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Valuation portfolio

In accordance with the Act of 12 May 2014 and the Royal Decree of 13 July 2014 on regulated real estate companies, the real estate portfolio is valued four times a year by an independent expert. The expert's valuation is based on the fair value in accordance with the Beama interpretation IAS 40 and is thus reported on the balance sheet.

Vastne Retail Belgium has appointed 2 property experts for the valuation of its portfolio:

  • Cushman & Wakefield
  • CB Richard Ellis

Cushman & Wakefield

The Cushman & Wakefield methodology is based on the ERV (Estimated Rental Value) with adjustments that take into account the current rent paid and/or any other element that influences the value, e.g. costs of vacancies.

They base their determination of the market rental value on their knowlegde of the real estate market and on recent transactions concluded by the Retail department. The rental value is influenced, inter alia, by:

  • location 
  • suitability of the site 
  • qualities of the building 
  • market circumstances.

The allocated unit price is multiplied by the surface area of the commercial in order to reach a total estimated rental value.
For the inner-city shops, the “zone A” principle is used. This methodology uses a three-step process to calculate the total estimated value. 

The first step involves calculating the first 10 metres depth over the full facade width of the premises at 100% of the estimated rent/m2, the next 10 metres at 50% and the rest at 25%. Storeys are charged at 25% or at a fixed estimated amount depending on location and usability.

Next, the Adjusted ERV is calculated: this is 60% of the difference between the current rent and the ERV. If the current rent is higher than the ERV, the Adjusted ERV is equal to the ERV and the 60% rule doesn’t apply.

A following step consists of determining a yield or capitalisation rate for which an investor would be prepared to buy the premises. The gross value before corrections is obtained. Possible corrections can be applied (e.g. vacancy costs), whereafter the investment value (deed in hand) is achieved.

CB Richard Ellis

Valuation on the basis of the capitalisation of rental income

For each let property the estimated market rental value (ERV) is determined along with a market-level capitalisation rate (cap rate) based on recent points of comparison and taking into account the results of our inspections on the spot.
If the estimated market value exceeds the current rental value, it is assumed that a rental increase can be obtaines at the next rental renewal, which is called ‘adjusted ERV’. This adjusted ERV consists of the amount of the current rental income increased by 60 % of the difference between the ERV and the current rental income. After capitalisation of the adjusted ERV the gross market value before adjustments of the property is obtained.
If the estimated market value is lower than the current rental income, the gross market value before corrections is obtained through capitalization of the estimated rental value (ERV).
The utilised adjustments on the gross rental value consist of:
  • deduction from the net current value of the difference between the adjusted ERV and the current rental income for the rest of the current rental period in case that the estimated market rental value exceeds the current rental income
  • increase by the current net value of the difference between the current rental income and the estimated market value for the remaining period of current rental period if the estimated market value is lower than the current rental income
  • deduction of the rental discount given
  • deduction for the necessary expenses to the property
  • deduction for the expected vacancy periods

Value real estate portfolio as at 31 December 2016 

Property expert
 Fair value investment properties
(€ 000)
 Cushman & Wakefield
 CB Richard Ellis



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