term loans
Total
December
31, 2020
Payments
of the
period
Reclassification
noncurrent/
current
Changes in
fair value
December
31, 2021
1,685,349
21,210
10,325
-2,323
1,695,674
18,888
-11,613
11,613
0
2,658
-21
2,638
1,697,605
19,594
1,717,199
1) Changes in deferred loan costs (effective interest).
2) Changes in the accrued interest.
The cash changes in borrowings shown in the column “Payments of the period” include, in addition
to the cash inflows and outflows from loans and corporate bonds, the payments of transaction costs
for taking out loans.
Corporate bonds
To finance its debt financing, the group predominantly uses corporate bonds. The following table
contains a summary of the corporate bonds in existence in the financial year:
Corporate
Bond
Issu-
ance
Maturity
Notional in
EUR k
Coupon
in %
Utilization
as of
31.12.202
1 in EUR k
Book Value
as of
31.12.2021
in EUR k
Fair Value as
of 31.12.2021
(hierarchy
level 1) in
EUR k
Accrued
interests as
of
31.12.2021
in EUR k
Corporate
Bond II
Corporate
Bond III
Corporate
Bond IV
Corporate
Bond V
II 2016 12.04.2023
500,000
2.125
325,000
324,111
330,512
4,995
IV 2017 15.11.2027
350,000
1.500
350,000
347,396
345,905
III 2019 26.09.2025
400,000
0.500
400,000
395,564
395,200
676
532
II 2020 23.06.2026
350,000
1.500
350,000
348,416
355,170
2,762
134
alstria Annual Report 2021
Consolidated Financial Statements
Mortgage loans
These are property-related bank loans, most of them with variable interest rates. The loans are
secured by mortgages and other collateral customary for bank loans.
Schuldschein
As of May 6, 2016, alstria issued a Schuldschein (a debenture bond) with a nominal value of
EUR 150,000 k. The Schuldschein has an average coupon of 2.07 % p.a. payable according to end-of-
year convention and a staggered term of between 4 and 10 years (see table on page 149). In the
meantime, loan shares in the amount of EUR 73,000 k were repaid before the end of their term, so
that the Schuldschein had a notional value of EUR 77,000 k at the end of the reporting period. The
fair value (hierarchy Level 2) amounted to EUR 84,729 k as of the balance sheet date.
KfW-Darlehen
The funds from the KfW loan are used to invest in measures to increase energy efficiency. They were
granted by the KfW or Kreditanstalt für Wiederaufbau, a German development bank. Due to the short
remaining term of the KfW loan and the low interest rates, their market value is assumed to be the
reported value.
Further details regarding the loan liabilities
The current portion of the loans refers to scheduled repayments and accrued interest on the loans.
As of the balance sheet date, EUR 10,304 k have been accrued for interest payment liabilities, which
will be payable in the course of the next 12 months (December 31, 2020: EUR 10,325 k).
The variable interest for the loans is payable on a quarterly basis, whereby the standard margin and
borrowing costs for the market are added to the respective EURIBOR rate.
Due to the variable interest rate of the main part of the mortgage loans, there are no significant
differences between the carrying amounts and the fair value of these loans, with the exception of
transaction costs.
A total of EUR 37,100 k (December 31, 2020: EUR 37,100 k) in financial liabilities from mortgage loans
is related to a fixed interest rate loan. At the end of the reporting period, the loan had a fair value
of EUR 39,592 k (December 31, 2020: EUR 41,034 k). The fair value estimation is based on the
discounted cash flows using quoted prices for loans with equivalent risk and maturity as a discount
rate (Level 2 in fair value hierarchy).
As of December 31, 2021, the loans and the convertible bond were reduced by accrued transaction
costs of EUR 9,893 k (December 31, 2020: EUR 12,551 k).
The average debt maturity slightly decreased from 4.9 years as of December 31, 2020, to 3.9 years
as of December 31, 2021. The Group’s average interest rate remained unchanged from the previous
balance sheet date at 1.4 %.
alstria Annual Report 2021
135
Consolidated Financial Statements
The carrying amounts of the loans are all reported in euros. With the exception of the fixed rate loan,
the corporate bonds, the Schuldschein, and the convertible bond described above, the fair values of
the Group’s financial liabilities approximate their carrying values at the end of the reporting period.
This does not apply to their accrued transaction costs.
As of December 31, 2021, a loan facility of EUR 100,000 k was in place.
The liabilities exposed to an interest rate risk are due as follows:
EUR k
Up to 1 year
More than 1 year
Total
The following loans are secured by land charges:
EUR k
Financial liabilities secured by land charges
thereof on investment property
thereof on own used property
7.4. Other provisions
Dec. 31, 2021
Dec. 31, 2020
0
158,800
158,800
0
158,800
158,800
Dec. 31, 2021
Dec. 31, 2020
209,238
202,688
6,550
195,900
189,801
6,099
EUR k
Other provisions
Provision virtual
share liabilities
Other
Total
Due
Due
up to
1 year
in more
than 1 year
Total
Dec. 31, 2021
up to
1 year
in more
than 1 year
Total
Dec. 31, 2020
1,911
528
2,439
2,585
0
2,585
4,496
528
5,024
1,301
729
2,030
0
0
0
1,301
729
2,030
The development of other provisions is shown in the following overview:
EUR k
Dec. 31, 2020 Consumption Resolution Additions
Dec. 31, 2021
Development of other provisions
Provision virtual share liabilities
Other
Total
1,301
729
2,030
-1,701
-261
-1,962
0
-38
-38
4,896
98
4,994
4,496
528
5,024
As of the balance sheet date, EUR 4,496 k (December 31, 2020: EUR 1,301 k) was recognized as a
provision for awarding the Long- and in the previous year still Short-Term Incentive Plan (Note 13.1).
Other provisions are related to litigation expenses.
136
alstria Annual Report 2021
Consolidated Financial Statements
7.5.
Trade payables and other liabilities
EUR k
Due
up to
1 year
in more
than 1 year
Total
Dec. 31, 2021
Trade payables
3,487
0
3,487
Due
up to
1 year
3,943
in more
than 1 year
Total
Dec. 31, 2020
0
3,943
28,488
0
28,488
21,109
0
21,109
Other current liabilities
Accruals for outstanding
invoices
Rent and security deposits
received
IFRS 16 lease liabilities
Cash compensation
Salary obligations
Accruals for tax consulting
Customers with credit balances
Supervisory Board compensation
Interests for tax provisions
Auditing costs
Vacation provisions
8,858
373
2,565
2,353
870
807
525
521
412
197
9,669
4,700
0
0
0
0
0
0
0
0
0
Miscellaneous liabilities
1,158
Financial liabilities
47,127
14,369
Advance rent payments
received
3,259
Value-added tax liabilities
1,728
Income tax and social security
contributions
Non-financial liabilities
217
5,204
0
0
0
0
Total other liabilities
52,331
14,369
18,527
5,073
2,565
2,353
870
807
525
521
412
197
1,158
61,496
8,800
405
6,052
2,335
800
2,142
525
106
380
296
116
7,856
4,772
0
0
0
0
0
0
0
0
0
16,656
5,177
6,052
2,335
800
2,142
525
106
380
296
116
43,066
12,628
55,694
3,259
3,293
1,728
3,359
217
5,204
66,700
230
6,882
49,948
12,628
0
0
0
0
3,293
3,359
230
6,882
62,576
The disclosed carrying amounts approximate their fair values.
The increase in obligations for outstanding invoices is due to the consulting expenses in connection
with the takeover bid by Alexandrite (see Note 5.6), which had not yet been settled as of the reporting
date.
In its decision of September 26, 2019, the Regional Court of Hamburg set the cash compensation to
be paid to entitled shareholders of the former DO Deutsche Office AG, which was leaving the company
with regard to the change of the legal form, at an amount of EUR 5.58 per share plus interest. The
decision is meanwhile effective. This led to a resurgence of the liability from the cash value
settlement, in terms of the outstanding settlement obligation including interests according to the
court decision, in the amount of EUR 6,052 k. At the end of the reporting period, after part of the
obligation has been settled, this still amounts to EUR 2,176 k, including interest.
The IFRS 16 lease liability relates to the contractually agreed rental terms, including the expected
extension options. Future cash outflows that the lessee might face due to extension options that were
not considered in the measurement of the lease liability amount to EUR 8,992 k.
alstria Annual Report 2021
137
Consolidated Financial Statements
7.6.
Income tax liabilities
The recognition of income tax liabilities as of December 31, 2021, is described in Note 5.9 regarding
income tax expenses. Obligations from income taxes arise almost exclusively at the level of the alstria
office’s Prime companies acquired through the business combination on October 27, 2015.
The tax liabilities mainly resulted from taxes arising out of the realization of hidden reserves as a
result of the inclusion of the companies into the tax-exempt REIT structure. As a result, no further
deferred tax liabilities had to be formed since the 2016 financial year.
8. OTHER NOTES
8.1.
Compensation of the Management Board and Supervisory Board
Management Board The following total remuneration was granted to the members of the
Management Board, according to IAS 24.17:
EUR k
Short-term benefits
Share-based remuneration
Postemployment benefits
Total
2021
1,411
900
161
2,472
2020
1,275
800
161
2,236
On the reporting date, liabilities for the compensation of the Management Board members amounted
to EUR 433 k (2020: EUR 433 k).
As of December 31, 2021, members of the Management Board were issued 234,620 virtual shares
(December 31, 2020: 240,817 virtual shares) from the cash-settled share-based management
remuneration plan implemented in 2010 and the equity-settled management remuneration plan in
place since 2018 (see Note 13.1).
Supervisory Board Pursuant to the Articles of Association, Supervisory Board members’ fixed annual
payments amounted to EUR 526 k (2020: EUR 525 k).
Further information on the disclosures from HGB Section 314, para. 1, no. 6a (German Commercial
Code) and IAS 24.17 is provided in the remuneration report (see Combined Management Report 2021,
Section VIII, 1).
8.2. Other financial commitments and contingencies
Other financial obligations from refurbishment projects and ongoing maintenance amounted to
EUR 45,402 k (2020: EUR 78,605 k). The decrease results from a higher level of ongoing development
projects at the end of the previous period.
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Consolidated Financial Statements
As of December 31, 2021, rental agreements for the car parking spaces and administrative premises
were subject to a minimum lease term. Future financial obligations of EUR 6,236 k arose from other
leasing agreements. Of these, EUR 459 k in obligations has a residual maturity of up to 1 year;
EUR 1,191 k in obligations has a remaining maturity of 1 to 5 years; and the remaining EUR 4,586 k
has more than 5 years.
8.3.
Consolidated cash flow statement
The cash flow statement shows how the Group’s cash and cash equivalents have changed over the
financial year as a result of cash received and paid. In accordance with IAS 7, cash flows are
distinguished from operating activities and from investing and financing activities.
Cash flows from investing and financing activities are calculated based on payments, whereas cash
flows from operating activities are indirectly derived based on the consolidated profit for the year.
The net cash generated from operating activities for the 2021 financial year amounted to
EUR 116,434 k, which is above the level of previous year’s operating cash flow (EUR 103,231 k). The
increase results on one hand from higher revenue received and on the other hand from higher interest
payments in the previous financial year due to the early interest payment for a corporate bond. The
net cash generated from operating activities includes other noncash income and expenses totaling
EUR 5,957 k. These essentially relate to allocation to provisions and other liabilities. Cash outflows
for leases amounted to EUR 999 k for the financial year.
The cash flow from investing activities is affected by the cash outflow for investments in the
investment property portfolio in the amount of EUR 206,996 k while the inflow of cash from property
disposals amounted to EUR 24,750 k.
The cash flows from financing activities includes cash inflows from taking out a bank loans in the
amount of EUR 21,210 k. Cash outflows resulted mainly from the dividend distribution in the amount
of EUR 94,230 k.
Cash and cash equivalents reported in the cash flow statement relate to all liquidity items disclosed
on the balance sheet (e.g., cash in hand and bank balances).
alstria Annual Report 2021
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Consolidated Financial Statements
9. RELATED PARTY RELATIONSHIPS
9.1.
Preliminary remarks
The related parties are the Management Board, the members of the Supervisory Board, the managing
directors of the subsidiaries and second-tier subsidiaries, and their close relatives. The related parties
also include entities with a controlling influence over the Group and entities with joint control or
significant influence over alstria office REIT-AG.
As of the balance sheet date, alstria office REIT-AG is the parent company of the alstria group.
The joint ventures over which alstria office REIT-AG has joint control are also considered related
parties.
In the view of alstria office REIT-AG’s management, all transactions with related parties entered into
during financial year 2021 were undertaken in terms of arm’s-length transactions or under conditions
favoring alstria office REIT-AG.
9.2.
Remuneration of key management personnel
For a detailed description of the remuneration of key management personnel, please refer to Note 8.1
and the remuneration report (see combined management report).
9.3.
Related party transactions
At the end of the reporting period, the Group recorded no receivables from or liabilities to joint
ventures. In the previous year, alstria received EUR 5 k from the joint ventures as compensation for
services connected to real estate. These services were no longer provided in the reporting period.
No further transactions with related parties were carried out during the reporting period.
10. EARNINGS PER SHARE
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 financial year — except for the
average number of treasury shares held by the Company itself.
Diluted earnings per share are calculated by dividing the profit attributable to the parent company’s
ordinary owners 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 of shares that
would be issued as a result of the dilutive potential ordinary shares’ conversion.
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Consolidated Financial Statements
The following table reflects the income and share data used in the earnings per share computations:
Earnings per share
Profit attributable to the shareholders (EUR k)
Average number of shares outstanding (thousands)
Basic earnings per share (EUR)
2021
209,678
177,949
1.18
2020
168,489
177,644
0.95
The granted Stock Awards and the convertible profit participation rights did not result in dilution
effects during the period under review.
alstria office REIT-AG is authorized to issue up to EUR 18,310 k in shares as conditional capital. These
contingently issuable shares could dilute basic earnings per share in the future, but they were not
included in the calculation of diluted earnings per share because they are nondilutive for the
presented period.
11. DIVIDENDS PAID AND DIVIDENDS PROPOSED
EUR k
Dividends on ordinary shares1) not recognized as a liability as of December 31
Dividend per share
1) Refers to all shares except treasury shares on the dividend payment date
2021
94,230
0.53
2020
94,125
0.53
At the Annual General Meeting held on May 6, 2021, alstria office REIT-AG resolved to distribute
dividends totaling EUR 94,230 k (EUR 0.53 per outstanding share). The dividends were distributed on
May 11, 2021. By comparison, the dividends paid out in 2020 totaled EUR 94,125 k (EUR 0.53 per
outstanding share). Due to the COVID 19 pandemic, the 2020 Annual General Meeting did not take
place until September. The dividend was therefore distributed in the second half of the year.
The Management Board, in agreement with the Supervisory Board, intends to propose to the Annual
General Meeting to use the balance sheet profit of alstria office REIT-AG for the 2021 financial year
to pay a dividend of EUR 0.04 per share. In the event that there are significant changes in the
company's available liquidity in the further course of the 2022 financial year, the Management Board
and Supervisory Board reserve the right to submit a different dividend proposal to the Annual General
Meeting. The payment of a dividend depends on the approval of the General Meeting.
12. EMPLOYEES
From January 1 to December 31, 2021, the Company had an average of 171 employees (January 1 to
December 31, 2020: 166 employees on average). The average was calculated based on the total
number of employees at the end of each quarter. On December 31, 2021, 171 people were employed
at alstria, excluding the Management Board members (December 31, 2020: 167 employees).
alstria Annual Report 2021
141
Consolidated Financial Statements
Employees
Average 2021 December 31, 2021 Average 2020 December 31, 2020
Real estate management and development
Finance and legal
Other occupations
Total
101
39
31
171
104
39
28
171
96
37
33
166
95
40
32
167
13. SHARE-BASED REMUNERATION
13.1. Share-based remuneration (virtual shares and stock awards) for Management Board
members
The virtual shares issued to the Management Board relate to share-based remuneration. In
January 2017, the Supervisory Board of the Company adopted an amendment to the remuneration
system for members of the Management Board, which has remained unchanged since 2010 and which
came into effect on January 1, 2018. As the term of the virtual shares granted is four years, virtual
shares still existed for the last time in the 2021 financial year until their conversion in March 2021
under the remuneration system that was valid from 2010. The criteria of the new compensation
system that came into effect on January 1, 2018 and with adjustments on January 1, 2021, apply to
all other share-based compensation entitlements that now exist. The latter are referred to as Stock
Awards. In the following, therefore, the cornerstones of the virtual shares under the Remuneration
System 2010 and the Stock Awards under the new Remuneration System 2018 are explained.
13.1.1. Virtual share-based remuneration 2010 to 2017
On March 2, 2010, the Company’s Supervisory Board established a share-based remuneration system
to provide success-based remuneration for members of the Management Board. This system was made
up of a long-term component, the Long-Term Incentive Plan 2010 (LTIP 2010), and a short-term
component, the Short-Term Incentive Plan 2010 (STIP 2010). These plans offered cash-settled and
share-based payment transactions, respectively.
Under the LTIP 2010, alstria office REIT-AG granted virtual shares, which entitle the recipient to a
conversion into cash payments after 4 years.
The amount of the conversion payment was based on the number of virtual shares multiplied by the
average stock market price of alstria’s shares on the Frankfurt Stock Exchange during the 60 trading
days prior to the relevant maturity date. An amount equal to the sum of the dividend per share that
the Company paid to its shareholders between the grant date and the maturity date was added as
well. The payment cannot be higher than 250 % of the average stock market price of alstria’s shares
on the Frankfurt Stock Exchange in the 60 trading days prior to the relevant grant date multiplied by
a specified discretionary factor.
The discretionary factor was a multiplier that could vary between 0.8 and 1.2; it was subject to each
participant’s individual performance during the holding period.
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Consolidated Financial Statements
The assessment of target achievement equally depended on the absolute return of alstria’s share
price (absolute total shareholder return) and on the relative performance of alstria’s shares in relation
to the EPRA/NA-REIT Index Europe Ex UK (relative total shareholder return).
Since the payment per vested virtual share depended on the average quoted price of alstria’s shares
for 60 trading days, the quoted average prior to the end of the reporting period essentially
represented the fair value of each virtual share.
The virtual shares resulting from the STI 2010 remuneration were subject to a minimum vesting period
of two years. Virtual STI 2010 shares were converted, the last time in the financial year 2020, into a
cash amount after the expiration of the vesting period. This cash amount was calculated based on the
number of virtual shares multiplied by the share price of one alstria share at that time, which was in
turn calculated based on a reference period.
13.1.2. Stock award-based remuneration starting in 2018 and 2021
Unlike the STIP 2010, no virtual shares or stock awards are issued under the STIP 2018.
The structure of the long-term share-based compensation system was retained in principle. The key
difference is that LTIP 2010 was a cash-settled share-based remuneration system, while the LTIP
2018/LTIP 2021 provides equity-settled share-based compensation. Apart from that, only
simplifications and adjustments were made. As part of the LTIP 2018/LTIP 2021, alstria office REIT-
AG grants stock awards, which entitle the holder to receive shares in the Company after 4 years,
instead of a cash payment, as in the LTIP 2010.
The number of shares to be issued to a Management Board member at the term’s end is calculated as
the number of stock awards achieved, multiplied by the average price of alstria shares on the
Frankfurt Stock Exchange during the last 60 trading days prior to the respective conversion date, plus
an amount equal to the total dividend paid by the Company to its shareholders per alstria share during
the respective term of a stock award. However, in no case can this be more than 250 % of the average
price of alstria shares on the Frankfurt Stock Exchange during the last 60 days before the grant date.
The number of shares to be issued to a Management Board member is multiplied by a specified
discretionary factor.
The basis for determining the performance targets, as in the LTIP 2010, is the absolute and relative
total shareholder returns. However, the relative total shareholder return will be weighted more
heavily, at 75 % (previously 50 %). The comparative index for the relative total shareholder return is
the FTSE EPRA/NAREIT Developed Europe Index (previously the EPRA/NAREIT Europe Ex-UK Index) for
alignment with real estate industry standards.
