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Financial statements

12 Investment property

  

2015

 

2014

At the beginning of the year

 

2,561,354

 

2,535,854

Transfers from investment property under construction

65,022

 

114,467

 

Investments

237

 

652

 

Total investments

 

65,259

 

115,119

Disposals

 

(6,258)

 

(116,394)

Net gain (loss) from fair value adjustments on investment property (like-for-like)

203,215

 

32,536

 

Net gain (loss) from fair value adjustments on investment property

9,739

 

(5,761)

 

In profit or loss

 

212,954

 

26,775

In other comprehensive income

 

-

 

-

Transfers out of level 3

 

-

 

-

Total investment property (level 3) at the end of the year

 

2,833,309

 

2,561,354

The Fund’s investment properties are valued by an external valuation expert on a quarterly basis. On 31 December 2015, these properties were revalued by independent professionally qualified valuation experts with experience in the locations and categories of the investment properties valued (level 3). The carrying values of investment property as at 31 December 2015, and 1 January 2015, are in line with the valuations reported by the external valuation experts. In estimating the fair value of the properties, the highest and best use of the properties is their current use. There has been no change to the valuation technique during the year and there were no transfers between levels 2 and 3 during the year.

The specifications of transfers from investments and Investment property under construction and also the disposals are set out below.

Investments and transfer from investment property under construction

2015

2014

Randstad

54,379

87,924

Mid East

5,370

12,928

Brabantstad

5,510

14,267

Non-core regions

-

-

Total investments and transfer from investment property under construction

65,259

115,119

Disposals

2015

2014

Randstad

(5,497)

(68,312)

Mid East

-

(4,297)

Brabantstad

(117)

-

Non-core regions

(644)

(43,785)

Total disposals

(6,258)

(116,394)

The significant assumptions made relating to the valuations are set out below.

2015

     
 

Randstad

Mid East

Brabantstad

Non-core regions

Total

Current average rent (€/unit)

996

805

878

796

966

Estimated rental value (€/unit)

1,021

823

903

813

976

Gross initial yield

5.6%

6.4%

5.8%

6.6%

5.7%

Net initial yield

4.2%

4.9%

4.8%

4.7%

4.3%

Current vacancy rate (no rental units)

1.4%

1.2%

1.5%

2.5%

1.5%

Current financial vacancy rate

2.3%

2.3%

1.2%

3.1%

2.4%

Long-term vacancy rate

2.5%

2.5%

2.5%

3.6%

2.6%

Long-term growth rental rate

2.1%

2.0%

2.0%

2.0%

2.1%

Average 10-year inflation rate (IPD Nederland)

    

1.5%

2014

     
 

Randstad

Mid East

Brabantstad

Non-core regions

Total

Current average rent (€/unit)

968

785

856

781

927

Estimated rental value (€/unit)

995

805

884

801

953

Gross initial yield

5.9%

6.7%

6.0%

6.7%

6.0%

Net initial yield

4.2%

4.8%

4.4%

4.7%

4.3%

Current vacancy rate (no rental units)

2.0%

1.1%

1.8%

3.4%

2.1%

Current financial vacancy rate

3.2%

2.7%

5.3%

5.2%

3.5%

Long-term vacancy rate

3.4%

3.9%

3.1%

4.8%

3.5%

Long-term growth rental rate

2.5%

2.4%

2.3%

2.3%

2.4%

Average 10-year inflation rate (IPD Nederland)

    

1.9%

The valuation of the investment properties has taken into account a vacancy period ranging from one (1) to three (3) months. There are no rental incentives.

The total gain (loss) for the year included an unrealised gain of € 213,877 (2014: € 43,865) relating to investment properties that are measured at fair value at the end of the reporting period.

The vacancy rate showed a downward trend due to successful efforts to improve letting in assets with the highest vacancy rate.

As at 31 December 2015, the Fund had unprovisioned contractual obligations for future repairs and maintenance of € 0.5 million (2014: € 2.7 million). Direct operating expenses recognised in profit or loss include € 0.4 million (2014: €0.5 million) relating to investment property that was vacant. Investment property includes buildings held under finance leases of which the carrying amount is nil (2014: nil).

Sensitivity analysis

The appraisal of the portfolio implies a net initial yield of 4.3% (2014: 4.3%). If the yields used for the appraisals of investment properties on 31 December 2015 had been 100 basis points higher (2014: 100 basis points higher) than was the case at that time, the value of the investments would have been 21.1% lower (2014: 18.9% lower). In this situation, the Fund’s shareholders’ equity would have been € 616 million lower (2014: € 499 million lower).

The table below presents the sensitivity of the valuation to changes in the most significant assumptions.

  

2015

 

2014

Change rental rates

– 5%

5%

– 5%

5%

Value of the investment property change

(162,808)

118,346

(131,965)

131,965

  

2015

 

2014

Change net initial yield

– 25 bps

+ 25 bps

– 25 bps

+ 25 bps

Value of the investment property change

173,537

(154,602)

163,453

(145,439)

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