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12 Investment property

  

2017

 

2016

At the beginning of the year

 

453,797

 

473,688

Transfer from investment property under construction

 

-

 

-

Investments

 

5,080

 

10,723

Transfers to investment property under construction

 

-

 

(34,531)

Disposals

 

-

 

-

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

3,333

 

3,917

 

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

-

 

-

 

In profit or loss

 

3,333

 

3,917

In other comprehensive income

 

-

 

-

Transfers out of level 3

 

-

 

-

Total investment property (level 3)

 

462,210

 

453,797

Lease incentives

 

6,451

 

4,965

At the end of the year

 

468,661

 

458,762

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 2017, 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 2017, and 1 January 2017, are in line with the valuations reported by the external valuation experts.

The lease incentives granted are included in the total fair value of investment properties. For the year 2017 the amount of lease incentives is € 6.5 million (2016: € 5.0 million).

Investments

2017

2016

Amsterdam

1,179

1,390

Rotterdam

2,603

3,223

Utrecht

1,050

1,583

The Hague

248

4,527

Total investments

5,080

10,723

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

2017

     
 

Amsterdam

Rotterdam

Utrecht

The Hague

Total

Current average rent (€/m²)

205

164

152

188

180

Current average rent (€/PP)

1,969

3,653

1,227

1,606

2,081

Estimated rental value (€/m²)

230

167

163

181

181

Estimated rental value (€/PP)

1,950

3,796

1,400

1,554

2,083

Gross initial yield

5.8%

5.4%

6.5%

7.4%

6.6%

Net initial yield

4.5%

1.6%

2.7%

5.6%

4.3%

Current vacancy rate (LFA m²)

3.7%

38.3%

2.6%

8.5%

16.4%

Current vacancy rate (PP)

71.9%

57.9%

7.2%

16.8%

39.8%

Current vacancy rate (financial)

4.1%

28.2%

5.6%

10.0%

13.7%

Long-term growth rental rate

2.2%

1.5%

2.2%

2.0%

1.9%

Average 10-year inflation rate (IPD Nederland)

    

0.5%

2016

     
 

Amsterdam

Rotterdam

Utrecht

The Hague

Total

Current average rent (€/m²)

205

163

153

193

183

Current average rent (€/PP)

2,005

3,441

1,060

1,485

1,974

Estimated rental value (€/m²)

234

164

161

181

181

Estimated rental value (€/PP)

1,990

3,922

1,400

1,444

2,049

Gross initial yield

6.0%

6.0%

6.0%

7.3%

6.7%

Net initial yield

5.6%

3.8%

1.0%

5.2%

4.7%

Current vacancy rate (LFA m²)

4.4%

27.5%

21.5%

14.8%

17.8%

Current vacancy rate (PP)

74.8%

55.6%

13.5%

28.4%

45.8%

Current vacancy rate (financial)

3.2%

24.1%

44.1%

14.3%

16.6%

Long-term growth rental rate

2.2%

1.8%

2.2%

2.0%

2.0%

Average 10-year inflation rate (IPD Nederland)

    

1.0%

The net valuation gain (loss) for the year included a positive fair value adjustment of € 10,469 (2016: € 12,683) 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 2017, the Fund had unprovisioned contractual obligations for future repairs and maintenance of € 0.9 million (2016: € 3.0 million).

Direct operating expenses recognised in profit or loss include € 0.2 million (2016: € 0.2 million) relating to vacant investment property. Investment property includes buildings held under finance leases. The carrying amount is
€ nil (2016: € nil).

Sensitivity analysis

The appraisal of the portfolio implies a net initial yield of 4.3% (2016: 4.7%). If the yields used for the appraisals of investment properties on 31 December 2017 had been 100 basis points higher (2016: 100 basis points higher) than was the case at that time, the value of the investments would have been 24.2% lower, ceteris paribus (2016: 23.0% lower). In this situation, the Fund’s shareholders’ equity would have been € 121 million lower (2016: € 112 million lower).

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

  

2017

 

2016

Change rental rates

– 5%

5%

– 5%

5%

Value of the investment property change

(23,429)

23,429

(22,938)

22,938

  

2017

 

2016

Change net initial yield

– 25 bps

+ 25 bps

– 25 bps

+ 25 bps

Value of the investment property change

29,020

(25,822)

25,834

(23,219)

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