Renovated area of
Na Žertvách 34
(Palmovka office) in Prague
ARCONA PROPERTY FUND N.V.
ANNUAL REPORT 2024
2
CONTENTS
1
ARCONA
PROPERTY
FUND
N.V
. ..................................................................................
6
2
FOREWORD
FROM
THE
MANAGING
BOARD
...............................................................
8
3
ARCONA
PROPERTY
FUND
IN
BRIEF
..........................................................................
9
4
REPORT
OF
THE
SUPERVISORY
BOARD
..................................................................
11
5
REPORT
OF
THE
MANAGING
BOARD
........................................................................
12
5.1
YEAR
IN
REVIEW
....................................................................................................
12
5.2
FINANCIAL
OVERVIEW
...........................................................................................
14
5.3
ECONOMIC
BACKGROUND
AND
OUTLOOK
............................................................
23
5.4
REAL
ESTATE
PORTFOLIO
DEVELOPMENT
...........................................................
32
5.5
FUND
STRATEGY
AND
FORWARD
OUTLOOK
.........................................................
35
5.6
RISK
MANAGEMENT
AND
GOVERNANCE
...............................................................
36
5.7
STATEMENT
REGARDING
ADMINISTRATIVE
ORGANISATION
AND
INTERNAL
CONTROL
................................................................................................................
39
6
THE
REAL
ESTATE
PORTFOLIO
................................................................................
40
6.1
PORTFOLIO
OVERVIEW
.........................................................................................
40
6.2
REGIONAL
PORTFOLIO
..........................................................................................
41
7
PERFORMANCE
INDICATORS
...................................................................................
50
8-20
CONSOLIDATED
FINANCIAL
STATEMENTS
2024
......................................................
58
3
KEY
FIGURES
REVENUES AND EARNINGS
2024
2023
Change
Gross rental and service charge income (in EUR 1,000)
8,829
9,084
-/- 255
Net rental and related income (in EUR 1,000)
4,412
4,582
-/- 170
Direct result before tax (in EUR 1,000)
1
807
201
606
Indirect result before tax (in EUR 1,000)
2
-/- 827
779
-/- 1,606
Total result before tax (in EUR 1,000)
-/- 20
980
-/- 1,000
Tax (in EUR 1,000)
12
797
-/- 785
Total result after tax (in EUR 1,000)
-/- 32
183
-/- 215
Earnings per share (in EUR) (see 15.41.1)
-/- 0.01
0.04
-/- 0.05
Diluted customized earnings per share
3
(in EUR)
0.06
-/- 0.19
0.25
Gross distribution per share (in EUR)
-
0.18
Na
Ongoing Charges Figure (
OCF
) (without non-regular costs) (%)
8.01
7.63
0.38
BALANCE SHEET
31-12-2024
31-12 2023
Change
Investment property and inventories (in EUR 1,000)
49,438
73,594
-/- 24,156
Assets held for sale (in EUR 1,000) (see 15.13)
19,580
5,253
14,327
Equity
(in EUR 1,000)
42,476
45,396
-/- 2,920
Net asset value (NAV) per share (in EUR)
11.34
11.58
-/- 0.24
NNNAV per share (in EUR)
10.71
10.93
-/- 0.22
Net Loan-to-Value (LTV) (%)
33.42
39.52
-/- 6.10
Weighted avg. number of shares outstanding (see 15.41.3)
4,116,009
4,178,497
-/- 62,488
KEY PORTFOLIO METRICS
31-12-2024
31-12-2023
Change
Number of properties
19
21
-/- 2
Value of assets (in EUR million)
4
67.8
78.8
-/- 11.0
Net rental and related income (in EUR million)
4.41
4.58
-/- 0.17
Lettable area (in sqm)
47,687
55,033
-/- 7,346
Weighted average occupancy (in %)
85.87
86.54
-/- 0.67
Weighted remaining maturity of loans/ borrowings (years)
5
3.75
3.52
0.23
1
The difference between the Total result before tax and the Indirect result before tax.
2
The net results on properties (see 15.30 Net result on properties).
3
See 7.1.4. APM stands for Alternative Performance Measure.
4
The value of the investment property, the inventory and the assets held for sale (see 15.2.3).
5
See 15.42.14
‘Liquidity risk’
.
4
BALANCE SHEET STATEMENT
(in EUR 1,000)
2024
2023
2022
2021
2020
Investment properties
49,438
72,656
73,183
79,973
79,577
Other non-current assets
1,076
995
1,454
1,259
471
Current assets
23,081
10,021
15,582
9,334
14,374
Total assets
73,595
83,672
90,219
90,566
94,422
Shareholders' equity
42,476
45,396
46,515
46,403
42,954
Deferred tax liabilities
2,647
3,426
3,183
3,514
4,143
Other non-current liabilities
17,217
7,334
17,597
30,597
18,274
Current liabilities
11,255
27,516
22,924
10,052
29,051
Total equity and liabilities
73,595
83,672
90,219
90,566
94,422
PROFIT AND LOSS STATEMENT
(in EUR 1,000)
2024
2023
2022
2021
2020
Direct result before tax
807
201
637
1,076
-/- 277
Indirect result before tax
-/- 827
779
-/- 4,577
1,949
-/- 3,295
Total result before tax
-/- 20
980
-/- 3,940
3,025
-/- 3,572
Income tax expense
12
797
410
-/- 109
217
Total result after tax
-/- 32
183
-/- 4,350
3,134
-/- 3,789
ISSUED CAPITAL
2024
2023
2022
2021
2020
Outstanding shares (ultimo)
4,177,083
4,177,083
4,185,984
3,758,683
3,758,683
Basic earnings p.s. (in EUR)
-/- 0.01
0.04
-/- 1.07
0.83
-/- 1.01
Diluted adj. earnings p.s. (in EUR)
6
0.17
-/- 0.12
0.11
-/- 0.33
-/- 0.63
DATA PER SHARE
(in EUR)
2024
2023
2022
2021
2020
(Interim-) dividend
n.a.
0.18
n.a.
n.a.
n.a.
NNNAV
7
10.71
10.93
11.81
12.76
11.84
Avg. monthly turnover
98,239
101,307
227,468
269,291
75,006
Highest share price
6.94
6.00
7.49
7.60
6.29
Lowest share price
4.57
3.80
4.61
3.40
3.70
Ultimo share price
6.05
5.00
5.90
7.50
3.93
6
As earnings is used to measure the operational performance, it is the income return generated by the investment,
rather than the change in value or capital return on investments
(see chapter 7 ‘performance indicators’)
.
7
See 7.1.11 ‘Explanation of adjustments calculation of NNNAV’ for the year 2023
.
5
REAL ESTATE PORTFOLIO AT A GLANCE
Portfolio breakdown (year-end 2024)
Number of assets
Value (in m.EUR)
Value (in %)
Offices
5
30.7
44.5
Retail centres
6
15.3
22.2
Land plots
8
3
3.4
5.0
Total investment properties
14
49.4
71.6
Held for sale
9
5
19.6
28.4
Total portfolio
19
69.0
100.00
Real estate portfolio
10
8
Including acquired Kyinovski Lane in Kyiv
9
Grzymaly Siedleckiego; Wolnosci; Kardynala Wyszynskiego; Legionow and Maris.
10
Including assets held for sale.
50%
18%
16%
11%
5%
Poland
Slovakia
Czechia
Romania
Ukraine
6
1
ARCONA
PROPERTY
FUND
N.V.
Incorporation
Arcona Property Fund N.V. (the
Fund
) is an investment company with variable capital within the meaning
of article 76a of Book 2 of the Dutch Civil Code. The Fund was incorporated on 27 November 2002 by a
notarial deed executed before Prof. D.F.M.M. Zaman, civil-law notary in Rotterdam.
Registered Office and entry in Trade Register
The Fund is registered in Amsterdam and is entered in the Trade Register of the Chamber of Commerce
under number 08110094.
Office Address
De Entree 55
–
floor 11
NL 1101 BH AMSTERDAM
The Netherlands
Tel: +31(0)20 82 04 720
E-Mail: info@arconacapital.com
Website: www.arconapropertyfund.com
Supervisory Board
The Supervisory Board of the Fund comprises:
Mr. drs. A.N. Krol (chairperson)
M.P. Beys Esq
Dr. J.J. van Heijst
The members of the Supervisory Board have chosen domicile at the offices of the Fund.
Nelleke Krol, born in 1966 (Rotterdam), holds a degree in Business Economics and Dutch Law from
Erasmus University. She has an extensive background in corporate law, including corporate governance
issues, as well as capital market transactions, such as IPOs, and regulatory issues like market abuse. Mrs.
Krol has also provided financial reporting advice on the application of Dutch GAAP and EU IFRS,
demonstrating her expertise in the field. With years of experience in advising on complex legal and financial
transactions, she has held senior positions at Loyens & Loeff N.V. Mrs. Krol is a member of the Supervisory
Board of the Dutch Vodafone Holding companies since September 2019 and was appointed to the
Supervisory Board on June 22, 2022, where she will serve a term ending on June 21, 2026.
Michael Beys was born in New York, New York, USA on October 25, 1971. Appointed to the board in 2021,
he is the founder and partner of a law firm in New York, the chairman of the Board of Directors of
shareholder Secure Property Development & Investment Plc (
SPDI
), and also the interim CEO and director
of FTE Networks, Inc., which owns and operates a real estate portfolio in the U.S. He does not hold any
shares in a private capacity. He was appointed to the Supervisory Board on June 16, 2021, where he will
serve a term ending on June 16, 2025.
Jan Jaap van Heijst was born in Leiden, on October 9, 1968. He received his PhD from Groningen
University, having done his research partly at Boston University on a Fulbright grant. He started his
professional career as a derivatives trader for Optiver in Amsterdam. He spent 2 years working for the same
company in New York. In 2009 he left as a partner and started working for ValuePartners Family Office as
an asset manager. Mr van Heijst owns 12,855 shares in the Fund. He was appointed to the Supervisory
Board on June 16, 2021, where he will serve a term ending on June 16, 2025.
7
Managing Board
The Fund is managed by Arcona Capital Fund Management B.V. (
ACFM
or the
Managing Board
). ACFM
is based in Amsterdam and registered in the Trade Register of the Chamber of Commerce under number
08107686.
The Managing Board currently has the following directors:
G.St.J. Barker LLB
P.H.J. Mars M.Sc.
M. van der Laan B.Sc
M.T.H. Blokland BBA
The Managing Board has chosen domicile at the offices of the Fund. More information can be found on
the website: www.arconapropertyfund.com
Stichting Prioriteit
Stichting Prioriteit (the
Foundation
) of the Fund is managed by a managing board consisting of two
members:
G.St.J. Barker LLB
P.H.J. Mars M.Sc
Auditors
Deloitte Accountants B.V.
Gustav Mahlerlaan 2970
NL 1081 LA Amsterdam
The Netherlands
Legal Advisor
Loyens & Loeff N.V.
Blaak 31
NL 3011 GA Rotterdam
The Netherlands
Listing Agent
ABN AMRO Bank N.V
Gustav Mahlerlaan 10
NL 1082 PP Amsterdam
The Netherlands
Administrator
Moore MKW Accountants B.V.
Colosseum 1
NL 7500 AC Enschede
The Netherlands
Depositary
CSC Depositary B.V.
Woudenbergseweg 11
NL 3953 ME Maarsbergen
The Netherlands
Identification codes
The ISIN code is NL0006311706
The REUTERS code is ARCPF
The BLOOMBERG code is ARCPF:NA
The Managing Board holds a license to manage Investment Institutions as defined by Section 2:65 Wft (Act
on the Supervision of Investment Institutions, Wet op het financieel toezicht).
8
2
FOREWORD
FROM
THE
MANAGING
BOARD
During 2024, the Central European real estate market continued to present a mix of challenges and
opportunities. High interest rates and inflationary pressures persisted, influencing financing conditions,
rental markets and investor sentiment. The continuing conflict in the Ukraine remained a deterrent factor
for investors from Asia and North America considering the region, but local investors have now accepted
the situation and are active purchasers of perceived value. Low levels of development activity have ensured
that the occupational markets have no problems of oversupply in any major sector and rental and
occupancy levels have accordingly remained firm.
Against this background, t
he Fund’s
focus during 2024 was to maintain its own occupancy levels,
specifically with lease renewals pending in several large office assets across the portfolio, and to execute
the monetization programme agreed at the General Meeting in December 2023.
Whilst key lease negotiations were successfully concluded at the Letna asset in Kosice (Slovakia) and
important new lease contracts signed at the Maris asset in Szczecin (Poland), the tenant of one of the
Fund´s Bucharest (Romania) office assets gave notice to terminate and will vacate the entire property in
May 2025. This presents a key asset management challenge and will likely impact portfolio occupancy
levels in the second half of the coming year.
The monetization programme was initiated by the successful sale of the Záhradnícka office building in
Bratislava, the Karlin office building in Prague and the residual Boyana Residence assets in Sofia,
generating a total transaction value of approximately EUR 13.5 million. These transactions enabled
substantial debt repayments and the initiation of the Reverse Book Build share buyback programme in
October, which acquired 294,118 shares at EUR 6.80 per share
The Fund finally completed the 6-asset acquisition programme from SPDI agreed before the COVID
pandemic with the acquisition of a prime development site on Kyianovski Lane in Kyiv, Ukraine.
For 2024 the Fund posted a post-tax loss of EUR 32,000, primarily caused by value falls in Romania and
Slovakia. Operational performance remained strong, however, with net rental income of EUR 4.41 million
and total direct income of EUR 5,374 million (2023: EUR 5,208 million), despite the reduction in size of the
portfolio.
The
Fund’s share price increased by 29.8% over the year
9
3
ARCONA
PROPERTY
FUND
IN
BRIEF
General
The Fund is an investment company with variable capital incorporated under Dutch law and registered in
Amsterdam. The shares have been listed on Euronext Amsterdam since 2003. Since 31 October 2018 the
Fund is also listed on the Prague Stock Exchange (the
PSE
). It is not possible to trade in the shares on the
PSE
11
. The Fund invests in commercial real estate in Central and Eastern Europe (the
CEE
).
The Fund offers several important features that distinguish it from other real estate funds:
•
The focus on Central and Eastern Europe;
•
Local representation of Arcona Capital with its own offices in Amsterdam (Netherlands), Munich
(Germany), Prague (Czechia), Sofia (Bulgaria) and Warsaw (Poland);
•
Access to regional property management knowledge and facilities;
•
Long-term management experience in Central Europe (since 1992).
Managing Board
Arcona Capital Fund Management B.V. is the managing board of the Fund. On 24 January 2006, it obtained
from the AFM a permit under the Wft.
Fund Structure and tradability
The Fund is a closed-end investment institution with shares listed on Euronext Amsterdam and the PSE.
Strategy
The Fund is one of a limited number of listed and regulated property vehicles active in the CEE region,
providing regional market exposure for both private and institutional investors. It aims to provide capital
preservation and a high dividend yield through a diversified and liquid vehicle managed by property
specialists with a fiduciary mind-set. This is a key differentiation from the other listed stocks in the region,
which are either very sector-specific or are primarily development-focused with a higher risk profile.
The costs of maintaining such a structure, offering daily trading in the shares, are high and impact
disproportionally on smaller funds. Accordingly, since 2012 the Fund has pursued a growth strategy to
achieve both critical mass and adequate investment diversification. Over the past nine years, the Fund has
doubled in size, expanded into four new regional markets and into the convenience retail and residential
sectors. Further growth through acquisition is, however, currently limited by the prevailing share price
discount (43% as at end 2024) to NAV. Over the next 6 months, the Fund will concentrate on returning
money to shareholders in accordance with the monetization plan agreed upon at the Extraordinary General
Meeting (EGM) at the end of 2023. The ongoing sales program is designed to divest non-core assets and
certain core assets that have reached their short-term peak values through refurbishment or re-letting
programmes.
Continued strong focus on operations
The Fund continues to improve operational cost ratios (see 15.39
‘
Ongoing charges figure
’
) and occupancy
levels in the existing portfolio. The Fund will continue to identify and realise opportunities to add value to
the existing portfolio by redevelopment and refurbishment.
Portfolio management through selective investments and disposals in core markets
Going forward, the Fund has a clear strategy for its core markets, focusing on regional sectors with above-
average growth potential and limited international competition. The Fund will continue to dispose of assets
that are not aligned with its strategic focus if favourable opportunities for completing such disposals arise.
Maintaining a prudent financial strategy
The Fund intends to maintain its prudent financial strategy of conservative leverage, targeting a LTV-ratio
in the range of 40% - 50% (as at 31 December 2024: 33.4%), although an LTV percentage of up to 60% is
possible. The Managing Board has regard to the need for flexibility, in particular the ability to sell real estate
from the portfolio without incurring high debt finance breakage costs. The Fund prefers to use several
different financiers, so as not to be dependent on just one party.
11
To trade shares on the PSE, issuing a new prospectus is required. At the moment, this is not advisable.
10
Investor relations and information supply
The Fund strives to achieve open, timely and clear communication with private and institutional investors,
asset managers and other interested parties, and endeavours to configure its public and investor relations’
policy accordingly. Currently the Fund’s investors are largely private investors and asset/wealth managers.
Corporate Governance
Clarity and transparency in supervision and accounting is considered by the Fund to be the cornerstone of
good management and entrepreneurship. The Fund aims for a sound system of corporate governance, with
its strategy and investment objectives clearly defined and its operations effectively monitored by the
Managing Board, Supervisory Board and independent external parties.
Diversity
The Dutch Corporate Governance Code mandates a diversity policy for the managing and supervisory
boards of large public and private companies. Since the Fund is not classified as a large company, there is
no obligation to specify a diversity policy. Currently, the Managing Board comprises four members (one
female, three males), while the Supervisory Board consists of three members (one female, two males).
Shareholders appoint these members based on their experience, language skills, and qualifications. Should
the boards expand in the future, opportunities may arise for increased diversity in aspects such as age,
gender, and geographical experience.
The Fund's Managing Board is operated by ACFM. However, formally ACFM is not obligated by the Non-
Financial Information Disclosure Decree and the Diversity Policy Disclosure Decree to provide information
regarding its diversity policy.
Sustainability
The investments underlying this financial product do not take into account the EU criteria for environmentally
sustainable economic activities.
Social commitments
The Fund employs no staff directly and does not currently engage in, or provide funding for, social or
community engagement activities across the markets where it is active.
However, the Fund Manager, Arcona Capital, does fund a variety of community and cultural activities both
across the markets in which the Fund is active and in Africa. This includes sponsorship of the Czech
Philharmonic orchestra in Prague, financial support for the Tyler Robinson Foundation (assisting the
families of severely-ill young children in Czechia) and sponsorship of the Kibo Education Trust in rural
Tanzania.
Financing
The Fund does not currently perceive significant risks concerning ESG in relation with bank refinancing of
expiring loans in 2024 and beyond. However, this situation may change in the future if banks implement
more stringent ESG standards.
11
4
REPORT
OF
THE
SUPERVISORY
BOARD
Recommendation to the General Meeting
This annual report of the Fund has been prepared by the Managing Board. This report contains the financial
statements for the period from 1 January to 31 December 2024. The financial statements are audited and
have been approved by Deloitte Accountants B.V
. The auditor’s report is presented on pages
198
–
208.
The Supervisory Board has received notice of this approval.
On 8 April 2025, the auditors of Deloitte presented their draft report summarizing the key findings of their
audit of the consolidated and company financial statements of Arcona Property Fund N.V. for the financial
year ended 31 December 2024. They discussed their audit approach, the most important matters
considered during the audit, and the status of outstanding items still to be resolved before finalizing their
auditor’s opinion.
The Supervisory Board recommends the financial statements for the year 2024 to the
General Meeting for adoption.
Meetings and activities of the Supervisory Board
During 2024, the Supervisory Board and the Managing Board had regular contact in the form of monthly
calls to discuss the progress of asset sales pursuant to the sales and monetization program established as
of 20 December 2023.
Besides these monthly calls, the Supervisory Board and the Managing Board had six joint meetings (2023:
six). During these meetings, the Supervisory Board and Managing Board discussed the (administrative)
organization, the operational performance, compliance with bank covenants, the proposed sales and
monetization strategy and financial reporting of the Fund.
In performing its duties, the Supervisory Board is guided by the interests of the Fund, taking into account
the interests of all stakeholders.
Composition of the Supervisory Board
According to the Supervisory Board Bylaws, the Supervisory Board members, with the exception of a
maximum of one person, must be independent. A supervisory director who is a managing director or a
supervisory director, or otherwise a representative, of a legal entity (not being a group company) that holds
at least 10% of the shares in the Company is non-independent. The current composition of the Supervisory
Board complies with this provision.
Mr. Beys is also the Chairman of the Board of Directors of SPDI owning 1,152,381 ordinary shares (of which
79,411 were acquired as part of the settlement for the acquisition of all shares in Aisi Ukraine LLC and final
settlement of the acquisition of the Romanian assets
(31 December 2023: 1,072,910)). However, SPDI is
in the process of distributing these shares to its shareholders pursuant to a resolution which was adopted
by SPDI´s Extraordinary General Meeting of Shareholders on 10 July 2024.
Mr. Van Heijst is a representative of the Stichting Value Partners Family Office who controls 376,787 (31
December 2023: 397,694) ordinary shares and is therefore independent. Relevant information of each of
the Supervisory Board members can be found on page 6.
Finally
The Supervisory Board would like to express its appreciation for the efforts made during the financial year
by the Managing Board and staff.
Amsterdam, 30 April 2025
Supervisory Board
Mr. drs. A. Nelleke Krol (chairperson)
Dr. Jan-Jaap van Heijst (vice-chairperson)
Mike P. Beys, Esq.
12
5
REPORT
OF
THE
MANAGING
BOARD
The Managing Board hereby presents the annual report of 2024 of the Fund. The reporting period is from
1 January 2024 to 31 December 2024.
5.1
YEAR IN REVIEW
In 2024, the Fund achieved milestones, including portfolio revaluations, loan refinancing, asset sales, and
improved profitability. Strategic initiatives such as a share buyback and lease extensions further
strengthened its position. The following highlights outline the year
’
s major developments.
KEY HIGHLIGHTS OF 2024
The following events took place during the reporting period:
20 February 2024
| The Fund updates portfolio values and deferred tax liabilities
The Fund reported adjustments in its real estate portfolio values as of 31 December 2023, with valuation
increases across its holdings, except for a decrease in Romanian assets. Following the Extraordinary
General Meeting on 20 December 2023, the Fund has updated its deferred tax liability calculation method,
now recognizing the full nominal value of these liabilities in anticipation of planned property sales in the triple
NAV.
22 March 2024
| Two investor loans refinance CVI bond loan
The Fund has secured a EUR 2 million loan from two investors, which is utilized to refinance the group-level
CVI bond loan. This loan was previously provided as an intercompany loan to its subsidiary, Arcona Capital
Real Estate Trio Limited Liability Company, which owns three leasehold retail assets in Poland. The CVI
bond loan carryied an interest rate of EURIBOR + 8.5%, effectively totalling 12.4% per annum. The new
investor loan has been used to settle the EUR 1.8 million principal of the CVI loan and all accrued interest.
30 April 2024
| Strong recovery in Fund results for 2023
The Fund achieved a post-tax profit of EUR 183,000 in 2023, reversing a EUR 4.35 million loss from the
previous year. Net rental income increased by 9.3% to EUR 4.6 million, supported by positive valuation
adjustments and asset sales. The Fund has secured waivers for all breaches of its Debt Service Coverage
Ratio (DSCR) covenants, maintaining financial stability despite rising interest expenses. The LTV-ratio
improved to 39.5% in 2023 from 43.6% in 2022.
21 May 2024
| The Fund posts strong Q1 2024 results
The Fund reported a pre-tax profit of EUR 555,000 in Q1 2024, a 217% increase from Q1 2023. Gross rental
income rose by 2.9% to EUR 1.70 million, while net rental and related income increased by 2.6%. The LTV-
ratio declined to 39.2%, and the Fund continued progressing with its asset sales programme, increasing the
total value of assets held for sale from EUR 5.25 million to EUR 11.30 million.
13 June 2024
| The Fund sells EUR 12 million of real estate
The Fund has signed agreements with a regional investment fund for the sale of the Z
á
hradn
í
cka office
building in Bratislava and the Karlin office building in Prague, with a total transaction value of approximately
EUR 10.3 million. Additionally, the Fund has agreed to sell its remaining Bulgarian real estate holdings for
EUR 1.59 million. The proceeds will contribute to the planned reverse bookbuilding programme
27 June 2024
| AGM resolutions adopted
During the AGM, the Fund's shareholders approved the 2023 financial statements, granted discharge to the
Managing Board and Supervisory Board, and reviewed the progress of the reverse bookbuilding process.
13
3 July 2024
| The Fund leases out 1,060 m² of office space in Poland
The Fund has secured two new rental contracts in the Maris office building in Szczecin, Poland, increasing
the building
’
s occupancy rate by 18% to 85%. The new tenants, EBZ Design and Affidea, have signed long-
term leases for 575 m
²
and 485 m
²
, respectively. These leases strengthen the property
’
s valuation of
EUR 9.1 million and enhance its investment market liquidity.
30 August 2024
| Financial results improve in H1 2024
The Fund realised a pre-tax result of EUR 674,000 in H1 2024, up 88% from the same period in 2023. Gross
rental income increased by 3.6% to EUR 4.56 million, while the LTV-ratio improved to 38.7%. The Fund
completed the sale of several assets, with proceeds earmarked for its planned tender offer.
18 September 2024
| The Fund launches EUR 2.0 million share buyback
The Fund announced a Reverse Bookbuilding Tender Offer to repurchase up to EUR 2.0 million of its shares.
Shareholders could tender shares at a price between EUR 6.50 and EUR 8.00 from 19 September to
16 October 2024.
17 October 2024
| The Fund announces tender offer results
The Fund has successfully completed its Tender Offer, purchasing 294,118 of its own shares at a price of
EUR 6.80 per share, totaling EUR 2 million. The repurchased shares are expected to be cancelled after
obtaining shareholder approval, leading to an increase of EUR 0.30 in the Fund
’
s net asset value per share.
1 November 2024
| Fund warrants expired
Two warrant contracts issued to SPDI in 2019, covering 144,264 shares, expired on 1 November 2024. The
warrants were exercisable if the Fund
’
s share price reached EUR 8.10.
19 November 2024
| Lease Termination
–
Danone, EOS Building Bucharest
Arcona Property Fund N.V. received a lease termination notice from Danone, the long-term tenant of the
EOS office building in Bucharest. Danone has occupied the 3,386 m
²
property with 90 parking spaces since
2008. The termination will be effective as of May 2025 and includes a termination fee equivalent to three
months' rent. The EOS property has a bank loan of EUR 2.6 million.
19 December 2024
| The Fund acquires a development site in Kyiv
The Fund has completed the acquisition of a prime 0.54-hectare residential development site in central Kyiv,
Ukraine. The site, located on Kyianovski Lane in the Shevchenkivskyi district, is suitable for high-end
residential development. The purchase was completed for a total of USD 2 million, consisting of USD 1.2
million in cash and USD 800,000 in Fund shares. This transaction marks the completion of the acquisition
programme from SPDI covering six assets across Bulgaria, Romania, and Ukraine
EVENTS AFTER BALANCE SHEET DATE
16 January 2025
| Expiration of Bydgoszcz land lease
The land lease of the investment property at Bydgoszcz in Poland has expired. In January 2025 the Fund
received a payment of approximately PLN 628,000 (approximately
€
147,000) from the lessor as part
payment of due compensation. The Fund is in negotiations with the lessor to agree additional compensation
amounts.
6 February 2025
| Share-Based Payments for Acquisitions
The Managing Board provided 68,782 registered shares of the Fund to SPDI as part of the settlement for the
acquisition of a 100% share in Aisi Ukraine LLC (
“
Share-based payment
”
) at an issue price of EUR 11.16
per registered share. This corporate structure holds the Kyianovskyi Lane land plot. Additionally, the Board
resolved to issue 10,689 registered shares to SPDI for the final settlement of the acquisition of the Romanian
assets, also at an issue price of EUR 11.16 per registered share.
14
26 March 2025
| AT&T Lease e
xtended at Letná 45, Košice
Arcona Property Fund N.V. has extended its lease with AT&T for approximately 3,000 m
²
of office space in
the Letn
á
45 property in Ko
š
ice, Slovakia, through 30 April 2030. This secures ca. 30% of the property
’
s
floorspace and enhances long-term income stability.
Although AT&T reduced its leased area by 2,000 m
²
, the new agreement includes flexible reduction options
and delivers a 16.5% rent increase per m
²
, boosting the asset
’
s investment value. AT&T remains the Fund
’
s
largest tenant, with global revenues of USD 122 billion and over 150,000 employees.
There were no further material events after balance sheet date.
5.2
FINANCIAL OVERVIEW
NAV PER SHARE AND SHARE PRICE DEVELOPMENT
The following tables show the development of the Fund’s Triple
NAV and share price during the period 1
January 2024 to 31 December 2024.
Table 2
–
Total Return on share price and Triple NAV during 2024
Based on share price
Based on NNNAV
In EUR
In %
In EUR
In %
Start of period
4.66
10.93
End of period
6.05
10.71
Return
1.39
29.8
-/- 0.22
-/- 2.0
Distribution to shareholders
-
-
Total Return
1.39
29.8
-/- 0.22
-/- 2.0
During 2024, the Triple Net Asset Value (NNNAV) per share decreased by EUR 0.22, a decline of 2.0%,
closing the year at EUR 10.71 (2023: EUR 10.93). This decline is primarily caused by value falls in Romania
and Slovakia, and the provision regarding the leasehold asset Bydgoszcz in Poland.
Despite the decline in NNNAV, the Fund’s share price increased significantly, from EUR 4.66 at the start of
the year to EUR 6.05 at year-end, generating a total return of 29.8%.
On 18 September 2024, the Fund launched a reverse bookbuilding tender offer to repurchase up to
EUR 2.0 million of its own shares. Shareholders were invited to tender their shares at prices ranging from
EUR 6.50 to EUR 8.00 during the offer period, which ran from 19 September to 16 October 2024. The offer
was successfully completed on 17 October 2024, resulting in the repurchase of 294,118 ordinary shares at
a price of EUR 6.80 per share, for a total amount of EUR 2 million.
The offer was concluded at a clearing price of EUR 6.80 per share, with all accepted shares repurchased.
The Fund intends to cancel these shares, permanently reducing the number of outstanding shares (see
also
section 15.14.3 ‘
Share buy-back / Reverse Bookbuilding
’
).
15
Figure 1
–
Development of the Fund’s
share price per share during 2024
Figure 1 shows a steady upward trend in the Fund’s share price throughout 2024, with minor fluctuations
along the way. Trading volume remained relatively modest throughout the year, with notable spikes in May
and October, partly driven by the share buyback programme.
Table 3
–
Development of the share price per quarter in 2024
Quarter
Opening price
Start of quarter
Closing price
End of quarter
Volume
in EUR
in EUR
number of shares
1
st
Quarter 2024
4.66
5.20
71,454
2
nd
Quarter 2024
5.19
6.44
70,470
3
rd
Quarter 2024
6.45
6.60
43,997
4
th
Quarter 2024
6.60
6.05
25,072
Average per quarter
52,748
The Fund’s share price showed strong growth in the first half of 2024, rising from
EUR 4.66 to EUR 6.44,
supported by trading volumes of over 70,000 shares per quarter. Momentum slowed in the third quarter,
with the price stabilizing at EUR 6.60 and trading volume dropping to 43,997 shares. In the fourth quarter,
the price declined to EUR 6.05, accompanied by reduced activity (25,072 shares). On average, 52,748
shares were traded per quarter.
0
5
10
15
20
25
30
35
0,0
1,0
2,0
3,0
4,0
5,0
6,0
7,0
8,0
jan-24
feb-24 mrt-24
apr-24 mei-24
jun-24
jul-24
aug-24 sep-24 okt-24
nov-24 dec-24
Thousands
Shares traded
Close
16
Table 4
–
Comparative statement of the NAV per share
31-12-2024
31-12-2023
Shareholders’ equity in accordance with NAV (in EUR 1,000)
44,664
48,360
Include:
1.
Fair value of financial instruments
127
300
2.
Fair value of deferred tax
-/- 2,935
-/- 3,852
3.
Fair value of inventories
-
846
4.
Minimum net expected value of claims under negotiation
-/- 491
-
5.
Share-based payments acquisition of subsidiaries
1,082
-
Shareholder’s equity in accordance with NNNAV
(in EUR 1,000)
42,447
45,654
Number of profit-sharing shares
3,882,965
4,177,083
7.
Effect of issuance of profit-sharing shares (share-based payments)
79,471
-
Number of profit-sharing shares (diluted) after issuance of shares
3,962,436
4,177,083
NNNAV per profit-sharing share (in EUR)
10.71
10.93
Annual return on NNNAV (in %)
-/- 2.0
-/- 7.5
See also chapter 7.1.13
The comparative statement gives an overview of the Net Asset Value (NAV) per share as at 31 December
2024 and 31 December 2023. To provide shareholders with a comprehensive and realistic view of the
Fund’s financial position, the NAV is adjusted to reflect the fair value of specific balance sheet items
,
resulting in the so-called Triple Net Asset Value (NNNAV).
These adjustments include the
fair value of financial instruments
, representing the difference between the
carrying amount and market value of derivative positions. The
fair value of deferred tax
is deducted to
account for the present value of potential future tax liabilities, which reduces the NNNAV. Additionally, the
fair value of inventories
is included, reflecting their estimated market value at the reporting date.
The NNNAV also includes an adjustment for the
minimum net expected value of claims under negotiation
.
This reflects the difference between the carrying amount of assets as at the Statement of Financial
Position’s date for which the Fund is seeking compensation through ongoing negotiations, and the minimum
net expected value of these claims. The adjustment is presented net of tax. For the current reporting period,
this pertains to the leasehold asset in Bydgoszcz, Poland.
An additional adjustment
share-based payments acquisition of subsidiaries
is included in respect of the
issuance of 79,471 shares of the Fund to SPDI as part of the final settlement for the acquisition of the 100%
stake in Aisi Ukraine LLC and the Romanian assets. This transaction represents a share-based payment
and affects the NNNAV accordingly.
The result of these adjustments is a more prudent and market-
aligned calculation of shareholders’ equity.
As shown in the table, the NNNAV per profit-sharing share decreased from EUR 10.93 at year-end 2023 to
EUR 10.71 at year-end 2024, representing a negative annual return of -/- 2.0%. This compares to a negative
return of -/- 7.5% in the previous year. The decline in NNNAV reflects the impact of ongoing value
adjustments within the property portfolio and prevailing market conditions, although offset by the share
buyback, net expected value of claims, operational performance and cost management efforts.
17
INCOME AND EXPENSES ANALYSIS
The following section provides an analysis of the
Fund’s
financial performance for the year ending
December 31, 2024. The analysis shows a reduction in the Fund's total assets and earnings per share due
to asset sales, and commensurate reductions in total liabilities and improvements in ongoing charges ratios.
RESULT
The following table compares key financial figures for 2024 and 2023, showing the Funds performance in
terms of rental income, operational costs and net results.
Table 5
–
Overview of result
All in EUR 1,000
2024
2023
Change
Gross rental income
6,334
6,576
-/- 242
Service charge income
2,495
2,508
-/- 13
Service charge expenses
-/- 2,610
-/- 2,668
58
Property operating expenses
-/- 1,807
-/- 1,834
27
Net rental and related income
12
4,412
4,582
-/- 170
Net result on equity investments
80
225
-/- 145
Financial and other operating income
882
401
481
Total direct income
5,374
5,208
166
Administrative expenses
-/- 675
-/- 675
0
Other operating expenses
-/- 1,296
-/- 1,219
-/- 77
Financial expenses
-/- 2,596
-/- 3,113
517
Total direct costs
-/- 4,567
-/- 5,007
440
Direct result before tax
13
807
201
606
Indirect result before tax
-/- 827
779
-/- 1,606
Result before tax
-/- 20
980
-/- 1,000
Tax
12
797
-/- 785
Result after tax
-/- 32
183
-/- 215
The Fund saw its gross rental income decrease from EUR 6.58 million in 2023 to EUR 6.33 million in 2024,
reflecting a decline of EUR 0.24 million. This decline can be largely attributed to asset sales. Meanwhile,
service charge income remained relatively stable, decreasing marginally by EUR 13,000 to EUR 2.49
million.
As a result, net rental and related income declined by EUR 170,000 to EUR 4.41 million. The net result on
equity investments declined by EUR 145,000 to EUR 80,000, primarily due to a lower dividend from Lelar
Holdings Limited related to the Romanian Delenco asset. However, financial and other operating income
rose significantly by EUR 481,000 to EUR 882,000, primarily driven by realized currency gains on net
investments in group companies (see 15.33 Financial Income). This growth helped offset some of the
decline in rental and investment income, leading to an overall increase in total direct income by
EUR 166,000.
On the expense side, administrative expenses were EUR 675,000, reflecting stable overhead costs.
However, other operating expenses increased by EUR 77,000, due to additional costs for to maintenance,
legal advice, sales costs, and regulatory requirements. Notably, financial expenses decreased significantly
by EUR 517,000, dropping to EUR 2.60 million.
12
See for applicable portfolio in 2023 and 2022 paragraph 15.5
13
Total direct income minus Total direct costs
18
As a result, the Direct result before tax acc. to APM improved, increasing by EUR 606,000 to EUR 810,000.
However, the Indirect result before tax acc. to APM turned negative, declining by EUR 1.61 million from
EUR 779,000 in 2023 to EUR -/- 827,000 in 2024. This was mainly a result of valuation downgrades in
Slovakia and Romania.
Consequently, the Result before tax dropped by EUR 1.0 million, turning negative at EUR -/- 20,000
compared to EUR 980,000 in 2023. The result after tax declined by EUR 215,000, leading to a net loss of
EUR 32,000 for 2024.
Table 6
–
Statement of comprehensive income
All in EUR 1,000
2024
2023
Profit for the period
-/- 32
183
Items that are or may be reclassified subsequently to profit or loss:
Foreign currency translation differences on net investment in group companies
-/- 871
-/- 551
Income tax on foreign currency translation differences on net investments in
group companies
28
42
Total foreign exchange differences
-/- 843
-/- 509
Total comprehensive income for the period
-/- 875
-/- 326
See also chapter 10
In 2024, the Fund experienced a significant
increase in ‘foreign currency translation differences,’ with losses
widening to EUR 0.87 million from EUR 0.55 million in 2023, reflecting intensified volatility in foreign
exchange rates driven by instability in global financial markets or notable currency fluctuations in key
operating regions, such as Czechia
with the Czech koruna. As a result, the ‘total recognized income and
expense’ for the period deteriorated, shifting from a EUR 0.33 million loss in 2023 to a EUR
0.88 million
loss in 2024. This decline was primarily influenced by the increased foreign exchange losses, intensified by
a reversal from a EUR 183,000 profit in 2023 to a EUR 32,000 loss in 2024.
CASH FLOW
The net cash flow of the Fund after operating-, investment- and financing activities was EUR 51,000
(2023: EUR -/- 2,425,000). The table below provides a summary of the cash flow (see also chapter 12
‘
Consolidated statement of cash flow
’
).
Table 7
–
Consolidated cash flow statement
All in EUR 1,000
2024
2023
Cash flow from operating activities
291
463
Cash flow from investing activities
9,989
2,668
Cash flow from financing activities
-/- 10,229
-/- 5,556
Net increase / decrease (-/-) in cash and cash equivalents
51
-/- 2,425
In 2024, the Fund experienced a decrease in ‘cash flow from operating activities’, declining to EUR 291,000
from EUR 463,000 in 2023.
Additionally, cash flow from investing activities increased significantly to EUR 9.99 million, up from EUR
2.69 million in 2023. This sharp rise was driven by proceeds from the sales of Zahranická in Slovakia and
Karlín in Czechia, partially offset by the acquisition of Kyanovski Lane in Ukraine at the end of the reporting
period.
Meanwhile, cash flow from financing activities declined further, reaching EUR -10.23 million, compared to
EUR -5.56 million in 2023. This net outflow primarily reflects the use of sales proceeds to reduce outstanding
debt on Czech and Slovak bank loans.
19
Despite these significant cash movements, the Fund ended 2024 with a slight net increase in cash and
cash equivalents of EUR 51,000, compared to a net cash decrease of EUR 2.43 million in 2023.
KEY BALANCE SHEET MOVEMENTS
Table 8
–
Balance statement
All in EUR 1,000
31-12-2024
31-12-2023
Change
Investment property
49,438
72,656
-/- 23,218
Non-current assets
1,076
995
81
Current assets
23,081
10,021
13,060
Total assets
73,595
83,672
-/- 10,077
Shareholders’ equity
42,476
45,396
-/- 2,920
Deferred tax liabilities
2,647
3,426
-/- 779
Long-term loans and borrowings
17,217
7,334
9,883
Total current liabilities
11,255
27,516
-/- 16,261
Total shareholders’ equity and liabilities
73,595
83,672
-/- 10,077
In 2024, the value of ‘investment properties’ dropped significantly to EUR 49.44 million from EUR 72.66
million in 2023, a reduction of EUR 23.22 million. This decline was mainly due to asset disposals and
reclassifications to assets held for sale.
‘Non
-
current assets’ saw a slight increase of EUR 0.08 million, reflecting a marginal rise in long
-term
holdings. Meanwhile, ‘current assets’ more than doubled, growing by EUR
13.06 million to EUR 23.08
million. This increase was driven by reclassifications to assets held for sale, higher cash reserves,
receivables, and short-term financial assets.
As a result, ‘total assets’ declined by EUR 1
0.08 million, reflecting the disposal of assets from the portfolio.
‘Shareholders’ equity’ decreased by EUR
2.92 million, primarily due to share buybacks, and adjustments to
retained earnings. At the same time, ‘long
-
term loans and borrowings’ rose by EUR 9.8
8 million, following
the reclassification of the HYPO NOE loan from short-term to long-
term. Conversely, ‘total current liabilities’
fell sharply by EUR 16.26 million due to the restructuring of the Slovak bank loan, loan reclassification to
long-term, and loan installment adjustments.
20
BANK LOANS
Table 9
–
Overview of interest-bearing loans and borrowings
All in EUR 1,000
31-12-2024
31-12-2023
Non-current part of loans and borrowings
Secured bank loans
16,532
5,727
Other loans and borrowings
250
0
Subtotal
16,782
5,727
Lease liabilities
-
1,231
Total non-current part of loans and borrowings
16,782
6,958
Current part of loans and borrowings
Secured bank loans
3,996
20,778
Other loans and borrowings
1,764
3,959
Subtotal
5,760
24,737
Lease liabilities
-
157
Total current part of loans and borrowings
5,760
24,894
Grand total loans and borrowings
22,542
31,852
In the overview of interest-bearing loans and borrowings as of December 31, 2024, and December 31,
2023, significant shifts in the Fund’s debt structure are evident. The ‘non
-
current loans and borrowings’
experienced a substantial increase from EUR 6.96 million in 2023 to EUR 16.78 million in 2024. This
increase is mainly
due to a rise in ‘non
-
current secured bank loans’, which grew from EUR 5.73 million to
EUR 16.53 million. Meanwhile, ‘lease liabilities’ were fully repaid, reducing from EUR 1.23 million t
o zero.
Conversely, the ‘current part of loans and borrowings’ saw a sharp decrease, declining from EUR 24.89
million in 2023 to EUR 5.76 million in 2024. This reduction is primarily driven by a significant decrease in
'current secured bank loans,' which declined from EUR 20.78 million to EUR 3.99 million, mainly due to the
reclassification of the HYPO NOE loan as a long-term loan. Additionally, 'other loans and borrowings' fell
from EUR 3.96 million to EUR 1.76 million. 'Lease liabilities,' which stood at EUR 0.16 million in 2023, were
also fully repaid.
Overall, the Fund’s ‘Grand Total Loans and Borrowings’ decreased by EUR 9.31 million, from EUR 31.85
million in 2023 to EUR 22.54 million in 2024, reflecting a net reduction in the Fund’s debt level. This
decrease resulted from the repayment of short-term liabilities and the installment of a secured bank loan,
both funded by sales proceeds. The Fund’s debt management strategy
is to reduce future interest costs
and enhance financial flexibility.
Moving forward, the Fund plans to continue optimizing its debt structure by refinancing loans under more
favorable terms and supporting DSCR covenants through strategic asset sales, thereby maintaining
financial stability.
21
Table 10
–
Overview of secured bank loans
All in EUR 1,000
31-12-2024
31-12-2023
Slovenská Sporiteľňa (Slovakian asset)
-
-
UniCredit (Czech assets)
2,774
5,727
HYPO NOE (Polish freehold assets)
11,480
-
Patria Bank (Romanian asset)
2,278
-
Total long-term secured interest-bearing loans and borrowings
16,532
5,727
Slovenská Sporiteľňa (Slovakian asset)
3,139
5,329
UniCredit (Czech assets)
57
109
HYPO NOE (Polish freehold assets)
510
12,505
Patria Bank (Romanian asset)
290
2,835
Total short-term secured interest-bearing loans and borrowings
3,996
20,778
Total secured interest-bearing loans and borrowings
20,528
26,505
UniCredit, which refinanced the Česká Spořitelna loan
in 2023 offering a loan of EUR 5.73 million, was
partly installed from sales proceeds from the Karlin sale. Hence, by the end of 2024, the outstanding loan
amount had decreased to EUR 2.77 million.
Loans from Austrian HYPO NOE, Romanian Patria Bank, and Slovakian Slovenská Sporiteľňa underwent
notable changes. The HYPO NOE loan for the Polish freehold assets, amounted to EUR 11.48 million in
2024. The Patria Bank loan for the Romanian asset is documented in 2024 with a balance of EUR 2.28
million.
The total long-term interest-bearing loans and borrowings increased significantly from EUR 5.73 million in
2023 to EUR 16.53 million in 2024, reflecting reclassification of loans.
Short-
term secured bank loans also underwent significant changes. The Slovenská Sporiteľňa loan declined
from EUR 5.33 million in 2023 to EUR 3.14 million in 2024. HYPO NOE Landesbank, which had been
classified as a short-term loan of EUR 12.51 million in the previous year, saw this amount reduced to EUR
0.51 million in 2024 due to a substantial reclassification to long-term. The Patria Bank short-term loan also
decreased from EUR 2.84 million to EUR 0.29 million. As a result, total short-term secured bank loans fell
sharply from EUR 20.78 million in 2023 to EUR 3.99 million in 2024.
Overall, total secured bank loans declined from EUR 26.51 million in 2023 to EUR 20.53 million in 2024,
further reducing the LTV-ratio to 33.4%.
ONGOING CHARGES FIGURE
Table 11
–
Ongoing Charges Figure
All in %
2024
2023
2022
2021
Ongoing Charges Figure
8.53
7.66
8.02
9.50
OCF excl. one-off and refinancing costs acc. to APM
8.01
7.63
7.61
9.31
Fund expense ratio acc. to APM
4.08
3.87
3.71
4.07
See also chapter 15.39
“Ongoing Charges Figures”
Over the five-year period from 2021 to 2024, there has been a clear downward trend in the OCF, decreasing
from 9.95% in 2020 to 8.52% in 2024, representing a total reduction of 1.42 percentage points. Although
the OCF increased slightly from 7.66% in 2023 to 8.53% in 2024, this one-off rise is primarily linked to
specific cost components in the reporting year, while the broader multi-year trend remains downward.
When considering the OCF excluding one-off and refinancing costs (as defined in the APM), the figure
shows a decline from 9.00% in 2021 to 8.00% in 2024. After reaching 7.61% in 2022, the adjusted OCF
has remained relatively stable, with 7.63% in 2023 and 8.01% in 2024.
22
Similarly, the fund expense ratio has improved from 4.89% in 2021 to 4.08% in 2024, despite a slight
increase from 3.87% in 2023.
CURRENCY EXCHANGE RATE
Table 12
–
Exchange rates used for the Statement of Financial Position (see also 13.7.4)
31-12-2024
31-12-2023
Bulgarian Lev (EUR/BGN)
1.9558
1.9558
% change year-on-year
0.0
0.0
Czech Koruna (EUR/CZK)
25.1850
24.7240
% change year-on-year
-/- 1.9
-/- 2.5
Polish Zloty (EUR/PLN)
4.2750
4.3395
% change year-on-year
1.5
7.3
Romanian Leu (EUR/RON)
4.9743
4.9756
% change year-on-year
0.0
-/- 0.5
Ukrainian Hryvnia (EUR/UAH)
43.9266
42.0792
% change year-on-year
-/- 4.1
-/- 8.4
US Dollar (EUR/USD)
1.0389
1.1050
% change year-on-year
6.0
-/- 3.6
Source: European Central Bank (ECB) if available. Exchange rates Ukrainian Hryvnia are based on National Bank of Ukraine.
Currency movements in the past year have shown some volatility across different markets. The Bulgarian
Lev (BGN) remained unchanged at 1.9558 EUR/BGN, as expected due to its fixed peg to the euro.
Meanwhile, the Czech Koruna (CZK) continued its weakening trend, depreciating by 1.9% year-on-year,
following a 2.5% decline the previous year. In contrast, the Polish Zloty (PLN) appreciated by 1.5%, though
at a slower pace than the 7.3% surge in 2023. The Romanian Leu (RON) remained stable, showing no
change after a modest 0.5% depreciation the year before. The Ukrainian Hryvnia (UAH) also continued to
weaken, falling by 4.1%, albeit at a slower rate than the 8.4% decline in 2023, reflecting the ongoing conflict
with Russia. Finally, the US Dollar (USD) strengthened against the euro, causing the euro to depreciate by
6.0%, reversing the 3.6% appreciation seen in 2023.
23
5.3
ECONOMIC BACKGROUND AND OUTLOOK
Core European and CEE economies continued a period of transition during 2024. While softer inflation
readings allowed Central Banks to lower policy interest rates, economic activity in the EU remained
sluggish, with Eurostat’s data indicating GDP growth la
st year of only 0.9% across the 27-member bloc.
The ramifications of Russia’s February 2022 invasion of Ukraine and de
-globalisation effects are still
unfolding. The policy direction adopted by the new US Presidential Administration is, as of the time of
writing, catalysing this process of change. New threats and opportunities are emerging for European
economies.
The shock and disruption of 2022’s invasion, profound inflation spike and 2022
-
23’s hikes in interest rates
continued to play out last year. Periods of high interest rates cause GDP growth in economies to slow down
over the ensuing 12-24 months, as inflationary demand is curbed. This partially explains the stagnating -
0.2% 2024 annual result in Europe’s historical powerhouse, Germany. Germany’s economy had also
suffered in 2023, having lost its cheap energy input, Russian gas and as demand subsided for a key export,
internal combustion engine motor vehicles. With 29% of Czech, 25% of Polish, 20% of Slovak and 19% of
Romanian exports in 2023 respectively going to Germany, the poor performance of Europe’s largest
economy has acted as a drag on these suppliers.
Figure 2
–
GDP GROWTH, SELECTED CEE COUNTRIES AND GERMANY, 2021-25E (%)
Source: countryeconomy.com (historical data), 2022A for Ukraine from the EBRD. Arcona Capital external consultancy
(2025 estimates), based on European Commission, EBRD estimates
The larger CEE countries in 2024 saw some benefit of the onset of interest rate cuts, especially in the latter
part of the year, offsetting the disturbed export picture. The Czech and Polish economies emerged from
stagnation and Slovakia’s growth picked up
. Domestic consumption and wage growth contributed to the
acceleration of output in these countries. The exception was Romania, where a higher level of policy rates
designed to help curb inflation and offset a wide government spending deficit meant that GDP growth
slowed to just 0.9% year-on-
year. Ukraine’s activity expanded again, driven by agricultural exports and the
demands of the war.
Figure 3
–
CONSUMER PRICE INFLATION AND CENTRAL BANK POLICY INTEREST RATES,
SELECTED CEE COUNTRIES AND GERMANY, FEBRUARY 2025 (%, YOY)
Source: investing.com, TradingEconomics
*February 2025 data published in March 2025
2.9
1.1
2.0
0.9
3.0
-0.2
3.6
2.4
2.3
2.5
3.5
0.8
-8.0
-4.0
0.0
4.0
8.0
Poland
Czech Republic
Slovakia
Romania
Ukraine
Germany
2021
2022
2023
2024
2025E
-30.0
4.9%
2.7%
3.8%
5.0%
13.4%
2.3%
5.75%
3.75%
2.9%
6.5%
15.5%
2.9%
0%
3%
6%
9%
12%
15%
18%
Poland
Czech Republic
Slovakia
Romania
Ukraine
Germany
Consumer price inflation, (latest*, % year-on-year)
Central Bank interest rate (latest, %)
24
Inflation rates steadying in the 2%-3% year-on-
year range enabled the European Central Bank (“ECB”) and
the Czech National Bank to cut policy rates by 1.5% (150 basis points) and 2.0% (200 basis points)
respectively over the past 12 months up to the time of writing. In contrast, the National Bank of Poland
observed closely a rise in goods price pressures and kept their policy rates flat at 5.75%. Romania’s inflation
rate, matching that of Poland, remains sticky at 5%. Consumer prices spiking back up to 13% year-on-year
jus
tified the National Bank of Ukraine’s policy of double
-digit policy rates. Unemployment levels in all of
these countries remain low, contributing to wage- and thus consumer price-growth during 2024.
The second Trump Presidency is, thus far as of the time of writing, accelerating the post-COVID and post-
Ukraine invasion changes to the CEE, European and world economies. “Near
-
shoring” towards CEE began
as a reaction to the disruption of COVID lockdowns and subsequent supply-chain stresses. The introduction
of the same “on
-
shoring” logic to building the US industrial base at the expense of foreign imports, being
executed in part by the threat and imposition of tariffs, has profound implications for global trade and export-
dependent economies. This includes the trade-driven economies of our region and is an economic growth
risk. CEE countries are likely to deepen their integration within their own continent even relative to the past.
Around 85% of exports from Poland the Czech Republic and Slovakia already went to other EU countries
in 2023, according to the Observatory of Economic Complexity. Romania’s figure was 78%.
The apparent future downscaling of US military support for Europe has forced EU governments to act in the
face of the perceived threat from Russia. The EU Commission has authorised large commitments to military
spending via allowing governments in EU countries to widen budget deficits. This has the potential to add
1%-2% to EU GDP growth per annum for the coming five years. Unproductive industrial capacity looks likely
to be repurposed for rearmament over coming quarters and years. Germany in addition announced another
EUR 500bn multi-year investment into national infrastructure, addressing decades of under-investment. A
period of stagnation becomes a period of transition when it has an end objective.
The implications of the above changes, if they are permanent, could be profound. The military and
geopolitical strengthening of Europe solidifies the notion of a “Cold War”
-style division with Russia,
especially if the latter agrees to a ceasefire/”Korean”
solution with Ukraine with the current frontlines in place
and the rest of Ukraine free to join the EU. All the while the war and uncertainty rumbles on, the CEE Central
Banks have to be vigilant on local currency stability and food/commodity price inflation. Politicians in the
region face starker choices regarding alliances and conflict resolution. Higher government spending helps
GDP growth but is inflationary, something which European bond investors have started to price in via higher
long-term bond yields. Finally, a US Administration with unconventional negotiating tactics increases
uncertainty, the cost and risk of doing business and therefore the cost of capital around the world.
Upcoming national elections in 2025 notwithstanding, the CEE’s growing IT specialism, historical legacy of
military manufacturing, labour flexibility and still-cheap workforces remain as longer-term positives in this
environment.
25
REAL ESTATE MARKETPLACE
The peaking of interest rates in the Eurozone and CEE saw real estate volumes rise last year from their
2023 cycle-lows.
Overall volumes were EUR 206bn and rose 23% year-on-year in the broader European
universe versus 2022, according to CBRE data. CEE volumes jumped some 68% to EUR 8.8bn, according
to Colliers. While still below the 5-year moving average of transactions, the observed recovery suggests a
narrowing of the gap between vendor and purchaser pricing expectations.
