24. Investment Property

Development of Investment Property

in € thousand

 

Investment
property

 

Payments on account and plants under construction

 

Total

Carrying amount as of 1 January 2014

 

172,552

 

11,704

 

184,256

Acquisition or production cost

 

 

 

 

 

 

1 January 2014

 

287,266

 

11,704

 

298,970

Additions

 

24,066

 

120

 

24,186

Disposals

 

- 230

 

 

 

- 230

Reclassifications

 

11,655

 

- 11,655

 

0

31 December 2014

 

322,758

 

169

 

322,927

Accumulated depreciation, amortisation and impairment

 

 

 

 

 

 

1 January 2014

 

114,714

 

0

 

114,714

Additions

 

9,031

 

 

 

9,031

Disposals

 

- 14

 

 

 

- 14

Reclassifications

 

 

 

 

 

0

31 December 2014

 

123,731

 

0

 

123,731

Carrying amount as of 31 December 2014

 

199,026

 

169

 

199,196

 

 

 

 

 

 

 

Carrying amount as of 1 January 2015

 

199,026

 

169

 

199,196

Acquisition or production cost

 

 

 

 

 

 

1 January 2015

 

322,758

 

169

 

322,927

Additions

 

180

 

634

 

815

Disposals

 

- 30

 

- 97

 

- 127

Reclassifications

 

0

 

0

 

0

31 December 2015

 

322,909

 

706

 

323,615

Accumulated depreciation, amortisation and impairment

 

 

 

 

 

 

1 January 2015

 

123,731

 

0

 

123,731

Additions

 

9,285

 

0

 

9,285

Disposals

 

- 4

 

0

 

- 4

Write-backs

 

0

 

0

 

0

31 December 2015

 

133,012

 

0

 

133,012

Carrying amount as of 31 December 2015

 

189,897

 

706

 

190,603

The properties held as investment property are mainly warehouses converted to office space and other commercial real estate in Hamburg’s Speicherstadt historical warehouse district as well as logistics warehouses and surfaced areas.

The addition to investment property in the previous year was due to the completion and handover of a hotel complex.

Rental income from investment property at the end of the financial year was € 51,022 thousand (previous year: € 46,287 thousand). The direct operating expenses for investment property amounted to € 14,867 thousand (previous year: € 16,631 thousand) at the end of the reporting year.

Fair value is calculated and measured annually by HHLA’s Real Estate segment. The associated inputs are classified as Level 3 in the fair value hierarchy, see Note 7.

Fair Value Reconciliation

in € thousand

 

2015

As of 1 January

 

521,005

Change in fair value (not realised)

 

63,207

As of 31 December

 

584,212

The valuation method used to measure the fair value of investment property as well as the key unobservable input factors applied:

Valuation method

 

Key unobservable input factors

 

Relationship between key unobservable input factors and measurement at fair value

 

 

 

 

The estimated fair value would increase (fall) if

Fair values are measured by applying the discounted cash flow method (DCF method) to the forecast net cash flows from managing the properties. This method is based on detailed forecasts of ten years or up to the end of the useful lives of properties with a remaining useful life of less than ten years. The cash flows are discounted using standard market interest rates. Property-specific fair value is determined on the basis of property-specific measurement criteria.

 

contractually agreed rental income

 

the expected rent increases were higher (lower)

 

expected rent increases

 

the expected rent increases were higher (lower)

 

vacancy periods

 

the vacancy periods were shorter (longer)

 

level of occupancy

 

the level of occupancy was higher (lower)

 

rent-free periods

 

the rent-free periods were shorter (longer)

 

possible termination of the tenancy agreement

 

tenancy agreements were not terminated (were terminated)

 

re-leasing

 

the property was re-leased sooner (later)

 

operating, management and maintenance costs

 

operating, management and maintenance costs were lower (higher)

 

discount rate
(4.54 to 7.82 % p. a.)

 

the risk-adjusted discount rate was lower (higher)

The valuation method used to measure the fair value of investment property as well as the key unobservable input factors applied:

Valuation method

Key unobservable input factors

Relationship between key unobservable input factors and measurement at fair value

 
 

The estimated fair value would increase (fall) if

Fair values are measured by applying the discounted cash flow method (DCF method) to the forecast net cash flows from managing the properties. This method is based on detailed forecasts of ten years or up to the end of the useful lives of properties with a remaining useful life of less than ten years. The cash flows are discounted using standard market interest rates. Property-specific fair value is determined on the basis of property-specific measurement criteria.

contractually agreed rental income

the expected rent increases were higher (lower)

expected rent increases

the expected rent increases were higher (lower)

vacancy periods

the vacancy periods were shorter (longer)

level of occupancy

the level of occupancy was higher (lower)

rent-free periods

the rent-free periods were shorter (longer)

possible termination of the tenancy agreement

tenancy agreements were not terminated (were terminated)

re-leasing

the property was re-leased sooner (later)

operating, management and maintenance costs

operating, management and maintenance costs were lower (higher)

discount rate
(4.54 to 7.82 % p. a.)

the risk-adjusted discount rate was lower (higher)

Regarding existing restrictions on the disposal and use of buildings in connection with the letting of the associated properties from the Free and Hanseatic City of Hamburg, see the explanatory remarks on the lease agreements in Note 45.