The fair value of the stock awards at the grant date was estimated using a 100,000-path Monte Carlo
simulation based on the terms of the LTIP 2018/LTIP 2021.
The following table lists the model specifications used to determine the fair value:
alstria Annual Report 2021
143
Consolidated Financial Statements
Grant date
Expected term of the option (in years)
Risk-free interest rate (%)
Share volatility (%)
Volatility of the FTSE EPRA/NAREIT Developed Europe Index (%)
Correlation between share price and benchmark index (%)
Expected dividend yield of the share (%)
Share price on grant (in EUR)
Index value when granted
Reference share price (in EUR)
Reference price of the FTSE EPRA/NAREIT Developed Europe
Index
March 7,
2018
March 4,
2019
March 2,
2020
March 1,
2021
4.00
0.11
18.77
16.46
65.19
4.03
12.06
4.00
−0.39
18.11
16.09
66.21
3.88
13.40
4.00
−0.84
15.95
13.58
56.57
3.11
16.74
4.00
−0.67
24.67
18.25
73.56
3.75
14.15
2,085.51
2,166.92
2,333.61
2.113.90
12.69
12.83
17.40
14.23
2,176.16
2,112.40
2,502.27
2.108.17
Estimated fair value of one option on the grant date (in EUR)
8.61
10.22
12.48
10.36
Comparison of the key terms of the variable remuneration systems 2010 and 2018/2021
STI
(Short-
Term
Incentive)
LTI
(Long-
Term
Incentive)
Until 2017
From 2018
From 2021
▪
▪
▪
▪
▪
▪
▪
FFO as target value
Threshold for the
performance target:
50 %
Discretionary factor to
reflect individual
performance: 0.8−1.2
75 % cash payout / 25
% payout in virtual
shares
Virtual shares with
term of 4 years, then
payout in cash
Performance subject to
absolute TSR (50 %)
and relative TSR
(EPRA/NAREIT Europe
Ex-UK Index) (50 %)
Discretionary factor to
reflect individual
performance: 0.8−1.2
▪
▪
▪
▪
▪
▪
▪
FFO per share as target
value
Threshold for the
performance target:
70 %
Discretionary factor to
reflect individual
performance: 0.7−1.3
100 % cash payout
Stock awards with
term of min. 4 years,
payout in Company
shares or cash payment
Performance subject to
absolute TSR (25 %)
and relative TSR (FTSE
EPRA/ NAREIT
Developed Europe
Index) (75 %)
Discretionary factor to
reflect individual
performance: 0.7−1.3
▪
▪
▪
▪
▪
▪
▪
FFO per share as target
value with 70% and
ESG-targets with 30%
Threshold for the
performance target:
70 %
Discretionary factor to
reflect individual
performance: 0.8-1.2
100 % cash payout
Stock awards with term
of min. 4 years, payout
in Company shares or
cash payment
Performance subject to
absolute TSR (25 %)
and relative TSR (FTSE
EPRA/ NAREIT
Developed Europe
Index) (75 %)
Discretionary factor to
reflect individual
performance: 1.0
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Consolidated Financial Statements
The table below summarizes the number of virtual shares and (from 2018 onward) stock awards
granted under the existing STIP and LTIP that remained outstanding as of December 31, 2021:
Start of deferral
period
Reference share
price in EUR
End of deferral
period
Olivier Elamine
Number of virtual
shares/Stock
Awards from
2018
Alexander Dexne
Number of virtual
shares/Stock
Awards from 2018
LTI 2018
LTI 2019
LTI 2020
LTI 2021
2018
2019
2020
2021
12.69
12.83
17.40
14.23
2022
2023
2024
2025
34,673
34,295
25,287
35,137
28,369
28,059
20,690
28,110
The development of the virtual shares through December 31, 2021, is shown in the following table:
Number of virtual shares and stock
awards
2021
2020
As of January 1
Stock Awards (2017: virtual shares)
granted in the reporting period
LTI
240,817
63,247
Converted into cash in the reporting period
-69,444
As of December 31
234,620
STI
0
0
0
0
LTI
263,158
45,977
−68,318
240,817
STI
8,313
0
−8,313
0
In the first quarter of 2021, 69,444 virtual shares from the LTIP were exercised, resulting in payments
of EUR 1,701 k.
In 2021, the LTIP generated remuneration expenses amounting to EUR 987 k (2020: EUR 1,241 k) and
provisions amounting to EUR 4,496 k (2020: EUR 1,301 k). The 234,620 stock awards issued under the
LTI were share-based payments that were intended to be settled in the form of equity instruments
when issued. The change in value was taken into account in the capital reserve. Due to a resolution
of the Supervisory Board, according to which the LTI 2018 will be settled in cash instead of converted
into shares in the company, the Group recognizes the obligation from granted stock awards at the
end of the reporting period in other provisions (see Note 2.3.1). Virtual shares in the form of STI no
longer exist.
The 8,313 virtual shares converted into cash under the STIP 2010 resulted in payments to the
Management Board amounting to EUR 151 k within the 2020 financial year. The conversion amount
was the weighted average price of the first 20 trading days in the 2020 calendar year plus the dividend
paid during the vesting period. This amounted to EUR 18.16, of which EUR 17.12 was related to the
share price and EUR 1.04 was related to the dividend paid.
13.2. Convertible profit participation rights program
On September 5, 2007, the Company’s Supervisory Board resolved the issuance of convertible profit
participation certificates (“certificates”) to employees of the Company and of companies in which
alstria office REIT-AG directly or indirectly holds a majority interest. Members of alstria office REIT-
alstria Annual Report 2021
145
Consolidated Financial Statements
AG’s Management Board are not considered employees of the Company in terms of this convertible
profit participation rights program. The Supervisory Board passed a resolution to specify the details
of the convertible profit participation rights program in accordance with an authorization granted at
the General Meeting of shareholders on March 15, 2007. The convertible profit participation rights
program was renewed by the Supervisory Board with minor modifications in 2012 in accordance with
an authorization granted at the General Meeting of shareholders on April 24, 2012.
The main terms of the program can be summarized as follows:
The nominal amount of each certificate is EUR 1.00, which is payable upon issuance. A maximum of
1,000,000 certificates with a total nominal value of up to EUR 1,000,000.00 can be issued as part of
the Conditional Capital III 2017 created by resolution of the Annual General Meeting. By the end of
the reporting period, certificates were granted corresponding to EUR 732,925 of conditional capital
III 2017. In 2021, the Annual General Meeting approved the implementation of additional Conditional
Capital III 2020 with an aggregate nominal value of up to EUR 1,000,000 for the conversion of
1,000,000 certificates. At the end of the reporting period, 281.050 certificates related to this
Conditional Capital III 2020 had still been granted.
The certificates are issued as nontransferable rights and are not sellable, pledgeable, or otherwise
chargeable.
The maximum term of each certificate is 5 years.
During its term, each certificate entitles the holder to a disbursement corresponding to the amount
of the dividend per share that the Company paid for a full financial year. For certificates held by a
beneficiary for less than a full financial year, the profit share is reduced pro rata temporis.
Each certificate shall be converted into one no-par value bearer share in the Company on the second,
third, fourth, or fifth anniversary of the issue date if the Company’s then-current stock exchange
share price has exceeded the share price on the issue date by 5 % or more on at least seven non-
subsequent trading days (market condition). For 260,025 certificates issued on September 30, 2020,
and 281,050 certificates issued on May 7, 2021, this market condition was fulfilled until the end of
the 2021 financial year.
Upon conversion of a certificate, the beneficiary shall pay an additional conversion price to the
Company for each certificate to be converted. This conversion price shall be the aggregate
proportionate amount of the Company’s share capital to which the certificate entitles the holder;
this amount shall be payable in addition to the offer price.
The fair values of the inherent options for conversion were estimated on the respective grant dates
using a binary barrier option model based on the Black-Scholes model. The conversion will
automatically be affected once the barrier has been reached. The model considers the terms and
conditions upon which the instruments were granted.
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alstria Annual Report 2021
Consolidated Financial Statements
The following share-based payment agreements under the employee profit participation program
existed during this year:
Number of certificates
Grant date of tranche
January 1, 2021
Expired due to termination of employment
Converted
Granted
December 31, 2021
May 23, 2019
Sept 30, 2020
May 7, 2021
240,250
0
-240,250
0
0
273,975
-13,950
0
0
260,025
0
-6,050
Total
514,225
-20,000
0
-240,250
287,100
281,050
287,100
541,075
For the conversion of 240,250 of the 2019 convertible profit participation rights certificates, the
relevant XETRA share price on the conversion date was EUR 14.37 per share.
Total expenses relating to convertible profit participation rights amounted to EUR 2,785 k in 2021
(see Note 5.4).
The following table lists the inputs used to determine the fair value of the options for conversion:
Grant date of tranche
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)
Estimated fair value of one option for conversion
on the grant date
May 23, 2019
Sept 30, 2020
May 7, 2021
3.77
−0.69
15.01
2.00
2.00
5.50
13.80
9.50
4.47
−0.82
20.20
2.00
2.00
6.00
11.86
8.57
3.67
−0.69
26.00
2.00
2.00
5.40
14.44
11.49
The expected volatility was based on the implied volatility of alstria shares.
alstria Annual Report 2021
147
Consolidated Financial Statements
14. FINANCIAL RISK MANAGEMENT
14.1. Managing financial risk factors
The Group’s activities expose it to a variety of financial risks related to interest rates, credit, and
liquidity. The Group’s overall risk management program focuses on the unpredictability of financial
markets and seeks to minimize potential adverse effects on the Group’s financial performance. To
this end, sources of funding are diversified and a balanced maturity profile is planned, enabling a
coordinated and continuous refinancing process. The financial instruments mainly used by the Group
are corporate bonds. Bank loans and a Schuldschein (promissory note loans) are used only to a lesser
extent, as the corporate bond instrument was favored, due to the fixed interest rate and direct access
to the capital market. The refinancing strategy could change in the future as a result of Alexandrite
taking over the majority of the shares (see Note 1). Should the corporate bonds and the promissory
note be returned before the end of their regular term, the new majority shareholder has committed
to provide a bridge financing with a term of up to two years. In the event of the loss of the investment
grade rating assigned to alstria by the rating agency Standard & Poor's (S&P), the bondholders could
have demanded that the corporate bonds to be repaid. In February 2022, S&P confirmed the
investment grade rating, although the rating was downgraded from BBB+ to BBB-, the lowest notch
within the investment grade rating. The main purpose of the debt funding is to finance alstria’s
business activities. In addition, the Group also owns various financial assets, such as loans granted
and short-term deposits, which arise directly from business activities.
The treasury function (group treasury) within the finance and controlling department manages
financial risks. The group treasury identifies, evaluates, and hedges financial risks in close cooperation
with the CFO. The Management Board provides written principles for overall risk management and
policies that cover specific areas, such as interest rate risk and credit risk, making use of both
derivative and nonderivative financial instruments, as well as excess liquidity investment.
Derivative financial instruments comprise interest caps. The purpose of these derivative financial
instruments is to hedge against the interest risks arising from the Group’s business activities and
funding.
The main risks arising from the Group’s financial instruments are related to cash flow, interest rates,
and liquidity. The Group is exposed mainly to credit risks, due to derivative financial instruments
being held as assets and due to its bank balances. The carrying amount of the financial assets is the
amount that best presents the maximum credit risk. The Management Board decides on strategies
and processes to manage specific risk types, as defined in the following paragraphs.
Risks that can arise from an economic slowdown are seen mainly in the potential default of payment
by tenants. For the increase in economic risks as a result of the COVID-19 pandemic, precautions have
been taken, in the form of increased value adjustments. Given that all of the Company’s main tenants
are public institutions or are highly rated, the risk of such defaults is currently still limited.
The loan agreements of alstria Group allow for the loan-to-value (LTV) ratios outlined by the following
148
alstria Annual Report 2021
Consolidated Financial Statements
table. As represented in the overview, the Group managed to keep its LTV below the LTV of the loan
at the relevant date — in some cases, significantly so. The risk of a breach of covenant is effectively
countered.
The following table presents the single-LTV ratios and covenants for the Group’s loans as of the end
of the reporting period:
Liabilities
Maturity
Loan #1
Loan #2
Loan #3
Loan #4
Loan #5
Loan #6
Total secured loans
Bond #2
Bond #3
Bond #4
Bond #5
June 28, 2024
Mar. 28, 2024
June 30, 2026
Sept. 29, 2028
Sept. 30, 2024
Mar. 31, 2023
Apr. 12, 2023
Nov. 15, 2027
Sept. 26, 2025
Jun. 23, 2026
Schuldschein 10y/fixed
May 6, 2026
Schuldschein 7y/fixed
May 6, 2023
Revolving credit line
Sept. 15, 2024
Total unsecured loans
Total
Net LTV
Principal amount
drawn as of
Dec. 31, 2021
(EUR k)
LTV as of
Dec. 31, 2021
(%)
LTV
covenant
(%)
Principal amount
drawn as of
Dec. 31, 2020
(EUR k)
34,000
45,900
56,000
60,000
13,338
5,550
214,788
325,000
350,000
400,000
350,000
40,000
37,000
0
1,502,000
1,716,788
13,4
28,1
35,0
30,2
n/a
n/a
20,2
−
−
−
−
−
−
−
−
35,2
28,8
65,0
75,0
65,0
n/a
n/a
n/a
–
−
−
−
−
−
−
−
−
−
34,000
45,900
56,000
60,000
0
0
195,900
325,000
350,000
400,000
350,000
40,000
37,000
0
1.502.000
1.697.900
Apart from the risks mentioned above, the Group is not exposed to any commodity or currency risks.
alstria Annual Report 2021
149
Consolidated Financial Statements
14.1.1. Interest rate risk
The following tables display the carrying amount of the Group’s financial instruments that are exposed
to interest rate risk by maturity:
EUR k
< 1 year
1–2 years
2–3 years
3–4 years
> 4 years
Total
Financial year ending
Dec. 31, 2021
Variable interest
Mortgage bank loans
Total
0
0
0
0
42,800
42,800
0
0
116,000
158,800
116,000
158,800
EUR k
< 1 year
1–2 years
2–3 years
3–4 years
> 4 years
Total
Financial year ending
Dec. 31, 2020
Variable interest
Mortgage bank loans
Total
0
0
0
0
0
0
42,800
42,800
116,000
158,800
116,000
158,800
Given its noncurrent financial liabilities with variable interest rates, alstria is exposed to risks from
fluctuations in market interest rates. The interest base for these financial liabilities (loans) is the
three-month EURIBOR rate, which is adjusted every three months. Derivative financial instruments
were originally acquired to hedge the interest expense. With the change in refinancing favoring fixed-
interest corporate bonds, the hedging strategy was also discontinued and no new interest rate hedging
instruments in the form of interest rate caps or swaps were used. The term of the last interest rate
swap ended in the reporting period (see Note 6.5).
The following table shows the sensitivity of the Company’s loans to consolidated profit or loss and
equity, due to a reasonably possible change in interest rates (due to the effect on the floating-interest
loans). All of the variables remain constant; the effects from the derivative financial instruments
were not factored into this calculation.
Interest expenses per annum
EUR k
+ 100 bps
− 50 bps
2021
1,588
−169
2020
1,588
−189
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 in respective fair market values:
Due to the termination of the remaining derivative financial instruments, the sensitivities did not
result in any changes in value as of December 31, 2021.
150
alstria Annual Report 2021
Consolidated Financial Statements
14.1.2. Credit risk
Credit risks are managed at the group level, except for those relating to accounts receivable balances.
The department responsible for managing the operating business property oversees and analyzes credit
risks in relation to each reletting activity before the standard payment and lease terms and conditions
are offered. Credit risk arises from cash and cash equivalents, derivative financial instruments, deposits
with banks and financial institutions, and credit exposures to customers (including outstanding
receivables and other compensatory commitments). Only banks and financial institutions are accepted
as counterparties—and only if they are independently rated parties with a minimum rating of
“investment grade.” If the tenants are independently rated, then their ratings are applied. If there is
no independent rating, the tenant’s credit quality is assessed; its financial position, past experience,
and other factors are taken into account. Credit limits are generally not provided to tenants. Lease
receivables from tenants are settled in bank transfers, which are usually due at the beginning of each
payment term. Tenants must pay a deposit or provide other warranties prior to the start of a lease
term.
14.1.3. Liquidity risk
The Company continually monitors the Group-wide risk of potential liquidity bottlenecks with a liquidity
planning tool. The tool uses the expected cash flows from business activities and the maturity of the
financial liabilities as a basis for analysis. The Group’s long-term refinancing strategy ensures that these
medium- and long-term liquidity requirements are met. Such forecasting considers the Group’s debt-
financing plans, covenant compliance, compliance with internal balance sheet targets, and, if
applicable, external regulatory or legal requirements (e. g., G-REIT equity ratio).
At the end of the reporting period, the nominal financial liabilities had the following maturities in line
with their contractual maturity (based on the three-month EURIBOR) as of December 31, 2021.
alstria Annual Report 2021
151
Consolidated Financial Statements
The following chart shows the related future undiscounted cash flows of financial liabilities:
EUR k
< 1 year 1–2 years 2–3 years 3–4 years 4–5 years >5 years
Total
Financial year ending Dec. 31, 2021
Corporate bond
Loans
Interest
Schuldschein
Trade payables
Other liabilities
0
325,000
0
400,000
350,000
350,000 1,425,000
9,290
5,960
83,538
0
56,000
60,000
214,788
23,437
23,853
15,350
14,206
12,218
6,461
95,525
0
37,000
3,487
0
0
0
0
0
40,000
0
0
0
77,000
3,487
52,331
2,321
2,306
2,217
2,127
6,520
67,822
88,545 394,134 101,194 416,423 460,345 422,981 1,883,622
EUR k
< 1 year 1–2 years 2–3 years 3–4 years 4–5 years >5 years
Total
Financial year ending Dec. 31, 2020
Corporate bond
Loans
Interest
Schuldschein
Trade payables
Other liabilities
0
0
325,000
0
400,000
700,000 1,425,000
2,322
13,310
4,850
80,627
0
116,000
217,109
23,412
23,399
23,335
14,565
13,856
17,863
116,430
0
3,943
0
0
37,000
0
0
0
0
0
40,000
77,000
0
3,943
49,948
1,853
1,785
1,792
1,745
5,454
62,577
79,625
38,562 391,970
96,984 415,601 879,317 1,902,059
Details on the loans, borrowings, and bonds can be found in Note 7.3. The loans’ maturity profile is
shown in Note 2.5 of the Combined Management Report. To secure the bank loans, receivables from
rental and property purchase agreements, as well as from insurance and derivative financial
instruments, were assigned to the lenders. Liens were granted on bank accounts, and charges were
registered on the land. Obligations arising from floating-interest bank loans were fully secured. Land
charges for real estate properties with a carrying amount of EUR 1,059,264 k (December 31, 2020:
EUR 787,716 k) were provided as collateral.
14.2. Capital management
Capital management activities are aimed at maintaining the Company’s classification as a REIT to
support its business activities and maximize shareholder value.
The Group actively manages its capital structure and makes adjustments in response to changes in
economic conditions. To maintain or adjust its 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 either December 31, 2020 and December 31, 2021.
152
alstria Annual Report 2021
Consolidated Financial Statements
The Company monitors its capital structure using the LTV indicator, as well as the relevant
performance indicators, for its classification as a REIT. The REIT equity ratio, which is the ratio of
equity to immovable assets, is the most important of these indicators. According to the Group’s
strategy, the REIT equity ratio is aimed at exceeding the REIT equity ratio of 45 %, within the relevant
terms provided by REIT law. G-REIT status is unaffected, as long as the G-REIT ratio is not below 45 %
at the end of the financial year for 3 consecutive financial years.
