Obligation Aareal 0% ( DE0007070088 ) en EUR

Société émettrice Aareal
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Pays  Allemagne
Code ISIN  DE0007070088 ( en EUR )
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Prospectus brochure de l'obligation Aareal DE0007070088 en EUR 0%, échéance Perpétuelle


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Montant de l'émission 180 000 000 EUR
Description détaillée L'Obligation émise par Aareal ( Allemagne ) , en EUR, avec le code ISIN DE0007070088, paye un coupon de 0% par an.
Le paiement des coupons est annuel et la maturité de l'Obligation est le Perpétuelle







Offering Circular / Listing Prospectus
8 October 2002
Capital Funding GmbH
Norderfriedrichskoog, Federal Republic of Germany
Offering Circular / Listing Prospectus for
5 180,000,000 Perpetual Floating Rate Notes
with the payment of interest and principal
conditional upon receipt of
profit participations in and repayment under
a Silent Participation in the commercial enterprise of
Aareal Bank AG
Wiesbaden
- German Securities Code 707 008 -
of Capital Funding GmbH


Capital Funding GmbH (formerly Real Fünfte Grundstücksgesellschaft mbH), a company incorporated in
accordance with German law with registered office in Norderfriedrichskoog (formerly Wiesbaden) (the
"Issuer"), shall use the proceeds from the issue of the Capital Notes to participate in the commercial enter-
prise of Aareal Bank AG, Wiesbaden, Federal Republic of Germany, as a typical silent partner by making a
capital contribution with a nominal value of 5 180,000,000.
The admission of the Capital Notes for trading on the offical market (amtlicher Markt) of the Frankfurt Stock
Exchange has been applied for.
The Capital Notes will be represented at all times by a global certificate in bearer form without interest
coupons which will be deposited at all times with Clearstream Banking AG, Frankfurt am Main. The Capital
Notes may be transferred in the form of co-ownership shares according to the applicable rules of
Clearstream Banking AG.
XXXXXXXXXXXXXXXXXXXXXXXXXX
Issue Price: 100 %
The Capital Notes have not been, and will not be, registered under the United States Securities Act of
1933 (the "Securities Act"). Accordingly, the Capital Notes may not be offered or sold in the United
States or to US Persons except in accordance with Regulation S under the Securities Act or pursuant
to an exemption from registration requirements of the Securities Act.
XXXXXXXXXXXXXXXXXXXXXXXXXX
Deutsche Bank
BCP Investimento, SA
BNP Paribas
HVB Corporates & Markets
Legg Mason Ltd. Spain
2


Contents
Page
General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4
Summary of the Offer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6
Appropriation of Issue Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
11
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
12
Description of Offering Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
23
Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
23
Terms and Conditions of the Issue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
24
Silent Partnership Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
38
Fiduciary Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
50
Material Provisions of the Receivables Purchase Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . .
53
Material Provisions of the Agreement on the Reimbursement of Expenses . . . . . . . . . . . . . . . . .
54
General Information on the Issuer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
55
General Information on Aareal Bank AG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
57
Selected Financial Information of Aareal Bank AG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
70
The Business of Aareal Bank AG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
80
Taxation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
93
Underwriting and Sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
95
Recent Developments and Outlook of Aareal Bank AG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
97
Financial Information of Aareal Bank AG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-1
3


