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12 Investment property (continued)
Our strategy
Our performance
Governance
Financials
Investors
V
Ahold Annual Report 2013
A significant portion of Ahold's investment property is comprised of shopping centers containing both an Ahold store and third-party retail units. The third-party retail units generate rental
income, but are primarily of strategic importance to Ahold in its retail operations. Ahold recognizes the part of a shopping center leased to a third-party retailer as investment property, unless
it represents an insignificant portion of the property.
In 2013, Ahold recognized impairment losses of €7 million. These were related to Ahold USA (€3 million) and the Netherlands (€4 million).
The carrying amount of investment property includes an amount related to assets held under finance leases and financings of €33 million and €44 million (December 30, 2012: €38 million
and €50 million), respectively. Ahold does not have legal title to these assets. Company-owned investment property with a carrying amount of €65 million (December 30, 2012: €66 million)
has been pledged as security for liabilities, mainly for loans.
The fair value of investment property as of December 29, 2013, amounted to approximately €715 million (December 30, 2012: €757 million). These fair value measurements are primarily
categorized within Level 2. The most significant input into this valuation approach are observable market retail yields and tenant rents to calculate the fair value. An insignificant portion of the
fair value measurement is based on the Company's own valuation methods, which are categorized within level 3. Fair value represents the price that would be received to sell an asset in an
orderly transaction between market participants and has generally been measured by using discounted cash flow projections based on the assets' highest and best use from the market
participants' perspective. For mixed use properties and properties held for strategic purposes, Ahold cannot determine the fair value of the investment property reliably. In such cases, the fair
value is assumed to be equal to the carrying amount.
Rental income from investment property included in the income statement in 201 3 amounted to €63 million (2012: €69 million). Direct operating expenses (including repairs and maintenance
but excluding depreciation expense) arising from rental-income-generating and non-rent-generating investment property in 2013 amounted to €30 million (2012: €36 million).