The following ratios are also used to manage capital:
Ratios according to G-REIT law
%
Equity ratio according to G-REIT law
Immovable assets
Revenues gained from immovable assets
Income gained from disposal of immovable assets
1) Within five years, based on the average property value during this period.
14.3. Determination of fair value
2021
69,13
93,05
100,00
13,09
2020
G-REIT covenant
71.11
89.86
100.00
23.59
> 45
> 75
> 75
< 501)
The following table shows the carrying amount and fair value of all financial instruments disclosed in
the consolidated financial statements:
Carrying
amount
Nonfinancial
assets
Financial assets
Assets as per balance
sheet (EUR k) as of
Dec. 31, 2021
Financial assets
Total long-term
Trade receivables
Tax receivables
Receivables and other
assets
Cash and cash
equivalents
Total short-term
Total
At amortized
costs
Fair value
through p/l
39,185
39,185
3,922
1,289
0
0
0
1,289
4,258
3,622
313,684
323,153
362,338
0
4,911
4,911
38,941
38,941
3,922
0
636
313,684
318,242
357,183
Total
39,262
39,262
3,922
0
636
Fair
value
39,262
39,262
3,922
0
636
313,684
313,684
318,242
318,242
321
321
0
0
0
0
0
321
357,504
357,504
alstria Annual Report 2021
153
Consolidated Financial Statements
Carrying
amount
Nonfinancial
liabilities
Financial liabilities
Liabilities as per
balance sheet (EUR k)
as of Dec. 31, 2021
Ltd. equity of
noncontrolling interests
Long-term loans
Other liabilities
Total long-term
Ltd. equity of
noncontrolling interests
Short-term loans
Trade payables
Tax liabilities
Other liabilities
Total short-term
69,798
1,697,605
14,369
1,781,772
15
19,594
3,487
4,525
52,331
79,952
Total
1,861,724
At amortized
costs
69,798
1,697,605
14,369
Total
69,798
1,697,605
14,369
Fair
value
69,798
1,729,207
14,369
1,781,772
1,781,772
1,813,374
15
19,594
3,487
0
47,127
70,223
15
19,594
3,487
0
47,127
70,223
15
19,594
3,487
0
47,127
70,223
1,851,995
1,851,995
1,883,597
0
0
0
0
0
0
0
4,525
5,204
9,729
9,729
Carrying
amount
Nonfinancial
assets
Financial assets
Assets as per balance
sheet (EUR k) as of
Dec. 31, 2020
Financial assets
Total long-term
Trade receivables
Tax receivables
Receivables and other
assets
Cash and cash
equivalents
Total short-term
Total
At amortized
costs
Fair value
through p/l
39,108
39,108
4,572
1,230
0
0
0
1,230
38,864
38,864
4,572
0
8,762
7,620
1,142
460,960
475,524
514,632
0
8,850
8,850
460,960
466,674
505,538
Total
39,108
39,108
4,572
0
Fair
value
39,108
39,108
4,572
0
1,142
1,142
460,960
460,960
466,674
466,674
244
244
0
0
0
0
0
244
505,782
505,782
154
alstria Annual Report 2021
Consolidated Financial Statements
Carrying
amount
Nonfinancial
liabilities
Financial liabilities
Liabilities as per
balance sheet (EUR k)
as of Dec. 31, 2020
Ltd. equity of
noncontrolling interests
Long-term loans
Other liabilities
Total long-term
Ltd. equity of
noncontrolling interests
Short-term loans
Trade payables
Tax liabilities
Other liabilities
Total short-term
68,275
1,685,349
12,628
1,766,252
15
10,325
3,943
4,780
49,948
69,011
Total
1,835,263
At amortized
costs
68,275
1,685,349
12,628
Total
68,275
1,685,349
12,628
Fair
value
68,275
1,753,754
12,628
1,766,252
1,766,252
1,834,657
15
10,325
3,943
0
43,067
57,350
15
10,325
3,943
0
43,067
57,350
15
10,325
3,943
0
43,067
57,349
1,823,602
1,823,602
1,892,007
0
0
0
0
0
0
0
4,780
6,882
11,662
11,662
All of the Group’s financial instruments, which are measured at fair value on the balance sheet, are
valued by applying the level 2 valuation measurement approach.
The disclosures in the Notes on the market values of the corporate bonds were assessed according to
Level 1.
alstria Annual Report 2021
155
Consolidated Financial Statements
15. SIGNIFICANT EVENTS AFTER THE END OF THE REPORTING PERIOD
After the balance sheet date, the Bidder took over the majority of the shares in the company as
described in Note 1. As a result, alstria is to be included in the consolidated financial statements of
Brookfield Asset Management Inc, Toronto, Canada, from January 11, 2022. As a result of the
takeover, the company rating was reclassified to the S&P rating BBB- (see Note 14.1 and the
explanations in the combined management report).
16. UTILIZATION OF EXEMPTING PROVISIONS
Certain subsidiaries that have been included in the consolidated financial statements of alstria office
REIT-AG have claimed an exemption from the obligation to prepare annual financial statements in
accordance with the provisions applicable to corporations, in accordance with Section 264b HGB. An
overview of the companies that made use of the exemption can be found in the table in Note 2.2.2.
17. DISCLOSURES PURSUANT TO THE WERTPAPIERHANDELSGESETZ [GERMAN SECURITIES
TRADING ACT] AND EUROPEAN MARKET ABUSE REGULATION [MAR]
17.1. Ad hoc announcements
The following table summarizes the announcements pursuant to Art. 17 MAR, as published by the
Company during the reporting period:
Date
Jan 13, 2021
Jul 21, 2021
Nov 4, 2021
Jan 12, 2022
Topic
Portfolio value increases by approx. EUR 150 m to approx. EUR 4.6 billion as per December 31, 2020
Market speculation with respect to a potential takeover offer by Brookfield
alstria office REIT-AG: Voluntary public takeover offer to the shareholders of alstria by Brookfield, alstria
enters into an Investment Agreement with Brookfield
Voluntary public takeover offer to the shareholders of alstria by Brookfield:
•
•
•
Brookfield secures more than 50% of the shares of alstria office REIT-AG
Change of control within the meaning of the terms and conditions of the Fixed Rate Notes has
occurred
In the event of a rating downgrade of the Fixed Rate Notes, the note holders may request
repayment of the Fixed Rate Notes at 101% of the principal amount of the Fixed Rate Notes
unpaid interest accrued
156
alstria Annual Report 2021
Consolidated Financial Statements
17.2. Directors’ dealings
The following transactions regarding the shares of the Company (ISIN DE000A0LD2U1) have been
reported to the Company during the reporting period pursuant to Art. 19 MAR:
Name of person
subject to the
disclosure
requirement
Marianne Voigt
Function
Member of the
Supervisory Board
Transaction
Tendering1)
Place
Outside a trading
venue
Transaction date
Jan 31, 2022
UTC + 1
Price
per
share in
EUR
19.50
Volume
in EUR
167,700.00
Aggregated information for the transactions by Ms. Voigt on Jan 31, 2022:
Average weighted share price: EUR 19.50; aggregated volume: EUR 167,700.00
1)Tendering of shares in the framework of the voluntary public take over offer from Alexandrite Lake Lux Holdings S.à r.l. in December
2021; pursuant to the conditions of the offer the settlement took place on January 31, 2022.
Name of person
subject to the
disclosure
requirement
Richard
Mully
Aggregated information for the transactions by Mr. Mully on Jan 31, 2022:
Average weighted share price: EUR 19.50; aggregated volume: EUR 390,000.00
1)Tendering of shares in the framework of the voluntary public take over offer from Alexandrite Lake Lux Holdings S.à r.l. in December
2021; pursuant to the conditions of the offer the settlement took place on January 31, 2022.
Function
Member of the
Supervisory Board
Transaction date
Jan 31, 2022
UTC + 0
Place
Outside a trading
venue
Price
per
share in
EUR
19.50
Transaction
Tendering1)
Volume
in EUR
390,000.00
Name of person
subject to the
disclosure
requirement
Dr. Johannes
Conradi
Aggregated information for the transactions by Mr. Conradi on Jan 31, 2022:
Average weighted share price: EUR 19.50; aggregated volume: EUR 1,170,000.00
1)Tendering of shares in the framework of the voluntary public take over offer from Alexandrite Lake Lux Holdings S.à r.l. in December
2021; pursuant to the conditions of the offer the settlement took place on January 31, 2022.
Function
Chairman of the
Supervisory Board
Transaction date
Jan 31, 2022
UTC + 1
Place
Outside a trading
venue
Price
per
share in
EUR
19.50
Transaction
Tendering1)
Volume
in EUR
1,170,000.00
Name of person
subject to the
disclosure
requirement
Benoît
Hérault
Aggregated information for the transactions by Mr. Hérault on Jan 31, 2022:
Average weighted share price: EUR 19.50; aggregated volume: EUR 180,375.00
1)Tendering of shares in the framework of the voluntary public take over offer from Alexandrite Lake Lux Holdings S.à r.l. in December
2021; pursuant to the conditions of the offer the settlement took place on January 31, 2022.
Transaction date
Jan 31, 2022
UTC + 1
Function
Member of the
Supervisory Board
Place
Outside a trading
venue
Price
per
share in
EUR
19.50
Transaction
Tendering1)
Volume
in EUR
180,375.00
Name of person
subject to the
disclosure
requirement
Alexander
Dexne
Function
Transaction
CFO
Tendering1)
Place
Outside a trading
venue
Transaction date
Jan 31, 2022
UTC + 1
Price
per
share in
EUR
Volume
in EUR
19.50
542,100.00
Aggregated information for the transactions by Mr. Dexne on Jan 31, 2022:
Average weighted share price: EUR 19.50; aggregated volume: EUR 542,100.00
1)Tendering of shares in the framework of the voluntary public take over offer from Alexandrite Lake Lux Holdings S.à r.l. in December
2021; pursuant to the conditions of the offer the settlement took place on January 31, 2022.
Name of person
subject to the
disclosure
requirement
Function
Transaction
Place
Transaction date
Price
per
share in
EUR
Volume
in EUR
CEO
Olivier Elamine
Aggregated information for the transactions by Mr. Elamine on Jan 31, 2022:
Average weighted share price: EUR 19.50; aggregated volume: EUR 1,347,703.50
1)Tendering of shares in the framework of the voluntary public take over offer from Alexandrite Lake Lux Holdings S.à r.l. in December
2021; pursuant to the conditions of the offer the settlement took place on January 31, 2022.
Tendering1)
19.50
1,347,703.50
Outside a trading
venue
Jan 31, 2022
UTC + 1
alstria Annual Report 2021
157
Consolidated Financial Statements
Name of person
subject to the
disclosure
requirement
Dr. Johannes Conradi
Dr. Johannes Conradi
Function
Chairman of the
Supervisory Board
Chairman of the
Supervisory Board
Chairman of the
Supervisory Board
Transaction
Place
Buy
Buy
XETRA
XETRA
Dr. Johannes Conradi
XETRA
Aggregated information for the transactions by Mr. Conradi on March 1, 2021:
Average weighted share price: EUR 14.0872; aggregated volume: EUR 140,871.76
Buy
Name of person
subject to the
disclosure
requirement
Function
Member of the
Supervisory Board
Transaction
Place
Benoît Hérault
XETRA
Aggregated information for the transactions by Mr. Hérault on March 1, 2021:
Average weighted share price: EUR 13.86; aggregated volume: EUR 20,790.00
Buy
Name of person
subject to the
disclosure
requirement
Olivier Elamine
Olivier Elamine
Olivier Elamine
Olivier Elamine
Olivier Elamine
Function
Transaction
CEO
CEO
CEO
CEO
CEO
Buy
Buy
Buy
Buy
Buy
Place
Lang & Schwarz
Exchange
Lang & Schwarz
Exchange
Lang & Schwarz
Exchange
Lang & Schwarz
Exchange
Lang & Schwarz
Exchange
Lang & Schwarz
Exchange
Olivier Elamine
Aggregated information for the transactions by Mr. Elamine on March 2, 2021:
Average weighted share price: EUR 14.0241; aggregated volume: EUR 15,426.50
CEO
Buy
Name of person
subject to the
disclosure
requirement
Function
Member of the
Supervisory Board
Transaction
Place
Benoît Hérault
XETRA
Aggregated information for the transactions by Mr. Hérault on March 2, 2021:
Average weighted share price: EUR 13.90; aggregated volume: EUR 17,375.00
Buy
Name of person
subject to the
disclosure
requirement
Function
Member of the
Supervisory Board
Transaction
Place
Munich
Exchange
Richard Mully
Aggregated information for the transactions by Mr. Mully on March 2, 2021:
Average weighted share price: EUR 14.0986; aggregated volume: EUR 70,493.00
Buy
Price
per
share in
EUR
14.08
14.07
14.09
Price
per
share in
EUR
Volume
in EUR
21,120.00
9,314.34
110,437.42
Volume
in EUR
13.86
20,790.00
Transaction date
Mar 1, 2021
UTC + 1
Mar 1, 2021
UTC + 1
Mar 1, 2021
UTC + 1
Transaction date
Mar 1, 2021
UTC + 1
Price
per
share in
EUR
14.15
14.05
14.00
14.00
13.95
13.97
Transaction date
Mar 2, 2021
UTC + 1
Mar 2, 2021
UTC + 1
Mar 2, 2021
UTC + 1
Mar 2, 2021
UTC + 1
Mar 2, 2021
UTC + 1
Mar 2, 2021
UTC + 1
Volume
in EUR
2,830.00
2,810.00
2,100.00
2,800.00
2,092.50
2,794.00
Price
per
share in
EUR
Volume
in EUR
13.90
17,375.00
Transaction date
Mar 2, 2021
UTC + 1
Price
per
share in
EUR
Volume
in EUR
14.0986
70,493.00
Transaction date
Mar 2, 2021
UTC + 0
Name of person
subject to the
disclosure
requirement
Function
Transaction
Olivier Elamine
CEO
Olivier Elamine
CEO
Olivier Elamine
Olivier Elamine
CEO
CEO
Buy
Buy
Buy
Buy
Place
Lang & Schwarz
Exchange
Transaction date
Mar 3, 2021
UTC + 1
Lang & Schwarz
Exchange
Mar 3, 2021
UTC + 1
Lang & Schwarz
Exchange
Lang & Schwarz
Exchange
Mar 3, 2021
UTC + 1
Mar 3, 2021
UTC + 1
Price
per
share in
EUR
Volume
in EUR
14.03
2,806.00
14.00
2,800.00
13.95
13.95
2,790.00
2,790.00
158
alstria Annual Report 2021
Consolidated Financial Statements
Name of person
subject to the
disclosure
requirement
Olivier Elamine
Olivier Elamine
Olivier Elamine
Olivier Elamine
Olivier Elamine
Function
Transaction
CEO
CEO
CEO
CEO
CEO
Buy
Buy
Buy
Buy
Buy
Place
Lang & Schwarz
Exchange
Lang & Schwarz
Exchange
Lang & Schwarz
Exchange
Lang & Schwarz
Exchange
Lang & Schwarz
Exchange
Transaction date
Mar 3, 2021
UTC + 1
Mar 3, 2021
UTC + 1
Mar 3, 2021
UTC + 1
Mar 3, 2021
UTC + 1
Mar 3, 2021
UTC + 1
Aggregated information for the transactions by Mr. Elamine on March 3, 2021:
Average weighted share price: EUR 13.9311; aggregated volume: EUR 24,379.50
Name of person
subject to the
disclosure
requirement
Function
Transaction
Olivier Elamine
CEO
Olivier Elamine
CEO
Buy
Buy
Place
Lang & Schwarz
Exchange
Transaction date
Mar 4, 2021
UTC + 1
Lang & Schwarz
Exchange
Mar 4, 2021
UTC + 1
Olivier Elamine
Aggregated information for the transactions by Mr. Elamine on March 4, 2021:
Average weighted share price: EUR 13.94; aggregated volume: EUR 6,970.00
CEO
Buy
Lang & Schwarz
Exchange
Mar 4, 2021
UTC + 1
Name of person
subject to the
disclosure
requirement
Marianne Voigt
Name of person
subject to the
disclosure
requirement
Olivier Elamine
Olivier Elamine
Olivier Elamine
Function
Transaction
Place
Transaction date
Member of the
Supervisory Board
Buy
XETRA
Marianne Voigt
Aggregated information for the transactions by Ms. Voigt on March 4, 2021:
Average weighted share price: EUR 13.82; aggregated volume: EUR 41,460.00
Buy
XETRA
Member of the
Supervisory Board
Mar 4, 2021
UTC + 1
Mar 4, 2021
UTC + 1
Function
Transaction
Place
Transaction date
CEO
CEO
CEO
Buy
Buy
Buy
Lang & Schwarz
Exchange
Lang & Schwarz
Exchange
Lang & Schwarz
Exchange
Lang & Schwarz
Exchange
Mar 8, 2021
UTC + 1
Mar 8, 2021
UTC + 1
Mar 8, 2021
UTC + 1
Mar 8, 2021
UTC + 1
Olivier Elamine
Aggregated information for the transactions by Mr. Elamine on March 8, 2021:
Average weighted share price: EUR 14.083; aggregated volume: EUR 14,083.00
CEO
Buy
Name of person
subject to the
disclosure
requirement
Olivier Elamine
Olivier Elamine
Olivier Elamine
Olivier Elamine
Olivier Elamine
Function
Transaction
CEO
CEO
CEO
CEO
CEO
Buy
Buy
Buy
Buy
Buy
Olivier Elamine
Aggregated information for the transactions by Mr. Elamine on March 9, 2021:
Average weighted share price: EUR 14,009; aggregated volume: EUR 21,714.00
CEO
Buy
Place
Lang & Schwarz
Exchange
Transaction date
Mar 9, 2021
UTC + 1
Lang & Schwarz
Exchange
Lang & Schwarz
Exchange
Lang & Schwarz
Exchange
Lang & Schwarz
Exchange
Lang & Schwarz
Exchange
Mar 9, 2021
UTC + 1
Mar 9, 2021
UTC + 1
Mar 9, 2021
UTC + 1
Mar 9, 2021
UTC + 1
Mar 9, 2021
UTC + 1
Price
per
share in
EUR
13.90
13.85
13.84
13.80
14.03
Price
per
share in
EUR
Volume
in EUR
2,085.00
2,077.50
2,768.00
2,070.00
1,403.00
Volume
in EUR
13.98
2,796.00
13.95
2,790.00
13.84
1,384.00
Price
per
share in
EUR
Volume
in EUR
13.84
20,760.00
13.80
20,700.00
Price
per
share in
EUR
Volume
in EUR
14.11
2,822.00
13.87
14.14
14.15
2,774.00
4,242.00
4,245.00
Price
per
share in
EUR
Volume
in EUR
14.04
4,212.00
14.04
14.00
14.05
14.00
13.95
4,212.00
4,200.00
1,405.00
3,500.00
4,185.00
alstria Annual Report 2021
159
Consolidated Financial Statements
Name of person
subject to the
disclosure
requirement
Olivier Elamine
Olivier Elamine
Olivier Elamine
Function
Transaction
Place
CEO
CEO
CEO
Buy
Buy
Buy
XETRA
XETRA
XETRA
Olivier Elamine
XETRA
Aggregated information for the transactions by Mr. Elamine on March 10, 2021:
Average weighted share price: EUR 14.0364; aggregated volume: EUR 15,440.00
CEO
Buy
Name of person
subject to the
disclosure
requirement
Function
Transaction
Place
Alexander Dexne
CFO
Buy
XETRA
Alexander Dexne
Aggregated information for the transactions by Mr. Dexne on March 10, 2021:
Average weighted share price: EUR 13,95; aggregated volume: EUR 41,850.00
CFO
Buy
XETRA
Name of person
subject to the
disclosure
requirement
Olivier Elamine
Olivier Elamine
Olivier Elamine
Olivier Elamine
Olivier Elamine
Olivier Elamine
Olivier Elamine
Olivier Elamine
Function
Transaction
CEO
CEO
CEO
CEO
CEO
CEO
CEO
CEO
Buy
Buy
Buy
Buy
Buy
Buy
Buy
Buy
Place
Lang & Schwarz
Exchange
Lang & Schwarz
Exchange
Lang & Schwarz
Exchange
Lang & Schwarz
Exchange
Lang & Schwarz
Exchange
Lang & Schwarz
Exchange
Lang & Schwarz
Exchange
Lang & Schwarz
Exchange
Lang & Schwarz
Exchange
Olivier Elamine
Aggregated information for the transactions by Mr. Elamine on March 11, 2021:
Average weighted share price: EUR 14.0003 ; aggregated volume: EUR 36,134.76
CEO
Buy
Price
per
share in
EUR
Volume
in EUR
14.05
2,810.00
13.99
4,197.00
14.05
4,215.00
14.06
4,218.00
Transaction date
Mar 10, 2021
UTC + 1
Mar 10, 2021
UTC + 1
Mar 10, 2021
UTC + 1
Mar 10, 2021
UTC + 1
Price
per
share in
EUR
Volume
in EUR
13.95
2,943.45
13.95
38,906.55
Transaction date
Mar 10, 2021
UTC + 1
Mar 10, 2021
UTC + 1
Price
per
share in
EUR
14.07
14.04
14.01
13.96
13.95
13.95
13.95
14.00
14.05
Transaction date
Mar 11, 2021
UTC + 1
Mar 11, 2021
UTC + 1
Mar 11, 2021
UTC + 1
Mar 11, 2021
UTC + 1
Mar 11, 2021
UTC + 1
Mar 11, 2021
UTC + 1
Mar 11, 2021
UTC + 1
Mar 11, 2021
UTC + 1
Mar 11, 2021
UTC + 1
Volume
in EUR
4,221.00
4,212.00
4,203.00
5,318,76
1,395.00
4,185.00
4,185.00
4,200.00
4,215.00
Name of person
subject to the
disclosure
requirement
Function
Transaction
Olivier Elamine
CEO
Buy
Place
Lang & Schwarz
Exchange
Transaction date
Mar 12, 2021
UTC + 1
Price
per
share in
EUR
Volume
in EUR
14.18
850.80
Aggregated information for the transactions by Mr. Elamine on March 11, 2021:
Average weighted share price: EUR 14.18 ; aggregated volume: EUR 850.80
160
alstria Annual Report 2021
Consolidated Financial Statements
17.3. Voting right notifications
Below is information according to Section 160 para. 1 No. 8 German Stock Corporation Act (AktG):
The following table shows shareholdings in the Company that were in place until the date of the
preparation of the financial statements, were communicated to us pursuant to Section 33 para. 1
WpHG, and have been published pursuant to Section 40 para. 1 WpHG.
