12 Investment property

At the beginning of the year2,535,8542,597,675
Transfer from investment property under construction114,46795,399
Total investments115,11996,364
Net gain (loss) from fair value adjustments on investment property (like-for-like)32,536(84,920)
Net gain (loss) from fair value adjustments on investment property(5,761)(12,445)
In profit or loss26,775(97,365)
In other comprehensive income- -
Transfers out of level 3- -
Total investment property (level 3)2,561,3542,535,854
Classified as held for sale- -
At the end of the year2,561,3542,535,854
Download XLS

The Fund’s investment properties are valued by an external valuation expert on a quarterly basis. On 31 December 2014, these properties were revalued by independent professionally qualified valuation experts with experience in the locations and categories of the investment properties valued (level 3). The carrying values of investment property as at 31 December 2014, and 1 January 2014, are in line with the valuations reported by the external valuation experts. In estimating the fair value of the properties, the highest and best use of the properties is their current use. There has been no change to the valuation technique during the year and there were no transfers between levels 2 and 3 during the year.

The specifications of transfers from investments and Investment property under construction and also the disposals are set out below.

Investments and investment property under construction20142013
Mid East12,92812,471
Non-core regions- -
Total investments and investment property under construction115,11996,364
Download XLS

Mid East(4,297)-
Brabantstad- (7,286)
Non-core regions(43,785)(13,227)
Total disposals(116,394)(60,820)
Download XLS

The significant assumptions made relating to the valuations are set out below.

 RandstadMid EastBrabantstadNon-core regionsTotal
Current average rent (€/unit)968785856781927
Estimated rental value (€/unit)995805884801953
Gross initial yield5.9%6.7%6.0%6.7%6.0%
Net initial yield4.2%4.8%4.4%4.7%4.3%
Current vacancy rate (no rental units)2.0%1.1%1.8%3.4%2.1%
Current financial vacancy rate3.2%2.7%5.3%5.2%3.5%
Long-term vacancy rate3.4%3.9%3.1%4.8%3.5%
Long-term growth rental rate2.5%2.4%2.3%2.3%2.4%
Average 10-years inflation rate (IPD Nederland)    1.9%
Download XLS

 RandstadMid EastBrabantstadNon-core regionsTotal
Current average rent (€/unit)948750827744899
Estimated rental value (€/unit)979778852765929
Gross initial yield5.6%5.9%5.2%6.5%5.7%
Net initial yield4.0%4.7%4.5%4.9%4.1%
Current vacancy rate (no rental units)2.3%4.1%1.5%4.5%2.7%
Current financial vacancy rate3.4%5.6%1.8%4.2%3.6%
Long-term vacancy rate3.1%5.3%2.2%3.3%3.2%
Long-term growth rental rate2.72%2.71%2.66%2.65%2.71%
Average 10-years inflation rate (IPD Nederland)    2.1%
Download XLS

The valuation of the investment properties has taken into account a vacancy period ranging from one (1) to three (3) months. There are no rental incentives.

The total gain (loss) for the year included an unrealised gain of € 43,865 (2013: € 6,516) relating to investment properties that are measured at fair value at the end of the reporting period.

The vacancy rate showed a downward trend due to successful efforts to improve letting in assets with the highest vacancy rate.

As at 31 December 2014, the Fund had unprovisioned contractual obligations for future repairs and maintenance of € 2.7 million (2013: € 3.5 million). Direct operating expenses recognised in profit or loss include € 0.5 million (2013: € 1.5 million) relating to investment property that was vacant. Investment property includes buildings held under finance leases of which the carrying amount is nil (2013: nil).

Sensitivity analysis

The appraisal of the portfolio implies a net initial yield of 4.3% (2013: 4.1%). If the yields used for the appraisals of investment properties on 31 December 2014 had been 100 basis points higher (2013: 100 basis points higher) than was the case at that time, the value of the investments would have been 18.9% lower (2013: 19.5% lower). In this situation, the Fund’s shareholders’ equity would have been € 499 million lower (2013: € 509 million lower).

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

  2014 2013
Change rental rates– 5%5%– 5%5%
Value of the investment property change(131,965)131,965(130,651)130,651
Download XLS

  2014 2013
Change net initial yield– 25 bps+ 25 bps– 25 bps+ 25 bps
Value of the investment property change163,453(145,439)168,334(149,121)
Download XLS

  • Share this article