Figure 4
–
CEE-6 REAL ESTATE INVESTMENT VOLUMES (2007-2024, EUR bn)
Source: Colliers data
2024’s total volumes match those of 2015
and the annual growth is mainly due to a recovery in activity in
CEE’s main driver during the last 2015
-19 cycle, Poland. Deal flows last year jumped 138% to EUR 5bn in
CEE’s largest market, with domestic purchasers playing a role for the first time. Tran
sactions in the Czech,
Romanian and Bulgarian arenas also jumped, up 57%, 58% and 96% respectively versus 2023. But
purchases in the Hungarian and Slovakian markets contracted, down a further -41% and -24% year-on-
year, according to Colliers data.
Figure 4
–
CEE-6 FLOWS
BY COUNTRY (2024, EUR bn)
BY SECTOR (2024, %)
Source: Colliers
Source: Colliers
Of the three largest sectors, retail saw the strongest growth, with some larger-ticket shopping centre
transactions reappearing, in Poland, for the first time this decade. But volumes in all of the larger sectors,
including industrial and residential, grew in absolute terms. The share of these two sectors remains
curtailed, to a certain extent, by a lack of product. Some offices are being converted into residential: this
represents attempts to address the creeping obsolescence of assets. It is tapping into and shifting elements
of the large legacy asset values that were built up in the CEE office sector during the 2010s decade.
11.2
6.1
2.2
3.6
6.6
3.9
5.9
7.5
8.8
12.1
13.1
13.8 13.8
10.4
11.1
10.7
5.2
8.8
0
3
6
9
12
15
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
5.0
1.81
0.35
0.52
0.75
0.39
Poland
Czech Republic
Hungary
Slovakia
Romania
Bulgaria
30%
32%
23%
7%
8%
Office
Retail
Industrial
Residential
Other
26
Figure 5
–
INVESTMENT VOLUME IN CEE BY CAPITAL ORIGIN FROM MAJOR REGIONS (%, 2024)
Source: Colliers
A rebound in purchase volumes from Western Europe (c.28% of a larger pie of transactions, including from
the UK and Sweden) last year versus c.21% of 2023’s much
-
smaller sum contributed around half of 2024’s
total growth. Much of the rest of the increase came from South Africa, mainly the large retail sector
transactions in Poland and a proportional increase from North American purchasers. Buyers of nearly half
of the increased total volume (around 44%) again came from within the CEE region. This extends the
increasing trend of local capital influence that began in earnest in 2019. The presence of investors who
probably know the markets best helps, as we have seen since 2022, to provide some liquidity and help
stabilise sentiment in more fragile market conditions. Specifically, Czech investors increased their spending
last year versus 2023 by over EUR 1bn, while purchases from the other CEE countries broadly flat-lined in
2024 versus the year before.
Figure 6
–
BENCHMARK PRIME YIELDS IN SELECTED CEE SEGMENTS & KEY FUNDING RATES
(EUR, %, 2023-24)
Source: Colliers, unless stated below
* Source: CBRE, data is as of Q3 2023. No known transactions during 2024
** Source: JLL. No region specified
Buyers and sellers conducted last year’s jump in CEE transaction volumes at very similar yields to a year
before. Yields had backed up during 2023 by c.50-75bps in most arenas. That upward movement
encouraged buyers in. And 2023’s higher cost of debt fundi
ng, at above 5% in Euros, appears to have
triggered acceptance to transact on the part of indebted sellers. Thus, the wide “bid
-
offer” spread described
by the real estate consultants as a cause of 2023’s illiquidity has vanished somewhat. Continued
refinancings of pre-2022 legacy purchase funding debts during 2024 and into 2025 are likely to force more
sellers to market at these yields. Eurozone 5-
year interest rate swap (“IRS”) rates fell during 2024, as
Europe’s inflation rates subsided and the ECB cut po
licy rates. There was an emerging expectation of some
lowering of transaction funding costs through H2 2024, which would have bolstered sentiment into 2025.
But, at the time of writing in late March 2025, the very recent geopolitical and fiscal shifts have sent
Eurozone 5-
year IRS rates back up to around 2.5% again. This erosion of 2024’s drop and the potential for
this swap rate to rise further could well act as a short-to-medium term drag on real estate transaction
30%
5%
9%
12%
8%
8%
4%
12%
7%
1%
4%
Czech Republic
Poland
Other CEE
Other Europe
UK
Sweden
Middle East / Africa
South Africa
Americas
Asia-Pacific
Other
2.46
8.65
7.25
5.50
7.75
7.50
2.18
8.65
7.25
5.50
7.75
7.50
0
2
4
6
8
10
EURIBOR 5yr
swap rate
Poland Szczecin
office *
Polish prime retail
park **
Prague prime
office
Bratislava
periphery office
Bucharest prime
office
Q4 2023
Q4 2024
27
sentiment. If it is the case that the anticipated increase in government spending will boost Eurozone
economic growth, then commercial rents would be, on average, boosted in the medium term. Such a
situation would then see higher capital valuations through rental growth, which would most likely encourage
transaction volumes higher.
REAL ESTATE OUTLOOK
The higher real estate transaction volumes in CEE in 2024 indicate that some improvement occurred in the
commercial investment environment. Rents, linked in many cases to Eurozone CPI rates, did rise. More
international buyers did return to the region. The persistence of both higher commercial benchmark yields
and elevated financing costs forced some vendors into making sales happen. Where new builds did appear
on the market they were of higher quality with top-notch ESG certification. Some of these factors need to
continue to apply for liquidity to reach the higher levels seen in the last cycle. A falling cost of finance would,
though, probably lead to a more decisive break with the post-2022 market situation. It would also lead to a
recovery in developer activity.
Central Bank policy rates have, as noted, fallen in most of the CEE region. But the prospect of higher
government spending across European economies probably means that the easy interest rate cuts are
done already. Unless the global economy plunges into a synchronised recession, higher longer term bond
yields look set to persist. Financing banks and bond buyers may well become more convinced that the
European and CEE economies will grow faster in coming years. In that case, the funding premium charged
to re
al estate players over these “base” levels could well fall moderately due to expectation of greater
demand for product and rent appreciation.
Banks and bond markets know that rent growth helps CEE real estate assets hold their value in inflationary
environments. The indexation linkage to Eurozone CPI, which averaged 2.4% in 2024, is set into many
tenancy agreements across sectors. Tenants appeared to have absorbed the rent and service charge cost
shocks of the 2022-23 period as there is no clear evidence of vacancy rates systematically rising.
CEE’s largest sector, office, is exhibiting most of these opportunities and challenges: a significant lack of
developer completions has constricted supply, particularly for high-quality, ESG-compliant buildings and is
forcing rents higher and vacancy rates in our locations generally lower. But structural issues remain, such
as obsolescence risk as assets age, consideration of the space needed in the post-COVID environment
and delivery of optimal workplace solutions. The situation in the retail sector is somewhat easier, especially
for retail parks, given consumer preference for proximity.
Supply of new builds is growing in this arena,
particularly in Poland. Convenience retail, where our assets are positioned, benefits even more from the
proximity trend and from the recovery of consumption in the CEE economies from a stagnant 2023. Inflation-
linked “turnover rents” also help. The strong rent growth in the inflationary period for Logistics tenants has
topped out but new supply continues to slowly appear on the market, as developers take advantage of the
recent build-out of highways in Poland, the Czech Republic and Romania.
Supply chain industrial assets,
very common in CEE, may well have weathered recession risk through the period of low GDP growth and
could see renewed substitution demand if the trend of higher government spending in the EU does unfold.
Construction costs across the sectors have largely stabilised but financing costs for developers mean that
new activity in this cycle is thus far muted.
The lowering of policy interest rates has led in previous cycles, with a 6-18 month lag, to a loosening of
lending conditions, a decreasing of the level of transaction debt funding costs and increasing developer
activity. This has not yet unfolded in CEE a
fter 2023’s Polish and 2024’s Czech and ECB rate cuts. Present
asset-holders still face elevated debt funding costs for now as international banks continue to refinance
older loans and, as of now, reassess the changing geopolitical environment and the CEE
region’s security
arrangements. Hedging costs in and out of local currencies have eased financial conditions somewhat for
tenants and landlords. Rent market outlooks look set to continue shifting slowly in favour of landlords in the
office and convenience retail sectors over the next 12-
24 months, as long as the region’s GDP growth
accelerates.
28
The Polish office market
Office lease demand in Poland did not keep up with an economy that expanded 2.9% in 2024. Gross take-
up across the country fell -2% to 1.454mn sqm but it was in new leases where demand was weaker: net
take-up fell -13% year-on-year to 751,600sqm according to Cushman & Wakefield data. But the market
remained balanced, with new supply of completed office space in the major cities falling by a third from
340,000sqm in 2023 to just 228,100 sqm by the end of last year. Taking into account conversions of office
space into other uses, total office stock across the major cities nationally thus edged up only 1% to 13.07mn
sqm. Office vacancy rates in the benchmark Warsaw market were thus stable, at 10.5% at the end of 2024.
In the major cities outside of the capital vacancy rates vary widely, between 11.6% and 23.5%, according
to Cushman & Wakefield. Office rent levels for higher-quality assets began to climb in Warsaw but remained
stable in the key regional cities during 2024, reflecting the vacancy rates.
The market balance is healthier In Szczecin, where our asset is located, than in other regions. The vacancy
rates sits at just 7.7%, according to Cushman & Wakefield: weak take-up, at just 2,900 sqm in 2024
compared to 9,000 sqm in 2023 did push that vacancy rate up nearly 300bps from the very low 4.8% level
noted a year ago. But office supply was very limited during last year, with Cushman & Wakefield noting just
a marginal increase of 1,800 sqm of new space. And a similar 2,000 sqm is under construction for delivery
in 2025-26, according to BNP Paribas. The latter will expand the total stock of 187,000 sqm in the city by
just 1%. As such, with the low vacancy rates, it would only take a restoration of Szczecin’s recent historical
take-up of 8,000-12,000 sq
m to eat into the vacant stock. Szczecin’s proximity to a German economy that
is likely to be on a higher growth trajectory in coming years is likely to keep demand robust and perhaps
push rents higher in the near run. Prime rents appeared to be stable in the EUR 13.5-15.50/sqm/month at
the year end. CBRE quoted a yield level of 8.65% for Szczecin office assets as of end Q3 2023. There were
no office purchase transactions of note in the city during 2024. The Czech fund Investika bought the 21,000
sqm Piastow Office Center asset from Blackstone in February 2025 for an undisclosed price.
The Polish retail market
A 3% trend Polish retail sales growth rate last year was a marked improvement on 2023, when real
consumption fell amidst a stagnating economy. Significant wage growth in Poland, in the range of 9.8%-
12.9% through 2024 in the corporate sector, helped drive the recovery. Looking at the latest available data,
momentum may be softening slightly in Q1 2025, with corporate sector wage growth coming in at 7.9%
year-on-year, though annual consumer price inflation to the end of February also surprised on the downside,
at 4.9%. While spending on luxury or ”discretionary” items tends to grow faster in any recovery phase,
outlays on essential items are usually maintained, usually matching general inflation. This exposure to
inflation spending benefits retail parks/convenience stores and e-commerce sales of necessities. The
market share of e-commerce in Poland varied in a narrower range than in 2023, between 8.0% to 10.7% of
total sales month-by-month according to Statistics Poland in 2024 and therefore did not steal market share.
Commentators suggest that cross-border e-commerce is likely to grow faster, something that is more likely
to be concentrated in discretionary purchasing rather than regular buying of staple products. The
competitive threat to the “bricks & mortar” space does look contained for now. While larger traditional
shopping centre deals were the driver of the improved overall investment volumes in Poland last year, retail
park transactions continued and made up 21% of the total pie in the first half of 2024 according to JLL.
Transactions of portfolios of retail parks, a trend that started in 2023, continued to occur: the largest of these
amounted to PLN 150mn (c.EUR 33mn) for three assets.
Yields for retail parks remained at 7.25% for the
best assets, a premium of 75-100bps above the benchmark prime yield for Warsaw shopping centres at the
end of 2024.
2024 brought a supply boom in the Polish retail park arena. 92 of the 96 retail schemes brought to market
in the country last year were retail parks and accounted for 90% of the whole sector’s supply of 610,200
sqm, according to CBRE. The proportion of these parks built in towns with populations below 100,000 was
46%. CBRE noted that these parks are increasingly emerging in close proximity to competitors and in areas
with relatively high saturation of retail space. While the advantage for consumers will be increased
convenience, proper focus on tenant mix looks to be of increasing importance at the retail park level.
29
Figure 7
–
NEW COMPLETIONS BY RETAIL FORMATS IN POLAND (SQM GLA), 2000-2024 H1
Source: JLL, as of H1 2024.
The market opportunity is probably more robust for convenience centres specifically. While 19% of all space
built in the retail sector in Poland between 2018-2024 H1 was in the convenience category it does not
appear saturated. A JLL study in June 2024 stated that over 3 million Poles residing in towns of 5,000-
15,000 inhabitants lack a modern retail offering. Further build-out of this format should increase asset
liquidity and bring economies of scale for tenants.
Tenant composition of convenience centres by type of retailer remains well-
diversified.
“Value” retailers
occupied 32% of the GLA in traditional retail parks and convenience centres in mid
—
2024, according to
JLL. This proportion slipped from the 39% level in H1 2023. The key tenants remain the retailers with basic
multi-brand offerings, names such as Action, Pepco, Tedi and Dealz. The drugstores (7% of space) and
convenience grocery players (16%) are still anchors, while fashion’s proportion (10%) is growi
ng faster than
others. Retail destinations that are close to residential areas remain the preference of consumers in Poland.
Convenience centres are also becoming an important part of omnichannel strategies, with “click & collect”
boxes increasing customer traffic visits. Rents have edged up, with an overall range of EUR 8-
20/sqm/month according to JLL’s data for H1 2024, compared to EUR 6
-13/sqm/month a year before. The
upper end of this range tends to be for units of 100-300 sqm. The lower service charges for retail parks and
convenience centres, usually EUR 2-4/sqm/month according to JLL, remains a large advantage versus the
EUR 25/sqm/month levels encountered in traditional shopping centres.
The Czech office market
Stability is the word to describe the Prague office market in 2024, with national GDP growth recovering to
just 1.1% after 2023’s very mild recession. Vacancy rates in the key Prague arena flatlined at 7.3% by the
year end, according to Colliers’ data. Dev
elopers delivered just 72,800 sqm of new space last year, adding
just 1.8% to total stock sitting at 3.96mn sqm. Just 24,600 sqm of new space is scheduled for completion
during 2025, out of a total of just 164,300 sqm under construction. On the demand side, net take-up also
flat-lined at 240,900 sqm, excluding a 75,000sqm new owner-occupation in the Smichov City district.
Renegotiations, as in 2023, remained as the majority (51%) of new leases agreed during the last year.
Taking these into account, gross take-up did rise to 643,500 sqm according to Colliers, up 22%, suggesting
some underlying health in the marketplace.
With demand exceeding supply, prime headline rents in Prague again ticked 7% higher to EUR
29.50/sqm/month by 2024’s year end, according to Colliers. Inner city class B rent levels also rose a solid
7% to EUR 19.50/sqm/month. Prime office yields also stayed steady at the level of 5.5% throughout 2024.
The proportion of the city’s total office space owned by Czech real estate investors rose to 58% by the year
end: Czech investors were active in their home market as well as in the wider region.
30
The Slovak office market
Slovakia’s economy recovered to a 2% GDP growth level during 2024. The pick
-up in economic activity
was evident in Bratislava’s benchmark office market and in Košice, where our sole Slovak asset is located.
Vacancy rates fell and rents stabilised in the capital city. Bratislava periphery rents, an approximation for B
class offices and other cities such as Kosice, remained at EUR 12.50/sqm/month for the best locations
according to Cushman & Wakefield.
Eastern Slovakia is seeing good economic growth dynamics, with auto component producers continuing to
locate there in 2024. The construction of a major Volvo EV production plant in Košice is on track to be
finalised in 2026.
Real estate developers are building out more industrial space capacity according to
Cushman & Wakefield. This activity and the presence of growing IT players, such as Deutsche Telekom T-
Systems Slovakia, suggests demand for office space in Košice should increase in the future. There we
re
no completions of new office buildings in Košice last year noted by the real estate consultants. A & B class
office space stock amounts to more than 181,000 sqm, according to data from Cushman & Wakefield. An
approximate vacancy rate for Košice is 12%, calculated using Cushman & Wakefield and Colliers’ data. A
-
class rents were advertised by Cushman & Wakefield in the range of EUR 10.50-16.00/sqm/month, with B
Class rents between EUR 8.50-10.50/sqm/month.
Yields for both Bratislava Prime and Bratislava Periphery office properties steadied at 6.0% and 7.75%
respectively during 2024. The 175bps gap between prime and non-prime yields, relevant for considering
pricing in regional cities such as Košice, thus rem
ained constant over the past 12 months.
The Romanian office market
A continued slowing of Romania’s GDP growth rate affected activity in the Bucharest office market in 2024.
Total leasing activity (gross take-up) shrank -19% to 338,600 sqm, according to Colliers but new demand,
at 116,000 sqm matched 2023’s level. On top
of that, expansions of floorspace accounted for c.76,000 sqm
of extra demand, according to CBRE. The majority of the gross take-up (55%) was thus, like in 2023,
renewals of leases.
New supply however shrivelled to just 16,100 sqm, adding just 0.5% to the
city’s office
stock of 3.4mn sqm of space. The supply pipeline for 2025 and 2026 is, according to CBRE, very limited,
with just 14,000 sqm and 50,000 sqm anticipated to be delivered over the two years.
With moderate demand exceeding the very low supply, overall vacancy rates across the city dropped to the
level of 12.2%, according to CBRE. Leases taken by the IT&C sector made up 37% of total demand last
year, almost matching 2023’s 44% proportion. The ag
encies observe that a continuation of these trends will
most probably see vacancy rates track down further, if the economy avoids a recession and lead to a firming
of rent levels. Prime rents for the most modern and ESG-compliant buildings in the CBD were stable last
year at EUR 22/sqm/month, according to Colliers. Rents are in the EUR 11-14/sqm/month range in the
Centre-East district of the city, while vacancy rates there have also dropped to 14%. Steadying rents and
interest rates helped Bucharest’s prime
office yields to hold at the 7.5% level through 2024.
The Ukrainian land market
Ukraine remains under martial law and fully engaged in repelling the Russian invasion that began on 24
February 2022. The land market thus remains with limited activity. The economy continued to stabilise in
2024, with real-terms GDP growth at 3.0% according to the EBRD. Spending on defence has grown as a
proportion of output, naturally as all of the front line remains active and Ukraine raises its own defence-
industrial base capabilities including maintaining the second-largest military force in Europe. Damage to
infrastructure and civilian assets is ongoing as a result of Russian actions and the repair of which not only
creates the obvious disruption but absorbs additional spending on repair and rectification. The strain of the
war on the labour force and weak harvests last year saw the annual inflation rate climb from around the 4%
year-on-year level 12 months ago to a reading of 13.4% year-on-year in February 2025. In response, the
National Bank of Ukraine had to reverse its prior policy rate-cutting course and raise benchmark interest
rates up to 15.5%. The hryvnia remained broadly stable against the Euro through 2024 as a result. If there
is any prospect of peace via the current Trump-
Putin process, it will of course relieve pressure on Ukraine’s
macro-economic situation. Real estate activity will only return towards normal when the war comes to an
31
end. Much lower interest rates will then prevail, as the country will very likely have substantial support from
European government and multinational agencies.
Land price inflation in Ukraine, as elsewhere, is seen as a hedge on general inflation pressures. Notional
land prices in US dollar terms continued to rise in 2024 according to the SV Development land price source.
Land prices in Kyiv city rose 4.8% during 2024, adding to the 3.6% rise registered during 2023. Odessa
Oblast’s land prices saw a 3.8% increase in USD terms at the beginning of this year compared to the end
of 2023. In Dnepropretrovsk Oblast’, adjacent to Zaporizhzhe Oblast’, the same source saw
a 3.3% increase
in calendar 2024.
32
5.4
REAL ESTATE PORTFOLIO DEVELOPMENT
In 2024, the Fund’s real estate portfolio underwent significant changes
through the sales related to the
monetization programme. This section provides a comprehensive overview of the portfolio's development
over the year, detailing the changes in value, composition, income, and key performance indicators, while
highlighting the financial impact of reclassifications across the various property categories.
Table 13
–
Comparative statement of the real estate portfolio
31-12-2024
31-12-2023
change
change
In EUR m
In EUR m
In EUR m
In %
Initial portfolio
78.85
81.84
-/- 2.99
-/- 3.7
Change: due to sales and other mutations
-/- 9.83
-/- 2.99
-/- 6.84
n/a
End portfolio value (in EUR 1,000):
69.02
78.85
-/- 9.83
-/- 12.5
Investment property (incl. under development)
46.04
68.97
-/- 22.93
-/- 33.2
Inventory
0.00
0.94
-/- 0.94
n/a
Investments in associates
3.40
3.69
-/- 0.29
-/- 7.9
Asset held for sale
14
19.58
5.25
14.33
n/a
Number of properties
19
21
-/- 2
-/- 9.5
The above table provides a comparison of the real estate portfolio as of 31 December 2024 and 31
December 2023. The total portfolio value decreased by 12.5% to EUR 69.02 million, due to asset sales and
revaluations. The value of investment property declined by 33.2% to EUR 46.04 million, reflecting property
sales, value adjustments, and the reclassification of several assets, such as Maris in Stettin, as assets held
for sale. In contrast, assets held for sale increased from EUR 5.25 million to EUR 19.58 million following
the reclassification of properties that are actively being marketed for disposal. Investments in associates
decreased slightly by 7.9%, while inventory was fully reduced to zero with the sale of the remaining
Bulgarian assets. The number of properties in the portfolio decreased from 21 to 19.
Table 14
–
Statement of changes in investment properties (see also 15.2.4)
All in EUR 1,000
2024
2023
Balance as of 1 January
66,622
67,344
Acquisitions
1,979
-
Purchases and additions
524
818
Exchange rate differences
-/- 300
-/- 454
Fair value adjustments
-/- 1,800
244
Balance as of 31 December (including assets held for sale)
67,025
67,952
Reclassification
-/- 22,260
-/- 1,330
Balance as of 31 December
44,765
66,622
In 2024, the 'Purchases and additions' amounted to EUR 524,000, reflecting capital improvements to the
investment properties, with the most significant expenditures made within the Polish portfolio. The
'Exchange rate differences' resulted in a negative impact of EUR 300,000 on the value of the investment
properties, primarily due to currency movements in the Czech koruna. The 'Fair value adjustments' show a
downward revaluation of EUR 1.8 million, reflecting a decrease in the market value of the portfolio over the
year. The 'Reclassification (to assets held for sale)' of EUR 22.26 million negative relates to the planned
sale of additional properties from the portfolio, which have been transferred to the category 'Assets held for
sale' as at year-end 2024.
14
Including right-of-use assets held for sale
33
Table 15
–
Statement of real estate income 2024
–
2023
2024
2023
Change
Change
in EUR 1,000
in EUR 1,000
in EUR 1,000
In %
Gross rental income
6,334
6,576
-/- 242
-/- 3.7
Service cost income
2,495
2,508
-/- 13
-/- 0.5
Total income
8,829
9,084
-/- 255
-/- 2.8
Service costs
-/- 2,610
-/- 2,668
58
-/- 2.2
Operational costs
-/- 1,807
-/- 1,834
27
-/- 1.4
Net rental income
4,412
4,582
-/- 170
-/- 3.7
Tables 14 and the following table 15 present the company's real estate income from two perspectives. Table
14 reflects the income based on the properties held during 2024 and 2023, capturing the actual performance
of the portfolio as it existed in those specific periods, including any acquisitions or dispositions. In contrast,
Table 15 offers a like-for-like comparison by focusing solely on properties held consistently throughout both
2023 and 2024, eliminating variables introduced by portfolio changes and providing a clearer insight into
the performance of long-term holdings.
Table 16
–
Comparative statement
15
of real estate income 2024
–
2023
2024
2023
Change
Change
in EUR 1,000
in EUR 1,000
in EUR 1,000
In %
Gross rental income
5,854
5,656
+ 198
3.5
Service cost income
2,358
2,248
+ 110
4.9
Total income
8,212
7,904
+ 308
3.9
Service costs
2,466
2,361
+ 105
4.4
Operational costs
1,638
1,510
+ 128
8.5
Net rental income
4,108
4,033
+ 75
1.9
In 2024, the company's gross rental income increased by EUR 198,000 (3.5%) to EUR 5,854,000, up from
EUR 5,656,000 in 2023, as shown in Table 15. Service cost income also rose by EUR 110,000 (4.9%),
reaching EUR 2,358,000 compared to EUR 2,248,000 in the previous year. Consequently, total income
experienced an uplift of EUR 308,000 (3.9%), amounting to EUR 8,212,000 in 2024, up from EUR 7,904,000
in 2023.
However, expenses also saw an upward trend. Service costs increased by EUR 105,000 (4.45%) to EUR
2,466,000, and operational costs rose by EUR 128,000 (8.5%) to EUR 1,638,000. Despite these higher
expenses, net rental income improved by EUR 75,000 (1.9%), totaling EUR 4,108,000 in 2024, compared
to EUR 4,033,000 in 2023.
These figures indicate a positive trajectory in rental income and overall revenue, reflecting effective property
management and leasing strategies. The increase in service cost income reflects enhanced efficiency in
recovering service-related expenses. While the rise in operational costs warrants attention, the overall
growth in net rental income demonstrates the
Fund’s
ability to maintain profitability whilst reducing the
overall portfolio volume .
15
Solely based on property assets in possession during whole 2024
34
FUND PORTFOLIO OPERATIONS
The table below shows how the key ratios of the Fund´s operations changed over 2024:
Table 17
–
Comparative statement of the real estate portfolio based on indicators
31-12-2024
31-12-2023
Change (in %)
Fair value per asset (in EUR 1,000)
3,790
3,854
-/- 1.7
Number of properties (annual average)
19.5
20.5
-/- 17.1
Net rental & related income per asset
16
(in EUR 1,000)
226.3
223.5
1.2
Occupancy
17
(in %)
85.7
86.5
-/- 0.8
Total loan-to-value (in %)
33.8
39.5
-/- 14.4
Discount Share price to NNNAV (in %)
43.0
55.0
-/- 21.8
Ongoing Charges Figure
18
(in %)
8.5
7.7
0.9
Fund expense ratio (in %)
4.1
3.9
4.6
Solvability
19
(in %)
136.5
118.6
17.9
The table with comparative statement for 2024 presents a detailed snapshot of the portfolio's performance
at the end of the year. The fair value per asset is recorded at EUR 3,790,000, indicating a slight reduction
compared to the previous year. The average number of properties decreased to 19.5, reflecting a
divestment
of
certain
assets.
Meanwhile,
the
net
operating
income
per
asset
stands
at
EUR 256,800, showing stable revenue generation despite the lower asset count. Occupancy remains
effectively stable at 85.7%, demonstrating consistent tenant demand and effective property management.
On the financial risk front, the total loan-to-value ratio has improved significantly, declining to 33.8% from a
39.5% in the previous period, reducing leverage and associated risks. Additionally, the discount on the
share price relative to the net asset value has narrowed to 43.0%, bringing the market valuation of the
portfolio closer to its intrinsic value. However, the ongoing charges figure has risen to 8.5%, and the fund
expense ratio has slightly increased to 4.08%, both of which suggest a modest upward pressure on
operating costs. Lastly, the solvability ratio has improved markedly to 133.3%, underscoring enhanced
financial stability and a stronger capacity to meet liabilities.
16
Net rental & related income per income producing asset
17
Occupancy rate (%) = 100% - EPRA Vacancy Rate (%)
18
Excluding one-off cost elements
19
Defined as equity / liabilities x 100%
35
5.5
FUND STRATEGY AND FORWARD OUTLOOK
FUND STRATEGY AND OBJECTIVE
The Fund's primary investment focus is income-generating real estate in Central and Eastern Europe. The
Fund's investment strategy aims to achieve a balanced portfolio of modern high-yielding, multi-tenanted
properties across the region with a loan to value between 40% to 50% (including convertible bonds).
Table 18
–
Distribution over the countries
C
OUNTRY
2024
2023
Poland
50.4%
42.6%
Czechia
16.5%
21.5%
Slovakia
17.8%
21.4%
Ukraine
3.6%
1.2%
Bulgaria
-
1.4%
Romania
11.7%
11.9%
Total
100.0%
100.0%
The Fund continually seeks to optimize its portfolio by balancing the allocation of assets across different
countries and improving its loan to value ratio.
DIVIDEND AND SHARE BUYBACK
The Fund's dividend policy is to distribute approximately 35% of the operational result to shareholders based
on the annual results. This annual distribution may be replaced or supplemented by specific share buyback
programmes. A combination of cash distributions for shareholders and the retention of a portion of the profits
to reinvest in physical assets and improve tenant retention should ultimately yield the highest total return.
The Fund aims to pay an interim dividend with the half-year results, followed by a final dividend after year-
end, in cash. However, dividend proposals will consider various factors, such as expected future capital
requirements, growth opportunities, net cash generation and regulatory developments.
OUTLOOK
In 2025, the Fund will prioritize returning substantial capital amounts to shareholders by completing the
monetization programme approved at the Extraordinary General Meeting in December 2023. The ongoing
sales programme has been expanded to include select core assets where short-term peak values have
been achieved through refurbishment or reletting initiatives, in addition to non-core assets.
The success of the disposal programme will depend on market sentiment and liquidity, both of which have
been adversely affected by the war in Ukraine and elevated interest rates. While the ongoing conflict
continues to deter international capital flows into the region, local buyers have adjusted their risk
assessments and are actively seeking value opportunities. For this segment, the availability and cost of
debt financing remain key considerations.
To support the monetization programme and to ensure the majority of the proceeds therefrom are able to
be returned to shareholders rather than retained by the financing banks, the operational performance of the
Fund needs to be maintained at its current levels or higher. This requires focussed asset management to
retain existing tenants, attract new ones and to control operational costs. In parallel, the Fund´s banking
relationships need to be constantly monitored to ensure compliance with income and valuation covenants.
In this respect the consistent reduction in the Fund´s loan to value ratios, achieved over recent years and
which now stand at 33%, provides some positive flexibility for future financing structures.
36
5.6
RISK MANAGEMENT AND GOVERNANCE
RISK MANAGEMENT
The management of risk is an essential responsibility of the Board. We can report that there have been no
significant changes to the risk management framework outlined in section 15.42 of this annual report.
Risk appetite and risk management
Our risk management policy is designed to identify, assess and respond to the primary risks inherent in the
Fund's activities. We conduct an annual top-down review and risk inventory to manage our risk exposure
by taking mitigating measures while pursuing our business opportunities to achieve our strategic objectives.
We have identified the risks presented in section 15.42
‘
Risk management
’
as our primary risks. We have
not found any other risks that could materially impact our business, but we acknowledge that unidentified
or unforeseen risks could have such an impact.
We have established an Internal Control Framework to provide reasonable assurance that risks are
identified and mitigated to achieve our significant objectives. The framework comprises monthly KPI
reporting, a cloud-based work environment supported by a data recovery plan, and a planning and control
structure. We have also implemented administrative organization and internal controls based on a division
of functions. Both contracting and payments take place based on the
‘
four-eyes
’
principle.
Internal control framework
Risk reports are a recurring topic at our supervisory and managing board meetings, and we continuously
monitor risks with mitigating measures in place. We stress test and discuss the results with both the
Managing and Supervisory Board to ensure effective risk management.
For further details on our main risks and uncertainties, please refer to section 15.42
‘
Risk management
’
and
the notes to the consolidated financial statements.
REMUNERATION POLICY
The Fund's Managing Board applies a remuneration policy that contributes to appropriate and effective risk
management while avoiding unnecessary risks within the framework of the Fund's prospectus and statutes.
This policy is in line with the Fund's strategy, the goals and values of the Managing Board, and the interests
of the Fund's investors. Additionally, the remuneration policy includes measures aimed at preventing
conflicts of interest.
The goal is to maintain a healthy balance between fixed and variable remuneration. Fixed remuneration is
sufficient for daily expenses and includes payments for education and pension contributions. Variable
remuneration should be viewed as an addition to the fixed remuneration and is based on evaluating
individual employees' achievements for the company as a whole.
The Managing Board does not provide a guaranteed variable bonus. Instead, any variable bonus is
determined based on measurable results or clear achievement goals. For further information, the full
remuneration policy of the Managing Board can be downloaded from http://www.arconacapital.com.
Remuneration to the Managing Board for the period 2024
–
2020
In 2024 the Fund paid a total fee of EUR 1,180,000 (2023: EUR 1,237,000) to the Managing Board, affiliated
companies and Secure Management. Of this total amount, the Managing Board received a fund
management fee of EUR 675,000 (2023: EUR 675,000) and affiliated companies received an asset
management fee of EUR 505,000 (2023: EUR 497,000).
37
Table 19
–
Total remuneration per year
All in EUR
2024
2023
2022
2021
2020
The Managing Board
675,000
675,000
705,000
648,000
665,000
Arcona Capital Czech Republic
233,000
263,000
295,000
406,000
473,000
Arcona Capital Poland
199,000
196,000
203,000
185,000
180,000
Arcona Capital Bulgaria
8,000
28,000
-
-
-
Secure Management
65,000
75,000
83,000
62,000
89,000
Total remuneration
1,180,000
1,237,000
1,286,000
1,301,000
1,407,000
The remuneration for the Managing Board is described in section 15.35.1
‘
Specification of administrative
expenses
’
. The Managing Board employed on average 4 employees (2023: 4 employees). The managing
directors of the Managing Board are employed by Arcona Capital Nederland N.V. (1), Arcona Capital Fund
Management B.V. (2) and Arcona Capital GmbH (1). The total number of employees involved in the
activities of the Fund is 7 (2023: 7). The Managing Board of the Fund receives a fixed management fee,
described in the prospectus of the Fund. Part of the fixed management fee is paid as asset management
fee to Arcona Capital Czech Republic; since 2017, it has been paid to Arcona Capital Poland, and since
2019, to Secure Management.
People in senior management functions with the Managing Board are seen as identified staff. Identified staff
are defined as follows:
•
Managing directors of the Managing Board; and
•
Employees fronting administration, portfolio management, marketing and human resources.
No employees received (according to article 1:120 Wft) a remuneration exceeding EUR 500,000. The
Managing Board comprises three men and one woman. During 2024 the Fund did not employ any staff
directly (2023: 0). The identified staff is represented by a Managing Director of Arcona Capital Nederland
N.V. and its parent company, Arcona Capital GmbH. This director is not a policy maker of the Managing
Board.
Remuneration for the Supervisory Board for the period 2024
–
2020
The Supervisory Board received a total remuneration of EUR 28,000 (2023: EUR 28,000) in 2023.
Table 20
–
Supervisory board remuneration per year
All in EUR
2024
2023
2022
2021
2020
Supervisory Board
28,000
28,000
35,000
35,000
28,000
The Managing Board´s management contract with the Fund is described in the prospectus of the Fund and
determines the annual level of management fee. The Supervisory Board is therefore not required to issue
a remuneration report under the remuneration policy. The Supervisory Board monitors that the fees paid
are in accordance with these contractual arrangements. An adjustment of the remuneration can only be
implemented if approved by the General Meeting of Shareholders.
The remuneration for the Supervisory Board and the remuneration for the statutory directors are described
in section 15.34.3 Analysis of Supervisory Board fees and 15.34.4 Analysis of other operating expenses.
Rules on appointment and replacement of board members
According to the Articles of Association (Articles 18 and 23) and under the oversight of the Priority share
foundation, board members are appointed through a structured process. The Foundation identifies qualified
candidates in line with the board regulations, and the proposed appointments are approved by the general
meeting. Vacancies are filled using a similar evaluation process, with all decisions transparently recorded.
38
CORPORATE GOVERNANCE
As a listed investment company, the Fund is not formally required to fully apply the Dutch Corporate
Governance Code. However, the Managing Board and Supervisory Board consider its principles of
transparency and accountability highly relevant and aim to apply them wherever possible in the Fund's
operations.
Capital structure
The Fund's share capital consists of 3,882,965 ordinary shares, 294,118 treasury shares, and one priority
share. Treasury shares carry no voting or dividend rights (see 19.9.4 Treasury shares). Registered shares
are restricted from trading related to their listing on Euronext Fund Services (EFS) in Amsterdam and the
Prague Stock Exchange (PSE). There are no other restrictions with regard to registered shares (see 19.9.3
Registered shares). Further details on the capital structure, including the number of shares, are provided in
the financial statements (sections 19.9 Issued capital and 20.4 Special controlling rights).
Transfer of shares
There are no restrictions on the transfer of ordinary shares. Registered shares, however, are subject to
certain limitations, as explained in the financial statements (section 19.9.3 Registered shares).
Significant shareholders
The Fund's significant direct and indirect shareholders are disclosed in the financial statements (see 15.45.3
Specification major investors), including holdings exceeding 5% of the share capital.
Special controlling rights
The priority share grants special rights, including the authority to nominate members of the Managing Board
and members of the Supervisory Board. These rights are detailed in the financial statements (sections
19.9.5 Priority shares and 20.4 Special controlling rights).
Employee share schemes
The Fund has no employee share schemes in place.
Voting rights
There are no voting restrictions, except that treasury shares have no voting rights. Voting procedures and
deadlines are set out in the Fund’s articles of
association.
Shareholder agreements
The Fund is not aware of any agreements between shareholders that could affect control of the Fund.
Board powers on share issuance and buybacks
The Managing Board (ACFM) is authorised to issue and repurchase shares, as described in Article 7 of the
articles of association, subject to the role of the Priority share foundation.
Change of Control Agreements
There are no agreements in place that would take effect upon a change of control following a public takeover
bid.
39
5.7
STATEMENT REGARDING ADMINISTRATIVE ORGANISATION AND INTERNAL CONTROL
The Managing Board has reviewed all elements of the administrative organization during the reporting
period. We consider that the administrative organization and internal control as prescribed by Article 121 of
the
Bgfo
(Besluit gedragstoezicht financiële ondernemingen), meet the requirements prescribed by the Wft
and related regulations. Pursuant to this, we declare as the Managing Board of the Fund that the Company
possesses a description as prescribed by Article 121 of the Bgfo, which meets the requirements as
prescribed by the Bgfo. In addition, the Managing Board declares with a reasonable degree of certainty that
the administrative organization and internal control function effectively and in accordance with this
description.
Amsterdam, April 30, 2025
The Managing Board:
Arcona Capital Fund Management B.V.
On behalf of,
G.St.J. Barker LLB
P.H.J. Mars M.Sc
M. Van der Laan B.Sc
M.T.H. Blokland BBA
Managing director
Managing director
Managing director
Managing director
40
6
THE
REAL
ESTATE
PORTFOLIO
6.1
PORTFOLIO OVERVIEW
As of December 31, 2024, the Fund's real estate portfolio encompasses nineteen properties across five
Central European countries.
ASSET ALLOCATION BY REGION
Country
Number of
Fair Value
Fair Value
properties
In EUR 1,000
In % of total
Poland
11
33,799
49.7
Czechia
2
11,025
17.6
Slovakia
1
11,940
16.2
Romania
2
7,817
11.5
Ukraine
3
3,395
5.0
Total
19
67,976
100.0
SECTORAL BREAKDOWN
Sector
Number of
Fair Value
Fair Value
properties
In EUR 1,000
In % of total
Retail
10
24,409
35.9
Office
6
40,172
59.1
Land
3
3,395
5.0
Total
19
67,976
100.0
41
6.2
REGIONAL PORTFOLIO
POLAND
As of December 31, 2024, the Fund's Polish portfolio consists of ten retail centres situated in regional cities
and one modern office building located in Szczecin. All properties are multi-tenanted. Key details of each
property are summarized below:
8 Laubitza
, Inowrocław
Type
Retail
Rentable Surface (in sqm)
1,781
Occupation Rate
(in %)
95.6
Fair value
(in EUR)
1,980,000
The property is located in Inowrocław, within Stare Miasto district, at 8 Laubitza
Street, close to Dworcowa Street. The area is mostly commercial in nature. The
retail building, completed in 2001, comprises one floor above ground of 1,765 sqm
of total lettable area and 41 parking spaces situated at the east, south and west
sides of the property. In April 2023, Rossmann signed a 5-year lease for 459 square
meters, and started to operate in August 2023.
42
800-
lecia Inowrocławia 27, Inowrocław
Type
Retail
Rentable Surface (in sqm)
2,366
Occupation Rate
(in %)
90.9
Fair value
(in EUR)
2,530,000
Inowrocław is located in the central part of Poland near to Bydgoszcz and Toruń.
The city has approximately 75,000 inhabitants. The site is located on the south-
eastern edge of the city, in a residential area comprising apartment blocks and
single-family houses. The immediate area is served by seven bus lines providing
convenient access to the property for customers using public transport. The centre
provides 2,366 sqm lettable area and 100 parking places. In June 2022, Carrefour
signed a seven-year lease for 1,430 square meters (rentable area 1,268), under
enhanced rental terms. The new supermarket opened its doors in early August
2022.
1 Krzemowa
, Gdańsk
Type
Retail
Rentable Surface (in sqm)
1,622
Occupation Rate
(in %)
100.0
Fair value
(in EUR)
3,240,000
The Gdańsk–
Sopot-Gdynia (750,000 inhabitants) conurbation (TriCity) is located in
the northern part of Poland, on the Baltic coast. The property is situated in the
southern part of Gdańsk, within the city’s most densely populated district, Chełm
(50,000 inhabitants). To the north-
east it borders the Śródmieście district, home of
the medieval old town. Surrounded by multifamily residential buildings, the property
benefits from high volumes of passing traffic, with Gdańsk’s city centre reachable
by car within less than 10 minutes. The site has two entry points, provides 46 parking
spaces and extends to 5,122 sqm. The main tenant is Biedronka, on a lease expiring
in 2027.
1 Plutona
, Głogów
(Plutona
Type
Retail
Rentable Surface (in sqm)
1,669
Occupation Rate
(in %)
77.6
Fair value
(in EUR)
1,920,000
Głogów
is a developing medium-sized town in the south-east part of Poland, with a
current population of nearly 70,000. The property is located in the city’s largest
housing estate, Kopernik, with a population of 22,500. High-rise residential buildings
dominate t
he property’s direct surroundings. The lettable area is 1,669 sqm and
there are 62 parking places. Anchor tenant in this location is Polo Market with a
lease agreement expiring in 2030.
43
82 Kalinkowa
, Grudziądz (Kalinkowa)
Plutona
Type
Retail
Rentable Surface (in sqm)
2,556
Occupation Rate
(in %)
100.0
Fair value
(in EUR)
2,850,000
Grudziądz
is a city with nearly 100,000 inhabitants, located in the north of Poland.
The property is located in the south-
western part of Grudziądz in a densely
populated residential area. It is bordered by the Strzemięcin housing estate with its
12-storey blocks of flats to the north and the Kopernika housing estate with its
medium-density dwellings to the north-east. The site size is 8,932 sqm and is
predominantly held freehold. The parking area overall has 126 parking places.
137 Wojska Polskiego, Piotrków Trybunalski
(Wajska)
Type
Retail
Rentable Surface (in sqm)
2,603
Occupation Rate
(in %)
94.6
Fair value
(in EUR)
3,210,000
Piotrków
Trybunalski is located in the central part of Poland near to Łódź. The city
has approximately 75,000 inhabitants. The city’s main competitive advantage is its
location in central Poland on the main transport artery providing fast connections to
the countr
y’s major towns and cities. With recent improvements in the national road
and transport infrastructure the city has become one of the most important
distribution locations in Poland. The property is located on Wojska Polskiego Street,
the main road connecting Piotrków city centre with the north-western peripheries.
Its neighbourhood comprises residential areas to the north and business facilities to
the south. Because of its prominent location on the main road and its distinctive
signage, the retail centre is highly visible. Extensive new residential developments
were developed adjoining the site to north-
west which increased the centre’s
catchment area. The property has 95 parking places. The main tenant is Biedronka,
expiring in 2028.
6 Wolnosci
, Słupsk
- held-for-sale
Wajska)
Type
Retail
Rentable Surface (in sqm)
1,831
Occupation Rate
(in %)
100.0
Fair value
(in EUR)
2,260,000
Słupsk is an historic town in north
-western Poland, located just 18 km away from
Ustka, a popular seaside resort on the Baltic coast. The current population is 95,000
inhabitants. The property is located in the northern part of the city and its immediate
surroundings comprise high density mid-rise residential developments. In year 2022
next to Wolności site stand alone Biedronka shop was built –
which increased
pedestrian traffic near the property. The Old Town is within 10-
minutes’ walk. Two
bus stops are located directly in front of the property with several others within
walking distance. The property has 48 parking places.
44
216 Legionów St.
, Toruń
–
held-for-sale
()
Type
Retail
Rentable Surface (in sqm)
2,229
Occupation Rate
(in %)
100.0
Fair value
(in EUR)
3,170,000
This single-storey retail building, completed in 2001, comprises 2,229 sqm of total
lettable area and 64 parking spaces. The property is located in Toruń, Koniuchy
district, at 216 Legionów St., close to Wielki Rów St. The area is predominantly
residential in nature. There is direct access to the building from Legionów and
Kozacka Sts. Car parking is located from the north (Wielki Rów St.), west (Legionów
St.) and south sides of the property and consists of 64 over ground car spaces.
Public transport is secured with 2 bus lines that have stops at Wielki Rów St. and 4
bus lines that have stops at Legionów St. The site of the property is held leasehold.
20 Grzymały Siedleckiego St.
, Bydgoszcz
–
held-for-sale
Type
Retail
Rentable Surface (in sqm)
1,793
Occupation Rate
(in %)
100.0
Fair value
(in EUR)
1,380,000
This single-storey retail building, completed in 2001, comprises 1,793 sqm of total
lettable area and 64 parking spaces. The subject property is located in the capital
of kujawsko-pomorskie voivodeship and ca. 3 km away from the Old Town, on the
same side of the Brda River. The surroundings of the property are dominated by
multifamily residential development and services. The nearest bus and tram stops
are located at Wojska Polskiego Street at a distance of approx. 300 m and are
serviced by 4 bus lines (including a night one) and 3 tram lines. The site of the
property is held leasehold.
107 Kardynala Wyszynskiego St.
, Łódź
- held-for-sale
Type
Retail
Rentable Surface (in sqm)
1,608
Occupation Rate
(in %)
77.1
Fair value
(in EUR)
1,870,000
This single-storey retail building, completed in 2001, provides 1,608 sqm of total
lettable area and 60 parking spaces situated in the north and east sides of the
property. The property is located in Łódź, Polesie District, at 107 Kardynała
Wyszyńskiego St., close to Popiełuszki St. The area is predominantly residential in
nature. Public transport is secured with 7 bus lines that have stops to the west of
the property. The main tenant is Netto, on a lease expiring in 2033. The site of the
property is held leasehold.
9 Holdu Pruskiego Square, Szczecin - held-for-sale
( (
Type
Office
Rentable Surface (in sqm)
5,945
Occupation Rate
(in %)
83.1
Fair value
(in EUR)
9,390,000
This office building, completed in 2005, comprises six floors above ground and three
underground levels (with 119 parking spaces) and is located in the city centre
opposite Szczecin´s iconic new concert hall. The total rentable area is 5,945 sqm.
The property is currently multi-leased, with 11 tenants. The main tenant is Intive.
45
CZECHIA
The portfolio comprises two commercial properties located in Prague, the capital city. The properties vary
in construction, specification and tenant mix however both are multi tenanted and are primarily used as
office accommodation with ground floor retail units. The main characteristics of the two properties are
summarised below.
Na Zertvach 34, Prague 8
Type
Office
Rentable Surface (in sqm)
2,263
Occupation Rate
(in %)
72.9
Fair value
(in EUR)
4,264,000
The modern office building is located in Prague near the Palmovka metro station in
a fast-
developing area on the border of the Prague districts of Karlin, Libeň and
Vysočany. The total rentable area is 2,263 sqm. The accessibility by road is good
and by public transport excellent. The building dates from 1998-1999 and has 28
underground parking spaces.
Politických vězňů
10, Prague 1
Type
Office
Rentable Surface (in sqm)
2,308
Occupation Rate
(in %)
79.1
Fair value
(in EUR)
6,760,000
This representative office building is located in Prague’s city centre, near Wenceslas
Square. The main building has eight floors and the total rentable space is 2,308
sqm. The whole complex has partly been reconstructed with additional parking
spaces. The property is close to the Wilsonova arterial road through Prague city
centre and within 5 minutes’ walk of the central railway station.
46
SLOVAKIA
The Fund portfolio as at end 2024 holds one commercial property in Slovakia, a multi storey B class office
property in Kosice, in the east of the country.
Letná 45,
Kosiče
(
Type
Office
Rentable Surface (in sqm)
11,169
Occupation Rate
(in %)
76.1
Fair value
(in EUR)
11,940,000
This office building (the biggest in the portfolio) is prominently situated on Festival
Square, approx. 1 km northwest from the historical centre of Košice. There is an
ongoing refurbishment programme to increase accessibility, aesthetics and tenant
facilities. The building is easily accessible by car or public transport as it is near the
outer city ring road. There are 70 parking places and 14 garages available. The
main tenant is AT&T.
47
ROMANIA
The Fund´s portfolio includes two office properties in Bucharest, Romania. The main characteristics of the
properties are summarised below:
EOS office, Bucharest
Type
Office
Rentable Surface (in sqm)
3,386
Occupation Rate
(in %)
100%
Fair value
(in EUR)
3,965,000
The office building completed in June 2008 has a total gross lettable area (
GLA
) of
3,386 sq m and 90 exterior parking places. The EOS office Building is located in the
North-Eastern part of Bucharest 900 metres north of Fundeni Road, a major artery
within that particular area of the city. The neighbouring area comprises a mix between
light industrial (food processing and logistics) and residential use. The property is
100% let to Danone. Danone will vacate the property in the second half of 2025.
Delenco office, Bucharest (Fund has 24.35% ownership)
Type
Office
Rentable Surface (in sqm)
10,384 (of which 711 sqm retail)
Occupation Rate
(in %)
86.0%
Fair value
(in EUR)
15,820,000
a 24.35% stake is :
3,852,000
The property is a multi-storey office building in central Bucharest, completed in June
2008.The DELENCO Building has a GLA of 10,384 sq m with 2 UG levels, lobby and
retail space on the ground floor and offices on upper floors. The property has different
height levels, from 7 upper floors in the north wing facing Calea Calarasilor to 9 partial
floors in the main wing, facing Delea Noua, and 10 floors in the wing facing Matei
Basarab St. The main tenant is ANCOM, the National Authority for Management and
Regulation in Communications of Romania.
48
UKRAINE
The Fund´s portfolio includes three land plots located in Ukraine, in the cities of Kiev, Odessa and
Zaporizhzhia. The main characteristics of the properties are briefly summarised below:
Nerubaiske Village, Odessa
(Biliayivskyi
Type
Land plot
Surface area
(in sqm)
223,934
Occupation Rate
(in %)
n/a
Fair value
(in EUR)
1,278,000
The land plot fronts the Odessa-Kiev M-05 Highway, a six-lane strategic road with
high levels of freight traffic connecting Ukraine´s capital city with its largest seaport.
The land plot is approximately 7.5 km from the Odessa Ring Road and 1.8 km from
the nearest motorway exit. The immediate neighbourhood is developing as a logistics
and industrial hub for Odessa, with two major schemes, the established temperature-
controlled complex ‘Inrise Logistics Park’ and the newly built ‘Odessa Logistics Park’
already in operation. The plot has been prepared for warehouse construction with
extensive foundation works already completed. The Fund´s business plan for the
project is to update the development documentation and planning and then to sell to
a local or international warehouse developer.
Balabynska Village, Zaporizhzhia
Biliayivskyi
Type
Land plot
Surface area
(in sqm)
263,834
Occupation Rate
(in %)
n/a
Fair value
(in EUR)
0
This very large land plot is located about 2 km to the south of the city of Zaporizhzhia
and borders the M105 highway from Kharkov to Mariupol. The site is zoned for
commercial use and offers potential for retail park or shopping centre development.
49
Kyianovski Lane, Kyiv
–
new acquisition
Biliayivskyi
Type
Land plot
Surface area
(in sqm)
5,400
Occupation Rate
(in %)
n/a
Fair value
(in EUR)
2,118,000
The landplot is a 0.54-hectare site in the city centre of Kyiv. The site, on Kyianovski
Lane in the Shevchenkivskyi district, is 500 meters from Lvivska Square and suitable
for high-end residential development. This acquisition completes the purchase
programme from SPDI, originally agreed in 2020.
50
7
PERFORMANCE
INDICATORS
The following performance indicators have been prepared in accordance with standards comparable to those
of EPRA
1
. The (diluted) adjusted earnings and (diluted) customized earnings are performance indicators
introduced by the management. There are no prescribed rules for such performance indicators, meaning that
each company develops its own policy and applies it consistently. Thus, performance indicators with the same
name can be determined in a different manner.
7.1.1
(Adjusted) earnings
Earnings reported in the Consolidated Income Statement, while compliant with IFRS, may not offer
shareholders the most relevant insight into the operating performance of real estate investment funds.
Earnings measures the Fund’s operational performance and the extent to which its dividend payments to
shareholders are underpinned by earnings is the level of income arising from operational activities. The Fund’s
operational performance represents the net income generated from the operational activities. Unrealised
changes in valuation of properties, gains or losses on disposals of properties and certain other items do not
necessarily provide an accurate picture of the Fund’s underlying operational perform
ance.
As earnings are used to measure the operational performance, it excludes all components not relevant to the
underlying net income performance of the portfolio, such as valuation result of owned investment properties,
valuation result of investment property under development, result on disposals of owned investment properties
and result on disposals of investment property under development. In effect, what is left as earnings is the
income return generated by the investment, rather than the change in value or capital return on investments.
Adjusted earnings per share
2
should be calculated on the basis of the basic number of profit-sharing shares.
The main reason for this is that earnings and the dividends to which they give rise accrue to current
shareholders and therefore it is more appropriate to use the basic number of profit-sharing shares.
The diluted adjusted earnings per share should be calculated on a diluted basis considering the impact of any
options, convertibles, etcetera that are dilutive. For the explanation of the effect of exercise of options,
convertibles, and other equity interests (fully diluted basis) reference is made to the explanation in (3),
mentioned in section 7.1.8 “Explanation of adjustments calculation of NAV”.
1
European Public Real Estate Association.
2
The adjusted earnings per share includes all types of profit-sharing shares (e.g., ordinary and registered shares). Therefore, treasury
shares are excluded from the adjusted earnings per share.
51
7.1.2
Calculation of (diluted) adjusted earnings per share
Notes
2024
2023
In € 1,000
In € 1,000
Earnings per IFRS Consolidated Income Statement
9
-/- 32
183
Exclude:
1.
Valuation results of:
a. owned investment property
15.28
1,797
-/- 303
b. investment property under development
15.28
-/- 366
-/- 65
c. equity investments
15.32
-/- 80
-/- 225
2.
Result on disposals of:
a.
realised currency results on net investments in
group companies
15.33
-/- 638
-/- 220
3.
Tax on result on disposals of properties and
equity investments
-
-
4.
Changes in fair value of financial instruments of:
a. derivatives
15.38
173
179
5.
Acquisition costs on share deals
-
-
6.
Taxes in respect of adjustments
-/- 201
-/- 54
Adjusted earnings
653
-/- 505
Basic number of profit-sharing shares
19.9.1
3,882,965
4,177,083
Adjusted earnings per share (in €)
0.17
-/- 0.12
Basic number of profit-sharing shares (fully diluted)
3,882,965
4,177,083
Diluted adjusted earnings per share (in €)
0.17
-/- 0.12
7.1.3
Explanation of adjustments calculation of (diluted) adjusted earnings per share
1.
