104 / 156
NOTES TO THE FINANCIAL STATEMENTS
continued
for the year ended 30 June 2015
2.
Investment property
continued
2.5 Investment property valuation
continued
Valuation techniques underlying management’s estimation of fair value
The valuations were determined using discounted cash flow projections, based on significant unobservable inputs. These inputs
include:
Future rental cash flows:
Based on the location, type and quality of the properties and
supported by the terms of any existing leases or other contracts
or external evidence such as current market rentals for similar
properties.
Discount rates:
Reflecting current market assessments of the uncertainty in the
amount and timing of cash flows.
Vacancy rates:
Based on current and expected future market conditions after
expiry of any current leases.
Maintenance costs:
Including necessary investments to maintain functionality of the
property for its expected useful life.
Capitalisation rates:
Based on location, size and quality of the properties and taking
into account market data at the valuation date.
Terminal value:
Taking into account assumptions regarding maintenance costs,
vacancy rates and market rentals.
The methods of valuation applied by the independent valuers was the same as the prior year.
Fair value hierarchy
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between
market participants at the measurement date, regardless of whether that price is directly observable or estimated using another
valuation technique. In estimating the fair value of an asset or a liability, the group takes into account the characteristics of the
asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the
measurement date.
In addition, for financial reporting purposes, fair value measurements are categorised into level 1, 2 or 3 based on the degree to
which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement
in its entirety. The three levels are explained as follows:
Level 1 – inputs are quoted prices in active markets for identical assets or liabilities that the company can access at the
measurement date. These quoted prices are unadjusted.
Level 2 – inputs are inputs, other than quoted prices included in level 1, that are observable for the asset or liability, either
directly or indirectly.
Level 3 – inputs are unobservable inputs for the asset or liability.
Group and company
Recurring fair value
measurements – level 3
June 2015
Valuation
R000
June 2014
Valuation
R000
Shopping centres
23 408 630
19 213 269
Value centres
1 112 000
1 290 000
Standalone offices
480 000
90 000
Development property
(1)
1 849 000
Total company
25 000 630
22 442 269
Manda Hill
1 618 506
Total group
25 000 630
24 060 775
(1)
Rosebank Mall and the Mall Offices were classified as development property at 30 June 2014
102
Hyprop Investments Limited
Integrated Report 2015
FINANCIAL STATEMENTS