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Annual Accounts /
Notes to the Consolidated Accounts
Valuation methods used
Based on a multi-criteria approach, the valuation methods used by the
real estate experts are the following:
Discounted estimated rental value method
This method involves capitalising the property's estimated rental value by
using a capitalisation rate (yield) in line with the real estate market. The
choice of the capitalisation rate used depends essentially on the capitali-
sation rates applied in the property investment market, taking into consid-
eration the location and the quality of the property and of the tenant at the
valuation date. The rate corresponds to the rate anticipated by potential
investors at the valuation date. The determination of the estimated rental
value takes into account market data, the property's location, it’s quality,
the number of beds for healthcare assets and, if available, the tenant's
financial data (EBITDAR).
The resulting value must be adjusted if the current rent generates an oper-
ating income above or below the estimated rental value used for the cap-
italisation. The valuation also takes into account the costs to be incurred
in the near future.
Discounted cash flow method
This method requires an assessment of the net rental income generated
by the property on an annual basis during a defined period. This flow is
then discounted. The projection period generally varies between 10 and
18 years. At the end of this period, a residual value is calculated using
the capitalisation rate on the terminal value, which takes into account
the building's expected condition at the end of the projection period,
discounted.
Market comparables method
This method is based on the principle that a potential buyer will not pay
more for the acquisition of a property than the price recently paid on the
market for the acquisition of a similar property.
Residual value method
The value of a project is determined by defining what can/will be devel-
oped on the site. This means that the purpose of the project is known or
foreseeable in terms of quality (planning) and quantity (number of square
meters that can be developed, future rents, etc.). The value is obtained by
deducting the costs to completion of the project from its anticipated value.
Other considerations
If the fair value cannot be determined reliably, the properties are valued at
the historical cost. In 2013, the fair value of all properties could be deter-
mined reliably so that no building was valued at historical cost.
In the event that the future selling price of a property is known at the valu-
ation date, the properties are valued at the selling price.
For the buildings for which several valuation methods were used, the fair
value is the average of the results of these methods.
During the year 2013, there was no transfer between level 1, level 2, and
level 3. In addition, there was no change in valuation methods for the
investment properties.
Changes in the fair value of investment properties, based on unobservable data
(x €1,000)
FAIR VALUE AT 31.12.2012
3,308,570
Gains/losses recognised under the income statement
-26,260
Acquisitions
7,412
Extensions/redevelopments
39,474
Investments
13,446
Writeback of lease payments sold
25,276
Disposals
-20,909
Transfers of levels
FAIR VALUE AT 31.12.2013
3,347,009