Valuation results of properties and equity investments
This adjustment includes the gain or loss in the Consolidated Income Statement arising in the period from the
revaluation of owned investment property, investment property under development and equity investments at
their fair value. Therefore the valuation result of properties held for sale and right-of-use assets are not
excluded from earnings.
2.
Result on disposals of properties and equity investments
This adjustment includes the gain or loss on disposal of owned investment property, investment property under
development and equity investments. Therefore the result on disposals of owned investment property held for
sale, right-of-use assets, right-of-use assets held for sale and investment property under development held for
sale are not excluded from earnings.
This adjustment also includes the gain or loss on foreign currency translation differences in case of (partial)
reduction of net investment in foreign activities (release from reserve for currency translation differences).
3.
Tax on result on disposals of properties and equity investments
This adjustment includes the tax charge or credit relating to gains or losses on owned investment property,
investment property under development and equity investments sold in the period, calculated consistently with
1 and 2 above.
52
4.
Changes in fair value of financial instruments
This adjustment includes the surplus or deficit arising in the period from the net mark-to-market adjustment to
the value of financial instruments (market value less acquisition price paid or received) which are used for
hedging purposes and where the Fund has the intention of keeping the hedge position until the end of the
contractual duration. Whether the Fund has chosen to apply hedge accounting under IFRS is irrelevant.
Material gains / costs associated with the early close-out of financial instruments used for hedging and / or
debt instruments should also be excluded from earnings.
The only exception to this is the early close-out of financial instruments or debt with a maturity date ending
within the current reporting period. In such circumstances, the cost of early close-out should not be adjusted
as the fair value difference would have been recognised in the current year’s earnings through the interest line
and therefore including the cost of early close-out should not significantly change earnings for that year.
5.
Acquisition costs on share deals
This adjustment includes the acquisition costs related to share deals (IFRS 3) and joint venture interests which
are, under IFRS, recognised in the Consolidated Income Statement when incurred. Property-related
acquisition costs are first capitalised and subsequently recognised in the Consolidated Income Statement as
a fair value change. To achieve consistency, acquisition costs related to share deals and joint venture interests
should be excluded to arrive at earnings.
6.
Taxes in respect of adjustments
This adjustment includes the deferred taxes in the period which only relates to the above items, and which
would not crystallise until or unless the property, investment or financial instrument is sold. This would typically
include deferred tax on fair value surpluses on owned investment property and investment property under
development which could reverse on disposal of the asset. This adjustment also includes any current income
tax relating directly to the above adjustments to the extent that they are considered material.
53
7.1.4
Calculation of (diluted) customized earnings per share
Notes
2024
2023
In € 1,000
In € 1,000
Adjusted earnings
7.1.2
653
-/- 505
Exclude:
1.
Valuation results of owned investment property held for
sale
15.28
-/- 996
-/-
2,350
2.
Valuation results of right-of-use assets
15.28
38
147
3.
Valuation results of right-of-use assets held for sale
15.28
127
-
4.
Result on disposals owned investment property held for
sale
15.29
1,006
2,885
5.
Result on disposals of inventories
15.30
-/- 779
-/- 1,093
6.
Penalties for early termination of rental contracts
15.34
-/- 5
-
7.
Steering Committee fees
15.36.2
47
-
8.
Court fees
15.36.2
68
-
9.
Costs of funding and acquisition
15.36.5
182
11
10.
Interest expense on lease liabilities
15.38
99
91
11.
Variable compensation on other long-term liabilities
15.38
29
101
12.
Fee for early repayment loans and borrowings
14
-
13.
Waiver fee loans and borrowings
2
8
14.
Foreign exchange and currency results
15.38
62
135
Include:
15.
Operating leases
15.16.5 /
15.21.4
-/- 264
-/- 219
Subtotal adjustments (before taxes)
-/- 370
-/- 284
16.
Taxes in respect of above adjustments
-/- 33
9
Total adjustments
-/- 403
-/- 275
Customized earnings
250
-/- 780
Basic number of profit-sharing shares
19.9.1
3,882,965
4,177,083
Customized earnings per share (in €)
0.06
-/- 0.19
Basic number of profit-sharing shares (diluted)
3,882,965
4,177,083
Diluted customized earnings per share (in €)
0.06
-/- 0.19
7.1.5
Explanation of adjustments calculation of (diluted) customized earnings per share
The earnings is a measure of the underlying operating performance of an investment property company. It
therefore does provide a measure of recurring income, but does not, for example, exclude “exceptional” items
that are part of IFRS earnings. For that reason, the Fund has introduced its own (diluted) customized earnings.
In this calculation the Fund excludes “exceptional” and “one
-
off costs” and “one
-
off revenues”. Moreover
, in
this calculation valuation results, as well as result on disposals of properties held for sale, right-of-use assets
and right-of-use assets held for sale are excluded, as well as accrued interest lease liabilities.
The operating leases are included in the calculation of the (diluted) customized earnings according to APM.
As a result of above-described adjustments the impact of applying IFRS 16 (e.g. fair value adjustments right-
of-use assets) are eliminated in the (diluted) customized earnings.
54
Net Asset Value
Net Asset Value (
NAV
) is a key performance measure used for real estate investment funds. However, NAV
reported in the Consolidated Financial Statements under IFRS does not provide shareholders with the most
relevant information on the fair value of the assets and liabilities within an ongoing real estate investment
company with a long-term investment strategy.
The NAV measures the fair value of net assets on an ongoing, long-term basis. Assets and liabilities that are
not expected to crystallise in normal circumstances such as the fair value of derivative financial instruments
and deferred taxes on investment property, investment property under development or other non-current
investments are therefore excluded.
NAV should be calculated on a diluted basis considering the impact of any options, convertibles, etcetera that
7.1.7
Calculation of NAV
Notes
31-12-2024
31-12-2023
In € 1,000
In € 1,000
Group equity in accordance with IFRS
11
42,476
45,396
Exclude:
1.
Fair value of financial instruments
15.5
-/- 127
-/- 300
2.
Deferred tax
15.6.1
2,315
3,264
Group equity in accordance with NAV
44,664
48,360
Total number of profit-sharing shares
19.9.1
3,882,965
4,177,083
3.
Effect of exercise of options, convertibles and other equity
interests (diluted basis)
-
-
Total number of profit-sharing shares (diluted)
3,882,965
4,177,083
NAV per profit-sharing share (in €)
11.50
11.58
7.1.8
Explanation of adjustments calculation of NAV
1.
Fair value of financial instruments
This adjustment includes the net mark-to-market adjustment to the value of financial instruments (market value
less acquisition price paid or received) which are used for hedging purposes and where the Fund has the
intention of keeping the hedge position until the end of the contractual duration. Whether the Fund has chosen
to apply hedge accounting under IFRS is irrelevant. The mark-to-market of any convertible debt is also
excluded from the net assets.
The logic for this adjustment is that, under normal circumstances, the derivative financial instruments which
property investment companies use to provide an economic hedge are held until maturity and so the theoretical
gain or loss at Statement of Financi
al Position’s date will not crystallise.
The above adjustments do not include (possible) foreign currency hedging instruments (fair value hedges or
net investment hedges) where the hedged item market value changes are also reflected in the Consolidated
Statement of Financial Position. The fair value of such instruments should remain in NAV to offset the
movement in the underlying investment being hedged.
55
2.
Deferred tax
This adjustment includes the recognised deferred taxes in the Consolidated Statement of Financial Position in
respect of the difference between the fair value and tax value of owned investment property, investment
property under development, or other non-current investments (including investments in group companies) as
these deferred taxes would only become payable if the assets are sold. Therefore, deferred taxes on properties
held for sale, right-of-use assets held for sale as well as on lease incentives are not excluded from NAV.
The deferred tax liability relating to the fair value of financial instruments, which would not crystallise until or
unless the financial instrument is sold, should also be added back.
3.
Effect of exercise of options, convertibles and other equity interests (diluted basis)
A convertible bond is viewed as dilutive provided that the following criteria are satisfied:
1.
the convertible bond is dilutive in accordance with IAS 33.50; and
2.
the share price as at Statement of Financial Position’s date exceeds the conversion price (“in the
money”).
7.1.9
Triple Net Asset Value
The Triple Net Asset Value (
NNNAV
) measures the Net Asset Value including fair value adjustments in respect
of all material Statement of Financial Position’s items which are not reported at their fair values as part of
the
NAV.
7.1.10
Calculation of NNNAV
Notes
31-12-2024
31-12-2023
In € 1,000
In € 1,000
Group equity in accordance with NAV
7.1.7
44,664
48,360
Include:
1.
Fair value of financial instruments
15.5
127
300
2.
Fair value of deferred tax
-/- 2,935
-/- 3,852
3.
Fair value of inventories
-
846
4.
Minimum net expected value of claims under negotiation
-/- 491
-
Group equity in accordance with NNNAV
41,365
45,654
Total number of profit-sharing shares
19.9.1
3,882,965
4,177,083
5.
Effect of exercise of options, convertibles and other equity
interests (diluted basis)
-
-
Total number of profit-sharing shares (diluted)
3,882,965
4,177,083
NNNAV per profit-sharing share (in €)
10.65
10.93
7.1.11
Explanation of adjustments calculation of NNNAV
1.
Fair value of financial instruments
This reinstates, and is equal to, the adjustment 1, as mentioned in the calculation of NAV. The reason for
reinstating is that NNNAV approximates fair value NAV.
2.
Fair value of deferred tax
This adjustment includes the fair value of the deferred taxes concerning owned investment property,
investment property under development or other non-current investments (including investments in group
companies; these three items hereinafter mentioned as
“non
-
current investments”).
The deferred taxes are
calculated with regard to all taxable temporary differences with regard to the non-current investments, whether
these deferred taxes are included in the Statement of Financial Position or not. For items not included in the
56
Statement of Financial Position reference is made
to section 13.41.3 “Deferred tax” in the Accounting
Principles Consolidated Financial Statements.
The taxable temporary difference with regard to the non-current investments is calculated by the difference
between the fair value of the non-current investment less the tax value of the non-current investment. In case
the taxable temporary difference should result in a deferred tax asset, this deferred tax asset will only be
recognised as far as it is probable that future taxable profits will be available against which they can be used.
Deferred taxes are measured at the tax rates that are expected to be applied to taxable temporary differences
when they reverse, using tax rates enacted or substantively enacted at the Statement of Financial Position’s
date. The deferred taxes are considered without applying any discount (nominal value), which is in accordance
with IFRS.
The Managing Board assessed that the fair value of the deferred taxes to non-current investments is equal to
the nominal value (similar as mentioned in the Statement of Financial Position), adjusted for unrecognised
deferred taxes of non-
current investments as mentioned in section 13.41.3 “Deferred tax” in the Accounting
Principles Consolidated Financial Statements. Since a substantial portion of the assets will likely be sold in the
near future, the Managing Board is exercising prudence with regard to the recognised deferred tax assets
related to non-current investments.
4.
Minimum net expected value of claims under negotiation
This adjustment includes the difference between the carrying amount of assets as at Statement of Financial
Position’s date for which the Fund is seeking compensation through ongoing negotiations, and the minimum
net expected value of the claims under settlement discussions. This adjustment is net of tax.
5.
Effect of exercise of options, convertibles, and other equity interests (diluted basis)
For the effect of exercise of options, convertibles, and other equity interests (fully diluted basis) reference is
made
to the explanation in section 7.1.8 (3) “Explanation of adjustments calculation of NAV”.
7.1.12
Calculation of NNNAV before distributions to shareholders
Notes
31-12-2024
31-12-2023
In € 1,000
In € 1,000
Group equity in accordance with NNNAV
7.1.10
41,365
45,654
Exclude:
1.
Cumulative distributions to shareholders
3,857
3,857
Group equity in accordance with NNNAV before distributions
to shareholders
45,222
49,511
Total number of profit-sharing shares
19.9.1
3,882,965
4,177,083
2.
Effect of exercise of options, convertibles, and other equity
interests (diluted basis)
-
-
Total number of profit-sharing shares (diluted)
3,882,965
4,177,083
NNNAV per profit-sharing share before distributions to
shareholders (in €)
11.65
11.85
57
7.1.13
Calculation of NNNAV after issuance of shares (share-based payments)
Notes
Proforma
31-12-2024
31-12-2024
In € 1,000
In € 1,000
Group equity in accordance with NNNAV
7.1.10
41,365
41,365
Include:
1.
Share-based payments acquisition of subsidiaries
1,082
N.a.
Group equity in accordance with NNNAV after issuance of
shares (share-based payments)
42,447
431,365
Total number of profit-sharing shares (diluted) in accordance with
NNNAV
19.9.1
3,882,965
3,882,965
2.
Effect of issuance of profit-sharing shares (share-based
payments)
79,471
N.a.
Total number of profit-sharing shares (diluted) after issuance
of shares (share-based payments)
3,962,436
3,882,965
NNNAV per profit-sharing share after issuance of shares (in €)
10.71
10.65
7.1.14
Explanation of adjustments calculation of NNNAV after issuance of shares (share-based
payments)
1.
Share-based payments acquisition of subsidiaries
This adjustment includes the final settlement of the remaining fair value of identifiable assets acquired and
liabilities assumed as at the acquisition date related to the acquisition of the 100% stake in Aisi Ukraine LLC
and the Romanian assets. This settlement was completed on February 6, 2025.
2.
Effect of issuance of profit-sharing shares (share-based payments)
This adjustment relates to the issuance of 79,471 registered shares of the Fund to SPDI as part of the final
settlement for the acquisition of the 100% stake in Aisi Ukraine LLC and the Romanian assets. This settlement
was completed on February 6, 2025.
58
CONSOLIDATED FINANCIAL STATEMENTS 2024
59
CONTENTS
8
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
............................................
62
9
CONSOLIDATED INCOME STATEMENT
........................................................................
63
10
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
...................................
64
11
CONSOLIDATED STATEMENT OF CHANGES IN GROUP EQUITY
...............................
65
12
CONSOLIDATED STATEMENT OF CASH FLOWS
.........................................................
66
13
ACCOUNTING PRINCIPLES CONSOLIDATED FINANCIAL STATEMENTS
..................
67
13.1
REPORTING ENTITY
.........................................................................................................................................
67
13.2
STATEMENT OF COMPLIANCE AND FUTURE RELATED ASSUMPTIONS
..................................................
67
13.3
SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES
............................................................................
68
13.4
BASIS OF PREPARATION OF THE CONSOLIDATED FINANCIAL STATEMENTS
.......................................
68
13.5
BASIS OF CONSOLIDATION
.............................................................................................................................
70
13.6
BASIS OF PREPARATION OF CONSOLIDATED STATEMENT OF CASH FLOWS
.......................................
71
13.7
CURRENCY
........................................................................................................................................................
71
13.8
FINANCIAL INSTRUMENTS
..............................................................................................................................
73
13.9
INVESTMENT PROPERTY
.................................................................................................................................
80
13.10
INVESTMENT PROPERTY UNDER DEVELOPMENT
.......................................................................................
83
13.11
INVESTMENTS IN ASSOCIATES
......................................................................................................................
84
13.12
DERIVATIVE FINANCIAL INSTRUMENTS
........................................................................................................
85
13.13
DEFERRED TAX ASSETS
.................................................................................................................................
85
13.14
TAX ASSETS
......................................................................................................................................................
85
13.15
TRADE AND OTHER RECEIVABLES
...............................................................................................................
85
13.16
PREPAYMENTS AND DEFERRED EXPENSES
................................................................................................
85
13.17
CASH AND CASH EQUIVALENTS
....................................................................................................................
85
13.18
ASSETS HELD FOR SALE
................................................................................................................................
86
13.19
GROUP EQUITY
.................................................................................................................................................
86
13.20
TAX LIABILITIES
................................................................................................................................................
86
13.21
LOANS AND BORROWINGS
.............................................................................................................................
86
13.22
TRADE AND OTHER PAYABLES
.....................................................................................................................
86
13.23
DEFERRED INCOME AND TENANT DEPOSITS
..............................................................................................
87
13.24
DEFERRED TAX LIABILITIES
...........................................................................................................................
87
13.25
PROVISIONS
......................................................................................................................................................
87
13.26
LIABILITIES DIRECTLY ASSOCIATED WITH ASSETS HELD FOR SALE
.....................................................
87
13.27
GROSS RENTAL INCOME
.................................................................................................................................
87
13.28
SERVICE CHARGE INCOME AND SERVICE CHARGE EXPENSES
...............................................................
88
13.29
PROPERTY OPERATING EXPENSES
..............................................................................................................
88
13.30
VALUATION RESULTS OF PROPERTIES
........................................................................................................
88
13.31
RESULT ON DISPOSALS OF PROPERTIES
....................................................................................................
88
13.32
(REVERSAL OF) IMPAIRMENT ALLOWANCE OF INVENTORIES
..................................................................
88
13.33
RESULT ON DISPOSALS OF INVENTORIES
...................................................................................................
88
13.34
SHARE IN RESULTS OF INVESTMENTS IN ASSOCIATES
............................................................................
89
13.35
RESULT ON DISPOSALS OF INVESTMENTS IN ASSOCIATES
.....................................................................
89
13.36
FINANCIAL INCOME
..........................................................................................................................................
89
13.37
OTHER OPERATING INCOME
..........................................................................................................................
89
13.38
LEASES
..............................................................................................................................................................
89
13.39
ADMINISTRATIVE EXPENSES AND OTHER OPERATING EXPENSES
.........................................................
91
13.40
FINANCIAL EXPENSES
.....................................................................................................................................
91
13.41
INCOME TAX EXPENSE
....................................................................................................................................
91
60
14
SEGMENT INFORMATION
...............................................................................................
93
14.1
GENERAL
...........................................................................................................................................................
93
14.2
GEOGRAPHIC CATEGORIES
...........................................................................................................................
93
14.3
BUSINESS CATEGORIES
.................................................................................................................................
93
14.4
SEGMENTATION CRITERIA
..............................................................................................................................
94
14.5
SEGMENT RESULTS
.........................................................................................................................................
95
15
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
....................................
100
15.1
SUBSIDIARIES
.................................................................................................................................................
100
15.2
INVESTMENT PROPERTY
...............................................................................................................................
102
15.3
INVESTMENT PROPERTY UNDER DEVELOPMENT
.....................................................................................
106
15.4
INVESTMENTS IN ASSOCIATES
....................................................................................................................
107
15.5
DERIVATIVE FINANCIAL INSTRUMENTS
......................................................................................................
108
15.6
RECOGNISED DEFERRED TAXES
.................................................................................................................
109
15.7
UNRECOGNISED DEFERRED TAXES
............................................................................................................
111
15.8
TAX ASSETS
....................................................................................................................................................
112
15.9
TRADE AND OTHER RECEIVABLES
.............................................................................................................
113
15.10
PREPAYMENTS AND DEFERRED EXPENSES
..............................................................................................
116
15.11
INVENTORIES
..................................................................................................................................................
117
15.12
CASH AND CASH EQUIVALENTS
..................................................................................................................
117
15.13
ASSETS HELD FOR SALE
..............................................................................................................................
118
15.14
GROUP EQUITY
...............................................................................................................................................
121
15.15
TAX LIABILITIES
..............................................................................................................................................
122
15.16
LOANS AND BORROWINGS
...........................................................................................................................
123
15.17
TRADE AND OTHER PAYABLES
...................................................................................................................
129
15.18
DEFERRED INCOME AND TENANT DEPOSITS
............................................................................................
129
15.19
PROVISIONS
....................................................................................................................................................
130
15.20
DEFERRED TAX LIABILITIES
.........................................................................................................................
131
15.21
LIABILITIES DIRECTLY ASSOCIATED WITH ASSETS HELD FOR SALE
...................................................
131
15.22
CONTINGENT ASSETS
...................................................................................................................................
132
15.23
NON-CONTINGENT ASSETS
..........................................................................................................................
132
15.24
CONTINGENT LIABILITIES
.............................................................................................................................
132
15.25
NON-CONTINGENT LIABILITIES
....................................................................................................................
133
15.26
GROSS RENTAL INCOME
...............................................................................................................................
134
15.27
REBILLED AND NON-REBILLED SERVICE CHARGES AND PROPERTY OPERATING EXPENSES
........
135
15.28
VALUATION RESULTS OF PROPERTIES
......................................................................................................
137
15.29
RESULT ON DISPOSALS OF PROPERTIES
..................................................................................................
137
15.30
RESULT ON DISPOSALS OF INVENTORIES
.................................................................................................
138
15.31
NET RESULTS ON PROPERTIES
...................................................................................................................
138
15.32
SHARE IN RESULTS OF INVESTMENTS IN ASSOCIATES
..........................................................................
139
15.33
FINANCIAL INCOME
........................................................................................................................................
139
15.34
OTHER OPERATING INCOME
........................................................................................................................
139
15.35
ADMINISTRATIVE EXPENSES
........................................................................................................................
139
15.36
OTHER OPERATING EXPENSES
...................................................................................................................
142
15.37
PERSONNEL COSTS
.......................................................................................................................................
145
15.38
FINANCIAL EXPENSES
...................................................................................................................................
145
15.39
ONGOING CHARGES FIGURE
........................................................................................................................
145
15.40
INCOME TAX EXPENSE
..................................................................................................................................
147
15.41
EARNINGS PER SHARE23F
...........................................................................................................................
149
15.42
RISK MANAGEMENT
.......................................................................................................................................
151
15.43
DISCLOSURES LEASES
.................................................................................................................................
163
15.44
DISCLOSURES CONSOLIDATED STATEMENT OF CASH FLOWS
.............................................................
165
15.45
RELATED PARTIES
.........................................................................................................................................
167
15.46
EVENTS AFTER STATEMENT OF FINANCIAL POSITION’S DATE
..............................................................
170
16
PARENT COMPANY BALANCE SHEET
........................................................................
172
17
PARENT COMPANY PROFIT AND LOSS ACCOUNT
...................................................
173
61
18
ACCOUNTING PRINCIPLES PARENT COMPANY FINANCIAL STATEMENTS
...........
174
18.1
GENERAL
.........................................................................................................................................................
174
18.2
SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES
..........................................................................
174
18.3
BASIS OF PREPARATION OF THE PARENT COMPANY FINANCIAL STATEMENTS
................................
174
18.4
SIZE AND COMPOSITION OF THE EQUITY AND RESULTS IN THE CONSOLIDATED AND PARENT
COMPANY FINANCIAL STATEMENTS
...........................................................................................................
176
19
NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS
...............................
177
19.1
INVESTMENTS IN GROUP COMPANIES
........................................................................................................
177
19.2
RECEIVABLES FROM GROUP COMPANIES
.................................................................................................
178
19.3
OTHER RECEIVABLES
...................................................................................................................................
179
19.4
DEFERRED EXPENSES
..................................................................................................................................
179
19.5
RECOGNISED DEFERRED TAXES
.................................................................................................................
180
19.6
UNRECOGNISED DEFERRED TAXES
............................................................................................................
181
19.7
CASH AT BANK
...............................................................................................................................................
181
19.8
SHAREHOLDERS’ EQUITY
.............................................................................................................................
182
19.9
ISSUED CAPITAL
.............................................................................................................................................
182
19.10
SHARE PREMIUM
............................................................................................................................................
184
19.11
DEFERRED TAX LIABILITIES
.........................................................................................................................
184
19.12
PRIVATE LOANS
.............................................................................................................................................
185
19.13
DEBTS TO GROUP COMPANIES
....................................................................................................................
185
19.14
TAX LIABILITIES
..............................................................................................................................................
187
19.15
OTHER LIABILITIES
........................................................................................................................................
187
19.16
ACCRUALS
......................................................................................................................................................
187
19.17
NON-CONTINGENT LIABILITIES
....................................................................................................................
188
19.18
CONTINGENT LIABILITIES
.............................................................................................................................
188
19.19
INCOME FROM INVESTMENTS
......................................................................................................................
188
19.20
REALISED VALUATION RESULTS OF INVESTMENTS IN GROUP COMPANIES
.......................................
189
19.21
REALISED VALUATION RESULTS OF RECEIVABLES FROM GROUP COMPANIES
................................
189
19.22
UNREALISED VALUATION RESULTS OF INVESTMENTS IN GROUP COMPANIES
..................................
190
19.23
UNREALISED VALUATION RESULTS OF RECEIVABLES FROM GROUP COMPANIES
...........................
190
19.24
OTHER OPERATING INCOME
........................................................................................................................
190
19.25
ADMINISTRATIVE EXPENSES
........................................................................................................................
191
19.26
OTHER OPERATING EXPENSES
...................................................................................................................
191
19.27
PERSONNEL COSTS
.......................................................................................................................................
192
19.28
INTEREST EXPENSES
....................................................................................................................................
192
19.29
INCOME TAX EXPENSE
..................................................................................................................................
193
19.30
RELATED PARTIES
.........................................................................................................................................
194
19.31
PROPOSAL FOR THE PARENT COMPANY RESULT APPROPRIATION
.....................................................
194
19.32
DETERMINING OF PARENT COMPANY RESULT FOR THE PREVIOUS FINANCIAL PERIOD
..................
194
19.33
EVENTS AFTER BALANCE SHEET DATE
.....................................................................................................
195
20
OTHER INFORMATION
..................................................................................................
196
20.1
GENERAL PROVISIONS OF ARTICLES OF ASSOCIATION CONCERNING RESULT APPROPRIATION .. 196
20.2
DECREE ON THE DUTCH ACT ON FINANCIAL SUPERVISION
...................................................................
196
20.3
PERSONAL INTERESTS
.................................................................................................................................
196
20.4
SPECIAL CONTROLLING RIGHTS
.................................................................................................................
197
20.5
INDEPENDENT AUDITOR’S REPORT
............................................................................................................
198
62
8
CONSOLIDATED
STATEMENT
OF
FINANCIAL
POSITION
Notes
31-12-2024
31-12-2023
In € 1,000
In € 1,000
Assets
Investment property
15.2
Investment property under development
15.3
Investments in associates
15.4
Derivative financial instruments
15.5
Deferred tax assets
15.6
Trade and other receivables
15.9
Prepayments and deferred expenses
15.10
Total non-current assets
Derivative financial instruments
15.5
Tax assets
15.8
Trade and other receivables
15.9
Prepayments and deferred expenses
15.10
Inventories
15.11
Cash and cash equivalents
15.12
Assets held for sale
15.13
Total current assets
Total assets
Group equity
(attributable to Parent Company shareholders)
11
Liabilities
Loans and borrowings
15.16
Deferred income and tenant deposits
15.18
Deferred tax liabilities
15.20
Total non-current liabilities
Tax liabilities
15.15
Loans and borrowings
15.16
Trade and other payables
15.17
Deferred income and tenant deposits
15.18
Liabilities directly associated with assets held for sale
15.21
Total current liabilities
Total liabilities
Total Group equity and liabilities
63
9
CONSOLIDATED
INCOME
STATEMENT
Notes
2024
2023
In € 1,000
In € 1,000
Gross rental income
15.26
Service charge income
15.27
Service charge expenses
15.27
-/- 2,610
-/- 2,668
Property operating expenses
15.27
-/- 1,807
-/- 1,834
Net rental and related income
Valuation results of properties
15.28
-/- 600
Result on disposals of properties
15.29
-/- 1,006
-/- 2,885
Result on disposals of inventories
15.30
Net results on properties
15.31
-/- 827
Share in results of investments in associates
15.32
Net results on equity investments
Financial income
15.33
Other operating income
15.34
Other income
Total income
Administrative expenses
15.35
Other operating expenses
15.36
Total operating expenses
Net operating result before financial expenses
Financial expenses
15.38
Profit / loss before income tax
-/- 20
Income tax expense
15.40
Profit / loss for the period
-/- 32
Profit / loss for the period attributable to:
Parent Company shareholders
-/- 32
Profit / loss for the period
-/- 32
Basic earnings per share (€)
15.41.1
-/- 0.01
Diluted earnings per share (€)
15.41.4
-/- 0.01
64
10
CONSOLIDATED
STATEMENT
OF
COMPREHENSIVE
INCOME
Notes
2024
2023
In € 1,000
In € 1,000
Profit / loss for the period
9
-/- 32
Items that are or may be reclassified subsequently to
profit or loss:
Foreign exchange and currency translation differences on net
investment in group companies
-/- 871
-/- 551
Income tax on foreign exchange and currency translation
differences on net investments in group companies
Total foreign exchange differences
-/- 843
-/- 509
Other comprehensive income for the period, net of tax
-/- 843
-/- 509
Total comprehensive income for the period
-/- 875
-/- 326
Total comprehensive income attributable to:
Parent Company shareholders
-/- 875
-/- 326
Total comprehensive income for the period
-/- 875
-/- 326
65
11
CONSOLIDATED
STATEMENT
OF
CHANGES
IN
GROUP
EQUITY
Issued
capital
Share
premium
Legal
revaluation
reserve
Reserve
currency
translation
differences
Retained
earnings
Total
share-
holders’
equity
In € 1,000
In € 1,000
In € 1,000
In € 1,000
In € 1,000
In € 1,000
Balance as at January 1, 2024
-/- 4,813
Profit or loss
-/- 32
-/- 32
Change in legal revaluation reserve
-/- 1,711
Other comprehensive income
-/- 843
-/- 843
Share buy-back / Reverse
Bookbuilding
3
-/- 2,045
-/- 2,045
Balance as at December 31, 2024
-/- 279
-/- 5,179
Balance as at January 1, 2023
-/- 5,581
Profit or loss
Change in legal revaluation reserve
-/- 228
Other comprehensive income
-/- 509
-/- 509
Share buy-back / Reverse
Bookbuilding
-/- 305
-/- 108
-/- 56
Distributions to shareholders
-/- 737
-/- 737
Balance as at December 31, 2023
-/- 4,813
3
For further information reference is made to section 15.14.3
“Share buy
-back / Reverse Bookbuilding
”.
66
12
CONSOLIDATED
STATEMENT
OF
CASH
FLOWS
Notes
2024
2023
In € 1,000
In € 1,000
Cash flows from operating activities
Profit / loss for the period
9
-/- 32
Adjustments for:
Net results on properties (inventories excluded)
4
15.28
-/- 988
Share in results of investments in associates
15.32
-/- 80
-/- 225
Financial income
15.33
-/- 865
-/- 394
Financial expenses
15.38
Income tax expense
15.40
Changes in:
Tax assets
-/- 21
Trade and other receivables
-/- 70
-/- 349
Prepayments and deferred expenses
-/- 96
Tax liabilities
-/- 36
-/- 201
Trade and other payables
-/- 707
Deferred income and tenant deposits
-/- 66
Cash generated from operating activities
Proceeds from the sale of inventories
Acquisitions of / additions to inventories
-/- 181
Interest received
Interest paid
-/- 2,326
-/- 3,034
Income tax paid / income tax received
Net cash from / used in (-/-) operating activities
Cash flows from investing activities
Acquisitions of subsidiaries, net of cash acquired
-/- 970
Sale of subsidiaries, net of cash disposed of
Dividend from associates
Proceeds from the sale of assets held for sale
Acquisitions of / additions to owned investment properties
-/- 524
-/- 818
Acquisitions of / additions to assets held for sale
-/- 531
-/- 15
Net cash from / used in (-/-) investing activities
15.44.1
Cash flows from financing activities
Share buy-back / Reverse Bookbuilding (treasury shares)
-/- 2,005
-/- 67
Proceeds from (refinanced) secured bank loans
Proceeds from other long-term liabilities
Distributions to shareholders
-/- 737
Transaction costs related to loans and borrowings
-/- 63
-/- 87
Repayments of secured bank loans
-/- 9,113
-/- 9,596
Repayments of other long-term liabilities
-/- 3,984
-/- 1,899
Payments of lease liabilities
-/- 264
-/- 219
Net cash from / used in (-/-) financing activities
15.44.2
-/- 10,229
-/- 5,556
Net increase / decrease (-/-) in cash and cash equivalents
-/- 2,425
Cash and cash equivalents as at 1 January
15.12
Effect of exchange and currency translation result on cash held
-/- 14
Cash and cash equivalents as at 31 December
15.12
4
Transaction costs and change in lease incentives excluded.
67
13
ACCOUNTING
PRINCIPLES
CONSOLIDATED
FINANCIAL
STATEMENTS
REPORTING ENTITY
The company Arcona Property Fund N.V. , hereinafter referred to as
“
the
Fund
”
, was incorporated on
November 27, 2002 in accordance with Dutch law and is established in Amsterdam (the Netherlands
Fund obtained a listing on the Euronext Fund Services in Amsterdam on November 13, 2003 and a listing on
the Prague Stock Exchange in Prague on October 30, 2018.
The Fund is registered in Amsterdam, De Entree 55, 1101 BH and is entered in the Trade Register of the
Chamber of Commerce under number 08110094.
The Fund is a closed-end investment company with variable capital within the meaning of Article 76a of Book
2 of the Dutch Civil Code. The Fund invests in commercial real estate in Central and Eastern Europe (
CEE
The Consolidated Financial Statements have been approved by the Supervisory Board.
The Consolidated Financial Statements of the Fund for the financial period comprise the Fund and its
STATEMENT OF COMPLIANCE AND FUTURE RELATED ASSUMPTIONS
The Fund has applied the significant accounting principles as set out in sections 13.3 to 13.41. The Managing
As at December 31, 2024, Group equity of the Fund is positive. As stated in the liquidity forecast up to May
2026, the current cash position is sufficient to cover budgeted costs. This forecast considers debt service
requirements, the repayment and / or refinancing of loans and uncertainty regarding the impact of the financial
markets (reference is made to section 15.42
“Risk management” and section 15.
46
“Events after Statement
of Financial Position’s date”).
Going concern
During the reporting period, the Fund’s financing position continued to strengthen, driven by both decreasing
interest rates and significant financial restructuring. This restructuring included the repayment of secured and
more expensive unsecured loans through substantial loan instalments funded by sales proceeds, as well as
refinancing initiatives, such as the replacement of the CVI loan with two investor loans. As a result, the Loan-
to-Value (LTV) ratio declined to 33.4% (2023: 39.5%) by the end of 2024, solvency improved, and the Debt
Service Coverage Ratio (DSCR) showed further enhancement. At year-end, the real estate portfolio -
excluding the 3.6% land plot component - was 96.4% income-generating.
Looking ahead, the expected proceeds from additional disposals, other assets classified as held-for-sale, and
potential further sales opportunities, will allow for the full repayment of all short-term residual investor loans at
the Group level. These transactions will strengthen liquidity and ensure ongoing compliance with bank loan
covenants at the subsidiary level. This proactive financial strategy reinforces the Fund’s long
-term financial
stability and its ability to operate as a going concern.
The cumulative reduction in the Fund’s LTV ratio in recent years has allowed it to meet all financial obligations
despite the current high-interest-rate environment. The Managing Board believes that the Fund will continue
to meet its financial commitments, supported by declining interest rates in its core markets, ongoing cash
generation from operations, and the execution of its sales programme.
68
The Managing Board expects that the real estate portfolio, excluding temporary and indirect impacts, will
continue to maintain good occupancy levels and to generate positive returns. Furthermore, the cash flow will
remain positive, driven by the expected sale of real estate in the upcoming period.
The Fund will continue to return money to shareholders in accordance with the monetization plan agreed upon
at the Extraordinary General Meeting (EGM) at the end of 2023. The ongoing sales programme will divest non-
core assets and certain core assets that have reached their short-term peak values through refurbishment or
re-letting campaigns.
concern up to mid-2026. Therefore, these Consolidated Financial Statements are prepared on the assumption
SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES
The Consolidated Financial Statements have been prepared in accordance with the International Financial
Reporting Standards (
IFRS
) and the interpretations thereof adopted by the International Accounting Standards
Board (
IASB
) as adopted by the European Union (hereinafter referred to as
EU-IFRS
) and in accordance with
Part 9 of Book 2 of the Dutch Civil Code (Titel 9, Boek 2 van het Burgerlijk Wetboek) and the Dutch Act on
Financial Supervision (Wet op het financieel toezicht, the
Wft
).
BASIS OF PREPARATION OF THE CONSOLIDATED FINANCIAL STATEMENTS
13.4.1
General
The Consolidated Financial Statements have been prepared based on historical cost, except for:
•
investment property;
•
investment property under development;
•
assets held for sale;
•
financial assets at fair value through profit or loss; and
•
financial liabilities at fair value through profit or loss.
The accounting policies explained below have been consistently applied to the results, other gains and losses,
assets, liabilities, and cash flows of entities included in the Consolidated Financial Statements and are
consistent with those used in the prior period
, with the exception of the application of new and amended IFRS’s
as mentioned in section 13.4.4
“New and amended IFRS Standards and interpretations that are effective for
the current period”
.
13.4.3.1 Amortised cost
The amortised cost is the amount for which a financial asset or financial liability is recognised on the
Consolidated Financial Statements at initial recognition less repayments on the principal, increased or
decreased by the cumulative amortisation of the difference between that initial amount and the final maturity
amount - determined through the effective interest method - less any write-downs (directly or by forming a
provision) due to impairments or uncollectability.
13.4.3.2 Netting
Financial assets and financial liabilities are reported net in the Consolidated Financial Statements exclusively
if and to the extent:
•
a proper legal instrument is available to set-off the recognised amounts; and
•
there is a firm intention to settle on a net basis, or to realise the asset and settle the liability
simultaneously.
69
Judgements, assumptions, and estimation uncertainties
13.4.3.1 General
Preparation of the Consolidated Financial Statements in accordance with EU-IFRS requires the Managing
Board to make judgements, estimates and assumptions that affect the application of policies and the reported
value of assets and liabilities, income and expenses. The estimates and associated assumptions have been
based on historical experience and various other factors that are believed to be reasonable under the
circumstances. The results of these estimates and assumptions form the basis of the judgements made about
carrying amounts of assets and liabilities that are not readily apparent from other sources. The actual results
may differ from these estimates.
13.4.3.2 Judgements
Judgements made by the Managing Board in the application of the EU-IFRS that have significant effect on the
Consolidated Financial Statements with a significant risk of material adjustment in the next financial period
are:
•
equity-accounted investees: whether the Fund has significant influence over an investee;
•
consolidation: whether the Fund has de facto control over an investee; and
•
lease term: whether the Fund is reasonably certain to exercise extension options.
13.4.3.3 Assumptions and estimation uncertainties
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting
estimates are recognised in the period in which the estimate is revised if the revision affects only that period
or in the period of revision and future periods if the revision affects both current and future periods.
Assumptions and estimation uncertainties made by the Managing Board that have significant risk of resulting
in material adjustments to the carrying amounts of assets and liabilities in the next financial period are:
•
fair value measurements: in estimating the fair value of an asset or liability, the Fund uses observable
market data to the extent it is available. The Fund engages external, independent appraisers to
perform the valuation. The Managing Board works closely with the external, independent appraisers
to establish the appropriate valuation techniques and inputs to the model;
•
recognition of deferred tax assets: availability of future taxable profit against which deductible
temporary differences and tax losses carried forward can be utilised;
•
recognition and measurement of provisions and contingencies: key assumptions about the likelihood
and magnitude of an outflow of resources;
•
measurement of expected credit losses allowance for trade receivables: key assumptions in
determining the weighted-average loss rate;
•
acquisition of subsidiary: fair value of the consideration transferred (including contingent
consideration) and fair value of the assets acquired, and liabilities assumed, measured on a
provisional basis;
•
Measurement of fair values
Several of
the Fund’s accounting policies and disclosures require the measurement of fair values, for both
financial and non-financial assets and liabilities.
When measuring the fair value of an asset or a liability, the Fund uses observable market data as far as
possible. Fair values are categorized into different levels in a fair value hierarchy based on the inputs used in
the valuation techniques as follows:
•
level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;
•
level 2: inputs other than quoted prices included in level 1 that are observable for the asset or liability,
either directly (i.e. as prices) or indirectly (i.e. derived from prices);
•
level 3: inputs for the asset or liability that are not based on observable market data (unobservable
inputs).
70
Further information about the assumptions made in measuring fair values is included in the following notes:
•
13.8
“Financial instruments”;
•
13.9.2
“
Investment property
”;
•
13.10
“
Investment property under development
”;
•
13.11
“Investments in associates”;
•
13.18.2
13.4.4
New and amended IFRS Standards and interpretations that are effective for the current
period
A number of new standards and amendments to existing standards and interpretations are effective for annual
periods beginning after January 1, 2024:
•
Non-
current Liabilities with Covenants: “Amendments to IAS 1”;
•
Classification of Liabilities as Current or Non-current:
“Amendments to IAS 1”;
•
Lease Liability in a Sale and Leaseback: ”Amendments to IFRS 16”;
•
Supplier Finance Arrangements: “Amendments to IAS 7 and IFRS 7”
.
These new standards, amendments and interpretations did not have a significant impact on the Consolidated
Financial Statements of the Fund.
13.4.5
New and amended IFRS Standards and interpretations not yet applied
A number of new standards, amendments to existing standards, and interpretations will become effective for
annual periods beginning after January 1, 2024, and have not been applied in preparing these Consolidated
Financial Statements:
•
Lack of Exchangeability: “Amendments to IAS 21”;
•
Classification and Measurement of Financial Instruments: “Amendments to IFRS 7 and IFRS 9”;
•
Presentation and Disclosure in Financial Statements: “IFRS 18”;
•
Disclosures subsidiaries without Public Accountability: “IFRS 19”
.
The Managing Board expects these new standards, amendments and interpretations will not have a material
impact on the Consolidated Financial Statements of the Fund in the current or future reporting periods, or on
BASIS OF CONSOLIDATION
Subsidiaries
Subsidiaries are entities over which the Fund has direct or indirect predominant control. The Fund has
predominant control if:
•
it has power over the entity;
•
it is exposed to or entitled to variable returns because of its involvement in the entity; and
•
it has the possibility of using its predominant control over the entity to influence the size of these
returns.
Every one of these three criteria must be satisfied before the Fund is deemed to have predominant control
over the entity in which it has an interest.
Subsidiaries are fully consolidated with effect from the date on which predominant control commences until
the date that control ceases.
Consolidated Financial Statements are prepared using uniform accounting policies for similar transactions.
Accounting principles of subsidiaries are consistent with the policies adopted by the Fund.
71
Acquisitions of subsidiaries
The Fund recognises acquisitions if IFRS 3 (revised) “Business Combinations” or IAS 40 “Investment property”
applies. Acquisitions are considered a business combination if there is an acquisition of assets, rental activities
and such a management organisation, that the acquired entity can operate as an independent company, with
the aim of generating economic results. The Fund does not necessarily consider acquisitions of properties
within a legal company as a business combination, but evaluates these acquisitions individually for the above
operational characteristics.
The Fund applies the acquisition method to account for business combinations. The consideration transferred
for the acquisition of a subsidiary is the fair value of the assets transferred, the liabilities incurred to the former
owners of the acquired assets and the equity interests issued by the Fund. The consideration transferred
includes the fair value of any asset or liability resulting from a contingent consideration arrangement.
Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are
measured initially at their fair values at the acquisition date. The Fund recognises any non-controlling interest
in the acquired assets on an acquisition-by-acquisition basis, either at fair value or at the non-controlling
interest’s proportionate share of the recognised amounts of acquiree’s identifiable net assets. Acquisition
-
related costs are expensed as incurred. Goodwill is the amount by which the cost of an acquired entity at first
recognition exceeds the net fair value of the identifiable assets and liabilities and contingent liabilities assumed.
Changes in the purchase price after the acquisition date do not result in recalculation or adjustment of the
goodwill. After first recognition, the goodwill is valued at costs less any cumulative impairment losses. Goodwill
is attributed to cash-generating entities and is not amortised. Goodwill is assessed for impairment annually, or
earlier if circumstances give cause. Negative goodwill resulting from an acquisition is recognised directly into
Income Statement.
For acquisitions of subsidiaries not meeting the definition of a business, the Fund allocates the cost between
the individual identifiable assets and liabilities assumed in the Fund based on their relative fair values at the
date of acquisition. Acquisition-related costs are capitalised. Such transactions or events do not give rise to
13.5.3
Elimination of transactions on consolidation
All intercompany receivables, payables, significant transactions and any unrealised profits and losses on
transactions within the Fund, or income or expenses from such transactions within the Fund have been
BASIS OF PREPARATION OF CONSOLIDATED STATEMENT OF CASH FLOWS
The Fund has used the indirect method for the Consolidated Statement of Cash Flows. Given the nature of
the Fund (investment company) financial income is not netted against financial expenses but presented
separately under the total income (reference is made to section 13.36
“Financial income”
), so financial income
is presented in the Consolidated Statement of Cash Flows under cash flows from operating activities.
Cash and cash equivalents as mentioned in the Consolidated Statement of Cash Flows include the Statement
of Financial Position
’s item
cash and cash equivalents and, if applicable bank overdrafts. Transactions without
CURRENCY
Functional and presentation currency
The functional currency of the Fund is the Euro (EUR
or €
),
reflecting the fact the majority of the Fund’s
transactions are settled in Euro. The Fund has adopted the Euro as its presentation currency since the shares
of the Fund are denominated in Euro.
72
Foreign currency transactions
Foreign currency transactions are translated into Euros at the exchange rate applicable on the transaction
date. Assets and liabilities denominated in foreign currencies are translated into Euros at the exchange rate
applicable on the Statement of Financial Position
’s date
. Exchange rate differences arising from translation
are recognised in the Income Statement. Cash flows in foreign currencies are converted at the exchange rate
Financial Statements of foreign activities and net investment in foreign activities
The assets and liabilities of foreign operations and fair value adjustments arising on consolidation are
translated into Euros at the exchange rate applicable on the Statement of Financial Position
’s date.
The income and expenses of foreign operations are translated into Euros at the exchange rates at the dates
of the transactions. For practical reasons, the average monthly exchange rates for the financial period are
used to approximate the exchange rates at the dates of the transactions, however only if the exchange rates
do not fluctuate significantly.
Foreign currency translation differences arising on translation of the net investment in foreign activities, and
the associated hedging transactions, are taken through the comprehensive income and are recognised in the
reserve currency translation differences. In case of a (part) reduction of the net investments in foreign activities,
the deferred cumulative amount recognised in the comprehensive income relating to that particular foreign
13.7.4
Exchange rates used for the Consolidated Statement of Financial Position
31-12-2024 |
31-12-2023 |
|
Bulgarian Lev (EUR / BGN) |
1.95580 |
1.95580 |
% change |
0.0% |
0.0% |
Czech Koruna (EUR / CZK) |
25.18500 |
24.72400 |
% change |
-/- 1.9% |
-/- 2.5% |
Polish Zloty (EUR / PLN) |
4.27500 |
4.33950 |
% change |
1.5% |
7.3% |
Romanian Leu (EUR / RON) |
4.97430 |
4.97560 |
% change |
0.0% |
-/- 0.5% |
Ukrainian Hryvnia (EUR / UAH) |
43.92660 |
42.20790 |
% change |
-/- 4.1% |
-/- 8.4% |
US Dollar (EUR / USD) |
1.03890 |
1.10500 |
% change |
6.0% |
-/- 3.6% |
Source: European Central Bank (ECB) if available. Ukrainian Hryvnia: National Bank of Ukraine.
13.7.5
Average exchange rates used for the Consolidated Income Statement
2024 |
2023 |
|
Bulgarian Lev (EUR / BGN) |
1.95580 |
1.95580 |
Czech Koruna (EUR / CZK) |
25.15608 |
23.97092 |
Polish Zloty (EUR / PLN) |
4.30209 |
4.52335 |
Romanian Leu (EUR / RON) |
4.97528 |
4.95140 |
Ukrainian Hryvnia (EUR / UAH) |
43.57652 |
39.76890 |
73
FINANCIAL INSTRUMENTS
13.8.1
General
Financial assets and financial liabilities are recognised in the Consolidated Statement of Financial Position
when the Fund becomes a party to the contractual provisions of the instrument.
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly
attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets
and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the
financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly
attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are
recognised immediately in profit or loss.
Financial assets
All regular way purchases or sales of financial assets are recognised and derecognised on a trade date basis.
Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within
the time frame established by regulation or convention in the marketplace.
All recognised financial assets are measured subsequently in their entirety at either amortised cost or fair
value, depending on the classification of the financial assets.
13.8.2.1 Classification of financial assets
In accordance with IFRS 7 financial assets have been classified as follows:
I.
Debt instruments that meet the following conditions are measured subsequently at amortised cost:
•
the financial asset is held within a business model whose objective is to hold financial
assets in order to collect contractual cash flows; and
•
the contractual terms of the financial asset give rise on specified dates to cash flows that
are solely payments of principal and interest on the principal amount outstanding.
II.
Debt instruments that meet the following conditions are measured subsequently at fair value through
other comprehensive income (
FVTOCI
):
•
the financial asset is held within a business model whose objective is achieved by both
collecting contractual cash flows and selling the financial assets; and
•
the contractual terms of the financial asset give rise on specified dates to cash flows that
are solely payments of principal and interest on the principal amount outstanding.
III.
By default, all other financial assets are measured subsequently at fair value through profit or loss
(
FVTPL
).
Despite the foregoing, the Fund may make the following irrevocable election / designation at initial recognition
of a financial asset:
•
the Fund may irrevocably elect to present subsequent changes in fair value of an equity investment
in other comprehensive income if certain criteria are met (see below); and
•
the Fund may irrevocably designate a debt investment that meets the amortised cost or FVTOCI
criteria as measured at FVTPL if doing so eliminates or significantly reduces an accounting mismatch
(see below).
I.
Financial assets at amortised cost and effective interest method
The effective interest method is a method of calculating the amortised cost of a debt instrument and of
allocating interest income over the relevant period.
For financial assets other than purchased or originated credit
‑
impaired financial assets (i.e. assets that are
credit
‑
impaired on initial recognition), the effective interest rate is the rate that exactly discounts estimated
future cash receipts (including all fees and points paid or received that form an integral part of the effective
interest rate, transaction costs and other premiums or discounts) excluding expected credit losses, through
the expected life of the debt instrument, or, where appropriate, a shorter period, to the gross carrying amount
74
of the debt instrument on initial recognition. For purchased or originated credit
‑
impaired financial assets, a
credit
‑
adjusted effective interest rate is calculated by discounting the estimated future cash flows, including
expected credit losses, to the amortised cost of the debt instrument on initial recognition.
The amortised cost of a financial asset is the amount at which the financial asset is measured at initial
recognition minus the principal repayments, plus the cumulative amortisation using the effective interest
method of any difference between that initial amount and the maturity amount, adjusted for any loss allowance.
The gross carrying amount of a financial asset is the amortised cost of a financial asset before adjusting for
any loss allowance.
Interest income is recognised using the effective interest method for debt instruments measured subsequently
at amortised cost and at FVTOCI. For financial assets other than purchased or originated credit
‑
impaired
financial assets, interest income is calculated by applying the effective interest rate to the gross carrying
amount of a financial asset, except for financial assets that have subsequently become credit
‑
impaired (see
below). For financial assets that have subsequently become credit
‑
impaired, interest income is recognised by
applying the effective interest rate to the amortised cost of the financial asset. If, in subsequent reporting
periods, the credit risk on the credit
‑
impaired financial instrument improves so that the financial asset is no
longer credit
‑
impaired, interest income is recognised by applying the effective interest rate to the gross carrying
amount of the financial asset.
For purchased or originated credit
‑
impaired financial assets, the Fund recognises interest income by applying
the credit
‑
adjusted effective interest rate to the amortised cost of the financial asset from initial recognition.
The calculation does not revert to the gross basis even if the credit risk of the financial asset subsequently
improves so that the financial asset is no longer credit
‑
impaired.
Interest income is recognised in profit or loss and is included in the financial income.
II.
Financial assets classified as at FVTOCI
There are no debt instruments or equity instruments designated as at FVTOCI as at Statement of Financial
P
osition’s date.
Financial assets at FVTPL
Financial assets that do not meet the criteria for being measured at amortised cost or FVTOCI (see I.) are
measured at FVTPL. Specifically:
•
investments in equity instruments are classified as at FVTPL, unless the Fund designates an equity
investment that is neither held for trading nor a contingent consideration arising from a business
combination as at FVTOCI on initial recognition;
•
debt instruments that do not meet the amortised cost criteria or the FVTOCI criteria (see (I.) and (II.)
above) are classified as at FVTPL. In addition, debt instruments that meet either the amortised cost
criteria or the FVTOCI criteria may be designated as at FVTPL upon initial recognition if such
designation eliminates or significantly reduces a measurement or recognition inconsistency (so
called
“
accounting mismatch
”
) that would arise from measuring assets or liabilities or recognising the
gains and losses on them on different bases. The Fund has not designated any debt instruments as
at FVTPL.
Financial assets at FVTPL are measured at fair value at the end of each reporting period, with any fair value
gains or losses recognised in profit or loss to the extent they are not part of a designated hedging relationship.
The net gain or loss recognised in profit or loss includes any dividend or interest earned on the financial asset
and is included in the financial income or financial expenses.
All the Fund’s financial assets
are classified as financial assets at amortised cost and effective interest method,
with the exception of:
•
investments in associates; and
•
derivative financial instruments.
75
The Fund recognises a loss allowance for expected credit losses on investments in debt instruments that are
measured at amortised cost or at FVTOCI, lease receivables, trade receivables and contract assets, as well
as on financial guaranteed contracts. The amount of expected credit losses is updated at each reporting date
to reflect changes in credit risk since initial recognition of the respective financial instrument.
The Fund always recognises lifetime ECL for trade receivables, contract assets and lease receivables. The
expected credit losses on these financial assets are estimated using a provision matrix based on the Fund’s
historical credit loss experience, adjusted for factors that are specific to the debtors, general economic
conditions, and an assessment of both the current as well as the forecast direction of conditions at the reporting
date, including time value of money where appropriate.
For all other financial instruments, the Fund recognises lifetime ECL when there has been a significant increase
in credit risk since initial recognition. However, if the credit risk on the financial instrument has not increased
significantly since initial recognition, the Fund measures the loss allowance for that financial instrument at an
amount equal to 12
‑
month ECL.
Lifetime ECL represents the expected credit losses that will result from all possible default events over the
expected life of a financial instrument. In contrast, 12
‑
month ECL represents the portion of lifetime ECL that is
expected to result from default events on a financial instrument that are possible within 12 months after the
reporting date.
Significant increase in credit risk
In assessing whether the credit risk on a financial instrument has increased significantly since initial
recognition, the Fund compares the risk of a default occurring on the financial instrument at the reporting date
with the risk of a default occurring on the financial instrument at the date of initial recognition. In making this
assessment, the Fund considers both quantitative and qualitative information that is reasonable and
supportable, including historical experience and forward
‑
looking information that is available without undue
cost or effort. Forward
‑
looking information considered includes the future prospects of the industries in which
the Fund’s debtors operate, obtained from economic expert reports, financial analysts, governmental bodies,
relevant think
‑
tanks and other similar organisations, as well as consideration of various external sources of
actual and forecast economic information that relate to the Fund’s core operations.
In particular, the following information is considered when assessing whether credit risk has increased
significantly since initial recognition:
•
an actual or expected significant deterioration in the financial instrument’s external (if available) or
internal credit rating;
•
significant deterioration in external market indicators of credit risk for a particular financial instrument,
e.g. a significant increase in the credit spread, the credit default swap prices for the debtor, or the
length of time or the extent to which the fair value of a financial asset has been less than its amortised
cost;
•
existing or forecast adverse changes in business, financial or economic conditions that are expected
to cause a significant decrease in the debtor’s ability to meet its debt obligations;
•
an actual or expected significant deterioration in the operating results of the debtor;
•
significant increases in credit risk on other financial instruments of the same debtor;
•
an actual or expected significant adverse change in the regulatory, economic, or technological
environment of the debtor that results in a significant decrease in the debtor’s ability to meet its debt
obligations.
Irrespective of the outcome of the above assessment, the Fund presumes that the credit risk on a financial
asset has increased significantly since initial recognition when contractual payments are more than 30 days
past due, unless the Fund has reasonable and supportable information that demonstrates otherwise.
Despite the foregoing, the Fund assumes that the credit risk on a financial instrument has not increased
significantly since initial recognition if the financial instrument is determined to have low credit risk at the
reporting date.
