6 Investment property
Movements in the value of investment property are explained in the following table.
Download data(x EUR million) | Market value | Investment Properties held for sale | Other movements market value to book value | Investment property under construction | Minimal lease obligations | Total investment property |
|---|---|---|---|---|---|---|
Book value as per 1 January 2014 | 2,989.7 | -125.1 | - | 6.2 | 2,286.7 | 5,157.5 |
Changes in book value: | ||||||
- Maintenance investments in investment property | 34.4 | - | - | 3.3 | - | 37.7 |
- New business investments in investment property | 5.6 | - | - | - | - | 5.6 |
- Acquisitions through business combinations | 1.5 | - | - | - | - | 1.5 |
- Divestments in investment property | -189.3 | 125.1 | - | -1.1 | - | -65.3 |
- Movement in capitalised lease obligations due to time effect | - | - | - | - | -58.6 | -58.6 |
- Lease obligations new contracts | - | - | - | - | 335.0 | 335.0 |
- Revaluation financial year | -161.2 | - | - | - | - | -161.2 |
- Relocation from/to fixed assets | 7.2 | - | -5.6 | -2.1 | - | -0.5 |
- Foreign exchange rate differences | 6.7 | - | - | - | 35.1 | 41.8 |
- Other | - | - | - | -0.2 | 0.6 | 0.4 |
Book value as per 31 December 2014 | 2,694.6 | - | -5.6 | 6.1 | 2,598.8 | 5,293.9 |
(x EUR million) | Market value | Investment Properties held for sale | Other movements market value to book value | Investment property under construction | Minimal lease obligations | Total investment property |
|---|---|---|---|---|---|---|
Book value as per 31 December 2014 | 2,694.6 | - | -5.6 | 6.1 | 2,598.8 | 5,293.9 |
Changes in book value: | ||||||
- Maintenance investments in investment property | 32.7 | - | - | 5.5 | - | 38.2 |
- New business investments in investment property | 4.1 | - | - | - | - | 4.1 |
- Acquisitions through business combinations | 14.9 | - | - | - | - | 14.9 |
- Divestments in investment property | -2.4 | - | - | -1.2 | - | -3.6 |
- Movement in capitalised lease obligations due to time effect | - | - | - | - | -63.3 | -63.3 |
- Lease obligations new contracts | - | - | - | - | 76.1 | 76.1 |
- Revaluation financial year | 4.2 | - | - | - | - | 4.2 |
- Relocation from/to fixed assets | 1.3 | - | - | -2.0 | - | -0.7 |
- Foreign exchange rate differences | 21.8 | - | -0.3 | - | 46.4 | 67.9 |
- Other | - | - | - | - | 210.9 | 210.9 |
Book value as per 31 December 2015 | 2,771.2 | - | -5.9 | 8.4 | 2,868.9 | 5,642.6 |
Market value
The table shows the market value of objects valued internally and externally as well as per object type. The market value of externally valued investment property stated in the table corresponds to the total market value as determined in the valuations made by the external valuer.
Download data(x EUR million) | 2015 | 2014 |
|---|---|---|
Market value of investment property valued externally | 2,690.4 | 2,626.8 |
Market value of investment property valued internally | 80.8 | 67.8 |
Total market value | 2,771.2 | 2,694.6 |
Of which legally owned property | 1,253.0 | 1,215.7 |
Of which concessions | 440.6 | 456.9 |
Of which ground lease constructions | 331.0 | 300.1 |
Of which lease contracts with protective constructions | 201.0 | 222.2 |
Of which other lease contracts | 545.6 | 499.7 |
Total market value | 2,771.2 | 2,694.6 |
Valuation method
In accordance with IFRS 13, the market value calculation used classifies this as a 'level 3' revaluation method for the whole portfolio.
The incoming and outgoing cash flows included in the valuation of the investment property are based on the revenue, costs related to operational and financial lease, and other operating expenses as recognised in the consolidated statement of comprehensive income, as well as the maintenance investments recognised in the consolidated cash flow statement.
The discount rate used in the valuation of the investment property differs per object, whereby the external valuers take the structure of the discount rate with all relevant aspects into account. These aspects include the nature of the object, the location, the function (multifunctional locations, train stations, hospitals and airports), the maintenance status and the cash flow development.
More specifically, the discount rate consists of the risk free interest rate per country, plus - if applicable - a surcharge for growth forecasts included in the cash flows. In addition, the discount rate includes surcharges as specified in the following table.
Download data2015 | 2014 | |
|---|---|---|
Investment property risk (from owned property to lease) | 0,00% - 3,00% | 0,00% - 3,00% |
Object type (from street parking to underground facility) | 0,75% - 1,25% | 0,75% - 1,25% |
Function risk (from multifunctional to monofunctional) | 0,00% - 2,00% | 0,00% - 2,00% |
Development risk (from low to high) | 0,00% - 4,00% | 0,00% - 4,00% |
Object specific risk (from very good to very poor) | 0,00% - 3,00% | 0,00% - 3,00% |
In the following table, the weighted average discount rate and the initial yield per region are shown.
Download dataDiscount rate | Net initial yield | |||
|---|---|---|---|---|
2015 | 2014 | 2015 | 2014 | |
Region 'Mid' | 9.3% | 9.1% | 6.4% | 6.2% |
Region 'West' | 10.1% | 9.9% | 6.4% | 6.4% |
Region 'South' | 7.7% | 7.7% | 5.7% | 6.0% |
Region 'North' | 9.3% | 9.6% | 5.7% | 5.9% |
Total | 8.8% | 8.8% | 6.2% | 6.2% |
The table shows that the (weighted average) discount rate for the operational component and the initial yield for the investment property component are stable compared to the previous financial year. Changes at region level have not resulted in an adjustment of the weighted average total discount rate and initial yield.
Revaluation result
The revaluation result for 2015 is EUR 4.2 million (2014: EUR -161.2 million). The 2015 revaluation result is the consequence of a stable cash flow development (in line with the business plan) and the above-mentioned discount rate and initial yield. The negative revaluation result in 2014 was mainly due to the downward adjustment of cash flow projections. The table gives insight into the revaluation result per region.
Download data(x EUR million) | Revaluation | |
|---|---|---|
2015 | 2014 | |
Region 'Mid' | 17.1 | -47.8 |
Region 'West' | -16.0 | -8.2 |
Region 'South' | -8.7 | -83.1 |
Region 'North' | 11.8 | -22.1 |
Total | 4.2 | -161.2 |
Sensitivities
A sensitivity analysis which gives insight into the impact of changes to the discount rate and initial yield on the fair value of the investment property is shown in the table.
Download data(x EUR million) | Discount rate | Net initial yield | ||
|---|---|---|---|---|
-0.5% | +0,5% | -0.5% | +0,5% | |
Region 'Mid' | 24.5 | -22.9 | 69.3 | -58.8 |
Region 'West' | 13.0 | -12.3 | 12.3 | -10.4 |
Region 'South' | 23.1 | -21.6 | 24.2 | -20.4 |
Region 'North' | 10.9 | -10.2 | 5.0 | -4.2 |
Total | 71.5 | -67.0 | 110.8 | -93.8 |
Other notes
Regarding the increase in the minimum lease obligations, please refer to the notes on the lease obligations such as explained in note non-current liabilities.
The total market value of the investment property sold in the financial year amounted to EUR 2.4 million. At the close of 2014, these property investments were part of the regular property investments and were not marked as fixed assets held for sale.
The total market value of the investment property includes contracts with a negative market value recognised for an amount of EUR 85.9 million (2014: EUR 86.1 million).