5 Investment property

Movements in the value of investment property are explained in the following table.

In 2013, investments in investment property under construction included EUR 1.0 million capitalised interest (2012: 1.0 million). In 2013, the average interest rate applicable to the capitalised interest amounted to 3.2% (2012: 3.2%).

The increase in capitalised lease obligations in 2013 as a result of new contracts is mainly due to expansion of the number of lease contracts, in particular in the Netherlands, Germany and Great Britain. Of this total increase in new contracts, EUR 175.4 million (2012: EUR 39.4 million) is due to new contracts arising from sale-and-leaseback transactions.

In the market value table, the market value is disclosed for objects valued internally and externally as well as per object types. The market value of externally valued investment property stated in the table corresponds to the total market value as determined in the valuations made by the external valuer (DTZ).

The following valuation methods can be distinguished:

• Level 1: Unadjusted quoted prices in active markets for identical assets and liabilities;
• Level 2: Actual prices for similar assets and liabilities in active markets or data which is based on or is supported by observable market data;
• Level 3: Unobservable data for determining the fair value of an asset or liability.

The total market value of the investment property includes contracts with a negative market value recognised for an amount of EUR 57.7 million (2012: EUR 30.0 million).

The discount rate used in the valuation of the investment property differs per object, whereby the external valuers take the structure of the discount rate with all relevant aspects into account. These aspects include the nature of the object, the location, the function (multifunctional locations, train stations, hospitals and airports), the maintenance status and the cash flow development. More specifically, the discount rate consists of the risk free interest rate per country plus surcharges as explained in the following table.

In the following table, the weighted average discount rate and exit yield used per cluster are included in the valuations.

The table shows that the discount rates used are adjusted both upwards and downwards. On balance, the (weighted average) discount rate for the company has remained at the same level. In addition to adjustments to the discount rate, adjustments were also made to the exit yields based on estimates made by DTZ. As shown in the table, the adjustments to the exit yield resulted in a total adjustment for the company of 8.3% (weighted average) in 2012 to 8.5% (weighted average) in 2013.

The revaluation result for 2013 is EUR -292.0 million (2012: EUR -3.1 million). The revaluation result is mainly due to the adjusted cash flow projections and the parameters (discount rate and exit yield) adjusted based on estimates provided by DTZ. The following table gives insight into the revaluation result per cluster.

A sensitivity analysis which gives insight into the impact of changes to the discount rate and exit yield on the fair value of the investment property is shown in the following table.

For a more detailed explanation of the change from country organisations to cluster organisations performed in 2013, please refer to explanation given in note 4.