76
A financial instrument is determined to have low credit risk if:
1.
the financial instrument has a low risk of default,
2.
the debtor has a strong capacity to meet its contractual cash flow obligations in the near term, and
3.
adverse changes in economic and business conditions in the longer term may, but will not
necessarily, reduce the ability of the borrower to fulfil its contractual cash flow obligations.
The Fund considers a financial asset to have low credit risk when the asset has external credit rating of
‘investment grade’ in accordance with the globally understood definition or if an external rating is not available,
the asset has an internal rating of
“
performing
”
. Performing means that the counterparty has a strong financial
position and there are no past due amounts.
For financial guaranteed contracts, the date that the Fund becomes a party to the irrevocable commitment is
considered to be the date of initial recognition for the purposes of assessing the financial instrument for
impairment. In assessing whether there has been a significant increase in the credit risk since initial recognition
of a financial guarantee contracts, the Fund considers the changes in the risk that the specified debtor will
default on the contract.
The Fund regularly monitors the effectiveness of the criteria used to identify whether there has been a
significant increase in credit risk and revises them as appropriate to ensure that the criteria are capable of
identifying significant increase in credit risk before the amount becomes past due.
Definition of default
The Fund considers the following as constituting an event of default for internal credit risk management
purposes as historical experience indicates that financial assets that meet either of the following criteria are
generally not recoverable:
•
when there is a breach of financial covenants by the debtor; or
•
information developed internally or obtained from external sources indicates that the debtor is
unlikely to pay its creditors, including the Fund, in full (without considering any collateral held by the
Fund).
Irrespective of the above analysis, the Fund considers that default has occurred when a financial asset is more
than 3 months past due unless the Fund has reasonable and supportable information to demonstrate that a
more lagging default criterion is more appropriate.
Credit
‑
impaired financial assets
A financial asset is credit
‑
impaired when one or more events that have a detrimental impact on the estimated
future cash flows of that financial asset have occurred. Evidence that a financial asset is credit
‑
impaired
includes observable data about the following events:
A.
significant financial difficulty of the issuer or the borrower;
B.
a breach of contract, such as a default or past due event (see above);
C.
the lender(s) of the borrower, for economic or contractual reasons relating to the borrower’s financial
difficulty, having granted to the borrower a concession(s) that the lender(s) would not otherwise
consider;
D.
it is becoming probable that the borrower will enter bankruptcy or undergo other forms of financial
reorganisation; or
E.
the disappearance of an active market for that financial asset because of financial difficulties.
Write-off policy
The Fund writes off a financial asset when there is information indicating that the debtor is in severe financial
difficulty and there is no realistic prospect of recovery, e.g. when the debtor has been placed under liquidation
or has entered into bankruptcy proceedings, or in the case of trade receivables, when the amounts are over
one year past due, whichever occurs sooner. Financial assets written off may still be subject to enforcement
activities under the Fund’s recovery procedures,
considering legal advice where appropriate. Any recoveries
made are recognised in profit or loss.
77
The measurement of expected credit losses is a function of the probability of default, loss given default (i.e.
the magnitude of the loss if there is a default) and the exposure at default. The assessment of the probability
of default and loss given default is based on historical data adjusted by forward
‑
looking information as
described above.
As for the exposure at default, for financial assets, this is represented by the assets’ gross carrying amount at
the reporting date; for financial guarantee contracts, the exposure includes the amount drawn down as at the
reporting date, together with any additional amounts expected to be drawn down in the future by default date
determined based on historical trend, the Fund’s understanding of the specific future financing needs of the
debtors, and other relevant forward
‑
looking information.
For financial assets, the expected credit loss is estimated as the difference between all contractual cash flows
that are due to the Fund in accordance with the contract and all the cash flows that the Fund expects to receive,
discounted at the original effective interest rate. For a lease receivable, the cash flows used for determining
the expected credit losses are consistent with the cash flows used in measuring the lease receivable in
accordance with IFRS 16.
For a financial guarantee contract, as the Fund is required to make payments only in the event of a default by
the debtor in accordance with the terms of the instrument that is guaranteed, the expected loss allowance is
the expected payments to reimburse the holder for a credit loss that it incurs less any amounts that the Fund
expects to receive from the holder, the debtor or any other party.
If the Fund has measured the loss allowance for a financial instrument at an amount equal to lifetime ECL in
the previous reporting period but determines at the current reporting date that the conditions for lifetime ECL
are no longer met, the Fund measures the loss allowance at an amount equal to 12
‑
month ECL at the current
reporting date, except for assets for which a simplified approach was used.
The Fund recognises an impairment gain or loss in profit or loss for all financial instruments with a
corresponding adjustment to their carrying amount through a loss allowance account, except for investments
in debt instruments that are measured at FVTOCI, for which the loss allowance is recognised in other
comprehensive income and accumulated in the revaluation reserve, and does not reduce the carrying amount
The Fund derecognises a financial asset only when the contractual rights to the cash flows from the asset
expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the
asset to another entity. If the Fund neither transfers nor retains substantially all the risks and rewards of
ownership and continues to control the transferred asset, the Fund recognises its retained interest in the asset
and an associated liability for amounts it may have to pay. If the Fund retains substantially all the risks and
rewards of ownership of a transferred financial asset, the Fund continues to recognise the financial asset and
also recognises a collateralised borrowing for the proceeds received.
On derecognition of a financial asset measured at amortised cost, the difference between the asset’s carrying
amount and the sum of the consideration received, and receivable is recognised in profit or loss. In addition,
on derecognition of an investment in a debt instrument classified as at FVTOCI, the cumulative gain or loss
previously accumulated in the revaluation reserve is reclassified to profit or loss. In contrast, on derecognition
of an investment in equity instrument which the Fund has elected on initial recognition to measure at FVTOCI,
the cumulative gain or loss previously accumulated in the revaluation reserve is not reclassified to profit or loss
78
13.8.3
Financial liabilities and equity
13.8.3.1 Classification as debt or equity
Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the
substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.
Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting
all of its liabilities. Equity instruments issued by the Fund are recognised at the proceeds received, net of direct
issue costs.
Repurchase of the Fund’s own equity investments is recognized and deducted directly in equity. No gain or
loss is recognized in profit or loss on the purchase, sale, issue or cancellation of the Fund’s own equity
instruments.
Compound instruments
The component parts of convertible bonds issued by the Fund are classified separately as financial liabilities
and equity in accordance with the substance of the contractual arrangements and the definitions of a financial
liability and an equity instrument. A conversion option that will be settled by the exchange of a fixed amount of
cash or another financial asset for a fixed number of the Fund
’s own equity instruments is an equity instrument.
At the date of issue, the fair value of the liability component is estimated using the prevailing market interest
rate for a similar non
‑
convertible instrument. This amount is recorded as a liability on an amortised cost basis
using the effective interest method until extinguished upon conversion or at the instrument’s maturity date.
The conversion option classified as equity is determined by deducting the amount of the liability component
from the fair value of the compound instrument as a whole. This is recognised and included in equity, net of
income tax effects, and is not subsequently remeasured. In addition, the conversion option classified as equity
will remain in equity until the conversion option is exercised, in which case, the balance recognised in equity
will be transferred to retained earnings. Where the conversion option remains unexercised at the maturity date
of the convertible bond, the balance recognised in equity will be transferred to retained earnings. No gain or
loss is recognised in profit or loss upon conversion or expiration of the conversion option.
Transaction costs that relate to the issue of the convertible bonds are allocated to the liability and equity
components in proportion to the allocation of the gross proceeds. Transaction costs relating to the equity
component are recognised directly in equity. Transaction costs relating to the liability component are included
in the carrying amount of the liability component and are amortised over the lives of the convertible bonds
using the effective interest method.
All financial liabilities are measured subsequently at amortised cost using the effective interest method or at
FVTPL.
However, financial liabilities that arise when a transfer of a financial asset does not qualify for derecognition or
when the continuing involvement approach applies, and financial guarantee contracts issued by the Fund, are
measured in accordance with the specific accounting policies set out below.
Financial liabilities are classified as at FVTPL when the financial liability is:
1.
contingent consideration of an acquirer in a business combination;
2.
held for trading; or
3.
it is designated as at FVTPL.
79
A financial liability is classified as held for trading if:
•
it has been acquired principally for the purpose of repurchasing it in the near term; or
•
on initial recognition it is part of a portfolio of identified financial instruments that the Fund manages
together and has a recent actual pattern of short
‑
term profit
‑
taking; or
•
it is a derivative financial instrument, except for a derivative financial instrument that is a financial
guarantee contract or a designated and effective hedging instrument.
A financial liability other than a financial liability held for trading or contingent consideration of an acquirer in a
business combination may be designated as at FVTPL upon initial recognition if:
•
such designation eliminates or significantly reduces a measurement or recognition inconsistency that
would otherwise arise; or
•
the financial liability forms part of a Fund of financial assets or financial liabilities or both, which is
managed,
and its performance is evaluated on a fair value basis, in accordance with the Fund’s
documented risk management or investment strategy, and information about the Grouping is
provided internally on that basis; or
•
it forms part of a contract containing one or more embedded derivative financial instruments, and
IFRS 9 permits the entire combined contract to be designated as at FVTPL.
net gain or loss recognised in profit or loss incorporates any interest paid on the financial liability and is included
in financial income or financial expenses.
However, for financial liabilities that are designated as at FVTPL, the amount of change in the fair value of the
financial liability that is attributable to changes in the credit risk of that liability is recognised in other
comprehensive income, unless t
he recognition of the effects of changes in the liability’s credit risk in other
comprehensive income would create or enlarge an accounting mismatch in profit or loss. The remaining
amount of change in the fair value of liability is recognised in profit or loss. Changes in fair value attributable
to a financial liability’s credit risk that are recognised in other comprehensive income are not subsequently
reclassified to profit or loss; instead, they are transferred to retained earnings upon derecognition of the
financial liability.
Financial liabilities measured subsequently at amortised cost
Financial liabilities that are not:
1.
contingent consideration of an acquirer in a business combination, or
2.
held
‑
for
‑
trading, or
3.
designated as at FVTPL
are measured subsequently at amortised cost using the effective interest method.
The effective interest method is a method of calculating the amortised cost of a financial liability and of
allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts
estimated future cash payments (including all fees and points paid or received that form an integral part of the
effective interest rate, transaction costs and other premiums or discounts) through the expected life of the
financial liability, or (where appropriate) a shorter period, to the amortised cost of a financial liability.
All the Fund’s liabilities are classified as financial liabilities measured subsequently at amortised cost, with the
exception of derivative financial instruments. Derivative financial instruments are classified as Financial
liabilities at FVTPL.
80
The Fund
derecognises financial liabilities when, and only when, the Fund’s obligations are discharged,
cancelled, or have expired. The difference between the carrying amount of the financial liability derecognised
and the consideration paid and payable is recognised in profit or loss.
When the Fund exchanges with the existing lender one debt instrument into another one with substantially
different terms, such exchange is accounted for as an extinguishment of the original financial liability and the
recognition of a new financial liability. Similarly, the Fund accounts for substantial modification of terms of an
existing liability or part of it as an extinguishment of the original financial liability and the recognition of a new
liability. It is assumed that the terms are substantially different if the discounted present value of the cash flows
under the new terms, including any fees paid net of any fees received and discounted using the original
effective rate is at least 10 per cent different from the discounted present value of the remaining cash flows of
the original financial liability.
If the modification is not substantial, the difference between:
1.
the carrying amount of the liability before the modification; and
2.
the present value of the cash flows after modification should be recognised in profit or loss as the
The Fund enters into a variety of derivative financial instruments to manage its exposure to interest rate and
foreign exchange rate risks, including foreign exchange forward contracts, options and interest rate swaps.
Derivative financial instruments are recognised initially at fair value at the date a derivative contract is entered
into and are subsequently remeasured to their fair value at each reporting date. The resulting gain or loss is
recognised in profit or loss immediately unless the derivative is designated and effective as a hedging
instrument, in which event the timing of the recognition in profit or loss depends on the nature of the hedge
relationship.
A derivative financial instrument with a positive fair value is recognised as a financial asset whereas a
derivative financial instrument with a negative fair value is recognised as a financial liability. Derivative financial
instruments are not offset in the Consolidated Financial Statements unless the Fund has both the legal right
and the intention to offset. A derivative financial instrument is presented as a non
‑
current asset or a non
‑
current
liability if the remaining maturity of the instrument is more than 12 months and it is not expected to be realised
or settled within 12 months.
INVESTMENT PROPERTY
13.9.1
General
Investment property comprises owned investment property, as well as right-of-use assets.
Investment property is property that is held to realise rental income or an increase in value, or both. The initial
recognition of investment property is at cost including related transaction costs. Additions to investment
property also includes letting fees. After initial recognition, investment property is carried at fair value, with an
adjustment for the carrying amount of lease incentives.
Right-of-
use assets are assets that represent a lessee’s right to use an underlying asset for the lease term.
For the accounting principles of right-of-use assets reference is made to section 13.38
“Leases”.
Lease incentives are initially and subsequently measured at historical cost. Lease incentives are allocated
proportionally to subsequent periods.
81
The time of accounting an investment property sale is based on an assessment of the time when control is
transferred. The Fund believes that control is transferred when the investment property is transferred to the
buyer and this party can therefore actually dispose of the investment property.
Measurement of fair value
Fair value is the price that would be received for an asset in an orderly transaction between market participants
at the measurement date and adjusted, if necessary, for differences in the nature, location, or condition of the
specific asset. If this information is not available, the Fund uses alternative valuation methods, such as recent
prices on less active markets or discounted cash flow or capitalisation projections. Valuations are performed
as at Statement of Financial Position
’s date
. External valuations are performed by an independent appraiser
with relevant recognised qualifications and recent experience with the location and the type of property. The
valuations have been made in accordance with the appropriate sections of the current RICS Valuation
Standards. The fair values are based on market values, being the estimated amount for which a property could
be exchanged on the date of valuation between a willing buyer and a willing seller in an arm’s length transaction
after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion.
Considering the type of investment property Level 3 fair value hierarchy is applied for all real estate assets in
the portfolio.
The valuations are made on the basis of the total of the net annual rents generated by the property and, where
relevant, the associated costs. The major sources of uncertainty in estimates are as follows:
A.
development of rents;
B.
capitalisation factor for transactions;
C.
fair rents per type of property;
D.
property prices;
E.
vacancy;
F.
remaining period of non-cancellable rental contracts.
Three standard methods of valuation computation are considered, namely:
I.
term and reversion method;
II.
hard core and top-slice method;
III.
initial yield method.
I.
Term and reversion method
The term and reversion method involves the following: net income up to the end of the contract term and the
market-based net income over the following at least ten years are discounted back to the valuation date
(“term”). For the time after this period, the stabilised net rental income is capitalised at the market interest rate
and also discounted back to the valuation date to determine the perpetual yield (“reversion”). Depending on
the estimates of risk - which are based on the type of property, location and region as well as current market
circumstances - different discount rates are applied to the current rental income and the capitalisation of the
perpetual yield. The assumptions underlying the valuation, e.g. for risk, void periods, vacancies or
maintenance costs and capex are based on estimates by relevant market players, on derived data or the
appraisers’ experience. Capital expense (
CAPEX
) is expenditure in the foreseeable future which falls outside
the scope of the normal annual maintenance programme.
II.
Hard core and top-slice method
The hard core and top-slice method is similar to the logic behind the term and reversion model. Net income
generated by the property - up to the market rent (hard core component) - is capitalised at a normal market
interest rate as a perpetual yield over the entire term (term of the rental contract plus subsequent rental). The
top-slice component (the net income for this same term that exceeds the market rent) is then discounted at a
risk-adjusted market interest rate. The amount of the risk premium is dependent on the probability of vacancy.
82
III.
Initial yield method
The initial yield method applies a single all risks yield at the date of valuation, i.e. net income / gross purchase
price.
For all investment property that is measured at fair value, the current use of the property is its highest and best
use. In these Financial Statements all properties were externally valued using the
“h
ard core and top-slice
method
”
. In order to arrive at the valuation of the property, the annual net rents are capitalized using a yield
13.9.3
Analysis of assumptions and input parameters used in the valuations per property category
The fair value is the outcome of the (theoretical) rent divided by the net initial yield (expressed as a percentage)
of the investment property. The yields applied are specific to the type of property, location, maintenance
condition and letting potential of each asset. The yields are determined based on comparable transactions, as
well as on market and asset-specific knowledge.
The most important assumptions and input parameters used in the valuations are set out in the tables below.
2024 |
2023 |
||
No. |
Property category |
Yield factor 5 |
Yield factor |
in % |
in % |
||
A |
Office B + -class |
6.01 - 9.50 |
6.01 - 9.27 |
B |
Office B – -class |
N.a. |
7.50 - 9.75 |
C |
Office / business B / C-class |
N.a. |
N.a. |
D |
Retail B-class 6 |
N.a. |
7.35 - 9.25 |
2024 |
2023 |
||
Market rent |
Market rent |
||
No. |
Property category |
per sqm |
per sqm |
in € |
i n € |
||
A |
Office B + -class |
132 - 208 |
113 - 189 |
B |
Office B – -class |
N.a. |
116 - 126 |
C |
Office / business B / C-class |
N.a. |
N.a. |
D |
Retail B-class |
92 - 154 |
92 - 162 |
2024 |
2023 |
||
No. |
Property category |
Vacancy |
Vacancy |
in % |
in % |
||
A |
Office B + -class |
0.0 - 27.1 |
0.0 - 23.9 |
B |
Office B – -class |
N.a. |
8.2 - 37.5 |
C |
Office / business B / C-class |
N.a. |
N.a. |
D |
Retail B-class |
0.0 - 22.9 |
0.0 - 54.8 |
5
The yield factors 2023 and 2024 corresponds with the equivalent yield specifications of the external independent appraiser.
6
Higher yields are related to the leasehold retail assets.
83
Where necessary the following aspects are reflected in the valuation:
•
the type of tenant that uses the property or that is responsible for fulfilling the rental obligations, or
the type of tenant that is likely to use the property after vacancy, and the general expectation with
regard to their creditworthiness;
•
void periods, vacancies, and maintenance costs, which are based on estimates by relevant market
players, on derived data or the appraisers’ experience;
•
the residual economic life of the property. Standard and infinite economic life is assumed;
•
it is assumed that in the case of rent adjustment or extension of the lease, in the case of which a rent
increase is expected, all notifications, and where necessary notices to the contrary, meet all legal
requirements and have been sent in good time.
Profits or losses arising from changes in the fair value are recognised in the Income Statement. In determining
the property fair value capitalized lease incentives are reflected in the valuation results, to avoid double
counting
.
On valuation date, the ongoing situation in Ukraine continues to create significant uncertainty in property
valuations, particularly due to the persistent military conflict and the scarcity of relevant or sufficient market
evidence for valuers to base their judgments on. In accordance with VPS 3 and VPGA 10 of the RICS Valuation
–
Global Standards, valuations are reported with material valuation uncertainty, meaning less certainty and a
higher degree of caution should be attached to the reported values. Market instability and potential further
developments in the conflict could lead to rapid changes in property values, necessitating frequent reviews.
As of April 30, 2025, the Managing Board does not anticipate any direct adverse impacts from developments
in Ukraine on the Fund’s remaining real estate portfolio in Central Europe.
With the exception of Ukraine the
Fund operates in countries that are NATO members, and while geopolitical tensions remain heightened, the
likelihood of military escalation into NATO territories remains low, given the potential for immediate collective
defence measures. The Fund continues to monitor macroeconomic conditions and market stability in its
INVESTMENT PROPERTY UNDER DEVELOPMENT
Property currently under construction or development for future use as investment property is classified as
investment property under development. Such property is measured at fair value when its fair value can be
reliably determined. If the fair value of investment property under development cannot reliably be determined
but is expected to be reliably determinable upon completion of construction, it is measured at cost less
impairment until the fair value can be reliably determined or construction is completed - whichever occurs first.
Determining the fair value of the investment property under development can sometimes present challenges.
To assess this, the Managing Board considers various factors, including, but not limited to:
•
provisions of the construction contract;
•
stage of completion;
•
whether the project / property is standard (typical for the market) or non-standard;
•
reliability of expected cash inflows after completion;
•
specific development risks associated with the property;
•
experience with similar constructions;
•
status of construction permits.
Costs include the material and labour for the construction, costs of staff related to technical supervision, project
management on the basis of time spent and finance costs. The finance cost refers to the capitalized interest
charged up until the delivery date. This interest is allocated to development projects based on either a specific
project's financing rate or, in cases where no specific project financing exists, it is determined by the Fund's
average effective rate. Interest charges include interest, and all costs associated with the Fund.
Capitalised interest will cease when substantially all the activities necessary to prepare the investment property
under development for its intended use or sale are completed.
84
The fair value of investment property under development is determined in a manner consistent with that of
investment property, with the understanding that the capitalisation factor is adjusted to reflect development
risks.
Changes in fair value and impairment losses are recognised in the Income Statement as valuation result.
INVESTMENTS IN ASSOCIATES
An associate is an entity over which the Fund has significant influence.
Significant influence is the power to participate in the financial and operating policy decisions of the investee
but is not control or joint control of those policies. If the Fund holds, directly or indirectly (e.g. through
subsidiaries), 20 percent or more of the voting power of the investee, it is presumed that the Fund has
significant influence, unless it can be clearly demonstrated that this is not the case. Conversely, if the Fund
holds, directly or indirectly (e.g. through subsidiaries), less than 20 percent of the voting power of the investee,
it is presumed that the Fund does not have significant influence, unless such influence can be clearly
demonstrated. A substantial or majority ownership by another investor does not necessarily preclude the Fund
from having significant influence.
The existence of significant influence by the Fund is usually evidenced in one or more in the following ways:
A.
representation on the board of directors or equivalent governing body of the investee;
B.
participation in policy-making processes, including participation in decisions about dividends or other
distributions;
C.
material transactions between the Fund and its investee;
D.
interchange of managerial personnel; or
E.
provision of essential technical information.
The Fund may own share warrants, share call options, debt or equity instruments that are convertible into
ordinary shares, or other similar instruments that have the potential, if exercised or converted, to give the Fund
additional voting power or to reduc
e another party’s voting power over the financial and operating policies of
another entity (i.e. potential voting rights). The existence and effect of potential voting rights that are currently
exercisable or convertible, including potential voting rights held by other entities, are considered when
assessing whether the Fund has significant influence. Potential voting rights are not currently exercisable or
convertible when, for example, they cannot be exercised or converted until a future date or until the occurrence
of a future event.
In assessing whether potential voting rights contribute to significant influence, the Fund examines all facts and
circumstances (including the terms of exercise of the potential voting rights and any other contractual
arrangements whether considered individually or in combination) that affect potential rights, except the
intentions of Managing Board and the financial ability to exercise or convert those potential rights.
The Fund loses significant influence over an investee when it loses the power to participate in the financial
and operating policy decisions of that investee. The loss of significant influence can occur with or without a
change in absolute or relative ownership levels. It could occur, for example, when an associate becomes
subject to the control of a government, court, administrator, or regulator. It could also occur as a result of a
contractual arrangement.
Usually, investments in associates are valued using the equity method. Since the investments in associates
are held by, or are
held indirectly through a “mutual fund” the Fund elect
s to measure the investments in
associates at fair value through profit or loss in accordance with IFRS 9 (IAS 28:18). Therefore, investments
in associates are initially and subsequently recognised at fair value, with transaction costs recognised in the
85
DERIVATIVE FINANCIAL INSTRUMENTS
For the accounting principles with regard to derivative financial instruments (assets and liabilities) reference is
made to section 13.9
13.13
DEFERRED TAX ASSETS
For the accounting principles with regard to deferred tax assets reference is made to section 13.41
“Income
tax expense”.
13.14
TAX ASSETS
Tax assets comprise the expected tax receivable on the taxable amounts and any adjustments to the tax
receivable in respect of previous years. The amount of the tax receivable is the best estimate of the tax amount
expected to be received, reflecting uncertainty related to taxes.
TRADE AND OTHER RECEIVABLES
Trade and other receivables (without a significant financing component) are initially measured at the
transaction price and subsequently measured at amortised cost using the effective interest method, less
13.16
PREPAYMENTS AND DEFERRED EXPENSES
Prepayments and deferred expenses are initially and subsequently measured at historical cost. Prepayments
and deferred expenses are allocated proportionally to subsequent periods.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist of cash and cash held in bank accounts. Time deposits are only included
in cash and cash equivalents if the expectation is that they will be used to fund working capital within a period
of three months or less from the date of acquisition. Cash and cash equivalents meet the definition given by
IFRS 9, i.e., short-term, highly-liquid investments that are readily convertible to known amounts of cash and
subject to an insignificant risk of changes in value.
Cash and cash equivalents are recognised and measured at fair value through profit or loss in accordance
with IFRS 9, as described in section 13.8
“Financial instruments”.
In the Consolidated Statement of Cash Flows, bank overdrafts at call, which are an integral part of the Fund's
86
ASSETS HELD FOR SALE
13.18.1 General
Non-current assets or disposal groups comprising assets and liabilities are classified as held for sale if it is
highly probable that they will be recovered primarily through sale rather than through continuing use. This only
applies if the asset or disposal group is available for immediate sale in its present condition. Furthermore, the
sale must be highly probable, the Managing Board must be committed to a plan to sell the asset or disposal
group and an active programme to locate a buyer must have been initiated. It is expected the sale will
principally be completed within one year from the date of classification.
13.18.2
Measurement of fair value
Assets or disposal groups held for sale are generally measured at the lower of their carrying amount and fair
value less cost of disposal, except for investment property. Investment property held for sale and right-of-use
assets held for sale are measured in accordance with section 13.9
“
Investment property
”. Any impairment loss
on a disposal group is allocated to the remaining assets and liabilities on a pro rata basis, except that no loss
is allocated to financial assets, deferred tax assets or investment property, which continue to be measured in
accordance with the
Fund’s
regular accounting policies. Impairment losses on initial classification as held for
sale or held for distribution and subsequent gains and losses on re-measurement are recognised in the Income
Statement.
Once classified as held for sale, intangible assets and property, plant and equipment are no longer amortised
GROUP EQUITY
For the accounting principles of the several
shareholders’
equity components reference is made to sections
18.3.4
“
Issued capital
”
to 18.3.8
“
Legal reserve investments in group companies
”
13.20
TAX LIABILITIES
Tax liabilities comprise the expected tax payable on the taxable amounts and any adjustments to the tax
payable in respect of previous years. The amount of the tax payable is the best estimate of the tax amount
expected to be paid, reflecting uncertainty related to taxes.
LOANS AND BORROWINGS
Loans and borrowings are recognised initially at fair value, net of transaction costs incurred and subsequently
measured at amortised cost, with any difference between cost and the redemption amount being stated in the
TRADE AND OTHER PAYABLES
Trade and other payables are recognised initially at fair value and subsequently measured at amortised cost
87
13.23
DEFERRED INCOME AND TENANT DEPOSITS
Deferred income and tenant deposits are initially and subsequently measured at historical cost. Deferred
income is allocated proportionally to subsequent periods. Tenant deposits are recognised at their received
amounts.
13.24
DEFERRED TAX LIABILITIES
For the accounting principles with regard to the deferred tax liabilities reference is made to section 13.41
“Income tax expense”.
PROVISIONS
A provision is a liability of uncertain timing or amount.
A provision shall be recognised when:
•
the Fund has a present obligation (legal or constructive) as a result of a past event;
•
it is probable that an outflow of resources embodying economic benefits will be required to settle the
obligation; and
•
a reliable estimate can be made of the amount of the obligation.
If these conditions are not met, no provision shall be recognised.
A provision is measured at the best estimate of the expenditure required to settle the present obligation at the
end of the reporting period and is discounted if the effect of discounting is material. Future events that may
affect the amount required to settle an obligation shall be reflected in the amount of a provision where there is
sufficient objective evidence that they will occur.
The best estimate of the expenditure required to settle the present obligation is the amount that the Fund would
rationally pay to settle the obligation at the end of the reporting period or to transfer it to a third party at that
time. It will often be impossible or prohibitively expensive to settle or transfer an obligation at the end of the
reporting period. However, the estimate of the amount that the Fund would rationally pay to settle or transfer
the obligation gives the best estimate of the expenditure required to settle the present obligation at the end of
13.26
LIABILITIES DIRECTLY ASSOCIATED WITH ASSETS HELD FOR SALE
For the accounting principles with regard to the liabilities directly associated with assets held for sale reference
is made to section 13.18
“
Assets held for sale
”.
GROSS RENTAL INCOME
Gross rental income from investment property is stated in the Income Statement excluding value added tax
(VAT), on the basis of the period of the lease. If the investment property has been acquired during the financial
period, the rental income is accounted as of the date of acquisition by the Fund. If office or other equipment is
leased together with the premises, this is included in the rental income.
Rent adjustments due to indexation are recognised as they arise.
Rent-free periods and investments made, or allowances granted to tenants by the Fund (lease incentives) are
allocated on a linear basis over the lease term. The lease term consists of the period until the first break option
88
for the tenants, which period can be extended by the Managing Board with the expected prolongation of the
leases.
Revenue received from tenants for early termination of leases is directly recognised in the Income Statement
as it arises.
13.28
SERVICE CHARGE INCOME AND SERVICE CHARGE EXPENSES
The Fund is acting as principal for service charge income. Service charge income corresponds to service
charges invoiced to tenants and is presented separately in the Income Statement. Service charge income is
recorded as income in the period in which it is earned.
Service charge expenses cover the costs of services such as general maintenance and repairs, security,
heating, cooling, lighting and cleaning of common areas. Service charge expenses are recognised in the
13.29
PROPERTY OPERATING EXPENSES
Property operating expenses consist mainly of maintenance costs, property taxes, insurance premiums and
management and collection costs. Service charges are stated separately in the Income Statement. If the
investment property has been acquired during the financial period, the direct operating expenses are
accounted for from the date of acquisition by the Fund.
13.30
VALUATION RESULTS OF PROPERTIES
The valuation results of properties (inventories excluded) relate to unrealised changes in the fair value of
properties compared to the fair value as at 31 December of the preceding financial period. In case (part of) a
property is sold the valuation result of properties also includes the reversal of the unrealised changes in the
fair value from prior years (reference is made to section 13.31
“Result on disposals of properties”)
.
RESULT ON DISPOSALS OF PROPERTIES
The result on disposals of properties comprises realised result on disposals of properties (inventories
excluded). This result is calculated by the difference between the selling price less the original purchase price.
Therefore, the result on disposals of properties comprise the valuation result of properties in the current year
(REVERSAL OF) IMPAIRMENT ALLOWANCE OF INVENTORIES
The (reversal of) impairment allowance of inventories relate to (reversal of) impairment changes of the
13.33
RESULT ON DISPOSALS OF INVENTORIES
The result on disposals of inventories relates to realised result on disposals of inventories. This result is
calculated by the difference between the selling price less valuation as at 31 December of the preceding
financial period.
89
13.34
SHARE IN RESULTS OF INVESTMENTS IN ASSOCIATES
The share in results of investments in associates relates to its share in the unrealised changes in the fair value
of investments in associates compared to its share in the fair value as at 31 December of the preceding
financial period, as well as the dividends the Fund is entitled to during the financial period. In case (part of) an
investment in an associate is sold the share in results of investments in associates also includes the reversal
of the unrealised changes in the fair value from prior years (reference is made to
section 13.35 “Result on
disposals of investments in associates”).
13.35
RESULT ON DISPOSALS OF INVESTMENTS IN ASSOCIATES
The result on disposals of investments in associates relates to the realised result on disposals of investments
in associates. This result is calculated by the difference between the selling price less the original purchase
price. Therefore the result on disposals of investments in associates comprises the valuation result of
investments in associates in the current year as well as the unrealised valuation result of investments in
associates booked in prior years.
FINANCIAL INCOME
Interest income on funds invested is recognised in the Income Statement as it accrues.
Given the nature of the Fund (investment company) financial income is not netted against finance charges,
but presented separately under the total income, except:
•
foreign exchange and currency results;
•
change in fair value of derivative financial instruments;
•
interest income / interest expense on derivative financial instruments; and
•
interest income / interest expense of Tax Authorities.
Financial income arises principally from the investments held in order to be used for investment in property.
Financial income also includes the exchange and currency translation profits that arise principally from the
settlement of monetary items or from the translation of monetary items in foreign currency.
13.37
OTHER OPERATING INCOME
Other operating income is recognised in the Income Statement when it is probable that the economic benefits
will flow into the Fund and the (net) revenues can be measured reliably.
Other operating income also includes penalties for early termination of rental contracts. Tenants who terminate
leases prior to the contractual expiration date are liable to pay early termination penalties, which are credited
to income for the period in which they are recognised.
LEASES
At inception of a contract, the Fund 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 Fund uses the definition of a lease in IFRS 16.
90
13.38.1
The Fund as a lessee
At commencement or on modification of a contract that contains a lease component, the Fund allocates the
consideration in the contract to each lease component on the basis of its relative stand-alone prices. However,
for the leases of property the Fund has elected not to separate non-lease components and account for the
lease and non-lease components as a single lease component.
The Fund recognises 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, less any lease incentives received.
The right-of-use asset is subsequently measured at cost (subject to certain exceptions), less accumulated
depreciation and impairment losses or, if it relates to investment property the right-of-use will be valued at fair
value in line with IAS 40. The right-of-use will additionally be adjusted for any remeasurement of the lease
liability, when applicable.
The lease liability is initially measured at the present value of the lease payments that are not paid at the
commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily
determined, the Fund
’s incremental borrowing rate.
The Fund uses its incremental borrowing rate as the
discount rate.
The Fund 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 type of the 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 at the commencement date;
•
amounts expected to be payable under a residual value guarantee; and
•
the exercise price under a purchase option that the Fund is reasonably certain to exercise, lease
payments in an optional renewal period if the Fund is reasonably certain to exercise an extension
option, and penalties for early termination of a lease unless the Fund is reasonably certain not to
terminate early.
The lease liability is subsequently increased by the interest cost on the lease liability and decreased by lease
payments made. It is remeasured when there is a change in future lease payments arising from a change in
an index or rate, a change in the estimate of the amount expected to be payable under a residual value
guarantee, or as appropriate, changes in the assessment of whether a purchase or extension option is
reasonably certain to be exercised or a termination option is reasonably certain not to be exercised.
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 is recorded in profit or loss if the carrying amount of the right-of-use asset has been
reduced to zero.
13.38.2
Short-term leases and low value assets
The Fund has elected not to recognise right-of-use assets and lease liabilities for leases of low-value assets
(USD 5,000 or less) and short-term leases. The Fund recognises the lease payments associated with these
leases as an expense on a straight-line basis over the lease term.
13.38.3
The Fund as a lessor
At inception or on modification of a contract that contains a lease component, the Fund allocates the
consideration in the contract to each lease component on the basis of their relative stand-alone prices.
When the Fund acts as a lessor, it determines at lease inception whether each lease is a finance lease or an
operating lease.
91
To classify each lease, the Fund 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, then the lease is a
finance lease; if not, then it is an operating lease. As part of this assessment, the Fund considers certain
indicators such as whether the lease is for a major part of the economic life of the asset.
When the Fund is an intermediate lessor, it accounts for its interests in the head lease and the sub-lease
separately. It assesses the lease classification of a sub-lease with reference to the right-of-use asset arising
from the head lease, not with reference to the underlying asset. If a head lease is a short-term lease to which
the Fund applies the exemption described above, then it classifies the sub-lease as an operating lease.
If an arrangement contains lease and non-lease components, then the Fund applies IFRS 15 to allocate the
consideration in the contract.
The Fund applies the derecognition and impairment requirements in IFRS 9 to the net investment in the lease.
The Fund further regularly reviews estimated unguaranteed residual values used in calculating the gross
investment in the lease.
The Fund recognises lease payments received under operating leases as income on a straight-line basis over
the lease term as part of other operating income.
Generally, the accounting policies applicable to the Fund as a lessor in the comparative period did not differ
ADMINISTRATIVE EXPENSES AND OTHER OPERATING EXPENSES
Administrative expenses and other operating expenses are recognised in the Income Statement. Expenses
FINANCIAL EXPENSES
Financial expenses comprise the interest expense on funds taken up, calculated using the effective interest
method, exchange, and currency translation losses, which arise principally from the settlement of monetary
items, or in the translation of monetary items in foreign currency.
Financial expenses also include the negative changes in fair value of derivative financial instruments.
Interest expense is recognised in the Income Statement as it accrues, by means of the effective interest rate
INCOME TAX EXPENSE
13.41.1
Income tax expense
The income tax expense for the financial period comprises current and deferred tax. It is recognised in Income
Statement except to the extent that it relates to a business combination, or items recognised in equity or in
other comprehensive income.
The Fund has determined that the global minimum top-up-tax - which is required to be paid under Pillar Two
legislation - is an income tax. The Fund has applied a temporary mandatory relief from deferred tax accounting
for the impacts of the top-up tax and accounts for it as a current tax when it is incurred.
92
13.41.2 Current tax
The current tax comprises the expected tax payable or receivable on the taxable statement of income for the
financial period and any adjustments to the tax payable or receivable in respect of previous years. The amount
of current tax payable or receivable is the best estimate of the tax amount expected to be paid or received that
reflects uncertainty related to income taxes, if any. It is measured using tax rates enacted or substantively
enacted as at Statement of Financial Position
’s date
. Current tax also includes any tax arising from dividends.
Tax assets and liabilities are offset only if certain criteria are met.
Deferred tax is recognised in respect of taxable and / or deductible temporary differences between the carrying
amounts of assets and liabilities for financial reporting purposes and the amounts used for tax purposes.
Deferred tax is not recognised for:
•
taxable and / or deductible temporary differences on the initial recognition of assets or liabilities in a
transaction which:
o
is not a business combination; and
o
at the time of the transaction,
affects neither accounting nor taxable profit or loss (“Initial
Recognition Exception”);
and
o
at the time of the transaction, does not give rise to equal taxable and deductible temporary
differences.
•
taxable and / or deductible temporary differences related to investments in subsidiaries, associates
and joint arrangements to the extent that the Fund is able to control the timing of the reversal of the
taxable temporary differences and it is probable that they will not reverse in the foreseeable future;
•
taxable and / or deductible temporary differences arising on the initial recognition of goodwill.
Deferred tax assets are recognised for unused tax losses, unused tax credits and deductible temporary
differences to the extent that it is probable that future taxable profits will be available against which they can
be used. Future taxable profits are determined based on the reversal of relevant taxable temporary differences.
If the amount of taxable temporary differences is insufficient to recognise a deferred tax asset in full, then
future taxable profits, adjusted for reversals of existing temporary differences, are considered, based on the
business plans for individual subsidiaries in the Fund. Deferred tax assets are reviewed at each Statement of
Financial Position
’s date
and are reduced to the extent that it is no longer probable that the related tax benefit
will be realised; such reductions are reversed when the probability of future taxable profits improves.
Unrecognised deferred tax assets are reassessed at each Statement of Financial Position
’s date
and
recognised to the extent that it has become probable that future taxable profits will be available against which
they can be used.
Deferred tax is measured at the tax rates that are expected to be applied to taxable temporary differences
when they reverse, using tax rates enacted or substantively enacted at the Statement of Financial Position
’s
date.
The measurement of deferred tax reflects the tax consequences that would follow from the manner in which
the Fund expects, at Statement of Financial Position
’s date, to recover or settle the carrying amount of its
assets and liabilities. For this purpose, the carrying amount of properties measured at fair value is presumed
to be recovered through sale, and the Fund has not rebutted this presumption.
Deferred tax assets and deferred tax liabilities are not discounted.
Deferred tax assets and liabilities are offset in case the Fund or its subsidiaries has a legally enforceable right
to set-off tax assets against tax liabilities and the deferred tax assets and the deferred tax liabilities relate to
93
SEGMENT
INFORMATION
14.1
GENERAL
•
that engages in business activities from which it may earn revenues and incur expenses (including
revenues and expenses related to transactions with other components of the Fund);
•
whose operating results are used by the fund manager to make decisions about resources to be
allocated to the segment and to regularly review and assess its performance; and for which discrete
financial information is available.
Given the Fund’s management decision
-making structure and internal reporting structure each property is
indicated as an operating segment. The properties held during the financial period (current period and / or
previous period), as mentioned in section 14.5.1
“
Overview of segment result (Overview A)
”,
are taken into
account in the segment reporting overviews.
The following segment reporting overviews are given for each property:
A.
o
verview of segment result (net operating income), apportioned to the Fund’s geographic categories;
B.
overview
carrying amount of type of property, apportioned to the Fund’s
business categories;
C.
o
verview of assets apportioned to the Fund’s geographic categories
.
Since each separate property is indicated as an operating segment, most of the Fund’s assets
cannot be
allocated to the operating segments. Therefore, only the carrying amount of each property is reported as a
segment asset. For an overview of the carrying amount of each property reference is made to section 14.5.3
“
Specification carrying amount of each property per business category (overview B)
14.2
GEOGRAPHIC CATEGORIES
The Fund distinguishes the following geographic categories:
A.
Czechia;
B.
Slovakia;
C.
Poland;
D.
Ukraine;
E.
Romania;
F.
The Netherlands;
G.
Other countries.
14.3
BUSINESS CATEGORIES
The Fund distinguishes the following business categories:
A.
Office;
B.
Retail;
C.
Residential;
D.
Land.
94
14.4
SEGMENTATION CRITERIA
•
if the assets in an individual foreign country represent more than 1% of the total assets as at
Statement of Financial Position
’
s date, these assets shall be disclosed separately. If those assets
represent less than 1% of the total assets as at Statement of Financial Position
’s date,
these items
will be allocated as other countries
. The assets located in the Fund’s country o
f domicile are
disclosed separately, also in case these assets are less than 1% of the total assets;
•
the allocation of the property is based on the geographic location of the premises;
•
the allocation of deferred tax assets is based on the geographic location of the company which
generated the deferred tax assets;
•
the allocation of investments in associates and other equity investments is based on the business
location of the company the Fund invests in;
•
the allocation of other assets (tax assets, trade and other receivables, prepayments and deferred
expenses and cash and cash equivalents) is based on the geographic location of the debtor and / or
contracting party.
The allocation of segment results to the several geographic categories is based on the geographic location of
95
14.5
SEGMENT RESULTS
14.5.1
Overview of segment result (overview A)
Property | Subtotal net | |||||||||
Gross | Service | Service | operating | rental & | ||||||
Segment | rental income | charge income | charge expenses | expenses | related income | |||||
2024 | 2023 | 2024 | 2023 | 2024 | 2023 | 2024 | 2023 | 2024 | 2023 | |
| in € 1,000 | in € 1,000 | in € 1,000 | in € 1,000 | in € 1,000 | ||||||
Czechia: | ||||||||||
Palmovka | 288 | 326 | 149 | 157 | -/- 108 | -/- 108 | -/- 103 | -/- 77 | 226 | 298 |
Karlin | 289 | 568 | 130 | 248 | -/- 95 | -/- 190 | -/- 62 | -/- 130 | 262 | 496 |
Newton House | 340 | 348 | 151 | 161 | -/- 125 | -/- 136 | -/- 108 | -/- 98 | 258 | 275 |
Total Czechia | 917 | 1,242 | 430 | 566 | -/- 328 | -/- 434 | -/- 273 | -/- 305 | 746 | 1,069 |
Slovakia: | ||||||||||
Záhradn í cka | 191 | 352 | 7 | 12 | -/- 45 | -/- 111 | -/- 96 | -/- 142 | 57 | 111 |
Letná | 1,377 | 1,229 | 23 | 25 | -/- 238 | -/- 233 | -/- 427 | -/- 391 | 735 | 630 |
Total Slovakia | 1,568 | 1,581 | 30 | 37 | -/- 283 | -/- 344 | -/- 523 | -/- 533 | 792 | 741 |
Poland: | ||||||||||
Laubitza 8 | 218 | 145 | 101 | 66 | -/- 91 | -/- 83 | -/- 77 | -/- 93 | 151 | 35 |
800-lecia Inowroclawia | 199 | 196 | 174 | 167 | -/- 185 | -/- 181 | -/- 101 | -/- 91 | 87 | 91 |
Krzemowa | 305 | 294 | 239 | 215 | -/- 171 | -/- 159 | -/- 94 | -/- 94 | 279 | 256 |
Plutona | 176 | 167 | 67 | 62 | -/- 95 | -/- 87 | -/- 48 | -/- 48 | 100 | 94 |
Kalinkowa | 328 | 294 | 252 | 224 | -/- 232 | -/- 214 | -/- 96 | -/- 91 | 252 | 213 |
Wojska Polskiego | 321 | 306 | 263 | 262 | -/- 204 | -/- 213 | -/- 99 | -/- 95 | 281 | 260 |
Wolnosci | 86 | 69 | 82 | 54 | -/- 110 | -/- 113 | -/- 65 | -/- 64 | -/- 7 | -/- 54 |
Grzymaly Siedleckiego | 251 | 246 | 155 | 135 | -/- 148 | -/- 129 | -/- 32 | -/- 30 | 226 | 222 |
Kardyn. Wyszynskiego | 191 | 193 | 131 | 137 | -/- 142 | -/- 133 | -/- 49 | -/- 49 | 131 | 148 |
Legionow | 381 | 372 | 223 | 255 | -/- 207 | -/- 208 | -/- 63 | -/- 68 | 334 | 351 |
Maris | 603 | 764 | 348 | 328 | -/- 410 | -/- 364 | -/- 163 | -/- 140 | 378 | 588 |
Total Poland | 3,059 | 3,046 | 2,035 | 1,905 | -/- 1,995 | -/- 1,884 | -/- 887 | -/- 863 | 2,212 | 2,204 |
Ukraine: | ||||||||||
Aisi Bela | - | - | - | - | - | - | -/- 15 | -/- 15 | -/- 15 | -/- 15 |
Kiyanovskiy Residence | - | N.a. | - | N.a. | - | N.a. | - | N.a. | - | N.a. |
Total Ukraine | - | - | - | - | - | -/- 15 | -/- 15 | -/- 15 | -/- 15 | |
Bulgaria: | ||||||||||
Boyana | N.a. | - | N.a. | - | N.a. | - | N.a. | -/- 11 | N.a. | -/- 11 |
Inventories | - | - | - | - | -/- 4 | -/- 6 | -/- 11 | -/- 41 | -/- 15 | -/- 47 |
Total Bulgaria | - | - | - | - | -/- 4 | -/- 6 | -/- 11 | -/- 52 | -/- 15 | -/- 58 |
Romania: | ||||||||||
EOS Business Park | 790 | 707 | - | - | - | - | -/- 98 | -/- 66 | 692 | 641 |
Lelar (Delenco) | N.a. | N.a. | N.a. | N.a. | N.a. | N.a. | N.a. | N.a. | N.a. | N.a. |
Total Romania | 790 | 707 | - | - | - | - | -/- 98 | -/- 66 | 692 | 641 |
Grand total | 6,334 | 6,576 | 2,495 | 2,508 | -/- 2,610 | -/- 2,668 | -/- 1,807 | -/- 1,834 | 4,412 | 4,582 |
Net result on | Financial | ||||||||||
Subtotal net | properties and | expenses / other | |||||||||
rental & | equity | Other operating | operating | Total segment | |||||||
Segment | related income | investments | income 7 | expenses 8 | result | ||||||
2024 | 2023 | 2024 | 2023 | 2024 | 2023 | 2024 | 2023 | 2024 | 2023 | ||
in € 1,000 | in € 1,000 | in € 1,000 | in € 1,000 | in € 1,000 | |||||||
Czechia: | |||||||||||
Palmovka | 226 | 298 | 55 | 550 | 3 | - | - | - | 284 | 848 | |
Karlin | 262 | 496 | 70 | 106 | 1 | - | - | - | 333 | 602 | |
Newton House | 258 | 275 | 332 | -/- 256 | 1 | - | - | - | 591 | 19 | |
Total Czechia | 746 | 1,069 | 457 | 400 | 5 | - | - | - | 1,208 | 1,469 | |
Slovakia: | |||||||||||
Záhradn í cka | 57 | 111 | -/- 137 | 45 | - | - | - | - | -/- 80 | 156 | |
Letná | 735 | 630 | -/- 984 | -/- 60 | - | - | - | - | -/- 249 | 570 | |
Total Slovakia | 792 | 741 | -/- 1,121 | -/- 15 | - | - | - | - | -/- 329 | 726 | |
Poland: | |||||||||||
Laubitza 8 | 151 | 35 | -/- 31 | 203 | - | - | - | - | 120 | 238 | |
800-lecia Inowroclawia | 87 | 91 | -/- 80 | -/- 64 | - | - | - | - | 7 | 27 | |
Krzemowa | 279 | 256 | 61 | -/- 10 | - | - | - | - | 340 | 246 | |
Plutona | 100 | 94 | -/- 20 | 40 | - | - | - | - | 80 | 134 | |
Kalinkowa | 252 | 213 | 59 | 66 | - | - | - | - | 311 | 279 | |
Wojska Polskiego | 281 | 260 | -/- 93 | 9 | - | - | - | - | 188 | 269 | |
Wolnosci | -/- 7 | -/- 54 | 380 | -/- 151 | - | - | - | - | 373 | -/- 205 | |
Grzymaly Siedleckiego | 226 | 222 | -/- 35 | -/- 108 | - | - | 3 | 6 | 188 | 108 | |
Kardyn. Wyszynskiego | 131 | 148 | -/- 381 | -/- 26 | - | - | 24 | 24 | -/- 274 | 98 | |
Legionow | 334 | 351 | -/- 55 | 113 | - | - | 71 | 60 | 208 | 404 | |
Maris | 378 | 588 | -/- 1 | -/- 140 | - | - | - | - | 377 | 448 | |
Total Poland | 2,212 | 2,204 | -/- 196 | -/- 68 | - | - | 98 | 90 | 1,918 | 2,046 | |
Ukraine: | |||||||||||
Aisi Bela | -/- 15 | -/- 15 | 366 | 65 | - | - | - | - | 351 | 50 | |
Kiyanovskiy Residence | - | N.a. | 126 | N.a. | - | N.a. | - | N.a. | 126 | N.a. | |
Total Ukraine | -/- 15 | -/- 15 | 492 | 65 | - | - | - | - | 477 | 50 | |
Bulgaria: | |||||||||||
Boyana | N.a. | -/- 11 | N.a. | -/- 579 | N.a. | - | N.a. | - | N.a. | -/- 590 | |
Inventories | -/- 15 | -/- 47 | 779 | 1,093 | - | - | - | - | 764 | 1,046 | |
Total Bulgaria | -/- 15 | -/- 58 | 779 | 514 | - | - | - | - | 764 | 456 | |
Romania: | |||||||||||
EOS Business Park | 692 | 641 | -/- 1,238 | -/- 117 | - | - | - | - | -/- 546 | 524 | |
Lelar (Delenco) | N.a. | N.a. | 80 | 225 | - | N.a. | 26 | 30 | 54 | 195 | |
Total Romania | 692 | 641 | -/- 1,158 | 108 | - | - | 26 | 30 | -/- 492 | 719 | |
Grand total | 4,412 | 4,582 | -/- 747 | 1,004 | 5 | - | 124 | 120 | 3,546 | 5,466 | |
7
Other operating income relates solely to penalties for early termination of rental contracts.
8
Financial expenses relate solely to interest expense on lease liabilities. Other operating expenses relates solely to Asset management
fee Delenco.
96
97
14.5.2
Reconciliation segment result with profit for the period
The reconciliation between the total segment results as calculated in section 14.5.1
“Overview of segment
result (overview A)”
with the profit for the period, as stated in the Consolidated Income Statement, is made
below.
2024 | 2023 | |
in € 1,000 | in € 1,000 | |
Total segment result (overview A) | 3,546 | 5,466 |
Unallocated income: | ||
Financial income | 865 | 394 |
Other operating income | 17 | 7 |
Less: early termination of rental contracts (allocated) | -/- 5 | - |
Subtotal unallocated income | 877 | 401 |
Unallocated expenses: | ||
Administrative expenses | 675 | 675 |
Other operating expenses | 1,296 | 1,219 |
Less: asset management fee (allocated) | -/- 26 | -/- 30 |
Subtotal unallocated other operating expenses | 1,945 | 1,864 |
Financial expenses | 2,596 | 3,113 |
Less: interest expense on lease liabilities (allocated) | -/- 98 | -/- 90 |
Subtotal unallocated expenses | 4,443 | 4,887 |
Profit before income tax | -/- 20 | 980 |
Income tax expense | 12 | 797 |
Profit for the period | -/- 32 | 183 |
98
14.5.3
Specification carrying amount of each property
9
per business category
10
(overview B)
31-12-2024 | 31-12-2023 | |
Carrying | Carrying | |
Segment | amount | amount |
In € 1,000 | In € 1,000 | |
Office: | ||
Palmovka | 4,264 | 4,053 |
Karlin | Sold | 6,190 |
Newton House | 6,761 | 6,507 |
Záhradnícka | Sold | 3,846 |
Letná | 11,940 | 12,830 |
Maris | 9,390 | 9,100 |
EOS Business Park | 3,965 | 5,202 |
Total office | 36,320 | 47,728 |
Retail: | ||
Laubitza 8 | 1,980 | 2,000 |
800-lecia Inowroclawia | 2,530 | 2,610 |
Krzemowa | 3,240 | 3,170 |
Plutona | 1,920 | 1,940 |
Kalinkowa | 2,850 | 2,790 |
Wojska Polskiego | 3,210 | 3,310 |
Wolnosci | 2,260 | 1,520 |
Grzymaly Siedleckiego | 1,380 | 1,330 |
Kardyn. Wyszynskiego | 1,870 | 2,190 |
Legionow | 3,170 | 3,210 |
Total retail | 24,410 | 24,070 |
Residential: | ||
Inventories Boyana | Sold | 938 |
Land plots: | ||
Aisi Bela | 1,271 | 945 |
Kiyanovskiy Residence | 2,105 | N.a. |
Total land | 3,376 | 945 |
Grand total | 64,106 | 73,681 |
14.5.4
Major tenants
The Fund reports the following tenants with a gross rental income of
more than 10% of the Fund’s total gross
rental income.
Tenant | Building | 2024 | 2023 |
In € 1,000 | In € 1,000 | ||
AT&T Global Network Services Slovakia, s.r.o. | Letná | 820 | 755 |
Danone PDPA | EOS Business Park | 790 | 707 |
1,610 | 1,462 |
9
Right-of-use assets excluded.
10
Based on main purpose of the property.
