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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, 2022

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 IAS 28/IFRS 16

Fair value Dec. 31, 2022

Fair value hierarchy level

Assets

Cash and cash equivalents

Cash on hand and deposits at banking institutions

1,101.8

1,101.8

1,101.8

1

Money market funds

200.6

200.6

200.6

2

Trade receivables

Receivables from the sale of properties

47.2

47.2

47.2

2

Receivables from property letting

44.9

44.9

44.9

2

Other receivables from trading

41.3

41.3

41.3

2

Receivables from the sale of real estate inventories

196.8

196.8

196.8

2

Financial assets

Investments valued at equity

240.1

240.1

n.a.

Finance lease receivables

23.7

23.7

n.a.

Loans to other investments

33.1

33.1

33.2

2

Other non-current loans

11.5

121.2

121.2

2

Other non-current loans to associates and joint ventures

825.9

716.2

716.2

2

Non-current securities

5.5

5.5

5.5

1

Other investments

398.6

398.6

398.6

2

Derivative financial assets

Cash flow hedges

115.1

-10.1

125.2

115.1

2

Stand-alone interest rate swaps and interest rate caps

99.8

99.8

99.8

2

Liabilities

Trade payables

568.5

568.5

568.5

2

Non-derivative financial liabilities

45,059.7

45,059.7

37,783.4

2

Derivatives and put options

Purchase price liabilities from put options/rights to reimbursement

270.9

270.9

189.6

3

Cash flow hedges

1.3

1.3

1.3

2

Lease liabilities

682.5

682.5

n.a.

Liabilities from tenant financing

155.1

155.1

155.1

2

Liabilities to non-controlling interests

235.8

235.8

235.8

2

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, 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

264.0

264.0

264.0

2

Financial assets

Investments valued at equity

425.3

425.3

n.a.

Finance lease receivables

23.7

23.7

n.a.

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

Derivatives and put options

Cash flow hedges (cross currency swaps)

35.8

-14.0

49.8

35.8

2

Stand-alone interest rate swaps and interest rate caps

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

n.a.

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.

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, 2022

Level 1

Level 2

Level 3

Assets

Investment properties

92,300.1

92,300.1

Financial assets

Non-current securities

5.5

5.5

Other investments

398.6

398.6

Assets held for sale

Investment properties (contract closed)

70.8

70.8

Derivative financial assets

Cash flow hedges

115.1

115.1

Stand-alone interest rate swaps and caps

99.8

99.8

Liabilities

Derivative financial liabilities

Cash flow hedges

1.3

1.3

Stand-alone interest rate swaps and caps

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

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 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).

All investments in equity instruments that do not relate to associates are measured at fair value in other comprehensive income. The Group’s primary aim is to hold its investments in equity instruments in the long term for strategic purposes. Measurement is consistent with Level 2 as the expected cash flows do not involve any considerable estimation uncertainties as the business model can be planned based on the contractual agreements, and discounting can use the same approach as that used for other financial instruments.

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.

Due to the current interest rate environment (and the return to more positive market values as a result), counterparty risk premiums were relevant for the interest rate swaps in the consolidated financial statements alongside Vonovia’s own credit risk. As with Vonovia’s own risk, they are derived from rates observable on the capital markets and ranged from 0 to 230 basis points, depending on the residual maturities. Vonovia’s own risk premiums were trading at between 25 and 280 basis points on the same cut-off date, depending on the maturities. Regarding the positive market values of the cross currency swaps, a counterparty risk of -20 basis points was taken into account.

As part of the valuation of the cross currency swaps, the USD cash flows are converted into EUR using the EUR/USD FX forward curve, after which all EUR cash flows are discounted using the 6M EURIBOR curve (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

Expected credit loss for other non-current loans to associates

Derecog­nized receivables

Derecog­nized liabilities

Financial result affecting income 2022

Measure­ment of cash flow hedges

Measure­ment of financial instruments categorized as equity instruments

Total financial result 2022

2022

Debt instruments carried at (amortized) cost

110.7

50.1

-25.7

-24.1

-2.5

108.5

108.5

Derivatives measured at FV through P&L with reclassification

141.8

141.8

141.8

Debt instruments measured at FVOCI with reclassification

72.9

72.9

Equity instruments measured at FVOCI without reclassification

21.2

21.2

-17.1

4.1

Financial liabilities measured at (amortized) cost

-480.1

-0.2

-480.3

-480.3

-227.6

50.1

21.2

-25.7

-24.1

-2.5

-0.2

-208.8

72.9

-17.1

-153.0

Net results according to measurement category – Previous year

From subsequent measurement

in € million

From interest

Income from other non-current loans

Dividends from other investments

Impair­ment losses

expected credit loss for other non-current loans to associates

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

-23.3

-15.9

-2.5

-7.5

-7.5

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

27.7

27.7

81.1

108.8

Financial liabilities measured at (amortized) cost

-385.4

3.5

-381.9

-381.9

-364.5

13.1

27.7

-23.3

-15.9

-2.5

3.5

-361.9

26.1

81.1

-254.7