No. Shareholders, registered office
1
The Goldman Sachs Group, Inc. Wilmington,
Delaware, USA
Voting rights
(new) (%)1)
Amount
of shares
Date
of change
Attribution of
voting rights
2.84
5,060,820
Jan. 12, 2022
Yes
Contains 3 % or
more of voting
rights from
2
DWS Investment GmbH, Frankfurt,
2.78
4,958,004
Jan. 10, 2022
No
Germany
3
SAS Rue la Boétie, Paris, France
0.56
989,070
Jan. 31, 2022
4
BlackRock Inc., Wilmington, Delaware, USA
2.592)
4,613,770
Feb. 10, 2022
Yes
Yes
5
Brookfield Asset Management Inc., Toronto,
Canada
95.11
169,328,485
Feb. 17, 2022
Yes
Lapis Luxembourg
Holdings S.à r.l.
(10.23%),
Alexandrite Lake
Lux Holdings S.à r.l.
(83.14%)
1) Percentage as per date of change. Current percentage in voting rights can deviate, e. g., due to changes in the share capital of the issuer.
2) Contains 0.04% financial instruments pursuant to Sec. 38 para. 1 No. 1 and No. 2 WpHG (equivalent to 71,552 voting rights).
The Company did not receive any notifications pursuant to Section 20 para. 1 and 4 AktG or pursuant
to Section 33 para. 2 WpHG during the reporting period.
18. DECLARATION OF COMPLIANCE PURSUANT TO AKTG SECTION 161
The Management Board and the Supervisory Board have submitted the declaration of compliance
required by AktG Section 161 with respect to the recommendations of the German Corporate
Governance Code as developed by a government commission. It is permanently available to the public
on alstria office REIT-AG’s website (www.alstria.com) and is included in the Group’s declaration of
corporate management according to HGB Section 315d.
alstria Annual Report 2021
161
Consolidated Financial Statements
19. AUDITORS’ FEES
On September 2, 2021, the General Meeting elected KPMG Wirtschaftsprüfungsgesellschaft (Ludwig-
Erhard-Strasse 11-17, Hamburg) auditor of the separate and consolidated financial statements for the
2021 financial year. The fees totaled EUR 564 k in 2021. They were structured as follows:
Auditors’ fees in EUR k
Audit services
thereof from previous year
Other confirmation services
Tax advisory services
Other services
Total
-5
2021
525
28
0
11
564
-16
2020
494
87
0
3
584
The non-audit services essentially relate to the review of the sustainability report and audit related
advisory.
René Drotleff is the professionally qualified auditor in charge of the financial statements for alstria
office REIT-AG and the Group. He first assumed this position in fiscal year 2018.
20. MANAGEMENT BOARD
During the financial year, the Company’s members of the Management Board were:
Olivier Elamine
Hamburg, Germany
COIMA RES S.p.A. SIIQ
Urban Campus Group SAS
CEO of the Company
Non-Executive Director
Member of the Advisory Board
Alexander Dexne
Hamburg, Germany
CFO of the Company
International School of
Management (ISM), Hamburg
Lecturer
The remuneration report (see combined management report) details the principles used to define the
remuneration of the Management Board and Supervisory Board.
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Consolidated Financial Statements
21. SUPERVISORY BOARD
Pursuant to the Company’s Articles of Association (Section 9), the Supervisory Board consists of six
members who are elected at the General Meeting of the shareholders.
During the 2021 financial year, the members of the Supervisory Board and their membership in
supervisory boards of German companies or comparable German or foreign controlling committees of
commercial enterprises were as follows:
Dr. Johannes Conradi
Chairman
Hamburg, Germany
Elbphilharmonie und Laeiszhalle
Betriebsgesellschaft mbH
Flughafen Hamburg GmbH
HamburgMusik gGmbH
Lawyer and Partner, Freshfields
Bruckhaus Deringer PartGmbB
Member of the Advisory Board
Member of the Supervisory Board
Member of the Supervisory Board
Richard Mully
Vice-Chairman
Cobham (Surrey),
United Kingdom
Great Portland Estates plc, UK
Director, Starr Street Limited
Non-Executive Chairman
Dr. Bernhard Düttmann
Left alstria’s
Supervisory Board on
May 6, 2021
Stefanie Frensch
Left alstria’s
Supervisory Board on
May 6, 2021
Meerbusch, Germany
CEO, CECONOMY AG (until Oct. 16,
2021)/
Executive Consultant
Berlin, Germany
Management Board member,
Familienstiftung Becker & Kries
Benoît Hérault
Uzès, France
Until June 15, 2021
Dr. Frank Pörschke
Joined alstria’s
Supervisory Board on
May 6, 2021
Until Aug. 8, 2021
Until Aug. 8, 2021
Until Aug. 8, 2021
Until June 30, 2021
Until Mar. 31, 2021
Shaftesbury Fund Management,
Luxemburg
Batipart Immo Long Terme,
Louxemburg (Batipart Group)
Hamburg, Germany
Verianos SE
Deka Immobilien Investment GmbH
(Deka Bank group)
Westinvest Gesellschaft für
Immobilienanlagen GmbH
(Deka Bank group)
AXA Investment Managers
Deutschland GmbH
(AXA S.A. group)
ECE Projektmanagement
G.m.b.H. & Co. KG
CEO, Elaia Investment Spain, SOCIMI,
S.A. (Batipart Group), Spain
Independent Director
Independent Director
CEO, P3 Logistic Parks s.r.o.
(GIC group), Czech Republic
(Since Apr. 1, 2021)
Non-Executive Director
Member of the Supervisory Board
Member of the Supervisory Board
Vice-Chairman of the
Supervisory Board
Member of the Advisory Board
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163
Consolidated Financial Statements
Until June 30, 2021
Elisabeth Stheeman
Joined alstria’s
Supervisory Board on
May 6, 2021
Aug. Prien Bauunternehmung
(GmbH & Co. KG)
Von Poll Immobilien Holding GmbH
(Deutsche Beteiligung AG Gruppe)
Member of the Supervisory Board
Member of the Advisory Board
Walton-On-Thames (Surrey),
United Kingdom
Supervisory Board member in
various companies
Aareal Bank AG
Edinburgh Investment Trust PLC,
UK
Member of the Supervisory Board
Member of the Board
Marianne Voigt
Berlin, Germany
BDO AG Wirtschaftsprüfungs-
gesellschaft
DISQ Deutsches Institut für Service-
Qualität GmbH & Co. KG
Managing Director,
bettermarks GmbH
Member of the Supervisory Board
Member of the Advisory Board
Hamburg, February 24, 2022
alstria office REIT-AG
The Management Board
Olivier Elamine
CEO
Alexander Dexne
CFO
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alstria Annual Report 2021
Responsibility statement
C. RESPONSIBILITY STATEMENT
To the best of our knowledge, we confirm that, in accordance with the applicable reporting principles,
the Consolidated Financial Statements for 2021 give a true and fair view of the Group’s assets,
liabilities, financial position and profit or loss, and that the Group Management Report 2021, which
has been combined with the Management Report for alstria office REIT-AG, includes a fair review of
the business’s development and performance and the Group’s position, together with a description
of the principal opportunities and risks associated with the Group’s expected development.
Hamburg, February 24, 2022
alstria office REIT-AG
The Management Board
Olivier Elamine
CEO
Alexander Dexne
CFO
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Independent Auditor‘s Report
D. INDEPENDENT AUDITOR’S REPORT
To alstria office REIT-AG, Hamburg
I. REPORT ON THE AUDIT OF THE CONSOLIDATED FINANCIAL STATEMENTS AND OF THE
COMBINED MANAGEMENT REPORT
1. OPINIONS
We have audited the consolidated financial statements of alstria office REIT-AG, Hamburg, and its
subsidiaries (the Group), which comprise the consolidated statement of financial position as of
December 31, 2021, and the consolidated
income statement, consolidated statement of
comprehensive income, consolidated statement of changes in equity and consolidated statement of
cash flows for the financial year from January 1 to December 31, 2021, and Notes to the consolidated
financial statements, including a summary of significant accounting policies. In addition, we have
audited the combined management report of alstria office REIT-AG including the remuneration report
and related disclosures contained in Section 8 of the combined management report for the financial
year from January 1 to December 31, 2021. In accordance with German legal requirements, we have
not audited the content of those components of the combined management report specified in the
“Other Information” section of our auditor’s report.
In accordance with German legal requirements, we have not audited the content of those components
of the combined management report specified in the “Other Information” section of our auditor’s
report.
In our opinion, on the basis of the knowledge obtained in the audit,
▪ the accompanying consolidated financial statements comply, in all material respects, with the
IFRSs as adopted by the EU, and the additional requirements of German commercial law
pursuant to Section 315e (1) HGB [Handelsgesetzbuch: German Commercial Code] and, in
compliance with these requirements, give a true and fair view of the assets, liabilities, and
financial position of the Group as of December 31, 2021, and of its financial performance for
the financial year from January 1 to December 31, 2021, and
▪ the accompanying combined management report as a whole provides an appropriate view of
the Group’s position. In all material respects, this combined management report is consistent
with the consolidated financial statements, complies with German legal requirements and
appropriately presents the opportunities and risks of future development. Our opinion on the
combined management report does not cover the content of those components of the combined
management report specified in the “Other Information” section of the auditor’s report. The
combined management report contains cross-references that are marked as unchecked and not
provided for by law. We have not audited the content of these cross-references and the
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information to which the cross-references refer in accordance with the German legal
regulations.
Pursuant to Section 322 (3) sentence 1 HGB, we declare that our audit has not led to any reservations
relating to the legal compliance of the consolidated financial statements and of the combined
management report.
2. BASIS FOR THE OPINIONS
We conducted our audit of the consolidated financial statements and of the combined management
report in accordance with Section 317 HGB and the EU Audit Regulation No 537/2014 (referred to
subsequently as “EU Audit Regulation”) and in compliance with German Generally Accepted Standards
for Financial Statement Audits promulgated by the Institut der Wirtschaftsprüfer [Institute of Public
Auditors in Germany] (IDW). Our responsibilities under those requirements and principles are further
described in the “Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
and of the Combined Management Report” section of our auditor’s report. We are independent of the
group entities in accordance with the requirements of European law and German commercial and
professional law, and we have fulfilled our other German professional responsibilities in accordance
with these requirements. In addition, in accordance with Article 10 (2)(f) of the EU Audit Regulation,
we declare that we have not provided non-audit services prohibited under Article 5 (1) of the EU Audit
Regulation. We believe that the evidence we have obtained is sufficient and appropriate to provide
a basis for our opinions on the consolidated financial statements and on the combined management
report.
3. KEY AUDIT MATTERS IN THE AUDIT OF THE CONSOLIDATED FINANCIAL STATEMENTS
Key audit matters are those matters that, in our professional judgment, were of most significance in
our audit of the consolidated financial statements for the financial year from January 1 to December
31, 2021. These matters were addressed in the context of our audit of the consolidated financial
statements as a whole, and in forming our opinion thereon, we do not provide a separate opinion on
these matters.
Valuation of investment property
For information on the valuation of investment property, please see the comments in the Notes to
the consolidated financial statements concerning valuation (‘accounting policies’ section) and the
Notes to the consolidated statement of financial position (‘investment property’ section).
THE FINANCIAL STATEMENT RISK
In the consolidated statement of financial position of alstria office REIT-AG as of December 31, 2021,
the total value of investment properties amounted to EUR 4,776 million These items represent 91.2 %
of total assets and thus significantly influence the Company’s balance sheet. The investment property
is measured at fair value according to IAS 40 in connection with IFRS 13. For 2021, a net gain of EUR
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Independent Auditor‘s Report
95 million resulting from the fair value adjustment was recognized in the consolidated income
statement.
The measurement of investment property at market value is carried out using a capitalized earnings
valuation model (“hardcore and top slice”). The valuation date was December 31, 2021.
The fair values were determined by the accredited, external and independent valuation appraiser
Savills Advisory Services Germany GmbH & Co. KG, Frankfurt am Main.
Besides information on actual data provided by the company, including for example the floor space
available for leasing, vacancies, planned maintenance and modernization measures and current rents,
numerous assumptions relevant to valuation are included in the determination of the property’s fair
value, which are subject to considerable estimation uncertainties and judgments. Even minor changes
in the assumptions relevant to measurement may have a material effect on the resulting fair value.
The key valuation assumptions used to measure the investment are market rents and the
capitalization rates.
There is a risk for the financial statements that, due to inaccurate or incomplete data provided by
alstria office, the measurement of the investment property by the external expert is not appropriate.
Estimation uncertainties and the incorrect exercise of judgment in relation to the relevant
measurement parameters can also lead to inaccurate measurement results.
In addition, there is the risk for the financial statements that the disclosures on property held for
investment required in the Notes pursuant to IAS 40 and IFRS 13 are incomplete and inadequate.
OUR AUDIT APPROACH
Our audit procedures particularly include assessing the appropriateness of the valuation method, the
accuracy and completeness of the actual data as well as the appropriateness of the assumptions and
parameters. We involved our appraisal specialists to carry out our substantive audit procedures.
In inquiries with the Management Board, representatives of the company’s departments (particularly
controlling and group financial accounting and reporting) and the external expert engaged by the
company, we sought to gain an understanding of the appropriateness of the measurement method
applied, the measurement process and the independent expert´s activities. We then sought to satisfy
ourselves of the appropriate design and implementation and the operating effectiveness of the
controls used to ensure the correct and complete recording of actual date and its proper provision to
the independent expert.
As part of our substantive audit procedures, we assessed whether the data provided to the external
expert was complete and correct and, thus, if it allowed the expert an appropriate basis for making
an assessment. For this purpose, among other things, we reconciled the company’s current tenant
lists with the underlying contracts for randomly selected rental spaces.
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We further verified the qualifications and objectivity of the external appraiser engaged by the
company to assess the investment property and evaluated the valuation logic applied in their expert
appraisal in terms of compliance with IAS 40 in conjunction with IFRS 13.
We assessed the appropriateness of the selected assumptions for measurement using a risk-based
selection of real estate. In particular, we assessed the assumptions made to determine the current
and future real estate-specific market rents, operating and maintenance costs and capitalization rates
and reviewed these assumptions for appropriateness, taking into account the type and location of the
real estate.
We evaluated the development of general assumptions underlying the valuations in course of time.
We compared the average multiples arising from the fair values and assumed market rents per location
in the light of the characteristics of the individual asset and location with multiples derived from
reports issued by real estate associations, expert committees, transaction databases and renowned
real estate experts.
In addition, we have determined an indicative range of appropriate property values of the risk-based
selection of real estate and compared them with the values determined by the external appraiser.
We also assessed the completeness and adequacy of disclosures on investment property required in
the Notes to the consolidated financial statements pursuant to IAS 40 and IFRS 13.
OUR OBSERVATIONS
The data used to assess the valuation of investment property is appropriate. The assumptions used
for valuation are appropriate.
The disclosures on investment property in the Notes to the consolidated financial statements pursuant
to IAS 40 and IFRS 13 are complete and appropriate.
4. OTHER INFORMATION
Management and the Supervisory Board are responsible for the other information. The other
information comprises
▪
▪
the combined corporate governance statement, which is referred to in the combined
management report
information extraneous to combined management reports and marked as unaudited
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Independent Auditor‘s Report
The other information also includes the remaining parts of the annual report. The other information
does not include the consolidated financial statements, the combined management report
information audited for content and our auditor’s report thereon.
Our opinions on the consolidated financial statements and on the combined management report do
not cover the other information, and consequently we do not express an opinion or any other form of
assurance conclusion thereon.
In connection with our audit, our responsibility is to read the other information and, in so doing, to
consider whether the other information
▪
is materially inconsistent with the consolidated financial statements, with the combined
management report information audited for content or our knowledge obtained in the audit,
or
▪ otherwise appears to be materially misstated.
5. RESPONSIBILITIES OF MANAGEMENT AND THE SUPERVISORY BOARD FOR THE CONSOLIDATED
FINANCIAL STATEMENTS AND THE COMBINED MANAGEMENT REPORT
Management is responsible for the preparation of the consolidated financial statements that comply,
in all material respects, with IFRSs as adopted by the EU and the additional requirements of German
commercial law pursuant to Section 315e (1) HGB and that the consolidated financial statements, in
compliance with these requirements, give a true and fair view of the assets, liabilities, financial
position, and financial performance of the Group. In addition, management is responsible for such
internal control as they have determined necessary to enable the preparation of consolidated
financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the
Group’s ability to continue as a going concern. They also have the responsibility for disclosing, as
applicable, matters related to going concern. In addition, they are responsible for financial reporting
based on the going concern basis of accounting unless there is an intention to liquidate the Group or
to cease operations, or there is no realistic alternative but to do so.
Furthermore, management is responsible for the preparation of the combined management report
that, as a whole, provides an appropriate view of the Group’s position and is, in all material respects,
consistent with the consolidated financial statements, complies with German legal requirements, and
appropriately presents the opportunities and risks of future development. In addition, management
is responsible for such arrangements and measures (systems) as they have considered necessary to
enable the preparation of a combined management report that is in accordance with the applicable
German legal requirements, and to be able to provide sufficient appropriate evidence for the
assertions in the combined management report.