General Information
Responsibility for Content of Prospectus
Capital Funding GmbH (formerly Real Fünfte Grundstücksgesellschaft mbH) (the "Issuer") and Deutsche
Bank Aktiengesellschaft, Frankfurt/Main ("Deutsche Bank") are responsible under German law in accordance
with Sec. 13 of the German Securities Sales Prospectus Act (Wertpapier-Verkaufsprospektgesetz) in conjunc-
tion with Sec. 44 et seq. of the German Stock Exchange Act (Börsengesetz) and hereby confirm that, to the
best of their knowledge, the information contained in this offering circular/listing prospectus ("Prospectus")
dated 8 October 2002 is correct and that no material information has been omitted.
The Issuer has not permitted any person to make any disclosures or representations that are not contained
in this Prospectus, or in other documents agreed upon in connection with the bond issue or in other disclo-
sures made by the Issuer or in publicly available information, and that do not correspond to the content of
any such documents, disclosures or information. Where any such disclosures or representations were made,
the Issuer does not accept any responsibility.
The delivery of the Prospectus or the offer, sale or delivery of the bonds does not mean, under any circum-
stances, that the information contained in the Prospectus will continue to apply after the publication date of
the Prospectus or that the financial condition of the Issuer or of Aareal Bank has not deteriorated since the
Prospectus date.
Subject Matter of Prospectus
The subject matter of the Prospectus is a total issue of 5 180,000,000 comprising 1,800,000 Perpetual
Floating Rate Notes 2002 of 5 100 each, vesting claims to interest payment and redemption subject to
certain conditions. For the purpose of this Prospectus, the individual bonds will hereinafter be referred to as
"Capital Notes" and the entirety of all Capital Notes as "Capital Notes Issue".
Inspection of Documents
The documents mentioned in this Prospectus, that refer to the Issuer and Aareal Bank AG, may be inspected
during normal office hours at the offices of the Issuer, Koogstraat 4, 25870 Norderfriedrichskoog, Germany,
as well as the offices of Deutsche Bank Aktiengesellschaft, Große Gallusstraße 10­14, 60272 Frankfurt/Main.
Description of Aareal Bank AG and Aareal Group
Any references in this Prospectus to the "Issuer" are references to Capital Funding GmbH (formerly Real
Fünfte Grundstücksgesellschaft mbH). Any references to "Aareal" or "Aareal Bank" are references to Aareal
Bank AG. Any references to the "Property Bank" or the "Aareal Group" are references to Aareal Bank AG and
its consolidated subsidiaries unless the context requires otherwise. For a detailed discussion of the compa-
ny's history, see "General Information on Aareal Bank AG". Any references to "Aareon AG" (formerly DePfa IT
Services AG) and "Aareal Immobilien Management AG" also include their respective subsidiaries. Any
references to the "DePfa Group" are references to DePfa Deutsche Pfandbriefbank AG as the former parent
company and its subsidiaries, including Aareal Bank (formerly carrying on business under the firm of
"DePfa Bank AG"), within the Group structure existing prior to the split of public finance and property
activities. Capitalised terms used and not defined herein shall have the meaning given to them in the Terms
and Conditions of the Issue, the Silent Partnership Agreement and the Fiduciary Agreement reproduced
under ,,Description of Offering Structure" in this Prospectus.
4


Disclosure Regarding Forward-looking Statements
The statements included herein regarding future financial performance and results and other statements
that are not historical facts are forward-looking statements. The words "believes", "expects", "predicts",
"estimates" and similar expressions are also intended to identify forward-looking statements. Such state-
ments are made on the basis of assumptions which, although reasonable at this time, may prove to be
erroneous. The risks and uncertainties which the Issuer and Aareal Bank face with respect to their future
development and the factors that might influence the correctness of such forward-looking statements are
considered, as a general rule, throughout this Prospectus. Such factors include, inter alia, the factors dis-
cussed in "Risk Factors", "Financial Information of Aareal Bank AG" and "Recent Developments and Out-
look". Actual results could differ significantly from those contemplated in the forward-looking statements
contained herein if one or more of any such risks and uncertainties materialise or the facts, upon which these
forward-looking statements have been based, prove to be incorrect.
Currency Presentations
In this Prospectus, references to "euro", "EUR" and "5" are references to the common currency of the
member states of the European Economic and Monetary Union, which as of 1 January 1999 replaced the
respective national currencies of the relevant countries. References to "Deutsche Mark", "DEM" or "DM" are
references to the former national currency of the Federal Republic of Germany prior to the introduction of the
euro. References to "US$", "USD" and "US dollars" are references to the dollar of the United States of
America. Aareal Bank publishes its financial statements in euro.
5


