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Financial statements

12 Investment property

  

2018

 

2017

At the beginning of the year

 

863,337

 

763,747

Transfers from investment property under construction

21,482

 

14,076

 

Acquisitions

53,518

 

60,833

 

Other capital expenditure

2,356

 

-

 

Total investments

 

77,356

 

74,909

Transfers to investment property under construction

 

(12,898)

 

-

Disposals

 

(1,240)

 

(450)

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

18,786

 

28,252

 

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

(3,910)

 

(3,121)

 

In profit or loss

 

14,876

 

25,131

In other comprehensive income

 

-

 

-

Transfers out of level 3

 

-

 

-

Total investment property (level 3)

 

941,431

 

863,337

Lease incentives

 

4,155

 

1,531

At the end of the year

 

945,586

 

864,868

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 2018, 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 2018, and 1 January 2018, 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 € 4.2 million (2017: € 1.5 million) is deducted from the total fair value of investment properties.

Investments and investment property under construction

2018

2017

Experience

17,058

7,617

Convenience

51,904

66,873

Other

8,394

419

Total Investments and investment property under construction

77,356

74,909

Disposals

2018

2017

Experience

-

(450)

Convenience

-

-

Other

(1,240)

-

Total disposals

(1,240)

(450)

The significant assumptions with regard to the valuations are set out below.

2018

    
 

Experience

Convenience

Other

Total

Current average rent (€/m²)

365

203

179

229

Estimated rental value (€/m²)

388

201

158

224

Gross initial yield

3.9%

6.2%

8.3%

5.5%

Net initial yield

3.6%

4.9%

6.3%

4.5%

Current vacancy rate (VVO m²)

1.4%

4.6%

10.1%

6.2%

Average financial vacancy rate

1.8%

4.2%

8.0%

4.6%

Long-term growth rental rate

0.9%

0.8%

0.4%

0.8%

Average 10-years inflation rate (NRVT)

   

0.5%

2017

    
 

Experience

Convenience

Other

Total

Current average rent (€/m²)

374

216

179

234

Estimated rental value (€/m²)

400

203

162

228

Gross initial yield

4.0%

6.8%

8.3%

5.7%

Net initial yield

3.8%

5.3%

7.0%

4.9%

Current vacancy rate (VVO m²)

1.1%

8.1%

6.6%

5.9%

Average financial vacancy rate

0.8%

6.6%

6.2%

4.3%

Long-term growth rental rate

1.9%

1.1%

1.0%

1.5%

Average 10-years inflation rate (NRVT)

   

0.5%

The net valuation gain (loss) for the year included a positive fair value adjustment of € 31.6 million (2017: € 46.5 million) relating to investment properties that are measured at fair value at the end of the reporting period.

Direct operating expenses recognised in profit or loss include € 0.1 million (2017: € 0.1 million) relating to vacant investment property. Investment property includes buildings held under finance leases. The carrying amount is
€ nil (2017: € nil).

Sensitivity analysis

The appraisal of the portfolio implies a net initial yield of 4.5% (2017: 4.9%). If the yields used for the appraisals of investment properties on 31 December 2018 had been 100 basis points higher (2017: 100 basis points higher) than was the case at that time, the value of the investments would have been 16.9% lower (2017: 15.8% lower). In this situation, the Fund’s shareholders’ equity would have been € 170 million lower (2017: € 146 million lower).

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

  

2018

 

2017

Change rental rates

-5%

5%

-5%

5%

Value of the investment property change

(47,279)

47,279

(43,243)

43,243

  

2018

 

2017

Change net initial yield

– 25 bps

+ 25 bps

– 25 bps

+ 25 bps

Value of the investment property

55,079

(115,183)

31,818

(53,625)

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