GLOSSARY.

 

Ad-hoc disclosures
Any corporate information with potential influence on the share price must be published by stock corporations in the form of ad-hoc notifications pursuant to Section 15 of the Austrian Securities Trading Act (Wertpapierhandels-Gesetz/WpHG). Issuers of securities admitted to trading at an Austrian stock exchange must disclose without delay any information which might affect the financial and earnings position of the company or might materially influence the stock exchange prices of securities. The company concerned is itself is responsible for the content of such information. Ad-hoc disclosures are meant to ensure that all market participants are equally supplied with information.

 

ATX
The Austrian Traded Index covers all blue chips listed on the Vienna Stock Exchange. It is the underlying value for options and futures. The ATX comprises 20 shares of the prime segment (Prime Market) with the highest liquidity and market capitalisation.

 

Authorised capital
Authorisation granted by resolution of the General Meeting to the Management Board for a maximum period of five years to increase the share capital by the issue of new shares up to a certain extent without further consultation of the General Meeting.

 

Benchmark
External comparative value used to measure various operating ratios, also used to measure the performance of various investment instruments.

 

Building on third-party land
Building erected by a tenant or leaseholder on third-party property and owned by the tenant or leaseholder.

 

Capitalisation rate
Is used to determine the reselling price at the end of a planning period and is oriented towards the discount rate determined for each project.

 

Cash flow
The cash flow calculation provides an overview of the liquid funds which have flowed into and out of a company during the reporting period. They are stated separately by operating, investment and financing activities.

 

Compliance Code, Compliance Decree for Issuers
Binding rules of conduct for issuers of securities drawn up by the Austrian Financial Market Authority, which primarily refer to the avoidance of insider dealing (insider information).

 

Consolidated net income
Income after taxes.

 

Corporate governance
Compliance with the rules of proper and responsible management and control of a company. The corporate governance code is compiled in Austria by the Working Group for Corporate Governance. Any company seeking a listing on the Vienna Stock Exchange must agree to abide by this code.

 

Deferred taxes
The IFRS apply the “temporary concept“ by using the balance sheet liability method. According to this method, deferred tax assets and liabilities are to be calculated for all differences between the carrying values of assets or liabilities recognised in the balance sheet and its respective tax base. This difference is expected to increase or decrease the income tax charge in the future (temporary differences). Deferred tax assets and liabilities are not discounted. Deferred tax assets in relation to loss carryforwards must be recognised and treated like any other asset with respect to its realisation.

 

Discount rate
The discount rate is determined on the basis of the net initial returns of comparable property transactions in the market.

 

Diversification
In the context of asset management, the spreading of investments over various types of investment with the aim of minimising risks. In real estate investments, the spreading of the portfolio over various regions and sectors.

EBIT
Earnings before interest and taxes.

 

EBIT margin
EBIT in relation to sales, operating sales return.

 

EBITDA
Earnings before interest, taxes, depreciation and amortisation.

 

EBT
Earnings before taxes.

 

EPRA
European Public Real Estate Association. The internationally utilised EPRA index tracks the performance of the largest listed property companies in Europe and north America.

 

EPS
Earnings per share; net income divided by the weighted number of shares.

Equity capital
Money raised by the owner of a company for financing the business or kept in retained earnings (reinvestment of profits). (Share capital plus reserves plus net profit/loss).

 

Equity ratio
Business indicator expressing the ratio of capital resources (economic equity capital) in a company’s balance sheet total

 

Equity-to-fixed-assets ratio
Equity capital in relation to fixed assets; indicates the extent to which the property assets and other fixed assets are covered by the equity capital.

 

EV
Enterprise value; defined as market capitalisation plus net debt.

 

Fair value
Price at which an asset is exchanged, or an obligation settled, between knowledgeable, willing parties in an arm’s length transaction (market value).

 

Gearing
Relation between net debt and equity capital.

 

Gross yield of properties
Actual rent/acquisition value of the property.

 

IAS 40
IAS 40 is an accounting standard for companies. It regulates a subsection of the International Financial Reporting System (IFRS), the carrying of investment property and the relevant reporting rules.

 

IATX
The most important real estate securities listed on the Vienna Stock Exchange are covered by the IATX (Immobilien-ATX), a benchmark index for Austrian property securities.

 

IFRS
International Financial Reporting Standards.

 

Initial yield
The yield for a property, determined by the ratio of current rental income to the acquisition price.

 

Insider information
Information about confidential facts relating to securities or issues which is liable to influence considerably the price of a security if such information becomes known to the public. The use of insider information e.g. for the purchase and sale of securities is forbidden and punishable under the Austrian Stock Exchange Act.

