BWP TRUST ANNUAL REPORT 2015 - page 41

BWP TRUST ANNUAL REPORT 2015 39
6. INVESTMENT PROPERTIES
Reconciliation of the carrying amount of investment properties:
June 2015
$000
June 2014
$000
Balance at the beginning
of the financial year 1,765,480 1,374,444
Acquisitions during the year 117,322 374,179
Divestments during the year (17,366) -
Reclassification to assets
held for sale (16,357) (49,396)
Capital improvements since
acquisition 7,328 9,140
Realised gains on disposal of
investment properties 371 -
Net unrealised gains from
fair value adjustments 108,137 57,113
Balance at the end of the
financial year 1,964,915 1,765,480
Recognition and measurement
Investment property is initially measured at cost and subsequently
at fair value with any change therein recognised in profit and loss.
Subsequent revaluations to fair value according to the Trust’s
revaluations policy may result in transaction costs appearing as a
negative adjustment (loss) in fair value.
Where assets have been revalued, the potential effect of the capital
gains tax (“CGT”) on disposal has not been taken into account in the
determination of the revalued carrying amount. The Trust does not
expect to be ultimately liable for CGT in respect of the sale of assets
as all realised capital gains would be distributed to unitholders.
Fair value – Hierarchy
The Trust is required to categorise the fair value measurement of
investment properties based on the inputs to the valuations technique
used. All investment properties for the Trust have been categorised on
a Level 3 fair value basis as some of the inputs required to value the
properties are not based on “observable market data”.
Fair value – Valuation approach
Key judgement
The Trust has a process for determining the fair value of
investment properties at each balance date, applying generally
accepted valuation criteria, methodology and assumptions
detailed below.
An independent valuer, having an appropriate professional
qualification and recent experience in the location and category of
property being valued, values individual properties every three years
on a rotation basis. The independent valuer determines the most
appropriate valuation method for each property (refer next page).
In accordance with the Trust’s policy, the following properties were
independently valued at 30 June 2015:
Property Valuation $000
Wallsend 28,400
Lismore 11,600
Southport 22,000
Underwood 18,800
Burleigh 17,500
Gladstone 34,000
Bayswater 31,600
Mentone 21,800
Balcatta 34,400
Mandurah 20,200
Joondalup 17,700
Properties that have not been independently valued as at balance date
are carried at fair value by way of directors’ valuation.
The directors adopt the valuation methodologies outlined on the
following page for all remaining properties, and these methodologies
are subject to an independent review process by Jones Lang LaSalle.