Glossary
- Asset management
- Cash flow
- Corporate governance
- DCF method
- EBIT
- EBITDA
- Equity ratio
- Finance lease
- Market capitalisation
- Operating earnings
- ROIC
- Total performance/Total return
- Value contribution
- WACC
Asset management
Value-driven property management via letting management, modernisation projects and management of local suppliers.
Cash flow
An indicator of a company’s financial and earning capacity. Cash flow represents the financial surplus from ongoing business activities in the income statement.
Corporate governance
Rules of good, value-based company management. The goal is to protect shareholders’ interests and ensure that company policy is responsible and directed towards long-term value creation.
DCF method
Abbreviation of discounted cash flow method. This is a key instrument in measuring the fair value of the property portfolio. This valuation method is based on net present values and discounts expected future cash flows from a property to the valuation date. Over a period of ten years the annual surplus (net operating income) is estimated for each property and discounted. It is assumed that the property will be sold at the end of the period and the assumed purchase price will be determined by a perpetuity.
EBIT
Earnings before interest and taxes.
EBITDA
Abbreviation of earnings before interest, taxes, depreciation and amortisation.
Equity ratio
Shareholders’ equity as a proportion of the balance sheet total. Calculations based on fair value valuations include unrealised capital gains, in contrast to calculations based on depreciated cost.
Finance lease
A lease in which the risks and rewards of ownership are transferred to the lessee. Under IFRS long-term leases can in certain circumstances be considered as a disposal. Investment property Property, land and buildings which are held as a financial investment to earn rents or for asset growth and not used for the company’s own purposes.
Market capitalisation
The market value of a publicly quoted company, obtained by multiplying the number of shares with the current share price.
Operating earnings
Earnings from the ongoing business.
ROIC
Return on invested capital; used for measurement of added value; used to determine ratio of adjusted EBIT to average committed capital. Stock options Rights to purchase shares and a remuneration component for managers, subject to fulfilling certain performance criteria.
Total performance/Total return
Total performance (TP) measures profitability; it is calculated by adding NOI yield and yield from change in value.
Value contribution
Along with the ROIC, this key figure is one of the central management tenets for value-driven management. It is determined from ROIC less WACC multiplied by the average committed capital.
WACC
Weighted average cost of capital. The weighted average cost of capital shows the interest cost of total capital and is calculated as an average of equity costs and borrowing costs.