Summary of the Offer
This summary of the transaction will, in its entirety, be qualified and supplemented by reference to the
detailed information as set out elsewhere in this Prospectus, in particular in the following Terms and Condi-
tions of Issue and the Silent Partnership Agreement. In case of any deviations between this summary and the
detailed information as set out elsewhere in this Prospectus, the latter shall prevail.
Issuer:
Capital Funding GmbH, (formerly Real Fünfte Grundstücksgesellschaft
mbH) with registered seat in Norderfriedrichskoog, Germany (formerly
Wiesbaden). The Issuer is a limited liability company (GmbH), incorp-
orated in accordance with German law, which is neither affiliated nor
consolidated with Aareal Bank and participates in the commercial enter-
prise of Aareal Bank as a typical silent partner (see "Description of
Offering Structure" ­ "Silent Partnership Agreement" ).
The Silent Partner must not create any liabilities other than the Capital
Notes issued by the Silent Partner to refinance the Capital Contribution
(see "Description of Offering Structure" ­ "Silent Partnership Agreement"),
except for liabilities, however, which are absolutely necessary to keep its
business in operation. See "General Information about the Issuer".
Aareal Bank:
Aareal Bank AG, Wiesbaden, Germany. See "General Information about
Aareal Bank AG".
Arranger and Lead Manager:
Deutsche Bank Aktiengesellschaft, Frankfurt am Main, Germany, acting
through its London Branch, Deutsche Bank AG London.
Paying Agent:
Deutsche Bank Aktiengesellschaft, Frankfurt am Main, Germany.
Capital Notes:
5 180,000,000 Perpetual Floating Rate Capital Notes with no maturity and
conditional obligation to pay principal and interest conditional upon Profit
Participations and repayment amounts received under a Silent Partnership
(see "Description of Offering Structure" ­ "Silent Partnership Agreement")
in the commercial enterprise of Aareal Bank in the nominal amount of
5 100 per Capital Note.
Use of Proceeds:
The Issuer will use the proceeds from the issue of the Capital Notes to
make the capital contribution for the purposes of the Silent Partnership.
Silent Partnership:
The Issuer participates in the commercial enterprise of Aareal Bank as a
typical silent partner by making a capital contribution in the nominal
amount of 5 180,000,000. The contribution is to serve as regulatory capi-
tal within the meaning of the German Banking Act and the capital ade-
quacy recommendations established by the Basle Committee on Banking
Supervision. The nominal amount of the Silent Participation (see "Descrip-
tion of Offering Structure" ­ "Silent Partnership Agreement") is equal to
the nominal amount of the Capital Notes.
The Silent Partnership is established for an indefinite period of time and is
subject to German law.
Ranking of the Silent Partner's:
Claims of the Silent Partner under the Silent Partnership are subordinated
Claims
to claims of all existing and future creditors of Aareal Bank (including the
claims under profit-participation rights or subordinated debt within the
meaning of § 10 (5), (5a) and (7) German Banking Act ("KWG")).
6


Participation of the Issuer in
For each Profit Period, the Issuer is entitled to a Profit Participation at a
Profits of Aareal Bank:
rate equal to 12-month EURIBOR plus a margin of 2.1014 % calculated
by reference to the Nominal Contribution Amount for a Payment Period
starting on a Distribution Date and ending on the next Distribution Date,
calculated on the basis of the actual number of days in this Period divided
by 360. "Payment Period" shall mean the period commencing upon pay-
ment of the contribution and ending on the first Distribution Date or com-
mencing on a Distribution Date and ending on the next Distribution Date.
For the First Profit Period, an interpolated EURIBOR rate will be applied
which is calculated for the Payment Period starting on the date of pay-
ment of the contribution and ending on the first Distribution Date. "Profit
Period" shall mean the Fiscal Year of Aareal Bank or any shorter period
within a Fiscal Year in which the Silent Partnership exists.
No Profit Participation is payable if and to the extent that such payment
would cause or increase an annual net loss of Aareal Bank. Furthermore,
payment of a Profit Participation requires replenishment in full of the Book
Value of the Capital Contribution in case the Book Value has been
decreased below the Nominal Contribution Amount as a result of any loss
participation.
If Aareal Bank pays a dividend for the relevant Fiscal Year or makes pay-
ments in respect of Other Tier 1 Capital Instruments, and if Aareal Bank's
solvency ratio is at least 9 % on an individual as well as on a consolidated
basis, Aareal Bank may pay a distribution on the Silent Partnership
despite any annual net loss by withdrawing amounts from any existing
reserves within the meaning of § 301 sentence 2 German Stock Corpora-
tion Act ("AktG").
If, due to the fact that the annual accounts have not yet been determined,
Aareal Bank pays the Profit Participation only after the Due Date, interest
shall be payable on the Profit Participation at a rate of 5 % above the then
applicable base rate.
The Silent Partner may request that the Profit Participation be increased if
and to the extent that, as a result of any tax-related changes, the Silent
Partner incurs higher refinancing costs or any additional liability.
There is no obligation to subsequently pay any skipped Profit Participa-
tions.
Participation of the Issuer in
In the event of an annual net loss, the Capital Contribution of the Silent
any Losses of Aareal Bank:
Partner will be reduced on a pro rata basis with other loss-participating
components of Aareal Bank's regulatory capital. Future annual net income
shall be used to replenish the Capital Contribution up to the Nominal Con-
tribution Amount.
If Aareal Bank pays a dividend for the relevant Fiscal Year or makes pay-
ments on any Other Tier 1 Capital Instruments, and if Aareal Bank's sol-
vency ratio is at least 9 % on an individual as well as on a consolidated
basis, Aareal Bank may, despite any annual net loss, withdraw the
required amounts from any existing revenue reserves within the meaning
of § 301 sentence 2 AktG in order to avoid any Reduction of the Book
Value of the Capital Contribution or to replenish the Capital Contribution
up to the Nominal Contribution Amount.
7