99
14.5.5
Overview of geographic assets (overview C)
Czechia | Slovakia | Poland | Ukraine | Bulgaria | ||||||
31-12-2024 | 31-12-2023 | 31-12-2024 | 31-12-2023 | 31-12-2024 | 31-12-2023 | 31-12-2024 | 31-12-2023 | 31-12-2024 | 31-12-2023 | |
in € 1,000 | in € 1,000 | in € 1,000 | in € 1,000 | in € 1,000 | ||||||
Investment property | 11,025 | 16,750 | 11,940 | 12,830 | 15,730 | 33,240 | 2,105 | - | N.a. | - |
Investment property under development | - | - | - | - | - | - | 1,271 | 945 | N.a. | - |
Investments in associates | - | - | - | - | - | - | - | - | N.a. | - |
Derivative financial instruments | - | - | - | - | - | - | - | - | N.a. | - |
Deferred tax assets | - | - | - | - | - | - | 95 | - | N.a. | - |
Inventories | N.a. | - | N.a. | - | N.a. | - | N.a. | - | N.a. | 938 |
Tax assets | - | 98 | - | 160 | 55 | 107 | 3 | - | N.a. | - |
Trade and other receivables | 183 | 50 | 238 | 233 | 349 | 284 | - | - | N.a. | 21 |
Prepayments and deferred expenses | 68 | 46 | 31 | 95 | 137 | 156 | - | 2 | N.a. | - |
Cash and cash equivalents | 260 | 674 | 467 | 312 | 978 | 1,105 | 4 | - | N.a. | 85 |
Assets held for sale | - | - | - | 3,846 | 19,580 | 1,407 | - | - | N.a. | - |
11,536 | 17,618 | 12,676 | 17,476 | 36,829 | 36,299 | 3,478 | 947 | N.a. | 1,044 | |
Romania | The Netherlands | Other countries | Total | |||||
31-12-2024 | 31-12-2023 | 31-12-2024 | 31-12-2023 | 31-12-2024 | 31-12-2023 | 31-12-2024 | 31-12-2023 | |
in € 1,000 | in € 1,000 | in € 1,000 | in € 1,000 | |||||
Investment property | 3,965 | 5,202 | - | - | - | - | 44,765 | 68,022 |
Investment property under development | - | - | - | - | - | - | 1,271 | 945 |
Investments in associates | 3,402 | 3,689 | - | - | - | - | 3,402 | 3,689 |
Derivative financial instruments | - | - | - | - | 127 | 300 | 127 | 300 |
Deferred tax assets | - | - | - | - | - | - | 95 | - |
Inventories | N.a. | - | N.a. | - | N.a. | - | N.a. | 938 |
Tax assets | 2 | 2 | - | - | - | - | 60 | 367 |
Trade and other receivables | 378 | 204 | - | 3 | 483 | 673 | 1,631 | 1,468 |
Prepayments and deferred expenses | 5 | 5 | 4 | 4 | - | - | 245 | 308 |
Cash and cash equivalents | 181 | 45 | 529 | 161 | - | - | 2,419 | 2,382 |
Assets held for sale | - | - | - | - | - | - | 19,580 | 5,253 |
7,933 | 9,147 | 533 | 168 | 610 | 973 | 73,595 | 83,672 | |
100
15
NOTES
TO
THE
CONSOLIDATED
FINANCIAL
STATEMENTS
SUBSIDIARIES
15.1.1
Consolidated subsidiaries
All subsidiaries of the Fund have been included in the consolidation. These are as follows:
31-12-2024 | ||||
Proportion | Proportion | |||
of shares | of shares | |||
Registered | Country of | held by the | held by the | |
Name of subsidiary | office | incorporation | Parent | Group |
In % | In % | |||
Arcona Capital RE Bohemia s.r.o. | Prague | Czechia | 100.0 | N.a. |
Arcona Capital RE Slovakia s.r.o. | Bratislava | Slovakia | 100.0 | N.a. |
Arcona Capital Real Estate Poland Sp. z o.o. | Warsaw | Poland | 100.0 | N.a. |
Arcona Capital Real Estate Trio Sp. z o.o. | Warsaw | Poland | 100.0 | N.a. |
Arcona Real Estate B.V. | Amsterdam | The Netherlands | 100.0 | N.a. |
Arcona Poland B.V. | Amsterdam | The Netherlands | N.a. | 100.0 |
Arcona Poland Project 5 Sp. z o.o. | Warsaw | Poland | N.a. | 100.0 |
Aisi Bela LLC | Kyiv | Ukraine | 100.0 | N.a. |
Boyana Residence E.O.O.D. | Sofia | Bulgaria | Sold | N.a. |
Arcona Black Sea Real Estate B.V. | Amsterdam | The Netherlands | 100.0 | N.a. |
N-E Real Estate Park First Phase S.r.l. | Bucharest | Romania | N.a. | 100.0 |
Aisi Ukraine LLC | Kyiv | Ukraine | N.a. | 100.0 |
Trade Center LLC | Kyiv | Ukraine | N.a. | 100.0 |
31-12-2023 | ||||
Proportion | Proportion | |||
of shares | of shares | |||
Registered | Country of | held by the | held by the | |
Name of subsidiary | office | incorporation | Parent | Group |
In % | In % | |||
Arcona Capital RE Bohemia s.r.o. | Prague | Czechia | 100.0 | N.a. |
Arcona Capital RE Slovakia s.r.o. | Bratislava | Slovakia | 100.0 | N.a. |
Arcona Capital Real Estate Poland Sp. z o.o. | Warsaw | Poland | 100.0 | N.a. |
Arcona Capital Real Estate Trio Sp. z o.o. | Warsaw | Poland | 100.0 | N.a. |
Arcona Real Estate B.V. | Amsterdam | The Netherlands | 100.0 | N.a. |
Arcona Poland B.V. | Amsterdam | The Netherlands | N.a. | 100.0 |
Arcona Poland Project 5 Sp.k. | Warsaw | Poland | N.a. | 100.0 |
Aisi Bela LLC | Kyiv | Ukraine | 100.0 | N.a. |
Boyana Residence E.O.O.D. | Sofia | Bulgaria | 100.0 | N.a. |
Arcona Black Sea Real Estate B.V. | Amsterdam | The Netherlands | 100.0 | N.a. |
N-E Real Estate Park First Phase S.r.l. | Bucharest | Romania | N.a. | 100.0 |
15.1.2
Subsidiaries incorporated during the financial period
During the financial period, the Fund incorporated no subsidiaries.
101
15.1.3
Subsidiaries acquired during the financial period
During the financial period, the Fund acquired the following subsidiaries:
Subsidiary | Interest | Date of acquisition |
In % | ||
Aisi Ukraine LLC | 100.0 | December 18, 2024 |
Trade Center LLC | 100.0 | December 18, 2024 |
The acquisitions during the financial period are not determined as a business combination (IFRS 3), but as an
asset acquisition. Therefore the results on acquisition of the identifiable assets acquired and liabilities assumed
are attributed to the acquired properties.
15.1.3.1 Acquisition of Aisi Ukraine LLC
As at acquisition date Aisi Ukraine LLC held a 100%-share in Trade Center LLC. The following tables
summarize the total recognised fair values on acquisition, as well as the total recognised amounts at fair value
of assets acquired and liabilities assumed at the date of acquisition and the result on acquisition. The result
on acquisition relates to the amount by which the balance of the identifiable net assets acquired exceeds the
consideration paid, including acquisition-related costs. This surplus is attributed to the acquired properties.
In € 1,000 | 19-12-2024 | |||
Recognised fair | Recognised fair | Total | ||
values on | values on | recognised fair | ||
Identifiable assets acquired | acquisition | acquisition Trade | values on | |
and liabilities assumed | Aisi Ukraine LLC | Center LLC | Eliminations | acquisition |
Investment property | 1,154 | 941 | - | 2,095 |
Investments in group companies | 860 | - | -/- 860 | - |
Receivables from group companies | 80 | - | -/- 80 | - |
Deferred tax assets | 116 | - | - | 116 |
Tax assets | 2 | 2 | - | 4 |
Debts to group companies | - | -/- 80 | 80 | - |
Deferred tax liabilities | -/- 116 | - | - | -/- 116 |
Trade and other payables | -/- 1 | -/- 3 | - | -/- 4 |
Identifiable net assets acquired | 2,095 | 860 | -/- 860 | 2,095 |
In € 1,000 | 19-12-2024 | ||
Total recognised | |||
Identifiable assets acquired and | fair values on | Fair value | Total acquisition |
liabilities assumed | acquisition | adjustments | carrying amount |
Investment property | 2,095 | -/- 116 | 1,979 |
Deferred tax assets | 116 | - | 116 |
Tax assets | 4 | - | 4 |
Deferred tax liabilities | -/- 116 | 116 | - |
Trade and other payables | -/- 4 | - | -/- 4 |
Identifiable net assets acquired | 2,095 | - | 2,095 |
Result on acquisition | 19-12-2024 |
In € 1,000 | |
Balance of identifiable net assets acquired | 2,095 |
Consideration paid (in cash and cash equivalents) | -/- 1,133 |
Consideration paid (by issuance of shares of the Parent Company) | -/- 962 |
Acquisition-related costs | - |
Result on acquisition | - |
102
15.1.4
Subsidiaries sold during the financial period
As at October 2, 2024 the Fund sold its 100%-share in Boyana Residence E.O.O.D. for an amount of
€
1,590,000. The following table summarizes the identifiable assets and liabilities disposed of and the result
on sale. The result on sale relates to the amount by which the balance of the net identifiable assets and
liabilities disposed of exceeds the consideration received, excluding sales-related costs. This surplus is
attributed to the sold inventories.
In € 1,000 | 02-10-2024 | ||
Carrying | Result on sale | Sales carrying | |
Identifiable assets and liabilities disposed of | amount | of subsidiaries | amount |
Inventories | 809 | 677 | 1,486 |
Trade and other receivables | 13 | - | 13 |
Cash and cash equivalents | 1 | - | 1 |
Tax liabilities | -/- 3 | - | -/- 3 |
Trade and other payables | -/- 13 | - | -/- 13 |
Net identifiable assets disposed of | 807 | 677 | 1,484 |
Result on sale | 02-10-2024 |
In € 1,000 | |
Consideration received (in cash and cash equivalents) | 1,590 |
Balance of net identifiable assets disposed of | -/- 1,484 |
Sales-related costs | -/- 106 |
Result on sale | - |
15.2
INVESTMENT PROPERTY
15.2.1
Analysis of investment property
31-12-2024 | 31-12-2023 | |
In € 1,000 | In € 1,000 | |
Owned investment property (lease incentives excluded) | 44,709 | 66,540 |
Lease incentives | 56 | 82 |
Owned investment property | 44,765 | 66,622 |
Right-of-use assets | - | 1,400 |
44,765 | 68,022 |
15.2.2
Analysis of owned investment property
31-12-2024 | 31-12-2023 | |
In € 1,000 | In € 1,000 | |
Buildings (including underground) | 42,660 | 66,622 |
Land plots | 2,105 | - |
44,765 | 66,622 |
103
15.2.3
Specification of owned investment property
Name of property | Address | 31-12-2024 | 31-12-2023 |
In € 1,000 | In € 1,000 | ||
In ownership of Arcona Capital RE Bohemia s.r.o. (Czechia) | |||
Palmovka | Na Žertvách 34, Prague | 4,264 | 4,053 |
Karlin | Prvního Pluku 621/8a, Prague | Sold | 6,190 |
Newton House | Politických Vězň u 10, Prague | 6,761 | 6,507 |
Subtotal | 11,025 | 16,750 | |
In ownership of Arcona Capital RE Slovakia s.r.o. (Slovakia) | |||
Letná | Letná 45, Ko š ice | 11,940 | 12,830 |
In ownership of Arcona Capital Real Estate Poland Sp. z o.o. (Poland) | |||
Laubitza | Laubitza 8, Inowroclaw | 1,980 | 2,000 |
Lecia Inowroclawia | 800-lecia Inowroclawia 27, Inowroclaw | 2,530 | 2,610 |
Krzemowa | Krzemowa 1, Gdansk | 3,240 | 3,170 |
Plutona | Plutona 1, Glogow | 1,920 | 1,940 |
Kalinkowa | Kalinkowa 82, Grudziadz | 2,850 | 2,790 |
Wojska Polsiekgo | Wojska Polskiego 137, Piotrkow Trybunalski | 3,210 | 3,310 |
Wolnosci | Wolnosci 6, Slupsk | Held for sale | 1,520 |
Subtotal | 15,730 | 17,340 | |
In ownership of Arcona Capital Real Estate Trio Sp. z o.o. (Poland) | |||
Kardynala Wyszynskiego | Kardynala Wyszynskiego 107, Lodz | Held for sale | 2,190 |
Legionow | Legionow 216, Torun | Held for sale | 3,210 |
Subtotal | - | 5,400 | |
In ownership of Arcona Capital Poland Project 5 Sp. z o.o. (Poland) | |||
| Maris | Holdu Pruskiego 9 & 12 Malopolska 12, | Held for sale | 9,100 |
| Szczecin | |||
In ownership of Aisi Bela LLC (Ukraine) | |||
| Balabino Project | Territory of Balabynska Village Council, | ||
| Zaporizkyi District, Zaporizhzhia Region | - | - | |
In ownership of Aisi Ukraine LLC (Ukraine) | |||
| Kiyanovskiy Residence | Kiyanovskiy Lane, Shevchenkisvkyi District, | ||
| Kiev Region | 2,105 | N.a. | |
In ownership of N-E Real Estate Park First Phase S.r.l. (Romania) | |||
EOS Business Park | Strada Nicolae Cânea 140-160, Bucharest | 3,965 | 5,202 |
44,765 | 66,622 | ||
104
15.2.4
Statement of changes in owned investment property
2024 | 2023 | |
In € 1,000 | In € 1,000 | |
Balance as at 1 January | 66,622 | 67,344 |
Acquisitions | 1,979 | - |
Additions | 524 | 818 |
Fair value adjustments | -/- 1,800 | 244 |
Exchange rate differences | -/- 300 | -/- 454 |
Reclassification (to “A ssets held for sale ” ) | -/- 22,260 | -/- 1,330 |
Balance as at 31 December | 44,765 | 66,622 |
The
“
Reclassification (to
“A
ssets held for sale
”
)
”
for the amount of
€
22,260,000 negative relates to the
properties:
-
Karlin (Czechia);
-
Wolnosci (Poland);
-
Kardynala Wyszynskiego (Poland);
-
Legionow (Poland); and
-
Maris (Poland),
which have been reclassified to
“A
ssets held for sale
”
. For further reference see section 15.13.4
“
Statement of
changes in owned investment property held for sale
”
.
15.2.5
Valuation of owned investment property
The owned investment property, as listed in section 15.2.3
“
Specification of owned investment property
”, w
as
valued by an external, independent appraiser as at Statement of Financial Position
’s date
, with the exception
of the Zaporizhzhia plot (Ukraine). Regarding the Zaporizhzhia plot, the Managing Board decided, given the
current situation in Ukraine and the
plot’s
proximity to the active front lines, to maintain the value of the land
plot at zero. The situation will be reviewed regularly
in consultation with the Fund’s local advisors.
The valuations are prepared for accounting purposes and are in accordance with relevant IFRS regulations.
Specification of right-of-use assets
Nature of right-of-use asset | Related to owned investment property | 31-12-2024 | 31-12-2023 |
In € 1,000 | In € 1,000 | ||
Right-of-use held by Arcona Capital Real Estate Trio Sp. z o.o. (Poland) | |||
Land lease | Kardynala Wyszynskiego | Held for sale | 382 |
Land lease | Legionow | Held for sale | 1,018 |
- | 1,400 | ||
15.2.7
Statement of changes in right-of-use assets
2024 | 2023 | |
In € 1,000 | In € 1,000 | |
Balance as at 1 January | 1,400 | 1,294 |
Remeasurement (as a result of an index / inflation) | 186 | 330 |
Fair value adjustments | -/- 38 | -/- 147 |
Reclassification (to assets held for sale) | -/- 1,548 | -/- 77 |
Balance as at 31 December | - | 1,400 |
105
The “Remeasurement (as a result of an index / inflation)” for the amount of €
186,000 relates to the
remeasurement of the lease liability. For further reference see section 15.16.5
“Statement of changes in lease
liabilities”).
The “Reclassification (to assets held for sale)” for the amount of €
1,548,000 negative relates to the properties
Kardynala Wyszynskiego (Poland) and Legionow
(Poland), which have been reclassified to “Assets held for
sale”. For further reference
see section 15.13.7
“Statement of changes in right
-of-
use assets held for sale”.
Valuation of right-of-use assets
The right-of-use assets, as listed in section 15.2.6
“Specification of right
-of-
use assets”, were not valued by an
external, independent appraiser as at Statement of Financial Position’s date.
Right-of-use assets are initially
measured at cost, which compromises the initial amount of the lease liability adjusted by the amount of any
prepaid or accrued lease payment, less any lease incentives received. The right-of-use asset is subsequently
measured at fair value (subject to certain exceptions), less accumulated depreciation and impairment losses.
The right-of-use asset will additionally be adjusted for any remeasurement of the lease liability, when
applicable.
The Managing Board is of the opinion the above method is the most appropriate approach to the valuation of
Transactions with related parties
The property sale and purchase transactions executed during the financial period were not executed with
parties affiliated with the Managing Board or the Fund, except the purchase of Aisi Ukraine LLC and Trade
15.2.10 Sensitivity analysis
The appraisal of the buildings including underground, hereinafter referred to as the Portfolio implies an average
weighted
“
Reversion Yield
”
of 8.2% (December 31, 2023: 8.1%).
In case the yields used for the appraisals of the Portfolio as at Statement of Financial Position
’s date
had been
50 basis points higher, the value of the Portfolio would have decreased by 6.6% (December 31, 2023: 6.5%).
In this situation, the Group equity would have been
€
3,328,000 lower (December 31, 2023
: €
3,874,000 lower).
In case the yields used for the appraisals of the Portfolio as at Statement of Financial Position
’s date
had been
50 basis points lower, the value of the Portfolio would have increased by 7.5% (December 31, 2023: 7.5%). In
this situation, the Group
equity would have been €
3,757,000 higher (December 31, 2023
: €
4,461,000 higher).
106
A sensitivity analysis with possible changes in Yield and Estimated Rental Value (
ERV
) results in the following
changes in portfolio value:
| 31-12-2024 | |||||
Change in | Change in yield | ||||
ERV | -/- 0.50% | -/- 0.25% | 0.00% | 0.25% | 0.50% |
-/- 5.0% | 3.0% | -/- 0.7% | -/- 4.2% | -/- 7.4% | -/- 10.4% |
-/- 2.5% | 5.2% | 1.5% | -/- 2.1% | -/- 5.4% | -/- 8.5% |
0.0% | 7.5% | 3.6% | 0.0% | -/- 3.4% | -/- 6.6% |
2.5% | 9.7% | 5.7% | 2.0% | -/- 1.5% | -/- 4.7% |
5.0% | 12.0% | 7.9% | 4.1% | 0.5% | -/- 2.8% |
| 31-12-2023 | |||||
Change in | Change in yield | ||||
ERV | -/- 0.50% | -/- 0.25% | 0.00% | 0.25% | 0.50% |
-/- 5.0% | 2.8% | -/- 0.8% | -/- 4.3% | -/- 7.5% | -/- 10.5% |
-/- 2.5% | 5.2% | 1.4% | -/- 2.1% | -/- 5.4% | -/- 8.6% |
0.0% | 7.5% | 3.7% | 0.0% | -/- 3.4% | -/- 6.5% |
2.5% | 9.9% | 5.9% | 2.2% | -/- 1.3% | -/- 4.6% |
5.0% | 12.2% | 8.1% | 4.3% | 0.8% | -/- 2.6% |
The ERV
is the external appraisers’ opinion as to the open market rent which, on the date of valuation, could
reasonably be expected to be obtained on a new letting or rent review of an investment property.
15.3
INVESTMENT PROPERTY UNDER DEVELOPMENT
15.3.1
Specification of investment property under development
Name of property | Address | 31-12-2024 | 31-12-2023 |
In € 1,000 | In € 1,000 | ||
In ownership of Aisi Bela LLC (Ukraine) | |||
| Bela Logistic Park | Territory of Nerubaiske Village Council, | ||
| Biliayivskyi District, Odessa Region | 1,271 | 945 | |
15.3.2
Statement of changes in investment property under development
2024 | 2023 | |
In € 1,000 | In € 1,000 | |
Balance as at 1 January | 945 | 958 |
Fair value adjustments | 366 | 65 |
Exchange rate differences | -/- 40 | -/- 78 |
Balance as at 31 December | 1,271 | 945 |
15.3.3
Valuation of investment property under development
The investment property under development, as listed in
section 15.3.1 “Specification of investment property
under development”, was valued by an external, independent appraiser as at Statement of Financial Position’s
date. The fair value of investment property under development is
primarily derived using the “
Market approach
”
based on comparable properties in the market.
107
An external, independent appraiser has stated that there remains a significantly higher-than-usual degree of
uncertainty regarding the reported value of the land. The key external risks identified are:
1.
Market Disruptions and Data Limitations. The valuation is conducted under conditions of extreme market
uncertainty due to the ongoing war in Ukraine. The real estate market continues to be affected by military
operations, economic instability, and disrupted investment flows. As of the valuation date, the appraiser
faces a unique set of circumstances, including a lack of high-quality market data and comparable
transactions. This is caused by the significant decline in transaction volumes and limited market evidence
to support valuations.
2.
Volatility and Economic Risks. The value of the land is likely to experience continued volatility over time.
The long-term impact of the war remains uncertain, affecting economic recovery and external financing
availability. Market conditions may change rapidly due to geopolitical developments, regulatory
adjustments, or shifts in investor sentiment. Given these factors, the appraiser strongly recommends that
the Managing Board review the valuation of the land plot on a frequent basis.
Additionally, the appraiser has issued a "Material Valuation Uncertainty" disclaimer in accordance with RICS
guidelines (VPS 3 and VPGA 10 of the RICS Red Book Global). As a result, greater caution should be
exercised in interpreting the valuation outcome, as it does not guarantee the value that may be realized in an
open market transaction.
INVESTMENTS IN ASSOCIATES
15.4.1
Specification of investments in associates
Name of project | Name of associate | Country | Asset type | 31-12-2024 | 31-12-2023 |
In € 1,000 | In € 1,000 | ||||
| Delea Nuova Project | Lelar Holdings Limited and | Romania | Office | 3,402 | 3,689 |
| S.C. Delenco Construct S.r.l. | building |
| 31-12-2024 | 2024 | |||||
Proportion | Net rental | |||||
of shares | and | Valuation | ||||
held by the | Total | Total | related | result of | Profit for | |
Name of project | Group | assets | liabilities | income | properties | the period |
In % | In € 1,000 | In € 1,000 | In € 1,000 | In € 1,000 | In € 1,000 | |
Delea Nuova Project | 24.35 | 16,548 | 2,581 | 1,451 | -/- 810 | 326 |
| 31-12-2023 | 2023 | |||||
Proportion | ||||||
of shares | Net rental | Valuation | ||||
held by the | Total | Total | and related | result of | Profit for | |
Name of project | Group | assets | liabilities | income | properties | the period |
In % | In € 1,000 | In € 1,000 | In € 1,000 | In € 1,000 | In € 1,000 | |
Delea Nuova Project | 24.35 | 17,356 | 2,208 | 1,406 | -/- 120 | 925 |
108
15.4.2
Statement of changes in investments in associates
2024 | 2023 | |
In € 1,000 | In € 1,000 | |
Balance as at 1 January | 3,689 | 3,587 |
Fair value adjustments | -/- 287 | 102 |
Balance as at 31 December | 3,402 | 3,689 |
The “Fair value adjustments” for the amount of €
287,000 negative consists of the following amounts:
•
s
hare in result of investments in associates for an amount of €
80,000; less
•
dividend
for an amount of €
367,000, which is recognised in the consolidated income statement;
For further reference see section 15.32
“Share in result
s
of investments in associates”.
DERIVATIVE FINANCIAL INSTRUMENTS
15.5.1
Specification of derivative financial instruments
31-12-2024 | 31-12-2023 | |
In € 1,000 | In € 1,000 | |
Non-current part of derivative financial instruments | 24 | 94 |
Current part of derivative financial instruments | 103 | 206 |
127 | 300 |
15.5.2
Specification of derivative financial instruments
31-12-2024 | 31-12-2023 | |
In € 1,000 | In € 1,000 | |
Interest rate swaps used for hedging | 127 | 300 |
109
RECOGNISED DEFERRED TAXES
15.6.1
Specification of recognised deferred taxes
| 31-12-2024 | |||
Recognised | Recognised | Total | |
deferred tax | deferred tax | recognised | |
assets | liabilities | deferred taxes | |
In € 1,000 | In € 1,000 | In € 1,000 | |
Owned investment property | 268 | 2,557 | -/- 2,289 |
Receivables from shareholders and other group companies | - | 26 | -/- 26 |
Subtotal non-current investments | 268 | 2,583 | -/- 2,315 |
Tax losses (carried forward) | 200 | - | 200 |
Trade and other receivables | 12 | 2 | 10 |
Prepayments and deferred expenses | 73 | 5 | 68 |
(Interest) receivables from shareholders and group | |||
| companies | - | 40 | -/- 40 |
Assets held for sale | 1 | 319 | -/- 318 |
Loans and borrowings | - | 139 | -/- 139 |
Loans due to shareholders and other group companies | - | 56 | -/- 56 |
Derivative financial instruments | - | 19 | -/- 19 |
Trade and other payables | 57 | - | 57 |
Deferred taxes before set-off | 611 | 3,163 | -/- 2,552 |
Set-off deferred taxes | -/- 516 | -/- 516 | - |
95 | 2,647 | -/- 2,552 | |
| 31-12-2023 | |||
Recognised | Recognised | Total | |
deferred tax | deferred tax | recognised | |
assets | liabilities | deferred taxes | |
In € 1,000 | In € 1,000 | In € 1,000 | |
Owned investment property | 201 | 3,411 | -/- 3,210 |
Receivables from shareholders and other group companies | - | 54 | -/- 54 |
Subtotal non-current investments | 201 | 3,465 | -/- 3,264 |
Tax losses (carried forward) | 158 | - | 158 |
Trade and other receivables | 25 | 7 | 18 |
Prepayments and deferred expenses | 36 | 6 | 30 |
(Interest) receivables from shareholders and group | |||
| companies | 10 | 55 | -/- 45 |
Cash and cash equivalents | 1 | - | 1 |
Assets held for sale | - | 215 | -/- 215 |
Loans and borrowings | - | 120 | -/- 120 |
Loans due to shareholders and other group companies | 3 | 19 | -/- 16 |
Interest due to shareholders and other group companies | 7 | - | 7 |
Derivative financial instruments | - | 45 | -/- 45 |
Trade and other payables | 65 | - | 65 |
Deferred taxes before set-off | 506 | 3,932 | -/- 3,426 |
Set-off deferred taxes | -/- 506 | -/- 506 | - |
- | 3,426 | -/- 3,426 | |
110
15.6.2
Analysis of recognised deferred taxes
31-12-2024 | 31-12-2023 | |
In € 1,000 | In € 1,000 | |
Will expire | 56 | 104 |
Will never expire | -/- 2,608 | -/- 3,530 |
-/- 2,552 | -/- 3,426 |
An allocation of the recognised deferred tax assets to the various geographic segments is presented in section
14.5.5
“
Overview of geographic assets (overview C
)”.
15.6.3
Analysis of recognised deferred tax assets concerning tax losses (carried forward)
31-12-2024 | 31-12-2023 | |
In € 1,000 | In € 1,000 | |
Expires in 2025 | 43 | 100 |
Expires in 2028 | - | 4 |
Expires in 2029 | 13 | - |
Subtotal will expire | 56 | 104 |
Will never expire | 144 | 54 |
200 | 158 |
Based on the tax forecast the Managing Board expects (considering local tax law and regulations) that in the
future there will be sufficient taxable profit to set-off these recognised tax losses.
15.6.4
Statement of changes in recognised deferred taxes
2024 | 2023 | |
In € 1,000 | In € 1,000 | |
Balance as at 1 January | -/- 3,426 | -/- 2,751 |
Adjustments related to prior years | 19 | -/- 3 |
Additions / withdrawals | 839 | -/- 599 |
Change in tax rate | 3 | -/- 94 |
Exchange rate differences | 13 | 21 |
Balance as at 31 December | -/- 2,552 | -/- 3,426 |
111
UNRECOGNISED DEFERRED TAXES
15.7.1
Specification of unrecognised deferred taxes
| 31-12-2024 | |||
Unrecognised | Unrecognised | Total | |
deferred tax | deferred tax | unrecognised | |
assets | liabilities | deferred taxes | |
In € 1,000 | In € 1,000 | In € 1,000 | |
Owned investment property | 419 | 620 | -/- 201 |
Investment property under development | 235 | - | 235 |
Receivables from shareholders and group companies | 415 | - | 415 |
Tax losses (carried forward) | 2,882 | - | 2,882 |
Trade and other receivables | 4 | - | 4 |
Trade and other payables | 4 | - | 4 |
Interest due to shareholders and other | 297 | - | 297 |
group companies | |||
Tax assets | 4 | - | 4 |
4,260 | 620 | 3,640 | |
| 31-12-2023 | |||
Unrecognised | Unrecognised | Total | |
deferred tax | deferred tax | unrecognised | |
assets | liabilities | deferred taxes | |
In € 1,000 | In € 1,000 | In € 1,000 | |
Owned investment property | 415 | 588 | -/- 173 |
Investment property under development | 313 | - | 313 |
Receivables from shareholders and group companies | 399 | - | 399 |
Tax losses (carried forward) | 2,849 | - | 2,849 |
Inventories | 14 | - | 14 |
Trade and other receivables | 9 | - | 9 |
Trade and other payables | 2 | - | 2 |
Interest due to shareholders and other | |||
group companies | 239 | - | 239 |
4,240 | 588 | 3,652 | |
15.7.2
Analysis of unrecognised deferred taxes
31-12-2024 | 31-12-2023 | |
In € 1,000 | In € 1,000 | |
Will expire | 154 | 358 |
Will never expire | 3,486 | 3,294 |
3,640 | 3,652 |
112
15.7.3
Analysis of unrecognised deferred tax assets concerning tax losses (carried forward)
31-12-2024 | 31-12-2023 | |
In € 1,000 | In € 1,000 | |
Expires in 2024 | - | 11 |
Expires in 2025 | - | 46 |
Expires in 2026 | 97 | 126 |
Expires in 2027 | - | 42 |
Expires in 2028 | 24 | 133 |
Expires in 2029 | 33 | - |
Subtotal will expire | 154 | 358 |
Will never expire | 2,728 | 2,491 |
2,882 | 2,849 |
The Managing Board expects (considering local tax law and regulations) that in the future there will be
insufficient taxable profit to set-off these unrecognised tax losses.
The unrecognised deferred tax assets concerning tax losses (carried forward) which will never expire relates
mainly to tax losses of the Parent Company. Mainly as a result of applying the participation exemption in the
Netherlands it is expected the Parent Company will not generate taxable profits in the (near) future. Therefore
the Managing Board is of the opinion no deferred tax assets can be recognised for these tax losses (carried
forward).
15.7.4
Statement of changes in unrecognised deferred taxes
2024 | 2023 | |
In € 1,000 | In € 1,000 | |
Balance as at 1 January | 3,652 | 3,028 |
Adjustments related to prior years | 21 | -/- 9 |
Additions as a result of acquisition of subsidiaries | 157 | - |
Withdrawals as a result of sale of subsidiaries | -/- 250 | - |
Additions / withdrawals | 79 | 650 |
Change in tax rate | 1 | - |
Exchange rate differences | -/- 20 | -/- 17 |
Balance as at 31 December | 3,640 | 3,652 |
TAX ASSETS
15.8.1
Specification of tax assets
31-12-2024 | 31-12-2023 | |
In € 1,000 | In € 1,000 | |
Non-current part of tax assets | - | - |
Current part of tax assets | 60 | 367 |
60 | 367 |
113
15.8.2
Specification of tax assets
31-12-2024 | 31-12-2023 | |
In € 1,000 | In € 1,000 | |
Corporate income tax ( CIT ) | 54 | 347 |
Value added tax ( VAT ) | - | 6 |
Property tax | 6 | 14 |
60 | 367 |
TRADE AND OTHER RECEIVABLES
Analysis of trade and other receivables
31-12-2024 | 31-12-2023 | |
In € 1,000 | In € 1,000 | |
Non-current part of trade and other receivables | 956 | 892 |
Current part of trade and other receivables | 675 | 576 |
1,631 | 1,468 |
Specification of trade and other receivables
31-12-2024 | 31-12-2023 | |
In € 1,000 | In € 1,000 | |
Debt Service Reserve Account ( DSRA ) | 956 | 892 |
Trade receivables | 445 | 439 |
Receivable dividend from associates | 122 | - |
Invoiceable amounts | 92 | - |
Receivables SPDI | - | 91 |
Sold properties | - | 21 |
(Claim) termination derivative financial instruments (interest rate swap) | 4 | - |
Interest income | 3 | 6 |
Other trade and other receivables | 9 | 19 |
1,631 | 1,468 |
The “
Receivable dividend from associates
” for the amount of €
122,000 relates to the declared dividend Lelar
Analysis of (claim) termination derivative financial instruments (interest rate swap)
31-12-2024 | 31-12-2023 | |
In € 1,000 | In € 1,000 | |
Termination derivative financial instruments (gross) | 4 | 76 |
Individually assessed expected credit losses for derivative financial | ||
| instruments | - | -/- 76 |
4 | - |
As at October 25, 2022 the Fund agreed with Sberbank CZ to terminate the interest rate swap for an amount
of approximately CZK 1,884,000 (€ 7
5,000). Sberbank CZ was declared bankrupt during August 2022. The
Fund has sued Sberbank CZ for the termination of the interest rate swap whose value was downrated to zero
by Sberbank CZ. During 2024 the terminated interest rate swap claim has been approved within the insolvency
114
15.9.4
Analysis of trade receivables
31-12-2024 | 31-12-2023 | |
In € 1,000 | In € 1,000 | |
Trade receivables (gross) | 731 | 825 |
Total expected credit losses for trade receivables | -/- 286 | -/- 386 |
445 | 439 |
Expected credit losses for trade receivables
The Fund always measures the loss allowance for trade receivables at an amount equal to lifetime expected
credit losses. The Fund has chosen to apply the “simplified model” for the calculation of the loss allowance for
trade receivables. The expected credit loss-rate is based on historical information (chosen is a 5-year history),
whereby the historical default loss percentage is adjusted for forecast information. The Fund presumed that
all trade receivables are homogenous. Usually, the Fund has recognised a loss allowance of 100% for
collective assessed expected credit losses with regard to trade receivables over one year past due (after
reduction of recoverable value added tax), because historical experience has indicated that these trade
receivables are generally not recoverable.
There has been no change in the estimation techniques or significant assumptions made during the current
reporting period.
The Fund writes-off on a trade receivable when there is information indicating the debtor is in severe financial
difficulty and there is no realistic prospect of recovery, e.g. when the debtor has been placed into liquidation
115
15.9.6
Risk profile of trade receivables
The following table details the risk profile of trade receivables based on the Fund’s provision matrix.
31-12-2024 | ||||||
More | ||||||
Not | Up to | 1 to | 3 months | than 1 | ||
past | 1 month | 3 months | to 1 year | year | ||
due | past due | past due | past due | past due | Total | |
Expected credit loss rate | 4.2% | 4.6% | 11.8% | 82.9% | 99.2% | |
Trade receivables (gross) | ||||||
(in € 1,000) | 333 | 108 | 17 | 35 | 238 | 731 |
Collective assessed expected credit | ||||||
losses (in € 1,000) | -/- 14 | -/- 5 | -/- 2 | -/- 29 | -/- 236 | -/- 286 |
Individually assessed expected | ||||||
credit losses (in € 1,000) | - | |||||
Trade receivables (net) (in € 1,000) | 445 | |||||
31-12-2023 | ||||||
More | ||||||
Not | Up to | 1 to | 3 months | than 1 | ||
past | 1 month | 3 months | to 1 year | year | ||
due | past due | past due | past due | past due | Total | |
Expected credit loss rate | 4.4% | 3.0% | 8.9% | 36.1% | 98.1% | |
Trade receivables (gross) | ||||||
(in € 1,000) | 318 | 66 | 45 | 36 | 360 | 825 |
Collective assessed expected credit | ||||||
losses (in € 1,000) | -/- 14 | -/- 2 | -/- 4 | -/- 13 | -/- 353 | -/- 386 |
Individually assessed expected | ||||||
credit losses (in € 1,000) | - | |||||
Trade receivables (net) (in € 1,000) | 439 | |||||
116
15.9.7
Movement in lifetime expected credit losses for trade receivables
The following table shows the movement in lifetime expected credit losses that has been recognised for trade
and other receivables in accordance with the
“
simplified approach
”
as set out in IFRS 9.
| 2024 | |||
Collective | Individually | ||
assessed | assessed | ||
expected credit | expected credit | Total expected | |
losses | losses | credit losses | |
In € 1,000 | In € 1,000 | In € 1,000 | |
Balance as at 1 January | 386 | - | 386 |
Amounts written-off | -/- 107 | - | -/- 107 |
Amounts recovered | -/- 53 | - | -/- 53 |
Change in loss allowance due to new trade and | |||
other receivables originated net of those | |||
derecognised due to settlement | 76 | - | 76 |
Withdrawals as a result of sale of subsidiaries | -/- 16 | - | -/- 16 |
Balance as at 31 December | 286 | - | 286 |
| 2023 | |||
Collective | Individually | ||
assessed | assessed | ||
expected credit | expected credit | Total expected | |
losses | losses | credit losses | |
In € 1,000 | In € 1,000 | In € 1,000 | |
Balance as at 1 January | 447 | - | 447 |
Amounts written-off | -/- 67 | - | -/- 67 |
Amounts recovered | -/- 90 | - | -/- 90 |
Change in loss allowance due to new trade and | |||
other receivables originated net of those | |||
derecognised due to settlement | 94 | - | 94 |
Exchange rate differences | 2 | - | 2 |
Balance as at 31 December | 386 | - | 386 |
PREPAYMENTS AND DEFERRED EXPENSES
15.10.1
Analysis of prepayments and deferred expenses
31-12-2024 | 31-12-2023 | |
In € 1,000 | In € 1,000 | |
Non-current part of prepayments and deferred expenses | 1 | 9 |
Current part of prepayments and deferred expenses | 244 | 299 |
245 | 308 |
117
15.10.2
Specification of prepayments and deferred expenses
31-12-2024 | 31-12-2023 | |
In € 1,000 | In € 1,000 | |
Deferred expenses | 166 | 160 |
Prepayments | 79 | 148 |
245 | 308 |
INVENTORIES
15.11.1
Analysis of inventories
31-12-2024 | 31-12-2023 | ||||
Carrying | Carrying | ||||
Name of inventory | Address | Quantity | amount | Quantity | amount |
In € 1,000 | In € 1,000 | ||||
In ownership of Boyana Residence E.O.O.D. | |||||
(Bulgaria) | |||||
Apartment 1-D | Gardova Glava, Boyana | - | Sold | 3 | 233 |
Apartment 3-C | Gardova Glava, Boyana | - | Sold | 2 | 269 |
Apartment 7-D | Gardova Glava, Boyana | - | Sold | 2 | 189 |
Apartment 8-E | Gardova Glava, Boyana | - | Sold | 2 | 159 |
Parking places | Gardova Glava, Boyana | - | Sold | 21 | 88 |
- | 938 | ||||
15.11.2
Statement of changes in inventories
2024 | 2023 | |
In € 1,000 | In € 1,000 | |
Balance as at 1 January | 938 | 1,835 |
Additions | - | 181 |
Disposals | -/- 938 | -/- 1,078 |
Balance as at 31 December | - | 938 |
The fair value of the inventories as at Statement of Financial P
osition’s date
amounts to
€
zero
(December 31, 2023
: €
1,784,000).
During 2024 the inventories were
CASH AND CASH EQUIVALENTS
The cash and cash equivalents are at the free disposal of the Fund, with the exception of €
237,000
(December 31, 2023
: €
282,000), which amount is retained on reserve accounts (e.g.
“Security Deposit
Account”, “Repair Reserve Account” and “CAPEX Account”).
118
15.12.1
Specification of cash and cash equivalents
31-12-2024 | 31-12-2023 | |
In € 1,000 | In € 1,000 | |
Bank balances | 2,171 | 2,236 |
Deposits | 247 | 144 |
Cash | 1 | 2 |
2,419 | 2,382 |
ASSETS HELD FOR SALE
15.13.1
Analysis of assets held for sale
31-12-2024 | 31-12-2023 | |
In € 1,000 | In € 1,000 | |
Owned investment property held for sale (lease incentives excluded) | 18,055 | 5,174 |
Lease incentives held for sale | 15 | 2 |
Owned investment property held for sale | 18,070 | 5,176 |
Right-of-use assets held for sale | 1,510 | 77 |
19,580 | 5,253 |
15.13.2
Analysis of owned investment property held for sale
31-12-2024 | 31-12-2023 | |
In € 1,000 | In € 1,000 | |
Buildings (including underground) | 18,070 | 5,176 |
119
Specification of owned investment property held for sale
Name of property | Address | 31-12-2024 | 31-12-2023 |
In € 1,000 | In € 1,000 | ||
In ownership of Arcona Capital RE Bohemia s.r.o. (Czechia) | |||
Karlin | Prvního Pluku 621/8a, Prague | Sold | Owned IP |
In ownership of Arcona Capital RE Slovakia s.r.o. (Slovakia) | |||
Záhradnícka | Záhradnícka 46, Bratislava | Sold | 3,846 |
In ownership of Arcona Capital Real Estate Poland Sp. z o.o. (Poland) | |||
Wolnosci | Wolnosci 6, Slupsk | 2,260 | Owned IP |
In ownership of Arcona Capital Real Estate Trio Sp. z o.o. (Poland) | |||
Grzymaly | Grzymaly Siedleckiego 20, Bydgoszcz | 1,380 | 1,330 |
Siedleckiego | |||
Kardynala | Kardynala Wyszynskiego 107, Lodz | 1,870 | Owned IP |
Wyszynskiego | |||
Legionow | Legionow 216, Torun | 3,170 | Owned IP |
Subtotal | 6,420 | 1,330 | |
In ownership of Arcona Capital Poland Project 5 Sp. z o.o. (Poland) | |||
| Maris | Holdu Pruskiego 9 & 12 Malopolska 12, | ||
| Szczecin | 9,390 | Owned IP | |
18,070 | 5,176 | ||
15.13.4
Statement of changes in owned investment property held for sale
2024 | 2023 | |
In € 1,000 | In € 1,000 | |
Balance as at 1 January | 5,176 | 6,777 |
Reclassification (from “O wned investment property ” ) | 22,260 | 1,330 |
Additions | 531 | 15 |
Fair value adjustments | 283 | -/- 445 |
Disposals | -/- 10,180 | -/- 2,501 |
Balance as at 31 December | 18,070 | 5,176 |
The
“Reclassification (from “O
wned investment property
”)” for the amount of €
22,260,000 relates to the
properties:
-
Karlin (Czechia);
-
Wolnosci (Poland);
-
Kardynala Wyszynskiego (Poland);
-
Legionow (Poland) and
-
Maris (Poland).
For further reference see section 15.2.4
“
Statement of changes in Owned Investment Property
”
.
The “Disposals” for the amount of €
10,180,000 negative relate to the sale of:
-
Karlin (Czechia) as at June 27
, 2024 for an amount of € 6,380,000 (CZK
160,500,000) and
-
Záhradnícka (Slovakia) as at July 1, 2024 for an amount
of € 3,800,000.
120
15.13.5
Valuation of owned investment property held for sale
The owned investment property held for sale, as listed in section 15.13.3 “Specification of owned investment
property held for sale”, has been valued by an external, independent appraiser as of the Statement of Financial
Position’s date, with the exception
of Grzymaly Siedleckiego (Bydgoszcz in Poland). For the general valuation
uncertainty and sensitivity analyses, reference is made to section 15.2.10, “Sensitivity Analysis.” For the
properties valued by an external independent appraiser, similar uncertainties and sensitivities are applicable.
For the respective property, Grzymaly Siedleckiego, the following approach and assumptions are applicable:
A land lease was established for the property on 16 January 2000, with a duration of 25 years.
As of 16 January 2025, the land lease for Grzymaly Siedleckiego has expired as a result the commercial and
legal title of the property (building) will automatically be transferred to the lessor (owner) of the land. Which
obliges the lessor to compensate the Fund in an amount equivalent to either the unamortised building cost or
the market value, whichever is lower. As at the valuation date of 31 December 2024, there was a leasehold
interest with only 16 days remaining and a right to compensation upon expiry.
In this context, “market value” refers to the value of the property to the lessor upon reversion—
an
unencumbered freehold without a head leasehold interest
—
allowing a ten or fifteen-year lease to be granted
to an occupational tenant, excluding the ground component.
The valuation approach focused on a specific premise of evaluating the compensation provisions detailed in
the lease, assessing the two alternative financial amounts (unamortised building cost and market value) for
their accuracy, and ultimately adopting the lower amount as the relevant figure for the 2024 accounts. This
figure is the unamortised building cost compensation of PLN 5,859,922.82 (€1,380,000), with the involvement
of an external, independent expert.
Management is of the opinion that the respective unamortised building cost compensation would be the most
appropriate amount to reflect the market value. However, management acknowledges that, based on the
specific contractual agreements with the land lease lessor, accurately assessing a precise market valuation
would be very difficult. As a result, management assumes there is a material valuation uncertainty regarding
the underlying property. Consequently, management expects a potentially negative valuation uncertainty in
the range of 20-30% or larger.
In January 2025, the Fund received a payment of approximately PLN 628,000 (€147,000) from the lessor as
partial payment of the due compensation. The Fund is currently in negotiations with the lessor to agree on
additional compensation amounts and is seeking to resolve the matter through mutual agreement. The
potential for settlement could indicate a likely resolution for receiving a reduced amount, thus necessitating a
greater degree of caution and uncertainty associated with the valuation than would typically be the case. For
further details, please refer to section 15.46 “Events after Statement of Financial Position Date”.
These valuations have been prepared in accordance with the applicable IFRS regulations and are intended
for accounting purposes.
15.13.6
Specification of right-of-use assets held for sale
Nature of right-of-use asset | Related to owned investment property | 31-12-2024 | 31-12-2023 |
In € 1,000 | In € 1,000 | ||
Right-of-use held by Arcona Capital Real Estate Trio Sp. z o.o. (Poland) | |||
Land lease | Grzymaly Siedleckiego | 4 | 77 |
Land lease | Kardynala Wyszynskiego | 364 | ROU asset |
Land lease | Legionow | 1,142 | ROU asset |
1,510 | 77 | ||
121
15.13.7
Statement of changes in right-of-use assets held for sale
2024 | 2023 | |
In € 1,000 | In € 1,000 | |
Balance as at 1 January | 77 | - |
Remeasurement (as a result of an index / inflation) | 12 | - |
Fair value adjustments | -/- 127 | - |
Reclassification (from “R ight-of-use assets ” ) | 1,548 | 77 |
Balance as at 31 December | 1,510 | 77 |
The “Reclassification (
from
“R
ight-of-use assets
”)” for the amount of €
1,548,000 relates to the properties
Kardynala Wyszynskiego (Poland) and Legionow (Poland). For further reference see section 15.2.7
“Statement of changes in right
-of-
use assets”.
15.13.8
Valuation of right-of-use assets held for sale
The right-of-use assets held for sale, as listed in section 15.13
.6 “Specification of right
-of-use assets held for
sale
”, were not valued by an external, independent appraiser as at Statement of Financial Position’s date.
Right-of-use assets held for sale are initially measured at cost, which compromises the initial amount of the
lease liability directly associated with assets held for sale adjusted by the amount of any prepaid or accrued
lease payment, less any lease incentives received. The right-of-use asset held for sale is subsequently
measured at fair value (subject to certain exceptions), less accumulated depreciation and impairment losses.
The right-of-use asset held for sale will additionally be adjusted for any remeasurement of the lease liability
directly associated with assets held for sale, when applicable.
The Managing Board is of the opinion the above method is the most appropriate approach to the valuation of
GROUP EQUITY
15.14.1
“Closed
-
end” structure
The Fund operates as a closed-end investment company. Ordinary shares can be traded continuously through
Euronext Fund Services in Amsterdam (The Netherlands).
The registered shares are currently restricted from trading on Euronext Fund Services. There are no other
restrictions with regard to registered shares.
All issued ordinary, treasury and registered shares are part of the
Fund’s capital management
responsibilities.
The
Fund’s objectives when managing capital are to safeguard the Fund’s ability to continue as a going
concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an
optimal capital structure to reduce the cost of capital. The Fund reserves the right to declare dividends and /
or distributions if the Managing Board so decides.
Shares of the Fund shall be issued by the Managing Board. The Managing Board shall also determine the time
of the issuance, the issue price and the other conditions of the issuance.
The Managing Board shall be authorised to perform legal acts relating to contributions in kind on ordinary
shares and other legal acts referred to in Section 2:94 of the Dutch Civil Code, without the approval of the
General Meeting. A resolution to enter into these legal acts shall require the approval of the Supervisory Board.
The Managing Board is authorised to alienate shares in its own capital or depository receipts thereof, held by
122
Share buy-back / Reverse Bookbuilding
As part of the share buy-back programme in 2024, the Fund has repurchased 294,118 ordinary shares of the
Fund
(equivalent to approximately €
2 million) through a Reverse Bookbuilding Tender Offer. As at September
18, 2024 the Fund announced that it would launch a Reverse Bookbuilding Tender Offer to repurchase
€ 2
million worth of ordinary shares on the open market. Shareholders were given the opportunity to offer their
shares at a price between € 6.50 and a maximum of € 8.00
from September 19, 2024 to October 16, 2024. All
shares repurchased by the Fund were
redeemed at the same price, the “Clearing Price”. The Tender Offer
resulted in
at a “Clearing Price” of € 6.80 per ordinary share.
The Fund intends to cancel the repurchased ordinary shares at the General Meeting of Shareholders in June
15.14.4
Nature and purpose of reserves
For the nature and the purpose of the various reserves reference is made to section:
-
18.3.6 “
Legal r
evaluation reserve”;
-
18.3.7 “Reserve currency translation differences”
.
15.14.5 Equity components
For further analysis and statements of changes in the various equity components reference is made to section
19.
8.1 “Statement of changes in shareholders’ equity”
TAX LIABILITIES
15.15.1
Specification of tax liabilities
31-12-2024 | 31-12-2023 | |
In € 1,000 | In € 1,000 | |
Non-current part of tax liabilities | - | - |
Current part of tax liabilities | 707 | 168 |
707 | 168 |
15.15.2
Analysis of tax liabilities
31-12-2024 | 31-12-2023 | |
In € 1,000 | In € 1,000 | |
Corporate income tax ( CIT ) | 583 | 5 |
Value added tax ( VAT ) | 81 | 129 |
Withholding tax ( WHT ) | 40 | 32 |
Property tax | 1 | 2 |
Other tax liabilities | 2 | - |
707 | 168 |
123
LOANS AND BORROWINGS
15.16.1
Analysis of loans and borrowings
| 31-12-2024 | |||
Non-current | Current | ||
Kind of loans and borrowings | liabilities | liabilities | Total |
In € 1,000 | In € 1,000 | In € 1,000 | |
Secured bank loans | 16,526 | 4,002 | 20,528 |
Lease liabilities | - | - | - |
Other loans and borrowings | 250 | 1,764 | 2,014 |
16,776 | 5,766 | 22,542 | |
| 31-12-2023 | |||
Non-current | Current | ||
Kind of loans and borrowings | liabilities | liabilities | Total |
In € 1,000 | In € 1,000 | In € 1,000 | |
Secured bank loans | 5,725 | 20,780 | 26,505 |
Lease liabilities | 1,231 | 157 | 1,388 |
Other loans and borrowings | - | 3,959 | 3,959 |
6,956 | 24,896 | 31,852 | |
15.16.2
Statement of changes in secured bank loans
2024 | 2023 | |
In € 1,000 | In € 1,000 | |
Balance as at 1 January | 26,505 | 30,175 |
Loans advanced | 3,200 | 6,049 |
Redemptions | -/- 9,113 | -/- 9,596 |
(Amortisation) flat fee and transaction costs | 40 | 25 |
Exchange rate differences | -/- 104 | -/- 148 |
Balance as at 31 December | 20,528 | 26,505 |
The “Loans advanced”
for the
amount of €
3,200,000 refers to the refinancing of the Slovak real estate
portfolio's loan, held by Slovenská
Spořitelna
.
15.16.3
Analysis of secured bank loans
31-12-2024 | |||||
Weighted | |||||
Name of | average | ||||
credit | Date of | interest | Face | Carrying | |
Name of company | institution | maturity | rate | value | amount |
In % | In € 1,000 | In € 1,000 | |||
Arcona Capital RE Bohemia s.r.o. | UniCredit | 31-12-2028 | 6.29 | 2,854 | 2,831 |
Slovenská | |||||
Arcona Capital RE Slovakia s.r.o. | Sporiteľňa | 31-12-2029 | 5.21 | 3,158 | 3,140 |
Arcona Capital Real Estate Poland Sp. | |||||
z o.o. & Arcona Poland Project 5 Sp. z o.o. | Hypo Noe | 31-03-2026 | 6.11 | 12,040 | 11,989 |
Patria | |||||
N-E Real Estate Park First Phase S.r.l. | Bank | 10-12-2031 | 6.83 | 2,622 | 2,568 |
20,674 | 20,528 | ||||
124
The fair value of the secured bank loans does not deviate substantially from carrying amount, since the
applicable interest rate as at Statement of Financial Position’s date are comparable to the market interest rate
for comparable loans.
| 31-12-2023 | |||||
Weighted | |||||
Name of | average | ||||
credit | Date of | interest | Face | Carrying | |
Name of company | institution | maturity | rate | value | amount |
In % | In € 1,000 | In € 1,000 | |||
Arcona Capital RE Bohemia s.r.o. | UniCredit | 31-12-2028 | 8.87 | 5,865 | 5,836 |
| Slovenská | |||||
| Arcona Capital RE Slovakia s.r.o. | Sporiteľňa | 30-09-2024 | 6.36 | 5,329 | 5,328 |
Arcona Capital Real Estate Poland Sp. | |||||
| z o.o. & Arcona Poland Project 5 Sp. z o.o. | Hypo Noe | 31-03-2026 | 7.07 | 12,600 | 12,506 |
N-E Real Estate Park First Phase S.r.l. | Patria Bank | 10-12-2031 | 7.50 | 2,897 | 2,835 |
26,691 | 26,505 | ||||
125
Securities provided, bank covenants and ratios secured bank loans
As at Statement of Financial Position
’s date
the following securities were provided, and bank covenants agreed
with regard to the secured bank loans. The ratios, as well as the withdrawable credit facilities as at Statement
of Financial Position’s date are also mentioned.
Slovenská | Hypo | Patria | ||
UniCredit | Sporiteľňa | Noe | Bank | |
Carrying amounts securities provided: | ||||
• Owned investment property (in € 1,000) | 11,025 | 11,940 | 15,730 | 3,965 |
• Assets held for sale (in € 1,000) | - | - | 11,650 | - |
• Trade and other receivables (in € 1,000) | 147 | 231 | 697 | 193 |
• Cash and cash equivalents (in € 1,000) | 260 | 466 | 824 | 181 |
Bank covenants: | ||||
• Debt Service Coverage Ratio ( DSCR ) | ||||
(minimum) | 1.20 | 1.20 | 0.95 | 1.30 |
• Debt Service Reserve Account ( DSRA ) | ||||
(in € 1,000) | 29 11 | 150 | 483 | 180 12 |
• Capital expenditure ( CAPEX ) (in € 1,000) | 60 13 | 40 | N.a. | N.a. |
• Minimum total annual collection in the bank | ||||
account (in € 1,000) | N.a. | N.a. | N.a. | 603 14 |
• Loan to value (maximum) | 60.00% | 50.00% | 44.00% | N.a. |
• Negative equity borrower | N.a. | N.a. | no 15 | N.a. |
• Issued shares borrower pledged | No | No | Yes 16 | No |
• Contractual testing date(s) of bank | 30.06 & | 30.06 & | ||
covenants | 31.12 | 31.12 | Quarterly 17 | 31.12 |
Ratios: | ||||
Debt Service Coverage Ratio ( DSCR ) | 1.32 | 1.22 | 0.95 | 1.36 |
Loan to value ( LTV ) | 25.89% | 26.49% | 46.10% | 66.13% |
Withdrawable credit facilities: | ||||
Maximum credit facilities | 4,840 | 3,158 | 12,040 | 2,622 |
Outstanding amount | 2,854 | 3,158 | 12,040 | 2,622 |
Withdrawable credit facilities | 1,986 18 | - | - | - |
For further information on pledged issued shares of the borrower reference is made to section 19.1.3
“Securit
ies provided
”
.
11
In accordance with the bank covenant CZK 720,000.
12
In accordance with the bank covenant the Debt Service Reserve account (DSRA) has to be built up monthly with an amount of
€
5,000
until an amount of € 265,000 is reached.
13
In accordance with the bank covenant CZK 1,500,000.
14
In accordance with the bank covenant RON 3,000,000.
