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12 Investment property

  

2016

 

2015

At the beginning of the year

 

521,589

 

445,936

Transfers from investment property under construction

232,447

 

85,239

 

Investments

10,896

 

8,475

 

Total investments

 

243,343

 

93,714

Transfers to investment property under construction

 

-

 

-

Disposals

 

(1,702)

 

(520)

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

(3,381)

 

(23,864)

 

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

3,898

 

6,323

 

In profit or loss

 

517

 

(17,541)

In other comprehensive income

 

-

 

-

Transfers out of level 3

 

-

 

-

Total investment property (level 3)

 

763,747

 

521,589

Lease incentives

 

1,866

 

4,504

At the end of the year

 

765,613

 

526,093

The Fund’s investment properties are valued by external valuation experts on a quarterly basis. The external valuation expert is changed every three years. On 31 December 2016, 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 2016, and 1 January 2016, 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 € 1,866,000 (2015: € 4,504,000) is deducted from the total fair value of investment properties.

Investments and investment property under construction

2016

2015

Experience

204,180

85,238

Convenience

38,979

77

Other

184

8,399

Total Investments and investment property under construction

243,343

93,714

Disposals

2016

2015

Experience

-

-

Convenience

-

-

Other

(1,702)

(520)

Total disposals

(1,702)

(520)

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

2016

    
 

Experience

Convenience

Other

Total

Current average rent (€/m²)

368

216

179

233

Estimated rental value (€/m²)

395

205

167

231

Gross initial yield

4.2%

6.4%

8.0%

5.8%

Net initial yield

3.9%

5.2%

6.9%

5.0%

Current vacancy rate (LFA m²)

3.2%

14.6%

5.4%

7.2%

Current financial vacancy rate

1.1%

3.6%

9.3%

5.3%

Long-term growth rental rate

2.0%

10.7%

10.2%

15.3%

Average 10-year inflation rate (IPD Nederland)

   

1.0%

2015

    
 

Experience

Convenience

Other

Total

Current average rent (€/m²)

395

205

192

225

Estimated rental value (€/m²)

390

193

174

211

Gross initial yield

4.9%

7.6%

8.1%

6.8%

Net initial yield

4.2%

6.8%

7.0%

5.9%

Current vacancy rate (LFA m²)

0.1%

4.2%

6.8%

5.2%

Current financial vacancy rate

2.5%

1.5%

7.9%

5.8%

Long-term growth rental rate

1.4%

1.8%

1.6%

1.6%

Average 10-year inflation rate (IPD Nederland)

   

1.5%

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

The net valuation gain (loss) for the year included a positive fair value adjustment of € 29,213 (2015: € 12,141) 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 2016, the Fund had unprovisioned contractual obligations for future repairs and maintenance of € 0.5 million (2015: € 0.3 million).

Direct operating expenses recognised in profit or loss include € 0.1 million (2015: € 0.2 million) relating to vacant investment property. Investment property includes buildings held under finance leases. The carrying amount is € nil (2015: € nil).

Sensitivity analysis

The appraisal of the portfolio implies a net initial yield of 5.0% (2015: 5.9%). If the yields used for the appraisals of investment properties on 31 December 2016 had been 100 basis points higher (2015: 100 basis points higher) than was the case at that time, the value of the investments would have been 15.6% lower (2015: 13.5% lower). In this situation, the Fund’s shareholders’ equity would have been € 128 million lower (2015: € 76 million lower).

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

  

2016

 

2015

Change rental rates

-5%

5%

-5%

5%

Value of the investment property change

(38,281)

38,281

(26,305)

26,305

  

2016

 

2015

Change net initial yield

- 25 bps

+ 25 bps

- 25 bps

+ 25 bps

Value of the investment property change

40,318

(36,477)

23,147

(21,275)

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