MAGNAT Real Estate AG with significant impairments of the portfolio in financial year 2011/2012

– The economic conditions in the target region Eastern Europe have significantly
deteriorated due to the exacerbating economic crisis in the eurozone
– Examination of financial statements as at March 31, 2010 requires a change in the accounting for the acquisition of R-Quadrat

Frankfurt am Main, June 6, 2012 – In its financial statements for financial year 2011/2012 (as per March 31, 2012), MAGNAT Real Estate AG („MAGNAT”, ISIN DE000A0XFSF0) once again will make significant, non-cash impairments to its investment portfolio. The estimated impairment charges of approximately EUR 30 million are the result of the on-going deterioration of the economic conditions in MAGNAT’s target markets of Eastern Europe. The recovery of the markets in Eastern Europe, which many professionals had predicted a year ago, did not materialise nor is a recovery currently foreseeable. In recent months, the economic crisis in the region has become rather exacerbated. Against this background, the value of MAGNAT’s investment portfolio determined by an assessor's valuation has been further considerably reduced. Therefore, MAGNAT expects a significant loss for the past financial year although the equity position will remain at a solid level.

In addition, MAGNAT’s Executive Board has also decided to treat the acquisition of R-Quadrat differently than in the financial statements for financial year 2009/2010. This occurred as a result of the recent examination of the 2009/2010 accounting by the German Financial Reporting Enforcement Panel (Deutsche Prüfstelle für Rechnungslegung).
The acquisition of the R-Quadrat Group had been accounted for according to the legal contractual relationships, but without having taken sufficient account of the economic effects of this transaction. In fact, R-Quadrat Immobilien GmbH had gained the capability to control the MAGNAT Group particularly as R-Quadrat Group’s fair value had significantly exceeded MAGNAT Group’s fair value. Thus, the indirect shareholders of the R-Quadrat Immobilien GmbH have obtained the majority of the shares of MAGNAT Real Estate AG and can appoint the majority of the Supervisory Board members. Hence, the transaction was a reverse acquisition. R-Quadrat Immobilien GmbH must be identified as the acquiring company. Correspondingly, the consolidated financial statements of MAGNAT Real Estate AG, after the acquisition, must reflect the fair values of the identified assets, liabilities, and contingent liabilities of the previous Group companies and not of the R-QUADRAT Group.
The main effect of the accounting change is the permanent elimination of R-Quadrat Group’s goodwill in the newly prepared consolidated balance sheet. The corresponding charges, which do not impact the cash position, relate to the financial year 2009/2010.

MAGNAT will publish its financial statements for financial year 2011/2012 on July 30, 2012.

End of the announcement

About Magnat:

MAGNAT Real Estate AG is the first real estate company with a focus on property development in Eastern European, Austrian and German metropolitan areas to be listed in Frankfurt.
MAGNAT has emerged to an integrated real estate group. The company covers the entire value chain - from acquisition across development through to the sale of projects and land. The MAGNAT Group offers through its subsidiaries also real estate asset management for third parties and tax relief programs/builders models in Austria.

Contact
MAGNAT Real Estate AG
Investor Relations
Lyoner Straße 32
D-60528 Frankfurt am Main
Phone: +49 (0) 69-719 189 79 0
Fax: +49 (0) 69-719 189 79 11
Email: ir@magnat.ag
Web: www.magnat.ag

Press Relations
edicto GmbH
Axel Mühlhaus / Werner Rüppel
Phone: +49 (0) 69-905 50 55 2
Email: amuehlhaus@edicto.de

This release was published on openPR.