IREIT Global
annual report 2014
For the reporting period from 1 November 2013 (date of constitution) to 31 December 2014
Notes to the
Financial Statements
7.
INVESTMENT PROPERTIES
(Continued)
The following table presents the valuation techniques and key inputs that were used to determine
the fair value of investment properties categorised under Level 3 of the fair value hierarchy:
Valuation Techniques
Income
Capitalisation
Rate
Discount
Rate
Terminal
Capitalisation
Rate
Price per
square meter
Income capitalisation method 5.75% to 7.41%
–
–
–
Discounted cash flow
–
6.25% to 8.25% 5.5% to 7.5%
–
Depreciated replacement cost
method
–
–
–
Building: €1,250
Car park: €375
There are inter-relationships between the above significant unobservable inputs. An increase in
the income capitalisation rate, terminal capitalisation rate or discount rate will result in a decrease
to the fair value of investment properties. An increase in the estimated price per square meter
will result in an increase to fair value of the investment properties. An analysis of the sensitivity
of each of the significant unobservable inputs is as follows:
Method
Impact on carrying value of properties
Income capitalisation method
If income capitalisation rate were to increase by 0.5%, the
carrying value of investment properties would decrease by
approximately EUR 19.90 million.
Discounted cash flow method
If discount rate were to increase by 0.5%, the carrying
value of investment properties would decrease by
approximately EUR 11.40 million.
Depreciated replacement cost
method
If the price per square meter were to increase by 0.5%, the
carrying value of investment properties would increase by
approximately EUR 0.36 million.
Investment properties with a fair value of approximately EUR 290.6 million have been pledged
as security for bank loans. All the investment properties are located in Germany.
