NOTES TO THE FINANCIAL STATEMENTS
(CONT’D)
31 DECEMBER 2015
14.
INVESTMENT PROPERTIES (CONT’D)
All fair value measurements of investment properties are based on discounted method and market capitalisation
method and are categorised within Level 3 of the fair value hierarchy. The information about the significant
unobservable inputs used in the fair value measurements are as follows:
2015
2014
1.
Estimated discount rates using pre-tax rates that reflect
current market assessments at the risks specific to the
properties
13.0% to 13.6% 12.5% to 13.3%
2.
Growth rates
0.0% to 9.1% 1.0% to 7.5%
3.
Terminal discount rates
7.0% to 9.7% 8.0% to 9.1%
4.
Market capitalisation rate
8.50%
–
5.
Cash flow forecasts derived from the most recent
financial budgets and plans approved
by management
Note 1
Note 1
Note 1:
Discounted cash flow analysis over the remaining lease period for existing Build, Operate and Transfer
(“BOT”) malls, over a 10-year projection for non-BOT malls and for retail spaces.
Relationship of unobservable inputs to fair value:
1.
Discount rates
– The higher the discount rates, the lower the fair value.
2.
Growth rates
– The higher the growth rates, the higher the fair value.
3.
Terminal discount rates – The higher the terminal discount rates, the lower the fair value.
4.
Market capitalisation rate – The higher the market capitalisation rates, the lower the fair value.
Sensitivity analysis on management’s estimates:
1.
Discount rates
A hypothetical 10% (2014: 10%) increase or decrease in the pre-tax discount rate applied to the
discounted cash flows would have an effect on return before tax of – lower by $157,723,000; higher
by $218,181,000 (2014: lower by $168,555,000; higher by $205,346,000).
2.
Growth rates
A hypothetical 10% (2014: 10%) increase or decrease in the rental income would have an effect on
return before tax of – higher by $21,296,000; lower by $156,746,000 (2014: higher by $129,518,000;
lower by $128,231,000).
3.
Terminal discount rates
A hypothetical 10% (2014: 10%) increase or decrease in the terminal discount rate would have an effect
on return before tax of – lower by $56,068,000; higher by $93,656,000 (2014: lower by $67,419,000;
higher by $82,405,000).
LIPPO MALLS INDONESIA RETAIL TRUST
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