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 2013 | 3,373.7 | -119.3 | - | 20.3 | 2,028.3 | 5,303.0 |
Changes in book value: | ||||||
- Maintenance investments in investment property | 34.0 | - | - | 3.9 | - | 37.9 |
- New business investments in investment property | 19.3 | - | - | - | - | 19.3 |
- Acquisitions through business combinations | - | - | - | - | - | - |
- Divestments in investment property | -137.5 | - | - | -1.7 | - | -139.2 |
- Movement in capitalised lease obligations due to time effect | - | - | - | - | -48.9 | -48.9 |
- Lease obligations new contracts | - | - | - | - | 313.2 | 313.2 |
- Revaluation financial year | -292.0 | - | - | - | - | -292.0 |
- Re-allocation of assets held for sale | - | -5.8 | - | - | - | -5.8 |
- Relocation from/to fixed assets | 16.5 | - | - | -16.0 | - | 0.5 |
- Foreign exhange rate differences | -24.3 | - | - | -0.3 | -24.6 | -49.2 |
- Other | - | - | - | - | 18.7 | 18.7 |
Book value as per 31 December 2013 | 2,989.7 | -125.1 | - | 6.2 | 2,286.7 | 5,157.5 |
(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 2013 | 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 exhange 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 |
Market value
The table contains 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) | 2014 | 2013 |
|---|---|---|
Market value of investment property valued externally | 2,626.8 | 2,922.4 |
Market value of investment property valued internally | 67.8 | 67.3 |
Total market value | 2,694.6 | 2,989.7 |
Of which legally owned property | 1,215.7 | 1,443.7 |
Of which concessions | 456.9 | 502.8 |
Of which ground lease constructions | 300.1 | 314.2 |
Of which lease contracts with protective constructions | 222.2 | 247.4 |
Of which other lease contracts | 499.7 | 481.6 |
Total market value | 2,694.6 | 2,989.7 |
Valuation method
The following valuation methods can be distinguished:
- Level 1: Unadjusted quoted prices in active markets for identical assets and liabilities;
- Level 2: Actual prices for similar assets and liabilities in active markets or data which is based on or is supported by observable market data;
- Level 3: Unobservable data for determining the fair value of an asset or liability.
(x EUR million) | Level 1 | Level 2 | Level 3 | Total |
|---|---|---|---|---|
Investment property and investment property under construction recognised at market value | - | - | 2,694.6 | 2,694.6 |
Total | - | - | 2,694.6 | 2,694.6 |
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 data2014 | 2013 | |
|---|---|---|
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 | |||
|---|---|---|---|---|
2014 | 2013 | 2014 | 2013 | |
Region 'Mid´ | 9.1% | 9.5% | 6.2% | 5.9% |
Region ´West´ | 9.9% | 9.4% | 6.4% | 6.1% |
Region ´South´ | 7.7% | 8.2% | 6.0% | 5.6% |
Region ´North´ | 9.6% | 9.4% | 5.9% | 5.8% |
Total | 8.8% | 9.0% | 6.2% | 5.8% |
The table shows that the discount rate for objects can be adjusted both upwards and downwards. On balance, the (weighted average) discount rate for the operational component has decreased slightly in total. In addition to adjustments to the discount rate, the external valuers have also made changes to the initial yield of the investment property component. As shown in the table, on balance, adjustments to the initial yield resulted in an adjustment of 5.8% (weighted average) in 2013 to 6.2% (weighted average) in 2014.
Revaluation result
The revaluation result for 2014 is EUR -161.2 million (2013: EUR -292.0 million). The revaluation result is mainly due to revised cash flow projections. The table gives insight into the revaluation result per region.
Download data(x EUR million) | Revaluation | |
|---|---|---|
2014 | 2013 | |
Region 'Mid´ | -47.8 | -159.8 |
Region ´West´ | -8.2 | -24.5 |
Region ´South´ | -83.1 | -68.6 |
Region ´North´ | -22.1 | -39.1 |
Total | -161.2 | -292.0 |
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´ | 19.6 | -18.2 | 72.9 | -61.7 |
Region ´West´ | 13.5 | -12.6 | 11.8 | -10.1 |
Region ´South´ | 23.8 | -22.2 | 20.3 | -17.1 |
Region ´North´ | 10.5 | -9.9 | 4.5 | -3.8 |
Total | 67.4 | -62.9 | 109.5 | -92.7 |
Other notes
As shown in the note about goodwill and other intangible fixed assets, the current regional structure is as follows:
- Region ‘Mid’ - Netherlands and Germany;
- Region ‘West’ - Great Britain and Ireland;
- Region ‘South’ - France and Belgium;
- Region ‘North’ - Denmark, Sweden, Norway and Finland.
The information per region included in this note is based on the region structure. Where applicable, the comparative figures in this note for 2013 have been adjusted on this point.
In 2014, no capitalised interest is included in the investments in investment property under construction (2013: EUR 1.0 million). In 2013, the average interest rate applicable to the capitalised interest amounted to 3.2%.
The total increase in the minimum lease obligations concerns EUR 256.0 million (2013: EUR 175.4 million) for lease obligations as a result of the sale-and-leaseback transactions conducted in the financial year. The remaining increase in the capitalised lease obligations is related to new lease contracts.
The total market value of the investment property sold (and leased back) during the financial year amounted to EUR 189.3 million, of which EUR 125.1 million was already recognised as fixed assets held for sale as per 31 December 2013.
The total market value of the investment property includes contracts with a negative market value recognised for an amount of EUR 86.1 million (2013: EUR 57.7 million).