The financial result made a marked improvement in a year-on-year comparison, rising by € 106.7 million to € -326.3 million. This is due primarily to the repayment of financing in the course of 2016. In addition, the prior-year figures were hit by transaction costs and prepayment penalties in connection with the repayment of portfolio loans. FFO 1 interest expense is derived from the financial result as follows.
Reconciliation of Financial Result/FFO Interest Expense
in € million
Change in %
Excluding income from other investments
Interest on the difference between the taking up and making use of the € 3 billion bonds from December 2015, which were intended to be used for the financing of the Deutsche Wohnen acquisition.
Income from loans
Prepayment penalties and commitment interest
Effects from the valuation of non-derivative financial instruments
Interest accretion to provisions
Net cash interest
Accrued interest adjustment
Adjustments EMTN interest**
Adjustments Income from investments in other real estate companies
Interest payment adjustment due to taxes
FFO interest expense
Due to refinancing and resulting lower interest rates, FFO interest expense came to € 287.5 million in the 2017 fiscal year, down by 10.9% on the value for the prior year of € 322.7 million.
The profit or loss for the period to reflect the adjusted profit or loss from sales; period adjustments from assets held for sale; specific effects that do not relate to the period, are non-recurring or do not relate to the objective of the company; the net income from fair value adjustments of investment properties; depreciation and amortization; deferred and prior-year current taxes (tax expenses/income); transaction costs; prepayment penalties and commitment interest; valuation effects on financial instruments; the unwinding of discounting for provisions, particularly provisions for pensions, and other prior-year interest expenses and income that are not of a long-term nature.
FFO (Funds From Operations)
FFO reflects the recurring earnings from the operating business. In addition to adjusted EBITDA, FFO allow for recurring cash-effective net interest expenses from non-derivative financial instruments as well as income taxes. This key figure is not determined on the basis of any specific international reporting standard but is to be regarded as a supplement to other performance indicators determined in accordance with IFRS.