SM4 · Revalue the Debt — From Annual Report to NAV (Alstria)

1 Step 1 of 3 · Why floating debt sits at parRead · ~3 min.

You mark a bond. You don't mark a floater.

A fixed-coupon bond gains or loses value as market rates move away from its coupon — so you mark it to market. A floating-rate loan re-prices to the market every quarter (Euribor + margin), so its economic value barely moves from par: by the next reset it's paying the market rate again. Alstria's entire €1.07bn loan book is floating. That single fact rewrites this sub-module.

Alstria debt at a glance	Figure	Source
Gross debt (face value)	€1,074.0m	Note 11.2 · syndicated facility + Deutsche Hypo
Interest basis	Euribor + margin	floating, quarterly reset
% hedged to fixed (via swaps)	100%	Note 10.5 · payer swaps
Average all-in rate	4.45%	last reported
Less: cash & equivalents	−€152.3m	BS
Net debt	€921.7m	gross − cash

The reframe: the loan body enters NAV at face value — €1,074.0m — because a quarterly-resetting floater is always ≈ par. So where's the analyst's work? In the two things bolted on top: the swap book that converts the floating rate to fixed, and the credit margin the loan contractually pays versus what the market now demands.

↓ ContinueStep 2 of 3 · The two adjustments→

2 Step 2 of 3 · The two adjustmentsInteractive · choose the basis, compute net debt, then Check.

✓ Debt carried at par — €1,074.0m locked for the NAV bridge.

Continue to Step 3 →

Two overlays — and a choice about which NAV you're building.

The swap book is marked at −€28.5m (Note 10.5 · notional €1,104.7m): rates fell after the swaps were struck near peak, so the payer-fixed position is under water. The contractual credit margin, struck pre-crisis, now sits below the spread a 2009 lender would demand. How you treat these decides whether you're computing an EPRA NAV or a triple-net NNNAV.

EPRA NAV

Debt at par · marks excluded

Strip out the swap mark and any debt fair-value adjustment. The long-term view: derivatives and refinancing noise wash out over the hold. This is the basis our model uses.

EPRA NNNAV

Triple-net · marks included

Add back the swap mark (−€28.5m) and any debt/credit-margin adjustment. The liquidation view — what's left if you settled everything today.

Naïve

Mark the loan like a bond

MTM the principal for rate moves. Wrong for a floater — it re-prices quarterly, so there is no fixed-coupon mark to take. The classic error.

Our NAV is built on the EPRA NAV basis. On that basis, what value does the loan book carry into the bridge?

Now confirm the net-debt figure that frames the leverage. Fill the cell and Check.

Gross debt (face)	1,074.0
Less: cash	−152.3
Net debt (€m)	—

Net debt = gross debt − cash.

Credit-margin gap — the judgement we flag but don't book: Alstria pays a pre-crisis margin; by 2009 lenders demand far more for a 60%-LTV German office REIT. Economically the below-market margin is favourable to the borrower — but with covenants tight (LTV 53.9% vs a 60% trigger) and €145m of undrawn lines, the refinancing risk is the live story. On the EPRA NAV basis we hold debt at par and surface this qualitatively; the market will price it in the share-price discount (SM6).

↓ ContinueStep 3 of 3 · Knowledge check→

3 Step 3 of 3 · Knowledge check3 questions. Then SM4 is complete.

✓ SM4 complete. Debt of −€1,074.0m carries into the NAV bridge.

See locked outputs ↓

The loans say €1.07bn. For a floating book, that's almost the whole story.

You mark a bond. You don't mark a floater.

Two overlays — and a choice about which NAV you're building.

Three traps in revaluing a property company's debt.