The supervisory board is responsible for overseeing the Group’s financial reporting process for the
preparation of the consolidated financial statements and of the combined management report.
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Furthermore, the management and the Supervisory Board are responsible for the preparation of the
remuneration report contained in a separate section of the combined management report, including
the related disclosures, in accordance with the requirements of Section 162 AktG. They are also
responsible for such internal control as they have determined necessary to enable the preparation of
the remuneration report that is free from material misstatement, whether due to fraud or error.
6. AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE CONSOLIDATED FINANCIAL
STATEMENTS AND OF THE COMBINED MANAGEMENT REPORT
Our objectives are to obtain reasonable assurance about whether the consolidated financial
statements as a whole are free from material misstatement, whether due to fraud or error, and
whether the combined management report as a whole provides an appropriate view of the Group’s
position and, in all material respects, is consistent with the consolidated financial statements and
the knowledge obtained in the audit, complies with the German legal requirements and appropriately
presents the opportunities and risks of future development, as well as to issue an auditor’s report
that includes our opinions on the consolidated financial statements and on the combined management
report.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with Section 317 HGB and the EU Audit Regulation and in compliance with German
Generally Accepted Standards for Financial Statement Audits promulgated by the Institut der
Wirtschaftsprüfer (IDW) will always detect a material misstatement. Misstatements can arise from
fraud or error and are considered material if, individually or in the aggregate, they could reasonably
be expected to influence the economic decisions of users taken on the basis of these consolidated
financial statements and this combined management report.
We exercise professional judgment and maintain professional scepticism throughout the audit. We
also:
▪
identify and assess the risks of material misstatement of the consolidated financial statements
and of the combined management report, whether due to fraud or error, design and perform
audit procedures responsive to those risks, and obtain audit evidence that is sufficient and
appropriate to provide a basis for our opinions. The risk of not detecting a material
misstatement resulting from fraud is higher than for one resulting from error, as fraud may
involve collusion, forgery, intentional omissions, misrepresentations, or the override of
internal controls.
▪ obtain an understanding of internal control relevant to the audit of the consolidated financial
statements and of arrangements and measures (systems) relevant to the audit of the
combined management report in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of these
systems.
▪ evaluate the appropriateness of accounting policies used by management and the
reasonableness of estimates made by management and related disclosures.
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Independent Auditor‘s Report
▪
conclude on the appropriateness of management’s use of the going concern basis of
accounting and, based on the audit evidence obtained, whether a material uncertainty exists
related to events or conditions that may cast significant doubt on the Group’s ability to
continue as a going concern. If we conclude that a material uncertainty exists, we are
required to draw attention in the auditor’s report to the related disclosures in the
consolidated financial statements and in the combined management report or, if such
disclosures are inadequate, to modify our respective opinions. Our conclusions are based on
the audit evidence obtained up to the date of our auditor’s report. However, future events
or conditions may cause the Group to cease to be able to continue as a going concern.
▪ evaluate the overall presentation, structure and content of the consolidated financial
statements, including the disclosures, and whether the consolidated financial statements
present the underlying transactions and events in a manner that the consolidated financial
statements give a true and fair view of the assets, liabilities, financial position and financial
performance of the Group in compliance with IFRSs as adopted by the EU and the additional
requirements of German commercial law pursuant to Section 315e (1) HGB.
▪ obtain sufficient appropriate audit evidence regarding the financial information of the
entities or business activities within the Group to express opinions on the consolidated
financial statements and on the combined management report. We are responsible for the
direction, supervision and performance of the group audit. We remain solely responsible for
our opinions.
▪ evaluate the consistency of the combined management report with the consolidated financial
statements, its conformity with [German] law, and the view of the Group’s position it
provides.
▪ perform audit procedures on the prospective information presented by management in the
combined management report. On the basis of sufficient appropriate audit evidence we
evaluate, in particular, the significant assumptions used by management as a basis for the
prospective information, and evaluate the proper derivation of the prospective information
from these assumptions. We do not express a separate opinion on the prospective information
and on the assumptions used as a basis. There is a substantial unavoidable risk that future
events will differ materially from the prospective information.
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We communicate with those charged with governance regarding, among other matters, the planned
scope and timing of the audit and significant audit findings, including any significant deficiencies in
internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with the
relevant independence requirements, and communicate with them all relationships and other matters
that may reasonably be thought to bear on our independence, and where applicable, the related
safeguards.
From the matters communicated with those charged with governance, we determine those matters
that were of most significance in the audit of the consolidated financial statements of the current
period and are therefore the key audit matters. We describe these matters in our auditor’s report
unless law or regulation precludes public disclosure about the matter.
II. OTHER LEGAL AND REGULATORY REQUIREMENTS
Report on the Audit of the Electronic Renderings of the Consolidated Financial Statements and
the Combined Management Report prepared for Disclosure Purposes in accordance with
Section 317 (3b) HGB
We have performed assurance work in accordance with Section 317 (3a) HGB to obtain reasonable
assurance about whether the rendering of the consolidated financial statements and the combined
management report (hereinafter the “ESEF documents”) contained in the electronic file
„alstriaofficereitag v2.xhtml“ (SHA256-Hashwert: f0a7c3fe98de0305ea978ded6ff5bfd2aeb
777b58ccaaa399370d50a74abc62d) available and prepared for disclosure purposes complies in all
material respects with the requirements of Section 328 (1) HGB for the electronic reporting format
(“ESEF format”). In accordance with German legal requirements, this assurance work extends only to
the conversion of the information contained in the consolidated financial statements and the
combined management report into the ESEF format and therefore relates neither to the information
contained in these renderings nor to any other information contained in the file identified above.
In our opinion, the rendering of the consolidated financial statements and the combined management
report contained in the electronic file made available, identified above and prepared for publication
purposes complies in all material respects with the requirements of Section 328 (1) HGB for the
electronic reporting format. Beyond this assurance opinion and our audit opinions on the
accompanying consolidated financial statements and the accompanying combined management report
for the financial year from January 1, 2021 to December 31, 2021 contained in the “Report on the
Audit of the Consolidated Financial Statements and the Combined Management Report” above, we do
not express any assurance opinion on the information contained within these renderings or on the
other information contained in the file identified above.
We conducted our assurance work on the rendering of the consolidated financial statements and the
combined management report contained in the file made available and identified above in accordance
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with Section 317 (3a) HGB and the IDW Auditing Standard: Assurance Work of financial statements
and management reports prepared for publication purposes in accordance with Section 317 (3a) HGB
(IDW AuS 410(10.2021)) [if conducive to the understanding of the report at an international level: and
the International Standard on Assurance Engagements 3000 (Revised)]. Our responsibility in
accordance therewith is further described below. Our audit firm applies the IDW Standard on Quality
Management 1: Requirements for quality control in audit firms (IDW Qualitätssicherungsstandard 1:
Anforderungen an die Qualitätssicherung in der Wirtschaftsprüferpraxis – IDW QS 1).
The company’s management is responsible for the preparation of the ESEF documents including the
electronic rendering of the consolidated financial statements and the combined management report
in accordance with Section 328 (1) sentence 4 item 1 HGB and for the markup of the consolidated
financial statements in accordance with Section 328 (1) sentence 4 item 2 HGB.
In addition, the company’s management is responsible for such internal controls that they have
considered necessary to enable the preparation of ESEF documents that are free from material non-
compliance with the requirements of Section 328 (1) HGB for the electronic reporting format, whether
due to fraud or error.
The supervisory board is responsible for overseeing the process of preparing the ESEF documents as
part of the financial reporting process.
Our objective is to obtain reasonable assurance about whether the ESEF documents are free from
material non-compliance with the requirements of Section 328 (1) HGB, whether due to fraud or error.
We exercise professional judgement and maintain professional scepticism throughout the audit. We
also
▪
Identify and assess the risks of material non-compliance with the requirements of Section 328
(1) HGB, whether due to fraud or error, design and perform audit procedures responsive to
those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for
our audit opinion.
▪ Obtain an understanding of internal control relevant to the assurance on the ESEF documents
in order to design audit procedures that are appropriate in the circumstances, but not for the
purpose of expressing an audit opinion on the effectiveness of these controls.
▪ Evaluate the technical validity of the ESEF documents, i.e., whether the file made available
containing the ESEF documents meets the requirements of the Delegated Regulation (EU)
2019/815, as amended as at the reporting date, on the technical specification for this
electronic file.
▪ Evaluate whether the ESEF documents provide a content-equivalent XHTML rendering of the
audited consolidated financial statements and the audited combined management report.
174
alstria Annual Report 2021
Independent Auditor‘s Report
Further Information pursuant to Article 10 of the EU Audit Regulation
We were elected as group auditor at the annual general meeting held on May 6, 2021. We were
engaged by the supervisory board on May 28, 2021. We have been the group auditor of alstria office
REIT-AG without interruption since the financial year 2018.
We declare that the opinions expressed in this auditor’s report are consistent with the additional
report to the audit committee pursuant to Article 11 of the EU Audit Regulation (long-form audit
report).
III. OTHER MATTER – USE OF THE AUDITOR’S REPORT
Our auditor’s report must always be read together with the audited consolidated financial statements
and the combined management report as well as the examined ESEF documents. The consolidated
financial statements and combined management report converted to the ESEF format – including the
versions to be published in the German Federal Gazette [Bundesanzeiger] – are merely electronic
renderings of the audited consolidated financial statements and the audited combined management
report and do not take their place. In particular, the ESEF report and our assurance opinion contained
therein are to be used solely together with the examined ESEF documents made available in electronic
form.
IV. GERMAN PUBLIC AUDITOR RESPONSIBLE FOR THE ENGAGEMENT
The German Public Auditor responsible for the engagement is René Drotleff.
Hamburg, February 24, 2022
KPMG AG
Wirtschaftsprüfungsgesellschaft
[Original German version signed by:]
Schmidt
Wirtschaftsprüfer
[German Public Auditor]
Drotleff
Wirtschaftsprüfer
[German Public Auditor]
alstria Annual Report 2021
175
Report of the Supervisory Board
E. REPORT OF THE SUPERVISORY BOARD
Dear shareholders,
In this report, we explain the Supervisory Board’s monitoring of and consultation with the Management
Board, the key issues discussed by the full Supervisory Board and its committees and the audit of the
annual and consolidated financial statements for the reviewed year 2021.
I. FOCUS OF THE DISCUSSION
The main topics discussed by the Supervisory Board and its committees in the 2021 financial year
were business and financial situation and the Company’s strategy, each in the light of the COVID-19-
pandemic, the adjustment of the Management Board’s remuneration system to a new legal framework
and the voluntary public takeover offer by Alexandrite Lake Lux Holdings S.à r.l. (Bidder), a company
indirectly controlled by Brookfield, to alstria’s shareholders regarding the acquisition of all Company
shares against a cash consideration, as published on December 13, 2021 (Takeover Offer).
II. MONITORING AND ADVISING THE COMPANY’S MANAGEMENT
In the 2021 reporting year, we performed the duties incumbent on us under the law and under the
articles of association, we advised the Company’s Management Board, and we monitored its
management. Based on the Management Board's reports, we thoroughly discussed business
development as well as decisions and events of importance to the group. The Supervisory Board was
intensively involved in the Company’s fundamental decisions. The Management and Supervisory Boards
discussed in detail all measures that required approval. To the extent provided by law, by the articles
of association, or by the rules of procedure, the Supervisory Board voted based on thorough
examination and consultation.
At Supervisory Board and committee meetings, the Management Board regularly informed the
Supervisory Board, in a timely and comprehensive manner, about the Company’s business
development, financial situation, planning, important business transactions, risk situations, risk
management and compliance. The Supervisory Board also met regularly without the Management
Board. The Management Board was also not present at the auditor's report on the 2021 half-year
financial report.
The Management Board informed the Supervisory Board between meetings about the development of
the real estate portfolio, rental activities and important events, generally by means of monthly
reports. The chairmen of the Supervisory and Management Boards held informative and advisory
meetings on a fortnightly basis.
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alstria Annual Report 2021
Report of the Supervisory Board
III. BOARD MEMBERS
With the end of the annual general meeting on May 6, 2021, the Supervisory Board members Dr.
Bernhard Düttmann and Stefanie Frensch resigned from the Supervisory Board. As their successors,
the annual general meeting elected Dr. Frank Pörschke and Elisabeth Stheeman to the Supervisory
Board, each for a term of three years. Dr. Pörschke has been elected by the Supervisory Board to the
Audit Committee and the Finance and Investment Committee, Ms. Stheeman to the Nomination and
Remuneration Committee and the Finance and Investment Committee.
In the year under review, the Supervisory Board and its committees comprised the following members:
Supervisory Board member
Dr. Johannes Conradi (chair)
Richard Mully (deputy chair)
Dr. Bernhard Düttmann 1)
Stefanie Frensch 1)
Benoît Herault
Dr. Frank Pörschke 2)
Elisabeth Stheeman 2)
Marianne Voigt
1)
2)
Until the annual general meeting 2021
Since the annual general meeting 2021
Audit
Committee
Nomination &
Remuneration
Committee
Finance &
Investment
Committee
−
−
Member
−
Member
Member
−
Chair
Chair
−
−
Member
Member
−
Member
−
−
Chair
Member
Member
−
Member
Member
−
ESG
Committee
Chair
Member
−
−
−
−
−
Member
The Supervisory Board reviewed the implementation status of the profile for the Supervisory Board
with concrete objectives regarding the composition of the board, including the competencies
represented on the board and its diversity, as presented in the Company’s Corporate Governance
Statement on pages 185 to 203 of the annual report. As of December 31, 2021, the composition of the
Supervisory Board meets these objectives. The profile for the Supervisory Board is complete.
Structured appointment procedures for the Supervisory Board, the regular 3-year terms of office and
the annual Supervisory Board elections, are described in the Corporate Governance Statement. The
Company has set up an onboarding process and supports new Supervisory Board members’
inauguration by familiarizing them with the people involved, the rules and the regulations of the
Company and the Supervisory Board’s working methods. In addition, the Company supports
Supervisory Board members’ training measures with regular internal training courses. No conflicts of
interest occurred in the past financial year for members of the Supervisory or Management Boards.
After the change of control occurred in the course of the Takeover Offer in January 2022, the members
of the Supervisory Board Dr. Johannes Conradi (chair), Richard Mully (deputy chair), Benoît Hérault
and Marianne Voigt resigned from their offices effective end of February 28, 2022. The resignations
were made in order to allow a representation of the Bidder in the Supervisory Board according to
their participation in the Company.
alstria Annual Report 2021
177
Report of the Supervisory Board
IV. MEETINGS OF THE SUPERVISORY BOARD
The full Supervisory Board held four ordinary and six extraordinary meetings in the 2021 financial
year. Based on detailed documents, we also made seven decisions via circular resolution. In the 2022
financial year, one additional meeting of the full Supervisory Board and one circular resolution have
taken place before this report’s completion. In the reporting year, nearly all meetings of the
Supervisory Board and its committees have been held via video conference due to the COVID-19-
pandemic.
At the regular Supervisory Board meetings, the Company’s situation, development, course of
business and market situation were discussed with the Management Board, and the Company's
financial results (the interim quarterly and half-year financial reports and the annual and
consolidated financial statements) were discussed. Committee chairs reported on the committees’
work.
In February 2021, the Supervisory Board, via written circulation, decided on the revision of the rules
of procedures for the Management Board and the Supervisory Board of alstria office REIT-AG and its
committees, on the profiles for the Supervisory and Management Boards and the status of their
implementation as of December 31, 2020, as well as on the Corporate Governance Statement which
is submitted jointly with the Management Board.
At the meeting in February 2021, the Supervisory Board addressed the annual and consolidated
financial statements as of December 31, 2020, and the consolidated management report and
discussed these reports with the auditor. The Supervisory Board approved the annual financial
statements for alstria office REIT-AG and
its consolidated financial statements as of
December 31, 2020 and agreed with the Management Board's proposal to appropriate the annual net
profit for the 2020 financial year. The Supervisory Board intensively discussed with the Management
Board on its proposal to the shareholders to withhold a so-called “Green Dividend” and to invest it to
“Green Projects”. The Management Board presented the newly established carbon accounting for
financial year 2020 to the Supervisory Board, by which alstria reports on the Company’s carbon
emissions as per December 31, 2020. The Supervisory Board passed a resolution on its report to the
annual general meeting for the 2020 financial year, dealt with the agenda items and proposed
resolutions for the annual general meeting and approved calling a so-called virtual annual general
meeting without physical presence of the shareholders and their representatives. The Supervisory
Board further dealt with the annual structured succession planning process for the Management Board
as well as with the succession planning for the Supervisory Board in the course of the preparation of
the recommendations to the annual general meeting for supervisory board elections. In the course of
the adjustment of the Management Board’s remuneration system to a new legal framework the
Supervisory Board resolved on the new Management Board remuneration system and the new
Management Board service agreements. The Supervisory Board also discussed the variable
remuneration for the Management Board’s members: We deliberated on the results of the long-term
178
alstria Annual Report 2021
Report of the Supervisory Board
variable remuneration element for financial year 2017 and on the short-term variable remuneration
for financial year 2020 — in each case considering individual performance — and on the parameters
of the long-term variable remuneration of the Management Board’s members for financial year 2021
applying the new Management Board’s remuneration system. The deliberations were each done after
a vertical remuneration comparison and in the light of the recommendation from its Nomination and
Remuneration Committee. Finally, the Supervisory Board discussed with the Management Board on
the market situation and real estate transactions and decided on the approval of investments into the
Company’s existing portfolio.
In March 2021, the Supervisory Board resolved by way of written circular resolution on the
recommendation for resolution to the annual general meeting 2021 and on a corporate governance
declaration pursuant to section 161 German Stock Corporation Act (AktG).
In May 2021, the Supervisory Board resolved on further investments into the Company’s real estate
portfolio as well as on the composition of the Supervisory Board’s committees. In June 2021, the
Supervisory Board dealt with the results of the corporate governance roadshow by the Supervisory
Board’s chair and deputy chair, with the new regulatory requirements for the Supervisory Board’s
composition as well as with the succession planning for the Management and Supervisory Boards. In
July 2021, the Supervisory Board in two meetings deliberated on a potential takeover offer by
Brookfield. By way of written circular resolution, the Supervisory Board approved mandating an
investment bank for the potential takeover offer and set up a Special Committee Offer, which was
staffed with four Supervisory Board members.
At the ordinary meeting in September 2021, the Management and Supervisory Boards discussed the
Company's strategy. They discussed the Company's largest properties and related development
projects as well as capital management. The Supervisory Board discussed with the Management Board
the market situation as well as potential real estate transactions and dealt with the positive results
from the review of its composition and effectiveness of work. Using the written circular resolution
procedure, the Supervisory Board resolved on the adjustment of the profile for the Supervisory Board
and made editorial amendments to the Company's articles of association to reflect a capital increase
from conditional capital: A total of 140,250 new shares were issued to Company employees under the
Company's employee participation plan. In two meetings held in November 2021, the Supervisory
Board dealt with the planned takeover offer by Brookfield and approved the deliberation and signing
of an investment agreement with the Bidder. The Supervisory Board continued its strategy
deliberations in the light of the intended takeover offer, discussed the possibility of a share buyback
program for the purpose of settlement of Management Board remuneration elements and thoroughly
dealt with investments into the Company’s real estate portfolio.
The two meetings in December 2021 concerned corporate and budget planning for the 2022 financial
year. The Supervisory Board further deal with the Takeover Offer by Brookfield, the support of the
Takeover Offer by Management and Supervisory Boards and the issuance of a joint reasoned statement
by Management and Supervisory Boards on the Takeover Offer to the Company’s shareholders as
alstria Annual Report 2021
179
Report of the Supervisory Board
published on December 13, 2021. Management and Supervisory Boards further deliberated on alstria’s
current and planned future financing as well as on potential consequences of the Takeover Offer on
the group structure. The Supervisory Board dealt with the impact of the Takeover Offer on the share
ownership guidelines for Management and Supervisory Boards and resolved to suspend the Supervisory
Board members’ self-commitment. The Supervisory Board also discussed with the Management Board
the current market environment, the planned real estate transactions, and the activities of the
Company’s Real Estate Operations team during these meetings. Furthermore, the Supervisory Board
dealt with the performance targets for the Management Board members’ variable remuneration
elements for financial year 2022. Via written circular resolution, the Supervisory Board approved the
joint reasoned statement by Management and Supervisory Board on the Takeover Offer.
