Annual Report 2019

EPRA Net Initial Yield

The EPRA net initial yield shows the ratio of annualized rental income minus property outgoings (annualized net rent) to the gross fair values of the properties. The fair values are increased by the estimated purchasers’ costs.

The topped-up net initial yield eliminates the rental incentives in the annualized net rental income. Rental incentives are of only minor importance to a company specializing in residential properties.

Despite the significant increase in annualized rental income, the EPRA net initial yield decreased from 3.5% in 2018 to 3.3% in 2019. The reason for this is a significant increase in the fair value of the real estate portfolio beyond the rent development (yield compression).

in € million

2018

2019

Change in %

*

Fair value of the developed land excluding IFRS 16, development, undeveloped land and inheritable building rights granted.

 

 

 

 

Investment properties*

43,490.9

51,383.8

18.1

Assets held for sale*

105.9

129.7

22.5

Fair value of the real estate portfolio (net)

43,596.8

51,513.5

18.2

Allowance for estimated purchasers’ costs

3,482.3

3,535.2

1.5

Fair value of the real estate portfolio (gross)

47,079.1

55,048.7

16.9

Annualized cash passing rental income

2,022.0

2,280.0

12.8

Property outgoings

-388.6

-480.0

23.5

Annualized net rents

1,633.3

1,800.0

10.2

Adjustments for rental incentives

2.8

3.8

35.7

Topped-up net annualized rent

1,636.1

1,803.8

10.2

EPRA net initial yield in %

3.5

3.3

-0.2 pp

EPRA topped-up net initial yield in %

3.5

3.3

-0.2 pp

European Public Real Estate Association (EPRA)
The European Public Real Estate Association (EPRA) is a non-profit organization that has its registered headquarters in Brussels and represents the interests of listed European real estate companies. Its mission is to raise awareness of European listed real estate companies as a potential investment destination that offers an alternative to conventional investments. EPRA is a registered trademark of the European Public Real Estate Association.
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 property portfolio additionally includes maintenance and improvement contributions (EVB). The rental income from the portfolio in Sweden reflects inclusive rents, meaning that the amounts contain operating and heating costs.
Fair Value
Fair value is particularly relevant with regard to valuation in accordance with IAS 40 in conjunction with IFRS 13. The fair value is the amount for which an asset could be exchanged between knowledgeable, willing parties in an arm’s length transaction.