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The basis for the valuations resulting in the fair values can be classified according to IFRS 13 as:
- level 1: quoted prices observable in active markets;
- level 2: observable data other than the quoted prices included in level 1;
- level 3: unobservable data.
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 essen-
tially on the capitalisation rates applied in the property investment
market, taking into consideration 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, its 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
operating income above or below the estimated rental value used for
the capitalisation. 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
developed 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 2015, the fair value of all properties
could be determined 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
valuation 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 2015, there was no transfer between level 1, level 2,
and level 3 (within the meaning of IFRS 13). In addition, there was no
change in valuation methods for the investment properties in 2015.
(x 1,000 EUR)
31.12.2015
31.12.2014
Asset category
1
Level 3
Level 3
Healthcare real estate
1,328,287
1,289,103
Belgium
770,420
804,956
France
378,824
375,417
Netherlands
99,242
87,290
Germany
67,081
Healthcare real estate under development
12,720
21,440
Offices
1,241,149 1,311,976
Antwerp
65,635
64,945
Brussels CBD
364,245
378,917
Decentralised Brussels
511,657
547,432
Brussels Periphery/ Satellites
138,827
141,703
Other regions
115,261
113,278
Offices under development
45,524
65,701
Property of distribution networks
538,124 533,538
Pubstone Belgium
274,299
272,202
Pubstone Netherlands
147,117
149,396
Cofinimur I France
116,708
111,940
Other
26,793
64,566
TOTAL
3,134,353 3,199,183
Determination of the valuation level of the fair value of
the investment properties
The fair value of the investment properties on the balance sheet results
exclusively from the portfolio’s valuation by independent real estate
experts.
To determine the fair value of the investment properties, the nature,
characteristics and risks of these properties, as well as available
market data, were examined.
Because of the state of market liquidity and the difficulty to find
unquestionably comparable transaction data, the level of valuation,
within the meaning of IFRS 13, of the fair value of the Cofinimmo build-
ings is 3, and this for the entire portfolio.
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ANNUAL ACCOUNTS /
Notes to the consolidated accounts