15
Each borrower (Arcona Capital Real Estate Poland Sp. z o.o. and Arcona Poland Project 5 Sp. z o.o.) has to ensure that, at all times,
its total assets increased by the aggregate of the subordinated liabilities then outstanding are greater than its total liabilities. For the
purpose of this calculation contingent and prospective liabilities will not be considered and liabilities under subordinated shareholders loan
will be treated as equity and not as liabilities.
16
Only the shares in Arcona Capital Real Estate Poland Sp. z o.o. are pledged. The shares in Arcona Poland Project 5 Sp. z o.o. are not
pledged.
17
March 31, June 30, September 30 and December 31.
18
UniCredit has made a credit line of up to CZK 50,000,000 available for investments, including for investments in the office building
Politickych Veznu 10.
126
Slovenská Sporiteľňa
The lease contract with AT&T has been successfully prolonged, hence the secured bank loan will be due by
December 31, 2029.
Based on above conditions the secured bank loan of
Slovenská Sporiteľňa is fully classified
as current as at
Statement of Financial Position’s date.
The remaining loans, primarily from Hypo Noe, have been reclassified as non-current as at the Statement of
15.16.5
Statement of changes in lease liabilities
2024 | 2023 | |
In € 1,000 | In € 1,000 | |
Balance as at 1 January | 1,388 | 1,162 |
Remeasurement (as a result of an index / inflation) | 186 | 330 |
Redemptions | -/- 87 | -/- 219 |
Accrued interest | 48 | 91 |
Exchange rate differences | 10 | 100 |
Reclassifications (to “L iabilities directly associated with assets held for | ||
| sale ” ) | -/- 1,545 | -/- 76 |
Balance as at 31 December | - | 1,388 |
The “Reclassification (to “L
iabilities directly associated with assets held for sale
”)” for the amount of
€
1,545,000 negative relates to the properties Kardynala Wyszynskiego (Poland) and Legionow (Poland). For
further reference see section 15.21.4
“Statement of changes in liabilities directly associated with assets held
for sale”.
15.16.6
Analysis of lease liabilities
Nature of lease liability | Related to property | 31-12-2024 | 31-12-2023 |
In € 1,000 | In € 1,000 | ||
Lease liability by Arcona Capital Real Estate Trio Sp. z o.o. (Poland) | |||
Land lease | Grzymaly Siedleckiego | Held for sale | Held for sale |
Land lease | Kardynala Wyszynskiego | Held for sale | 379 |
Land lease | Legionow | Held for sale | 1,009 |
- | 1,388 | ||
15.16.7
Maturity analysis contractual undiscounted cash flows of lease liabilities
31-12-2024 | 31-12-2023 | |
In € 1,000 | In € 1,000 | |
Less than 1 year | 184 | 232 |
1 year to 5 years | 706 | 639 |
More than 5 years | 1,710 | 1,619 |
2,600 | 2,490 |
127
Statement of changes in other loans and borrowings
2024 | 2023 | |
In € 1,000 | In € 1,000 | |
Balance as at 1 January | 3,959 | 4,788 |
Loans advanced | 2,000 | 1,000 |
Redemptions | -/- 3,984 | -/- 1,899 |
(Amortisation) flat fee and transaction costs | 32 | 37 |
Accrued interest | 9 | 37 |
Exchange rate differences | -/- 2 | -/- 4 |
Balance as at 31 December | 2,014 | 3,959 |
128
15.16.9
Analysis of other loans and borrowings
31-12-2024 | ||||||
Weighted | ||||||
Name of | Secured / | Date of | average | Face | Carrying | |
Name of company | counterparty | unsecured | maturity | interest rate | value | amount |
In % | In € 1,000 | In € 1,000 | ||||
Almaz-Press- | ||||||
Aisi Bela LLC | Ukraine LLC | Unsecured | - | 0.00 | 47 | 47 |
Arcona Capital Real | ||||||
Estate Trio Sp. z o.o. | Bond holder | Secured | 29-03-2024 | N.a. | N.a. | N.a. |
Arcona Property Fund | Other third | |||||
N.V. | party (I) | Unsecured | 15-01-2026 | 9.50 | 250 | 250 |
Arcona Property Fund | Other third | |||||
N.V. | party (II) | Unsecured | 30-06-2025 | 9.00 | 667 | 667 |
Arcona Property Fund | Other third | |||||
N.V. | party (III) | Unsecured | 18-12-2025 | 11.00 | 600 | 600 |
Arcona Property Fund | Other third | |||||
N.V. | party (IV) | Unsecured | 18-12-2025 | 12.00 | 450 19 | 450 |
2,014 | 2,014 | |||||
31-12-2023 | ||||||
Weighted | ||||||
average | ||||||
Name of | Secured / | Date of | interest | Face | Carrying | |
Name of company | counterparty | unsecured | maturity | rate 20 | value | amount |
In % | In € 1,000 | In € 1,000 | ||||
Almaz-Press- | ||||||
Aisi Bela LLC | Ukraine LLC | Unsecured | - | 0.00 | 49 | 49 |
Arcona Capital Real | ||||||
Estate Trio Sp. z o.o. | Bond holder | Secured | 29-03-2024 | 12.45 21 | 1,800 | 1,788 |
Arcona Property Fund | Other third | |||||
N.V. | party (I) | Unsecured | 15-01-2024 22 | 9.50 | 250 | 250 |
Arcona Property Fund | Other third | |||||
N.V. | party (II) | Unsecured | 30-06-2024 | 9.00 | 334 | 327 |
Arcona Property Fund | Other third | |||||
N.V. | party (III) | Unsecured | 30-06-2024 | 9.00 | 400 | 396 |
Arcona Property Fund | Other third | |||||
N.V. | party (IV) | Unsecured | 30-06-2024 | 9.00 | 667 | 660 |
Arcona Property Fund | Other third | |||||
N.V. | party (V) | Unsecured | 30-06-2024 | 9.00 | 500 | 489 |
4,000 | 3,959 |
The bond, secured by Arcona Capital Real Estate Trio Sp. z o.o. and having a carrying amount of € 1.79
million, set to mature on March 29, 2024, has been successfully refinanced in March 2024 through two investor
loans from third parties, each of € 1 million. These loans are designated to be repaid with the proceeds from
the forthcoming sales in 2025.
19
This loan has been successfully refinanced during January 2025 at more favourable loan conditions.
20
Exclusive variable remunerations.
21
The weighted average interest rate used amounts to 11.78%.
22
During January 2024 the date of maturity has been extended for 2 years (January 15, 2026).
129
15.16.10 Securities provided of other loans and borrowings
As at Statement of Financial Position’s date
there were no securities provided with regard to the other loans
TRADE AND OTHER PAYABLES
15.17.1
Analysis of trade and other payables
31-12-2024 | 31-12-2023 | |
In € 1,000 | In € 1,000 | |
Non-current part of trade and other payables | - | - |
Current part of trade and other payables | 3,163 | 2,148 |
3,163 | 2,148 |
Specification of trade and other payables
31-12-2024 | 31-12-2023 | |
In € 1,000 | In € 1,000 | |
Trade payables | 501 | 539 |
Accruals | 615 | 542 |
Fund Management fee | 436 | 550 |
Interest payables | 219 | 397 |
Payable settlement acquisitions | 1,187 | 120 |
Sales performance-related fee | 169 | - |
Sales fee | 32 | - |
Other trade and other payables | 4 | - |
3,163 | 2,148 |
The “Payable settlement acquisitions” for the amount of € 1,187,000 relates to
the remaining balance of the
acquisition of the Ukrainian and Romanian assets from SPDI, which was settled during the first quarter of
DEFERRED INCOME AND TENANT DEPOSITS
15.18.1
Analysis of deferred income and tenant deposits
31-12-2024 | 31-12-2023 | |
In € 1,000 | In € 1,000 | |
Non-current part of deferred income and tenant deposits | 441 | 378 |
Current part of deferred income and tenant deposits | 100 | 228 |
541 | 606 |
15.18.2
Specification of deferred income and tenant deposits
31-12-2024 | 31-12-2023 | |
In € 1,000 | In € 1,000 | |
Deposits received from tenants | 524 | 591 |
Advance payments received from tenants | 17 | 15 |
541 | 606 |
130
PROVISIONS
15.19.1
Analysis of provisions
31-12-2024 | 31-12-2023 | |
In € 1,000 | In € 1,000 | |
Non-current part of provisions | - | - |
Current part of provisions | - | - |
- | - |
15.19.2
Specification of provisions
31-12-2024 | 31-12-2023 | |
In € 1,000 | In € 1,000 | |
Sales performance-related fee | - | - |
The provision for sales performance-related fee relates to the best estimate of the amount, with regard to the
Incentive for the Managing Board for the achieved sales of assets.
1.
in the case the sale of an asset is realised within the 12-month period (December 21, 2023 -
December 20, 2024) the sales performance-related fee is 20.0%% of the excess gross sales price
over valuation;
2.
in the case the sale of an asset is realised within the 13-to-18-month period (December 21, 2024 -
June 20, 2025) the sales performance-related fee is 15.0% of the excess gross sales price over
valuation.
The sales performance-related fee is calculated separately for each period on the entire positive or negative
deviation compared to the asset value as at June 30, 2023 during the 12- and 6-months period. For further
reference see section
15.35.5 “Sales fee and sales performance
-
related fee”.
Since the 12-
month period has expired, an amount of € 169,000 of the provision was used during the financial
15.19.3
Statement of changes in provisions
In € 1,000 | 2024 |
Sales performance- | |
related fee | |
Balance as at 1 January | - |
Provisions made during the financial | |
period | 169 |
Provision used during the financial period | -/- 169 |
Balance as at 31 December | - |
131
DEFERRED TAX LIABILITIES
For the specification and analysis of the (un)recognised deferred tax liabilities reference is made to sections:
•
15.6
.1 “Specification of recognised deferred taxes”;
•
15.6
.4 “Statement of changes in recognised deferred taxes”;
•
15.7.1
“Specification of unrecognised
deferred taxes
”
; and
•
15.7.4
“
Statement of changes in
unrecognised deferred taxes”
LIABILITIES DIRECTLY ASSOCIATED WITH ASSETS HELD FOR SALE
15.21.1
Analysis of liabilities directly associated with assets held for sale
31-12-2024 | 31-12-2023 | |
In € 1,000 | In € 1,000 | |
Loans and borrowings | 1,519 | 76 |
15.21.2
Analysis of loans and borrowings
31-12-2024 | 31-12-2023 | |
In € 1,000 | In € 1,000 | |
Lease liabilities | 1,519 | 76 |
15.21.3
Analysis of lease liabilities
Nature of lease liability | Related to property | 31-12-2024 | 31-12-2023 |
In € 1,000 | In € 1,000 | ||
Lease liability by Arcona Capital Real Estate Trio Sp. z o.o. (Poland) | |||
Land lease | Grzymaly Siedleckiego | 4 | 76 |
Land lease | Kardynala Wyszynskiego | 366 | - |
Land lease | Legionow | 1,149 | - |
1,519 | 76 | ||
15.21.4
Statement of changes in liabilities directly associated with assets held for sale
2024 | 2023 | |
In € 1,000 | In € 1,000 | |
Balance as at 1 January | 76 | - |
Remeasurement (as a result of an index / inflation) | 12 | - |
Redemptions | -/- 177 | - |
Accrued interest | 50 | - |
Exchange rate differences | 13 | - |
Reclassifications (from “Lease liabilities”) | 1,545 | 76 |
Balance as at 31 December | 1,519 | 76 |
The “Reclassification (from “L
ease liabilities
”)” for the amount of €
1,545,000 relates to the properties
Kardynala Wyszynskiego (Poland) and Legionow (Poland). For further reference see section 15.16.5
“Statement of changes in
lease
132
CONTINGENT ASSETS
A contingent asset is a possible asset that arises from past events and whose existence will be confirmed only
by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of
the Fund.
As of the Statement of Financial Position
’
s date, the Fund did not hold any contingent assets that are not
included in the Statement of Financial Position, except for unrecognised deferred tax assets, as mentioned in
section 15.7
“
Unrecognised deferred taxes
”
15.23
NON-CONTINGENT ASSETS
As of the Statement of Financial Position
’
s date, the Fund did not hold any non-contingent assets other than
those already recognised in the Statement of Financial Position.
CONTINGENT LIABILITIES
A contingent liability is:
A.
a possible obligation that arises from past events and whose existence will be confirmed only by the
occurrence or non-occurrence of one or more uncertain future events not wholly within the control of
the Fund; or
B.
a present obligation that arises from past events but is not recognised because:
-
it is not probable that an outflow of resources embodying economic benefits will be required
to settle the obligation; or
-
the amount of the obligation cannot be measured with sufficient reliability.
As at Statement of Financial Position
’s date the Fund has the following contingent liabilities
which are not
included in the Statement of Financial Position:
A.
Arcona Capital RE Bohemia s.r.o. has a contingent liability for the amount of CZK 4,509,000
(€
179
,000) towards the buyer of the investment property Štefánikova with regard to rent received in
advance by Arcona Capital RE Bohemia s.r.o. for usage of the parking places (free of payment) by
the lessee of Štefánikova. Based on the agreement (2012) the buyer of Štefánikova will pay the taxes
with regard to this rent;
As a result of acquisitions through share-based payments the Fund has a contingent liability to issue
ordinary shares against an exercise price as mentioned below as a result of the outstanding warrants.
The conditions are as follows:
Number of | Date of | Expiration | Required | Exercise | |
Holder | warrants | Issue | date | share price | price |
SPDI | 76,085 | 29-03-2022 | 29-03-2027 | € 7.20 | € 0.00 |
SPDI | 39,458 | 15-06-2022 | 15-06-2027 | € 7.20 | € 0.00 |
The exercise date of the outstanding warrants is the trading day immediately following the 10
th
trading day on which the shares have traded on a regulated market (or system comparable to a
regulated market) and for which the volume-weighted average price of a share was
€ 7.20
or higher
(the “required share price”)
, provided that this warrant may not be exercised within a 12 months
period following the issue date, unless a prospectus approved by the AFM with respect to the
warrants and / or the warrant shares is published by the Fund.
133
In case the conditions are met the warrant shares will be issued against an exercise price of € 0.00.
The fair value of the warrants is nil. In case the conditions are met each warrant entitles the holder
to one ordinary share of the Fund and the warrant shares will be charged from the share premium
or other freely distributable reserve to the issued capital.
The statement of changes in warrants is as follows:
2024 | 2023 | |
In pieces | In pieces | |
Balance as at 1 January | 259,807 | 259,807 |
Granted during the financial period | - | - |
Forfeited during the financial period | - | - |
Expired during the financial period | -/- 144,264 | - |
Balance as at 31 December | 115,543 | 259,807 |
Exercisable as at 31 December | - | - |
C.
The Fund has a contingent liability towards the Managing Board with regard to sales fee and sales
performance-related fee, which is described in section 15.35
.5 “Sales fee and sales performance
-
related fee.
As at Statement of Financial Position’s date the Fund was not subject to any further contingent liabilities,
including any obligations that result from security transactions related to (exchange) rate risk in connection
NON-CONTINGENT LIABILITIES
As of the Statement of
Financial Position’s date, the Fund was not subject to any contractual obligations, such
as investments, repairs, maintenance, or other non-contingent liabilities, that require settlement in a future
134
GROSS RENTAL INCOME
15.26.1 General
The Fund leases out its investment property. The Fund has classified these leases as operating leases
because the Fund does not transfer substantially all of the risks and rewards incidental to the ownership of the
assets. All gross rental income can be classified as operating lease income, with the exception of amortisation
of lease incentives.
During the financial period, as well as during the previous financial period no contingent rental income was
accounted for as income in the Income Statement. Leases for a determined time are normally indexed yearly
with annual inflation stated by the relevant national Central Banks. New leases for a determined time are
usually signed for a term of five years. All these lease contracts usually include at least a three-month deposit.
15.26.2
Analysis of gross rental income
2024 | 2023 | |
In € 1,000 | In € 1,000 | |
Gross rental income collected / accrued | 6,542 | 6,794 |
Amortisation of lease incentives | -/- 208 | -/- 218 |
6,334 | 6,576 |
15.26.3
Analysis of gross rental income collected / accrued
2024 | 2023 | |
In € 1,000 | In € 1,000 | |
Fixed lease payments received | 6,542 | 6,794 |
Variable lease payments received | - | - |
6,542 | 6,794 |
15.26.4
Weighted average percentage of the vacant space
Weighted to the fair value, the weighted average percentage of the vacant space as at Statement of Financial
Position’s date
is as follows:
31-12-2024 | 31-12-2023 | |
In % | In % | |
Buildings (including underground) | 15.2 | 14.3 |
Land plots | N.a. | N.a. |
Investment property under development | 100.0 | 100.0 |
Inventories | Sold | 100.0 |
Buildings (including underground) held for sale | 10.8 | 28.2 |
135
Weighted to the fair value, the weighted average percentage of the vacant space during the financial period is
as follows:
2024 | 2023 | |
In % | In % | |
Buildings (including underground) | 13.9 | 13.4 |
Land plots | N.a. | N.a. |
Investment property under development | 100.0 | 100.0 |
Inventories | Sold | 100.0 |
Buildings (including underground) held for sale | 22.3 | 29.7 |
15.26.5 Non-cancellable leases
The gross rental income receivable on account of non-cancellable leases related to owned investment
property, investment property under development and inventories as at
Statement of Financial Position’s date
is as follows (The future minimum gross rental income receivable in foreign currency has been translated at
the average exchange rate used for the Consolidated Income Statement for the financial period):
31-12-2024 | 31-12-2023 | |
In € 1,000 | In € 1,000 | |
Less than 1 year | 4,295 | 5,778 |
1 year to 2 years | 3,079 | 3,365 |
2 years to 3 years | 2,587 | 2,343 |
3 years to 4 years | 1,988 | 1,778 |
4 years to 5 years | 900 | 1,237 |
More than 5 years | 3,262 | 1,167 |
16,111 | 15,668 |
REBILLED AND NON-REBILLED SERVICE CHARGES AND PROPERTY OPERATING
EXPENSES
15.27.1 General
As the Fund invoices service charges independently (or as principal) to the lessees on the basis of the leases
entered into, such reimbursed service charges are shown separately in the Consolidated Income Statement.
The work associated with the service charges is carried out either by the Fund, or by third parties on a contract
basis. Contracts for the performance of service work are usually entered into for a maximum period of six
months. In addition, service charge expenses also include charges related to vacant units and / or other
irrecoverable service charges due to contractual limits or insolvent tenants.
136
15.27.2
Analysis of property operating expenses
2024 | 2023 | |
In € 1,000 | In € 1,000 | |
Property management | 456 | 476 |
Asset management | 479 | 532 |
Maintenance expenses in respect of properties | 431 | 481 |
Property taxes and fees | 385 | 322 |
Insurance premiums | 55 | 52 |
Other property operating expenses | 1 | - |
Subtotal | 1,807 | 1,863 |
Adjustment property taxes and fees previous year(s) | - | 9 |
Reimbursement from tenants | - | -/- 38 |
1,807 | 1,834 |
15.27.3
Allocation of service charges and property operating expenses
The determination of costs from non-rented properties is based on properties that had an average vacancy of
more than 10% during the financial period. The allocation of service charges and direct operating expenses to
the properties, whether or not rent generating, is as follows:
2024 | 2023 | |
In € 1,000 | In € 1,000 | |
For properties let | 3,966 | 4,028 |
For properties not let | 451 | 474 |
4,417 | 4,502 |
15.27.4
Non-cancellable operating leases (not in scope of IFRS 16)
Non-cancellable operating leases of investment properties and inventories as at 31 December of the relevant
financial period, which are not in scope of IFRS 16 are shown as follows (the future non-cancellable operating
leases in foreign currency have been translated at the average exchange rate used for the Consolidated
Income Statement for the financial period):
31-12-2024 | 31-12-2023 | |
In € 1,000 | In € 1,000 | |
Less than 1 year | - | - |
1 to 5 years | - | - |
More than 5 years | - | - |
- | - |
137
VALUATION RESULTS OF PROPERTIES
2024 | 2023 | |
In € 1,000 | In € 1,000 | |
Owned investment property | -/- 1,797 | 303 |
Right-of-use assets | -/- 38 | -/- 147 |
Investment property under development | 366 | 65 |
Owned investment property held for sale | 996 | 2,350 |
Right-of-use assets held for sale | -/- 127 | - |
-/- 600 | 2,571 |
15.29
RESULT ON DISPOSALS OF PROPERTIES
15.29.1
Analysis of result on disposals of properties
2024 | 2023 | |
In € 1,000 | In € 1,000 | |
Owned investment property held for sale | -/- 1,006 | -/- 2,885 |
15.29.2
Specification of result on disposals of properties - per building
2024 | 2023 | |
In € 1,000 | In € 1,000 | |
Záhradnícka (Slovakia) | -/- 1,691 | - |
Karlin (Czechia) | 685 | - |
Gardova Glava, Sofia (Bulgaria) | - | -/- 2,885 |
-/- 1,006 | -/- 2,885 |
Specification of result on disposals of properties
2024 | 2023 | |
In € 1,000 | In € 1,000 | |
Realised value adjustments | -/- 703 | -/- 2,795 |
Sales fee | 204 | - |
Sales performance-related fee | 85 | - |
Transaction costs on sale of investment properties | 6 | 78 |
Consultancy fees and legal fees | 8 | 12 |
Subtotal costs on sale of investment properties | 303 | 90 |
-/- 1,006 | -/- 2,885 |
138
RESULT ON DISPOSALS OF INVENTORIES
15.30.1
Analysis of result on disposals of inventories
Quantity | 2024 | 2023 | |
In € 1,000 | In € 1,000 | ||
Apartment 1-D, Gardova Glava, Sofia (Bulgaria) | 3 | 198 | 227 |
Apartment 2-A, Gardova Glava, Sofia (Bulgaria) | - | - | 26 |
Apartment 3-C, Gardova Glava, Sofia (Bulgaria) | 2 | 188 | 155 |
Apartment 7-D, Gardova Glava, Sofia (Bulgaria) | 2 | 144 | 129 |
Apartment 8-E, Gardova Glava, Sofia (Bulgaria) | 2 | 109 | 474 |
Parking places, Gardova Glava, Sofia (Bulgaria) | 21 | 140 | 82 |
779 | 1,093 |
Specification of result on disposals of inventories
2024 | 2023 | |
In € 1,000 | In € 1,000 | |
Selling price | 1,848 | 2,349 |
Less: carrying amount of sold inventories | 938 | 1,078 |
910 | 1,271 | |
Sales fee | 37 | - |
Sales performance-related fee | 84 | - |
Adjustment refund of value added tax | 10 | 177 |
Transaction costs on sale of inventories | - | 1 |
Subtotal costs on sale of inventories | 131 | 178 |
779 | 1,093 |
The “Adjustment refund of value added tax” for the amount of €
10,000 represents the expense for Bulgarian
NET RESULTS ON PROPERTIES
2024 | 2023 | |
In € 1,000 | In € 1,000 | |
Valuation gains | 2,636 | 2,519 |
Valuation losses | -/- 3,029 | -/- 1,472 |
-/- 393 | 1,047 | |
Costs on sale of properties | 434 | 268 |
-/- 827 | 779 |
139
SHARE IN RESULTS OF INVESTMENTS IN ASSOCIATES
15.32.1
Analysis of share in results of investments in associates
2024 | 2023 | |
In € 1,000 | In € 1,000 | |
Lelar Holdings Limited | 80 | 225 |
15.32.2
Specification of share in results of investments in associates
2024 | 2023 | |
In € 1,000 | In € 1,000 | |
Fair value adjustments | -/- 287 | 102 |
Dividend | 367 | 123 |
80 | 225 |
FINANCIAL INCOME
2024 | 2023 | |
In € 1,000 | In € 1,000 | |
Realised currency results on net investments in group companies | 638 | 220 |
Interest income on derivative financial instruments | 200 | 150 |
Interest income of bank balances and deposits | 14 | 19 |
Interest on trade receivables | 4 | 4 |
Penalty interest and fees | 9 | 1 |
865 | 394 |
OTHER OPERATING INCOME
2024 | 2023 | |
In € 1,000 | In € 1,000 | |
Penalties for early termination of rental contracts | 5 | - |
Other operating income | 12 | 7 |
17 | 7 |
ADMINISTRATIVE EXPENSES
15.35.1
Specification administrative expenses
2024 | 2023 | |
In € 1,000 | In € 1,000 | |
Fund management fee | 675 | 675 |
Performance-related remuneration | - | - |
675 | 675 |
140
15.35.2 Management fee
This is the total fee received by the Managing Board (Arcona Capital Fund Management B.V.) for the
management it performs. The total management fee consists of the Fund management fee as well as the
Asset management fee. The management fee is calculated by percentages on the value of the
Fund’s total
assets at month-end.
In accordance with the Fund’s prospectus, the Registration Document dated October
19,
2016, Security Note dated October 28, 2016 and the addendum of the Registration Document dated December
20, 2023 these percentages are:
•
f
or assets below € 75 million: 1.50% per annum (0.125% per month);
•
for assets as of
€ 75 million and above: 1.00% per annum (0.083% per month).
15.35.3
Specification Fund management fee
2024 | 2023 | |
In € 1,000 | In € 1,000 | |
Management fee | 1,180 | 1,237 |
Less: Asset management fee: | ||
Arcona Capital Czech Republic s.r.o. | 233 | 263 |
Arcona Capital Poland Sp. z o.o. | 199 | 196 |
Arcona Capital Bulgaria E.O.O.D. | 8 | 28 |
CEG South East Continent Unique Real Estate Management Limited | 65 | 75 |
505 23 | 562 | |
Fund management fee (Arcona Capital Fund Management B.V.) | 675 | 675 |
15.35.4 Performance-related remuneration
Until December 20, 2023 the Managing Board was entitled to performance-related remuneration dependent
on the Fund’s total annual return.
The total return is defined as the increase in Net Asset Value per profit-
sharing share over the relevant financial period increased by dividends distributed during that financial period.
The sum of these components is expressed as a percentage of the Net Asset Value per profit-sharing share
at the start of the financial period. The total performance-related remuneration is calculated on the total
average number of outstanding profit-sharing shares in the relevant financial period multiplied by the Net Asset
Value per profit-sharing share at the start of the relevant financial period.
In accordance with the Fund’s prospectus, the Registration Document dated October 19, 2016
, Security Note
dated October 28, 2016 and the First Amendment (Addendum May 24, 2018) the performance-related
remuneration consists of three tiers:
1.
in the case of a total return of up to 12% the performance-related remuneration is 0%;
2.
in the case of a total return of 12% to 15% the performance-related remuneration is 20% of the total
return less 12%;
3.
in the case of a total return of more than 15% the performance-related remuneration is 30% of the
total return less 15%. In addition, the remuneration indicated under 2 will be awarded.
The performance-related remuneration will be charged annually in arrears and is budgeted and put aside on
a three-monthly basis. This performance-related remuneration will not be due if the stock exchange price of
the share plus the dividends distributed in the relevant financial period is lower than that of any preceding
period for which the performance-related remuneration was deducted.
50% of the performance-related remuneration is payable in shares of the Fund, such shares to be issued at
Net Asset Value as at year-end rather than the prevailing stock exchange price (unless the stock market price
is above the Net Asset Value per share). The share component of the performance-related remuneration due
23
Reference is made to section 15.26.2
“Analysis of property operating expenses”
and 15.36
.2 “Analysis of costs of service providers”
.
141
for a financial period is payable after publication of the Annual Report after the end of the relevant financial
period, the cash components are payable in three equal amounts on 30
April, 31
July and 31
October following
the end of the relevant financial period.
As of June 21, 2025, the original agreement (Registration Document dated October 19, 2016 and the Securities
Note dated October 28, 2016) and the First Amendment (Addendum May 24, 2018) will come into force again.
15.35.5
Sales fee and sales performance-related fee
In accordance with the addendum of the Registration Document dated December 20, 2023 the Managing
Board is entitled to a sales fee and sales performance-related fee, which replaces the performance-related
remuneration is described in section 15.35
.4 “Performance
-
related remuneration”.
The sales fee consists of two tiers:
1.
in the case the sale of an asset is realised within the 12-month period the sales fee is 2.0% of the
gross sales price agreed;
2.
in the case the sale of an asset is realised within the 13-to-18-month period the sales fee is 1.5% of
the gross sales price agreed.
The sales performance-related fee consists of two tiers:
1.
in the case the sale of an asset is realised within the 12-month period the sales performance-related
fee is 20.0%% of the excess gross sales price over valuation;
2.
in the case the sale of an asset is realised within the 13-to-18-month period the sales performance-
related fee is 15.0% of the excess gross sales price over valuation.
Starting points for the calculation of the Incentive for the Managing Board:
1.
gross sales price is the sales price before costs;
2.
valuation: the assessed value in local currency as reported as at June 30, 2023;
3.
a sale is realised on the date of the contractual signing of the sales agreement;
4.
the 12-months period runs from December 21, 2023 up to and including December 20, 2024;
5.
the 13 to 18-months period runs from December 21, 2024 up to and including June 20, 2025;
6.
the sales fee is payable upon receipt of the sale proceeds (sales closed);
7.
the 20.0% sales performance-related fee is payable as of December 21, 2024 for sales closed prior
to this date or (if closed on or later than December 21, 2024) at the moment of closing;
8.
the 15.0% sales performance-related fee is payable as of June 21, 2025 for sales closed prior to this
date or (if closed on or later than June 21, 2025) at the moment of closing;
9.
the sales performance-related fee is calculated separately for each period on the entire positive or
negative deviation compared to the assessed value as at June 30, 2023 during the 12- and 6-months
period.
As of June 21, 2025, the original agreement (Registration Document dated October 19, 2016 and the Securities
Note dated October 28, 2016) and the First Amendment (Addendum May 24, 2018) will come into force again.
15.35.6
Specification sales fee and sales performance-related fee
2024 | 2023 | |
In € 1,000 | In € 1,000 | |
Sales fee | 241 24 | - |
Sales performance-related fee | 169 24 | - |
410 | - |
24
Reference is made to section 15.29.3 “Specification of result on disposal of properties” and 15.30.2 “Specification of result
on disposals
of inventories
”
.
142
OTHER OPERATING EXPENSES
15.36.1
Specification of other operating expenses
2024 | 2023 | |
In € 1,000 | In € 1,000 | |
Costs of service providers | 1,049 | 1,059 |
Other operating expenses | 65 | 149 |
1,114 | 1,208 | |
Costs of funding and acquisitions | 182 | 11 |
1,296 | 1,219 |
Analysis of costs of service providers
2024 | 2023 | |
In € 1,000 | In € 1,000 | |
Accounting expenses | 278 | 275 |
Audit fees | 252 | 262 |
Consultancy fees | 128 | 239 |
Court fees | 68 | 3 |
Custody fees | 57 | 59 |
Steering Committee fees | 47 | - |
Appraisal expenses | 39 | 39 |
Asset management | 26 | 30 |
Supervisory Board fees | 28 | 28 |
Marketing expenses | 7 | 26 |
Supervisors’ expenses | 22 | 22 |
Insurance AIFMD | 22 | 22 |
Bank costs | 21 | 17 |
Listing, Paying and Fund Agent fees | 12 | 14 |
Other costs of service providers | 42 | 23 |
1,049 | 1,059 |
For the items listed above the following explanation can be given:
•
t
he “Accounting expenses” include the expenses
in respect of bookkeeping, consolidation activities
on a quarterly basis for results announcements and the determination of corresponding Net Asset
Value (
NAV
), preparation of (semi)-annual report and other activities to fulfil administrative
requirements for the Fund and its subsidiaries;
•
t
he “Audit fees”
include the fees for the audit of the Consolidated Financial Statements and Parent
Company Financial Statements, as well as audits of accounts of subsidiaries. The fees for the audit
of the Consolidated Financial Statements, Parent Company Financial Statements and European
Single Electronic Format (
ESEF
) reporting 2024 (Deloitte Netherlands)
are estimated at €
88,000
(2023
: €
86,000). During the financial period audit fees related to prior years have been booked in
an amount of €
1,000 negative (2023
: €
1,000 negative). The audit fees of accounts of subsidiaries
(Deloitte other countries) amount to
€
165,000 (2023
: €
177,000).
Except for:
o
audit of the Consolidated Financial Statements and Parent Company Financial Statements,
o
audits of accounts of subsidiaries, and
o
audit of ESEF reporting and requirements
no services of Deloitte have been used.
143
•
the “Court fees” relates mainly to court fees and corresponding legal fees
related to a (potential)
claim against Spó
ldzielnia “Budowlani (the Cooperative)
concerning the leased Bydgoszcz property.
•
t
he “Consultancy fees”, including legal fees, relate mainly to consultancy fees for tax structuring;
•
t
he “Custody fees”
include the fees for operational activities by the AIFMD Depositary;
•
the “Asset management” relate to asset management
fee Delenco (associates);
•
t
he “Supervisors’ expenses” include
expenses for supervision by the AFM and DNB;
•
t
he “Other
costs of service providers
” include, among others, costs of press releases
, required
15.36.3
Analysis of Supervisory Board fees
2024 | 2023 | |
In € 1,000 | In € 1,000 | |
Mr. M.P. Beys | 14 | 14 |
Mrs. A.N. Krol | 14 | 14 |
Mr. J.J. van Heijst MSc 25 | - | - |
28 | 28 |
The Fund has provided no loans, advances, or guarantees for the members of the Supervisory Board. The
members of the Supervisory Board receive no options or remuneration in the form of the Fund’s shares.
15.36.4
Analysis of other operating expenses
2024 | 2023 | |
In € 1,000 | In € 1,000 | |
Change in expected credit losses termination interest rate swaps | -/- 75 | 79 |
Irrecoverable trade receivables | 107 | 67 |
Change in expected credit losses for trade receivables | -/- 84 | -/- 63 |
Non-refundable value added tax ( VAT ) | 105 | 54 |
Wages and salaries statutory directors | 12 | 12 |
65 | 149 |
15.36.5
Analysis of costs of funding and acquisitions
2024 | 2023 | |
In € 1,000 | In € 1,000 | |
Consultancy fees / legal fees | 182 | 11 |
The costs of funding and acquisitions include costs of technical, legal and tax due diligence for (potential)
acquisitions.
25
Mr. J.J. van Heijst M.Sc. has waived his Supervisory Board fee.
144
15.36.6 Transaction costs
In accordance with the EU-IFRS accounting principles the Fund includes the transaction costs incurred on
purchase of properties, inventories and other equity investments in the purchase price of investments and
recognises the transaction costs incurred on sale of properties, inventories and other equity investments under
result on disposals of investments.
Based on article 123:1.c of the Decree on Conduct of Business Supervision of Financial Undertakings under
the Act of Financial Supervision (in Dutch: Besluit Gedragstoezicht Financiële ondernemingen Wft) the
analysis of identifiable and quantifiable transaction costs on purchase and sale of investments during the
financial period is disclosed.
The analysis is as follows:
2024 | 2023 | |
In € 1,000 | In € 1,000 | |
Transaction costs on purchase of investments | - | - |
Transaction costs on sale of investments | 434 | 268 |
434 | 268 |
15.36.7
Costs of lending financial instruments
During the financial period, no financial instruments were borrowed or lent by either the Fund or its related
parties (so-called securities lending). No expenses were therefore incurred, or fees requested.
15.36.8
Remuneration for orders on behalf of the Fund
Neither the Managing Board, the directors of the Managing Board, the Fund, the Depositary of the Fund, nor
parties affiliated with these parties, received any remuneration for performing assignments for the Fund, other
than as described in section 15.35
“Administrative expenses” and 15.
36
“
O
ther operating expenses”.
The
management fee is paid to the Fund Manager by the Fund. This fee also contains the remuneration of the
Managing Board. However, this is not possible to quantify to the Fund.
15.36.9 Outsourcing expenses
The Managing Board of the Fund has in the ordinary course of business outsourced the accounting activities
of the Fund to Moore MKW Accountants B.V.
The related expenses are included in the section accounting expenses, as indicated in section 15.36.2
“
Analysis of costs of service providers
”.
15.36.10 Comparison of actual costs with prospectus
2024 | 2023 | |||
Actual | Prospectus | Actual | Prospectus | |
In € 1,000 | In € 1,000 | In € 1,000 | In € 1,000 | |
Costs of service providers | 1,049 | 900 | 1,059 | 900 |
For comparison of actual costs of service providers with budgeted costs of service providers
as per the Fund’s
prospectus, the Registration Document dated October 19, 2016 in conjunction with the Security Note dated
October 28, 2016 has been used.
For the analysis of costs of service providers reference is made to section 15.36
.2 “Analysis of
costs of service
145
PERSONNEL COSTS
The Fund does not employ any personnel, with the exception of statutory directors of the
Fund’s subsidiaries
.
The statutory directors receive a wage, which is specified in
“O
ther operating expenses
”
(reference is made to
section 15.36.4
“Analysis of other operating expenses”
FINANCIAL EXPENSES
2024 | 2023 | |
In € 1,000 | In € 1,000 | |
Interest expense on secured bank loans | 1,752 | 1,932 |
Interest expense on other loans and borrowings | 425 | 620 |
Change in fair value of derivative financial instruments | 173 | 179 |
Interest expense on lease liabilities | 99 | 91 |
Foreign exchange and currency losses | 62 | 135 |
Variable compensation on other loans and borrowings | 29 | 101 |
Withholding tax on loans due to shareholders and other group companies | 40 | 37 |
Interest expense and costs of Tax Authorities | - | 5 |
Penalty interest and costs on secured bank loans | - | 1 |
Other financial expenses | 16 | 12 |
2,596 | 3,113 |
ONGOING CHARGES FIGURE
Based on article 123:1.l of the Decree on Conduct of Business Supervision of Financial Undertakings under
the Act of Financial Supervision (in Dutch: “Besluit Gedragstoezicht Financiële ondernemingen Wft”) the
Ongoing Charges Figure (
OCF
) is disclosed. The OCF is calculated by dividing the total expenses (including
operating expenses) during the financial year by the average Group equity of the Fund during the financial
year. The total expenses include the expenses charged to the profit for the period as well as to Group equity.
They also include the operating expenses of the properties. No net service charges are included in the total
expenses, since these are entirely covered by the service income from service fees and the fees part of the
gross rental income.
The expenses which are related to the issuance and the redemption of own ordinary
shares, as far as these are covered by surcharges and reductions received, are not taken into consideration.
Regular interest charges for loans contracted, as well as costs of investment transactions, are also not included
in the calculation of the OCF.
The average Group equity is determined by the average of all calculated and published Triple Net Asset Values
(
NNNAV
’s).
2024 | 2023 | 2022 | 2021 | 2020 | |
In % | In % | In % | In % | In % | |
OCF | 8.53 | 7.66 | 8.02 | 9.50 | 9.96 |
In 2024 the OCF increased as a result of an increase of the total expenses (including
“O
ther operating
expenses
”
) by approximately 1%, in conjunction with the decrease of the average Group equity by
approximately 9%.
146
The total expenses also include non-regular costs, such as costs of funding and acquisition and Steering
Committee fees (reference is made to section
15.36.2 “Analysis of costs of service providers” and
15.36.5
“Analysis of costs of funding and acquisitions”
). Without these non-regular costs, the OCF would be as follows:
2024 | 2023 | 2022 | 2021 | 2020 | |
In % | In % | In % | In % | In % | |
OCF (without non-regular costs) | 8.01 | 7.63 | 7.61 | 9.31 | 9.00 |
147
INCOME TAX EXPENSE
15.40.1 Tax position
The taxable profits of the Fund are subject to corporate income tax (
CIT
).
15.40.2
Income tax expense recognised in the Consolidated Income Statement
2024 |
2023 |
|
In € 1,000 |
In € 1,000 |
|
Current income tax expense |
||
Current year |
723 |
63 |
Adjustments related to prior years |
6 |
-/- 4 |
Subtotal current income tax expense |
729 |
59 |
Deferred income tax expense |
||
Origination and reversal of taxable temporary differences |
-/- 758 |
249 |
Recognition of previously unrecognised (derecognition of previously |
||
| recognised) tax losses carried forward |
20 |
35 |
Recognition of previously unrecognised (derecognition of previously |
||
| recognised) other taxable temporary differences |
43 |
357 |
Change in tax rate |
-/- 3 |
94 |
Adjustments related to prior years |
-/- 19 |
3 |
Subtotal deferred income tax expense |
-/- 717 |
738 |
Total income tax expense |
12 |
797 |
15.40.3
Reconciliation of effective tax rate
2024 |
2024 |
2023 |
2023 |
|
In % |
In € 1,000 |
In % |
In € 1,000 |
|
Profit before income tax |
-/- 20 |
980 |
||
Tax using the Parent Company’s domestic tax rate |
-/- 25.8 |
-/- 5 |
25.8 |
253 |
Effect of tax rates in foreign jurisdictions |
915.0 |
183 |
-/- 11.4 |
-/- 112 |
Change in tax rate |
-/- 15.0 |
-/- 3 |
9.6 |
94 |
Tax effect of: |
||||
Non-deductible expenses |
490.0 |
98 |
5.6 |
55 |
Tax exempt revenues |
-/- 1,934.2 |
-/- 387 |
-/- 19.8 |
-/- 194 |
Tax on phantom results |
-/- 95.0 |
-/- 19 |
-/- 7.3 |
-/- 72 |
Current year losses for which no deferred tax asset |
||||
| is recognised |
475.0 |
95 |
38.9 |
382 |
| Recognition of previously unrecognised |
||||
(derecognition of previously recognised) tax losses |
100.0 |
20 |
3.6 |
35 |
Recognition of previously unrecognised |
||||
(derecognition of previously recognised) other |
||||
taxable temporary differences |
215.0 |
43 |
36.4 |
357 |
Adjustments related to prior years |
-/- 65.0 |
-/- 13 |
-/- 0.1 |
-/- 1 |
60.0 |
12 |
81.3 |
797 |
148
15.40.4
Deferred income tax recognised directly in Group equity
2024 |
2023 |
|
In € 1,000 |
In € 1,000 |
|
Related to receivables from shareholders and other group companies |
-/- 28 |
-/- 42 |
15.40.5
Applicable local corporate income tax rates
2025 |
2024 |
2023 |
2022 |
2021 |
|
In % |
In % |
In % |
In % |
In % |
|
The Netherlands: |
|||||
- first bracket |
19.00 |
19.00 |
19.00 |
19.00 |
15.00 |
- second bracket as of € 200,000 |
25.80 |
25.80 |
25.80 |
25.80 |
N.a. |
- s econd bracket as of € 395,000 |
N.a. |
N.a. |
N.a. |
N.a. |
25.80 |
Czechia: |
21.00 |
21.00 |
21.00 |
19.00 |
19.00 |
Poland: |
|||||
- regular |
19.00 |
19.00 |
19.00 |
19.00 |
19.00 |
- small taxpayers 26 |
9.00 |
9.00 |
9.00 |
9.00 |
9.00 |
Romania: |
|||||
- regular |
16.00 |
16.00 |
16.00 |
16.00 |
16.00 |
- micro-companies with at least 1 employee 27 |
1.00 |
1.00 |
1.00 |
1.00 |
1.00 |
- micro-companies with no employees |
N.a. |
N.a. |
N.a. |
N.a. |
3.00 |
Slovakia: |
|||||
- regular |
21.00 |
21.00 |
21.00 |
21.00 |
21.00 |
- micro-taxpayers 28 |
15.00 |
15.00 |
15.00 |
15.00 |
15.00 |
Ukraine |
18.00 |
18.00 |
18.00 |
18.00 |
18.00 |
26
As of January 1, 2019, a reduced corporate income tax rate was introduced in Poland for so-
called “small taxpayers”. Small taxpayers
are, for example, entities whose revenues, including value added tax (
VAT
), in a given tax year did not exceed in the preceding tax year
the
PLN equivalent of €
2.0 million. The reduced corporate income tax rate will not be available for entities created or involved in certain
restructuring activities.
27
Micro-companies in Romania are corporate taxpayers and entrepreneurs and self-employed individuals that achieve turnover up to
€ 0.5 million for the relevant tax period (until January 1, 2023: up to € 1.0 million). The reduced tax rate of 1.00% is sole
ly applicable if the
company has at least one employee with full-time employment contract for an indefinite period.
28
As of January 1, 2021, a reduced corporate income tax rate was introduced in Slovakia for so-
called “
micro-
taxpayers”.
Micro-taxpayers
are corporate taxpayers and entrepreneurs and self-
employed individuals that achieve taxable income (revenues) up to € 49,790 for the
149
EARNINGS PER SHARE
29
Calculation of basic earnings per share
The basic earnings per share are calculated by dividing the profit for the period attributable to holders of shares
by the weighted average number of shares outstanding during the financial period.
The weighted average number of shares is adjusted for events, other than the conversion of potential ordinary
shares, which have changed the number of ordinary shares outstanding without a corresponding change in
resources.
If the number of shares outstanding increases as a result of a capitalisation, bonus issue or share split, or
decreases as a result of a reverse share split, the calculation of basic and diluted earnings per share and of
15.41.2
Profit for the period attributable to shareholders (basic)
2024 |
2023 |
|
In € 1,000 |
In € 1,000 |
|
Profit for the financial period |
-/- 32 |
183 |
15.41.3
Weighted average number of outstanding shares (basic)
2024 |
2023 |
|
In pieces |
In pieces |
|
Issued shares as at 1 January |
4,177,083 |
4,185,984 |
Effect of treasury shares held during the financial period |
-/- 61,074 |
-/- 7,487 |
4,116,009 |
4,178,497 |
15.41.4
Calculation of diluted earnings per share
The diluted earnings per share are calculated by dividing the profit for the period attributable to holders of
shares, adjusted for costs relating to the convertible securities included in the profit for the period, by the
weighted average number of shares during the financial period, adjusted for the maximum number of shares
that could be converted during the financial period.
The adjustments as described are only made in case conversion will cause dilution of earnings. In case
conversion will have a positive effect on the earnings per share, these adjustments are not made.
15.41.5
Profit for the period attributable to shareholders (diluted)
2024 |
2023 |
|
In € 1,000 |
In € 1,000 |
|
Profit for the period |
-/- 32 |
183 |
Interest expense on convertible bonds (net of tax) |
- |
- |
-/- 32 |
183 |
29
The calculation of the earnings per share includes all types of profit-sharing shares (e.g. ordinary and registered shares). Therefore,
treasury shares are excluded from the earnings per share.
150
15.41.6
Weighted average number of outstanding shares (diluted)
2024 |
2023 |
|
In pieces |
In pieces |
|
Weighted average number of outstanding shares outstanding during |
||
| the financial period (basic) |
4,116,009 |
4,178,497 |
Effect of conversion of warrants |
- |
- |
Effect of conversion of convertible bonds |
- |
- |
4,116,009 |
4,178,497 |
151
RISK MANAGEMENT
15.42.1 General
According to its investment policy set out in the prospectus, the Registration Document dated
October 19, 2016 in conjunction with the Security Note dated October 28, 2016, as well as the addendum of
the Registration Document dated December 20, 2023 the Fund may hold investments in direct property in
Central Europe. The
Fund’s investment portfolio currently consists of pro
perty in Czechia, Slovakia, Poland,
Ukraine and Romania. These properties in principle are held for an indefinite period. However, the goal is to
monetize a significant portion of the portfolio within an 18-month period by selling, among other things, the
assets in Ukraine, as well as non-core assets in Slovakia and Poland.
The Fund’s investment activities resul
t
in exposure to various risks, as also defined in the prospectus.
The Managing Board of the Fund determines the tactical investment mix. The Managing Board regularly
monitors the deviation between the previously determined tactical investment mix and the actual investment
mix. The risks are summarised in the table below:
Risk |
Risk |
Policy |
Notes |
Risk |
Impact |
Likelihood |
category |
appetite |
|||||
Market |
Mitigation |
15.42.2 |
High |
Medium |
High |
|
Strategy |
Concentration |
Avoidance / control |
15.42.3 |
Low |
Medium |
Medium |
Economic |
Acceptance |
15.42.4 |
High |
High |
High |
|
Fraud |
Avoidance / |
15.42.5 |
Low |
Medium |
Low |
|
mitigation |
||||||
Operational |
Internal control |
Mitigation |
15.42.5 |
Low |
Medium |
Low |
Counterparty |
Mitigation |
15.42.6 |
Low |
Medium |
Low |
|
Integrity |
Avoidance |
15.42.7 |
Low |
Medium |
Low |
|
Currency |
Mitigation / |
15.42.8 |
Medium |
Medium |
High |
|
avoidance |
||||||
Interest rate |
Mitigation |
15.42.9 |
Low |
High |
High |
|
Price |
Acceptance |
15.42.10 |
High |
High |
High |
|
| Financial |
Borrowed money / |
Avoidance |
15.42.11 |
Low |
High |
Medium |
position |
credit |
|||||
Rent |
Mitigation |
15.42.12 |
Medium |
Medium |
High |
|
Debtor |
Mitigation |
15.42.13 |
Medium |
Medium |
High |
|
Vacancy |
Mitigation |
15.42.14 |
Medium |
Medium |
High |
|
Liquidity |
Avoidance |
15.42.15 |
Low |
High |
Medium |
|
| Financial |
Outsourcing |
Avoidance |
15.42.16 |
Low |
Low |
Low |
reporting |
||||||
Regulations |
Mitigation |
15.42.17 |
Low |
Medium |
Medium |
|
Tax |
Mitigation / |
15.42.18 |
Low |
Medium |
High |
|
Legal and |
acceptance |
|||||
compliance |
Legal |
Mitigation |
15.42.19 |
Low |
High |
High |
| risk |
ESG |
Mitigation / |
15.42.20 |
Low |
Medium |
Medium |
| avoidance |
The nature and scope of properties as at Statement of Financial Position
’s date and the risk policy with regard
to the above-mentioned risks and other risks are discussed below.
Market risk is the risk of losses in positions arising from movements in market prices. Property values are
affected by many factors, including the outlook for economic growth, inflation rate, and developments on the
capital markets and the rental income at the time of sale of the property.
152
The greater the fluctuation in the development of these factors, the greater the risk. The Fund cannot influence
macro-economic factors that determine property value. However, through good investment property
management the Fund will try to mitigate the risk and will seek to maximise the attraction of the properties in
its portfolio to prospective tenants and purchasers. The Fund invests in countries which have different legal
systems to Western Europe. In some areas there is much less public information available than would be the
case in Western Europe.
Control of the market risk is determined by the
Managing Board’s
investment policy, which is aimed at
achieving investment results by purchasing investments that are assumed to have been undervalued and are
expected to benefit from the further development of the Czech, Slovak, Polish, Ukrainian, and Romanian
economy. The market risk is managed on a day-to-day basis.
The Fund’s policy is
mitigation
. The risk appetite is high. The impact is considered medium, the likelihood is
high (reference is made to section 15.2.10
“Sensitivity analysis” of the
15.42.3 Concentration risk
The concentration risk is the risk that can occur if the Fund has a large concentration of investments in certain
regions or types of properties or if the Fund depends on a limited number of large tenants. To reduce this risk,
investments of the Fund are spread across different types of properties in several regions in Central Europe
and the portfolio has many small and medium-sized tenants. The Fund has decreased its concentration in
Košice
, Slovakia by selling during 2024 a further one of the eight properties it originally owned in
Košice
,
reducing the holding to a single property (Letna).
The Fund’s policy towards this risk is
Avoidance / control.
The risk appetite is low. The impact of this risk is
medium, the likelihood is medium.
15.42.4 Economic risk
Economic risk is derived from direct financial factors (developments in interest rates and inflation) and market
developments (changes in for example GDP growth and employment). The former tends to affect capital
values, the latter occupancy rates and rental levels. Economic risk is managed by the Fund through focussing
the Fund’s investments on flexible assets in ec
onomically stable regional centres, and managing these assets
through local professional teams closely attuned to developments in local market conditions.
The Fund’s policy towards this risk is
Acceptance.
The risk appetite is high. The impact of economic risk is
high, the likelihood is also high.
15.42.5 Operational risk
Operational risk is the risk of losses coming from failed internal processes, people or systems or from external
operational events. Examples of operational risk incidents are fraud, claims, losses, errors, violation of laws
and system failure. During the financial period, no material operational risks materialised.
The risk appetite is low. The Fund’s policy towards operational risks is
Avoidance
/
mitigation.
The Fund for
example does not tolerate fraud, executes an extensive supplier due diligence / know your customer analysis
for service contracts and for transactions and asks for Supervisory Board approval for the purchase or sale of
real estate. The impact of these risks is medium, the likelihood is low.
15.42.6
Counterparty risk (credit risk)
The credit risk can be defined as the risk of a counterparty being unable to fulfil its obligation to the Fund
associated with monetary assets. The Fund has a credit policy, and the counterparty risk is monitored and
controlled on a continuous basis. The risk is presumed to be low, given the short settlement period of most of
such monetary assets. The Fund does business with various parties; the most important are banks, tenants
and the local administrators of the properties. The Fund will mitigate this risk by regular contact with these
counterparties. If credits rise above certain risk limits, measures will be taken to reduce the risk for the Fund.
153
The carrying amount of monetary assets best represents the maximum credit risk exposure as at Statement
of Financial Position’s date. As this date, the Fund’s monetary assets exposed to credit risk amounted to the
following, related to the Fund’s net asset
s attributable to the holders of redeemable (ordinary registered and
treasury) shares:
31-12-2024 | 31-12-2024 | 31-12-2023 | 31-12-2023 | |
In € 1,000 | In % | In € 1,000 | In % | |
Derivative financial instruments | 127 | 0.3 | 300 | 0.7 |
Tax assets 30 | 6 | 0.0 | 20 | 0.0 |
Trade and other receivables | 1,631 | 3.8 | 1,468 | 3.2 |
Cash and cash equivalents | 2,419 | 5.7 | 2,382 | 5.2 |
4,183 | 9.8 | 4,170 | 9.1 |
Other than the above-mentioned items, there were no significant concentrations of credit risk to counterparties
as at Statement of Financial Position’s date. No individual financial investment exceeded 10% of the net assets
attributable to the holders of redeemable (ordinary, registered and treasury) shares either as at Statement of
Financial Position’s date.
The following table sets out the ageing analysis of the Fund’s monetary assets. The amounts are based on
the carrying amount of monetary assets.
In € 1,000 | 31-12-2024 | |||||
Current | Up to | 1 to | 3 months | More than | ||
(not past | 1 month | 3 months | to 1 year | 1 year | ||
due) | past due | past due | past due | past due | Total | |
Gross monetary assets | ||||||
Derivative financial instruments | 127 | - | - | - | - | 127 |
Tax assets 30 | 6 | - | - | - | - | 6 |
Trade and other receivables | 1,390 | 230 | 17 | 35 | 245 | 1,917 |
Cash and cash equivalents | 2,419 | - | - | - | - | 2,419 |
3,942 | 230 | 17 | 35 | 245 | 4,469 | |
Impairment of monetary assets | ||||||
Derivative financial instruments | - | - | - | - | - | - |
Tax assets 30 | - | - | - | - | - | - |
Trade and other receivables | 14 | 5 | 2 | 29 | 236 | 286 |
Cash and cash equivalents | - | - | - | - | - | - |
14 | 5 | 2 | 29 | 236 | 286 | |
Net monetary assets | ||||||
Derivative financial instruments | 127 | - | - | - | - | 127 |
Tax assets 30 | 6 | - | - | - | - | 6 |
Trade and other receivables | 1,376 | 225 | 15 | 6 | 9 | 1,631 |
Cash and cash equivalents | 2,419 | - | - | - | - | 2,419 |
3,928 | 225 | 15 | 6 | 9 | 4,183 | |
30
Exclusive of corporate income tax (
CIT
).
