Valuation real estate portfolio
In accordance with the Royal Decree of 7 December 2010 on the property investment funds, the real estate portfolio is valued four times a year by independent property experts. The expert valuation starts out from the fair value in accordance with the Beama interpretation of IAS 40 and is thus reported on the balance sheet.
The valuation of the current real estate portfolio of Intervest Offices & Warehouses is carried out by the following two independent property experts:
- Jones Lang LaSalle, represented by Frank Weyers
- Cushman & Wakefield, represented by Matthias Gerits
The property experts analyse rental, sale and purchase transactions on a permanent basis. This makes it possible to correctly analyse real estate trends on the basis of prices actually paid and thus to build up market statistics.
Assessment of real estate assets
For the assessment various factors are taken into account:
- Market
- supply and demand of tenants and buyers of comparable real estate
- evolution of yields
- expected inflation
- current interest rates and expectations in terms of interest rates
- Location
- factors in surroundings
- availability of parking
- infrastructure
- accessibility by way of private and public transport
- facilities such as public buildings, stores, hotels, restaurants, banks, schools, etc.
- development (construction) of comparable real estate
- Real estate
- operating and other expenses
- type of construction and level of quality
- state of maintenance
- age
- location and representation
- current and potential alternative usage possibilities
Valuation methods
Subsequently 3 major valuation methods are used:
- Net present value of estimated rental revenues
The investment value is result of the applicable return (yield or opportunity cost, which represents the gross return required by a buyer) on the estimated rental value (ERV), corrected by the net present value (NPV) of the difference between the current actual rent and the estimated rental value at the date of evaluation and this for the period until the following possibility to give notice under the current rental contracts.
For buildings that are partially or completely vacant, the valuation is calculated on the basis of the estimated rental value, with deduction of the vacancy and the costs (rental costs, publicity costs, etc.) for the vacant portions.
Buildings to be renovated, buildings being renovated or planned projects are evaluated on the basis of the value after renovation or the end of the works, reduced by the amount of the works yet to be done, fees for architects and engineers, interim interest expenses, the estimated vacancy and a risk premium.
- Unit prices
The investment value is determined on the basis of unit prices for the real estate asset per m² for office space, storage space, archive space, number of parking spaces, etc. and this in turn on the basis of the market and building analyses described above.
- Discounted cash flow analysis
This method is used primarily for valuation of assets that are the object of leasing or long-term contracts. The investment value is determined on the basis of the conditions stipulated in the contract. This value is equal to the sum of the NPV of the various cash flows over the duration of the contract.
The cash flows consist of yearly payments (discounted according to a financial interest rate) together with the value at which the asset could be sold at the end of the contract (based on the free market value at that moment and discounted at an opportunity cost rate) if the lessee (or tenant) has a purchase option at the end of the contract.
The free market value at the end of the leasing contract is calculated using the first method mentioned above (net present value of the estimated rental income).
Value of the real estate portfolio on 31 December 2011
| Valuer | Valued property | Fair value | Investment |
| Cushman & Wakefield |
| 370.410 | 379.670 |
| Jones Lang LaSalle |
| 210.895 | 216.249 |
| TOTAL |
| 581.305 | 595.919 |