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

MAGNAT Real Estate AG  / Key word(s): Miscellaneous

06.06.2012 16:46

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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

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 2009/10.

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

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Language:     English
Company:      MAGNAT Real Estate AG
              Lyoner Straße 32
              60528 Frankfurt am Main
Phone:        +49 (0)69  / 719 189 79 0
Fax:          +49 (0)69  / 719 189 79 11
ISIN:         DE000A0XFSF0
WKN:          A0XFSF
Listed:       Regulierter Markt in Frankfurt (General Standard);
              Freiverkehr in Berlin, Stuttgart
End of Announcement                             DGAP News-Service