Notes to the consolidated financial statements
91
12 Investment property (continued)
Ahold at a glance
Business review
Governance
Financials
Ahold
Annual Report 2014
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 2014, Ahold recognized net impairment losses of €9 million. These were related to Ahold USA (€3 million) and the Netherlands (€6 million).
The carrying amount of investment property includes an amount related to assets held under finance leases and financings of €29 million and €48 million (December 29, 2013: €33 million and €44 million), respectively.
Ahold does not have legal title to these assets. Company-owned investment property with a carrying amount of €75 million (December 29, 2013: €65 million) has been pledged as security for liabilities, mainly for loans.
The fair value of investment property as of December 28, 2014, amounted to approximately €744 million (December 29, 2013: €715 million). 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. Ahold's 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. 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 2014 amounted to €66 million (2013: €63 million). Direct operating expenses (including repairs and maintenance but excluding depreciation
expense) arising from rental-income-generating and non-rent-generating investment property in 2014 amounted to €30 million (2013: €30 million).
