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Financial statements

12 Investment property

  

2015

 

2014

At the beginning of the year

 

445,936

 

459,494

Transfers from investment property under construction

85,239

 

9,511

 

Investments

8,475

 

45,947

 

Total investments

 

93,714

 

55,458

Transfers to investment property under construction

 

-

 

(9,279)

Disposals

 

(520)

 

(21,356)

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

(23,864)

 

(33,841)

 

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

6,323

 

(4,540)

 

In profit or loss

 

(17,541)

 

(38,381)

In other comprehensive income

 

-

 

-

Transfers out of level 3

 

-

 

-

Total investment property (level 3)

 

521,589

 

445,936

Lease incentives

 

4,504

 

373

At the end of the year

 

526,093

 

446,309

The Fund’s investment properties are valued by an external valuation expert on a quarterly basis. The external valuation expert is changed every three years. On 31 December 2015, these properties were revalued by independent professionally qualified valuation experts who hold a recognised relevant professional qualification and had recent experience in the locations and categories of the investment properties valued. 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.

Since the accounting effect of lease incentives granted is included under non-current assets the recognised amount € 4,504,000 (2014: € 373,000) is deducted from the total fair value of investment properties.

Investments and investment property under construction

2015

2014

High street retail

85,238

54,765

Shopping centres

77

86

Other retail location

8,399

607

Total Investments and investment property under construction

93,714

55,458

Disposals

2015

2014

High street retail

-

-

Shopping centres

-

-

Other retail location

(520)

(21,356)

Total disposals

(520)

(21,356)

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

2015

    
 

High street retail

Shopping centres

Other retail location

Total

Current average rent (€/m²)

273

205

139

225

Estimated rental value (€/m²)

253

192

141

211

Gross initial yield

6.2%

7.7%

8.0%

6.8%

Net initial yield

5.5%

7.0%

4.6%

5.9%

Current vacancy rate (LFA m²)

4.0%

3.6%

12.2%

5.2%

Current financial vacancy rate

4.3%

2.8%

16.4%

5.8%

Long-term vacancy rate

2.7%

4.1%

11.8%

4.2%

Long-term growth rental rate

1.5%

1.8%

0.7%

1.6%

Average 10-year inflation rate (IPD Nederland)

   

1.5%

2014

    
 

High street retail

Shopping centres

Other retail location

Total

Current average rent (€/m²)

254

209

149

219

Estimated rental value (€/m²)

242

192

145

206

Gross initial yield

6.9%

7.6%

5.9%

7.0%

Net initial yield

5.2%

6.5%

7.2%

5.9%

Current vacancy rate (LFA m²)

4.5%

3.9%

26.0%

7.8%

Current financial vacancy rate

4.3%

3.1%

16.4%

5.9%

Long-term vacancy rate

3.0%

3.7%

N/A

3.3%

Long-term growth rental rate

2.0%

2.1%

1.6%

2.0%

Average 10-year inflation rate (IPD Nederland)

   

1.9%

The vacancy rate showed an upward trend due to some bankruptcies.

The total gain (loss) for the year included an unrealised gain of € 12,141 (2014: € 2,465) relating to investment properties that are measured at fair value at the end of the reporting period.

The valuation of the investment properties takes into account a rent-free period/rent incentives ranging from 1 to 3 months after occupation.

As at 31 December 2015, the Fund had unprovisioned contractual obligations for future repairs and maintenance of € 0.3 million (2014: € 0.1 million).

Direct operating expenses recognised in profit or loss include € 0.2 million (2014: € 0.1 million) relating to vacant investment property. Investment property includes buildings held under finance leases. The carrying amount is € nil (2014: € nil).

Sensitivity analysis

The appraisal of the portfolio implies a net initial yield of 5.9% (2014: 5.9%). 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 13.5 % lower (2014: 14.7% lower). In this situation, the Fund’s shareholders’ equity would have been € 76 million lower (2014: € 92 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

(26,305)

26,305

(24,396)

25,872

  

2015

 

2014

Change net initial yield

- 25 bps

+ 25 bps

- 25 bps

+ 25 bps

Value of the investment property change

23,147

(21,275)

23,145

(19,835)

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