Termination of the Silent
Termination by the Silent Partner is excluded.
Partnership:
Pursuant to the Silent Partnership Agreement, Aareal Bank may terminate
the Silent Partnership by giving two years' prior notice with effect as of the
end of a Fiscal Year, and, in case of certain tax or regulatory changes, with
effect as of the end of a calendar month, but in no event earlier than with
effect as of 31 Decemer 2007. However, Aareal Bank has waived the right
to terminate with effect as of any date earlier than 31 December 2013. In
addition, Aareal Bank has entered into an angreement with the Silent Part-
ner amending the Silent Partnership Agreement pursuant to which Aareal
Bank may terminate the Silent Partnership Agreement no earlier than with
effect as of 31 December 2013 (see "Risk Factors" ­ "No Fixed Termination
Date" and "Description of Offering Structure" ­ "Overview" ­ "Silent Part-
nership Agreement"). Termination requires the prior consent of the German
Financial Services Supervisory Agency (BAFin).
Should the Silent Participation no longer qualify as Tier 1 Capital within
the meaning of the KWG, Aareal Bank may terminate the Silent Partner-
ship at any time by giving two months' notice with effect as of the end of
a Fiscal Year.
If the Book Value of the Capital Contribution is decreased below the
Nominal Contribution Amount, the Silent Partnership Agreement will be
deemed not terminated until the Capital Contribution has been fully
replenished to the Nominal Contribution Amount.
In the event the Silent Partnership is terminated during a Fiscal Year, inter-
est shall be payable on the Silent Partnership at the then applicable rate
of the Profit Participation from the Termination Date until the end of the
Fiscal Year in which the Silent Partnership is terminated.
Except for the obligation to pay interest in the event of a termination of
the Silent Partnership during a Fiscal Year, no interest shall be payable on
the Repayment Amount which is due upon termination of the Silent Part-
nership for the period between the Termination Date and the Repayment
Date.
Receivables Purchase
Payments of Profit Participations are subject to investment income tax
Agreement:
(Kapitalertragsteuer) to be withheld and transferred to the tax authorities
by Aareal Bank. The Issuer has Tax Refund Claims against the tax authori-
ties in respect of the amounts withheld. Pursuant to a Receivables
Purchase Agreement, Aareal Bank has undertaken with the Issuer to pur-
chase such Tax Refund Claims from the Issuer upon withholding of such
amounts. The Profit Participation, after deduction of investment income
tax, plus the Purchase Price paid for the Tax Refund Claims equals the
gross amount of the Profit Participation.
Fiduciary Agreement:
Pursuant to a Fiduciary Agreement entered into between the Issuer,
Aareal Bank and the Fiduciary for the benefit of the Noteholders, the
Issuer has assigned to the Fiduciary all present and future Profit Participa-
tion Claims, Delayed Payment Interest Claims, Payment Claims and
Termination Claims against Aareal Bank as security for the claims of the
Noteholders.
Fiduciary:
Deutsche Bank Luxembourg S. A., Luxembourg.
Status of the Capital Notes:
The Capital Notes represent unsecured and unsubordinated liabilities of
the Issuer ranking pari passu among themselves and with all other unse-
cured and unsubordinated liabilities of the Issuer, except for liabilities
which rank senior as a matter of law.
8


