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52 Additional Financial Instrument Disclosures

Additional Financial Instrument Disclosures – Fiscal year

Amounts recognized in balance sheet in accordance with IFRS 9

Measurement categories and classes: in € million

Carrying amounts Dec. 31, 2021

Amortized cost

Fair value affecting net income

Fair value reco­gnized in equity with reclas­sifi­cation

Fair value reco­gnized in equity without reclas­sifi­cation

Amounts reco­gnized in balance sheet in acc. with IFRS 16/ IAS 28

Fair value Dec. 31, 2021

Fair value hierarchy level

Assets

Cash and cash equivalents

Cash on hand and deposits at banking institutions

1,134.0

1,134.0

1,134.0

1

Money market funds

298.8

298.8

298.8

2

Trade receivables

Receivables from the sale of properties

104.6

104.6

104.6

2

Receivables from property letting

48.6

48.6

48.6

2

Other receivables from trading

32.7

32.7

32.7

2

Receivables from the sale of real estate inventories (Development)

264.0

264.0

264.0

2

Financial assets

Investments valued at equity

548.9

548.9

548.9

n.a.

Finance lease receivables

23.7

23.7

23.7

Other current financial receivables from financial transactions*

499.6

499.6

499.6

2

Loans to other investments

33.2

33.2

54.8

2

Other non-current loans

511.8

511.8

511.8

2

Other non-current loans to associates and joint ventures

563.1

563.1

563.1

2

Non-current securities

5.2

5.2

5.2

1

Other investments

377.0

377.0

377.0

2

Derivative financial assets

Cash flow hedges (cross currency swaps)

35.8

-14.0

49.8

35.8

2

Stand-alone interest rate swaps and interest rate caps as well as embedded derivatives

30.6

30.6

30.6

2

Liabilities

Trade payables

449.8

449.8

449.8

2

Non-derivative financial liabilities

47,029.0

47,029.0

-47,596.5

2

Derivative financial liabilities

Purchase price liabilities from put options/rights to reimbursement

264.0

264.0

264.0

3

Stand-alone interest rate swaps and interest rate caps

53.9

53.9

53.9

2

Cash flow hedges

14.3

11.4

2.9

14.3

2

Lease liabilities

679.1

679.1

Liabilities from tenant financing

157.5

157.5

157.5

2

Liabilities to non-controlling interests

240.5

240.5

240.5

2

  1. * This includes time deposits and short-term investments in highly liquid money market funds with an original maturity of more than three months.

Additional Financial Instrument Disclosures – Previous year

Amounts recognized in balance sheet in accordance with IFRS 9

Measurement categories and classes: in € million

Carrying amounts Dec. 31, 2020

Amortized cost

Fair value affecting net income

Fair value reco­gnized in equity with reclas­sifi­cation

Fair value reco­gnized in equity without reclas­sifi­cation

Amounts reco­gnized in balance sheet in acc. with IFRS 16/ IAS 28

Fair value Dec. 31, 2020

Fair value hierarchy level

Assets

Cash and cash equivalents

Cash on hand and deposits at banking institutions

613.3

613.3

613.3

1

Trade receivables

Receivables from the sale of properties

65.3

65.3

65.3

2

Receivables from property letting

38.0

38.0

38.0

2

Other receivables from trading

16.0

16.0

16.0

2

Receivables from the sale of real estate inventories (Development)

149.6

149.6

149.6

2

Financial assets

Investments valued at equity

32.9

32.9

32.9

n.a.

Loans to other investments

33.3

33.3

63.3

2

Other non-current loans

11.3

11.3

11.3

2

Non-current securities

4.9

4.9

4.9

1

Other investments

311.2

311.2

311.2

2

Derivative financial assets

Cash flow hedges (cross currency swaps)

18.8

-13.1

31.9

18.8

2

Stand-alone interest rate swaps and interest rate caps as well as embedded derivatives

4.0

4.0

4.0

2

Liabilities

Trade payables

234.5

234.5

234.5

2

Non-derivative financial liabilities

24,084.7

24,084.7

25,767.7

2

Derivative financial liabilities

Purchase price liabilities from put options/rights to reimbursement

220.5

220.5

220.5

3

Stand-alone interest rate swaps and interest rate caps

47.2

47.2

47.2

2

Cash flow hedges

31.3

12.1

19.2

31.3

2

Lease liabilities

495.1

495.1

Liabilities from tenant financing

163.4

163.4

163.4

2

Liabilities to non-controlling interests

43.1

43.1

43.1

2

The section below provides information on the financial assets and financial liabilities not covered by IFRS 9:

The following table shows the assets and liabilities that are recognized in the balance sheet at fair value and their classification according to the fair value hierarchy:

Assets and liabilities

in € million

Dec. 31, 2021

Level 1

Level 2

Level 3

Assets

Investment properties

94,100.1

94,100.1

Financial assets

Non-current securities

5.2

5.2

Other investments

377.0

377.0

Assets held for sale

Investment properties (contract closed)

