Annual Reports

Letter to shareholders

the operating result of the Fair Value Group came in around 20% higher than expected in the financial year 2013. At the same time, we completed a substantial  portfolio adjustment with the sale of several properties and the termination of a non-strategic participation in return for a settlement at fair market value. As a result, our sustainable profitability has been strengthened and the Group structure simplified.
The net income according to HGB increased substantially, which allows us to more than double the dividend for 2013 year-on-year to €0.25 per share.

Simplifying the Group structure through the full consolidation of former associated companies

In these financial statements as of December 31, 2013, we have adopted the accounting regulations of IFRS 10 for the first time and are therefore applying the new regulations at the earliest possible time. According to IFRS 10,  participations are to be fully consolidated into the consolidated financial  statements if they are de facto controlled by the parent company. This is the case at five former associated companies for Fair Value REIT-AG due to our  historical voting majoritites. The change in the accounting of these participations has been made retroactively. This leads to adjustments in the opening balance sheet as of January 1, 2012, the previous end of year balance sheet as of December 31, 2012 as well as the items of the income statement for the financial year 2012, which are explained in detail in the notes. The comparability of our company with other real estate companies is therefore substantially improved and our attractiveness on the capital market should increase.

Financial year 2013: FFO increased, valuation and financial results impact consolidated net income

Consolidated net income adjusted for sales and valuation results as well as other one-off effects (FFO funds from operations) of €6.4 million or €0.69 per share was 8% up on the adjusted previous year figure of €5.9 million and even exceeded our forecast of €5.3 million by 21% due to higher rental  income and lower real estate related expenses.
In the financial year 2013, net one-off effects after minority interests totalled €11.6 million. As a result, a consolidated net loss pursuant to IFRS of €5.2 million was recorded, down €5.0 million on the adjusted previous year net loss of €0.2 million. In 2013, the largest proportion of one-off effects with around 72% derived from balance sheet valuation losses at the properties as well as around 27% from the market valuation and the cancellation of interest rate hedging transactions.

Group equity and NAV per share up slightly

The valuation losses from interest hedging transactions recorded in other income in previous years with a negative impact on Group equity were reclassified into the consolidated income statement. Group equity as of December 31, 2013 attributable to the shareholders of Fair Value REIT-AG therefore rose from an adjusted €80.4 million in the previous year to €80.7 million despite the consolidated net loss. Net asset value per share increased slightly from €8.62 (adjusted figure for the previous year) to €8.65 on the
balance sheet date.
On the balance sheet date, the REIT equity ratio came in at 46.9% of the immovable assets, higher than the legally required minimum level of 45%.

Net income pursuant to HGB rises sharply

Net income for 2013 pursuant to HGB came in at €2.7 million, more than 150% up on the €1.1 million reported in the previous year. This increase results from the net balance from sales and cancellationrelated one-off income as well as valuation and cancellation costs of interest rate hedging transactions.
After discontinuing a reinvestment reserve in line with Section 13 REITG,  modified net income of around €2.5 million was reported. At the Annual General Meeting on May 27, 2014, we will therefore propose a dividend of €0.25 per share for 2013.

Forecasts for 2014 and 2015

With a look to 2014, we are expecting FFO of €5.1 million or €0.55 per share, with this figure rising to €5.7 million or €0.61 per share in 2015. The planned dividends should total 45% of FFO respectively, which represents €0.25 per share in circulation for 2014 and €0.28 per share for 2015. Fair Value REIT-AG plans to continue its initiated portfolio adjustments. With regard to making new investments, the focus will be on real estate in the retail field, allowing our company to enjoy a solid basis with clear growth prospects.

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