Other Tier 1 Capital Instruments:
Aareal Bank reserves the right to enter into agreements on Other Tier 1
Capital Instruments (see "Description of Offering Structure" ­ "Silent Part-
nership Agreement") on identical or different terms. Claims of any future
silent partners (or of holders of security provided for Tier 1 Capital
instruments of subsidiaries) may not rank prior to the claims of the Issuer
under the Silent Partnership Agreement.
Repayment of the Capital Notes:
The Capital Notes have no fixed maturity.
The Issuer may terminate the Capital Notes for early redemption for the
first time with effect at 30 April 2014 or at any time for tax reasons, pro-
vided that the financing of the repayment of the principal under the Capi-
tal Notes plus any interest accrued is secured by the issue of similar debt
securities or in any other way.
In the event of a breach by the Issuer of any obligations under the Terms
and Conditions of Issue, the Noteholders are entitled to early termination
of the Capital Notes.
In all other circumstances, the Capital Notes will be redeemed upon
repayment of the Capital Contribution in the amount of the Capital Contri-
bution repaid by Aareal Bank.
Payment of Interest:
Annually, at a rate equal to 12-month EURIBOR (or a EURIBOR rate calcu-
lated by linear interpolation in relation to the interest payment to be made
on the first Due Date following the issue of the Capital Notes) plus 2.10 %
p.a. of the Nominal Contribution Amount, if and to the extent that the
Fiduciary has effectively received the necessary amounts for the account
of the Issuer. The interest rate corresponds to the Profit Participation of
the Issuer less a margin of 0,0014 % p.a. of the Nominal Contribution
Amount, which margin will be retained by the Issuer as own profit, if and
to the extent that the Annual Profit Participation together with the Pur-
chase Price paid for the Tax Refund Claims exceeds the amount of inter-
est payable to the Investors. Aareal Bank has undertaken with the Issuer
to reimburse to the Issuer the current expenses relating to and required in
respect of the business operations of the Issuer.
Interest Payment Days:
30 April following the relevant Fiscal Year of Aareal Bank; if such day is
not a Business Day, immediately interest shall be paid on the Business
Day following 30 April; no additional interest shall be payable in case of
such postponement.
In the event that the annual accounts of the relevant Fiscal Year of Aareal
Bank have not yet been determined on the relevant Due Date, payment
will be postponed until the first Business Day following the day on which
the annual accounts of Aareal Bank are determined. The Issuer will pay
any amounts of Delayed Payment Interest received from Aareal Bank as
additional interest on the Capital Notes.
Profit Period:
The First Profit Period (see "Description of Offering Structure" ­ "Silent
Partnership Agreement") is the period commencing on (and including) the
Start Date and ending on (and including) 31 December 2002. Each follow-
ing Profit Period corresponds with the Fiscal Year of Aareal Bank com-
mencing on (and including) 1 January and ending on (and including) 31
December of each year, unless the Profit Period shall end early due to
effective termination of the Silent Partnership Agreement.
9


Payment Period:
The First Payment Period (see "Description of Offering Structure" ­ "Silent
Partnership Agreement") commences on (and includes) the Start Date and
ends on (and excludes) the first Distribution Date. Each following Payment
Period commences on (and includes) a Distribution Date and ends on
(and excludes) the next following Distribution Date.
The relevant Profit Participation will be calculated in respect of each
Payment Period on the basis of the effective number of days in that
Payment Period divided by 360.
Gross Interest Clause:
The Issuer is obliged to pay Additional Amounts in the event that pay-
ments on the Capital Notes become subject to any withholding tax or
deductions.
In such case, or if the tax liability of the Issuer increases due to a change
in trade income taxation or the introduc-tion of an other income or prop-
erty tax, Aareal Bank shall increase the Profit Participation accordingly.
Applicable Law:
The laws of the Federal Republic of Germany.
Envisaged Listing
of the Capital Notes:
Frankfurt am Main (Official Market)
10