9. Investment Property
(4)
FINANCIAL STATEMENTS
Investment property, principally comprised of owned rental space attached to supermarket buildings and excess real estate, is
held for long-term rental yields or appreciation and is not occupied by the Group.
Investment property is accounted for at cost less accumulated depreciation and accumulated impairment losses, if any. When
stores held under finance lease agreements are closed (see Note 20.1) or if land will no longer be developed for construction
purposes or is held for currently undetermined use, they are reclassified from property, plant and equipment to investment
property.
(in millions of
2014
2013
2012
Cost at January 1
252
250
137
Additions
2
6
Sales and disposals
(41)
(22)
(29)
Transfers (to) from other accounts
33
142
Currency translation effect
23
(9)
(6)
Classified as held for sale
(6)
Cost at December 31
226
252
250
Accumulated depreciation and impairment at January 1
(152)
(134)
(54)
Depreciation expense
(4)
(4)
(4)
Impairment losses
(2)
(6)
(14)
Sales and disposals
28
17
26
Transfers to (from) other accounts
(31)
(91)
Currency translation effect
(14)
6
3
Classified as held for sale
2
Accumulated depreciation and impairment at December 31
(142)
(152)
(134)
Net carrying amount at December 31 84 100 116
In 2012, a net book value of €51 million was transferred to investment property from (i) property, plant and equipment (€44
million) primarily as a result of the store portfolio review and (ii) assets held for sale in Serbia (€7 million). Due to a weakening
real estate market and the deteriorating state of the property for sale, making a sale within the foreseeable future unlikely, certain
properties were reclassified into investment property.
At December 31, 2014, 2013 and 2012, the Group only had insignificant investment property under construction.
The fair value of investment property amounted to €120 million, €132 million and €146 million at December 31, 2014, 2013 and
2012, respectively. Level 2 fair values were estimated using third party appraisals and signed, non-binding purchase and sales
agreements. Level 3 fair values were predominantly established applying an income approach. The entity did not change the
valuation technique applied during the reporting period. The main inputs to the valuation model are current market rents,
estimated market rental value (EMRV), term yield and reversionary yield. Independent external or internal valuers supporting the
fair value estimates have the necessary recognized and relevant professional qualification.
The fair value of the investment properties has been categorized as follows:
December 31, 2014
Carrying amount Fair value
(in millions of
at amortized cost
Total
Level 2
Level 3
United States
66
97
61
36
Southeastern Europe
18
23
23
Total investment property
84
120
61
59
Rental income from investment property recorded in other operating income was €6 million for 2014, €6 million for 2013 and
€7 million for 2012. Operating expenses arising from investment property generating rental income, included in selling, general
and administrative expenses, were €4 million in 2014, €4 million in 2013 and €6 million in 2012. Operating expenses arising from
investment property not generating rental income, included in selling, general and administrative expenses, were €1 million in
2014, €6 million in 2013 and €4 million in 2012.