154
In € 1,000 | 31-12-2023 | |||||
Current | Up to | 1 to | 3 months | More than | ||
(not past | 1 month | 3 months | to 1 year | 1 year | ||
due) | past due | past due | past due | past due | Total | |
Gross monetary assets | ||||||
Derivative financial instruments | 300 | - | - | - | - | 300 |
Tax assets 31 | 20 | - | - | - | - | 20 |
Trade and other receivables | 1,254 | 66 | 47 | 36 | 527 | 1,930 |
Cash and cash equivalents | 2,382 | - | - | - | - | 2,382 |
3,956 | 66 | 47 | 36 | 527 | 4,632 | |
Impairment of monetary assets | ||||||
Derivative financial instruments | - | - | - | - | - | - |
Tax assets 31 | - | - | - | - | - | - |
Trade and other receivables | 14 | 2 | 4 | 13 | 429 | 462 |
Cash and cash equivalents | - | - | - | - | - | - |
14 | 2 | 4 | 13 | 429 | 462 | |
Net monetary assets | ||||||
Derivative financial instruments | 300 | - | - | - | - | 300 |
Tax assets 31 | 20 | - | - | - | - | 20 |
Trade and other receivables | 1,240 | 64 | 43 | 23 | 98 | 1,468 |
Cash and cash equivalents | 2,382 | - | - | - | - | 2,382 |
3,942 | 64 | 43 | 23 | 98 | 4,170 |
The impairment with regard to trade and other receivables relates to trade receivables and termination
derivative financial instruments. For further details with regard to these amounts is referred to section 15.9
“Trade and other receivables”. The following table sets out the pledges of the Fund’s financial assets.
In € 1,000 | 31-12-2024 | ||
Guarantee deposits | |||
from tenants | Other pledge | Total | |
Trade and other receivables | 100 | - | 100 |
Prepayments and deferred expenses | 28 | - | 28 |
128 | - | 128 | |
In € 1,000 | 31-12-2023 | ||
Guarantee deposits | |||
from tenants | Other pledge | Total | |
Trade and other receivables | 235 | - | 235 |
Prepayments and deferred expenses | 93 | - | 93 |
328 | - | 328 | |
The Fund’s policy towards this risk is
Mitigation.
The risk appetite is low. The impact is medium, the likelihood
15.42.7 Integrity risk
Within organizations there is a risk that people harm organizations by committing fraud or theft.
The Managing Board therefore evaluates the reliability and integrity of its staff. All staff in key positions
employed the Managing Board will be screened by “Pre
-
Employment Screening of Dutch Securities Institute”
31
Exclusive of CIT.
155
(
DSI
).
The Fund’s policy towards the integrity risk is
Avoidance
. The risk appetite is low. The impact of the risk
is medium, the likelihood low.
15.42.8 Currency risk
The currency risk can be defined as the risk that the fair value of investments and the fair value or future cash
flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Fund may
invest in properties in countries where the Euro has not (yet) been implemented. There is a currency risk that
the exchange rate fluctuates. The Fund has the option to mitigate the risk by using financial instruments to
hedge the currency risk. The Fund also seeks to mitigate/avoid the risk by concluding rental contracts in Euro.
The Fund invests in property in currencies other than the functional currency (the Euro) used in these
Consolidated Financial Statements. At present, the currencies involved are:
•
Czech Koruna (CZK);
•
Polish Zloty (PLN);
•
US Dollar (USD);
•
Ukrainian Hryvnia (UAH); and
•
Romanian Leu (RON).
Consequently, the Fund is exposed to the risk that the exchange rate of the functional currency in relation to
the foreign currency may develop in such a way that this has a negative impact on the value of the investment
portfolio in foreign currency.
Taking into account the high costs involved and
Managing Board’s
expectation that the EUR / CZK exchange
rate, EUR / PLN exchange rate, EUR / USD exchange rate, EUR / UAH exchange rate and EUR / RON
exchange rate will continue to show relative stability over the long term, the Managing Board has opted not to
hedge the currency risk by means of financial derivative financial instruments, such as forward contracts. The
EUR / UAH exchange rate is more vulnerable to fluctuations, as the UAH is, compared to the other currencies,
less liquid. As at Statement of Financial Position
’s date
the Fund had the following exposure with regard to
financial assets. The percentages are based on the carrying amount of financial assets.
31-12-2024 | 31-12-2023 | |
In % | In % | |
Euro (EUR) | 76.8 | 77.0 |
Polish Zloty (PLN) | 13.3 | 10.3 |
Czech Koruna (CZK) | 6.5 | 10.2 |
Romanian Leu (RON) | 3.4 | 1.6 |
Bulgarian Lev (BGN) | N.a. | 0.9 |
100.0 | 100.0 |
The following table sets out the Fund’s total
exposure to currency risk and the net exposure to currencies of
the monetary assets and liabilities. The amounts are based on the carrying amount of monetary assets and
liabilities.
In € 1,000 | 31-12-2024 | ||
Monetary assets | Monetary liabilities | Net exposure | |
Euro (EUR) | 2,618 | 21,423 | -/- 18,805 |
Czech Koruna (CZK) | 443 | 3,035 | -/- 2,592 |
Polish Zloty (PLN) | 859 | 1,956 | -/- 1,097 |
Romanian Leu (RON) | 259 | 85 | 174 |
Ukrainian Hryvnia (UAH) | 4 | 56 | -/- 52 |
US Dollar (USD) | - | 939 | -/- 939 |
4,183 | 27,494 | -/- 23,311 | |
156
| 31-12-2023 |
|||
Monetary assets |
Monetary liabilities |
Net exposure |
|
Euro (EUR) |
2,604 |
26,237 |
-/-23,633 |
Czech Koruna (CZK) |
723 |
6,045 |
-/- 5,322 |
Polish Zloty (PLN) |
632 |
1,979 |
-/- 1,347 |
Bulgarian Lev (BGN) |
79 |
93 |
-/- 14 |
Romanian Leu (RON) |
132 |
48 |
84 |
Ukrainian Hryvnia (UAH) |
- |
51 |
-/- 51 |
US Dollar (USD) |
- |
4 |
-/- 4 |
4,170 |
34,457 |
-/- 30,287 |
|
If the Euro had weakened by 5.0% in relation to one of the other
currencies, with all variables held constant,
net assets attributable to shareholders per the Consolidated Income Statement and equity would have
decreased by the amounts shown below:
31-12-2024 |
31-12-2023 |
|
In € 1,000 |
In € 1,000 |
|
Czech Koruna (CZK) |
130 |
266 |
Polish Zloty (PLN) |
55 |
67 |
Bulgarian Lev (BGN) |
N.a. |
1 |
Romanian Leu (RON) |
-/- 9 |
-/- 4 |
Ukrainian Hryvnia (UAH) |
3 |
3 |
US Dollar (USD) |
47 |
- |
A 5% strengthening of the Euro against the above currencies would have resulted in an equal but opposite
effect on the above Financial Statement amounts, on the basis that all other variables remain constant.
The Fund’s policy is mitigation / avoidance. The risk appetite is medium, the impact is
medium and the
likelihood high.
Interest rate risk
General
The interest rate risk is the risk the fair value or future cash flows of a financial instrument will fluctuate because
of changes in market interest rates. The F
und’s investment policy allows loans to be taken up. For reasons of
control of liquidity, the Fund holds limited cash and cash equivalents. The Fund has the possibility of investing
these funds in short-term deposits. The Fund manages its interest rate risk with the objective of reducing the
cash flow interest rate risk by the use of derivative financial instruments.
In Czechia,
Sberbank CZ (the former lender of the Czech portfolio) asserts that on October 25, 2022, they
terminated the interest rate swap as part of the insolvency process, thus reducing its value to zero. On February
9, 2024, Sberbank CZ rejected the objections of ACREB regarding the zero value of the interest rate swap.
The Fund has filed a lawsuit against Sberbank CZ seeking the termination of the interest rate swap, the value
of which was reduced to zero by Sberbank CZ. During 2024 the terminated interest rate swap claim has been
approved within the insolvency proceedings and the Fund has already received 95% of the claim.
157
As at Statement of Financial Position’s date the Fund has contracted into the following derivative financial
instruments for the loans contracted Poland (Interest rate swap II).
| 31-12-2024 | ||||||
Average | Line item in the SFP where | |||||
Nominal | fixed | Termination | the hedging instrument is | |||
amount | interest rate | date | Assets | Liabilities | included | |
In € 1,000 | In % | In € 1,000 | In € 1,000 | |||
Interest rate swap I | N.a. | 1.995 | 25-10-2022 | 4 | - | Trade and other receivables |
Interest rate swap II | 8,428 | 1.480 | 31-03-2026 | 127 | - | Derivative financial instruments |
| 31-12-2023 | ||||||
Average | Line item in the SFP where | |||||
Nominal | fixed | Termination | the hedging instrument is | |||
amount | interest rate | date | Assets | Liabilities | included | |
In € 1,000 | In % | In € 1,000 | In € 1,000 | |||
Interest rate swap I | N.a. | 1.995 | 25-10-2022 | - | - | Trade and other receivables |
Derivative financial | ||||||
Interest rate swap II | 8,820 | 1.480 | 31-03-2026 | 300 | - | instruments |
Exposure to interest rate risk
The following table details the Fund’s exposure to interest rate risks. It includes the Fund’s
financial assets
and financial liabilities, categorised by the earlier of contractual re-pricing or maturity date measured by the
carrying amount of the financial assets and financial liabilities.
In € 1,000 | 31-12-2024 | ||||||
Less | 1 month | 3 months | 1 year | More | Non- | ||
than | to | to | to | than | interest | ||
1 month | 3 months | 1 year | 5 years | 5 years | bearing | Total | |
Investments in associates | - | - | - | - | - | 3,402 | 3,402 |
Derivative financial instruments | - | - | 127 | - | - | - | 127 |
Tax assets | - | - | - | - | - | 60 | 60 |
Trade and other receivables | 956 | - | - | - | - | 675 | 1,631 |
Prepayments and deferred | - | - | - | - | - | 245 | 245 |
expenses | |||||||
Cash and cash equivalents | 2,418 | - | - | - | - | 1 | 2,419 |
Financial assets | 3,374 | - | 127 | - | - | 4,383 | 7,884 |
Loans and borrowings | 24 | 8,890 | 13,477 | 250 | - | 47 | 22,688 |
Effect of interest rate swaps | - | - | -/- 8,428 | - | - | - | -/- 8,428 |
Tax liabilities | - | - | - | - | - | 707 | 707 |
Trade and other payables | - | - | - | - | - | 3,163 | 3,163 |
Deferred income and tenant deposits | - | - | - | - | - | 541 | 541 |
Liabilities directly associated | |||||||
with the assets held for sale | 11 | 15 | 67 | 404 | 1,022 | - | 1,519 |
Financial liabilities | 35 | 8,905 | 5,116 | 654 | 1,022 | 4,458 | 20,190 |
Total interest sensitivity gap | 3,339 | -/- 8,905 | -/- 4,989 | -/- 654 | -/- 1,022 | -/- 12,231 | |
158
In € 1,000 |
31-12-2023 |
||||||
Less |
1 month |
3 months |
1 year |
More |
Non- |
||
than |
to |
to |
to |
than |
interest |
||
1 month |
3 months |
1 year |
5 years |
5 years |
bearing |
Total |
|
Investments in associates |
- |
- |
- |
- |
- |
3,689 |
3,689 |
Derivative financial instruments |
- |
- |
300 |
- |
- |
- |
300 |
Tax assets |
- |
- |
- |
- |
- |
367 |
367 |
Trade and other receivables |
772 |
- |
- |
- |
- |
696 |
1,468 |
Prepayments and deferred |
|||||||
expenses |
- |
- |
- |
- |
- |
308 |
308 |
Cash and cash equivalents |
2,380 |
- |
- |
- |
- |
2 |
2,382 |
Financial assets |
3,152 |
- |
300 |
- |
- |
5,062 |
8,514 |
Loans and borrowings |
284 |
16,164 |
14,419 |
262 |
969 |
49 |
32,147 |
Effect of interest rate swaps |
- |
- |
-/- 8,820 |
- |
- |
- |
-/- 8,820 |
Tax liabilities |
- |
- |
- |
- |
- |
168 |
168 |
Trade and other payables |
- |
- |
- |
- |
- |
2,148 |
2,148 |
Deferred income and tenant |
|||||||
deposits | - | - | - | - | - | 605 | 605 |
Financial liabilities |
284 |
16,164 |
5,599 |
262 |
969 |
2,970 |
26,248 |
Total interest sensitivity gap |
2,868 |
-/- 16,164 |
-/- 5,299 |
-/- |
262 |
-/- 969 |
-/- 19,826 |
An increase of 100 basis points in interest rates as at Statement of Financial Position
’s date
would have
decreased Group
equity and profit for the period by €
122,000 (2023
: €
198,000). A decrease of 100 basis
points in interest rates as at Statement of Financial Position
’s date
would have increased Group equity and
profit for the period by €
122,000 (2023
: €
198,000). This analysis assumes that all other variables, in particular
Cash flow value sensitivity analysis for variable-rate instruments
A possible change of 100 basis points (
bp
) in interest rates as at Statement of Financial Position
’s date
would
have increased and / or decreased profit for the period by the amounts shown below.
This analysis assumes that all other variables, in particular foreign currency exchange rates, remain constant.
In € 1,000 |
31-12-2024 |
31-12-2023 |
||
100 bp |
100 bp |
100 bp |
100 bp |
|
increase |
decrease |
increase |
decrease |
|
Variable rate instruments |
-/- 153 |
172 |
-/- 169 |
284 |
Interest rate swaps |
71 |
-/- 71 |
95 |
-/- 55 |
Cash flow sensitivity (net) |
-/- 82 |
101 |
-/- 74 |
229 |
Weighted average interest rate of loans and borrowings
The main part of the financial liabilities represents loans and borrowings. As at Statement of Financial
Position
’s date
the weighted average interest rate of loans and borrowings is as follows:
31-12-2024 |
31-12-2023 |
|
In % |
In % |
|
Weighted average interest rate of loans and borrowings |
6.44 |
7.83 |
The Fund’s policy is
mitigation.
The risk appetite is low. The impact of interest rate risk is high, the likelihood
159
15.42.10 Price risk
The price risk can be defined as the risk that the value of the investments will fluctuate as a result of changes
in market prices (other than those arising from currency risk or interest rate risk), caused by factors specific to
the individual investment or the issuing institution or factors applicable to the market as a whole.
Rental risk includes the risk of loss of rental income due to vacancies, the ease with which space can be
leased, and fluctuations in market rents.
Property value risk includes the risk of loss of property value due to changing economic circumstances,
economic decline and / or oversupply of comparable real estate.
Since the Fund’s properties are stated at fair value, with both
realised and unrealised value adjustments being
recognised directly in the Income Statement
, a change in market conditions impacts directly on the Fund’s
investment result. The price risk is managed by the Fund by constructing a portfolio such that optimum
diversification across sectors and markets is achieved.
The Fund’s risk policy towards price risk is
Acceptance.
The risk appetite is high. The impact of this risk is
high, the likelihood is also high. For the sensitivity analysis of the buildings (including underground) is referred
to section 15.2.10
“Sensitivity analysis”.
15.42.11 Risk associated with investing with borrowed money
The risk associated with investing with borrowed money lies in the fact that shareholders might lose their
investment because the lender has a priority call on the proceeds of realisation. The investments are indeed
used as a security for the (bank) loans. However, this risk is limited to the equity within the borrower subsidiary
as there is no cross collateralisation and no parent entity guarantee. If the LTV-ratio is too high according to
the bank covenants it is possible that the Fund needs to sell property to improve LTV. The Fund manages this
risk by keeping the LTV below 60% and preferably around 50%. For the LTV reference is made to section
15.16.4
“Securities provided, bank covenants and ratios secured bank loans”.
The Fund’s policy towards this risk is
Avoidance / mitigation.
The risk appetite is low. The impact of this risk is
high, the likelihood is medium.
15.42.12 Rent risk
Rent levels may be subject to downward pressure in periods of economic weakness. In the market, vacancy
rates can increase, and rents will drop. This can also occur at other points of the economic cycle when new
development creates supply that temporarily exceeds demand. Rental risk can be best mitigated by
professional, active local asset management with the ability to deploy cash resources to modernise assets and
fund tenant incentives. It is also mitigated by ensuring diversification in lease contract expiry dates, to avoid a
number of contracts expiring contemporaneously into a weak market.
The Fund’s policy towards the risk is
Mitigation.
The risk appetite is medium. The impact of the rent risk is
medium, the likelihood is high.
15.42.13 Debtor risk
Debtor risk is the risk that arises from the possibility that a specific counterparty is unable to meet its obligations
to the Fund. The policy of the Fund is to reduce the default risk by applying a capital adequacy ratio to
(potential) tenants and by ensuring a diverse tenant base across industries (e.g. Food Retail, Financial
Services, Communications, Healthcare, Technology, Government, Transportation & Logistics) so that an
exposure to certain sectors is limited.
The Fund’s policy towards this risk is
Mitigation
. The risk appetite is medium. The impact of this risk is medium,
the likelihood is high.
160
15.42.14 Vacancy risk
The occupancy of properties may decrease by lease termination or bankruptcy of tenants. This risk is mitigated
and most effectively managed by the Fund by active local asset management and by a regular programme of
capital investment at asset level. For information about non-cancellable leases reference is made to section
15.25.5
“
Non-cancellable
leases”
.
The Fund’s policy towards this risk is
Mitigation.
The risk appetite is medium. The impact of this risk is medium,
the likelihood is high.
The liquidity risk can be defined as the risk of the Fund being unable to fulfil its obligation to counterparties
associated with monetary liabilities.
The Fund invests in real estate, a characteristic of which is its relative illiquidity; typically, the sale of real estate
takes time, and this could potentially affect the liquidity position of the Fund. The Fund will continuously monitor
and manage liquidity to meet its obligations.
The following table shows the contractual,
undiscounted cash flows of the Fund’s monetary liabilities. The
loans and borrowings include the payable interest. The payable interest is calculated by using the weighted
average interest rate of loans and borrowings as at Statement of Financial Position’
s date.
In € 1,000 |
31-12-2024 |
||||||
Less |
1 month |
3 months |
1 year |
More |
|||
than |
to |
to |
to |
than |
No stated |
||
1 month |
3 months |
1 year |
5 years |
5 years |
maturity |
Total |
|
Non-derivative liabilities |
|||||||
Tax liabilities 32 |
124 |
- |
- |
- |
- |
- |
124 |
Loans & borrowings |
193 |
654 |
6,301 |
16,786 |
949 |
- |
24,883 |
Trade and other payables |
3,011 |
152 |
3,163 |
||||
Liabilities directly associated with |
|||||||
assets held for sale |
19 |
31 |
137 |
717 |
1,476 |
- |
2,380 |
3,347 |
837 |
6,438 |
17,503 |
2,425 |
- |
30,550 |
|
Derivative liabilities |
|||||||
Interest rate swaps |
- |
- |
- |
- |
- |
- |
- |
Monetary liabilities |
3,347 |
837 |
6,438 |
17,503 |
2,425 |
- |
30,550 |
In € 1,000 |
31-12-2023 |
||||||
Less |
1 month |
3 months |
1 year |
More |
|||
than |
to |
to |
to |
than |
No stated |
||
1 month |
3 months |
1 year |
5 years |
5 years |
maturity |
Total |
|
Non-derivative liabilities |
|||||||
Tax liabilities 32 |
163 |
- |
- |
- |
- |
- |
163 |
Loans & borrowings |
541 |
2,700 |
9,337 |
23,215 |
2,817 |
- |
38,610 |
Trade and other payables |
1,879 |
168 |
101 |
- |
- |
- |
2,148 |
Liabilities directly associated with |
6 |
15 |
55 |
- |
- |
- |
76 |
| assets held for sale |
|||||||
2,589 |
2,883 |
9,493 |
23,215 |
2,817 |
- |
40,997 |
|
Derivative liabilities |
|||||||
Interest rate swaps |
- |
- |
- |
- |
- |
- |
- |
Monetary liabilities |
2,589 |
2,883 |
9,493 |
23,215 |
2,817 |
- |
40,997 |
32
Exclusive of CIT.
161
Weighted remaining maturity of loans and borrowings
The main part of the financial liabilities represents loans and borrowings. As at Statement of Financial
Position’s date the weighted remaining maturity of loans and borrowings is as follows:
31-12-2024 |
31-12-2023 |
|
In years |
In years |
|
Weighted remaining maturity of loans and borrowings |
3.75 |
3.52 |
Withdrawable credit facilities
As at Statement of Financial Position’s date the withdrawable credit facilities of the Fund are as follows:
31-12-2024 |
31-12-2023 |
|
In € 1,000 |
In € 1,000 |
|
Withdrawable credit facilities |
1,986 |
2,022 |
For further information with regard to the withdrawable credit facilities reference is made to section 15.16.4
“Securities provided, bank covenants and ratios secured bank loans”.
The Fund’s policy towards this risk is
Avoidance.
The risk appetite is low. The Fund works with budgets where
the debt service obligation towards banks is carefully monitored. The impact of this risk can be high, the
15.42.16 Outsourcing risk
Risk of outsourcing activities brings with it the risk that the counterparty does not fulfil its contractual obligations
or makes mistakes. The Fund periodically assesses the compliance of the agreements and acts as it deems
necessary, e.g. when mistakes occur.
The Fund’s policy towards this risk is
Avoidance
. The risk appetite, impact and likelihood are low.
15.42.17 Risks with regard to regulations
Political decisions to change the law on, for example, soil pollution, zoning, rent control and taxation can affect
the yield of the Fund. This risk is mitigated by the undertaking of detailed analysis of potentially relevant risks
(due diligence) before an acquisition. The Fund also follows new developments and adjusts its policy, if
necessary, based on changes in laws and regulations.
The Fund’s policy is
Mitigation
. The risk appetite is low. The impact of this risk is medium, the likelihood also
is medium.
15.42.18 Tax risk
Tax risk is the risk associated with possible changes in tax laws or changing interpretations and effects of
government policy and regulation.
T
he Fund’s policy towards this risk is
Mitigation / acceptance.
The Fund tries to mitigate this risk by using local
specialists on regulation and taxation. The risk appetite is low. The impact of this risk is medium, the likelihood
is high.
15.42.19 Legal risk
Legal risk is the risk associated with possible changes in legislation or changing interpretations. In normal
times legislative changes are proposed by governments and made subject to comment by interested parties
before finally being passed into law. This enables drafting errors and unintended consequences to be identified
and removed and market participants to prepare themselves carefully for the impact of such changes. The
COVID-19 pandemic has led to a wave of emergency legislation from governments across the region in which
the Fund invests. This legislation has not been subject to the usual consultation and review processes. As a
result, there is a significantly increased risk that such legislation will impact negatively on the interests of the
162
Fund and its subsidiaries. In particular, there is a risk that cancellation or deferment of lease obligations,
ostensibly to help retail tenants affected by the pandemic, will lead to a long-term diminution of value in some
of the Fund´s properties. The Managing Board will carefully assess all such legislation and seek to mitigate its
negative effects to the fullest extent possible by active asset management and by specific legal action.
The Fund’s policy is therefore
Mitigation
. The risk appetite is low. The impact can be high, the likelihood is
high.
15.42.20 ESG risk
ESG risk refers to the risk of non-compliance with ESG standards for properties, which can have adverse
effects. To mitigate this risk, the Fund actively strives to meet ESG standards by investing in energy-saving
measures, enhancing real estate, and fostering a positive social environment for tenants. As of now, the Fund
does not perceive significant ESG risks, such as refinancing of expiring loans in 2025 and beyond. However,
this may change in the future if banks establish higher ESG standards, which they presently do not.
The Fund's policy for managing this risk is
Mitigation / avoidance
, with a low-risk appetite. The impact of this
risk is considered medium, while the likelihood is medium.
As at Statement of Financial Position’s date t
he Fund has set-off the following financial assets and / or financial
liabilities:
In € 1,000 |
31-12-2024 |
||
Gross amounts before |
Gross amounts |
Net amounts |
|
set-off |
set-off |
presented in SFP |
|
Trade and other receivables |
1,752 |
-/- 121 |
1,631 |
Trade and other payables |
3,284 |
-/- 121 |
3,163 |
In € 1,000 |
31-12-2023 |
||
Gross amounts before |
Gross amounts |
Net amounts |
|
set-off |
set-off |
presented in SFP |
|
Trade and other receivables |
1,468 |
- |
1,468 |
Trade and other payables |
2,148 |
- |
2,148 |
The above set-off relates to:
-
a receivable towards SDPI for the
amount of € 8
5,000 with regard to settlements acquisition
Bulgarian subsidiaries. The receivable for an amount of
€ 8
5,000 has been set-off against the liability
towards SPDI with regard to the acquisition of Aisi Ukraine LLC;
-
a receivable towards Hypo Noe for the amount of € 36,000 with regard to accrued interest interest
rate swap. The receivable for an amount of € 36,000 has been set
-off against the liability towards
Hypo Noe with regard to accrued interest secured bank loan.
The Fund does not intend to set-off other financial assets and / or financial liabilities and / or does not have
163
DISCLOSURES LEASES
15.43.1
Impact as at Statement of Financial
Position’s date
The following table present the impact of the application of IFRS 16 as at Statement of Financial Position’s
date:
31-12-2024 |
31-12-2023 |
|
In € 1,000 |
In € 1,000 |
|
Right-of-use assets |
- |
1,400 |
Right-of-use assets held for sale |
1,510 |
77 |
Total assets |
1,510 |
1,477 |
Non-current lease liabilities |
- |
1,231 |
Current lease liabilities |
1,519 |
233 |
Total liabilities |
1,519 |
1,464 |
For the specification and statement of changes in right-of-use assets reference is made to sections:
•
15.2.
6 “Specification of right
-of-
use assets”;
•
15.2.7 “Statement of changes in right
-of-
use assets”
;
•
15.13.6
“Specification of right
-of-use assets held for sale
”
; and
•
15.13.7
“Statement of changes in right
-of-use assets held for sale
”
.
For the statement of changes, analysis, and maturity analysis of undiscounted cash flows of lease liabilities
reference is made to sections:
•
15.16.5
“Statement of changes in lease liabilities”
;
•
15.16.6
“
Analysis of lease liabilities;
•
15.16.7
“Maturity analysis contractual undiscounted cash flows of lease liabilities”
;
•
15.21.3
“Analysis of lease liabilities”
; and
•
15.21.4
“Statement of changes
in liabilities directly associated with assets held for sale
”
.
15.43.2
Amounts recognised in Consolidated Income Statement
The following table present the impacts of the application of IFRS 16 in the Consolidated Income Statement:
31-12-2024 |
31-12-2023 |
|
In € 1,000 |
In € 1,000 |
|
Valuation losses of right-of-use assets |
38 |
147 |
Valuation losses of right-of-use assets held for sale |
127 |
- |
Interest expense on lease liabilities |
99 |
91 |
Foreign exchange and currency results of lease liabilities |
10 |
100 |
Foreign exchange and currency results of liabilities directly associated |
||
| with the assets held for sale |
13 |
- |
Expenses relating to short-term leases |
- |
- |
Expenses relating to leases of low-value assets, excluding short-term |
||
leases of low-value assets |
- |
- |
287 |
338 |
164
15.43.3
Amounts recognised in Consolidated Statement of Cashflows
The following table present the impacts of the application of IFRS 16 in the Consolidated Statement of
Cashflows:
31-12-2024 |
31-12-2023 |
|
In € 1,000 |
In € 1,000 |
|
Payment of lease liabilities |
87 |
219 |
Payment of liabilities directly associated with the assets held for sale |
177 |
- |
264 |
219 |
15.43.4
Analysis of lease payments
31-12-2024 |
31-12-2023 |
|
In € 1,000 |
In € 1,000 |
|
Fixed lease payments |
264 |
219 |
Variable lease payments |
- |
- |
264 |
219 |
165
DISCLOSURES CONSOLIDATED STATEMENT OF CASH FLOWS
15.44.1
Changes in cash flows arising from investing activities
The following table shows the changes in cash flows arising from investing activities, including:
•
changes arising from cash flows; and
•
non-cash changes.
In € 1,000 |
2024 |
||
Cash |
Non-cash |
||
Investing activities |
changes |
changes |
Total |
Acquisitions of / additions to owned investment property |
-/- 524 |
-/- 1,979 |
-/- 2,503 |
Acquisitions of / additions to assets held for sale |
-/- 531 |
- |
-/- 531 |
Acquisition of subsidiaries, net of cash acquired |
-/- 970 |
- |
-/- 970 |
Sale of subsidiaries, net of cash disposed of |
1,589 |
1 |
1,590 |
Proceeds from the sale of assets held for sale |
10,180 |
- |
10,180 |
Dividend from associates |
245 |
122 |
367 |
Fair value adjustments of owned investment property |
- |
1,800 |
1,800 |
Fair value adjustments of right-of-use assets |
- |
38 |
38 |
Fair value adjustments of investment property under development |
- |
-/- 366 |
-/- 366 |
Fair value adjustments of investments in associates |
- |
-/- 80 |
-/- 80 |
Fair value adjustments of assets held for sale (owned investment property) |
- |
-/- 283 |
-/- 283 |
Fair value adjustments of assets held for sale (right-of-use assets) |
- |
127 |
127 |
Remeasurements (as a result of an index / inflation) of right-of-use assets |
- |
-/- 186 |
-/- 186 |
Remeasurements (as a result of an index / inflation) of assets held for sale |
- |
-/- 12 |
-/- 12 |
Effect of changes in exchange rate of owned investment property |
- |
300 |
300 |
Effect of changes in exchange rate of property under development |
- |
40 |
40 |
Reclassifications of owned investment property |
- |
22,260 |
22,260 |
Reclassifications of assets held for sale (owned investment property) |
- |
-/- 22,260 |
-/- 22,260 |
Reclassifications of right-of-use assets |
- |
1,548 |
1,548 |
Reclassifications of assets held for sale (right-of-use assets) |
- |
-/- 1,548 |
-/- 1,548 |
9,989 |
-/- 478 |
9,511 |
|
In € 1,000 |
2023 |
||
Cash |
Non-cash |
||
Investing activities |
changes |
changes |
Total |
Acquisitions of / additions to owned investment property |
-/- 818 |
- |
-/- 818 |
Acquisitions of / additions to assets held for sale |
-/- 15 |
- |
-/- 15 |
Proceeds from the sale of assets held for sale |
3,378 |
-/- 877 |
2,501 |
Dividend from associates |
123 |
- |
123 |
Fair value adjustments of owned investment property |
- |
-/- 244 |
-/- 244 |
Fair value adjustments of right-of-use assets |
- |
147 |
147 |
Fair value adjustments of investment property under development |
- |
-/- 65 |
-/- 65 |
Fair value adjustments of investments in associates |
- |
-/- 102 |
-/- 102 |
Fair value adjustments of assets held for sale |
- |
445 |
445 |
Remeasurements (as a result of an index / inflation) of right-of-use assets |
- |
-/- 330 |
-/- 330 |
Effect of changes in exchange rate of owned investment property |
- |
454 |
454 |
Effect of changes in exchange rate of property under development |
- |
78 |
78 |
Reclassifications of owned investment property |
- |
1,330 |
1,330 |
Reclassifications of assets held for sale (owned investment property) |
- |
-/- 1,330 |
-/- 1,330 |
Reclassifications of right-of-use assets |
- |
77 |
77 |
Reclassifications of assets held for sale (right-of-use assets) |
- |
-/- 77 |
-/- 77 |
2,668 |
-/- 494 |
2,174 |
|
166
15.44.2
Changes in cash flows arising from financing activities
The following table shows the changes in cash flows arising from financing activities, including:
•
changes arising from cash flows; and
•
non-cash changes.
In € 1,000 |
2024 |
||
Cash |
Non-cash |
||
Financing activities |
changes |
changes |
Total |
Share buy-back / Reverse Bookbuilding (treasury shares) |
-/- 2,005 |
-/- 40 |
-/- 2,045 |
Proceeds from / acquisitions of secured bank loans |
3,200 |
- |
3,200 |
Proceeds from other loans and borrowings |
2,000 |
- |
2,000 |
Repayments of secured bank loans |
-/- 9,113 |
- |
-/- 9,113 |
Repayments of other loans and borrowings |
-/- 3,984 |
- |
-/- 3,984 |
Payments of lease liabilities |
-/- 87 |
- |
-/- 87 |
Payment of liabilities directly associated with assets held for sale |
-/- 177 |
- |
-/- 177 |
(Amortisation) flat fee and transaction costs of secured bank loans |
-/- 48 |
88 |
40 |
(Amortisation) flat fee and transaction costs of other loans and borrowings |
-/- 15 |
47 |
32 |
Accreted interest of lease liabilities |
- |
48 |
48 |
Accreted interest of other loans and borrowings |
- |
9 |
9 |
Accreted interest of liabilities directly associated with the assets held for sale |
- |
50 |
50 |
Effect of changes in exchange rate of secured bank loans |
- |
-/- 104 |
-/- 104 |
Effect of changes in exchange rate of lease liabilities |
- |
10 |
10 |
Effect of changes in exchange rate of other loans and borrowings |
- |
-/- 2 |
-/- 2 |
Effect of changes in exchange rate of liabilities directly associated with the |
|||
assets held for sale |
- |
13 |
13 |
Remeasurements (as a result of an index / inflation) of lease liabilities |
- |
186 |
186 |
Remeasurements (as a result of an index / inflation) of liabilities directly |
|||
associated with the assets held for sale |
- |
12 |
12 |
Reclassifications of lease liabilities |
- |
-/- 1,545 |
-/- 1,545 |
Reclassifications of liabilities directly associated with assets held for sale |
- |
1,545 |
1,545 |
-/- 10,229 |
317 |
-/- 9,912 |
|
In € 1,000 |
2023 |
||
Cash |
Non-cash |
||
Financing activities |
changes |
changes |
Total |
Distribution to shareholders |
-/- 737 |
- |
-/- 737 |
Share buy-back / Reverse Bookbuilding (treasury shares) |
-/- 67 |
11 |
-/- 56 |
Proceeds from / acquisitions of secured bank loans |
6,049 |
- |
6,049 |
Proceeds from other loans and borrowings |
1,000 |
- |
1,000 |
Repayments of secured bank loans |
-/- 9,596 |
- |
-/- 9,596 |
Repayments of other loans and borrowings |
-/- 1,899 |
- |
-/- 1,899 |
Payments of lease liabilities |
-/- 219 |
- |
-/- 219 |
(Amortisation) flat fee and transaction costs of secured bank loans |
- |
25 |
25 |
(Amortisation) flat fee and transaction costs of other loans and borrowings |
-/- 87 |
124 |
37 |
Accreted interest of lease liabilities |
- |
91 |
91 |
Accreted interest of other loans and borrowings |
- |
37 |
37 |
Effect of changes in exchange rate of secured bank loans |
- |
-/- 148 |
-/- 148 |
Effect of changes in exchange rate of lease liabilities |
- |
100 |
100 |
Effect of changes in exchange rate of other loans and borrowings |
- |
-/- 4 |
-/- 4 |
Remeasurement (as a result of an index / inflation) of lease liabilities |
- |
330 |
330 |
Reclassifications of lease liabilities |
- |
-/- 76 |
-/- 76 |
Reclassifications of liabilities directly associated with assets held for sale |
- |
76 |
76 |
-/- 5,556 |
566 |
-/- 4,990 |
|
167
RELATED PARTIES
15.45.1
Identity of related parties
For the Fund, the following categories of related parties were identified during the financial period:
I.
Managers in key positions, meaning the Managing Board and the Supervisory Board;
II.
Major investors (more than 20% voting rights);
III.
All organisational entities within the Group designated as Arcona Capital;
IV.
Investment trusts, investment funds and other investment companies which are managed by an
entity belonging to Arcona Capital;
V.
Investments undertaken by Arcona Capital, in which Arcona Capital has significant influence (more
than 20% of voting rights).
Related parties include both natural and legal persons. Close members of the family of natural persons, being
related parties, are also classified as related parties.
Transactions with and / or interests of managers in key positions (I)
During the financial period, the Fund entered into the following transactions with the managers in key positions:
A.
the Managing Board received a remuneration (management fee) for an amount of € 1,
180,000 (2023:
€ 1,
237,000);
B.
the Managing Board reduced its own management fee by an amount equivalent to the asset
management fees paid by the Fund (and / or its subsidiaries) to Arcona Capital Czech Republic s.r.o.
for the amount of €
233,000 (2023
: €
263,000);
C.
the Managing Board reduced its own management fee by an amount equivalent to the asset
management fees paid by the Fund (and / or its subsidiaries) to Arcona Capital Poland Sp.
z o.o.
for the amount of €
199,000 (2023
: €
196,000);
D.
the Managing Board reduced its own management fee by an amount equivalent to the asset
management fees paid by the Fund (and / or its subsidiaries) to Arcona Capital Bulgaria E.O.O.D.
for the amount of €
8,000 (2023
: €
28,000);
E.
the Managing Board reduced its own management fee by an amount equivalent to the asset
management fees paid by the Fund (and / or its subsidiaries) to CEG South East Continent Unique
Real Estate Management Limited for the amount of €
65,000 (2023
: €
75,000);
F.
the Managing Board received a sales fee for an amount of €
37
,000 (2023: € nil)
. The remaining
sales fee was received at the local entities for an amount
of € 204,000 (2023 € nil)
;
G.
the Managing Board received a sales performance-
related fee for an amount of € 169,000 (2023:
€ nil);
H.
the Supervisory Board received a remuneration for an amount of €
28,000 (2023
: €
28,000).
During the financial period, no other transactions occurred with members of the Managing Board and / or
members of the Supervisory Board.
For the personal interests of members of the Managing and Supervisory Board reference is made to section
20.3
“Personal interests”.
For the remuneration of the Managing Board reference is made to section 15.35
“Administrative expenses”.
For the calculation of the sales fee and sales performance-related fee reference is made to section 15.35.5
“Sales fee and
sales performance-related fee.
For the remuneration of the Supervisory Board and the remuneration of the statutory
directors’
reference is
made to section 15.36
.3 “Analysis of Supervisory Board fees” and
section 15.36
.4 “Analysis of other
operating
168
15.45.3
Specification major investors
As at Statement of Financial Position’s date the Fund identified the following major investors:
Direct real | Indirect real | Direct potential | |||
Name | Type of share | voting rights | voting rights | voting rights | Total |
In % | In % | In % | In % | ||
Stichting Prioriteit APF | Priority shares | 100.00 | N.a. | N.a. | 100.00 |
SPDI | Ordinary shares | 25.32 | N.a. | 2.98 | 28.30 |
H.M. van Heijst | Ordinary shares | 19.16 | 6.57 | N.a. | 25.73 |
The voting rights are based on information in the Register of substantial holdings and gross short positions of
the AFM, as at Statement of Financial Position
’s date
, and have been adjusted to reflect the expiry - without
conversion - of two 2019 warrant contracts for a total of 144,264 ordinary shares in Arcona Property Fund N.V.
15.45.4
Transactions with and / or interests of major investors (II)
During the financial period, the Fund entered into or maintained the following transactions with major investors:
2024 | 31-12-2024 | ||
Name | Kind of transaction | Amount of transaction | Carrying amount |
In € 1,000 | In € 1,000 | ||
SPDI | Acquisition 21.18%-share in Lelar Holding Ltd. | - | 57 |
SPDI | Acquisition 3.17%-share in Lelar Holding Ltd. | - | 16 |
SPDI | Acquisition 100%-share in N-E Real Estate Park First Phase S.rl. | - | 47 |
SPDI | Receivable / current account | -/- 6 | 85 |
SPDI | Acquisition 100%-share in Aisi Ukraine LLC | 2,095 | 1,152 |
SPDI | Conversion 1,072,910 pieces registered shares into | - | - |
1,072,910 pieces ordinary shares | |||
SPDI | 144,286 pieces warrants expired | - | - |
H.M. van Heijst | Providing unsecured loan | 1,000 | 600 |
H.M. van Heijst | Payable interest unsecured loan provided | 76 | 18 |
2023 | 31-12-2023 | ||
Name | Kind of transaction | Amount of transaction | Carrying amount |
In € 1,000 | In € 1,000 | ||
SPDI | Acquisition 21.18%-share in Lelar Holding Ltd. | - | 57 |
SPDI | Acquisition 3.17%-share in Lelar Holding Ltd. | - | 16 |
SPDI | Acquisition 100%-share in N-E Real Estate Park First Phase S.r.l. | - | 47 |
SPDI | Receivable / current account | - | 91 |
169
15.45.5
Transactions with other related parties (III-IV-V)
During the financial period, the Fund entered into or maintained the following transactions with other related
parties:
2024 | 31-12-2024 | |||
Other | Amount of | Carrying | ||
Name | Kind of transaction | information | transaction | amount |
In € 1,000 | In € 1,000 | |||
Arcona Capital Czech Republic s.r.o. | Asset management fee | - | 233 | - |
Arcona Capital Poland Sp. z o.o. | Asset management fee | - | 199 | - |
Arcona Capital Bulgaria E.O.O.D. | Asset management fee | - | 8 | - |
440 | - | |||
Arcona Capital Czech Republic s.r.o. | Sales fee | - | 204 | - |
Arcona Capital Czech Republic s.r.o. | Advisory services | - | 18 | - |
Several | Rental income | 268 m 2 | 65 | - |
Statutory directors | Wages and salaries | - | 12 | 4 |
2023 | 31-12-2023 | |||
Other | Amount of | Carrying | ||
Name | Kind of transaction | information | transaction | amount |
In € 1,000 | In € 1,000 | |||
Arcona Capital Czech Republic s.r.o. | Asset management fee | - | 263 | - |
Arcona Capital Poland Sp. z o.o. | Asset management fee | - | 196 | - |
Arcona Capital Bulgaria E.O.O.D. | Asset management fee | - | 28 | - |
487 | - | |||
Arcona Capital Czech Republic s.r.o. | Advisory services | - | 13 | - |
Several | Rental income | 268 m 2 | 69 | - |
Statutory directors | Wages and salaries | - | 12 | 1 |
15.45.6
Investments in other related parties (III-IV-V)
Investment trusts, investment funds and other investment companies managed by an entity within Arcona
Capital, do hold investments in companies in which the Fund also has investments. As at Statement of
Financial Position’s date the Fund
held no investments in other related parties.
15.45.7
Transactions with related parties
During the financial period, the Fund entered into or maintained the following transactions with related parties
affiliated with the Managing Board of the Fund:
2024 | 31-12-2024 | ||
Name | Kind of transaction | Amount of transaction | Carrying amount |
In € 1,000 | In € 1,000 | ||
R.J. Barker | Providing unsecured loan | - | 250 |
R.J. Barker | Payable interest unsecured loan provided | 24 | 6 |
2023 | 31-12-2023 | ||
Name | Kind of transaction | Amount of transaction | Carrying amount |
In € 1,000 | In € 1,000 | ||
R.J. Barker | Providing unsecured loan | - | 250 |
R.J. Barker | Payable interest unsecured loan provided | 24 | 6 |
The Fund has not entered into any other transactions with parties affiliated with the Managing Board of
the Fund.
170
15.45.8
Loans from third parties
During the financial period, the Fund has entered into loan agreements with third parties. Those third parties
are not related parties to the Fund or the Managing Board but are investors in other funds managed by the
EVENTS AFTER STATEMENT OF FINANCIAL
POSITION’S DATE
The following material events after Statement of Financial Position’s date have occurred:
A.
As at January 16, 2025 the land lease of the investment property Bydgoszcz has expired. In January
2025 the Fund received a payment of approximately PLN 628,000 (
approximately € 147,000)
from
the lessor as part payment of due compensation. The Fund is in negotiations with the lessor to agree
additional compensation amounts. Reference is made to note 15.13.5
”Valuation
of owned
investment property held for sale”.
B.
As at February 6, 2025 the Managing Board provided 68,782 registered shares of the Fund to SPDI
as part of the settlement of the acquisition of the 100% stake
in Aisi Ukraine LLC (“Share
-based
payment”). The issue price
was
€ 11.16 per registered share.
C.
As at February 6, 2025 the Managing Board provided 10,689 registered shares of the Fund to SPDI
as the (final) settlement for the acquisition of the Romanian assets. The issue price was
€ 11.16 per
registered share.
D.
As at March 26, 2025 the Fund has extended its lease with AT&T for approximately 3,000 m² of office
space in the Letná 45 property in Košice, Slovakia, through April
30, 2030. This secures
approximately
30% of the property’s floorspace and enhances long
-term income stability. Although
AT&T reduced its leased area by 2,000 m², the new agreement includes flexible reduction options
and delivers a 16.5% rent increase per m², boosting the asset’s investment value. AT&T remains the
Fund’s largest tenant, with glo
bal revenues of USD 122 billion and over 150,000 employees.
For further information is referred to section 13.2 “Statement of compliance and future related assumptions”.
171
PARENT COMPANY FINANCIAL STATEMENTS 2024
172
16
PARENT
COMPANY
BALANCE
SHEET
After proposal result appropriation
Notes
31-12-2024
31-12-2023
In € 1,000
In € 1,000
Investments
Investments in group companies
19.1
25,876
29,659
Receivables from group companies
19.2
20,274
22,219
46,150
51,878
Receivables
Other receivables
19.3
461
1,226
Deferred expenses
19.4
4
4
465
1,230
Other assets
Cash at bank
19.7
529
160
Total assets
47,144
53,268
Shareholders’ equity
19.8
Issued capital
19.9
20,885
20,885
Share premium
19.10
21,077
21,077
Revaluation reserve
19.8.1
5,972
7,683
Reserve currency translation differences
19.8.1
-/- 279
564
Reserve investments in group companies
19.8.1
8,853
7,750
Retained earnings
19.8.1
-/- 14,032
-/- 12,563
42,476
45,396
Long-term liabilities
Private loans
19.12
250
-
Debts to group companies
19.13
597
581
847
581
Current liabilities
Private loans
19.12
1,717
2,122
Debts to group companies
19.13
910
4,255
Tax liabilities
19.14
16
3
Other liabilities
19.15
96
48
Accruals
19.16
1,082
863
Total current liabilities
3,821
7,291
Total shareholders’ equity and liabilities
47,144
53,268
173
17
PARENT
COMPANY
PROFIT
AND
LOSS
ACCOUNT
Notes
2024
2023
In € 1,000
In € 1,000
Income from investments
Interest
19.19
1,864
1,334
Realised valuation results of investments
Investments in group companies
19.20
1,257
104
Receivables from group companies
19.21
58
116
1,315
220
Unrealised valuation results of investments
Investments in group companies
19.22
-/- 1,160
219
Receivables from group companies
19.23
-/- 62
377
-/- 1,222
596
Other operating income
19.24
17
53
Total income
1,974
2,203
Administrative expenses
19.25
775
675
Other operating expenses
19.26
650
460
Interest expenses
19.28
553
843
Total expenses
1,978
1,978
Result before income tax
-/- 4
225
Income tax expense
19.29
28
42
Result after income tax
-/- 32
183
174
18
ACCOUNTING
PRINCIPLES
PARENT
COMPANY
FINANCIAL
STATEMENTS
18.1
GENERAL
The Parent Company Financial Statements for the financial period are part of the Consolidated Financial
Statements for the financial period.
18.2
SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES
The Parent Company Financial Statements have been prepared in accordance with the provisions of Part 9 of
Book 2 of the Dutch Civil Code (Titel 9, Boek 2 van het Burgerlijk Wetboek). For the purpose of determining
the principles of valuation of assets and liabilities and the determination of results for its Parent Company
Financial Statements, the Parent Company makes use of the option offered in Book 2, article 2:362 (8) of the
Dutch Civil Code. This means that the principles of valuation of assets and liabilities and determination of
results (hereinafter referred to as the “principles of valuation”) of the Fund’s
Parent Company Financial
Statements are identical to those that have been applied for the Consolidated Financial Statements. In this
context investment in group companies, on which significant influence is exercised, are valued at Net Asset
Value. The Consolidated Financial Statements have been prepared in accordance with the standards adopted
by the International Accounting Standards Board (“
IASB
”) and accepted by the European Union (hereinafter
referred to as “EU
-
IFRS”). Reference is made to sections 1
3.6
“Basis of preparation of the consolidated
financial statements”
to 13.41
“Income tax expense”
, inclusive for a description of those principles.
18.3
BASIS OF PREPARATION OF THE PARENT COMPANY FINANCIAL STATEMENTS
18.3.1
Investments in group companies
Investments in group companies in which the Parent Company either exercises voting control or effective
management responsibility are valued at Net Asset Value. The initial recognition in the accounts and valuations
at balance sheet dates is made at Net Asset Value. The value is adjusted with the share of the Parent Company
in the results of the group company, based on the principles for determining results as applied in the
Consolidated Financial Statements and with the share in the other movements in equity of the group company
with effect from the date on which control commences.
In case the value of the group company is reduced to zero, additional losses are provided for, and a liability is
recognised, only to the extent that the Parent Company has incurred legal or constructive obligations or made
payments on behalf of the group company. If the group company subsequently reports profits, the Parent
Company resumes recognising its share of those profits only after its share of the profits equals the share of
losses not recognised.
The Net Asset Value of the foreign group companies is translated into Euros at the exchange rate as at the
balance sheet date. The results of foreign group companies are translated into Euros at the exchange rates at
the dates of the transactions. For practical reasons, the average monthly exchange rates for the financial
period are used to approximate the exchange rates at the dates of the transactions, as long as the exchange
rates have not fluctuated significantly.
175
18.3.2
Receivables from group companies
Receivables from group companies are initially measured at fair value and subsequently measured at
amortised cost. As at balance sheet date the receivables from group companies are translated into Euros at
the exchange rate as at the balance sheet date. The recognition and determination of impairments takes place
in a forward-looking manner based on the expected credit loss model (
ECL
). The ECL model applies to the
receivables from group companies. Due to the fact that investments in group companies are considered as a
combination of assets and liabilities, this means in general that expected credit losses on receivables from
group companies are eliminated. The elimination is recognised in the carrying amount of the receivables from
group companies.
18.3.3
Acquisitions through share-based payments
In case the Fund acquires investments in group companies, receivables from group companies, investments
in associates or other assets by share-based payments (IFRS 2), the difference between the fair value of those
assets and the purchase price agreed is recognised directly into share premium.
18.3.4
Issued capital
Incremental costs directly attributable to the issue of (ordinary and registered) shares are recognised as a
deduction from
shareholders’
equity.
When equity shares are repurchased (e.g. through share buy-back or reverse bookbuilding), the consideration
paid, which includes directly attributable costs, is recognized as a deduction from
shareholders’
equity. The
Parent Company classifies the repurchased shares as treasury shares at the payment date to its liquidity
provider and charges them from the retained earnings, including directly attributable costs. If the treasury
shares are sold or reissued later, the amount received is recognized as an increase in
shareholders’
equity,
and any surplus or deficit resulting from the transaction is presented within share premium. There is no impact
on the profit and loss account when the company buys back, sells, issues, or cancels its own shares.
18.3.5
Share premium
Share premium comprises the amount paid in by the shareholders on ordinary and registered shares of
the Parent Company over and above the nominal value. The uplift received on issuance of own ordinary and
registered shares, or the reduction applied on redemption of own ordinary and registered shares is recognised
directly into share premium.
18.3.6
Legal revaluation reserve
The legal revaluation reserve comprises the cumulative unrealised positive net changes in the fair value of the
properties held by the investments in group companies (owned investment property, investment property under
development as well as properties classified as assets held for sale), less the related deferred tax liabilities.
The deferred tax liabilities are deducted in accordance with the principles of valuation for deferred taxes.
In case of sale of property the cumulative unrealised positive net change in the fair value of the property sold,
as well as the related deferred tax liabilities, are no longer stated in the legal revaluation reserve but recognised
under retained earnings.
18.3.7
Reserve currency translation differences
Results arising from translation of net investments in group companies outside the Euro-zone into the Parent
Company
’s
functional currency (Euro)
are recognised directly in the shareholders’ equity in
reserve currency
translation differences. In the event of reduction or sale of the net investment in group companies the
cumulative exchange differences related to that group company are (proportionally) transferred to the retained
earnings.
176
18.3.8
Legal reserve investments in group companies
The Parent Company maintains a legal reserve for the amount of its share in the positive result in its group
companies and of its share in direct increases in equity since the initial recognition of the group company was
made. Negative cumulative results in a group company since its first valuation are not considered.
The legal reserve investments in group companies will be reduced by:
•
distributions to which the Parent Company, until the moment of adoption of its own Financial
Statement, has acquired an entitlement;
•
direct decreases in equity of the group company;
•
distributions which the Parent Company may affect without restrictions.
The distributions as mentioned in this section do not include distributions made in the form of shares.
18.3.9
Result from investments in group companies
The share of the results from investments in group companies comprises the Parent Company
’s share in the
results of the group companies, including the revaluation result of the assets held by the group companies.
The result from investments in group companies has been determined on the basis of the principles of valuation
adopted by the Parent Company. Results from transactions between the Parent Company and the group
companies, as well as between the group companies themselves, are recognised as far as they are realised.
If the group companies have been acquired in the course of the financial period, the Parent Company accounts
for the results from investments in group companies with effect from the date on which control commenced.
18.4
SIZE AND COMPOSITION OF THE EQUITY AND RESULTS IN THE CONSOLIDATED AND
PARENT COMPANY FINANCIAL STATEMENTS
As the Parent Company makes use of the option provided in Book 2, article 2:362 (8) of the Dutch Civil Code,
the size of the G
roup equity (in the Consolidated Statement of Financial Position) and the shareholders‘ equity
(in the Parent Company Balance Sheet) is identical.
The composition of the
shareholders’
equity (in the Consolidated Statement of Financial Position) and the
shareholders‘ equity (in the Parent Company Balance Sheet) is not identical
, caused by the
“L
egal reverse
investments in group companies” in the
Parent Company Financial Statements.
Since the Parent Company makes use of the option provided in Book 2, article 2:362 (8) of the Dutch Civil
Code, the profit for the period in the Consolidated Income Statement and profit for the period in the Parent
Company Profit and Loss Account is identical.
177
19
NOTES
TO
THE
PARENT
COMPANY
FINANCIAL
STATEMENTS
19.1
INVESTMENTS IN GROUP COMPANIES
19.1.1
Analysis of investments in group companies
31-12-2024
31-12-2023
In € 1,000
In € 1,000
Arcona Capital RE Bohemia s.r.o.
7,413
7,867
Arcona Capital RE Slovakia s.r.o.
7,978
11,530
Arcona Capital Real Estate Poland Sp. z o.o.
2,535
2,320
Arcona Capital Real Estate Trio Sp. z o.o.
6,354
6,664
Arcona Real Estate B.V.
587
564
Aisi Bela LLC
1,009
714
Boyana Residence E.O.O.D.
Sold
-
Arcona Black Sea Real Estate B.V.
-
-
25,876
29,659
The companies indicated above are included in the Consolidated Financial Statements. For further analysis of
the investments in group
companies’
reference is made to section 15.1.1
“Consolidated subsidiaries”.
19.1.2
Statement of changes in investments in group companies
2024
2023
In € 1,000
In € 1,000
Balance as at 1 January
29,659
31,981
Additions
2,019
-
Share in result of group companies
-/- 1,160
181
Distributions
-/- 3,870
-/- 2,221
Exchange rate differences
-/- 183
-/- 282
Disposals
-/- 807
-
Other movements directly in
shareholders’ equity
218
-
Balance as at 31 December
25,876
29,659
The “A
dditions
” for the amount of € 2,019,000 relates to the increase of the issued capital
of Boyana Residence
E.O.O.D. (BGN 3,949,000).
The
“Distributions” for the amount of €
3,870,000 negative concerns:
•
capital reductions from Arcona Capital RE Slovakia s.r.o.
for an amount of € 3,028,000;
•
dividend distribution from
Arcona RE Bohemia s.r.o. for an amount of € 84
2,000.
The disposals for the amount of € 807,000 relate
to the sale of the 100%-share in Boyana Residence E.O.O.D.
as at October 2, 2024 for an amount of € 1,590,000.
The “Other movements directly in shareholders’ equity”
for the amount of € 21
8,000 relates to the result on
acquisition with regard to the acquisition of Aisi Ukraine LLC by Arcona Black Sea Real Estate B.V.
