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Notes to the Financial Statements
Washington H. Soul Pattinson and Company Limited
Annual Report 2016
82
Accounting for Our Investments
NOTE 12
INVESTMENT PROPERTIES
12
Accounting policy –
Investment properties
Investment properties consist of properties held for long term rentals and/or capital appreciation and properties
being constructed or developed for future use as investment properties.
Investment properties are initially recognised at cost including transaction costs. Other costs capitalised into the
carrying value of investment properties include development, construction, redevelopment, refurbishment (other
than repairs and maintenance) and interest (until the property is ready for its intended use).
Investment properties are subsequently stated at fair value. Changes in fair value are recognised as gains or losses
in the Income Statement as part of ‘Other income’.
Valuations are obtained periodically, and at least every three years from independent Registered Property Valuers
who hold recognised and relevant qualifications and have recent valuation experience in the location and
categories of each property held.
At the end of each reporting period, the Directors update their assessment of the fair value of each property,
taking account of the most recent independent valuations.
Amounts provided to customers as lease incentives and assets relating to fixed rental income increases in
operating lease contracts are included within investment property values. Lease incentives are amortised over the
term of the lease on a straight line basis. The amortisation is applied to reduce gross rental income. Rental income
is recognised on a straight line basis within revenue.
On disposal of an investment property, a gain or loss is recognised in the income statement in the year of disposal.
It is calculated as the difference between the carrying amount of the asset at the date of disposal and the net
proceeds received.
2016
2015
$’000
$’000
Non-Current Assets
Investment properties
Industrial property
21,008
20,720
Commercial property
71,924
–
92,932
20,720
Reconciliation
Opening net book amount
20,720
139,421
Acquisitions
71,603
–
Capitalised costs
146
26,844
Movement in tenant incentives, contracted rent uplift balances
and leasing fee asset
463
1,649
Disposal of investment properties
–
(147,194)
Closing net book amount
92,932
20,720
In the current year, the Group acquired two commercial properties in Pennant Hills for a total of $71.603 million.
In the prior year, the Australian Logistics Property Fund, a 100% controlled entity, sold two distribution warehouses.