12. Bank loans and overdrafts

in € thousand 31.12.2010 31.12.2009
Non-current bank loans and overdrafts 1,227,096 921,170
Current bank loans and overdrafts 61,060 13,025
  1,288,156 934,195

Bank loans and overdrafts are recognised at amortised cost on the balance sheet date. The present value of loans is redetermined at the balance sheet date. To do so, the annuities due up to this date, together with any residual amount according to the redemption schedule are discounted at the balance sheet date at market rates of interest plus a margin. The fair value of the bank loans and overdrafts at the balance sheet date is €1,324,096 thousand (previous year: €968,000 thousand).

Bank loans and overdrafts relate to loans raised to finance real property acquisitions and investment projects. Land charges on Company properties amounting to €1,288,156 thousand (previous year: €934,195 thousand) serve as collateral.

Discounts are amortised over the term of the loan. In the year under review, €4,592 thousand (previous year: €5,555 thousand) was recognised in income.

Currently, eight of a total of 34 loan agreements contain provisions on covenants. In all cases, these related to debt service cover ratios (DSCR) prescribing minimum values of between 110% and 165%. One loan is also subject to a condition of a maximum loan-to-value ratio of 60%. This condition is reviewed every three years. The last review took place in March 2010, based on an appraiser’s opinion of value. The loan conditions have not been breached thus far and will not be breached according to current planning for 2011–2014.

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