Abbreviation for “Aktiengesetz” (German public limited Companies Act). This act regulates the rights and obligations of corporations limited by shares (German “Aktiengesellschaften” or “AGs”), limited partnerships by shares (“Kommanditgesellschaften auf Aktien” or “KGaAs”) and their shareholders.

At Equity 

Used in consolidation. “At equity” refers to a method of valuing equity interests in companies over which the group can exercise a significant influence (associated companies). When these companies are valued at equity, the associated company’s equity is only carried proportionately.

Asset Management 

Investment-oriented real estate asset management is the strategic, result-oriented investment management/value creation management of a real estate portfolio on individual property level in the interest of the property owner. This includes activities such as rentals, maintenance and also the disposition of properties. Associated Company According to the provisions of the “Handelsgesetzbuch” (“HGB” – German Commercial Code), an associated company is significantly controlled by a group company which holds an interest in the associate. Associated companies are consolidated at equity within the meaning of Section 312 of HGB.

Capitalization Rate 

As is the case for the discount rate, the capitalization rate is also used to calculate the present value of future cash flows. In contrast to discounting, capitalization refers to the compounding of a future recurrent payment.

Cash Flow 

Cash flow is a key performance indicator (KPI) used to describe profits when analyzing a company. It provides information on the company’s financial strength. To derive the cash flow, the net profit is adjusted for noncash relevant earnings positions. 

Closed-end Real Estate Funds 

A form of investing indirectly in real estate, which is defined by a fixed principal sum. After equity is completely placed, the fund is closed. Trading of participations in these real estate partnerships is possible via a secondary market to a limited extent. 


This term stems from the Latin word “derivare” (to derive). A derivative refers to a financial instrument whichis based on an underlying (e.g., equities, bonds, interest, commodities). The derivative comprises the right to buy or sell the underlying at a fixed price at a specific time in the future. The price of the derivative depends on the performance of the price of the underlying. 

Designated Sponsor 

This term is used on the capital markets to refer to a financial services provider (mostly a bank or asecurities trading bank). The function of a designated sponsor is to improve trading and pricing of security papers (such as shares) by providing additional liquidity. For this purpose, a designated sponsor offers bid and ask prices (both on the supply and the demand side) in electronic trading.

Discount Rate 

Discounting is a method in compound interest rate calculation. By discounting future cash flows through application of the discount rate and subsequent aggregation of the results their present value is determined.


Earnings before interest and taxes. EBIT shows a company’s operating results and is generally used to assess its earnings.


European Public Real Estate Association; aims at promoting transparency among publicly listed real estate companies by establishment of consistent standards

EPRA Result 

Consolidated income determined according to recommendations of EPRA; adjusts the consolidated income according to IFRS for one-off effects (such as sales) as well as valuation changes of properties and financial derivatives; indicator for operative result of portfolio holders.


Net asset value determined according to recommendations of EPRA; adjusts the NAV shown on the balance sheet for valuation changes of financial derivatives as well as deferred taxes; indicator for the real estate related enterprise value of portfolio holders.

Exit Tax 

This relates to a tax benefit for profits from the sale of land and buildings to a REIT. The arrangement has a limited term through to December 31, 2009.


Fair Value 

This accounting term refers to the value of an asset (such as a property) at its current present value, which is based on the future discounted cash flows.



Short for “funds from operations”. FFO indicates a real estate company’s earnings strength. The figure is calculated by adjusting the net income for the period by not liquidityrelated positions, e.g. the valuation result (see consolidated cash flow statement).



Hedges are used to shelter certain items (e.g. interest or currencies) against fluctuations in their market value. These transactions aim to fix an economic price (e.g. an interest rate) at a fixed date in the future.



Abbreviation for “Handelsgesetzbuch” (German Commercial Code or German GAAP). This act sets out core principles of German commercial law in a total of five books.



Abbreviation for “International Financial Reporting Standards”. This term refers to international accounting standards which comprise the standards issued by the International Accounting Standards Board (IASB), International Accounting Standards (IAS) and the interpretations of the International Financial Reporting Interpretations Committee (IFRIC). These regulations aim to ensure an internationally comparable, adequate presentation of a company’s actual financial position and results of operations.


Interest Rate Swap 

Swaps are derivatives which agree the swap of definite and fixed cash flows at a certain date in the future. In the case of an interest rate swap, the contracting parties undertake to pay a fixed or a variable interest rate for a specific underlying to the respective other contracting party. This mostly aims to hedge against the risk of changes in interest rates or to generate speculative profits.


Investor Relations 

Also known as IR. Describes the relationship,in particular the communication, with potential andcurrent investors in a listed company. These activities aim toprovide investors with up-to-date, comprehensive information.



Short for “net asset value”. This KPI describes the actual enterprise value. Under IFRS regulations, the net asset value mostly corresponds to the balance sheet equity.


Potential Rent 

Potential rent describes the annual rent for an existing property which could currently be received. This is the total of all of the contractual annual rent and any vacancies at market rents adequate for the respective location and property.


Prime Standard 

Listing segment of Deutsche Börse AG, organized under civil law and subject to statutory regulation. Companies listed in this segment have to fulfill particularly high transparency requirements.



Short for a “real estate investment trust”. The business purpose of a REIT is conducting activities relating to real estate. Under German law this includes, in particular, acquiring, managing and selling commercially used properties. In return for fulfilling the statutory requirements, no corporation or trade tax is paid at the REIT-company level. Instead, the shareholders are taxed to the extent that net income under the commercial code is disbursed as a dividend. In Germany, the corresponding tax rate has totaled 25% since the definitive withholding tax (“Abgeltungssteuer”) was introduced.



Short for upstream-REIT. Refers to the exchange of participations in closed-end real estate funds for shares of a listed REIT. Although comparable concepts are wide-spread in the USA, Fair Value REIT-AG is the only company to date in Germany to use this business model.



Abbreviation for “Wertpapierhandelsgesetz” (German Securities Trading Act). The WpHG regulates trading in  securities such as shares or bonds in Germany. The “Bundesanstalt für Finanzdienstleistungsaufsicht” (BaFin – German Financial Services Supervisory Authority) controls the upholding of this act.



Stands for exchange electronic trading. This refers to Deutsche Börse AG’s computer-assisted trading system for the spot market.

Fair Value REIT-AG