Liquidity risk

Owing to a clear reluctance on the bank of banks to extend credit at present, short-term liquidity risks cannot be ruled out. Liquidity risk is potentially created where negative market trends prevent or lead to delays in planned sales activity. Other risks arise from unforeseen additional funding obligations in relation to project financing and breaches of covenant in the property financing area. CA Immo is highly skilled at planning and securing liquidity in order to counter these risks and ensure the Group can meet unexpected cash flow requirements as well as its financing commitments on projects and investments. To this end, various liquidity deployment measures have been identified; amongst other things, these provide for the early redemption of loans with very high margins. Loans are invariably agreed on a long-term basis in accordance with the investment horizon for real estate. Even with meticulous planning, however, liquidity risk cannot be eliminated, particularly where capital requests linked to joint venture partners and fund partners are not viable. Capital commitments are typical in the case of development projects; the Group company CA Immo Deutschland has a particularly high commitment in the case of the Tower 185 project. Financing has been secured for all projects under construction; additional financing is required for new project launches, however.

Given the refinancing scheduled for 2012/13, partner risks pose a particular threat; project-related and country-specific risks will also persist, especially with regard to further developments in Hungary. Additional reserves are needed to cover any breaches of covenant. The refinancing risk and the risk of a breach of contract terms are monitored continuously. The worst case resulting from the potential hazard is included in the current liquidity planning.

<< back