In February 2022, the Supervisory Board passed a resolution via written circulation procedure on the
corporate governance statement and on the remuneration report for the 2021 financial year. At the
balance sheet meeting in February 2022, the Supervisory Board dealt with the annual and consolidated
financial statements as of December 31, 2021, with the Management Board's proposal for
appropriating profits and passed a resolution on the report to the annual general meeting for the 2021
financial year.
180
alstria Annual Report 2021
Report of the Supervisory Board
Attendance of Supervisory Board members at meetings
Supervisory Board member attendance at meetings of the Supervisory Board in plenary session
averaged 99.2% in the 2021 financial year.
Attendance at meetings*
Participation in %
regular
meetings
4/4
4/4
1/1
1/1
4/4
3/3
3/3
4/4
extraordinary
meetings
6/6
6/6
0/0
0/0
6/6
5/6
6/6
5/6
Full Supervisory Board
Dr. Johannes Conradi (Chair)
Richard Mully (Deputy Chair)
Dr. Bernhard Düttmann
Stefanie Frensch
Benoît Hérault
Dr. Frank Pörschke
Elisabeth Stheeman
Marianne Voigt
Audit Committee
Marianne Voigt (Chair)
Dr. Bernhard Düttmann
Benoît Hérault
Dr. Frank Pörschke
Nomination and Remuneration Committee
Dr. Johannes Conradi (Chair)
Stefanie Frensch
Benoît Hérault
Elisabeth Stheeman
Finance and Investment Committee
Richard Mully (Chair)
Dr. Bernhard Düttmann
Stefanie Frensch
Dr. Frank Pörschke
Elisabeth Stheeman
ESG Committee
Dr. Johannes Conradi (Chair)
Richard Mully
Marianne Voigt
Total
* Participation in a meeting can also be via telephone or video conference
V. COMMITTEES OF THE SUPERVISORY BOARD
5/5
5/5
5/5
5/5
7/7
2/2
7/7
5/5
3/3
0/0
0/0
3/3
3/3
2/2
2/2
2/2
total
100
100
100
100
100
90
100
90
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
99.2
The six-member Supervisory Board established four standing committees to support its work, each
with at least three members. The committees prepared some of the Supervisory Board’s resolution
via resolution recommendations; in some cases, decision-making powers were delegated to the
committees to the extent permitted by law. In the 2021 financial year, the Supervisory Board’s
committees primarily dealt with the following topics:
1. AUDIT COMMITTEE
The Audit Committee held five meetings in the 2021 financial year, each attended by the Chief
Financial Officer. At the beginning of the reporting year, the Audit Committee thoroughly dealt with
alstria Annual Report 2021
181
Report of the Supervisory Board
property valuation as of December 31, 2020, and with the key audit matters selected by the auditors
for the audit of the financial statements for the 2020 financial year. In February 2021, the Audit
Committee discussed the annual financial statements and consolidated financial statements as of
December 31, 2020, and the consolidated management report as part of the audit of the financial
statements. They discussed the documents with the auditors, conducted a preliminary review of the
annual and consolidated financial statements and of the Management Board's proposal for the
appropriation of profits and submitted corresponding resolution proposals to the full Supervisory
Board. The Audit Committee dealt with the auditor's report in accordance with Section 1 para. 4 of
the REIT Act and handled the non-auditing services provided by the auditors in the 2020 financial
year. In the summer, the Audit Committee dealt with the half-year financial report issued as of
June 30, 2021 prior to publication and discussed this with the Management Board and thereafter, in
the absence of the Management Board, with the auditor. The Company’s risk situation was discussed
regularly. Other topics included the audit of the auditor’s independence, the appointment of KPMG
AG Wirtschaftsprüfungsgesellschaft, Hamburg, as auditor and discussions of accounting, the
accounting process, the risk management system, the material risks identified, the effectiveness of
the internal control and audit system and an extensive deliberation of alstria’s revised compliance
system. The Audit Committee also discussed the internal audit’s results for the 2021 financial year
and the financial audit’s quality, and it approved certain non-auditing services provided by the
auditors for the 2022 financial year. The division heads of Reporting and Finance as well as the
Compliance Officer participated in some of the Audit Committee’s meetings.
2. NOMINATION AND REMUNERATION COMMITTEE
The Nomination and Remuneration Committee met seven times during the 2021 financial year. Against
the background of regulatory changes regarding Management Board remuneration, the updated
recommendations of the German Corporate Governance Code and the expectations of investors, the
Nomination and Remuneration Committee dealt with the corresponding adjustment of the
Management Board remuneration system and the preparation of a proposal to the annual general
meeting in the 2021 financial year for the approval of the updated Management Board remuneration
system as well as the preparation of new Management Board service agreements. The Nomination and
Remuneration Committee dealt with the regular issues of Management Board remuneration and, in
particular, deliberated on the amount of variable remuneration for the Management Board’s
members, taking into account their individual performance in each case. They also submitted
corresponding resolution proposals to the full Supervisory Board. The Nomination and Remuneration
Committee gave its approval to the sideline activities of the Management Board members and decided
in each case against a possible offsetting of the remuneration earned for these activities against the
Management Board remuneration at alstria. The Nomination and Remuneration Committee also
assessed the implementation status of the share ownership obligation for members of the Management
and Supervisory Boards. They also reviewed the Management Board’s composition and continued the
development of a structured process for long-term succession planning. The Nomination and
Remuneration Committee also reviewed the composition and succession planning for the Supervisory
182
alstria Annual Report 2021
Report of the Supervisory Board
Board based on results from the review of the Supervisory Board’s composition and effectiveness of
work in the context of the expiration of two members’ terms of office in each of the 2021 and 2022
financial years. The profiles for the Management and the Supervisory Boards with the criteria for the
composition of both bodies were further developed by the Nomination and Remuneration Committee
in the reporting year and the committee recommended their adaptation to the Supervisory Board.
3. FINANCE AND INVESTMENT COMMITTEE
The Finance and Investment Committee held three meetings in the 2021 financial year and took one
decision on the disposal of a building by way of written circular procedure. During meetings with the
Management Board, the committee discussed the financing strategy of alstria office REIT-AG and
approved real estate transactions. The head of the Transactions team also participated in some of
the committee’s meetings.
4. ESG COMMITTEE
The ESG Committee held two meetings in fiscal year 2021. With the Management Board, the
committee discussed corporate social responsibility issues, like the concept of the “Green Dividend”
and the “Green Projects” in which the Company will invest the Green Dividend, the renewal of the
ISO 50.001 certification of the Company’s energy management, alstria’s purchase of a forest plot.
Further, the ESG Committee discussed with the Management Board alstria’s sustainability report and
the report on alstria’s carbon emissions as of December 31, 2020 (carbon accounting). Finally, the
committee discussed the ESG targets for the variable Management Board remuneration for the
financial year 2021.
5. SPECIAL COMMITTEE OFFER
In the summer of the reporting year, the Supervisory Board established the Special Committee Offer
on the occasion of the possible takeover bid by Brookfield, which consisted of the four Supervisory
Board members Dr. Johannes Conradi, Richard Mully, Dr. Frank Pörschke and Elisabeth Stheeman. The
Special Committee Offer held six meetings in the reporting year, each of which was also open to the
other members of the Supervisory Board. The Special Committee Offer dealt intensively with all
aspects of the Takeover Offer, advised the Management Board and prepared the decisions of the
Supervisory Board on the investment agreement with the Bidder and on the submission of the joint
reasoned statement of the Management Board and the Supervisory Board on the Takeover Offer of
December 13, 2021.
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183
Report of the Supervisory Board
VI. AUDIT OF THE ANNUAL AND CONSOLIDATED FINANCIAL STATEMENTS
KPMG AG Wirtschaftsprüfungsgesellschaft, Hamburg, audited the annual financial statements and the
management report of alstria office REIT-AG prepared by the Management Board as well as the
consolidated financial statements - including the group management report for the fiscal year from
January 1 to December 31, 2021 - and issued an unqualified audit opinion.
The annual financial statements of alstria office REIT-AG, the consolidated financial statements and
the combined management report, the Management Board’s proposal for the appropriation of the net
income, as well as the auditor's reports, were made available to all Supervisory Board members
immediately after their preparation. The Supervisory Board comprehensively reviewed documents
prepared by the Management Board in the Audit Committee and in the plenary session. At the Audit
Committee meeting, the auditor reported on his audit’s scope, focal points and main results (including
the audit of the internal control and risk management system). The auditor addressed the particularly
important audit issues (key audit matters) and the audit procedures and was available to answer
questions. The Audit Committee prepared the audit by the Supervisory Board and dealt, in particular,
with the key audit matters described in the auditor's report, including the audit procedures
performed. The full Supervisory Board examined the annual financial statements and consolidated
financial statements prepared by the Management Board, along with the combined management
report and discussed the results of the audit with the auditor. No objections were raised following
the final result of the Supervisory Board's examination. The Supervisory Board approved the annual
financial statements and the consolidated financial statements. The annual financial statements are
thus deemed adopted. The Supervisory Board concurred with the Management Board's proposal for
appropriating net profit.
The Supervisory Board thanks the Management Board and all employees for their extra-ordinary
performance, which made it possible for alstria - despite the impacts of the COVID-19-pandemic - to
look back on a successful financial year 2021.
Hamburg, February 2022
For the Supervisory Board
Dr Johannes Conradi
Chairman of the Supervisory Board
184
alstria Annual Report 2021
Corporate Governance Statement
F. CORPORATE GOVERNANCE STATEMENT
This declaration, pursuant to Section 289f and 315d of the German Commercial Code
(Handelsgesetzbuch, HGB), describes the working methods of the Management Board and
Supervisory Board as well as the composition and working methods of the Supervisory Board
committees, the diversity concepts for the Management Board and Supervisory Board composition,
the provisions to promote women’s participation in management positions in accordance with
Section 76 para. 4 and Section 111 para. 5 of the German Stock Corporation Act (Aktiengesetz, AktG),
the current declaration of compliance in accordance with Section 161 AktG and relevant information
on corporate governance practices. The declaration also includes the report on the corporate
governance of the Company and forms part of the combined management report of alstria office REIT-
AG (alstria) and the Group.
The disclosures are made as of December 31, 2021 in each case. Alexandrite Lake Lux Holdings S.à r.l.
and its affiliated companies acquired 95.11% of the Company's share capital by February 2022 as part
of a public takeover bid. In the course of the takeover, four members of the Company's Supervisory
Board have resigned from office with effect from February 28, 2022 (cf. Section I. 5.7 below).
Following the replacement of the Supervisory Board members, the Company’s intends to review its
corporate governance in the light of the takeover and it is possible that this review will lead to
substantial deviations to the extent permitted by law.
I. MANAGEMENT BOARD AND SUPERVISORY BOARD
The German stock corporation is legally required to have a dual management system, which provides
a strict personnel and functional separation between the Management Board as the management body
and the Supervisory Board as the monitoring and advising body. Within this dual management system,
the Management Board and Supervisory Board cooperate closely and faithfully in the Company’s
interest.
1. MANAGEMENT BOARD
As of December 31, 2021, the Management Board of alstria office REIT-AG consists of two members:
Member
Olivier Elamine
Alexander Dexne
Chief Executive Officer
Chief Financial Officer
Term of office
(in years)
15
14
Appointed until
31.12.2022
31.12.2022
The Management Board is responsible for managing the Company in the Company’s interests. In
particular, the Management Board determines the corporate objectives and develops the Company’s
fundamental strategic orientation, agrees on these with the Supervisory Board and ensures their
implementation. Furthermore, the Management Board ensures an appropriate internal control and
alstria Annual Report 2021
185
Corporate Governance Statement
risk management system as well as the observation of legal provisions and internal guidelines and
works towards their observance in the group (Compliance).
The Management Board members are jointly responsible for the management of the Company.
Fundamental matters or financially significant material matters stipulated by law, by the Articles of
Association or by the rules of procedure for the Management Board, are decided by the Management
Board as a whole. The Management Board’s resolutions are passed by a simple majority, whereby a
unanimous vote shall generally be sought. Certain resolutions on the Company’s significant business
transactions are also subject to approval by the Supervisory Board. The Management Board reports
regularly to the Supervisory Board. At least once a year, the Management Board reports on the
intended business policy and on other fundamental issues of corporate planning for the Company and
the Group. The Management Board reports regularly (at least quarterly) on the state of business,
particularly on sales revenues and income, material indicators and the net assets development,
financial position and operation results. The work of the Management Board, the transactions
requiring supervisory board approval, the allocation of responsibilities between the individual
Management Board members and the reporting and information obligations to the Supervisory Board
are detailed in the rules of procedure for the Management Board.
The Management Board’s members are committed to the Company’s interest and do not pursue
personal interests in their decisions or take advantage of business opportunities to which the Company
is entitled. They must immediately disclose any conflicts of interest to the chairman of the Supervisory
Board. In particular, members of the Management Board shall not directly compete with the Company
through private real estate investments; real estate transactions between the Company and members
of the Management Board are forbidden. Major business transactions between the Company on the
one hand and the Management Board’s members, related parties, companies or associations within
the meaning of Section 111a AktG on the other hand, require the Supervisory Board’s approval. All
such transactions must be concluded under customary commercial conditions. The Management
Board’s members require the Supervisory Board’s approval to conduct secondary activities,
particularly memberships in supervisory boards of companies not affiliated with the Group. The
members of alstria’s Management Board had no conflicts of interest in the reporting year. There were
no agreements on such transactions between the Company and members of the Management Board
and related parties in the reporting period. With the approval of the Supervisory Board, the members
of the Management Board sit on the boards of companies outside the Group. A list of the memberships
of the Management Board members in supervisory boards of listed companies or companies with
comparable requirements pursuant to Section 285 No. 10 HGB can be found on page 162 of the
Company’s Annual Report.
The compensation of the members of the Management Board is presented in the Compensation Report
on pages 58 to 74 of this Annual Report. The Compensation Report, together with the other documents
required by Sec. 289 f of the HGB, is also available on the Company's website at www.alstria.com →
Company → Corporate Governance → Remuneration.
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2. PROFILE FOR THE MANAGEMENT BOARD AND LONG-TERM SUCCESSION PLANNING
The Supervisory Board appoints and dismisses the members of the Management Board and, with the
support of its Nomination and Remuneration Committee and the Management Board, ensures long-
term succession planning. The Supervisory Board strives for a Management Board composition that
ensures that all the knowledge, skills and experience necessary to best manage the Company are
available on the Management Board. Therefore, with due consideration of alstria’s specific situation,
on February 18, 2021 the Supervisory Board last established this profile of skills and expertise and
diversity concept with targets for the composition of the Management Board (Profile for the
Management Board), pursuant to Section 289 f HGB, Section 76 para. 3 AktG and to the
German Corporate Governance Code.
The Company’s Articles of Association provide that the Management Board shall consist of one or more
members. The Supervisory Board decides on the exact number of Management Board members, the
Management Board’s individual staffing and the Management Board’s chairman. Potentially suitable
candidates for each Management Board position are generally identified once per calendar year with
the help of external personnel consultants. Search profiles for each Management Board position are
used as a basis, in which the professional and personal requirements of the candidates for the
respective position are described. The search profiles are drawn up by the Supervisory Board as part
of a due analysis of the current and future challenges of the Company. The search profiles also take
into account the Profile for the Management Board. On this basis a shortlist of available candidates is
drawn up with whom structured discussions can be held without delay if necessary. Internal
candidates for Management Board succession are identified by the Supervisory Board, which gets to
know particularly qualified employees, both professionally and personally, in the course of its
meetings.
The initial appointment of Management Board members shall be for a maximum of three years;
reappointment of Management Board members shall also generally be for a maximum of three years.
Acting members of the Management Board will only be reappointed one year before the end of their
term of office, and their current appointment will be terminated at the same time if there are special
circumstances.
2.1.
Requirements for all management board members
All Management Board members shall have the personal qualification for being a member on the
Company’s Management Board and shall each meet the legal as well as the following requirements:
▪
▪
▪
▪
▪
▪
▪
a managerial mindset,
integrity,
a capacity for interaction and teamwork,
leadership skills and persuasive power,
communication skills,
an ability to balance risk appetite and risk avoidance,
relevant education and sufficient professional experience and
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Corporate Governance Statement
▪
an age of up to 65 years, as a general rule.
2.2.
Requirements for the entire Management Board
Viewed as a whole, the members of the Management Board shall have all knowledge, skills and
experience needed. In particular, at all times at least one Management Board member shall have
due / be duly:
▪ expertise regarding real estate management (ideally in the management of office properties,
▪
▪
acquired in a comparable company);
knowledge of the German real estate market;
skills
in the sectors real estate transactions, asset management/letting, project
development, real estate valuation and all other relevant business divisions;
▪ experience in defining, setting and executing corporate strategy and an ability to implement
profound change and ensure good communication;
▪
familiarity with the requirements concerning corporate governance and
investor
communication, gained within a listed company (ideally with a comparable market
capitalization);
▪ experience in leadership and corporate management (ideally acquired in a comparable
company) and
▪ experience in corporate finance and capital markets (ideally acquired in a comparable
company).
The composition of the Management Board shall also reflect internationality in terms of diverse
cultural backgrounds and international experience of the Management Board members.
2.3.
Diversity
▪ The members of the Management Board shall complement one another in terms of their
backgrounds, professional experience and expertise in order to let the leadership benefit from
diverse sources of experience, skills and points of view on corporate challenges.
▪
In the recruitment process, the candidates are treated neutrally in terms of sex and age and
will be assessed according to their qualifications.
2.4.
Status of implementation as of December 31, 2021
The Profile for the Management Board was fully implemented as of December 31, 2021.
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3. SUPERVISORY BOARD
The alstria office REIT-AG Supervisory Board is generally elected by the Annual General Meeting. It is
composed exclusively of shareholder representatives. As of December 31, 2021, the Supervisory Board
comprised the following six members:
Supervisory Board member
Committee memberships
Dr. Johannes Conradi (Chair)
Richard Mully (Vice Chair)
Benoît Hérault
Dr. Frank Pörschke
Elisabeth Stheeman
Marianne Voigt
Term of
office
(in years)
Appointed
until1)
Audit
committee
Nomination &
Remuneration
committee
Finance &
Investment
committee
ESG
committee
15
15
10
1
1
10
2023
2022
2022
2024
2024
2023
−
−
Chair
−
−
Chair
Chair
Member
Member
Member
−
−
Member
−
−
Member
Member
Member
Chair
−
−
Member
1) until the close of the Annual General Meeting in the respective financial year
The Supervisory Board advises the Management Board on the management of the Company and
monitors how it conducts business. The Management Board involves the Supervisory Board in decisions
of fundamental importance to the Company. To this end, the rules of procedure for the
Management Board stipulate that its approval is required, for example, for the acquisition or disposal
of real estate property, for the conclusion of new financing agreements with a consideration or volume
of more than EUR 30 million, or for modernization measures not included in the budget approved by
the Supervisory Board that exceed a total annual amount of EUR 2 million. Furthermore, transactions
with related parties pursuant to Section 111 b para.1 AktG require the approval of the Supervisory
Board.
The Supervisory Board elects a Chairman and a Deputy Chairman from among its members. The
Chairman of the Supervisory Board coordinates the Supervisory Board’s work, chairs its meetings and
attends to its affairs externally. The Chairman maintains regular contact with the Management Board
and discusses strategy, planning, business development, the risk situation, risk management and
corporate compliance with its members. The Management Board immediately informs the Chairman of
important events that are of material significance for assessing the situation as well as for development
and management. If necessary, the Chairman then informs the Supervisory Board and, when
appropriate, convenes a Supervisory Board meeting. The Chairman and Deputy Chairman of the
Supervisory Board also regularly hold discussions with investors on Supervisory Board-specific topics.