Interest-rate cap
Contractually agreed ceiling for floating-rate liabilities protecting borrowers against a rise in interest rates. A lower limit to interest rates is an interest rate floor.

 

Investment horizon
The period of time over which investors intend to invest their capital.

 

ISIN
International Securities Identification Number, a 12-digit combination of letters and numbers uniquely identifying a security traded on the stock market.

 

Investment income tax
Interest and dividends earned from Austrian securities are subject to 25 % investment income tax (Kapitalertragsteuer/KESt). Investment income tax can be netted against income tax.

 

Leverage
The level of debt of a company

Market capitalisation
Number of shares issued multiplied by the market price = value of a company measured by the market value of its shares.

 

Market price (quotation)
Price of securities traded on the stock exchange. The market prices of real estate securities in Austria are characterised by a relatively steady price trend and low volatility.

 

Market value
See fair value.

 

NAV
Net asset value: equity capital plus undisclosed reserves in the property assets.

 

NNNAV
Calculation method according to EPRA; NAV adjusted for value adjustments (for financial instruments) and deferred taxes.

 

Net asset value per share
Net asset value divided by the number of shares issued as at 31 December.

 

Net debt
Balance of financial liabilities less liquid funds.

P

PER
The price/earnings ratio indicates how often the earnings per share go into the price of a stock. The PER is an important ratio for the valuation of shares. It is especially meaningful in comparisons (historical, with competitors, with the overall market, etc.).

Price
Market price of exchange-traded securities.

 

Price/cash flow ratio
The price/cash flow ratio (PCR) is an important performance ratio in which the current stock price is divided by the cash flow per share. The lower the PCR, the more attractive the respective securities.

 

Price gain
The positive difference between the price at which securities were purchased and the price at which they are currently quoted or have been sold.

 

Price/NAV ratio
The current market price of a share divided by the net asset value per share.

 

Performance
Total return of an investment. Considers changes in the value of the capital employed, but also distributions and their re-investment.

 

Perpetual lease
Right applied in Poland that allows the use and management of property belonging to the state for a specified period of time (40 to 99 years).

 

Re-investment of profits
Profits earned are fully re-invested into the company, thus increasing its intrinsic value. Investors do not benefit from current income resulting from dividend payments, but from the price gains of the respective share.

 

Return
Key ratio for the profit derived from an investment (property). Total return of an investment in relation to the capital employed; specified in per cent. In contrast to the performance, value adjustments are not taken into account.

 

Revaluation gain / revaluation loss
In according with the IFRS accounting rules, rented properties are entered on the balance sheet at fair value. These entries are verified by an external expert at regular intervals. Where a change in fair value is ascertained, this is reflected in the profit and loss statement as a revaluation gain or revaluation loss. Apart from changes to fair value, this items also reflects value changes linked to the completion of real estate developed by the company. During the construction phase, only the acquisition costs for such properties are indicated in the balance sheet. Upon completion, revaluation to fair value is performed as part of the reclassification to rented properties.

 

Risk management
Systematic approach for identifying and assessing potential risks as well as selecting and using measures for coping with risks.

 

ROCE
Return on capital employed: indicates the profitability of the interest-bearing capital made available

 

ROE
Return on investment

 

Share capital
Share capital of a stock corporation corresponding to the nominal value of all shares issued (minimum of € 70,000).

 

Shareholder value
Orientation towards shareholder value implies the consistent focus of managerial action on increasing the enterprise value.

 

Swap
Exchange of one security for another. There are three basic categories of swaps: interest-rate swaps, currency swaps and combined interest-rate and currency swaps. The swap partners may e.g. exchange fixed for floating-rate obligations or exchange loans in different currencies.

 

Undisclosed reserves
Market value less stated value of the property assets.

 

Voting right
Right of the shareholder to vote for or against motions presented at the General Meeting. Ownership of a share usually carries the right to vote.

 

Volatility
A measure of the average fluctuation margin of a price within a certain period of time. The higher the (historical) volatility of an investment instrument, the higher the risk involved. Property shares are characterised by relatively low volatility.

 

Yield
See return

 

Yield Compression
Yield compression refers to a fall in the implicit yields paid for real estate on the investment market. Lower yield results in higher prices, so property values increase during a yield compression phase. For example, a property with an annual rental income of €0.1 million and a yield of 6% would be valued at €1.75 million. However, a fall (compression) in the nominal yield to 5% would raise the value to €2.0 million (0.1/0.05).