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Financial statements

12 Investment property

  

2017

 

2016

At the beginning of the year

 

763,747

 

521,589

Transfers from investment property under construction

14,076

 

232,447

 

Investments

60,833

 

10,896

 

Total investments

 

74,909

 

243,343

Transfers to investment property under construction

 

-

 

-

Disposals

 

(450)

 

(1,702)

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

28,252

 

(3,381)

 

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

(3,121)

 

3,898

 

In profit or loss

 

25,131

 

517

In other comprehensive income

 

-

 

-

Transfers out of level 3

 

-

 

-

Total investment property (level 3)

 

863,337

 

763,747

Lease incentives

 

1,531

 

1,866

At the end of the year

 

864,868

 

765,613

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.

Since the accounting effect of lease incentives granted is included under non-current assets the recognised amount € 1.5 million (2016: € 1.9 million) is deducted from the total fair value of investment properties.

Investments and investment property under construction

2017

2016

Experience

7,617

204,180

Convenience

66,873

38,979

Other

419

184

Total Investments and investment property under construction

74,909

243,343

Disposals

2017

2016

Experience

(450)

-

Convenience

-

-

Other

-

(1,702)

Total disposals

(450)

(1,702)

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

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%

Inflation rate

   

0.5%

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%

The net valuation gain (loss) for the year included a positive fair value adjustment of € 46.5 million (2016: € 29.2 million) relating to investment properties that are measured at fair value at the end of the reporting period.

As at 31 December 2017, the Fund had unprovisioned contractual obligations for future repairs and maintenance of € 0.3 million (2016: € 0.5 million).

Direct operating expenses recognised in profit or loss include € 0.1 million (2016: € 0.1 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 4.9% (2016: 5.0%). 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 15.8% lower ceteris paribus (2016: 15.6% lower). In this situation, the Fund’s shareholders’ equity would have been € 146 million lower (2016: € 128 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

(43,243)

43,243

(38,281)

38,281

  

2017

 

2016

Change net initial yield

– 25 bps

+ 25 bps

– 25 bps

+ 25 bps

Value of the investment property

31,818

(53,625)

40,318

(36,477)

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