1,661.5

1,661.5

Derivative financial assets

Cash flow hedges (cross currency swaps)

35.8

35.8

Stand-alone interest rate swaps and caps as well as embedded derivatives

30.6

30.6

Liabilities

Derivative financial liabilities

Cash flow hedges

14.3

14.3

Stand-alone interest rate swaps and caps

53.9

53.9

in € million

Dec. 31, 2020

Level 1

Level 2

Level 3

Assets

Investment properties

58,071.8

58,071.8

Financial assets

Non-current securities

4.9

4.9

Other investments

311.2

311.2

Assets held for sale

Investment properties (contract closed)

164.9

164.9

Derivative financial assets

Cash flow hedges (cross currency swaps)

18.8

18.8

Stand-alone interest rate swaps and caps as well as embedded derivatives

4.0

4.0

Liabilities

Derivative financial liabilities

Cash flow hedges

31.3

31.3

Stand-alone interest rate swaps and caps

47.2

47.2

In general, Vonovia measures its investment properties on the basis of the discounted cash flow (DCF) methodology (Level 3). The material valuation parameters and valuation results can be found in chapter [D28] Investment Properties.

The investment properties classified as assets held for sale are recognized at the time of their transfer to assets held for sale at their new fair value, the agreed purchase price (Level 2).

No financial instruments were reclassified to different hierarchy levels as against the comparative period.

Securities and shares in listed companies included in other investments are generally measured using the quoted prices in active markets (Level 1).

For the measurement of financial instruments, cash flows are initially calculated and then discounted. In addition to the tenor-specific EURIBOR/STIBOR rates (3M; 6M), the respective credit risk is taken as a basis for discounting. Depending on the expected cash flows, either Vonovia’s own credit risk or the counterparty risk is taken into account in the calculation.

For the consolidated financial statements, Vonovia’s own credit risk was fundamentally relevant for interest rate swaps. This credit risk is derived for material risks from rates observable on the capital markets and ranges from 5 to 155 basis points, depending on the residual maturities of financial instruments. Regarding the positive market values of the cross currency swaps, a counterparty risk of 15 basis points was taken into account.

The calculated cash flows of the cross currency swaps result from the forward curves for USD/EUR. The cash flows are discounted on the basis of the reference interest rate of each currency (STIBOR and EURIBOR) and translated into euros at the current exchange rate (Level 2).

The fair values of the cash and cash equivalents, trade receivables and other financial receivables approximate their carrying amounts at the reporting date owing to their mainly short maturities. The amount of the estimated impairment loss on cash and cash equivalents was calculated based on the losses expected over a period of twelve months. It was determined that the cash and cash equivalents have a low risk of default due to the external ratings and short residual maturities and that there is no need for any material impairment of cash and cash equivalents.

The fair value of the purchase price liabilities from put options/rights to reimbursement granted to minority shareholders is generally based on the going concern value of the respective company; if a contractually agreed minimum purchase price is higher than this amount, this purchase price is recognized (Level 3). The unobservable valuation parameters may fluctuate depending on the going concern values of these companies. However, a major change in value is not likely, as the business model is very predictable.

Net results according to measurement category – Fiscal year

From subsequent measurement

in € million

From interest

Income from other non-current loans

Dividends from other investments

Impairment losses

Derecognized receivables

Derecognized liabilities

Financial result affecting income 2021

Measurement of cash flow hedges

Measurement of financial instruments categorized as equity instruments

Total financial result 2021

2021

Debt instruments carried at (amortized) cost

21.1

13.1

-23.2

-2.5

8.5

8.5

Debt instruments measured at FVOCI

27.7

27.7

27.7

Derivatives measured at FV through P&L with reclassification

-0.2

-0.2

-0.2

Debt instruments measured at FVOCI with reclassification

26.1

26.1

Equity instruments measured at FVOCI without reclassification

81.1

81.1

Financial liabilities measured at (amortized) cost

-385.4

3.5

-381.9

-381.9

-364.5

13.1

27.7

-23.2

-2.5

3.5

-345.9

26.1

81.1

-238.7

Net results according to measurement category – Previous year

From subsequent measurement

in € million

From interest

Dividends from other investments

Impairment losses

Derecognized receivables

Derecognized liabilities

Financial result affecting income 2020

Measurement of cash flow hedges

Measurement of financial instruments categorized as equity instruments

Total financial result 2020

2020

Debt instruments carried at (amortized) cost

21.8

-40.0

0.0

-18.2

-18.2

Debt instruments measured at FVOCI

13.4

13.4

13.4

Derivatives measured at FV through P&L with reclassification

-59.2

-59.2

-59.2

Debt instruments measured at FVOCI with reclassification

24.0

24.0

Equity instruments measured at FVOCI without reclassification

9.0

9.0

Financial liabilities measured at (amortized) cost

-329.8

0.7

-329.1

-329.1

-367.2

13.4

-40.0

0.0

0.7

-393.1

24.0

9.0

-360.1