Financial Performance Indicators

Group FFO is key for managing the sustained operational earnings power of our business. It is calculated as follows:

The individual EBITDA figures, after adjustments to reflect effects that do not relate to the period, recur irregularly or are atypical for business operation, form the basis for the operational management of the segments.

The Adjusted EBITDA Rental reflects the operating profit from residential property management. It can be broken down into three central components: rental revenue from the Rental segment, expenses for maintenance and operating expenses in the Rental segment. The latter include all expenses and income that do not relate to expenses for maintenance or rental revenue in the Rental segment.

In addition to the expenses for maintenance, we make large-scale investments in our real estate portfolios, with a distinction being made between capitalized maintenance and value-enhancing investment in modernization and new construction measures for our own portfolio. The total amount of all maintenance, modernization and new construction measures includes the services performed by the Group’s own craftsmen’s organization, valued at the market price, and any third-party services that have been purchased, including the development activities for the company’s own portfolio.

The Value-add segment encompasses all of the business activities relating to the expansion of our core business to include services that are closely related to and/or influence the rental business. We manage these business activities using the Adjusted EBITDA Value-add.

In addition to the management of our residential real estate portfolio and the services that are closely related to our rental business, another business segment relates to the privatization of individual apartments. We measure the success of our sales activities using the Adjusted EBITDA Recurring Sales. The Adjusted EBITDA Recurring Sales compares the proceeds generated from privatization business with the fair values of assets sold and also deducts the related costs of sale. In order to disclose profit and revenue in the period in which they are incurred and to report a sales margin, the fair value of properties sold, valued in accordance with IFRS 5, have to be adjusted to reflect realized/unrealized changes in value.

We bundle all business activities aimed at the development of attractive residential real estate projects both for our own portfolio and for sale to third parties in the Development segment. In addition to the revenue from the sale of residential properties built in the reporting year to third parties and the associated costs, we also record the fair value that newly constructed properties create for our own portfolio, as well as the associated costs, as a means of measuring the success of the Development segment. We manage these business activities using the Adjusted EBITDA Development.

The Adjusted EBITDA Total is calculated as the sum total of the Adjusted EBITDA figures for our four segments. It expresses the overall performance of our sustainable operating business before interest, taxes, depreciation and amortization.

As financing is a fundamental component for the success of our business activities, we deduct the current interest expense, adjusted for special circumstances (FFO interest expense), from the Adjusted EBITDA Total. Taking current income taxes and consolidation effects into account, this allows us to calculate Group FFO, the key figure for the sustained earnings power of our business.

When it comes to managing the growth of our company, we also focus on Total Segment Revenue. This key figure supplements the organic rent increase reported to date, which is based solely on like-for-like growth in the Rental segment. Total Segment Revenue includes all income generated by the four segments that contributes to value creation, i.e., that covers costs and makes an earnings contribution (changes as against the previous year are set out in the segment reporting).

In addition to our operational earnings power, the value of our property assets and our modernization and new construction measures are decisive for the further development of our company. The Adjusted Net Asset Value (Adjusted NAV) is used to manage the company’s value. The indicator relevant from a corporate management perspective was the Adjusted NAV per share.

With effect from the 2021 fiscal year, we will be managing the value of our company using the EPRA Net Tangible Assets (EPRA NTA), which replaces the Adjusted Net Asset Value (Adjusted NAV) reported to date. Our calculations are based on the best practice recommendations of the EPRA (European Public Real Estate Association). The indicator that is relevant from a corporate management perspective is the EPRA NTA per share.

An additional non-operational key financial figure, the loan-to-value ratio (LTV ratio) is also used for monitoring the degree to which debt is covered by the value of the properties. This key figure helps the real estate sector ensure a sustainable ratio of borrowings to the fair values of our properties.

All of the key financial figures shown here are known as “non-GAAP” measures or alternative performance measures (APMs), i.e., key figures which cannot be taken directly from the figures in the consolidated financial statements according to IFRS. The financial performance indicators can, however, all be reconciled to the closest-possible key figure in the consolidated financial statements.