FAQs – Frequently Asked Questions

1. What is the MAGNAT business model?

The MAGNAT business model covers the entire value chain – from acquisition across development through to the sale of projects and land.

2. What strategy does MAGNAT pursue?

MAGNAT focuses on property development projects supplemented by property trading and the exploitation of special situations. Depending on the opportunity, MAGNAT adopts a "Develop & Sell" and/or "Buy & Sell" strategy.

3. What is the role of the subsidiaries of MAGNAT?

The subsidiaries MAGNAT Asset Management GmbH and MAGNAT Asset Management Deutschland GmbH offering the above mentioned services, plus Real Estate Asset  Management for third parties and tax relief programs/builders models in Austria.

4. In what countries does MAGNAT operate?

MAGNAT targets selected urban centres in interesting markets of the CEE/SEE/CIS region as well as in Germany and Austria. At present, especially in CEE, Turkey and the home market of Germany and Austria.

5. Why does MAGNAT operate in the above markets?

MAGNAT operates in these countries because their respective markets are expanding rapidly. Our experts on the ground create opportunities that promise disproportionately high returns.

6. What maximum holding period does MAGNAT aim to apply
to its projects?

MAGNAT aims for a holding period of 2-3 years. MAGNAT's holding period for real estate is aligned towards generating maximum development returns.

7. What is the percentage of the German portfolio in relation
to the total portfolio?

The current proportion of the total portfolio is about 30% and increasing.

8. In what market is the MAGNAT share listed?

The MAGNAT share is listed on the regulated market (Frankfurt) in General Standard.

9. What is the free float proportion of the share?

As of March 2010, MAGNAT holds a free float of around 35%.

10. What dividend policy does MAGNAT pursue?

Due to the company's young history a disbursement of dividends has not yet taken place. In coming years the dividend policy will be officially proposed by management in good time prior to the shareholders' meeting.  

11. Does the international financial- and real estate crisis have any negative impact on the core markets of MAGNAT?

The negative rejections of both real estate and financial markets in Western Europe spill over to our markets in CEE, SEE and CIS delayed. A remarkable reduction of GDP growth is to be stated. Project financing in these markets is not available at reasonable costs. Therefore MAGNAT put on hold all development projects and shifted these projects to the segment land banking to ensure maximum value security. Currently the economic situation seems to improve slightly.

12. Please explain the effects of a capital reduction. What are the consequences for MAGNAT shareholders?

A shareholder, who is invested in MAGNAT with e.g. 10.000 shares, will be invested with 1.000 shares after the reduction. The share price of these 1.000 shares will be ten times higher than before the capital reduction. An example: Instead of EUR 0,40 per share the investor arithmetically will get EUR 4. At the same time the nominal capital will be reduced adequate, which means that 1.000 shares representing the same holding in the company than 10.000 shares represented before the capital reduction. Shareholders are not harmed by any fall in value therfore. With this step, MAGNAT share will get rid of its “penny-stock image” and therefore will become more interesting for institutional investors. 

13. How does a capital reduction work and what does it mean for the shareholders?

A shareholder who, for example, owns 10,000 shares will in future own 1,000 shares; however, the value will be 10 times higher than the value of the MAGNAT share before this measure was taken. By way of example: rather than each share being worth EUR 0.40, after the capital reduction the value should be EUR 4 per share. Due to the reduction in share capital, 1,000 new shares are equal to the same proportion of MAGNAT's share capital as 10,000 used to be. Therefore, the shareholder suffers no loss in value due to the capital reduction. At the same time, the MAGNAT share will be able to lose its penny-stock image and will thus be more attractive for institutional investors. 

14. Why is integration of the hitherto external asset manager,
R-Quadrat Immobilien GmbH, desirable?

- Improved transparency Integration of the external asset manager,
R-Quadrat, will lead to clear structures and increased transparency in terms of cost and performance

- Profitable growth Integration of the asset manager, which operates on the third market, is a substantial growth driving measure

- Strengthened liquidity position Integration of the profitable
R-Quadrat provides access to additional liquidity

- Concentration of expertise Concentration of extensive real estate expertise in one integrated group

- Improved corporate governance Conversion into a joint-stock corporation leads to significantly improved corporate governance

15. What are the technicalities/legalities of the integration?

- Integration will be carried out by way of a capital increase through contribution in kind.

- On 8 September 2009, a decision was taken to utilise the authorised capital of the Company, currently amounting to EUR 26,450,000, and increase the share capital from EUR 5,290,000 by EUR 8,604,651 to EUR 13,894,651 by issuing 8,604,651 new bearer shares with dividend rights as of 1 April 2009 against contributions in kind. The issue price of the new shares is EUR 3.44  per share. The subscription rights of shareholders have been excluded.

- The contribution in kind is made up of all 10,150,000 shares of
R-QUADRAT Holding AG, Vienna, Austria, whose sole asset after restructuring is a 77.49% stake in R-QUADRAT Immobilien GmbH, and all the shares in Altira ImmoFinanz GmbH, whose sole asset is a 22.51% stake in R-QUADRAT Immobilien GmbH. The competent district court has appointed Warth & Klein Wirtschaftsprüfungsgesellschaft, Dusseldorf, as auditor of the capital increase.

- Use of this method means that MAGNAT's liquidity remains untouched.

- For reasons of transparency and in the interest of good corporate governance, MAGNAT's Management and Supervisory Board have decided to enable its shareholders to decide on the matter at the next Annual General Meeting on 29 October 2009. The transaction is to be implemented in December 2009 after registration of the resolutions of the Annual General Meeting

16. How was the value of the contribution in kind determined?

The value of the contribution in kind for the 100% interest in R-Quadrat Immobilien GmbH was set at EUR 29.6 million after much negotiation.

Based on the results of a due diligence process, the Management of MAGNAT set a range as a basis for negotiation. A purchase price at the lower end of the conservative valuation of R-Quadrat was ultimately agreed upon.

17. When will MAGNAT become a joint stock company (AG)?

MAGNAT will become a joint stock company (AG) until third quarter 2010.