Supervisory Board resolutions are adopted through a majority of votes by the Supervisory Board
members as specified in the Articles of Association, unless otherwise required by law. Resolutions are
generally passed at ordinary or extraordinary meetings. Supervisory Board members may attend
Supervisory Board meetings in person or via telephone, videoconference or similar audiovisual means.
The Supervisory Board also meets regularly without the Management Board. Supervisory Board
resolutions may also be adopted outside of meetings by means of written, telephonic or electronic
communication if the Chairman permits it for an individual case.
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Corporate Governance Statement
The Supervisory Board regularly reviews, whether internally or with the assistance of external
consultants, how effectively the Supervisory Board as a whole and its committees perform their duties.
During the 2021 financial year, very positive results were achieved through an effectiveness assessment
conducted by means of online questionnaires, which were discussed by the Supervisory Board.
All Supervisory Board members are committed to the Company’s interests and do not pursue personal
interests in their decisions or take advantage of business opportunities to which the Company is
entitled. Conflicts of interest must be disclosed to the Chairman of the Supervisory Board without
delay. In the case of resolutions for which a conflict of interest exists, the Supervisory Board member
concerned abstains from voting. Members of the Supervisory Board shall not directly compete with the
Company through private real estate investments; real estate transactions between the Company and
members of the Supervisory Board are forbidden. Significant transactions between the Company on
the one hand and members of the Supervisory Board, related parties, companies or associations within
the meaning of Section 111a AktG on the other hand require the approval of the Supervisory Board. In
the reporting year, there were no conflicts of interest involving members of alstria's Supervisory Board.
There were no agreements on such transactions between the Company on the one hand and members
of the Supervisory Board and related parties on the other in the reporting period.
Supervisory Board members ensure that they have sufficient time to perform their duties. The members
of the Supervisory Board observed the overboarding rules as defined in the Profile for the Supervisory
Board (see below). alstria’s website contains the member’s curricula vitae and an overview of their
main activities in addition to their Supervisory Board mandate. A list of the memberships of the
Supervisory Board members on supervisory boards or similar supervisory bodies of non-Group companies
in accordance with Section 285 no. 10 of the HGB can also be found in the annual report on pages 163
to 165.
The compensation of the members of the Supervisory Board is presented in the compensation report
on pages 75 to 78 of this Annual Report.
4. SUPERVISORY BOARD COMMITTEES
To manage its tasks efficiently, the Supervisory Board has formed four standing committees from
among its members: an Audit Committee, a Finance and Investment Committee, a Nomination and
Remuneration Committee and a purely advisory and preparatory ESG Committee. Each committee has
its own rules of procedure, which further regulate the committee’s affairs, tasks and decision-making
powers, where appropriate. The rules of procedure for the Supervisory Board can be viewed on the
Company’s website.
4.1.
Audit Committee
The Audit Committee deals with the Company’s accounting and accounting process, risk management,
internal control and audit system and compliance. In addition, the Audit Committee deals with the
audit of the financial statements, in particular the selection, independence and qualification of the
auditors and the additional services provided by the auditors, the issuing of the corresponding audit
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Corporate Governance Statement
engagement, the determination of focal points of the audit, the fee agreement and the assessment
of the audit’s quality.
4.2.
Finance and Investment Committee
The Finance and Investment Committee discusses the Company’s financing strategy and grants
Supervisory Board approval for the conclusion of financing agreements and for the acquisition or
disposal of real estate properties or other assets, provided that the underlying financing volume or
the consideration for the transaction exceeds EUR 30 million and does not exceed EUR 100 million.
Financing agreements and transactions that exceed this amount must be submitted to the full
Supervisory Board for approval. The Finance and Investment Committee also grants Supervisory Board
approval for the conclusion or early termination of lease agreements with third parties as well as for
contracts with Supervisory Board members, in accordance with Section 114 of the AktG.
4.3.
Nomination and Remuneration Committee
The Nomination and Remuneration Committee deals with the preparation of the resolutions of the
full Supervisory Board on the appointment and dismissal of Management Board members (including
the preparation of the Profile for the Management Board), on the Management Board’s compensation
system and the total compensation of individual Management Board members, on the target figures
for the proportion of women on the Management Board and Supervisory Board, and on the rules of
procedure for the Management Board. The Nomination and Remuneration Committee deals with
ongoing succession planning for the Management Board and decides on the conclusion, amendment,
extension and termination of Management Board employment contracts, on the content of contracts
(with the exception of compensation), and on the approval of certain other activities of Management
Board members. Finally, the Nomination and Remuneration Committee prepares the Supervisory
Board’s resolution on election proposals to the Annual General Meeting for suitable Supervisory Board
members (including the Profile for the Supervisory Board) and on determining the compensation for
the Supervisory Board, and it deals with any insider information that falls within the Supervisory
Board’s remit.
4.4.
ESG Committee
The ESG Committee deals with environment social governance issues such as environmental policies
and CO2 targets, energy management policies, the potential impact of climate change, corporate
social responsibility legislation, corporate social responsibility ratings and the Company’s
sustainability reports.
The Supervisory Board reports on its activities and its committees’ work during the 2021 financial
year in its report to the Annual General Meeting on pages 176 to 184 of the Annual Report. The
Compensation Report, together with the other documents required by Sec. 289 f of the HGB, is also
available on the Company's website at www.alstria.com → Company → Corporate Governance →
Remuneration.
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Corporate Governance Statement
5. PROFILE FOR THE SUPERVISORY BOARD
alstria office REIT-AG’s Supervisory Board shall ensure proper consultation with and control of the
Management Board. Therefore, Supervisory Board members shall have the knowledge, skills and
experience necessary to properly fulfil their duties and complement one another. For this reason, on
September 9, 2021, the Supervisory Board has last established this profile of skills and expertise and
diversity concept with targets for the composition of the Supervisory Board (“Profile for the
Supervisory Board”) according to Sec. 289 f of the German Commercial Code and the German
Corporate Governance Code. Thereby, the Supervisory Board has especially considered alstria’s
specific situation and shareholder structure.
5.1.
General profile of qualification
▪ Managerial or operational experience
▪ Availability and willingness to dedicate sufficient time
▪ Discretion and integrity
▪ Capacity for interaction and teamwork
▪
Leadership skills and persuasive power
▪ Willingness to engage in regular and independent advanced training
▪ Age of up to 70 years, as a rule;
▪ No board membership, no advisory function excluding independence with and no personal
relationship to a significant competitor of the Company.
5.2. Overboarding
Including their membership on alstria’s Supervisory Board, our Supervisory Board members shall, as a
rule, not permanently have more than five board mandates at listed companies with registered seats
in Germany and abroad. For the purposes of calculating this limit, a Supervisory Board mandate or a
comparable function in non-listed companies is counted as one mandate, with a supervisory board
chair being counted as two; management board mandates at listed companies are counted as three
and should not be held by the Chair of our Supervisory Board.
5.3. Qualification and diversity
▪ The members of the Supervisory Board shall complement one another in terms of background,
professional experience and skills in order to provide the Supervisory Board with the most
diverse sources of experience and skills possible.
▪ Viewed as a whole, the members must be familiar with the real estate sector. At least two
members shall have due expertise in the office real estate market.
▪ At least two members shall have strong international backgrounds. At least two members shall
have strong German backgrounds.
▪ At least one member shall have experience as a management board member (ideally as the
chief executive officer of a listed company) and be familiar with stakeholder management.
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Corporate Governance Statement
▪ At least two members of the Audit Committee, including the Chair, shall be financial experts:
At least one member shall have gained special expertise and experience in accounting, the
application of accounting principles and internal control systems (e.g., as the chief financial
officer of a comparable company). At least one further member shall have gained special
expertise and experience in the auditing of annual statements (e.g., as auditor in an audit
firm or as chief financial officer of a comparable company).
▪ The members of the Supervisory Board shall complement one another in terms of gender. At
least two members shall be female. At least two members shall be male.
5.4.
Independence
A Supervisory Board member is independent from the Company and its management as long as it has
no personal or business relationships with the Company or its Management Board, which could cause
a substantial and not merely temporary conflict of interest.
A Supervisory Board member is independent from a controlling shareholder if the Supervisory Board
member or a close relative is neither a controlling shareholder, nor a member of the executive
governing body of the controlling shareholder and does not have a business or personal relationship
with the controlling shareholder that may cause a substantial and not merely temporary conflict of
interest.
The Supervisory Board has determined the following requirements for the independence of its
members from the Company and its management. The Supervisory Board regularly reviews at its
reasonable discretion, whether its members are independent in its assessment. Thereby, the
Supervisory Board particularly considers if a Supervisory Board member or one of their close relatives
▪ was a member of the Management Board in a Group company in the three years before its
appointment (for Supervisory Board members themselves, a five-year period shall apply);
▪ has, or had within the 3 years up to his appointment, a material business relationship with
the Group or a member of the Management Board (e.g., as a tenant, lender or advisor), either
directly or as a shareholder, director or senior employee of a non-group entity that has such
a relationship with the Group (acceptance of payment in excess of EUR 50,000 p.a. is
considered as material);
▪
is a close relative of one of the members of the Management Board of the Company;
▪ has been a member of the Supervisory Board for more than 12 years;
▪
is affiliated with a not-for-profit entity that receives significant contributions from the
Company; or
▪ was a partner or employee of the Company’s outside auditor during the past three years (only
applicable to Supervisory Board members themselves).
Should the Supervisory Board come to the conclusion that a Supervisory Board member is independent
even though there are opposing criteria, the Supervisory Board will give reasons for this assessment
in the corporate governance statement. A membership of more than 12 years in the Supervisory Board
does not exclude independence as long as there are no further criteria for a missing independence.
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Corporate Governance Statement
5.4.1. Independence in the plenum and committees:
The Supervisory Board has determined the following requirements for the independence regarding
the composition of the plenum and the committees:
▪ At least four members of the Supervisory Board shall be independent from the Company and
its Management Board.
▪
Should the Company have a controlling shareholder, at least three members of the
Supervisory Board shall be independent from the controlling shareholder.
▪ No more than two Supervisory Board members shall be former members of the
Management Board.
▪ The Chair of the Supervisory Board shall be independent from the Company and its
Management Board as well as from a controlling shareholder. The Chair of the audit
committee shall not chair the Supervisory Board.
▪ The Chair as well as the majority of the members of the Audit Committee shall be
independent from the Company and its Management Board and from a controlling
shareholder.
▪ The Chair as well as the majority of the members of the Nomination and Remuneration
Committee shall be independent from the Company and its Management Board.
5.5.
Succession planning and annual elections to the Supervisory Board
alstria appoints Supervisory Board members using a structured process. The Supervisory Board submits
nominations to the Annual General Meeting for each vacant Supervisory Board position. The
Supervisory Board’s Nomination and Remuneration Committee prepares these recommendations for
an election.
The Supervisory Board chooses the candidates whom it recommends to the Annual General Meeting
for an election as follows: Annually, the Supervisory Board assesses the effectiveness of its work –
every three years this is done by an external advisor – and checks the composition of the Supervisory
Board and whether the targets laid down in the Profile for the Supervisory Board are being met. The
Supervisory Board also checks whether the targets need to be adjusted in light of alstria’s situation
and circumstances, which might have evolved. Given such results, the Supervisory Board assesses in
the first place whether it would be appropriate to recommend to the Annual General Meeting to
reappoint the Supervisory Board member whose term of office will end with the next Annual General
Meeting. When doing so, the Supervisory Board takes into consideration the criteria for independence
mentioned above, especially whether the candidate is a member of the Supervisory Board for more
than 12 years. The Supervisory Board will search for external candidates for the vacant position with
the help of an external advisor and thereby strives to fulfil the Profile for the Supervisory Board.
In its election proposals to the Annual General Meeting, the Supervisory Board discloses the personal
and business relationships of every candidate with the Company, the Management and
Supervisory Boards and any shareholders with a material interest in the Company. The election
proposals go along with a curriculum vitae, providing information on each candidate’s relevant
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Corporate Governance Statement
knowledge, skills and professional experience and an overview of the candidate’s material activities
in addition to the Supervisory Board mandate. The curricula vitae of all Supervisory Board members
are updated annually and published on the Company’s website.
The Supervisory Board agreed on recommending at the Annual General Meeting to elect Supervisory
Board members for a term of three years only - rather than for five years as permitted by law. Two
members of the Supervisory Board will have equal terms of office. As a result, the Annual General
Meeting of shareholders elects two members of the Supervisory Board each year and thus has the
opportunity to shape the composition of the Supervisory Board every year. In this way, the legitimacy
of the shareholder representatives on the Supervisory Board is annually renewed. The Annual General
Meeting of shareholders elects each member of the Supervisory Board individually. Where an
application is made for the appointment of a Supervisory Board member by a court, the term of that
member will be limited until the next Annual General Meeting.
5.6.
Status of implementation as of December 31, 2021
In line with the appointment procedure described above, Dr. Frank Pörschke and Elisabeth Stheeman
were proposed for election as Supervisory Board members at the Annual General Meeting of alstria
office REIT-AG in Mai 2021 and elected to the Supervisory Board for a term of three years. All the
objectives set out in the Profile for the Supervisory Board were implemented as of December 31,
2021, and the Profile was fully completed by the full Supervisory Board in terms of the set general
requirements, overboarding rules, qualification and diversity, independence and conflicts of interest.
The Supervisory Board considers the members Dr. Johannes Conradi and Richard Mully to be
independent despite their fifteen years of membership on the Supervisory Board of the Company.
Their special familiarity with the Company’s affairs enables them to use their expertise for the benefit
of the Company. The Supervisory Board also does not see any other criteria that stand against
independence. Neither of the two members has a significant business relationship with the Company
or any of its subsidiaries. Likewise, there are no family or other personal relationships. The occasional
advice given to the Company by the law firm Freshfields Bruckhaus Deringer PartG mbB, of which Dr.
Johannes Conradi is a partner, does not conflict with the independence of Dr. Johannes Conradi, as
the advice given in each case concerns nonessential matters of the Company. Accordingly, the
remuneration paid to Freshfields Bruckhaus Deringer PartG mbB in the last three financial years was
in total less than EUR 10 k. Furthermore, these mandates were exclusively handled by other lawyers
and not by Dr. Johannes Conradi. The Supervisory Board therefore regards both longstanding members
as independent of the Company and the Management Board, especially since both members had
declared at an early stage that they will not be available for a further term of office after their terms
expire (Richard Mully in 2022 and Johannes Conradi in 2023).
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Corporate Governance Statement
The following table illustrates the achievement of the target in the area of independence from the
Company and the Management Board as of December 31, 2021:
Member1)
Term
of office
exceeding
12
years
Former
member of
alstria’s
Management
Board
Substantial
business
relationship
with alstria2)
Close relative
of a member
of alstria’s
Management
Board
Independent3)
Dr. Johannes Conradi (Chair)
Richard Mully (Vice Chair)
Benoît Hérault
Dr. Frank Pörschke
Elisabeth Stheeman
Marianne Voigt
yes
yes
no
no
no
no
no
no
no
no
no
no
no
no
no
no
no
no
no
no
no
no
no
no
yes
yes
yes
yes
yes
yes
1) with the exception of the term of office, the information relates in each case to the Supervisory Board member and his/her close relatives
2) currently or in the three years up to appointment; directly or as a shareholder or in a responsible function of a company outside the Group
3) ff the Company, the Management Board and a controlling shareholder (in the opinion of the Supervisory Board)
The following table illustrates the achievement of targets in the area of overboarding as of
December 31, 2021. A Supervisory Board member should not permanently have more than five board
mandates (including the membership on alstria’s Supervisory Board). Supervisory Board mandates at
non-group listed companies in Germany and abroad and, due to size, internationality and complexity,
comparable functions at non-listed companies are considered, with a supervisory board chair counting
as two mandates; management board mandates at non-group listed companies in Germany and abroad
are counting as three mandates:
Member
Management board mandates
at listed companies
Supervisory board mandates at
listed or comparable companies
Total count of
mandates
Overboarded
Dr. Johannes Conradi
(Chair)
Richard Mully (Vice Chair)
Benoît Hérault
3
Elaia Investment Spain
SOCIMI, S.A.
(CEO) (Batipart Group)
2
3
alstria office REIT-AG
(chairman)
alstria office REIT-AG (member)
Great Portland Estates PLC, UK
(non-executive chairman)
1 alstria office REIT-AG (member)
2/5
3/5
4/5
Dr. Frank Pörschke
2 alstria office REIT-AG (member)
2/5
Elisabeth Stheeman
AUG. PRIEN Bauunternehmung
(GmbH & Co. KG) (member)
3 alstria office REIT-AG (member)
3/5
Aareal Bank AG (member)
Edinburgh Investment Trust
PLC, UK (member)
no
no
no
no
no
Marianne Voigt
1 alstria office REIT-AG (member)
1/5
no
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Corporate Governance Statement
The following table illustrates the knowledge and experience of the single members of the Supervisory
Board relevant to their work on the Supervisory Board as of December 31, 2021:
Member
Nationa-
lity
Industry
background
Real
estate
sector
Office
real
estate
Inter-
national
back-
ground
German
back-
ground
Financial
expert
Experience
as
management
board
member
Dr. Johannes Conradi (Chair)
German
Law
Richard Mully (Vice Chair)
British
Finance
X
X
Benoît Hérault
Dr. Frank Pörschke
Elisabeth Stheeman
Marianne Voigt
French
German
German
and British
German
X
Law
Finance
Real Estate X
Finance
X
Controlling/
Finance, IT,
Management
1) as CEO of a non-group, listed company
5.7.
Further developments
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X1)
X
X
X
X
(audit)
X
(accounting)
X
(audit and
accounting
Following the takeover of the Company by Alexandrite Lake Lux Holdings S.à r.l., the Chairman of the
Supervisory Board, Dr. Johannes Conradi, and the members of the Supervisory Board, Benoît Hérault,
Richard Mully and Marianne Voigt, had resigned from office with effect from February 28, 2022.
On February 11, 2022, the Company had applied for the judicial appointment of Messrs. Brad Hyler,
Jan Sucharda and Karl Wambach and Ms. Rebecca Worthington as members of the Supervisory Board
of the Company with effect from March 1, 2022 until the end of the next Annual General Meeting.
The motion was granted by resolution dated February 16, 2022.
II. WOMEN IN LEADING POSITIONS
Employees and their development within the Company are of central importance for society to
achieve sustainable success. When filling management positions in the Company, the Management
Board strives for a high level of diversity among employees and a high proportion of female managers.
The Management Board determined a target figure of at least 30 % for the proportion of women in
the first management level below the Management Board (Head of Departments) in accordance with
Section 76 para. 4 AktG. This target figure has been achieved with 36,4 % as of December 31, 2021
and will apply until December 31, 2026. Due to the lack of an additional management level with
decision-making competence and budget responsibility, there was no need to determine a target
figure for women’s participation at the second management level.
The Supervisory Board set a target figure of at least 30 % for the proportion of women on the
Supervisory Board. This target was reached at 33.3 % as of December 31, 2021 and will apply until
December 31, 2024. The target for the proportion of women on the Management Board was initially
0 % against the background of the terms of office of the two Management Board members lasting until
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Corporate Governance Statement
December 31, 2022. In December 2020 the target for the proportion of women on the Management
Board was raised to at least 30 %. This target was not reached as of
December 31, 2021 and will apply until December 31, 2024.
III. GERMAN CORPORATE GOVERNANCE CODE
The recommendations and suggestions of the Government Commission, as appointed by the
German Federal Ministry of Justice, contain internationally and nationally accepted standards of good
and responsible corporate governance. Our declarations of compliance with the recommendations of
the German Corporate Governance Code pursuant to Section 161 AktG are published on the Company’s
website (www.alstria.com). alstria complied and complies with the recommendations of the
German Corporate Governance Code with the few exceptions stated in the declaration of compliance.