178
19.1.3
Securities provided
As at balance sheet date the following securities were provided:
•
the issued shares of Arcona Capital Real Estate Poland Sp. z o.o. are pledged to Hypo Noe.
For further information on the pledges to credit institutions and bank covenants reference is made to section
15.16.
4 “Securities provided, bank covenants and ratios secured bank loans”.
19.2
RECEIVABLES FROM GROUP COMPANIES
19.2.1
Analysis of receivables from group companies
31-12-2024
31-12-2023
In € 1,000
In € 1,000
Loans to group companies
20,274
22,219
19.2.2
Analysis of loans to group companies
31-12-2024
31-12-2023
In € 1,000
In € 1,000
Arcona Capital Real Estate Poland Sp. z o.o.
9,198
8,541
Arcona Capital Black Sea Real Estate B.V.
6,364
5,983
Arcona Poland Project 5 Sp. z o.o.
4,534
4,335
Arcona Capital RE Bohemia s.r.o.
-
2,265
Boyana Residence E.O.O.D.
-
936
Aisi Bela LLC
178
159
20,274
22,219
As at balance sheet date the weighted average interest rate on all receivables from group companies is 6.33%
per annum (December 31, 2023: 6.57% per annum).
19.2.3
Statement of changes in loans to group companies
2024
2023
In € 1,000
In € 1,000
Balance as at 1 January
22,219
22,542
Loans advanced
3,142
8,732
Redemption on loans advanced
-/- 4,977
-/- 9,383
Exchange rate differences
-/- 48
-/- 49
Provision
-/- 62
377
Balance as at 31 December
20,274
22,219
179
19.3
OTHER RECEIVABLES
All other receivables have a maturity within one year.
19.3.1
Analysis of other receivables
31-12-2024
31-12-2023
In € 1,000
In € 1,000
Dividend from investments in group companies
146
846
Interest on receivables to group companies
306
278
Receivables SPDI
-
83
Current account to group companies
9
16
Other receivables
-
3
461
1,226
19.3.2
Specification of dividend from investments in group companies
31-12-2024
31-12-2023
In € 1,000
In € 1,000
Arcona Capital Real Estate Trio Sp. z o.o.
146
846
19.3.3
Specification of interest on receivables to group companies
31-12-2024
31-12-2023
In € 1,000
In € 1,000
Arcona Capital RE Bohemia s.r.o.
-
264
Arcona Capital Real Estate Trio Sp. z o.o.
286
-
Aisi Bela LLC
20
14
306
278
19.3.4
Specification of current account to group companies
31-12-2024
31-12-2023
In € 1,000
In € 1,000
Arcona Capital Real Estate Trio Sp. z o.o.
-
16
N-E Real Estate Park First Phase S.r.l.
9
-
9
16
19.4
DEFERRED EXPENSES
All deferred expenses have a maturity within one year.
19.4.1
Analysis of deferred expenses
31-12-2024
31-12-2023
In € 1,000
In € 1,000
Prepayments
4
4
180
19.5
RECOGNISED DEFERRED TAXES
19.5.1
Specification of recognised deferred taxes
In €
1,000
31-12-2024
Recognised
deferred tax
assets
Recognised
deferred tax
liabilities
Total
deferred
taxes
Receivables from group companies
-
28
-/- 28
Tax losses (carried forward)
28
-
28
Deferred taxes before set-off
28
28
-
Set-off deferred taxes
-/- 28
-/- 28
-
-
-
-
In € 1,000
31-12-2023
Recognised
deferred tax
assets
Recognised
deferred tax
liabilities
Total
deferred
taxes
Receivables from group companies
-
55
-/- 55
Tax losses (carried forward)
55
-
55
Deferred taxes before set-off
55
55
-
Set-off deferred taxes
-/- 55
-/- 55
-
-
-
-
19.5.2
Analysis of recognised deferred tax assets concerning tax losses (carried forward)
31-12-2024
31-12-2023
In € 1,000
In € 1,000
Will expire
-
-
Will never expire
28
55
28
55
Based on the tax forecast the Managing Board expects (considering local tax law and regulations) that in the
future there will be sufficient taxable profit to set-off these recognised tax losses.
181
19.6
UNRECOGNISED DEFERRED TAXES
19.6.1
Specification of unrecognised deferred taxes
| 31-12-2024 | |||
Unrecognised | Unrecognised | ||
deferred tax | deferred tax | ||
assets | liabilities | Total | |
In € 1,000 | In € 1,000 | In € 1,000 | |
Tax losses (carried forward) | 2,096 | - | 2,096 |
Receivables from group companies | 415 | - | 415 |
2,511 | - | 2,511 | |
| 31-12-2023 | |||
Unrecognised | Unrecognised | ||
deferred tax | deferred tax | ||
assets | liabilities | Total | |
In € 1,000 | In € 1,000 | In € 1,000 | |
Tax losses (carried forward) | 2,010 | - | 2,010 |
Receivables from group companies | 399 | - | 399 |
2,409 | - | 2,409 | |
19.6.2
Analysis of unrecognised deferred taxes
31-12-2024 | 31-12-2023 | |
In € 1,000 | In € 1,000 | |
Will expire | - | - |
Will never expire | 2,511 | 2,409 |
2,511 | 2,409 |
The Managing Board expects (considering local tax law and regulations) that in the future there will be
insufficient taxable profit to set-off these unrecognised tax losses.
19.6.3
Statement of changes in unrecognised deferred taxes
2024 | 2023 | |
In € 1,000 | In € 1,000 | |
Balance as at 1 January | 2,409 | 2,278 |
Additions / withdrawals | 102 | 131 |
Balance as at 31 December | 2,511 | 2,409 |
19.7
CASH AT BANK
Cash at bank is entirely at the free disposal of the Parent Company.
182
19.8
SHAREHOLDERS’ EQUITY
Statement of changes in
shareholders’ equity
Reserve |
Legal reserve |
||||||
Legal |
currency |
investments |
Share- |
||||
Issued |
Share |
revaluation |
translation |
in group |
Retained |
holders’ |
|
capital |
premium |
reserve |
differences |
companies |
earnings |
equity |
|
In € 1,000 |
In € 1,000 |
In € 1,000 |
In € 1,000 |
In € 1,000 |
In € 1,000 |
In € 1,000 |
|
Balance as at January 1, 2024 |
20,885 |
21,077 |
7,683 |
564 |
7,750 |
-/- 12,563 |
45,396 |
Result after income tax |
- |
- |
- |
- |
- |
-/- 32 |
-/- 32 |
Change in legal revaluation reserve |
- |
- |
-/- 1,711 |
- |
- |
1,711 |
- |
Change in reserve currency |
- |
- |
- |
-/- 843 |
- |
- |
-/- 843 |
translation differences |
|||||||
Change in legal reserve investments |
- |
- |
- |
- |
1,103 |
-/- 1,103 |
- |
in group companies |
|||||||
Treasury shares repurchased |
- |
- |
- |
- |
- |
-/- 2,045 |
-/- 2,045 |
Balance as at December 31, 2024 |
20,885 |
21,077 |
5,972 |
-/- 279 |
8,853 |
-/- 14,032 |
42,476 |
Reserve |
Legal reserve |
||||||
Legal |
currency |
investments |
Share- |
||||
Issued |
Share |
revaluation |
translation |
in group |
Retained |
holders’ |
|
capital |
premium |
reserve |
differences |
companies |
earnings |
equity |
|
In € 1,000 |
In € 1,000 |
In € 1,000 |
In € 1,000 |
In € 1,000 |
In € 1,000 |
In € 1,000 |
|
Balance as at January 1, 2023 |
21,190 |
21,922 |
7,911 |
1,073 |
9,157 |
-/- 14,738 |
46,515 |
Result after income tax |
- |
- |
- |
- |
- |
183 |
183 |
Change in legal revaluation reserve |
- |
- |
-/- 228 |
- |
- |
228 |
- |
Change in reserve currency |
- |
- |
- |
-/- 509 |
- |
- |
-/- 509 |
translation differences |
|||||||
Change in legal reserve investments |
- |
- |
- |
- |
-/- 1,407 |
1,407 |
- |
in group companies |
|||||||
Treasury shares repurchased |
-/- 305 |
-/- 108 |
357 |
-/- 56 |
|||
Distributions to shareholders |
- |
-/- 737 |
- |
- |
- |
- -/- |
737 |
Balance as at December 31, 2023 |
20,885 |
21,077 |
7,683 |
564 |
7,750 |
-/- 12,563 |
45,396 |
19.9
ISSUED CAPITAL
Analysis of issued capital
31-12-2024 |
31-12-2024 |
31-12-2023 |
31-12-2023 |
|
In pieces |
In € 1,000 |
In pieces |
In € 1,000 |
|
Ordinary shares (at € 5.00 each) |
3,882,965 |
19,415 |
3,104,173 |
15,521 |
Registered shares (at € 5.00 each) |
- |
- |
1,072,910 |
5,364 |
Subtotal profit- sharing shares (at € 5.00 each) |
3,882,965 |
19,415 |
4,177,083 |
20,885 |
Treasury shares (at € 5.00 each) |
294,118 |
1,470 |
- |
- |
Priority shares (at € 5.00 each) |
1 |
- |
1 |
- |
4,177,084 |
20,885 |
4,177,084 |
20,885 |
183
19.9.2
Ordinary shares
The holders of ordinary shares (without division in share classes) are entitled to dividends, the distribution of
which has been resolved by the General Meeting of Shareholders. The holders of ordinary shares are entitled
to exercise one vote per ordinary share at the General Meeting of Shareholders.
2024
2024
2023
2023
In pieces
In € 1,000
In pieces
In € 1,000
Balance in issue as at 1 January
3,104,173
15,521
3,113,074
15,565
Conversion registered shares
1,072,910
5,364
-
-
Share buy-back / Reverse Bookbuilding
-/- 294,118
-/- 1,470
-/- 8,901
-/- 44
Balance in issue as at 31 December fully paid
3,882,965
19,415
3,104,173
15,521
19.9.3
Registered shares
The registered shares (without division in share classes) are currently restricted from trading on Euronext Fund
Services in Amsterdam and the Prague Stock Exchange. There are no other restrictions with regard to
registered shares.
2024
2024
2023
2023
In pieces
In € 1,000
In pieces
In € 1,000
Balance in issue as at 1 January
1,072,910
5,364
1,072,910
5,364
Conversion into ordinary shares
-/- 1,072,910
-/- 5,364
-
-
Balance in issue as at 31 December fully paid
-
-
1,072,910
5,364
19.9.4
Treasury shares
The treasury shares are ordinary shares, held by the Parent Company. Treasury shares are restricted from
voting rights and / or dividends.
2024
2024
2023
2023
In pieces
In € 1,000
In pieces
In € 1,000
Balance in issue as at 1 January
-
-
52,075
261
Share buy-back / Reverse Bookbuilding
294,118
1,470
8,901
44
Repurchased during the financial period
-
-
-/- 60,976
-/- 305
Balance in issue as at 31 December fully paid
294,118
1,470
-
-
As at September 18, 2024 the Parent Company announced it would repurchase ordinary shares for a
maximum of € 2 million through a Reverse Bookbuilding Tender Offer. Shareholders could offer their shares
at a price per share between
€ 6.50 and a maximum of € 8.00 from September 19, 2024 to October 16, 2024.
As at October 17, 2024 the Parent Company announced it has accepted to purchase 294,118 ordinary shares
at a price of € 6.80 per ordinary share
(the “Clearing Price”)
, resulting in a total transaction value of
approximately € 2 million. The Parent Company intends
to cancel the treasury shares subsequently, following
a resolution of the General Meeting of Shareholders in June 2025.
184
19.9.5
Priority shares
From the profit earned in a financial period, primarily and as far as possible a dividend is distributed on the
priority shares amounting to seven per cent (7%) on an annual basis, calculated over the nominal value of the
priority shares. No further distributions are made on the priority shares. For the (special) rights with regard to
the holders of priority shares reference is made
to section 20.4 “Special controlling rights”.
2024
2024
2023
2023
In pieces
In € 1,000
In pieces
In € 1,000
Balance in issue as at 1 January
1
-
1
-
Issued during the financial period
-
-
-
-
Redeemed during the financial period
-
-
-
-
Balance in issue as at 31 December fully paid
1
-
1
-
19.9.6
Analysis of authorised share capital
31-12-2024
31-12-2024
31-12-2023
31-12-2023
In pieces
In € 1,000
In pieces
In € 1,000
Ordinary shares (at € 5.00 each)
4,999,999
25,000
4,999,999
25,000
Priority shares (at € 5.00 each)
1
-
1
-
5,000,000
25,000
5,000,000
25,000
19.9.7
Acquisitions through share-based payments
During the financial period, the Fund acquired the following subsidiaries
(“Investments in group companies”)
(partly) through share-based payments:
•
Trade Center LLC and Aisi Ukraine LLC (through Arcona Black Sea Real Estate B.V.): issuance of
registered shares for an amount of an equivalent of USD 800,000, against the applicable foreign
exchange rate USD / EUR as at conversion date and the applicable last published NNNAV as at
execution date;
as well as a payment in “Cash and cash equivalents” for an amount of
an equivalent
of USD 1,170,362, against the applicable foreign exchange rate USD / EUR as at payment date.
Above described (final) settlement took place as at February 6, 2025. For further reference see section 19.33
“Events after balance sheet date”.
For a specification of the subsidiaries assets acquired, and liabilities assumed reference is made to section
15.1.3
“Subsidiaries acquired during the financial period”.
19.10
SHARE PREMIUM
For the statement of changes in share premium reference is made to section
19.8.1 “Statement of changes in
shareholders’ equity”
.
The paid-up share premium for tax purposes as at December 31, 2024
was €
25,297,000 (December 31, 2023:
€
25,297,000).
19.11
DEFERRED TAX LIABILITIES
For the specification and analysis of the (un)recognised deferred tax liabilities reference is made to section
19.5 “Recognised deferred taxes and
section 19
.6 “Unrecognised deferred taxes”.
185
19.12
PRIVATE LOANS
19.12.1
Specification of private loans
2024
2023
In € 1,000
In € 1,000
Non-current part of private loans
250
-
Current part of private loans
1,717
2,122
1,967
2,122
19.12.2
Analysis of private loans
31-12-2024
31-12-2023
In € 1,000
In € 1,000
Unsecured loans third parties
1,967
2,122
19.12.3
Statement of changes in private loans
2024
2023
In € 1,000
In € 1,000
Balance as at 1 January
2,122
2,798
Loans advanced
2,000
1,000
Redemptions
-/- 2,184
-/- 1,699
(Amortisation) flat fee and transaction costs
29
23
Balance as at 31 December
1,967
2,122
For the conditions and securities provided of the private loans reference is made to section 15.16.9
“
Analysis
of other loans and borrowings”
and section 15.16.10
“Securities provided of other loans and borrowings”.
19.12.4
Maturity analysis of private loans
31-12-2024
31-12-2023
In € 1,000
In € 1,000
Less than 1 year
1,717
2,122
1 to 5 years
250
-
More than 5 years
-
-
1,967
2,122
19.13
DEBTS TO GROUP COMPANIES
19.13.1
Specification of debts due to group companies
2024
2023
In € 1,000
In € 1,000
Non-current part of debts due to group companies
597
581
Current part of debts due to group companies
910
4,255
1,507
4,836
186
19.13.2
Analysis of debts to group companies
31-12-2024
31-12-2023
In € 1,000
In € 1,000
Loans due to group companies
1,037
3,995
Interest on loans due to group companies
470
828
Payables due to group companies
-
13
1,507
4,836
19.13.3
Maturity analysis of debts due to group companies
31-12-2024
Loans due to
group companies
Interest on loans
due to group
companies
Payables due to
group companies
Total
In € 1,000
In € 1,000
In € 1,000
In € 1,000
Less than 1 year
440
470
-
910
1 to 5 years
597
-
-
597
More than 5 years
-
-
-
-
1,037
470
-
1,507
31-12-2023
Loans due to
group companies
Interest on loans
due to group
companies
Payables due to
group companies
Total
In € 1,000
In € 1,000
In €
1,000
In € 1,000
Less than 1 year
3,414
828
13
4,255
1 to 5 years
581
-
-
581
More than 5 years
-
-
-
-
3,995
828
13
4,836
19.13.4
Specification of loans due to group companies
31-12-2024
31-12-2023
In € 1,000
In €
1,000
Arcona Capital Real Estate Trio Sp. z o.o.
-
2,013
Arcona Capital RE Slovakia s.r.o.
440
1,401
Arcona Real Estate B.V.
597
581
1,037
3,995
As at balance sheet date the weighted average interest rate on all loans due to group companies is 7.21% per
annum (December 31, 2023: 8.25%).
19.13.5
Statement of changes in loans due to group companies
2024
2023
In € 1,000
In €
1,000
Balance as at 1 January
3,995
6,237
Loans advanced
2,684
671
Redemptions
-/- 5,644
-/- 2,913
Exchange rate differences
2
-
Balance as at 31 December
1,037
3,995
187
19.13.6
Specification of interest on loans due to group companies
31-12-2024
31-12-2023
In € 1,000
In € 1,000
Arcona Capital RE Slovakia s.r.o.
48
236
Arcona Capital Real Estate Trio Sp. z o.o.
422
592
470
828
19.13.7
Specification of payables due to group companies
31-12-2024
31-12-2023
In € 1,000
In € 1,000
Arcona Capital Real Estate Trio Sp. z o.o.
-
13
19.14
TAX LIABILITIES
31-12-2024
31-12-2023
In € 1,000
In € 1,000
Value Added Tax (
VAT
)
16
3
19.15
OTHER LIABILITIES
All other liabilities have a maturity within one year.
19.15.1
Analysis of other liabilities
31-12-2024
31-12-2023
In € 1,000
In € 1,000
Trade payables
96
48
19.16
ACCRUALS
All accruals have a maturity within one year.
19.16.1
Analysis of accruals
31-12-2024
31-12-2023
In € 1,000
In € 1,000
Administrative expenses
436
550
Other operating expenses
255
156
Sales performance-related fee
169
-
Payable settlement acquisitions
134
-
Interest payables
56
157
Sales fee
32
-
1,082
863
188
19.17
NON-CONTINGENT LIABILITIES
As at balance sheet date the Parent Company was not subject to any contractual obligation concerning for
example investments or other non-contingent liabilities that require settlement in a future financial period.
19.18
CONTINGENT LIABILITIES
As at balance sheet date the Parent Company has the following contingent liabilities:
A.
The Parent Company is at the head of the fiscal unity for corporate income tax (
CIT
) purposes with
Arcona Black Sea Real Estate B.V., Arcona Real Estate B.V. and Arcona Poland B.V. On this basis,
the Parent Company is jointly and severally liable for the corporate income tax liability of the fiscal
unity as a whole.
B.
The Parent Company has a contingent liability to issue ordinary shares arising from the outstanding
warrants. For further information reference is made to section 15.24
“Contingent liabilities”
.
C.
The Parent Company has a contingent liability towards the Managing Board with regard to sales fee
and sales performance-related fee, which is described in section 15.35
.5 “Sales fee and sales
performance-related fee.
As at balance sheet date the Parent Company was not subject to any other contingent liabilities, including any
obligations that result from security transactions related to (exchange) rate risk in connection with investments.
19.19
INCOME FROM INVESTMENTS
The income from investments concerns the interest from receivables from group companies. The specification
is as follows:
2024
2023
In € 1,000
In € 1,000
Arcona Poland Project 5 Sp. z o.o.
529
-
Arcona Capital Real Estate Poland Sp. z o.o.
515
480
Arcona Black Sea Real Estate B.V.
367
356
Arcona Capital Real Estate Trio Sp. z o.o.
51
-
Arcona Capital RE Bohemia s.r.o.
163
273
Arcona Real Estate B.V.
-
219
Aisi Bela LLC
7
6
Subtotal
1,632
1,334
Adjustment previous years Arcona Capital Real Estate Trio Sp. z o.o.
232
-
1,864
1,334
189
19.20
REALISED VALUATION RESULTS OF INVESTMENTS IN GROUP COMPANIES
2024
2023
In € 1,000
In € 1,000
Realised currency results Arcona Capital RE Slovakia s.r.o.
451
104
Realised currency results Arcona Capital RE Bohemia s.r.o.
129
-
Result on disposal of Boyana Residence E.O.O.D.
677
-
1,257
104
The “Realised currency results Arcona Capital RE Slovakia s.r.o.” for the amount of €
451,000 concerns
realised currency results as a result of capital reductions Arcona Capital RE Slovakia s.r.o. for the amount of
€
3,028,000.
The “Realised currency results Arcona Capital RE
Bohemia
s.r.o.” for the amount of €
129,000 concerns
realised currency results as a result of dividend distributions Arcona Capital RE Bohemia s.r.o. for the amount
of €
840,000.
19.20.1
Specification of result on disposal of Boyana Residence E.O.O.D.
2024
2023
In € 1,000
In € 1,000
Selling price
1,590
-
Less: carrying amount of sold group company
807
-
783
-
Sales fee
32
-
Sales performance-related fee
74
-
Transaction costs on sale of group companies
-
-
Subtotal costs on sale group companies
106
-
677
-
As at October 2, 2024 the 100%-share in Boyana Residence E.O.O.D. has been sold for an amount of
€ 1,590,000.
19.21
REALISED VALUATION RESULTS OF RECEIVABLES FROM GROUP COMPANIES
2024
2023
In € 1,000
In € 1,000
Realised currency results Arcona Capital RE Bohemia s.r.o.
58
116
190
19.22
UNREALISED VALUATION RESULTS OF INVESTMENTS IN GROUP COMPANIES
The unrealised valuation results of investments in group companies contain the share in the results from
investments in group companies as well as changes in provisions investments in group companies. The
specification is as follows:
2024
2023
In € 1,000
In € 1,000
Arcona Capital RE Bohemia s.r.o.
532
278
Arcona Capital RE Slovakia s.r.o.
-/- 524
329
Arcona Capital Real Estate Poland Sp. z o.o.
215
-/- 498
Arcona Capital Real Estate Trio Sp. z o.o.
-/- 311
356
Arcona Real Estate B.V.
23
-/- 330
Aisi Bela LLC
335
34
Boyana Residence E.O.O.D.
-/- 1,212
-
Arcona Capital Real Estate Bulgaria Ltd.
N.a.
38
Arcona Black Sea Real Estate B.V.
-/- 218
12
-/- 1,160
219
19.23
UNREALISED VALUATION RESULTS OF RECEIVABLES FROM GROUP COMPANIES
The unrealised valuation results of receivables from group companies contain the provision loan to group
companies, in case the carrying amount of the corresponding investment in group company is negative and
the Parent Company has provided a loan to the corresponding group company. The specification is as follows:
2024
2023
In € 1,000
In € 1,000
Boyana Residence E.O.O.D.
1,318
337
Arcona Black Sea Real Estate B.V.
-/- 749
40
Arcona Poland Project 5 Sp. z o.o.
-/- 631
-
-/- 62
377
19.24
OTHER OPERATING INCOME
2024
2023
In € 1,000
In € 1,000
Foreign exchange and currency gains
15
53
Other operating income
2
-
17
53
191
19.25
ADMINISTRATIVE EXPENSES
19.25.1
Specification of administrative expenses
2024
2023
In € 1,000
In € 1,000
Fund Management fee
675
675
Sales performance-related fee
95
-
Sales fee
5
-
775
675
19.26
OTHER OPERATING EXPENSES
19.26.1
Specification of other operating expenses
2024
2023
In € 1,000
In € 1,000
Costs of service providers
468
449
Costs of funding and acquisition
182
11
650
460
19.26.2
Analysis of costs of service providers
2024
2023
In € 1,000
In € 1,000
Audit fees
121
118
Accounting expenses
112
114
Custody fees
57
59
Consultancy fees
-/- 4
30
Steering Committee fees
47
-
Supervisory Board fees
28
28
Marketing expenses
7
26
Insurance AIFMD
22
22
Supervisors’ expenses
22
22
Listing, Paying and Fund Agent fees
12
14
Other costs of service providers
44
16
468
449
19.26.3 Audit fees
The
“Audit fees”
for the amount of
€
121,000 include the fees for the audit of the Consolidated Financial
Statements and Parent Company Statements and European Single Electronic Format (
ESEF
) reporting 2024,
as well as an
estimated amount of €
27,000 (2023
: €
33,000) for the audit of the figures of the Bulgarian,
Ukrainian and Romanian subsidiaries. During the financial period audit fees for prior years have been booked
in an amount of €
1,000 negative (2023
: €
1,000 negative).
19.26.4
Analysis of Supervisory Board fees
For the analysis of the Supervisory Board fees reference is made to section 15.35
.3 “Analysis of Supervisory
Board fees”.
192
19.26.5
Analysis of costs of funding and acquisition
For the analysis of the cost of funding and acquisition reference is made to section 15.35
.5 “Analysis of
costs
of funding and acquisitions
”.
19.26.6
Supervisors’ expenses
The “Supervisors’ expenses” include expenses for supervision by
the AFM and DNB.
19.26.7
Other costs of service providers
The “Other costs of service providers” include, among others, costs of press releases,
required software
European Single Electronic Format (
ESEF
), Euronext Fund Services and Prague Stock Exchange.
19.26.8
Costs of funding and acquisitions
The “Costs of funding and acquisitions” include costs of technical, legal and tax due diligence for potential
acquisitions.
19.27
PERSONNEL COSTS
The Parent Company does not employ any personnel (2023: nil).
19.28
INTEREST EXPENSES
2024
2023
In € 1,000
In € 1,000
Interest expense on loans due to group companies
175
402
Interest expenses on private loans
349
340
Variable compensation on private loans
29
101
553
843
19.28.1
Specification of interest expense on loans due to group companies
31-12-2024
31-12-2023
In € 1,000
In € 1,000
Arcona Capital RE Slovakia s.r.o.
66
145
Arcona Capital Real Estate Trio Sp. z o.o.
67
256
Arcona Real Estate B.V.
40
-
Arcona Capital RE Bohemia s.r.o.
2
-
Arcona Capital Real Estate Bulgaria Ltd.
-
1
175
402
193
19.29
INCOME TAX EXPENSE
The results of the Parent Company are subject to corporate income tax (
CIT
).
19.29.1
Income tax expense recognised in the Parent Company profit and loss account
2024
2023
In € 1,000
In € 1,000
Current income tax expense
Current year
-
-
Adjustments related to prior years
-
-
-
-
Deferred income tax expense
Origination and reversal of taxable temporary differences
2
16
Recognition of previously unrecognised (derecognition of previously
recognised) tax losses
26
42
Recognition of previously unrecognised (derecognition of previously
recognised) other taxable temporary differences
-
-/- 16
Change in tax rate
-
-
Adjustments related to prior years
-
-
28
42
Total
28
42
19.29.2
Deferred income tax recognised directly in
shareholders’
equity
2024
2023
In € 1,000
In € 1,000
Related to receivables from group companies
-/- 28
-/- 42
194
19.30
RELATED PARTIES
For the definition of related
parties’
reference is made to
section 15.45 “Related parties”.
In addition to section 15.45
“Related parties” the
Parent Company entered into or maintained the following
transactions with group companies, part of other related parties:
A.
dividends received and capital reductions from group companies, as described in section 19.1.2
“Statement of changes in investments in group companies”
;
B.
loans advanced and redemption on loans to group companies, as described in section 19.2.3
“
Statement of changes in loans to group
companies”
;
C.
loans advanced and redemption on loans due to group companies, as described in section 19.13.4
“
Statement of changes loans due
to group companies”
;
D.
the Parent Company has paid several costs for N-E Real Estate Park First Phase S.r.l. for an amount
of €
9,000
, as described in section 19.3.4 “Specification of current account to group companies”;
E.
the Parent Company has charged several costs to the Arcona Capital Real Estate Trio Sp. z o.o. for
an amount of €
13,000.
19.31
PROPOSAL FOR THE PARENT COMPANY RESULT APPROPRIATION
The Parent Company´s result
for the financial period amounts to €
32,000 negative. Recognising the
mandatory:
•
net deduction
of €
1,711,000 from the revaluation reserve; and
•
net addition
of €
1,103,000 from the reserve investments in group companies;
the remaining profit for the financial period was
€
576,000. It is proposed to the General Meeting of
Shareholders (
GM
) to add the whole of the remaining profit for the financial period to the retained earnings.
This proposal has already been recognised in the Parent Company balance sheet.
19.32
DETERMINING OF PARENT COMPANY RESULT FOR THE PREVIOUS FINANCIAL PERIOD
During the General Meeting of Shareholders (
GM
) of the Parent Company as at June 26, 2024, the GM
approved the result appropriation proposal of the Managing Board as stated in the Annual Report of the
previous year.
195
19.33
EVENTS AFTER BALANCE SHEET DATE
The following material events have occurred after balance sheet date:
A.
As at February 6, 2025 the Managing Board provided 68,782 registered shares of the Fund to SPDI
as part of the settlement of the acquisition of the 100% stake in Aisi Ukraine LLC
(“Share
-based
payment”). The issue price
was
€ 11.16 per registered share.
B.
As at February 6, 2025 the Managing Board provided 10,689 registered shares of the Fund to SPDI
as the (final) settlement for the acquisition of the Romanian assets. The issue price was
€ 11.16 per
registered share.
No further material events have occurred after balance sheet date.
Amsterdam, April 30, 2025
The Managing Board:
Arcona Capital Fund Management B.V.
On behalf of,
G.St.J. Barker LLB
P.H.J. Mars M.Sc
M. Van der Laan B.Sc
M.T.H. Blokland BBA
Managing director
Managing director
Managing director
Managing director
The Supervisory Board:
Mr. drs. A.N. Krol
J.J. van Heijst M.Sc
M.P. Beys Esq.
Chairperson
Member
Member
196
20
OTHER
INFORMATION
20.1
GENERAL PROVISIONS OF THE ARTICLES OF ASSOCIATION CONCERNING RESULT
APPROPRIATION
In accordance with Article 28 of the Articles of Association dated September 21, 2016, profits are determined
and distributed as follows:
28.1
From the profit earned in a financial period as far as possible a dividend is first distributed on the
priority share, the amount of which dividend is equal to seven per cent (7%) on an annual basis,
calculated on the nominal value of the priority share. No further distributions are made on the priority
share.
28.2
The priority shareholder determines annually what part of the profit remaining after application of
article 28.1 above is added to the reserves.
28.3
It is the prerogative of the general meeting of shareholders to allocate the profit remaining after
application of articles 28.1 and 28.2 above.
28.4
Distribution of profit occurs after adoption of the Financial Statements evidencing that this is
permitted.
28.5
The priority shareholder may resolve to make interim distributions on ordinary shares and / or
distributions on ordinary shares charged to a Parent Company reserve.
28.6
Distributions on shares may only take place up to a maximum of the amount of the distributable
shareholders’ equity.
28.7
Unless the body that decides on distribution determines another time, distributions on shares are
payable immediately after declaration.
28.8
In calculating the amount of any distribution on shares the shares held by the Parent Company in
its own capital are not included.
20.2
DECREE
ON THE DUTCH ACT ON FINANCIAL SUPERVISION
Arcona Capital Fund Management B.V. has a permit from the AFM under the Dutch Act on Financial
Supervision (Wet op het financieel toezicht, the
Wft
) to act as the management company of the Parent
Company.
20.3
PERSONAL INTERESTS
During the financial period neither the Managing Board nor the Supervisory Board held interests in investments
by the Parent Company, except for:
•
J.J. van Heijst (member of the Supervisory Board) who owns 12,855 pieces (December 31, 2023:
12,855 pieces) of ordinary shares in private possession. Mr. J.J. van Heijst M.Sc. is working for the
Stichting Value Partners Family office who owns 376,787 pieces (December 31, 2023: 397,694
pieces) of ordinary shares;
•
M.P. Beys (member of the Supervisory Board) owns no (December 31, 2023: no) ordinary shares in
private possession. Mr. M.P. Beys is also the Chairman of the Board of Directors of SPDI. SPDI
owns 1,072,910 pieces of ordinary shares (December 31, 2023: 1,072,910 pieces of registered
shares).
197
20.4
SPECIAL CONTROLLING RIGHTS
Special rights in respect of control of the Parent Company have been granted to the holders of priority shares.
The priority shares are bearer shares. As provided by the Articles of Association the priority shares entitle the
Foundation:
•
to determine the number of members of the Managing Board and Supervisory Board;
•
to make binding nominations for appointment of the members of the Managing Board and the
members of the Supervisory Board;
•
to make the proposal to the General Meeting of Shareholders to suspend or dismiss a Managing
Board member and / or a Supervisory Board member;
•
to make the proposal to the Supervisory Board for the remuneration of the members of the
Supervisory Board;
•
to determine which part of the profits remaining after priority dividend (reference is made to section
20.1) shall be reserved;
•
to make interim distributions
on ordinary shares and / or distributions on ordinary shares charged to
a Parent Company reserve
;
•
to make the proposal to the General Meeting of Shareholders to amend the Articles of Association of
the Parent Company;
•
to make the proposal to the General Meeting of Shareholders for statutory merger or statutory
demerger of the Parent Company;
•
to make the proposal to the General Meeting of Shareholders for dissolution of the Parent Company.
The General Meeting of Shareholders needs the approval of the Foundation for decisions of the Managing
Board concerning the reduction of the issued share capital.
198
20.5
INDEPENDENT AUDITOR’S REPORT
Deloitte Accountants B.V.
Gustav Mahlerlaan 2970
1081 LA Amsterdam
P.O. Box 58110
1040 HC Amsterdam
The Netherlands
Tel: +31 (0)88 288 2888
www.deloitte.nl
INDEPENDENT AUDITOR'S REPORT
To: The shareholders, the Managing Board and the Supervisory Board of Arcona Property Fund N.V.
Report on the audit of the financial statements 2024 included in the annual report
Our opinion
We have audited the financial statements 2024 of Arcona Property Fund N.V., based in Amsterdam. The financial
statements comprise the consolidated and company financial statements.
In our opinion:
•
The accompanying consolidated financial statements give a true and fair view of the financial position of
Arcona Property Fund N.V. as at 31 December 2024, and of its result and its cash flows for 2024 in accordance
with International Financial Reporting Standards as adopted by the European Union (EU-IFRS) and with Part 9
of Book 2 of the Dutch Civil Code.
•
The accompanying company financial statements give a true and fair view of the financial position of Arcona
Property Fund N.V. as at 31 December 2024, and of its result for 2024 in accordance with Part 9 of Book 2 of
the Dutch Civil Code.
The consolidated financial statements comprise:
1.
The consolidated statement of financial position as at 31 December 2024
.
2.
The following statements for 2024: the consolidated income statement, the consolidated statements of
comprehensive income, changes in equity and cash flows.
3.
The notes comprising material accounting policy information and other explanatory information.
The company financial statements comprise:
1.
The parent company balance sheet as at 31 December 2024.
2.
The company profit and loss account for 2024.
3.
The notes comprising a summary of the accounting policies and other explanatory information.
Basis for our opinion
We conducted our audit in accordance with Dutch law, including the Dutch Standards on Auditing. Our
responsibilities under those standards are further described in the 'Our responsibilities for the audit of the financial
statements' section of our report.
We are independent of Arcona Property Fund N.V. in accordance with the EU Regulation on specific requirements
regarding statutory audit of public-interest entities, the Wet toezicht accountantsorganisaties (Wta, Audit firms
supervision act), the Verordening inzake de onafhankelijkheid van accountants bij assurance-opdrachten (ViO,
199
Code of Ethics for Professional Accountants, a regulation with respect to independence) and other relevant
independence regulations in the Netherlands. Furthermore, we have complied with the Verordening gedrags- en
beroepsregels accountants (VGBA, Dutch Code of Ethics for Professional Accountants).
We believe the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Information in support of our opinion
We designed our audit procedures in the context of our audit of the financial statements as a whole and in forming
our opinion thereon. The following information in support of our opinion was addressed in this context, and we do not
provide a separate opinion or conclusion on these matters.
Materiality
Based on our professional judgment we determined the materiality for the financial statements as a whole at
€ 735.000. The materiality is based on 1% of total assets. We have also taken into account misstatements and/or
possible misstatements that in our opinion are material for the users of the financial statements for qualitative
reasons.
We agreed with Supervisory Board that misstatements in excess of € 36.750, which are identified during the audit,
would be reported to them, as well as smaller misstatements that in our view must be reported on qualitative
grounds.
Scope of the group audit
Arcona Property Fund N.V. is at the head of a group of components. The financial information of this group is
included in the financial statements of Arcona Property Fund N.V.
Based on our risk assessment, we determined the nature, timing and extent of audit procedures to be performed,
including determining the components at which to perform audit procedures. We have used the work of
component auditor Deloitte Czech Republic when auditing entities in Czech Republic and Slovakia. We have used
the work of component auditor Deloitte Poland when auditing entities in Poland. We have prepared group referral
instructions for the component auditor and performed a file review at the component auditor. On the level of
Romania and Ukraine we performed risk assessment procedures and audit procedures on specific accounts.
The group engagement team directed the planning, reviewed the work performed by component auditors and
assessed and discussed the results and findings with the component auditors.
The group engagement team held multiple meetings, with all the individual component auditors, and management of
the relevant group entities, and participated in the component auditor closing calls. For all component auditors, file
reviews were conducted to evaluate the work undertaken and to assess their findings.
By performing the procedures mentioned above at components, together with additional procedures at group
level, we have been able to obtain sufficient and appropriate audit evidence about the group's financial
information to provide an opinion on the financial statements.
Audit approach fraud risks
We identified and assessed the risks of material misstatements of the financial statements due to fraud. During our
audit we obtained an understanding of the company and its environment and the components of the system
200
of internal control, including the risk assessment process and management's process for responding to the risks of
fraud and monitoring the system of internal control and how the Supervisory Board exercises oversight, as well as the
outcomes.
We evaluated the design and relevant aspects of the system of internal control and in particular the fraud risk
assessment, as well as among others the code of conduct, whistle blower procedures and incident registration. We
evaluated the design and the implementation and, where considered appropriate, tested the operating effectiveness,
of internal controls designed to mitigate fraud risks.
As part of our process of identifying fraud risks, we evaluated fraud risk factors with respect to financial reporting
fraud, misappropriation of assets and bribery and corruption. We evaluated whether these factors indicate that a
risk of material misstatement due to fraud is present.
We identified the following fraud risks and performed the following specific procedures:
Fraud risk
Audit approach
Management override of controls
We presume a risk of material misstatement due to
fraud related to management override of controls. The
Management Board is in a unique position to
perpetrate fraud because of the Management Board’s
ability to manipulate accounting records and prepare
fraudulent financial statements by overriding controls
that otherwise appear to be operating effectively.
We have, among other things, performed the
following procedures:
We incorporated elements of unpredictability in our
audit. We also considered the outcome of our other
audit procedures and evaluated whether any findings
were indicative of fraud or noncompliance.
We tested the appropriateness of journal entries
recorded in the general ledger and other adjustments
made in the preparation of the financial statements.
We considered available information and made
inquiries of relevant personnel of Arcona Property
Fund N.V. We evaluated the design and the
implementation of internal controls designed to
mitigate fraud risks.
We evaluated whether the selection and application
of accounting policies by Arcona Property Fund N.V.,
particularly those related to subjective
measurements and complex transactions, may be
indicative of fraudulent financial reporting. For
significant
transactions we have evaluated whether the
business rationale of the transactions suggests that
they may have been entered into to engage in
fraudulent financial reporting or to conceal
misappropriation of assets.
As part of our audit procedures, we verified whether
the significant transactions should be considered
related party transactions.
201
We evaluated whether the judgments and decisions
made by the Management Board in making the
accounting estimates included in the financial
statements indicate a possible bias that may
represent a risk of material misstatement due to
fraud. The Management Board insights, estimates
and assumptions that might have a major impact on
the financial statements are disclosed in Note 13.4.2
of the financial statements. We performed a
retrospective review of the Management Board
judgments and assumptions related to significant
accounting estimates reflected in prior year financial
statements. Reference is made “Valuation of
investment property” below as well.
Valuation of investment property
In relation to valuation of investment properties a
potential fraud risk is identified to revaluations and
other deviations from the normal valuation process.
The Management Board’s adjustment of external
valuations, optimistic estimation of gross initial yield
and market rent.
Valuation of investment property is a significant area
to our audit as the valuation is inherently judgmental
in nature, due to the use of assumptions that are
highly sensitive, any change in assumptions may have
a significant effect on the outcome given the relative
size of the investment property balance.
The Management Board insights, estimates
and assumptions related to valuation of
investment property have a major impact on
the financial
statements and are disclosed in Note 13.9, 13.10 and
13.18 of the financial statements. Further reference is
made to the section “Our key audit matter” for audit
procedures performed.
Risk of incorrect recognition of disposals and
acquisitions of investment property
The accurate and complete recognition of these
transactions is an important area of emphasis in our
audit. We pay special attention to fraud risks
associated with selling properties, such as ABC
transactions.
In 2024, Arcona Property Fund N.V. sold multiple
properties and acquired a property. We have tested
the design and controls related to property
investment sales and acquisitions, which includes
ensuring proper authorisation and conducting
background checks of buyers and sellers.
We carried out procedures on the disposals and
acquisition of investment property. We have
reconciled the recognised transactions with the
relevant supporting documentation and confirmed the
accurate and complete recognition of transactions
results in the fiscal year. Furthermore, we have carried
out procedures to identify and test ABC transactions.
In addition, we have analysed the sales price of
property transactions in relation to the most recent
valuation as determined by the external appraiser. If
202
applicable, we have assessed the reasonableness of
considerations paid to intermediaries.
Accounting on rental income including lease
incentives
We presume a risk of material misstatement due to fraud
related to revenue recognition and evaluate which types of
revenue, revenue transactions or assertions give rise to such
risks.
We pinpoint the significant risk to the occurrence of
rental income (specific to new rental agreements) and
the accuracy of the accounting for lease
incentives/discounts provided, in accordance with the
applicable financial reporting standards.
During our audit of rental income, we tested the
design, implementation, and operating effectiveness
of the relevant internal controls, carried out
comparative testing procedures to assess the
reliability of the rent roll data, developed an
independent expectation of total revenue and
compared it to the actual amounts recorded, reviewed
new lease agreements to ensure revenue was
accurately captured in line with the underlying
contracts, and tested the recognition of newly granted
lease incentives.
In addition, we performed ongoing substantive
analytical procedures to verify the straight-lining of
those incentives.
For significant transactions such as disposal of investment property we evaluated whether the business rationale of
the transactions suggests that they may have been entered into to engage in fraudulent financial reporting or to
conceal misappropriation of assets.
This did not lead to indications for fraud potentially resulting in material misstatements.
Audit approach compliance with laws and regulations
We assessed the laws and regulations relevant to the company through discussion with the Managing Board and
other personnel, reading minutes.
As a result of our risk assessment procedures, and while realizing that the effects from non-compliance could
considerably vary, we considered the following laws and regulations: (corporate) tax law, the requirements under
the International Financial Reporting Standards as adopted by the European Union (EU-IFRS) and Part 9 of Book 2
of the Dutch Civil Code with a direct effect on the financial statements as an integrated part of our audit
procedures, to the extent material for the financial statements.
We obtained sufficient appropriate audit evidence regarding provisions of those laws and regulations generally
recognized to have a direct effect on the financial statements.
Apart from these, Arcona Property Fund N.V. is subject to other laws and regulations where the consequences of
non-compliance could have a material effect on amounts and/or disclosures in the financial statements, for
instance, through imposing fines or litigation.
Our procedures are more limited with respect to these laws and regulations that do not have a direct effect on the
determination of the amounts and disclosures in the financial statements. Compliance with these laws and
regulations may be fundamental to the operating aspects of the business, to Arcona Property Fund N.V.'s ability to
continue its business, or to avoid material penalties (e.g., compliance with the terms of operating licenses and
203
permits or compliance with environmental regulations) and therefore non-compliance with such laws and
regulations may have a material effect on the financial statements. Our responsibility is limited to undertaking
specified audit procedures to help identify non-compliance with those laws and regulations that may have a
material effect on the financial statements. Our procedures are limited to (i) inquiry of the Management Board,
the Supervisory Board and others within Arcona Property Fund N.V. as to whether Arcona Property Fund N.V. is in
compliance with such laws and regulations and (ii) inspecting correspondence, if any, with the relevant licensing or
regulatory authorities to help identify non-compliance with those laws and regulations that may have a material
effect on the financial statements.
Naturally, we remained alert to indications of (suspected) non-compliance throughout the audit. Finally, we
obtained written representations that all known instances of (suspected) fraud or non-compliance with laws and
regulations have been disclosed to us.
Audit approach going concern
Management made a specific assessment of the company’s ability to continue as a going concern and to continue its
operations for at least the next 12 months. We discussed and evaluated the assessment with management
exercising professional judgment and maintaining professional skepticism. We considered whether management’s
going concern assessment, based on our knowledge and understanding obtained through our audit of the financial
statements or otherwise, contains all events or conditions that may cast significant doubt on the company’s ability to
continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in
our auditor’s report to the related disclosures in the financial statements or, if such disclosures are
inadequate, to modify our opinion. Based on our procedures performed, we did not identify serious doubts on Arcona
Property Fund N.V.’s ability to continue as a going concern for the next 12 months. Our conclusions are
based on the audit evidence obtained up to the date of our independent auditor’s report. However, future events
or conditions may cause a company to cease to continue as a going concern.
Our key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of
the financial statements. We have communicated the key audit matters to Supervisory Board. The key audit
matters are not a comprehensive reflection of all matters discussed.
These matters were addressed in the context of our audit of the financial statements as a whole and in forming our
opinion thereon, and we do not provide a separate opinion on these matters.
Key audit matter
How the key audit matter was addressed in the audit
As at December 31, 2024 the company held a portfolio of
investment property (under development) including assets
held for sale with a fair value of € 65.6 million (December 31,
2023: € 74.2 million).
At the end of each reporting period, the Management
Board determines the fair value of its investment property
portfolio in accordance with the requirements of IAS 40
and IFRS 13.
How the key audit matter was addressed in the audit:
Our audit procedures included, among others, the following:
We have gained understanding of the valuation process
and tested the design and implementation of Arcona
Property Fund N.V.’s relevant controls with respect to the
data used in the valuation of the investment property.
We noted that management involved established
international parties to assist with the valuation of the
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Arcona Property Fund N.V. uses external valuation reports
issued by external independent professionally qualified
valuers to determine the fair value of its investment
property.
As the valuation of investment property is inherently
judgmental in nature, due to the use of assumptions that
are highly sensitive, any change in assumptions may have a
significant effect on the outcome given the relative size of
the investment property balance. The most significant
assumptions and parameters involved, given the sensitivity
and impact on the outcome, are the gross initial yield, and
market rent levels.
IFRS 13 seeks to increase consistency and comparability in
fair value measurements and related disclosures through a
'fair value hierarchy'. The hierarchy categorises the inputs
used in valuation techniques into three levels. The
hierarchy gives the highest priority to (unadjusted) quoted
prices in active markets for identical assets or liabilities
and the lowest priority to unobservable inputs.
(Unobservable) inputs are used to measure fair value to
the extent that relevant observable inputs are not
available, thereby allowing for situations in which there is
little, if any, market activity for the asset at the
measurement date. Fair value measurements categorised
within Level 3 have the lowest priority as the valuation is
predominately based on unobservable inputs and those
measurements have a greater degree of uncertainty and
subjectivity. This means that a valuation at Level 3 has a
fairly large measure of estimation uncertainty and as a
result a fairly large bandwidth of valuation uncertainty in
which a valuation can been seen reasonable in the light of
IFRS 13.
In addition, and as the external appraiser has
recommended in its assessment of the fair value of the
property portfolio, caution is needed in analysing the
values due to the unknown future impacts on economy
and real estate markets.
investment properties. We evaluated the competence of
company’s external appraiser, which included
consideration of their qualifications and expertise.
We have further evaluated and challenged the
assumptions made in respect to the creditworthiness of
significant tenants, lease incentives and vacancy periods
in the valuation calculations.
We reconciled the fair value carrying amounts of all
investment properties to the external valuation reports as
per 31 December 2024.
In relation to the significant assumptions in the valuation of
investment property, we have:
•
Determined that the valuation methods as
applied by the Management Board, as included
in the valuation reports, are appropriate and
consistently applied.
•
For the Czech, Slovak and Polish portfolio, we
provided direction and oversight to Deloitte
Czech Republic and Deloitte Poland, and
conducted a file review of the work they
performed.
•
We have challenged the significant
assumptions used (such as gross initial yield,
market rent levels,) against relevant market
data. We have involved our internal real estate
valuation experts in these assessments.
•
We have reviewed other relevant assumptions
included in the cash flow forecasts of the
valuation reports for the investment property
and discussed with client. Among other things
the discounts forecasted, CAPEX program,
vacancy allowances/loss of rent and credit loss.
•
We assessed the sensitivity analysis on the
key input data and assumptions to
understand the impact of reasonable changes
in assumptions on the valuation and other
key performance indicators.
•
We have assessed the appropriateness of the
disclosures relating to the assumptions used in
the valuations and sensitivity analysis in the
notes to the consolidated Financial Statements.
•
We assessed the asset’s “held for sale”
classification against the requirements of IFRS
5. We draw attention to Note 15.13.5
“Valuation of owned investment property
held for sale” and Note 15.46 “Events after
Statement of Financial
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Position Date” in the financial statements, which
describes the significant judgements, key assumptions and
estimates in relation to the valuation of the Bydgoszcz
property. As stated in Note 15.13.5, these events and
conditions, along with other matters as set forth in Note
15.13.5, indicate that a material uncertainty exists with
respect to the valuation of the Bydgoszcz property.
Consequently, less certainty and a higher degree of
caution should be attached to management’s valuation
than would normally be the case. Our opinion is not
modified in respect of this matter.
Observation:
We found that, with the (significant) assumptions used in
the valuation reports, the valuation of the investment
property is valued within a reasonable range in the light of
the valuation uncertainty for level 3 valuations.
Report on the other information included in the annual report
The annual report contain other information, in addition to the financial statements and our auditor's report
thereon.
The other information consists of:
•
Report of the Managing Board.
•
Other information as required by Part 9 of Book 2 of the Dutch Civil Code.
Based on the following procedures performed, we conclude that the other information:
•
Is consistent with the financial statements and does not contain material misstatements.
•
Contains the information as required by Part 9 of Book 2 of the Dutch Civil Code.
We have read the other information. Based on our knowledge and understanding obtained through our audit of the
financial statements or otherwise, we have considered whether the other information contains material
misstatements.
By performing these procedures, we comply with the requirements of Part 9 of Book 2 of the Dutch Civil Code and
the Dutch Standard 720. The scope of the procedures performed is substantially less than the scope of those
performed in our audit of the financial statements.
Management is responsible for the preparation of the other information, including the management report in
accordance with Part 9 of Book 2 of the Dutch Civil Code, and the other information as required by Part 9 of Book 2
of the Dutch Civil Code.
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Report on other legal and regulatory requirements and ESEF
Engagement
We were engaged by the Supervisory Board as auditor of Arcona Property Fund N.V. on 18 May 2017, as of the audit
for the year 2017 and have operated as statutory auditor ever since that financial year.
No prohibited non-audit services
We have not provided prohibited non-audit services as referred to in Article 5(1) of the EU Regulation on specific
requirements regarding statutory audit of public-interest entities.
European Single Electronic Format (ESEF)
Arcona Property Fund N.V. has prepared its annual report in ESEF. The requirements for this are set out in the
Delegated Regulation (EU) 2019/815 with regard to regulatory technical standards on the specification of a single
electronic reporting format (hereinafter: the RTS on ESEF).
In our opinion, the annual report, prepared in XHTML format, including the (partly) marked-up consolidated
financial statements, as included in the reporting package by Arcona Property Fund N.V. complies in all material
respects with the RTS on ESEF.
Management is responsible for preparing the annual report including the financial statements in accordance with
the RTS on ESEF, whereby management combines the various components into one single reporting package.
Our responsibility is to obtain reasonable assurance for our opinion whether the annual report in this reporting
package complies with the RTS on ESEF.
We performed our examination in accordance with Dutch law, including Dutch Standard 3950N ‘Assurance-
opdrachten inzake het voldoen aan de criteria voor het opstellen van een digitaal verantwoordingsdocument’
(assurance engagements relating to compliance with criteria for digital reporting).
Our examination included amongst others:
•
Obtaining an understanding of the company's financial reporting process, including the preparation of the
reporting package.
•
Identifying and assessing the risks that the annual report does not comply in all material respects with the RTS
on ESEF and designing and performing further assurance procedures responsive to those risks to provide a
basis for our opinion, including:
o
obtaining the reporting package and performing validations to determine whether the reporting package
containing the Inline XBRL instance and the XBRL extension taxonomy files has been prepared in
accordance with the technical specifications as included in the RTS on ESEF;
o
examining the information related to the consolidated financial statements in the reporting package to
determine whether all required mark-ups have been applied and whether these are in accordance with
the RTS on ESEF.
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Description of responsibilities regarding the financial statements
Responsibilities of management and the Supervisory Board for the financial statements
Management is responsible for the preparation and fair presentation of the financial statements in accordance with
EU-IFRS and Part 9 of Book 2 of the Dutch Civil Code. Furthermore, management is responsible for such internal
control as management determines is necessary to enable the preparation of the financial statements that are free
from material misstatement, whether due to fraud or error.
As part of the preparation of the financial statements, management is responsible for assessing the company's
ability to continue as a going concern. Based on the financial reporting frameworks mentioned, management
should prepare the financial statements using the going concern basis of accounting unless management either
intends to liquidate the company or to cease operations, or has no realistic alternative but to do so.
Management should disclose events and circumstances that may cast significant doubt on the company's ability to
continue as a going concern in the financial statements.
The Supervisory Board is responsible for overseeing the company's financial reporting process.
Our responsibilities for the audit of the financial statements
Our objective is to plan and perform the audit engagement in a manner that allows us to obtain sufficient
appropriate audit evidence for our opinion.
Our audit has been performed with a high, but not absolute, level of assurance, which means we may not detect all
material misstatements, whether due to fraud or error, during our audit.
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 financial statements.
The materiality affects the nature, timing and extent of our audit procedures and the evaluation of the effect of
identified misstatements on our opinion.
We have exercised professional judgment and have maintained professional scepticism throughout the audit, in
accordance with Dutch Standards on Auditing, ethical requirements and independence requirements. Our audit
included among others:
•
Identifying and assessing the risks of material misstatement of the financial statements, whether due to fraud
or error, designing and performing audit procedures responsive to those risks, and obtaining audit evidence
that is sufficient and appropriate to provide a basis for our opinion. 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 control.
•
Obtaining an understanding of internal control relevant to the audit 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
the company's internal control.
•
Evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates
and related disclosures made by management.
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•
Concluding 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 company's ability to continue as a going concern. If we conclude that
a material uncertainty exists, we are required to draw attention in our auditor's report to the related
disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. 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 company to cease to continue as a going concern.
•
Evaluating the overall presentation, structure and content of the financial statements, including
the disclosures.
•
Evaluating whether the financial statements represent the underlying transactions and events in a
manner that achieves fair presentation.
Because we are ultimately responsible for the opinion, we are also responsible for directing, supervising and
performing the group audit. In this respect we have determined the nature and extent of the audit procedures
to be carried out for group entities.
We communicate with the Supervisory Board regarding, among other matters, the planned scope and timing of the
audit and significant audit findings, including any significant findings in internal control that we identified during
our audit. In this respect we also submit an additional report to the Supervisory Board in accordance with Article
11 of the EU Regulation on specific requirements regarding statutory audit of public-interest entities. The
information included in this additional report is consistent with our audit opinion in this auditor's report.
We provide Supervisory Board with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with the Supervisory Board, we determine the key audit matters: those matters
that were of most significance in the audit of the financial statements. We describe these matters in our auditor’s
report unless law or regulation precludes public disclosure about the matter or when, in extremely rare
circumstances, not communicating the matter is in the public interest.
Amsterdam, 30 April 2025
Deloitte Accountants B.V.
Signed on the original: V. Borreman