Half-Year Report 2019

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12 Intangible Assets


Goodwill amounted to € 935.6 million as of June 30, 2019. This means that goodwill has dropped by € 1,906.8 million compared with December 31, 2018. The change is due to an impairment loss of € 1,901.0 million and to a negative effect resulting from currency changes affecting the Swedish krona in the amount of € 5.8 million.

The impairment loss is the result of the impairment test performed in the second quarter of 2019. The € 2,258.7 million increase in the value of the real estate portfolio in the first half of the 2019 fiscal year (thereof € 2,056.2 million in Germany), together with the revision of the regional structure within Germany that is planned with effect from July 1, 2019, constituted a triggering event according to IAS 36 (see explanatory information in note [18] “Subsequent Events”). This resulted in the German business areas of the Rental segment being subjected to an impairment test. Other than for these business areas, no triggering events were identified for any other groups of cash-generating units.

In general, an increase in the value of the real estate portfolio increases the carrying amount of the groups of cash-generating units affected by the measurement, which can, in turn, lead to impairment losses being recognized on the goodwill allocated to the business areas.

As part of the impairment test and in accordance with IAS 36.19, first the value in use was calculated based on the Management Board-approved detailed plan with a planning period of five years. This was derived from the five-year plan at Group level approved by the Management Board and the Supervisory Board. With regard to the regional business areas of the Rental segment, the main drivers behind the results of the five-year plan are the increase in gross rental income and the planned vacancy rate.

The growth rate for the cash-generating units of the Rental segment was calculated regionally on the basis of actual rents and limited to 1% for the segment as a whole. The main parameters for calculating the value in use are the sustainable rate of increase, the weighted average total cost of capital (WACC) and the expected cash flows.

Parameters for WACC Calculation for the Rental Segment (Germany)


Dec. 31, 2018

June 30, 2019




Risk-free interest rate in %



Market risk premium in %



Levered beta



WACC (after tax) in %






The need for impairment that has been calculated is distributed among the North, Southeast, West, Middle and South areas, with the goodwill allocated being written off in full for all of the business areas with the exception of West and Central. In the West area, the remaining goodwill comes to € 341.0 million, with goodwill of € 19.2 million remaining for the Central area.

The impairment loss was recognized in the consolidated income statement under “depreciation and amortization.” The value in use for the North area amounts to € 5.8 billion, with a value of € 3.4 billion for the Southeast area, € 4.8 billion for the West area, € 4.9 billion for the Middle area and € 5.5 billion for the South area.

In the West business area any negative deviation of the values planned for the key assumptions would ceteris paribus lead to a further impairment loss. If the planned sustainable rate of increase were to decline by 0.25 percentage points or the average total cost of capital were to increase by 0.4 percentage points, then this would result in a full impairment loss of € 341.0 million being recognized against the goodwill remaining in the West business area. In the Central area ceteris paribus, an impairment loss of € 19.2 million would be recognized against the allocated goodwill in the event of an increase in the average total cost of capital of 0.3 percentage points, with an increase of 0.4 percentage points triggering a full impairment.

Vacancy rate
The vacancy rate is the number of empty units as a percentage of the total units owned by the company. The vacant units are counted at the end of each month.
Cash-generating Unit (CGU)
The cash-generating unit refers, in connection with the impairment testing of goodwill, to the smallest group of assets that generates cash inflows and outflows independently of the use of other assets or other cash-generating units (CGUs).
Rental Income
Rental income refers to the current gross income for rented units as agreed in the corresponding lease agreements before the deduction of non-transferable ancillary costs. The rental income from the Austrian real estate portfolio also includes maintenance and improvement contributions (EVB). The rental income from the Swedish real estate portfolio shows inclusive rents, meaning that the rental amounts include operating and heating costs.