These exceptions and the reasons for the Company’s nonconformity are set out in the declaration of
compliance, as last issued by the Management Board and the Supervisory Board on March 12, 2021:
Declaration of compliance dated March 12, 2021
“I.
alstria office REIT-AG (“Company”) complies with all recommendations of the ‘Government
Commission German Corporate Governance Code’ in the version which entered into force on
March 20, 2020 (“GCGC”) with the following exception. The Company intends to comply with
all recommendations of the GCGC in future, except for the temporary deviation mentioned
below.
Number of mandates outside the group, C. 4 GCGC
According to the recommendations of the GCGC, a supervisory board member who is not a
member of any management board of a listed company shall not accept more than five
supervisory board mandates at non-group listed companies or comparable functions with an
appointment as chair of the supervisory board being counted twice. The Supervisory Bord,
based on the recommendation of its nomination and remuneration committee, will
recommend Dr Frank Pörschke to the Company's Annual General Meeting on May 6, 2021 for
election to the Supervisory Board. Dr Pörschke has declared that he will terminate most of his
current external mandates effective June 30, 2021 and thus will meet the requirements set
out in C. 4 GCGC.
II.
The Company has - apart from the exceptions stated below - complied with the
recommendations of the GCGC since its last Declaration of Compliance on December 3, 2020
with the following exceptions.
Publication of rules of procedure for the Supervisory Board, D.1 GCGC
The rules of procedure for the Supervisory Board of alstria office REIT-AG have been revised
and adapted to the current regulatory framework. Since the completion of the revision, the
rules of procedure for the Supervisory Board are being published on the Company website.
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Remuneration of the Management Board
Compared to the previous version, Section G.I. of the GCGC contains new recommendations
on the remuneration of the Management Board. The Company’s Management Board
remuneration system, which was approved by the Annual General Meeting of alstria office
REIT-AG on May 16, 2017 complied largely, but not fully with these new recommendations. At
the beginning of financial year 2021, the Supervisory Board has revised and adapted the
Management Board compensation system to the new regulatory requirements, also
implementing the requirements of the GCGC. The Company will present the adjusted
remuneration system for the Management Board to the Annual General Meeting of the
Company in financial year 2021 for approval and has implemented it as per January 1, 2021,
subject to the approval of the Annual General Meeting.
Determination of a maximum compensation, G.1 GCGC
The remuneration system for the Management Board which was in place until December 31,
2020 specified maximum amounts for the remuneration, these did not yet include fringe
benefits for Company cars and insurance benefits. As part of the introduction of the
remuneration system for the Management Board 2021, a maximum remuneration has been
determined for each Management Board position which includes any and all fringe benefits.
Determination of performance targets for variable remuneration elements, G.7 GCGC
The Supervisory Board is in agreement that it will determine the performance targets for all
Management Board members and all variable remuneration elements before the start of each
respective financial year. However, due to the implementation of the Management Board
remuneration system 2021, this was not possible for the variable remuneration elements for
financial year 2021. The Supervisory Board has set these targets at the beginning of financial
year 2021.
Change of performance targets for elements of variable remuneration, G.8 GCGC
In the Management Board remuneration system as applicable until December 31, 2020, the
short-term incentive remuneration element of the Management Board was mainly based on
the achievement of a funds from operations per share (“FFO per share”) target. In the event
that the achieved FFO per share in a financial year was impacted by real estate acquisitions
and disposals, the Supervisory Board adjusted the FFO per share target accordingly. In doing
so, the Supervisory Board ensured the Management Board was not incentivized to enter into
acquisitions by means of achieving personal short-term benefits. The impact of any real estate
transaction on the management remuneration was solely linked to multi-year remuneration
elements, therefore aligning the interest of the Management Board with those of the Company
and its shareholders. Furthermore, the FFO per share target was being adjusted to changes in
the Company’s share capital carried out in the relevant financial year. The Management Board
remuneration system 2021 still provides the FFO per share target, cleared up by the effects
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Corporate Governance Statement
mentioned above. However, a case-by-case decision of the Supervisory Board is no longer
necessary.
Possibility to retain or reclaim variable compensation, G.11 GCGC
The remuneration system for the Management Board as applicable until December 31, 2020 did not
provide for a possibility to entirely retain or reclaim variable remuneration components. As part of
the revision of the Management Board compensation system, these possibilities have been
introduced.”
IV. CORPORATE MANAGEMENT PRACTICES
To achieve a value-oriented and trust-building corporate management, alstria applies management
practices that go beyond the legal requirements.
1. CORPORATE GOVERNANCE
In managing the Company, the Management Board and Supervisory Board of alstria are aware of their
responsibility towards the shareholders, employees, tenants and business partners of alstria. Good
corporate governance strengthens the trust of our stakeholders and is therefore the basis for our
decision-making and control processes. It stands for a responsible, value and long-term success-driven
governance and control of the Company, a targeted and efficient cooperation between the
Management Board and the Supervisory Board, respect for the interests of our shareholders and
employees, transparency and responsibility in all entrepreneurial decisions as well as an appropriate
risk management.
alstria has implemented large parts of the recommendations and suggestions of the German Corporate
Governance Code and thus goes beyond the legal requirements. At least once a year and whenever
necessary, a corporate governance officer in the Company reports to the Management Board and the
Supervisory Board any changes to the German Corporate Governance Code. alstria thus ensures that
these principles are observed throughout the Company.
2.
INTEGRITY AND COMPLIANCE
Behavior with integrity is one of alstria’s most important principles. The trust of shareholders, tenants,
employees and business partners depends crucially on the conduct of each individual. The Company’s
Management Board has therefore implemented a compliance management system geared towards the
risk situation of the Company, to ensure compliance with legal requirements and internal guidelines,
and it also sets standards for fair treatment of business partners, competitors and employees.
A code of conduct for employees sets our principles of conduct, provides guidance in conflict
situations (e.g., a conflict of interest) and thus serves as a model and orientation for correct behavior
for all employees of the company. The code of conduct is published on the alstria website. The
Compliance Officer is responsible for communicating these values to the employees by in-house
training for all employees and by answering questions on the code of conduct’s implementation of
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Corporate Governance Statement
the as well as internal guidelines. Compliance with the code of conduct is monitored by colleagues,
superiors and the Compliance Officer, as well as by regular reviews by an auditor. Employees are
given the opportunity to report violations within the Company via various reporting channels. alstria
has also set up a telephone hotline at a law firm where employees can anonymously report violations
of the code of conduct or the Company’s internal guidelines. In addition, the Management Board
regularly discusses the Company’s compliance with the Audit Committee of the Supervisory Board.
Violations of the code of conduct will not be tolerated and will be fully investigated and sanctioned.
These may include disciplinary measures up to and including termination of employment, the assertion
of a claim for damages and criminal charges.
Integrity is also an essential condition for building trusting partnerships and cooperation with our
business partners. For this reason, alstria has introduced a code of conduct for its service providers,
craftsmen, suppliers and business partners, which describes fundamental legal and ethical
requirements. This code of conduct for service providers is published on the website of alstria and
defines the Company’s expectations of integrity and compliant behavior of its business partners.
3. COMMUNICATION AND TRANSPARENCY
Transparent corporate governance and good communication with the shareholders and the public help
to strengthen the confidence of investors and the public in alstria’s work.
3.1.
Relationship to the shareholders
alstria respects the rights of its shareholders and guarantees to the best of its ability to exercise these
rights within the legal and statutory framework. These rights include, in particular, the free
acquisition and free sale of shares, participation in the Annual General Meeting, adequate satisfaction
of the need for information and adequately distributed voting rights per share (one share - one vote).
Shareholders have the option of exercising their voting rights at the Annual General Meeting in person
or through a proxy of their choice or a company-appointed proxy that is bound by instructions. The
invitation to the Annual General Meeting explains how instructions for exercising voting rights can be
issued. The documents convening the Annual General Meeting can also be sent electronically at the
request of the shareholder. The convening notice and the documents to be made available for
inspection in accordance with the statutory provisions will be published on alstria’s website together
with the agenda and the additional documents pursuant to Section 124a AktG. The Annual General
Meeting of alstria office REIT-AG is usually chaired by the Chairman of the Supervisory Board, who
aims to hold the Annual General Meeting within a time window of no more than four to six hours.
Following the Annual General Meeting, the voting results will be announced on alstria’s website.
3.2.
Communication with the public
When sharing information with persons outside the Company, the Management Board follows the
principles of transparency, promptitude, comprehensibility and equal treatment of shareholders.
alstria informs its shareholders and the interested public about the Company’s situation, significant
business events, and changes in the business outlook and risk situation in particular through financial
reports, analyst and press conferences, press and ad-hoc announcements and the Annual General
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Corporate Governance Statement
Meeting. The alstria website provides comprehensive information about the Company, its shares and
other financial instruments and the share price development, as well as notifications of directors’
dealings in accordance with Article 19 of the Market Abuse Regulation (Regulation (EC) No. 596/2014
of the European Parliament and the Council) (Directors’ Dealings). Furthermore, alstria publishes a
financial calendar in its financial reports and on its website, listing all dates of importance to
shareholders. The notices and information are additionally published in English.
3.3.
Financial reporting
alstria regularly informs shareholders and third parties during each financial year by means of the
consolidated and half-year financial statements, as well as quarterly interim statements. The
accounting of the alstria Group is based on International Financial Reporting Standards (IFRS) as
applied in the European Union. For corporate law purposes (calculation of dividends, creditor
protection), financial statements for alstria office REIT-AG are prepared in accordance with the
national commercial law (HGB).
The Annual General Meeting appoints an independent auditor for alstria office REIT-AG and the Group
as well as for the audit review of the interim financial reports. Following the election by the
Annual General Meeting, the Audit Committee of the Supervisory Board awards the mandate for the
audit of the financial statements and agrees on the fee with the auditor. It is agreed with the auditors
that the auditors will inform the Audit Committee without delay of all findings and events of significance
for their duties which come to their attention during the performance of the audit. In the event that
the auditor, during the performance of the audit, discovers facts that indicate that the declaration of
compliance with the German Corporate Governance Code issued by the Management Board and
Supervisory Board in accordance with Section 161 AktG is incorrect, an obligation to provide information
and disclosure in the audit report is agreed upon.
The auditor participates in the deliberations of the Audit Committee and the full Supervisory Board to
discuss the financial statements of alstria office REIT-AG and the consolidated financial statements of
the Group. The auditor also participates in the meeting of the Audit Committee to discuss the half-year
financial report. In the meetings, the auditor presents the main results of the respective audit. KPMG
AG Wirtschaftsprüfungsgesellschaft, Hamburg, was appointed to audit the annual financial statements
of alstria office REIT-AG and of the Group for the 2021 financial year and for further interim financial
reports until the next ordinary general meeting in 2022. Since the 2018 financial year, René Drotleff has
been the auditor directly responsible for auditing the financial statements of alstria office REIT-AG and
the Group.
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Corporate Governance Statement
4. SUSTAINABILITY
alstria’s sustainability approach is based on a three-pillar model and considers the effects of business
activities in the areas of economy, ecology and social issues. As a commercial organization, alstria’s
main objective is to increase the value of the Company on a sustainable basis. It strives to generate
the best possible return on its capital in the long-term. alstria’s sustainability approach is not
exclusively focused on the environment, as the economic and social impacts of its activities are also
taken into account. The Company weighs the risk–benefit of all three areas before making any
decisions and adapts its actions to what it feels is the most viable course of action in each case. The
result of this approach is that alstria might not always make decisions that maximize its short-term
profit, but strives to follow the path that will produce the best long-term prospects for the Company.
alstria’s sustainability approach and performance in the three sustainability areas, as well as its future
goals, are described in detail in the Company’s annual sustainability report, which is available on
alstria’s website.
February 2022
The Management Board
The Supervisory Board
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203
REIT Disclosures
G. REIT DISCLOSURES
I. REIT DECLARATION
Statement of the management board
In relation to the financial statements according to Section 264 of the German Commercial Code
(Handelsgesetzbuch, HGB) and the IFRS consolidated financial statements according to Section 315e
HGB as per December 31, 2021, the Management Board of alstria office REIT-AG (alstria or the
company) issues the following declaration regarding compliance with the requirements of Sections 11
to 15 of the REIT Act (German Real Estate Investment Trust Act) and regarding how the composition
of income subject to and not subject to income tax is calculated for the purposes of Section 19
paragraph 3 REIT Act, in conjunction with Section 19a REIT Act:
1. As per balance sheet date, to our knowledge, 46.69 % of alstria’s shares were free float according
to Section 11 paragraph 1 REIT Act. This was communicated in writing to the German Federal
Financial Supervisory Authority (BaFin) on January 10, 2022.
2. Alexandrite Lake Lux Holdings S.à r.l., Luxembourg, Grand Duchy of Luxembourg, announced
pursuant to section 23 para. 1 sentence 1 no. 1 WpÜG (German Securities Takeover Act) that it
directly held 60,098,666 or 33.76 % of alstria’s shares as of the balance sheet date. Additionnaly,
Lapis Luxembourg Holdings S.à r.l., Luxembourg, Luxembourg, was reported to directly hold
18.213.868 or 10,23 % of alstria’s shares. This is a deviation from the regulation of Section 11,
Paragraph 4 of the REIT Act, which means that no investor should directly hold 10% or more of
the shares in the company. Apart from the two named companies, according to our knowledge,
no investor directly owns 10% or more of the shares in our company or shares to such an extent
that he has 10% or more of the voting rights.
3. In relation to the sum of the assets pursuant to the consolidated statements less the distribution
obligation and the reserves pursuant to Section 12 paragraph 2 REIT Act
a) As per the balance sheet date, the immovable assets amounted to EUR 4,870,339 k, which
equals 93.05 % of the assets; therefore, at least 75 % of the assets are immovable assets.
b) The assets belonging to the property of REIT service companies as per balance sheet date which
were included in the consolidated statements amount to a maximum of 20 %, namely
EUR 1,314 k and therefore 0.03 %.
4. In relation to the sum of the entire sales revenue plus the other earnings from immovable assets
pursuant to the IFRS consolidated financial statements (Section 12 paragraph 3 and 4 REIT Act)
a) For the financial year 2021, the entire sales revenues plus other earnings from immovable assets
amounted to EUR 332.4 million. This equals 100 % of total revenues plus other earnings from
immovable assets;
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REIT Disclosures
b) The sum of the sales revenue plus the other earnings from immovable assets of the REIT service
companies amounted to EUR 64 k in the financial year 2021. This equals 0.02 % of the Group’s
total revenue plus other earnings from immovable assets.
5. In financial year 2021, a dividend payment of EUR 94,230 k for the prior financial year was
distributed to the shareholders. Financial year 2020 resulted in a net gain amounting to
EUR 42,448 k, according to commercial law.
6. alstria office REIT-AG’s dividend is not derived from already taxed parts of the annual profit.
7. Since 2017, the Group has realised 13.09 % of the average portfolio of its immovable assets and
therefore did not trade with real estate, according to Section 14 REIT Act.
8. On the balance sheet date, the Group’s equity was EUR 3,367.1 million, as shown in the IFRS
Consolidated Financial Statements. This equals 69.13 % of the value of the immovable assets
shown in the consolidated financial statements, in accordance with Section 12 paragraph 1 REIT
Act (Section 15 REIT Act).
Hamburg, February 24, 2022
alstria office REIT-AG
Olivier Elamine
CEO
Alexander Dexne
CFO
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205
REIT Disclosures
II. REIT MEMORANDUM
Auditor’s memorandum according Section 1 (4) REIT Act
To alstria office REIT-AG, Hamburg
As auditor of the annual financial statements and the consolidated financial statements of alstria
office REIT-AG, Hamburg, for the financial year from January 1 to December 31, 2021, we have
audited the information given in the attached declaration of the management board members for the
compliance with the requirements of sections 11 to 15 of the REIT Act and the composition of the
proceeds concerning the pretaxation of proceeds according to section 19 (3), section 19a REIT Act as
of December 31, 2021 (hereinafter referred to as “REIT declaration”). The information given in the
REIT declaration is the responsibility 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 guidance promulgated by the Institut der
Wirtschaftsprüfer (Institute of Public Auditors in Germany) (IDW): Particularities concerning the audit
of a REIT stock corporation 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 judgment 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 according to section 11 (5) REIT Act
as of December 31, 2021 and if the provided information concerning the requirements of sections 12
to 15 REIT Act and the composition of the proceeds concerning the pretaxation of proceeds according
to section 19a REIT Act is appropriate. It was not part of our engagement to fully assess the company’s
tax assessments or position. Within our audit procedures we compared the information concerning
the free float ratio and the maximum stock ownership per shareholder according to section 11 (1) and
(4) REIT Act provided within the REIT declaration with the announcements according to section 11 (5)
REIT Act as of December 31, 2021 and agreed the provided information concerning the requirements
of sections 12 to 15 REIT Act with the information disclosed in the annual financial statements and
the consolidated financial statements of the Company. Furthermore, we tested the adjustments made
to the valuation of immovable assets held as investment for their compliance with section 12 (1) REIT
Act. 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 according to section
11 (1) and (4) REIT Act agrees with the announcements made according to section 11 (5) REIT Act as
of December 31, 2021 and the information provided concerning the compliance with sections 12 to
15 REIT Act and the composition of the proceeds concerning the pretaxation of proceeds according to
section 19a 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 and is not to be used for other purposes.
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REIT Disclosures
The Engagement in whose fulfilment we provided abovenamed services for alstria office REIT-AG was
based on the General Engagement Terms for German Public Auditors and Public Audit Firms dated
January 1, 2017 (Appendix 3). By acknowledging and using the information contained in this memo,
each recipient confirms that he/she has taken note of the regulations made therein (including the
liability regulation under no. 9 of the General Engagement Terms) and acknowledges their validity in
relation to us.
Hamburg, February 24, 2022
KPMG AG
Wirtschaftsprüfungsgesellschaft
[Original German version signed by:]
Schmidt
Wirtschaftsprüfer
[German Public Auditor]
Drotleff
Wirtschaftsprüfer
[German Public Auditor]
alstria Annual Report 2021
207
Financial Calendar/Imprint
H. FINANCIAL CALENDAR/IMPRINT
I. FINANCIAL CALENDAR
Events 2022
May 3
June 10
August 9
November 8
Publication of Q1
Interim report
Annual General Meeting
Publication of Q2
Half-year interim report
Publication of Q3
Interim report
Publication of sustainability report
II. CONTACT/IMPRINT
alstria office REIT-AG is a member of DIRK (Deutscher Investor Relations Verband, the German Investor Relations
Association).
Other reports issued by alstria office REIT-AG are posted on the Company’s website.
Forward-looking statements
This annual report contains forward-looking statements. These statements represent assessments which we have
made on the basis of the information available to us at the time. Should the assumptions on which the statements
are based not occur, or if risks should arise the actual results could differ materially from the results currently
expected.
Note
This report is published in German (original version) and English (non-binding translation).
Contact Investor Relations
Julius Stinauer MRICS
Phone +49 (0) 40 22 63 41−344
Fax
+49 (0) 40 22 63 41−229
E-Mail
jstinauer@alstria.de
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BUILDING
YOUR
FUTURE
alstria office REIT-AG
www.alstria.com
info@alstria.de
Elisabethstr. 11
40217 Düsseldorf, Germany
+ 49 (0)211 / 30 12 16 - 600
Platz der Einheit 1
60327 Frankfurt / Main, Germany
+ 49 (0)69 / 15 32 56 - 740
Steinstr. 7
20095 Hamburg, Germany
+ 49 (0)40 / 22 63 41 - 300
Reuchlinstr. 27
70176 Stuttgart, Germany
+ 49 (0)711 / 33 50 01 - 50
Rankestr. 17
10789 Berlin, Germany
+ 49 (0)30 / 89 67 795 - 00
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